FY12 INTERIM RESULTS 14 December 2011 DISCLAIMER This presentation - PowerPoint PPT Presentation

FY12 INTERIM RESULTS 14 December 2011

DISCLAIMER This presentation and its contents may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part for any purpose without the consent of Betfair Group plc ("Betfair"). This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. Neither this document nor the fact of its distribution nor the making of the presentation constitutes a recommendation regarding any securities. This presentation is being provided to you for information purposes only. Certain statements, beliefs and opinions contained in this presentation, particularly those regarding the possible or assumed future financial or other performance of Betfair, industry growth or other trend projections are or may be forward looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Betfair's ability to control or predict. Forward-looking statements are not guarantees of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Neither Betfair, nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority), Betfair is not under any obligation and Betfair expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No statement in this presentation is intended as a profit forecast or a profit estimate and no statement in this presentation should be interpreted to mean that earnings per Betfair share for the current or future financial years would necessarily match or exceed the historical published earnings per Betfair share. The distribution of this presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this presentation or any part of it comes should inform themselves about, and observe, any such restrictions. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction. By attending the presentation and/or accepting or accessing this document you agree to be bound by the foregoing limitations and conditions and will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice. 1

INTRODUCTION David Yu – Chief Executive Officer

DELIVERING AGAINST OUR PRIORITIES 1 Accelerate growth 12% Core Betfair revenue growth in Q2 Deliver further margin Margin improvement drives record 2 improvement profitability Return cash to our Returned almost £30m of cash through 3 shareholders buyback and dividends 3

OPERATIONAL HIGHLIGHTS  Strong Exchange performance 1 Strong sports-led growth  Improved monetisation of Exchange activity  Mixed Games performance Cross-selling & portfolio 2 expansion  Improving trend in Poker  Significant mobile product improvements 3 New channels  Strong mobile growth  Strong European growth 4 Geographic expansion  Applied for a licence in Spain & Denmark  US: California Exchange development 5 New markets / new verticals continues 4

FINANCIAL RESULTS Stephen Morana – Chief Financial Officer

H1 SUMMARY Other Core Group investments £21.0m £191.3m £170.3m Revenue -2% +1% +2% (£2.2m) £42.4m £44.6m EBITDA NA +36% +26% (4.9p) 19.5p 24.4p EPS NA +43% +26% Dividend 3.2p Figures represent underlying results, which exclude, where relevant: the revenue and EBITDA from the High rollers segment; exceptional items; equity settled share-based payments; and the associated tax effect of these adjustments. 6

CORE BETFAIR: YOY REVENUE GROWTH Q1 FY12 Q2 FY12 H1 FY12 Sports Flat +20% +9% Non-risk Risk -92% -13% -44% Total -6% +16% +5% Games -12% -5% -9% Poker -12% +3% -5% Total net gaming revenue -7% +12% +2% Revenue from management +31% +5% +17% of client funds Core revenue -7% +12% +2% 7

CORE BETFAIR: NON-RISK SPORTS EXCHANGE PERFORMANCE (ROLLING 12 MONTHS) Number of bets matched Value of matched volume +23% +12% Total net losses Betfair exchange revenue Flat +8% Rolling 12 month to 31 Oct 11 vs 31 Oct 10 8

CORE BETFAIR: NON-RISK SPORTS IMPROVED MONETISATION - EDUCATION  Training and educational events ‘Cash Out’ transactions (‘ 000)  Betfair Ambassadors – expert tips 451 532 376  Agreement with Opta to provide statistics to high 297 value customers  ‘Cash Out’ making trading easier  New trading tools planned Jul Aug Sep Oct % of actives ‘cashing out’ in Oct 20% 17% Football Tennis Making our customers better bettors 9

̵ CORE BETFAIR: NON-RISK SPORTS IMPROVED MONETISATION - PRICING  Pricing changes for a very small number of customers Fewer than 500 affected out of over 200,000 winning customers 1  Limited impact on liquidity  Vast majority of the affected customers have continued betting  Delivered a positive overall result - important driver of growth in Q2 Ensuring all customers are profitable for Betfair 1 Over 200,000 customers made a net profit in FY11 10

CORE BETFAIR: KPI S Quarterly Actives (‘ 000) Quarterly ARPU (£) Quarterly NGR (£m) 600 100 240 220 90 500 200 80 400 180 70 160 60 300 140 50 200 120 40 100 100 30 FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 Focus on high value acquisition / retention: Q2 actives flat year-on-year  Q2 ARPU up 13% year-on-year  11

CORE BETFAIR: RISK SPORTS Risk margins, % 12% 10% FY10 to FY11 average = 9% 8% 6% 4% 2% 0% Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Risk margins returned to historical norms in Q2  Q2 revenue of £5.2m – prior year had above average margins  and revenue of £6.0m 12

CORE BETFAIR: COSTS As % of Core Betfair Costs (1) (£m) revenue H1 FY12 H1 FY11 H1 FY12 H1 FY11 Cost of sales 18.1 26.3 10.6% 15.7% Commercial & Marketing 38.9 43.3 22.8% 25.9% Technology & Product 34.8 34.0 20.5% 20.3% Operations 10.0 9.1 5.9% 5.4% Corporate 23.9 19.1 14.0% 11.4% Total admin expenses 107.6 105.4 63.2% 63.1% (1) Excluding exceptional items and equity settled share-based payments 13

CORE BETFAIR: EBITDA DEVELOPMENT H1 FY12 H1 FY11 YoY % (£m) (£m) Revenue 170.3 167.2 +2% Variable costs (18.1) (26.3) -31% Gross profit 152.2 140.9 +8% Administrative expenses (1) (107.6) (105.4) +2% EBITDA (1) 44.6 35.5 +26% EBITDA margin (%) (1) 26.2% 21.2% +5pp (1) Figures represent underlying results, which exclude, the High rollers segment; exceptional items; equity settled share-based payments; 14

OTHER INVESTMENTS: BETFAIR US Change % H1 FY12 H1 FY11 Revenue +2% $30.2m $29.5m ($m) Revenue -3% £18.7m £19.3m (£m) N/A EBITDA (1) £0.5m £(1.8)m TVG increased market share with Handle growth of 5% and Actives growth of 4%  Profit improvement following prior year TVG restructuring and H2 phasing of  marketing spend Alpha version of the US exchange being trialled and discussions with horse racing  industry in anticipation of exchange wagering in California from May 2012 Operating costs expected to increase in H2 ahead of exchange launch  (1) Figures represent underlying results, which exclude equity settled share-based payments 15

̵ OTHER INVESTMENTS: LMAX H1 FY12 H2 FY11 H1 FY11 Revenue £2.2m £1.4m £2.1m Adjusted £(2.7)m £(3.4)m £(2.4)m EBITDA Revenue in H1 mostly from Tradefair financial spread betting business  Both periods benefited from increased volatility in financial markets Sequential reduction in underlying opex following restructure  New management team successfully transitioned LMAX to a sales-led  distribution strategy Improved customer traction resulting in higher FX volumes in recent  months 16

BETFAIR AUSTRALIA Change % H1 FY12 H1 FY11 Revenue 1 +13% $22.8m $20.1m (AUS $m) Betfair share N/A £0.4m (£0.3m) of EBIT (£m) Revenue driven by strong horse racing performance and improved monetisation  of Exchange activity Profitability improved through operating efficiencies  Expect High Court’s decision re NSW Racing dispute in early 2012  1 JV revenue 17