Paddy Pow er Betfair plc 2016 Prelim Results Financial & - PowerPoint PPT Presentation

Paddy Pow er Betfair plc 2016 Prelim Results

Financial & Operating Review [find new imagery for cover]

3 Financial highlights YOY OY % % £m, Proforma 1 2016 016 201 015 YOY OY % %  18% revenue growth (Sports +19%, Gaming CC 2 CC +14%) Revenue 1, 1,551 551 1,318 1, 318 +18% +18% +11% +11% Cost of sales (357) (311) +15% +9%  Operating costs up 12% (cc +4%): Gross profi Gro fit 1,194 1, 194 1, 1,007 007 +19% +19% +12% +12% − 27% increase in sales & marketing (cc +21%) Operating costs (794) (711) +12% +4% − 4% increase in other costs (cc -3%) EBIT ITDA 400 400 296 296 +35% +35% +31% +31%  Operating leverage led to 35% increase in EBITDA margin % 25.8% 22.4% +3.4% +3.8% EBITDA vs 18% revenue growth Depreciation & amortisation (70) (67) +4% +5%  Final dividend of 113p per share results in Und nder erlying ng oper erating ng profit 330 330 229 229 +44% +44% +42% +42% total dividends for the year of 165p per share Separately disclosed items (318) (9) n/a n/a  Cash position of £36m after merger related Operating profit 12 219 -94% -95% exceptional payments of £104m and dividends of £179m Underlying earnings per share 330.9p 229.8p +44% +43% Dividends per share 165p n/a Net cash at end of year £36m £84m 1 Note throughout this presentation results are shown prepared on a “Proforma” basis for the Group as if the merger completed on 1 January 2015 2 Constant currency (“cc”) growth throughout this presentation is calculated by retranslating n on-sterling denominated component of 2015 at 2016 exchange rates

4 Group EBITDA bridge EBITDA + +£1 £104 04m / / +35 35% ( (cc cc +31% 1%) Benefit from £35m of total 500 £65m cost synergies 30 35 £38m revenue less 15 taxes & marketing 400 costs 90 13 Includes impact 11 300 from Ireland POCT & increased Aus. £'m product fees 200 400 400 307 307 296 296 100 0 2015 EBITDA FX 2015 EBITDA CC Euro 2016 EBITDA Revenue growth* Merger cost Marketing cost Other cost growth 2016 EBITDA (ex Euro 2016) synergies growth (ex Euro 2016) * EBITDA impact of revenue growth estimated using average 2016 cost of sales %

5 Divisional overview ONL NLINE NE AUSTR TRALIA IA RETAI AIL US US GROU GR OUP 1 £m, Proforma Underlying 2016 2016 YOY OY % % 2016 2016 YOY OY % % 2016 2016 YOY OY % % 2016 2016 YOY OY % % 2016 2016 YOY OY % % Sportsbook stakes 5,266 +19% 2,911 +42% 1,713 +12% - - 9,890 +24% Sportsbook net rev % 6.6% Flat 10.7% -0.6% 11.6% -0.1% - - 8.7% 8.7% -0.1% Sports revenue 609 +14% 312 +34% 198 +11% 79 +24% 1,198 +19% Gaming revenue 245 +14% - - 97 +10% 12 +56% 353 +14% Total re reve venu nue 853 +14% 312 +34% 295 +11% 91 91 +28% 1,551 +18% EBIT BITDA 289 +27% 94 94 +35% 62 62 +21% 12 12 +25% 400 +35% Ope Operating pr profi fit 255 +34% 84 84 +38% 45 45 +23% 4 +39% 330 +44% 2016 Oper 2016 erating Pr Profit 2016 Net 2016 Net Revenue Revenue Unregulated Online Exchange, US 5% Regulated Sports & B2B Online Online Online 22% 66% Sportsbook Australia 50% 42% 20% Online Gaming 17% Australia Retail Retail Retail US 22% Retail 12% 19% 6% Sportsbook Gaming US 13% 6% 1% By d divisio ision 2 By Ma Market et By P Product 1 Group EBITDA and operating profit includes unallocated central costs 2 Before unallocated central costs of £58m

6 Online CC CC £m, Proforma 2016 016 201 015 YOY OY % % YOY OY % % Sportsbook s stakes es 5, 5,266 266 4,416 4, 416 +19% +19% +16% +16% Sportsbook net revenue % 6.6% 6.6% Flat Flat  Regulated revenues up 16% (cc +13%) Sports revenue 609 534 +14% +10% with unregulated -2% (cc -11%), primarily Gaming revenue 245 214 +14% +12% due to exiting Portugal in July 2015 Total r rev evenue enue 853 853 748 748 +14% +14% +11% +11%  Exchange & B2B revenue +7% (cc +3%) Cost of sales (193) (178) +8% +5%  Gaming growth slowed in Q4 Gro Gross Pr Profit 661 661 570 570 +16% +16% +12% +12% Sales & marketing (195) (159) +23% +19%  Sales & marketing costs increase includes Product & technology (111) (117) -6% -13% continued asset inflation and Euro 2016 Operations (65) (66) -2% -8%  Decrease in other operating costs reflects Total operating costs (371) (343) +8% +3% benefit of merger synergies & underlying operating efficiencies Underlyin ing EBITDA 289 289 227 227 +27% +27% +28% +28% Depreciation & amortisation (34) (36) -6% -13% Und nder erlying ng oper erating ng profit 255 255 191 191 +34% +34% +36% +36% Active customers (000’s) * 3,904 3,511 +11% Online division includes the UK/Ireland telephone business * Active customers throughout are defined as those who have deposited real money and have bet in the reporting period, excluding indirect B2B customers. Note that the active customer numbers have not been adjusted for customers who were active on both the Paddy Power and Betfair brands.

7 Australia A$ A$ £m, Proforma 2016 016 201 015 YOY OY % % YOY OY % %  Growth benefited from ‘Bet Live’ before its Sportsbook s stakes es 2, 2,911 911 2, 2,053 053 +42% +42% +25% +25% switch off on 4 October 2016 Sportsbook net revenue % 10.7% 11.3% -0.6% -0.6% − in-play betting contributed 12% of stakes Revenue 312 312 232 232 +34% +34% +18% +18% & 6% of revenues in FY2016 versus 6% & 3% in the prior year Cost of sales (80) (58) +38% +20%  18% EBITDA growth (H1: -10%, H2: +39%) Gross Pr Gro Profit 231 231 174 174 +33% +33% +17% +17% Sales & marketing (72) (51) +41% +28%  H2 opex growth reduced to +7% from +30% in H1 due to both lapping of significant Product & technology (24) (19) +24% +11% operational expansion during H2 2015 and Operations (41) (34) +22% +4% an increased focus on operating efficiencies Total operating costs (137) (104) +32% +17% Underlyin ing EBITDA 94 94 70 70 +35% +35% +18% +18% Depreciation & amortisation (10) (9) +11% -2% Und nder erlying ng oper erating ng profit 84 84 61 61 +38% +38% +21% +21% Active customers (000’s) 956 767 +25%

8 Retail CC CC £m, Proforma 2016 016 201 015 YOY OY % %  Good revenue growth in both estates: YOY OY % % ― UK +8% Sportsbook s stakes es 1,713 1, 713 1,530 1, 530 +12% +12% +4% +4% ― Ireland +15% (+2% in constant currency) Sportsbook net revenue % 11.6% 11.7% -0.1% -0.1%  Like-for-like KPIs in constant currency: Sportsbook revenue 198 178 +11% +3% ― Sportsbook stakes +1% Machine gaming revenue 97 88 +10% +10% ― Sportsbook revenue +1% Total r rev evenue enue 295 295 266 266 +11% +11% +6% +6% ― Machine gaming revenue +7% Cost of sales (63) (58) +7% +4% ― Total revenue +3% Gro Gross Pr Profit 233 233 208 208 +12% +12% +6% +6% ― Opex +2% Operating costs (170) (156) +9% +5%  16 new shops opened in 2016 (12 in the Underlyin ing EBITDA 62 62 52 52 +21% +21% +10% +10% UK & 4 in Ireland) & 1 UK closure Depreciation & amortisation (18) (15) +16% +10% Und nder erlying ng oper erating ng profit 45 45 36 36 +23% +23% +10% +10% Shops at year end 613 598 +3%

9 US US$ US £m, Proforma 2016 016 201 015 YOY OY % % YOY OY % % TVG VG s stakes es 883 883 750 750 +18% +18% +4% +4%  Sports revenue driven by 9% growth Sports revenue 79 64 +24% +10% (constant currency) in TVG supplemented by the launch of the Betfair horseracing Gaming revenue 12 7 +56% +39% exchange in New Jersey in May Total r rev evenue enue 91 91 71 71 +28% +28% +13% +13%  New Jersey casino now operating at Cost of sales (21) (16) +34% +18% breakeven EBITDA Gro Gross Pr Profit 70 70 55 55 +26% +26% +11% +11% Operating costs (57) (45) +26% +12% Underlyin ing EBITDA 12 12 10 10 +25% +25% +6% +6% Depreciation & amortisation (9) (7) +20% +5% Und nder erlying ng oper erating ng profit 4 3 +39% +39% +9% +9% Active customers (000’s) 139 131 +6%

10 Separately disclosed items £m, Proforma 2016 016 201 015 Merger deal expenses 50 6 Includes stamp duty & advisor fees Merger integration costs 66 - One-off costs to achieve the cost synergy savings Restructuring costs (pre-merger) - 3 Non-cash merger related items: Business combination intangible asset amortisation 174 - IFRS3 acquisition accounting Fair value adjustment for share-based payments 22 - Revaluation of existing plans Impairment of assets 6 - Obsolete assets resulting from the merger Total al se separ arately d y dis isclose sed it items ms 318 318 9  All 2016 items result from the merger  Merger deal expenses & integration costs now fully incurred  Further details of non-cash items included in the Appendix