Flutter Entertainment PLC (FLUT) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Paddy Power Betfair prelim results call hosted by Breon Corcoran. My name is Nigel and I'm your event manager. (Operator Instructions). I'd also like to advise all parties this conference is being recorded. Now I'd like to hand over to Breon, please go ahead.

Thank you. Good morning all, and thank you for joining us on the Paddy Power Betfair prelims' call. With me today is Andy McCue, our Chief Operating Officer; and Alex Gersh, our CFO.

We were very pleased last month to complete the merger of Paddy Power and Betfair, creating one of the world's largest online betting and gaming companies with enlarged scale, capability and distinctive complementary brands.

This morning we released our 2015 preliminary results. The purpose of this call is to take you through the highlights and to answer any questions you might have.

Due to the timing of completion, this is an unconventional results announcement which is why we've opted for a call rather than the usual presentation.

The main component of the release was the 2015 results for the Paddy Power Group, prior to the merger with Betfair, the highlights of which Andy will take you through shortly.

We've also included pro forma 2015 information for the combined Group, which Alex will talk you through.

Last September when announcing the merger, we spoke about how the combination of the two industry-leading operators, with significant growth momentum, aligned strategies and strong cultural fit, was hugely exciting.

Since then, as we've learnt more about each other's businesses, and in particular over the last five weeks as we've begun the integration process, our belief in the compelling strategic rationale of this merger has only been strengthened further.

We've appointed our leadership team, which combines significant experience and knowledge from both legacy organizations, and I'm hugely excited about the pool of talent we have available right across the Group's operations.

While it's important to act quickly to bring the best attributes of each business together to create a stronger combined operation, it's also critical that we don't disrupt the momentum of the existing businesses, in particular in the context of the approaching key trading period, which kicks off next week with Cheltenham and culminates with the European Championships this summer.

Turning to the results. Both Paddy Power and Betfair have a track record of substantial growth in revenues and profits, and both businesses entered the merger with strong trading momentum.

In 2015, revenues were up 21% on a pro forma basis, and both Groups enjoyed profit growth, despite the headwind of new taxes and product fees.

The results also highlight the scale of the enlarged Group with revenues of over [GBP1.3 billion]. This ensures we are better positioned to generate returns from investments in marketing, technology and product spend.

You would appreciate it's still early days in the life of Paddy Power Betfair, and, accordingly, we are not going to update you with details of our outlook for the combined business or its future strategic direction.

We do, however, look forward to updating you in more detail at our interim results in August.

Now with that, I'll hand you over to Andy to take you through the highlights of the Paddy Power 2015 results.

Thank you, Breon. In 2015, Paddy Power saw continued strong growth, culminating in record high revenues of over EUR1 billion and operating profits of EUR180 million, up 10% year on year, or 50% growth before the incremental impact of new taxes.

This growth was underpinned by a strong operational performance and substantial strategic progress, with significant product enhancements, new marketing campaigns, and efficiency gains.

All of our online and retail divisions contributed to this performance, with each business achieving double-digit revenue growth.

In online Europe, net revenue increased 12%, and operating profit of EUR73 million was up 48%, before EUR54 million of new taxes.

Sportsbook stakes increased 8%, or 13%, excluding the World Cup. And gaming revenues were up 10%, driven by continued strong performance from mobile and proprietary games.

In paddypower.com, our focus in 2015 was on developing new market leading sports betting apps. In November we released our new native iOS app, delivering significantly enhanced customer navigation for iPhone betting, with for example, faster price updates and bet placement.

We followed this in December with our new HTML5 web app, to deliver similar benefits to Android and iOS web customers. And the intuitive design, and seamless launch of the new apps, is driving very positive customer reaction.

Our brand investment is focused on showcasing this enhanced product offering and our new You're Welcome! campaign is resonating strongly with customers since we launched it last August.

In Italy we have made substantial operational improvements to position the business for long-term growth and profitability.

In 2015 we restructured our cost base with OpEx decreasing 19%, whilst growing net revenue by 18%, and therefore reduced the operating loss substantially.

Moving to Australia. Even in the context of our track record of strong market-share gains and profitable growth, 2015 was a standout year. 43% revenue growth, combined with further profit margin expansion, drove operating profit growth of 54%.

Sportsbet became Australia's largest online brand, with [44%] online sales growth, 31% growth in actives and 23% growth in new customers.

This performance is driven by ongoing substantial investment in new product, supported by increased marketing investment.

Significant product releases last year included Punters Club, Cash Out, live Victorian streaming and, in December our Betlive product.

Betlive is our new betting-in-running product, which utilizes traditional phone service capabilities with our mobile app and is driving accelerating telephone stakes growth since launch. For example, in January telephone stakes were double that of the prior year.

In marketing we materially increased spend in 2015, with a total spend over double that of 2013, illustrating our substantial growth and scale. And this increased -- this investment included significant increased promotional activity, targeting key events such as the racing Spring Carnival and continued acquisition of key media assets.

In retail we grew strongly and increased our market share. Top line momentum accelerated in 2015, with like-for-like revenues up 8% and operating profits up 11%, notwithstanding increased taxes and regulation.

In sports betting, like-for-like stakes increased 6%, as we benefit from offering customers leading products and value.

We continued to extend our long-standing leadership position in self-service betting terminals. We're also pleased with our machine gaming performance with 6% like-for-like growth in 2015, driven by good execution of carded play and continued B3 machine growth, driven by regular new game releases.

So in conclusion from me, in 2015 we were pleased with both the strong operational performance and the strategic progress made in products and marketing and this has ensured that we enter the merger with good momentum.

Thank you, Andy.

So this morning we also announced Betfair's Q3 numbers which cover the three-month period leading up to merger completion.

Revenues increased 21%, driven by 31% growth in regulated markets. Revenues in non-regulated markets were down 20%, with the withdrawal of our products in Portugal being a major factor behind this decline.

Sports revenues increased 21%, driven by 51% growth in Sportsbook stakes and also benefiting from favorable football results. Which, excluding the impact of recycling, added approximately GBP7 million to revenue.

Gaming revenue was up 20%, driven by continued cross-sell from sports customers and growth in mobile revenues.

In the United States, revenue increased 15% in local currency, with ongoing revenue and handle growth at TVG supported by the online casino in New Jersey.

Regulatory clearance has been received for a horseracing Exchange in New Jersey and we are hoping to launch this product in the summer of 2016.

Overall, the strong revenue growth led to a 10% increase in EBITDA, a 30% growth before new taxes.

I'll now pass over to Alex, our Finance Director, to comment on the 2015 pro forma results for the combined business that we published with the announcement.

Thank you Breon and good morning, everyone.

Just a few things. The bad news, as Breon said, we're not going to be talking about any kind of updated guidance, we're not going to be talking about timing of synergies. All of this will be discussed when we have more information in August.

So I'm going to just take you through some of the, what I really think as more of housekeeping items.

So, as we've said before, reporting currency for the new Group will be sterling. And that should reduce some of the effects of variability in terms of the numbers, as 80% of our EBITDA is -- of the combined Group is in sterling and that should help.

Of course, as you know, all of you will have to continue to watch both Australian currency -- Australian dollar as well as the US dollar. Those will still continue to have variations on the results.

The year-end will be calendar year-end, December 31. And again, nothing new here for you, as we've said before.

Now here in these results, we are presenting the 2015 pro forma financial metrics for the Group. We tend to report, from now on, four segments. As you can see online, Australia, US and retail.

The questions will be asked, and I might as well just answer them now. People ask me, would we be reporting gross-win margin? Will we reporting free bets? You can see that we're reporting stakes and net revenue, that's going to be our normal reporting.

However, if there is a significant something special, or something we need to say and highlight, whether it's in free bets or gross-win margin, of course we will come back to you and we will talk about it. But as an ongoing reporting, this is what it will look like.

Online will include B2B and telephone division again, as reflected in the statement.

One of the things we've done on the cost side of things, is we've stripped out all the corporate administrative costs from the divisions. And we will present it as an unallocated central cost, in order to clearly show you profitability of each segment.

In addition to the prelims and interim results, we will be issuing quarterly result updates. First Q1 IMF, we will be issuing in May of this year. And again, there will be some more information there.

But the majority of things about guidance and the synergies and strategy, as Breon said, and balance sheet, anything we're going to say will have to wait until the summer.

In the summer I would expect for the Group to return to issuing operating guidance. It most likely will be a range like Betfair historically have reported, or have guided to in the past, on the profitability of the Group.

That is all that I was going to say on the matter and I will turn it over to Breon.

Thank you, Alex. I think with that we'll go to questions.

(Operator Instructions). Patrick Coffey, Barclays.

It was just a question on the timing of the revenue synergies. No I'm joking. It was just a question on the EBITDA drop-through for Q3 of Betfair. Obviously, the revenues ahead of perhaps where expectations were, but maybe the EBITDA drop-through is a little bit worse than usual? Can you just talk us through the moving parts there? I appreciate maybe marketing costs were higher. If you could possibly quantify that?

And also some of the impacts from national insurance. But if you could give us a sense of what, perhaps, the underlying EBITDA would have been, ex-those impacts? That was the first question.

The second question was a bit of a bigger picture question, which perhaps you won't go into now. But just on the retail division, and your thoughts in terms of expansion there. Would you be interested in shops if competitors were forced to sell some shops in the future.

And is retail a core part of Paddy Power Betfair going forward? Thanks.

Okay, well I'll take the first one. On the quarter there was a couple of things that we highlighted in the announcements. We've highlighted a sports margin that was a little bit higher than normal in terms of the revenue side of things.

And we've highlighted -- well, I will highlight two things on the cost side. So yes, we've always said that marketing costs can be very difficult to predict on a quarterly basis. And there's no question that if you look at the second quarter or indeed the first quarter, that marketing costs were higher in the third quarter of the year and they were higher by about EUR4 million, EUR4.5 million or so.

The other thing that -- the other increase in the costs in the third quarter came from our LTIP, our stock option plans for our employees. Because of the significant move in the share price of Betfair, what has happened to our plans is we obviously are liable for the employee portion of the national insurance contribution and that is based on the time that the employees exercise their share price.

So while we accrue those on the regular basis, when the share price movement happens -- significant share price movement happens, we have to effectively adjust our accrual for this additional national insurance contribution that -- that's what we'll be making on behalf of its employees who exercise -- once they exercise the shares.

The impact of that in the quarter is [EUR5 million] and while I don't want to talk about it as necessarily an [absolutely one off] because obviously the share price moves and you never know how many times you can have this; clearly the share price almost doubled in the period and so it's been a very significant move.

And in addition, this has been somewhat of a catch up for the previous period, so that EUR5 million has to be looked at that way. So that's really on the cost side, it's marketing and then there's employment costs of EUR5 million which created some of this drop-through situation that you referred to.

Hi Patrick, Andy here. In relation to retail expansion plans. In the UK we opened 21 shops last year, I'd expect us to open somewhat fewer shops this year ,just as we find it harder to open -- relatively harder to open attractive sites.

In Ireland we opened 14 shops last year, I think we'll open a handful of shops this year in Ireland. And our strategy for expansion really remains the same as it has been for a number of years now which is, we are interested in locations that have a high absolute profit per shop, that we can generate a high return on investments and that don't cannibalize our existing estate. And so as we think of anything that may or may not come on to the market we look at them through that lens as well.

Thanks. And do you mind if I do just one quick follow-up on retail? Can you just quantify, obviously there's been a few press articles recently with regards to a fine as part of the retail division. Can you just quantify that fine and when would the fine hit, would it be an exceptional, etc., for 2016? Thanks.

Yes, so there was a report, I think, out a couple of weeks ago, the fine is in the order of GBP300,000 and it's provided for in 2015 numbers.

Okay, thank you very much.

Gavin Kelleher, Goodbody.

Just on Paddy Power online. If I look at bonusing cost in the supplementary information in the results, it looks like the overall bonusing cost in H2 was up on H1 for the Paddy Power online business. Can you just give a bit of color on what drove that, was it the product launches towards the end of the year? And is the amount we saw in H2, the 1.4% of amounts wagered, will that continue into 2016 or how should we think about that?

Yes, hi Gavin, I'll take that. Yes you're right, it did increase and it was in part driven by the support of the product launches, both the iOS launch and the HTML5 launch. We also experimented with some alternative promotional activity in the second half and some of that will generate in reasonable pay back we think, so that will determine what we spend in 2016 along, obviously, with the general competitive environment. So, I don't think we'll give specific guidance at this stage.

Okay, cool. And just a question on Italy. I see there was a minor cost saving -- there will be a minor cost saving from the new tax regime over there, is there any revenue benefit we should expect in Italy on the back of that, does it make live betting products more attractive? And can Italy net revenue growth accelerate on the back of that?

Yes, you're right, there is a -- we are beneficiaries of the tax change. It's relatively modest in the context of the overall business, so it won't in any meaningful way change our trade and approach.

Okay cool. And just on, Alex, just on the D&A charge for the US. Could you just break down how much of the D&A charge on the pro forma last year for the US business related to the HRTV acquisition?

A little bit over [EUR4 million].

Okay, cool. Thanks a million guys.

Vaughan Lewis, Morgan Stanley.

First one. The outlook statement says that growth momentum has continued. Does that mean you're still seeing 20%-type revenue growth rates in the current trading period?

Well, Vaughan, as we said, we're not going to be giving any kind of guidance. What we've said in that statement and what we meant to say was that, it's performing to our expectations. Our expectations are against the combined budget of the Group and therefore combined management plan. That's as much as we're going to say at this point.

Okay. Is there any chance you can comment at all on your plans for the brands? Will Betfair brands still be targeting mass-market customers?

Yes, Vaughan, I think the point we're trying to politely make is that we're five weeks into the deal. While we've been thinking about this for several months because of our obvious need to respect the Competition Authority processes, management conversations only happened -- only really started towards the back end of -- about competitively-sensitive issues, only happened towards the back end of January. So we'll address this more fully in August.

There is work underway on the brand stuff which we will discuss in August. For people that can't wait until August, I'd point them at the two promotional offers for Cheltenham where the Betfair brand offer is rewarding people -- is bonusing people who back winners at 3:1 or greater. Whereas the Paddy Power promotional offer is a loss mitigation thing where people get money refunded if the horse is second or if they're fallers.

So I think there's already evidence that we can target different segments of the market using the brands but we'll address that more fully in August.

Makes sense, thanks. And then just on the press commentary at the weekend; can you just give us your view on FOBTs and how important a product you think that is for the Group?

Yes, so we have a lot to learn about each other's businesses. Paddy Power opened its 600th shop recently and to Patrick's earlier question, we see attractions in Paddy Power, we see attractions in multi-channel, and Paddy Power have done a lot of work in Ireland and the UK in benefitting that.

The FOBTs business is about 7% of the Group revenues, it's a well-established part of the business and I don't think there's really any more to say than that.

Great, thank you.

Alistair Ross, Investec.

Morning, just two from me. Firstly, you mention on the call that 80% of your EBITDA's in sterling. Can you just flesh out how much of your revenue actually is in sterling and how much of your costs are in sterling? This is on a pro forma basis.

I don't have the cost number in front of me, but the revenue is about 56% of it. If you look at the FY15 numbers, they're roughly about 56% of it would be in sterling.

50%, okay.

56%.

And then the other question is, just on Gavin's point in terms of EBITDA from HRTV, does that include any costs savings, or is that just pure EBITDA from HRTV, the HRTV acquisition?

No, the question was not about EBITDA for HRTV. The question was depreciation, amortization from that.

Apologies. Could you just then specify how much EBITDA was through the HRTV acquisition?

No I can't; we've never broken down EBITDA through HRTV acquisition. We've combined the business. HRTV acquisition was bringing more customers and we don't separate because they -- and bringing more content to be able to show on television. So there is absolutely no way to separate EBITDA from HRTV acquisition, versus our normal EBITDA. So no.

So would say there was a cost saving through the HRTV acquisition?

There was growth through HRTV. We've gained more customers and we've gained more racing content. Both of those things drove revenue, they obviously had costs associated with them. It's a positive contribution to the business and that's as much as I can say.

Thank you very much.

Ed Birkin, Credit Suisse.

Andy, Paddy Power for quite a long time has talked about how you don't see operational gearing in the business, but obviously this year there was substantial amounts of operational gearing. Is that a one-off cost saving to try and offset some of the taxes or how should we think about that on a sustainable basis going forward?

I'll talk about what we achieved last year. I think, to talk about it going forward, risks it getting confused or conflated with other guidance issues.

I think we -- you're right, we'd previously guided to revenues growing in line with costs. I think we made conscious and good progress last year to generate leverage that came through, tightly controlling costs and central functions through some savings generated through some of the restructuring work we did in the middle of the year; some reduced investment in some of our eGaming verticals, particularly in poker and bingo; and obviously, in Italy we restructured the cost base.

So I see it as a general approach to running the business in a disciplined fashion, we'd obviously expect that sort of discipline to continue.

Okay. And then, second one, Alex, you've given one year as a pro forma for P&L but there's no cash flow or balance sheet, is that something you'll be able to send round? I assume you've got it internally.

No, we weren't planning to do this. For this exercise here, really what we wanted to do was give something accurate but quick and this was what came up with. But as we report the results for the six months and so on and so forth, obviously we'll try to give more color on that.

Okay, all right. Thank you.

By the way, we've given -- of course we've given the net debt number, right, so the GBP63 million, so we've given a little bit of a look in terms of the cash.

Okay, thanks.

James Letten, Jefferies.

Morning guys. First one just on the racing right. Until we get some more [color to that], am I right in thinking that Betfair is able to advertise at the races as part of the ABP Scheme?

Secondly, could you give us an idea of where Paddy Power marketing will be next year?

And lastly, can you give us an estimate of what you think the market growth rate is in the UK and Australia? Thanks.

The ABP at Betfair is absolutely signed up and accordingly can sponsor and advertise on British racing.

On guidance on marketing for calendar 2016 and thereafter it's too early to say. As we said earlier, we're pretty focused and pretty -- I'm happy with the progress we made on integration. There are decisions to make about brand strategy and the mix of advertising and products and so on, so we'll talk about that more in August.

I guess guidance for market growth rate in the UK is probably still at or around 10%, in Australia it will be higher that. I don't know if we've giving guidance, probably closer to 15%.

Great, thanks a lot.

(Operator Instructions). David Jennings, Davy.

Two questions from me, please. Firstly, post Portugal, should we now assume that unregulated revenues will be relatively stable from here?

And then secondly, I was just wondering what is the new Group's status strategy in relation to gray market investment?

Good morning, David, and thank you for two nice tricky ones.

So the reason other revenues are called other, I think, is because we find them very hard to forecast with any certainty. So, in the past, as you know, we've given guidance about a decline and we've seen that play out in the recent period. We may choose to address this again in August, but I've no guidance on it this morning.

And again, with respect to the appetite for the Group, we'll chat about that in August. But you will have noted, it's a materially smaller part of the combined entity that it was of Betfair on a standalone basis.

So we continue to take play from pretty much all of the countries we were in six months ago with the material exception of Portugal. And, as we think about a strategic -- laying out a strategic backdrop for the combined -- for the new business, in August, I guess, we'll address regulated and unregulated revenues then.

Okay, thanks.

Nick Edelman, Goldman Sachs.

Good morning, three questions, please. The first is just on balance sheet. You talk about the efficiency of the capital structure being kept under regular revenue. When you talk to us in August will you communicate a leverage policy or perhaps just where you see balance efficiency?

The second question is, in your definition of sales and marketing, is that broadly comparable with your peers or do you think you've got more headcount costs in that, that would inflate it slightly if we were comparing it directly?

And then the third question is, I wonder if you could just talk qualitatively about how much technology combination forms the cost synergies, the driver being, is there a very significant technology, [re architecture], that you'll be doing over the next couple of years, and should we think about execution risk of that taking place? Thank you.

So on the balance sheet -- the current state of the balance sheet is addressed in the statement, as you'll have seen. It's too early to definitively say that we'll address -- we'll give guidance in August, we may, but equally as you know that's a decision for the Board and not one we've made as yet.

On marketing; our sales and marketing, you're right, headcount is included in our number, you'd have to go to the specifics of competitors, I think, you're probably better judged to -- a better position to judge that than I am.

On technology, there is platform work to be done, we're still working through exactly what we'll do and when. That is multi-year -- that's a multi-year agenda, that much is already clear.

Of course, there's execution risk. There's execution risk with all of this. But, other than to say, I'm happy with the progress we've made and how we've started, in terms of thinking about this, I think we'll probably be able to give a bit more color on that in the summer as well.

That's great, thank you very much.

Vaughan Lewis, Morgan Stanley.

A couple of follow-ups if I can. One following up to that technology one; would a change in control of OpenBet have any impact on you and on your plans at all?

And then secondly, if I understand it correctly, the integration and the headcount changes are basically being done already and now you're concentrating on operating for Cheltenham and Aintree, and then get back to strategic decisions and changes in the summer. Is that right?

Well, let's take that bit by bit. OpenBet are a possible change of ownership of OpenBet. Obviously, we have a number of key partners, OpenBet is one of those. So we remain in contact with them but I've no evidence to suggest that this is something that's more worrying than the normal course of business.

I think, Vaughan ,you might be giving us more credit than is entirely appropriate. We have started work on integration, we've made some changes at the senior level, but that's the last to play out. And we've probably announced -- we've announced a proportion of the senior changes that will be made, I think there'll be more of that announced over the coming weeks, but there's still a lot of work to do there.

I think the point, when we mentioned Cheltenham and the European Championships, we don't want to jeopardize momentum, and accordingly we got -- we started with some stuff quickly, we've been very focused on operations for the last few weeks and will be for the next few weeks, but we have more integration work to do -- much more integration work to do in April and the months that follow.

Great, thank you.

Ivor Jones, Numis Securities.

Paddy Power online Australia actives fell a bit last year and Betfair still powered ahead; are we approaching an inflection point in the market where a market leading revenue growing company will have no growth in actives or a decline? Are you reaching the point where you've got all the players that you need to have in core markets and you just need to have a bigger share of wallet? I'm just wondering what KPIs we should be focusing on?

I think, as we highlighted through the quarter, specifically in the case of Paddy Power, there were some specific changes in the way that we approached some of our acquisition through the course of the year, and in particular in the case of the actives, some of our trading strategies that's impacted that number. So I wouldn't necessarily infer it is our direction for the future.

So, I should infer that a market leading player will still need to grow active strongly? [Grow revenue].

I'm not sure that's how we necessarily think about it.

Yes, I think, we think about profitable market share, Ivor, as you know, and revenue is probably the most important metric. Sometimes that comes from better monetization of existing customers, sometimes that comes from new customer growth.

You've seen the slides we had back when we announced the deal which were third-party slides that in some way address the overlap of the two businesses and indeed the opportunity for growth for the two businesses. So, as to whether we're at a tipping point in the market or not, I think it's a little bit early to call that, maybe that's something we should chat about more in August.

Thank you. Can I just ask you a quick couple of questions about the US? I guess you're not going to talk about the cost of launching the Exchange in New Jersey, but it would be great if you did then you could do it profitably in the first year.

But the knock-on question is, are there other active conversations now the New Jersey legislation is in place that should make us think about other racing states and moving in the same direction, is there any change in what other states are going to do that we should have noticed? And --

So --

Sorry, please go ahead.

Sorry, so let me -- if we take them one by one. To be honest, Ivor, I wince slightly as I say that we're excited about launching an Exchange this summer because you know we've waited a very long time, and until it's live and trading, I still think there's a risk that it doesn't go live.

So it's our forecast, we are working towards a launch this summer. Until start-up -- the start-up investment is relatively modest, but there will be a marketing investment immediately thereafter. And focus groups have shown that there are some customers who get it immediately, but other -- the vast majority of horseracing consumers in the United States don't.

So it's too hard to guide; it's too hard to know with certainty when we launch -- presumably we launch; and it's way too early to say how much we spend on marketing investment thereafter. But as and when we have more color to share on that, we will.

With respect to conversations in other states, Paddy Power had a business development resource in the United States, and obviously Betfair had a team primarily based in Los Angeles. So I'd like to think we're in touch with what's going on in most states, but I've no guidance to give, in terms of what might happen next. Forecasting this stuff is very difficult, if not impossible.

Okay. Thank you. And just sticking with the US, I wonder if the TVG team, the HRTV team, will have noticed any impact on the business and the growth of DFS? And therefore I wonder if there's any potential upside from a withdrawal of -- sorry, Daily Fantasy Sports, from some states, perhaps more states?

Yes. So the guys track that, and we're conscious of the risk of -- it's a competing gambling-type product. Specifically, I think, it's a game of skill, but nonetheless a somewhat competing for share of mind, if nothing else.

You'll know that [Drop Kings] advertised with TVG at some stage last year. Our expectation is, they won't do quite as much advertising with us in the year we're currently in.

So as and when, or as and if, the Daily Fantasy businesses leave some states, I believe they've only left a very modest number to date, is that incrementally one headwind less? It might be, but there's no real evidence of that in the numbers so far.

Okay, great. That's it from me, thank you.

Richard Stuber, Nomura.

Just a couple of questions. The first one is on CPAs. I was wondering if you give some idea how CPAs have progressed, in both the UK and Australia, over the last 12 months?

And the second question, I suppose more for Alex, is regarding the reporting structure going forward. In terms of online, will you be breaking out exchange and Sportsbook, and therefore we can see what the Sportsbook net win or gross win will be, as opposed to the blended number? Thank you.

Let me just start with the second one first. It's a very short answer. We won't be breaking-out the Exchange and Sportsbook. We've always said, even in the past, that we see sports betting as sports betting, when Betfair reported, and together we still see that.

We obviously give stakes and more of the things about the Sportsbook, to give people the opportunity. You may be able to back into some of the Exchange numbers on the basis of what we [get in Sportsbook]. We won't be breaking them out, no.

As with any of these things, of course, if there is a -- as I've said before, there is a very -- something very major, that's a major effect, that we want to highlight, we of course could. So that's really a -- that's really the answer to that.

And, Richard, I can't speak for how Paddy Power reported in the past, but typically we don't guide on CPAs, because of the variance in it that's a function of a whole bunch of things, including competitor intensity. So I don't think we'll be giving guidance in future, unless you want to talk about last year.

Yes, there's a couple of moving factors again in the Paddy Power numbers. So one is, you need to strip out the effects of the World Cup; and there's also the impact of CPAs as a function of our different or changed trading strategy, particularly a translation of more of a volume to a value approach around some key headline events related to the Grand National.

So those factors have been -- if you strip out those effects, Richard, I'd regard the marketplace to be broadly equivalently competitive to what it was 12 months ago. So CPAs broadly flat.

Both in Australia and UK? And -- or was that broadly flat just in Australia?

Broadly the same in both territories, yes.

Okay. Thank you.

(Operator Instructions). Patrick Coffey, Barclays.

A couple of follow-ups, if that's okay. First of all, just in advance of Cheltenham, have you had time to address potential promo abusers across both platforms? Are you -- do you think you're potentially better placed in advance of Cheltenham now, as a combined entity, than you would have been on a standalone basis?

And the second question is, at the H1 results, Breon, you said you very much doubt you'll be increasing prices in the Exchange in core markets. I just wanted to clarify if you have, or if you're contemplating changing Exchange pricing for non-core, non-sustainable markets? Thanks.

So, Patrick, they -- with respect to your question about promotions, I think you'll probably get away with whatever you're getting away with for another few weeks. The guys are working as a single team, and I think there's already benefits -- there's already obvious benefits in terms of operational efficiencies. But I can't put a number on it, and I can't be drawn on the specifics just yet.

In terms of Exchange, there's -- it's one of many different moving parts at the moment. So really no guidance but that's really because we have an awful lot going on, as opposed to, there's something I'm not ready to tell you yet. So, no change to what we said at the last time we talked about pricing.

Okay. Thank you.

We have no further questions. I'd like to hand back now to Breon.

Great. Well, thank you all for your time this morning, I think that wraps up our first combined results.

As ever, the team that deals with investor relations round this is available during the day; or just call any of us if we can help you with your numbers. But thank you for joining us for the call.

Thank you, Breon. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thanks for joining. Enjoy the rest of your day.