INTERIM RESULTS HALF YEAR ENDED 30 JUNE 2014 12 August 2014 - - PowerPoint PPT Presentation

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INTERIM RESULTS HALF YEAR ENDED 30 JUNE 2014 12 August 2014 - - PowerPoint PPT Presentation

INTERIM RESULTS HALF YEAR ENDED 30 JUNE 2014 12 August 2014 Disclaimer Certain statements included or incorporated by reference within this presentation may constitute "forward looking statements" in respect of the operations,


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SLIDE 1

INTERIM RESULTS HALF YEAR ENDED 30 JUNE 2014

12 August 2014

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SLIDE 2

Disclaimer

2

Certain statements included or incorporated by reference within this presentation may constitute "forward looking statements" in respect of the

  • perations, performance, prospects and/or financial condition of Ladbrokes plc (the “Company”). Generally, words such as “may”, “could”, “will”,

“expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” or similar expressions identify forward looking

  • statements. Such statements are inherently predictive and speculative and are based on the Company’s current expectations and beliefs concerning

future events and are subject to a number of known and unknown risks and uncertainties beyond the Company’s control that could cause actual future financial condition, performance or results to differ materially from any plans, goals and expectations referred to in these forward looking

  • statements. Such statements are also based on numerous assumptions regarding the Company’s present and future strategy and the environment in

which it operates, which may not be accurate. The Company undertakes no obligation to update any forward looking statements contained in this presentation or any other forward looking statements it may make, save in respect of any requirement under applicable law or regulation. Nothing in this presentation should be construed as a profit forecast. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. No representation or warranty (express or implied) of any nature is given nor is any responsibility or liability of any kind accepted by the Company or any of its directors, officers, employees, advisers, representatives or other agents, with respect to the truthfulness, completeness or accuracy of any information, projection, representation or warranty (expressed or implied), omissions, errors or misstatements in this presentation, or any other written

  • r oral statement provided.

Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotions in section 21 of the UK Financial Services and Markets Act 2000. In making this presentation available, the Company makes no recommendation to buy, sell or otherwise deal in shares of the Company or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity. This presentation may not be reproduced (in whole or in part), distributed or transmitted to any other person without the prior written consent of the Company and is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation . Any recipients of this presentation outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction, and are treated as having represented that they are able to receive this presentation without contravention of any law or regulation in the jurisdiction in which they reside or conduct business. In particular, the securities referred to in this presentation have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933.

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SLIDE 3

INTRODUCTION Peter Erskine, Chairman

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SLIDE 4

AGENDA

Financial Overview Ian Bull, CFO Operational Review Richard Glynn, CEO Q&A

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SLIDE 5

5

Group Financial Performance Summary

£m 14H1 13H1 Variance

Before exceptional items (1) Excluding High Rollers (2) 2013 net revenue has been restated for the MGD/VAT impact to enable like for like comparison (3) Includes amortisation of acquisition related intangible assets of £2.7m in 14H1 and £1.7m in 13H1

Net revenue

(1)

577.8 563.0 +2.6% Net revenue ADJ

(1) (2)

577.8 568.5 +1.6% Operating profit

(1)(3)

56.8 85.7 (33.7)% Finance costs (12.8) (12.2) (4.9)% Profit before tax

(1)

44.0 73.5 (40.1)% Effective tax rate 10.0% 12.2% High Rollers 10.7 3.4 n/a Underlying EPS

(1)

4.3p 7.0p (38.6)% Dividend 4.3p 4.3p

  • Net Debt

425.9 375.5 (13.4)%

  • H1 results:
  • Staking +4.4% ex. W’Cup, Aus, HR
  • H1 industry wide sporting results

impacted margin

  • Tax: rate in line with guidance
  • Interim dividend: 4.3p per share

consistent with Board commitment of 8.9p per share for 2014

  • High Rollers: strong contribution
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SLIDE 6

Group Operating Profit

Significant results impact; underlying trends as expected

6

  • Overall
  • H1 EBIT ahead of H2 13(1) as guided
  • Industry-wide poor Q1 football and June horse festivals(2) – combined gross win impact yoy £29.3m
  • Good World Cup contributes H1: £18.5m gross win
  • Corporate costs: £11.1m in H1 – expect FY14 to be towards upper end of guidance range

(1) EBIT for the six months to December 2013 £52.6m (2) Reflecting the year-on-year of losses on football in weeks 2, 4 and 12 in 14Q1 and at Ascot and Epsom festivals in June 2014

£85.7m £56.8m £(15.6)m £(3.1)m £(7.8)m £(2.7)m £0.3m

13H1 EBIT UK Retail European Retail Telephone Digital Corp Costs 14H1 EBIT

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SLIDE 7

£73.2m £57.6m £(16.9)m £(1.8)m £(5.0)m £(4.4)m £(2.1)m £(1.6)m £8.5m £0.9m £3.8m £3.0m

13H1 EBIT Sporting results (1) World Cup OTC gross win, adjusted (2) Machine gross win GPT/ Freebets MGD & VAT Content costs Other costs D&A SIS income 14H1 EBIT

UK Retail Operating Profit

Underlying OTC gross win stable, machine growth, cost trends better

7

Operating costs +4.3%, ahead of guided of c.5% LFL costs +2.6%

  • OTC Staking: +5%; football +54% supported by SSBTs/World Cup offset horses/greyhounds -2%
  • Gross win: broadly stable OTC gross win (adjusted)(2); machines growth, Clarity offsets ABB impact
  • Rigorous cost focus continues: operating costs +4.3%. Staff scheduling, procurement and property
  • savings. Further cost focus in H2, expect £3-4m savings. FY cost growth +4.4% vs. +5% guidance
  • Estate optimisation: 29 shops closed by 30 June; exceptional costs of £13.9m(3), H1 cash of £1.5m(4)

Adjusted gross win growth(2)

(1) Reflecting the year-on-year of losses on football in weeks 2, 4 and 12 in 14Q1 and at Ascot and Epsom festivals in June 2014 (2) Adjusted for the sporting results and World Cup gross win figures in the graph above (3) Reflects the exceptional costs of the c.50 shop closures, 29 shops were closed by 30 June 2014 and the remainder in 14H2 (4) Cash impact in 14H2 being £0.9m and afterwards of £5.2m

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SLIDE 8

UK Retail Gross Win

Q1 results impact evident, machine returned to underlying growth

8

Machine Gross Win Growth yoy

Total machine GW Machine GW per shop per week Q3 2013 +0.7% (5.0)% Q4 2013 +2.5% (2.4)% Q1 2014 +2.2% (1.1)% Q2 2014 +1.5% +0.4%

OTC trends

  • Staking trends continue – strong increase in

football, continued decline in traditional products

  • Q1 gross win per shop heavily impacted by

football results

  • Recovery in Q2 helped by good World Cup off-

setting June horse festivals Machine growth

  • Q2 impacted by ABB Code. Clarity benefit as

roll-out completed prior to World Cup

  • Clarity performance as expected driving growth

in GW per shop

  • Target 1-2% lfl growth in H2

Resilient format with strong cash generation: Operating FCF(2) of c.£68.0m (13H1: £69.5m). H1 capex £9.4m (13H1: £21.4m) Gross Win per Shop Analysis(1) (£’000)

(1) Analysis excludes greyhound tracks (2) Operating FCF = EBITDA - Capex

88 89 90 89 94 96 93 95 91 95 85 92 86 94 20 40 60 80 100

11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2

Machine GW per shop OTC GW per shop

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SLIDE 9

Digital Operating Profit

Strong Sportsbook growth; costs well controlled

9

  • Digital NGR(1): stable year on year – Sportsbook, strong growth; Casino performance as expected
  • Digital Costs: good cost control, broadly flat on 2013; depreciation in line with FY guidance
  • Australia/Betdaq: strong growth in revenue, expect positive EBIT contribution in H2
  • European Digital: launch of Ladbrokes.be and Sportium.es – further spend to fund development in Q3/Q4

14H1 EBIT: Betdaq flat Australia £(0.1)m Belgium £(1.0)m Spain JV £(1.2)m

(1) Reflecting the year-on-year of losses on football in weeks 2, 4 and 12 in 14Q1 and at Ascot and Epsom festivals in June 2014 (2) Adjusted for the sporting results and World Cup revenue figures in the graph above

£11.1m £5.3m £3.0m £(8.1)m £(8.5)m £(4.6)m £(0.1)m £(2.3)m £4.9m £9.4m £1.2m

13H1 EBIT, reported ex. Betdaq Sporting results NGR (1) World Cup NGR Sportsbook NGR, adjusted (2) Gaming NGR Betting tax D&A Other

  • perating

costs 14H1 EBIT, LFL Betdaq, Australia, Spain JV & Belgium 14H1 EBIT

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SLIDE 10

Digital(1)

Strong sportsbook growth driven by mobile

10

  • Sportsbook staking: strong growth driven by

mobile; mobile migration drives gradual desktop decline

  • Sportsbooks customers: actives 598,000

(+21%, mobile +74%); sign-ups 326,000 (+52%, mobile +176%)

  • NGR: Sportsbook returned to growth in Q2;

Casino declined in H1 as expected – target Q3 broadly flat yoy; growth in Q4

  • Marketing : H1 weighted c.31% of NGR

(World Cup effect); expect full year within 25- 30% range. Digital CPA £70 (13H1: £94)

  • Grey markets: EBIT impact of c.£2m in H2,

exceptional cost of £3.8m

50 100 150 200 250 300 350 400 Q3-13 Q4-13 Q1-14 Q2-14 £m Sportsbook Mobile sportsbook

+30% +114%

  • 1%
  • 12%

+24% +95% +30% +23%

Sportsbook Staking £m and yoy % change Digital NGR £m and yoy % change Mobenga

(1) Excludes Betdaq, Australia, Spain JV and Ladbrokes.be 5 10 15 20 25 30 35 Q3-13 Q4-13 Q1-14 Q2-14 £m Sportsbook Gaming

+55%

  • 23%
  • 14%
  • 17%
  • 18%
  • 19%
  • 16%
  • 18%
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SLIDE 11
  • Group: results improved noticeably during H2
  • UK Retail: increased staking broadly in line with retail estate growth
  • Digital: encouraging result – The Mobile World Cup
  • European Retail: Strong staking growth in Spain (+160%) and Belgium (+157%)
  • H1: stakes £81.4m, +15.3%; gross win £18.5m and gross win margin 22.7%

(1) Growth vs. 2010 (on a comparable market basis for Digital) (2) Includes Telephone (3) Includes Sportium JV stakes and gross win on 50% basis

11

World Cup 2014

Good World Cup across the Group

Stakes Gross win Gross win £m £m margin

Ladbrokes Group(2)(3) 115.3 +22% 28.0 24.3% UK Retail 47.8 +8% 13.1 27.4% Digital(3) 48.1 +43% 9.1 18.9% European Retail(3) 15.9 +66% 5.3 33.3%

Full Tournament Growth(1)

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SLIDE 12

Digital – Developing International Operations

Australia

(1) Proforma 2013 data is ex. Betstar , unaudited and based on 14H1 exchange rate

  • Strong organic growth and benefit of acquisition
  • f Betstar in Q2
  • EBITDA positive in H1
  • Ahead of acquisition plan – both revenue and

cost synergies

  • Victoria and Queensland horseracing content

costs increase c.£1m in H2

  • Growth phased towards Q4 – Spring Racing

Carnival

  • European digital progress: Sportium.es launched in 13Q4, Ladbrokes.be in April 2014. Further

development spend in H2

  • Ladbrokes Exchange/Betdaq: good growth in Q2 net revenue +23.3%. Breakeven EBIT

12

2014 2013 (1) £m £m Stakes 216.5 135.7 +60% Net revenue 13.6 4.3 +216% Actives 37,406 7,787 +380% Half year ended 30 June Variance

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SLIDE 13

European Retail

Good progress in Spain and Belgium

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  • Spain: JV EBITDA positive in H1. Overall revenue +c.39% helped by new region launches. Roll-out in

Catalunya will impact EBIT in H2

  • Belgium: broadly flat staking despite industry-wide horse trends, EBIT growth
  • Ireland: Northern Ireland trends as UK; Republic of Ireland aggressive competition continues

Half year ended 30 June 2014 £m 2013 £m Variance Gross Win Spain JV(1) 8.5 6.1 +39.3% Belgium 24.3 24.3 Flat Ireland 37.5 42.6 (12.0)% EBIT Spain JV(1) (0.7) (1.0) +30.0% Belgium 4.8 4.4 +9.1% Ireland 2.5 6.3 (60.3)% European Retail 6.6 9.7 (32.0)%

(1) Being 50% of Sportium JV gross win and EBIT

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SLIDE 14

Cashflow and Dividend

14

  • Capex
  • FY guidance unchanged c.£60-65m
  • H1 split: UK £9.4m; Digital £14.8m; European and
  • ther £2.7m
  • Dividend
  • Board re-confirms 8.9p per share commitment
  • One off items
  • Includes 2013/14 exceptional cash costs £14.2m

(1) Excludes exceptional items (2) Covers cost of Betstar

£m H1 14 EBITDA (1) 104.9 Net finance expense (13.6) Tax (8.3) Capex (26.9) Other (8.1) Operating free cash flow 48.0 Dividend (42.0) Business combinations (2) (12.1) One off items (21.2) Net debt movement (27.3) Opening net debt (398.6) Closing net debt (425.9)

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SLIDE 15

Balance Sheet

Enhanced liquidity/maturity profile; comparable terms

  • Diversification: £100m retail bond – attractive, long-term finance
  • Extended banking facilities: longer maturity, cancellation of surplus to reduce commitment fees
  • Longer duration: average debt life = 4.6 years
  • Competitive rates and terms: covenants unchanged, average interest rate c.7.0%

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SLIDE 16

On Track to Deliver 2014 Financial Guidance

Group

  • H1 EBIT sequentially ahead of H2 2013 but lower than H1 2013
  • Depreciation & amortisation c.£75-80m (UK Retail +£5m, Digital +£7m)

Towards guidance upper end – Australia

  • Corporate costs no higher than FY12 level (£25m)

Towards guidance upper end. Q3 weighted

  • Capex – £60-65m
  • Underlying tax rate c.10%
  • Dividend commitment at least 8.9p confirmed

UK Retail

  • Estate optimisation: confirmed 50 shops closed for 2014
  • Operating costs +c.5% (+3% LFL) incl. +£5m depreciation

H2 £3-4m savings, Q4 weighted

  • SIS income zero (FY13: £4.0m)

Digital

  • H1 2014 vs. H2 2013: revenue ahead, EBITDA similar
  • +£7m depreciation and amortisation(1)
  • Expected increase in marketing in H1, FY c.25-30% of net revenue
  • Launch of Belgium online during H1 – expect small loss
  • Launch of Sportium online – expect small loss
  • Casino growth in H2

Q3 flat and growth during Q4

  • Grey markets exit

H2 impact of c.£2m EBIT yoy European Retail

  • Expansion in Spain – expect c.£2-3m further start up losses

H2 impact c.£1-2m H2 c.£2-3m loss combined

(1) FY14 amortisation of acquired intangibles estimated at £5.6m, reflecting acquisition of Betstar

16

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SLIDE 17

H1 Summary

Tough trading period; good World Cup; underlying trends in line

  • UK Retail: stable top line performance ex. results; cost trends on track; strong FCF
  • Digital: Sportsbook strong driven by mobile; Games early progress; Casino a focus for H2
  • Europe: continued diversification driven by expansion in Spain and Belgium
  • FCF/Balance sheet: strong position and enhanced liquidity
  • Interim dividend: held at 2013 level in line with Board commitment for FY14
  • Current trading to 5 August: Net Revenue +18.4% (+6.6% ex. Australia and World Cup)
  • UK Retail: Machine growth good, benefit from weather-impact in 2013; OTC gross win ahead, margin

improved, yet to return to usual level; OTC staking down modestly overall reflecting continuation of racing trends seen in Q2, World Cup benefit

  • Digital: Sportsbook growth continues; margins benefit from World Cup; Casino returned

to growth, an early but encouraging sign

  • EBIT phasing: Q3/Q4; c.40%/60% split
  • Overall: Well positioned for 2014/15 football season, on track to deliver results in line with our

expectations, subject to a normal run of sporting results and no further adverse regulation in H2

17

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SLIDE 18

AGENDA

Financial Overview Ian Bull, CFO Operational Review Richard Glynn, CEO Q&A

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SLIDE 19

13H2 14H1 Additional UK Retail

  • 2014 Estate optimisation
  • Focus on football, margins
  • Clarity roll-out pre World Cup
  • 1,750 SSBT roll out pre World Cup

Digital

  • Single customer wallet on IMS
  • Transition to Playtech casino and bingo
  • Consistent back office and CRM across all products
  • Integrate Ladbrokes Exchange
  • Establish Ladbrokes Israel
  • Establish Ladbrokes Mobile Centre of Excellence
  • Attract senior talent

International

  • Australia: establish and increase presence (Betstar)
  • Launch Belgium online
  • SSBT roll out in Belgium
  • Expand Sportium into Catalunya
  • Launch Sportium online

Operational Delivery in H1 + Competitive Offer at World Cup = Positioned for Growth from H2 into 2015

Operational Achievements since August 2013

Objective: mitigate execution risks, competitive by World Cup

19

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SLIDE 20

Making Ladbrokes Competitive

A competitive customer proposition

20 Competitive from the World Cup

Strong Brand Competitive Digital Product Capability Competitive Retail Product

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SLIDE 21

WORLD LD CUP

334,400 bets placed ed on Final day day

Making Digital Competitive

Mobile Sportsbook – an intense focus on giving customers more

Ease of Registration/ Deposit Simple to Bet Compelling Offers Engaging Features Focused Products

21

30% 1st

st deposits

now via PayPal 10% highe her propensity ity to bet 5x increase in time spent nt on mobile le 50K 50K 100% % availa labili ility ty

Switch tched d to new mobile platform

  • rm

Mobenga ga in December 2013

1st to launch ch in Windows App Store re

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SLIDE 22

Making Digital Competitive

Customers have responded well

22

  • Strong growth in mobile Sportsbook

recorded in consecutive months

  • Mobile now larger than desktop

Actives(1) +74% Stakes(1) +105%

H1 KPIs(3)

Mobile bigger than desktop

Sign Ups(1) +176% Conversion(2) +14% pts.

(1) 14H1 vs. 13H1 (2) Jan’14 vs. Jun‘14 (3) Being Mobile Sportsbook

£m

Mobile Sportsbook Weekly Stakes

Mobenga launched FY13 +23% yoy 14H1 +105% yoy

Mobile, 36% Desktop, 64%

Nov'13 stakes

Mobile, 60% Desktop, 40%

Jun'14 stakes

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SLIDE 23

Making Digital Competitive

Desktop improvements support growth

23

  • Focus on product simplification
  • Investment in systems and capacity
  • Ladbrokes Exchange “Red Box”

Mobile +95% Mobile & Desktop +24%

14Q1 stakes yoy

Mobile +114% Mobile & Desktop +30%

14Q2 stakes yoy

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SLIDE 24

Making Digital Competitive

Games and Casino – positioned for growth

24

  • All products now on Playtech Casino
  • Playtech back office (IMS, 28 Apr) enables better

customer targeting/segmentation

  • Maintain disciplined marketing approach/spend
  • NGR target: Q3 broadly flat yoy; growth in Q4

Casino – cross selling to Sports betting customers is key Games – early encouraging progress

  • First area of focus for Ladbrokes Israel in H1
  • Product not dependent on Playtech transition
  • Returned to growth in Q2
  • Q2: NGR +10%, actives +27%, sign ups +25%
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SLIDE 25

Regulation

Leading the debate – creating a sustainable future

25

  • Sector has been characterised by regulatory uncertainty in recent years
  • Ladbrokes making the right choices
  • First dedicated Responsible Gambling Advertising Campaign
  • First to commit to social responsibility targets forming part of executive remuneration
  • Leading player in introduction of ABB code
  • Demonstrating our social responsibility credentials will be key to sustainability – established

a Board Committee on social responsibility

  • Key near term regulatory impacts
  • New £50 stake with above £50 only when using an identifiable account or at the counter

– some impact expected but Ladbrokes will encourage further sign ups to Odds On

  • POC from December 2014

Our industry needs fiscal and regulatory stability

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SLIDE 26

Making Retail Stronger

An enhanced machine experience for customers

26 Clarity gaming machines

  • c.9,000 rolled out pre World Cup
  • Quick installation (<1.5 hour per

shop) and little adoption lag

  • Clarity now offsetting ABB code
  • Target 1-2% lfl growth in H2

SSBTs

  • c.1,750 now in shops
  • Encouraging staking trends
  • Strong football performance

(1) Being average of weekly amounts staked per SSBT terminal per week, 14H1 vs. 13H2

Gaming Machine Gross Win yoy change (rolling 4 weeks)

ABB code launched Clarity roll out completed

13wk27 13wk30 13wk33 13wk36 13wk39 13wk42 13wk45 13wk48 13wk51 14wk2 14wk5 14wk8 14wk11 14wk14 14wk17 14wk20 14wk23 14wk26 £

SSBT Stakes per terminal

Stakes grew >2x1 even ex. World Cup weeks

  • Inc. World

Cup

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SLIDE 27

Making Retail Stronger

Driving better OTC returns

27

  • Attractive, market leading offers to engage

customers across all key products

  • Focus on quality of earnings
  • Drive football: increased visibility
  • Accumulators: compelling new coupon product
  • SSBTs: >70% football; c.35% in-play

Football growth

2013/14 season vs. 2012/13 season H1 yoy amounts staked ex. World Cup

+27% +25%

% of stakes from multiples

c.60%

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SLIDE 28

Making Retail Stronger

Retail – a valued part of a multi-channel offering

28

  • Customers remain loyal to the retail estate
  • Offering the richest retail experience – more reasons for customers to

choose Ladbrokes

  • More opportunities to bet – Horses, Dogs, Football, Numbers, Sports
  • Richer content – Sky, Racing and Football zones, WiFi
  • More ways to place bet – SSBTs, coupons, mobile tills
  • Excellent customer service
  • Retail gives us high, everyday brand visibility at no incremental cost
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SLIDE 29

Enhancing Ladbrokes Brand

Strong brand underpinned by products and capability

29

A full video of our advert This is the Ladbrokes Life can be viewed at https://www.youtube.com/watch?v=MgCzKQJyWdk

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SLIDE 30

International Diversification

Building market leading positions in Europe

30 Spain

c.35%(1) market share, Madrid c.53%(2), Catalunya c.75%(3)

  • Sportium brand now unified across retail and digital
  • H1 yoy(4) stakes +40%, revenue +45%
  • Profitable including Catalunya launch costs
  • Launched 322 outlets in H1; total now 1,075 outlets
  • Expect more regions to regulate in 2015

Belgium market leader >50% share(5)

  • H1 yoy(4) stakes +2%, revenue +3%
  • Over 400 SSBTs rolled out, >80% stakes on football
  • Virtual trial successful, roll out by 2014
  • Belgium digital launched

(1) Current Sportium market share based on % of GGR (2) Based on turnover, Q2 2014 per Communidad de Madrid (3) Based on number of shops (4) Constant currency (5) Company estimate

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SLIDE 31

International Diversification

Building Australia’s digital challenger

31

  • Ladbrokes has established Australia’s digital challenger
  • Attractive growth at low entry cost: spend to date £25m
  • Innovative management with digital marketing track record
  • Strong execution skills: Betstar integrated in 28 days
  • Now a material contributor to Digital: Q2 c.16% of staking and c.14% of revenue
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SLIDE 32

UK Retail Stakes +8%

  • No. of bets +27%

Spain(1) Stakes +160%

  • No. of bets +321%

Belgium(1) Stakes +157%

  • No. of bets +201%

Australia First contribution

The World Cup at Ladbrokes

Competitive across all channels

32

Digital Stakes +29% Actives +28% Mobile Stakes + c.1100% Actives + c.700% Technology stats(2) 5.5m peak site visits 99.9% uptime Brand stats(3) Biggest sign up match +70%

Growth vs. 2010 (on comparable market basis for Digital) (1) Retail only (2) Being site visits on 14 Jun 2014, with one of the matches on the day being England vs. Italy (3) Being the England vs. Italy match in 2014 and England vs. USA match in 2010

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SLIDE 33

33

Maintaining Our Competitive Momentum

Core H2 objectives

Retail H2 focus

  • Machines – deliver growth from Clarity machines and SSBTs
  • Football – maintain focus building on 2013/14 season and World Cup experience
  • Costs – deliver cost savings in H2

Digital H2 focus

  • Sportsbook – build on mobile success in H1
  • Gaming – return to growth in H2
  • Costs – maintain disciplined marketing approach

International H2 focus

  • Spain and Belgium – enhance number one retail market positions
  • Australia – drive growth and deliver on Betstar plan
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SLIDE 34

34

Summary

Achieved key milestones; encouraging progress; focus on growth

  • Operational delivery since August 2013
  • Our focus on growth is underpinned by:
  • Competitive Digital products
  • An enhanced Retail offer
  • Effective investment in our brand
  • A more stable Technology platform
  • Our expert Trading and Marketing capabilities
  • Strong balance sheet position and liquidity
  • Our focus moves to building a sustainable growing business to drive shareholder value

Operational Delivery in H1 + Competitive Offer at World Cup = Positioned for Growth from H2 into 2015

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SLIDE 35

AGENDA

Financial Overview Ian Bull, CFO Operational Review Richard Glynn, CEO Q&A

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SLIDE 36

Appendices

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SLIDE 37

Half year ended 30 June Gross win Net revenue (re-stated) (1) Operating profit(2) 2014 £m 2013 £m Variance £m 2014 £m 2013 £m Variance £m 2014 £m 2013 £m Variance £m UK Retail 413.8 417.5 (3.7) 405.7 407.1 (1.4) 57.6 73.2 (15.6) European Retail 61.8 66.9 (5.1) 61.3 65.7 (4.4) 6.6 9.7 (3.1) Digital(3) 141.0 112.4 +28.6 105.0 90.8 14.2 3.0 10.8 (7.8) Telephone Betting 6.9 5.3 +1.6 5.8 4.9 0.9 0.7 0.4 +0.3 Corporate costs

  • (11.1)

(8.4) (2.7) Total 623.5 602.1 21.4 577.8 568.5 9.3 56.8 85.7 (28.9)

(1) UK Retail net revenue unadjusted for MGD: H1 2013 £401.7m; European Retail net revenue unadjusted for MGD: H1 2013 £65.6m; Total net revenue £566.5m (2) Operating profit is before exceptional items (3) 2014 includes: Betdaq: £6.6m net revenue and nil EBIT Australia: £13.6m net revenue and £0.1m operating loss Belgium: £0.2m net revenue and £1.0m operating loss Sportium.es: JV share of operating loss £1.2m

Group

Net revenue and operating profit (ex. High Rollers)

37

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SLIDE 38

Half year ended 30 June 2014 2013 Variance

OTC Gross win margin 16.4% 17.8% (1.4)pps Like for like OTC amts staked growth/(decline) 2.9% (10.9)% +13.8pps Like for like OTC net revenue (decline)/growth (4.8)% (2.4)% (2.4)pps Like for like total costs (1) increase 2.6% 2.5% +0.1pps Like for like shop staff costs increase/ decrease 0.4% (3.7)% +4.1pps Stake per slip (2) £8.53 £8.12 +5.0% Average number of machines 9,033 8,725 +3.5% Average weekly gross win per machine £913 £929 (1.7)% Average weekly machine gross win per shop £3,618 £3,636 (0.5)%

Like for like takes into account shop openings and closures (1) Excludes VAT on Machines, MGD, freebets and gross profits tax (2) Slips exclude machines

UK Retail

KPIs

38

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SLIDE 39

Half year ended 30 June 2014 £m 2013 (1) £m Variance

OTC gross win 200.5 208.0 (3.6)% Machines gross win 213.3 209.5 +1.8% Total gross win 413.8 417.5 (0.9)% OTC net revenue 196.3 202.5 (3.1)% Machines net revenue 209.4 204.6 +2.3% Total net revenue 405.7 407.1 (0.3)% Associate income

  • 1.6

n/a Gross profits tax (29.6) (30.3) +2.3% Machine Gaming Duty/VAT (41.8) (40.0) (4.5)% Staff costs (101.3) (100.5) (0.8)% Property costs (2) (56.5) (56.0) (0.9)% Content costs (3) (48.1) (43.1) (11.6)% Other costs (inc. depn) (4) (70.8) (65.6) (7.9)% Operating costs (276.7) (265.2) (4.3)% Operating profit 57.6 73.2 (21.3)%

(1) 2013 adjusted to reflect the change from VAT on Machines to MGD (2) Rent, rates and utilities

UK Retail

P&L (ex. exceptional items)

(3) Pictures, data, levy, Sky TV (4) Depreciation = £19.8m (2012: £17.7m)

39

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SLIDE 40

Half year ended 30 June 2014 2013 (1) OTC £m Machines £m Total £m OTC £m Machines £m Total £m Variance

Gross win 200.5 213.3 413.8 208.0 209.5 417.5 (0.9)% Freebets (4.2) (3.9) (8.1) (5.5) (4.9) (10.4) +22.1% Net revenue 196.3 209.4 405.7 202.5 204.6 407.1 (0.3)%

(1) 2013 adjusted to reflect the change from VAT on Machines to MGD

UK Retail

Gross win adjustments

40

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SLIDE 41

Half year ended 30 June 2014 £m % of net revenue 2013 £m % of net revenue Variance Net revenue 84.6 86.9 (2.6)% Betting tax (0.4) 0.5 (1.6) 1.8 +75.0% Levy and licenses (0.5) 0.6 (0.5) 0.6

  • Staff costs

(12.8) 15.1 (12.5) 14.4 (2.4)% Software and geographical partners (1) (9.8) 11.6 (11.0) 12.7 +10.9% Marketing (including affiliates) (26.5) 31.3 (25.9) 29.8 (2.3)% Banking and chargebacks (2.7) 3.2 (3.5) 4.0 +22.9% Other costs (including depreciation and amortn) (2) (26.6) 31.5 (20.8) 23.9 (27.9)% Operating costs (2) (78.9) 93.3 (74.2) 85.4 (6.5)% Digital EBITDA 17.3 18.5 (6.5)% Digital operating profit 5.3 11.1 (52.3)% Betdaq

  • (0.3)
  • Australia

(0.1) Na

  • Sportium.es

(1.2) Na Ladbrokes.be (1.0) Na Total Digital operating profit 3.0 10.8 (72.2)%

(1) Payments to third party software and platform providers and geographical partners (2) Includes depreciation of £10.7m (£6.1m in 2013) and amortisation of acquired intangibles of £1.3m (2013:£1.3m)

Digital

P&L (ex. exceptional items)

41

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SLIDE 42

(1) A player who contributed to rake and/or placed a wager during the year (2) A new player who has registered and deposited funds during the year (3) Revenue per unique active player for the year

Half year ended 30 June 2014 2013 Variance

Total Digital Unique active players (1) (000s) 704 644 +9.3% Real money sign-ups (2) (000s) 376 274 +37.2% Sportsbook Gross win margin 7.8% 8.5% (0.7)pp Unique active players (1) (000s) 598 494 +21.1% Average monthly active player days (000s) 1085 913 +18.8% Yield per unique active player (£) (3) 79 83 (4.8)% Casino Unique active players (1) (000s) 125 155 (19.4)% Average monthly active player days (000s) 131 153 (14.4)% Yield per unique active player (£) (3) 162 163 (0.6)% Poker Unique active players (1) (000s) 21 41 (48.8)% Average monthly active player days (000s) 55 110 (50.0)% Yield per unique active player (£) (3) 81 103 (21.4)% Games Unique active players (1) (000s) 112 100 +12.0% Average monthly active player days (000s) 141 140 +0.7% Yield per unique active player (£) (3) 92 103 (10.7)% Bingo Unique active players (1) (000s) 43 53 (18.9)% Average monthly active player days (000s) 92 102 (9.8)% Yield per unique active player (£) (3) 121 114 +6.1%

Digital

KPIs (ex. Australia and Betdaq)

42

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SLIDE 43

UK Retail and Digital

Quarterly figures

Q1 2013 vs. Q1 2012 Q2 2013 vs. Q2 2012 Q3 2013 vs. Q3 2012 Q4 2013 vs. Q4 2012 Q1 2014 Vs. Q1 2013 Q2 2014 Vs Q2 2013 UK Retail OTC Stakes (11.2)% (5.8)% +5.1% +4.6% +8.5% +1.8% OTC GW Margin 18.9% +1.7pp 16.9% +1.6pp 14.9% (2.0)pp 17.1% (0.4)pp 16.2% (2.7)pp 16.5% (0.4)pp Machine Gross Win Growth +3.2% +3.2% +0.7% +2.5% +2.2% +1.5% Machine Gross Win per shop per week +0.3% (1.9)% (5.0)% (2.4)% (1.1)% +0.4% Total Net Revenue YoY (Restated)

(1)

(0.8)% +2.1% (3.9)% +1.6% (2.3)% +1.4% Digital (2) Sportsbook Net Revenue +13.2% +5.7% (23.0)% (15.9)% (17.9)% +54.8% Gaming Net Revenue (11.4)% (8.6)% (13.6)% (17.2)% (17.7)% (19.3)% Sportsbook Gross Win Margin 9.6% +2.2pp 7.5% +2.2pp 6.6% (1.0)pp 8.0% (0.3)pp 6.4% (3.2)pp 9.1% +1.5pp

(1) Net revenue has been restated to allow for like for like comparison to 2013 UK Retail and European Retail net revenue where MGD replaced VAT for Machines from 1 February 2013. MGD is deducted from net revenue whereas VAT was deducted from gross win to arrive at net revenue (2) Excludes Australia, Betdaq, Ladbrokes.be and Sportium.es

43

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SLIDE 44

(1) 2013 proforma to reflect the change from VAT on Machines to MGD (2) Fair value adjustments, freebets and VAT

Year ended 30 June 2014 £m 2013 (1) £m Variance Gross win 37.5 42.6 (12.0)% Net revenue 37.0 41.4 (10.6)% Betting tax and Machine Gaming Duty (4.0) (4.4) +9.1% Operating costs (30.5) (30.7) +0.7% Operating profit 2.5 6.3 (60.3)% Constant currency amounts staked decrease (5.7)% (6.1)% Constant currency gross win decrease (10.0)%

  • Shop numbers at the end of the period

292 292

Ireland

P&L (ex. exceptional items)

44

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SLIDE 45

45

(1) Growth vs. 2010 (on a comparable market basis for Digital) (2) Sportium JV revenues on 50% basis

World Cup – H1 and H2 analysis

Stakes Growth(1) Gross win Gross win Stakes Growth(1) Gross win Gross win £m £m margin £m £m margin Ladbrokes Group 81.4

+15%

18.5 22.7% 33.9

+44%

9.5 28.0% UK Retail 33.7

(2)%

8.5 25.2% 14.1 +40% 4.6 32.6% European Retail

  • Ireland

3.5 (8)% 1.0 28.6% 1.3 (13)% 0.4 30.8%

  • Belgium

3.9 +144% 1.3 33.3% 2.0 +186% 0.9 45.0%

  • Spain(2)

3.4 +183% 1.1 31.1% 1.8 +125% 0.6 33.3% Digital

  • Ladbrokes.com

31.2 +24% 5.8 18.6% 12.4 +44% 2.3 18.5%

  • Australia

1.1 na 0.1 9.1% 0.7 na 0.1 14.3%

  • Belgium

0.4 na 0.1 25.0% 0.2 na

  • -
  • Spain(2)

1.5 na 0.2 13.3% 0.6 na 0.2 33.3%

  • Betdaq

na na 0.2 na na na 0.1 na Telephone 2.7 (43)% 0.2 7.4% 0.8 (58)% 0.3 37.5% 42.3% 18.7% H1 H2