PRELIMINARY RESULTS Year ended 31 December 2015 Ladbrokes plc 23 - - PowerPoint PPT Presentation

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PRELIMINARY RESULTS Year ended 31 December 2015 Ladbrokes plc 23 - - PowerPoint PPT Presentation

PRELIMINARY RESULTS Year ended 31 December 2015 Ladbrokes plc 23 February 2016 Disclaimer Certain statements included or incorporated by reference within this presentation may constitute "forward looking statements" in respect of the


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PRELIMINARY RESULTS Year ended 31 December 2015

Ladbrokes plc 23 February 2016

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Disclaimer

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

  • ther 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 or 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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Introduction John Kelly, Chairman

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Jim Mullen, Chief Executive

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Strategy for 2017 based on four key pillars

Encouraging progress in H2 2015

UK: GROW RECREATIONAL CUSTOMER BASE UK: DEVELOP MULTI-CHANNEL UK: INCREASE FOOTFALL IN RETAIL AUSTRALIA: GROW MARKET SHARE

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Focus on 2017 targets – backed by performance driven approach

2017 Targets 2015 Performance 2014 Actual UK Retail Net revenue per shop(1) > FY14 £377k £356k EBIT per shop(2) > FY14 £51k £42k Digital 30% of Group net revenue(3) 20.3% 18.6% Ladbrokes.com Actives over 1.3m 1.1m 960k Ladbrokes Australia More than 2x FY14 net revenue 1.7x n/a

All targets/KPIs moving positively

(1) Excludes revenue from greyhound tracks. (2) On a comparable basis and excludes greyhound tracks, associate income and exceptional items. (3) Excludes High Rollers.

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Financial Overview Ian Bull, CFO

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Group Financial Performance Summary

Year ended 31 December 2015 2014 Variance £m £m

Before exceptional items (1) Excluding High Rollers (2) Includes amortisation of acquisition related intangible assets of £4.9m in FY15 and £5.6m in FY14 (3) EPS excluding High Rollers, tax credit and at a normalised medium term tax rate in the mid teens is 4.6 pence in 2015

  • Net revenue growth(1): +5.3% ex. W’

Cup

  • Operating profit:
  • Increased direct taxes (MGD/POC)

and marketing investment in H2 as

  • utlined in the strategic plan
  • H1 weak margin/HVC impact in

Ladbrokes.com

  • Tax: lower underlying rate than
  • guidance. Tax credit from accelerated

use of losses

  • 2015 dividend: 1p interim and 2p

final as announced in July 2015

  • Leverage: share placing proceeds of

£112.9m net of expenses, reduces net debt leverage to 1.9x

Net revenue

(1)

1,195.5 1,158.9 +3.2% Operating profit

(1)(2)

80.6 125.4 (35.7)% Finance costs (28.1) (27.4) (2.6)% Profit before tax

(1)

52.5 98.0 (46.4)% High Rollers 3.3 14.2 (76.8)% Underlying EPS

(1)(3)

9.1p 10.1p (9.9)% Dividend 3.0p 8.9p (66.3)% Net debt 304.1 419.2 (27.5)%

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Group Operating Profit

KPIs on track; Q4 performance delivers better PBIT outturn

  • UK Retail: OTC staking growth in H2; machines ahead of expectations driven by

lower staking slots

  • Digital: H2 marketing investment after impact of margins/HVC in H1
  • European Retail: EBIT ahead of 2014
  • Corporate costs: £24.0m – in line with guidance

Before exceptional items (1) POC £(18.0)m, MGD £(16.9)m, Grey Markets £(2.9)m (2) Additional marketing spend in Ladbrokes.com, Australia and UK Retail

£125.4m £87.6m £80.6m £(22.9)m £(4.2)m £(1.1)m £18.9m £0.5m £1.8m FY14 EBIT Tax / Regulation(1) FY 14 Adjusted H2 Marketing(2) UK Retail Digital European Retail Telephone Corp Costs FY15 EBIT

£(37.8)m

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£119.3m £102.7m £116.1m £(16.6)m £(12.8)m £(5.5)m £17.6m £2.5m £8.6m £3.0m FY14 EBIT MGD Adjusted H1 OTC net revenue H1 Machines net revenue H2 OTC net revenue H2 Machines net revenue Costs/GPT/MGD/SIS H2 Marketing FY15 EBIT

  • OTC Net revenue: -2.7% (H2 +1.4%)
  • OTC staking: growth in H2 from improved horse racing trends and 7.8% growth in

football

  • SSBTs: 8% of OTC staking in Q4 15 vs 3% in Q4 14
  • Gross win margin: 16.2% (-0.2ppts) with a strong finish to the year
  • Machines: 7th consecutive quarter of growth(1); GWPTW in Q4 £1,060
  • Operating costs: 0.1% down on FY14 despite additional £5.5m marketing investment, in

line with guidance

  • UK Retail has substantially offset the impact of the increase in MGD

UK Retail – Operating profit ahead of expectations

(1) On per shop per week basis

H1 H2

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180 176 180 186 191

12-13 Ave. 14 H1 14 H2 15 H1 15 H2 OTC net revenue per shop (£000) Machine net revenue per shop (£000) +2.2% +1.5% +4.9% +5.9% +12.2% +4.3% +4.6% +3.7% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Machine GW yoy growth

UK Retail – trends supportive of our FY17 targets

(1) 2013 net revenue has been restated for the MGD/VAT impact to enable like for like comparison (2) Excludes revenue from greyhounds tracks

Total Net Revenue Per Shop Trends(1)(2)

  • Inc. World Cup

Net revenue per shop grows in 2015

  • Gaming machines; lower staking play
  • SSBT net revenue +144%
  • Effective estate optimisation
  • Regular product launches continue to

deliver growth

  • Lower staking slot products the key

driver (slots FY15 39% of machine gross win vs. FY14 31%)

  • Growth slowing following £50+

staking regulations from April

ABB Code implementation/ Clarity roll-out £50+ B2 regulation implementation

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UK Retail – cost savings generate room for investment

Costs guidance delivered

Year ended 31 December 2015 £m 2014 £m Variance Staff 205.0 200.5 +2.2% Property 112.8 115.8 (2.6)% Content 91.1 96.8 (5.9)% Marketing 23.6 18.1 +30.4% Depreciation 37.6 39.3 (4.3)% Other 79.8 79.7 (0.1)% Operating Costs 549.9 550.2 (0.1)%

  • Staff costs – investment in retail team;

sports betting champions; FY15/16 increases provide protection against NLW

  • Rent – well managed renewal process;

environment remains favourable

  • Content – benefit from shop closures
  • Marketing investment as per strategic plan

includes staff incentives payments for multi-channel

  • On a like for like basis costs per shop

increased by 2.5% primarily due to marketing

  • 2015 Estate optimisation: 56 closures in FY15; c.25 scheduled for FY16 excluding the

merger

  • 2016 guidance:
  • Costs increase by c.3%
  • Includes impact of NLW of c.£1.5m and net impact of voluntary single scheduling
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£215.1m £242.8m

£(10.4)m £(5.4)m £8.2m £8.9m £5.6m £0.1m £18.6m £2.1m

FY14 NGR H1 Sportsbook H1 Gaming H2 Sportsbook H2 Gaming Exchanges Australia Other Regulated Grey markets exit FY15 NGR World Cup £7.3m

Digital Revenue – all segments growing in H2

  • Sportsbook: staking +29.0% (Mobile +69.4%); margins remained weak (Q1 HVC losses

and H1 results)

  • Gaming: fifth consecutive quarter of growth for both NGR and actives
  • Australia(1): Net revenue +70.9%, staking +62.9%, GW margin +0.8ppts
  • Other Regulated NGR +105%: Ladbrokes.be building on long-standing retail presence

(1) Constant currency statutory data reflecting Betstar from April 2014

H1 (2.6)% H2 +17.6% Ladbrokes.com

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14 (1)

POC impact of £(13.4)m and grey markets impact of £(1.3)m

Ladbrokes.com and Exchanges H2 PBIT

  • Ladbrokes.com and Exchanges compared with FY14
  • H1 down £17.2m EBIT – POC/HVC loss and weak margins
  • H2 begins to show returns from investment
  • H2 POC/Grey markets impact: £14.1m
  • Opex investment in staff and product capability
  • Marketing: H2 marketing at 33%
  • NGR growth from investment programme

£11.1m £(9.7)m Tax/Regulation(1) £(14.7)m 14H2 EBIT H2 Marketing £(13.4)m Underlying Net revenue £14.4m 15H2 EBIT Operating Expenses / Other Variable Costs £(7.1)m

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Digital – Ladbrokes Australia well set for 2016

  • Increased marketing and promotional

activity driving growth in key KPIs

  • Actives 135k (+65%) targeting

recreational customers

  • Emphasis on retail customers

delivered higher GW margin (+0.8ppts)

  • H2 Marketing/NGR = 37% (H2 2014:

29%)

  • Operating costs: investment in people,

product and technology to support growth strategy, levy costs

Actual Year ended 31 December 2015 AUDm 2014 AUDm Var. Staking 1,512.2 928.4 +63% Gross win 148.6 83.3 +78% Gross win margin 9.8% 9.0% +0.8ppts Net revenue 108.0 63.2 +71% Operating costs (103.0) (58.6) (76)% Operating profit 5.0 4.7 +6%

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European Retail – investment and restructuring = growth

  • Belgium(2): product strategy and investment in SSBTs driving strong customer activity

(staking +49%); net revenue growth (+22%) and PBIT growth (+9%).

  • Ireland: Northern Ireland: similar trends to UK Retail. Republic of Ireland: market re-

engagement strategy post Examinership driving strong like-for-like staking growth; return to profitability in H2.

  • Spain: Regional roll-out delivering performance in line with expectations. Investment

will continue

Year ended 31 December 2015 2014 Variance Net revenue Belgium (€m) 76.1 62.3 +22% Ireland (£m) 64.2 72.2 (11)% Spain JV(1) (€m) 29.5 21.3 +38% EBIT Belgium (€m) 13.1 12.0 +9% Ireland (£m) 6.8 4.4 +55% Spain JV(1) (€m) (2.5) (1.2) (108)% European Retail (£m - reported) 14.5 13.0 +12%

(1) Being 50% of Sportium JV gross win and EBIT (2) local currency

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Rebased Dividend Covered by Operating Free Cash-flow

(1) Excludes exceptional items, includes High Rollers (2) Excludes treasury shares of 31.8m

Year ended 31 December 2015 £m

EBITDA (1) 161.3 Net finance expense (26.6) Tax (2.3) Capex (66.1) Other 13.3 Operating free cash flow 79.6 Dividend (52.3) Exceptional items (25.1) U'lying net debt movement 2.2 Share placing 112.9 Net debt movement 115.1 Opening net debt (419.2) Closing net debt (304.1) Net Debt / EBITDA(1) 1.9x

  • Capex
  • FY15: inc. UK Retail £29.1m; Digital £25.6m
  • FY16 guidance: c.£90-95m
  • Share placing
  • Issued 92.4m shares; Net proceeds £112.9m
  • Total shares now in issue 1,016m(2)
  • Interest:
  • Net debt is predominantly financed by:
  • £225m 7.625% bond maturing in 2017
  • £100m 5.125% retail bond maturing in 2022
  • Ongoing cost of service c.£27m including fees
  • Leverage: within 1.5-2.0x guidance
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Exceptional Items and Taxation

Exceptional items – £99.0m (£78.9m in H1) include:

  • Retail: impairments £53.2m; UK shop closures £13.4m
  • Republic of Ireland: Examinership £10.0m
  • Software impairment £5.1m
  • Coral merger transaction costs £17.6m
  • 2016 exceptional cash flows c.£25-30m; primarily merger transaction costs

Material tax credit c.£35m:

  • accelerated recovery of tax losses from 2010 agreement with Inland Revenue
  • £35m credit in 2015 with cash receipt expected during Q1
  • strengthens balance sheet both stand-alone and post merger
  • stand-alone tax rate to be at normal corporate rates in FY16
  • Excluding the £35m tax credit in 2015 and at a normalised tax rate in the mid teens,

2015 EPS is 4.6 pence In line with H1 guidance

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Group

  • Continued increased marketing investment in UK Retail, Ladbrokes.com and Australia
  • Depreciation & amortisation c.£80-82m
  • Corporate costs stable
  • Capex – c.£90-95m – UK estate investment programme commences
  • H1/H2 PBIT phasing 40/60, reflecting sustained marketing investment in Ladbrokes.com
  • Quarterly trading updates will discuss revenue trends only

UK Retail

  • Estate optimisation: c.25 shop closures in FY16
  • OTC gross win margin target range c.16-17% with SSBTs driving higher margins vs recent averages
  • Machines revenue: competitor response, target very low single digit growth
  • Operating costs increase c.2-3%; includes impact of National Living Wage and implementation of

voluntary single scheduling Digital

  • Ladbrokes.com
  • Increase marketing intensity c.30% of NGR, H1 weighted – building on Q3/Q4 performance
  • Margin c.7% to permit value based offers
  • Australia – target strong double digit revenue growth; continue to invest in market share

European Retail

  • Spain continued small EBIT loss reflecting expected roll-out programme
  • Belgium continues to deliver moderate growth

Outlook for 2016(1)

(1) Standalone Ladbrokes

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FY15 – Financial Summary

  • A year impacted by significant changes in tax and regulation and significant marketing

investment in H2

  • FY15 finished with strong customer KPIs being converted into net revenue growth
  • Early days with new strategy but key operational and financial objectives are being

delivered

  • Rebased dividend in line with new policy covered by operating free cash flow
  • Robust balance sheet and strong liquidity position supports continued investment in

marketing, product and customer experience

  • Current trading: positive operating metrics continuing from Q4 2015 and a run of

favourable sporting results, margins expected to normalise, expect to deliver results in line with expectations

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Building a Better Ladbrokes Making it Happen Jim Mullen, Chief Executive

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UK: GROW RECREATIONAL CUSTOMER BASE UK: DEVELOP MULTI-CHANNEL UK: INCREASE FOOTFALL IN RETAIL AUSTRALIA: GROW MARKET SHARE

Strategy based on four key pillars

(1) Excludes revenue from greyhound tracks. (2) On a comparable basis and excludes greyhound tracks, associate income and exceptional items.

Four key pillars underpinned by non-negotiables

NON-NEGOTIABLES Health & Safety

  • Instructed complete review: top to bottom
  • Single scheduling: moving to voluntary only in evenings

Responsible Gambling

  • Progressing Retail and Digital algorithms
  • Launch National self-exclusion in April 2016
  • Link to executive remuneration from 2015
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UK Retail Making it Happen

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People

UK Retail: Cultural change, sports focus, proposition driven

Recreational customer is responding

Products Promotions

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  • Strong underlying metrics
  • Driven by
  • Increased marketing investment
  • More spend in key red top and TV media
  • SPFL sponsorship: growing football staking in Scotland
  • Product diversity: SSBTs plus traditional coupon offer
  • Promotions: re-established our value proposition

Football: Core opportunity in a core market

Favourable results welcome but underlying metrics are encouraging

+13% yoy 15Q4 football as a % of staking Staking, 15/16 football season(1) +2pps yoy +29% yoy Gross win, 15/16 football season(1)

(1) 2015/16 football season to 31 December 2015

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  • Successful roll out
  • 6,408 SSBTs across the estate to plan and budget
  • Tactically deployed based on local market demand
  • Delivering encouraging staking trends
  • 15Q4 8% of OTC staking (14Q4: 3%)

SSBTs: Market leading position

Customer appeal underpins strong performance to date

  • Opportunities for growth
  • Increasing in-play bets (15Q4 SSBT

staking 30% in-play; 70% pre event)

  • Increasing higher team multiples

Single 30% Acca 2 to 4 37% Acca 5+ 33%

SSBT 2015 stakes

(1) Excludes SSBTs

Single 27% Acca 2 to 4 31% Acca 5+ 42%

OTC(1) 2015 stakes

SSBT Staking per shop per week £

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  • Shops the most effective cross sell / affiliate network
  • Shop colleagues key ambassadors
  • Cost effective recruitment through colleague incentive
  • c.6,200 shop colleagues rewarded so far
  • >35,000 actives by 31 Dec 2015
  • Launched at start of football season
  • Run rates continue
  • Attracts younger demographic
  • Value more valuable than pure .com players
  • Higher retention than pure .com players

Multi-channel: Unlocking the value of our retail estate

Compelling Product + Engaged Employees = Strong Proposition

18-25 26% 26-35 30% 36-45 18% 46-55 16% 56+ 10%

Multi-channel players age profile

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Multi-channel: real industry leadership through innovation

Product evolution essential, more to play for ` ` ` ` ` ` ` `

DEPOSIT & WITHDRAW IN SHOP RETAIL CASHOUT BET STATUS AND MY ACCA'S LIVE SCOREBOARDS MY BET HISTORY LOTTO TRACKER PUSH NOTIFICATIONS

MAJOR COMPETITORS

TRANSFER WINNINGS ONLINE

LADBROKES

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  • Driven by expertise in content management
  • More games: 27 new slots games vs. 5 B2 casino games
  • More regular co-ordinated in shop launches
  • Successful implementation of all new regulations
  • Delivered DCMS £50+ (£50+ stakes -68%)
  • Delivered all Senet obligations
  • Responsible Gambling algorithms now in use across all regions

Machines: Strategy driven by lower stakes slots

Slots / B3 growth gives more sustainable income

29% 30% 33% 33% 37% 39% 40% 40% 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4

Machine Gross Win coming from Slots

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Shop Fabric: Investing in locations that make a difference

  • Historical underspend tarnishing the Brand
  • Smaller targeted investments
  • Flexibility to turn the dial up or down based on performance
  • Not about large capital projects
  • Up to £25-30m capex available
  • c.£6m approved to spend in 16H1
  • Competitive locations
  • Shops chosen on proven criteria: age, gross win, EBITDA
  • New approach to fit-out
  • Primarily in geographic clusters: proven to outperform individual refurbishments
  • Shop by shop review
  • Get the basics right

Flexible investment strategy – performance driven

Existing Refurbished

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Ladbrokes.com Making it Happen

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Ongoing User Experience enhancements driven by customer demand Improved product + Increased marketing = 15Q4 best ever NGR performance

Live Streaming Cash Out

Focus on Products, Experience and Games

Mobile Games

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  • Staking: key measure of customer engagement
  • 8th consecutive quarter of yoy growth
  • Football growth: FY15 +38%
  • BIP: FY15 +12%
  • Mobile still leading the way: FY15 NGR +69% yoy
  • Actives: on track for 2017 target
  • Well planned marketing/CRM activities
  • Customers being acquired on attractive terms
  • CPA: yoy broadly similar

Sportsbook: Strong H2 – on the go and on the up

Mobile product key – innovation focus

(0.5)% +39% +34% +14% +19% (5)% +2% +26% +34% +42% +21% +30% +29% +13% +34% +44% 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4

Sportsbook Actives yoy Sportsbook Staking yoy

W'Cup in 14Q2

Actives FY15 +10% yoy +17% yoy Stake per Active FY15

Mobile 54% Desktop 46% FY14 Sportsbook Stakes

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  • 5th quarter of growth
  • Mobile: now over half of Gaming: 52% (2014 34%)
  • Driven by products
  • New games every week on average since Oct with loyalty features
  • New Casino website
  • 82 Mobile games released; Live Dealer for all Mobile platforms
  • Cross sell: continues to improve
  • Supported by improved customer experience and CRM

Gaming: on the go and on the up

Increased marketing and new products driving increased actives

  • 7%
  • 2%

+23% +35% +13% +29% +42%

  • 19%

+9% +13% +19% +12% +10% 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4

Gaming Actives yoy Gaming NGR yoy

Playtech migration completed

Flat

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Ladbrokes Australia Making it Happen

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  • High profile marketing = better brand awareness
  • Brand awareness(2) now No. 3 from zero in September 2013
  • 12% market share(3)
  • 2016: reinvest profit in building market share and customer base
  • Key sports sponsorships secured for 2016

Ladbrokes Australia: goes from strength to strength

(1) Local currency; (2) Corporate bookmakers, Nielsen consumer survey, December 2015 (3) Corporate market share figures based on gross profit, online sportsbetting market, Australian Wagering Factbook, 2014 and latest available competitor data

Key sporting sponsorships deliver brand awareness

+63% Actives yoy Staking yoy(1) +65% +71% NGR yoy(1)

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Retail cash in at over 1,000 newsagents

  • First to market
  • Funds available for placing bets seconds after deposit

Featured bets

  • Suggest bets to customers based on customer data
  • Improve customer experience

Info hub

  • Released at the end of January
  • Enriched horse racing experience on mobile

BIP opportunity

  • Contributed 10% of staking with no promotions

Differentiated product key to building customer loyalty

Innovation, customer experience and marketing investment give confidence for 2017 target

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European operations update

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Belgium

  • Product differentiation delivering revenue and customer growth
  • Continued investment to drive digital growth
  • Exploring Multi-channel opportunities

Republic of Ireland

  • Examinership delivering for customers, employees and shareholders
  • H2 returned to profitability
  • Multi-channel launched

Spain

  • No. 1 retail presence with continued regional expansion in 2016
  • Early regions EBITDA positive
  • Digital business on track
  • La Liga sponsorship supporting brand awareness

Continued international progress

Balanced portfolio in regulated markets

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Summary

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Boxing Day 2015 vs. 2014 Saturdays in January 2016 vs. 2015, average

What a difference a year makes

A good start but an intense period of execution lies ahead...

2015 vs. 2014 OTC staking lfl +14% Football staking (UK Retail and Ladbrokes.com) +56% Ladbrokes.com Sportsbook actives +28% Ladbrokes.com Sportsbook staking +42% 2016 vs. 2015 OTC staking lfl +2% Football staking (UK Retail and Ladbrokes.com) +8% Ladbrokes.com Sportsbook actives +25% Ladbrokes.com Sportsbook staking +26%

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Q&A

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Appendices

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  • Accelerated Phase 1 complete
  • Phase 2 CMA commenced

Merger no distraction to day-to-day business

Merger timetable on track and progressing to plan

  • Benefits of merger continue to be compelling

2016

Early Feb: issues statement February January March April May June February / March: main party hearings in near future Late March: deadline for all parties’ responses Mid-April: notifying provisional findings and if required provisional remedies Late May: final deadline for all parties’ responses / submissions Late June: publish final report

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Year ended 31 December Gross win Net revenue Operating profit(1) 2015 £m 2014 £m Variance £m 2015 £m 2014 £m Variance £m 2015 £m 2014 £m Variance £m UK Retail 838.5 824.2 +14.3 827.4 811.5 +15.9 116.1 119.3 (3.2) Digital 316.4 288.3 +28.1 242.8 215.1 +27.7 (23.8) 14.0 (37.8) European Retail 120.9 122.9 (2.0) 119.8 122.1 (2.3) 14.5 13.0 +1.5 Telephone Betting 5.9 11.6 (5.7) 5.5 10.2 (4.7) (2.2) 2.0 (4.2) Corporate costs

  • (24.0)

(22.9) (1.1) Total 1,281.7 1,247.0 +34.7 1,195.5 1,158.9 +36.6 80.6 125.4 (44.8)

(1) Operating profit is before exceptional items

Group

Net revenue and operating profit (ex. High Rollers)

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Year ended 31 December 2015 2014 Variance

OTC Gross win margin 16.2% 16.4% (0.2)pps Like for like OTC amts staked decline (0.4)% (2.3)% +1.9pps Like for like OTC net revenue decline (0.9)% (4.2)% +3.3pps Like for like total costs (1) increase 2.5% 2.3% (0.2)pps Like for like shop staff costs increase 3.0% 0.2% (2.8)pps Stake per slip (2) £8.51 £8.72 (2.4)% Average number of machines 8,670 8,966 (3.3)% Average weekly gross win per machine £1,028 £937 +9.7% Average weekly machine gross win per shop £4,094 £3,722 +10.0%

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

UK Retail

KPIs

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Year ended 31 December 2015 £m 2014 £m Variance

OTC gross win 373.9 386.3 (3.2)% Machines gross win 464.6 437.9 +6.1% Total gross win 838.5 824.2 +1.7% OTC net revenue 369.2 379.5 (2.7)% Machines net revenue 458.2 432.0 +6.1% Total net revenue 827.4 811.5 +2.0% Associate income 4.3 1.2 +258% Gross profits tax (55.0) (56.9) +3.3% Machine Games Duty (110.7) (86.3) (28.3)% Staff costs (205.0) (200.5) (2.2)% Property costs (1) (112.8) (115.8) +2.6% Content costs (2) (91.1) (96.8) +5.9% Marketing (23.6) (18.1) (30.4)% Other costs (inc. depn) (3) (117.4) (119.0) +1.3% Operating costs (549.9) (550.2) +0.1% Operating profit 116.1 119.3 (2.7)%

(1) Rent, rates and utilities (2) Pictures, data, levy, Sky TV (3) Depreciation = £37.6m (2014: £39.3m)

UK Retail

P&L (ex. exceptional items)

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Year ended 31 December 2015 2014 OTC £m Machines £m Total £m OTC £m Machines £m Total £m Variance Gross win 373.9 464.6 838.5 386.3 437.9 824.2 +1.7% Freebets (4.7) (6.4) (11.1) (6.8) (5.9) (12.7) +12.6% Net revenue 369.2 458.2 827.4 379.5 432.0 811.5 +2.0%

UK Retail

Gross win adjustments

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Year ended 31 December 2015 £m % of net revenue 2014 £m % of net revenue Variance Net revenue 185.5 178.5 +3.9% Betting tax / Irish VAT (1.1) (1.1)

  • POC tax

(28.1) (2.1) (1238)% Levy and licenses (1.0) 0.5 (0.9) 0.5 (11.1)% Staff costs (30.3) 16.3 (29.0) 16.2 (4.5)% Software and geographical partners (1) (21.5) 11.6 (18.2) 10.2 (18.1)% Marketing (including affiliates) (56.8) 30.6 (46.5) 26.1 (22.2)% Banking and chargebacks (6.5) 3.5 (6.7) 3.8 +3.0% Other costs (including depreciation and amortn) (2) (60.9) 32.8 (56.7) 31.8 (7.4)% Operating costs (2) (177.0) 95.4 (158.0) 88.5 (12.0)% Operating (loss)/profit (20.7) 17.3 (220)% Digital EBITDA 7.8 44.5 (82.5)%

(1) Payments to third party software and platform providers and geographical partners (2) Includes depreciation of £24.7m (£23.4m in 2014) and amortisation of acquired intangibles of £3.8m (2014:£3.8m)

Digital – Ladbrokes.com & Exchanges

P&L (ex. exceptional items)

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Digital - Australia

P&L (ex. exceptional items)

(1) Includes depreciation and amortisation of £2.1m (£2.0m in 2014)

Year ended 31 December 2015 % of net revenue 2014 % of net revenue Variance £m £m Gross win 73.2 45.5 +60.9% Freebets (14.9) (7.5) (98.7)% GST (5.1) (3.4) (50.0)% Net revenue 53.2 34.6 +53.8% Levy and licenses (12.3) 23.1 (7.0) 20.2 (75.7)% Staff costs (8.3) 15.6 (5.2) 15.0 (59.6)% Marketing (including affiliates) (17.4) 32.7 (11.0) 31.8 (58.2)% Other costs (including depreciation)

(1)

(12.7) 23.9 (8.8) 25.4 (44.3)% Operating costs

(1)

(50.7) 95.3 (32.0) 92.5 (58.4)% Australia operating profit 2.5 2.6 (3.8)% Australia EBITDA 4.6 4.6

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(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

Year ended 31 December 2015 2014 Variance Total Digital Unique active players (1) (000s) 1,104 960 +15.0% Real money sign-ups (2) (000s) 699 586 +19.3% Sportsbook Gross win margin 6.1% 7.8% (1.7)pp Unique active players (1) (000s) 866 788 +9.9% Average monthly active player days (000s) 1,263 1,039 +21.6% Yield per unique active player (£) (3) 94 108 (13.0)% Casino Unique active players (1) (000s) 296 211 +40.3% Average monthly active player days (000s) 163 135 +20.7% Yield per unique active player (£) (3) 152 204 (25.5)% Poker Unique active players (1) (000s) 27 30 (10.0)% Average monthly active player days (000s) 42 51 (17.6)% Yield per unique active player (£) (3) 119 101 +17.8% Games Unique active players (1) (000s) 261 173 +50.9% Average monthly active player days (000s) 206 146 +41.1% Yield per unique active player (£) (3) 116 135 (14.1)% Bingo Unique active players (1) (000s) 70 65 +7.7% Average monthly active player days (000s) 108 90 +20.0% Yield per unique active player (£) (3) 181 170 +6.5%

Digital

KPIs - Ladbrokes.com

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UK Retail and Digital

Quarterly figures

Q3 2014 vs. Q3 2013 Q4 2014 vs. Q4 2013 Q1 2015 vs. Q1 2014 Q2 2015 vs. Q2 2014 Q3 2015 vs. Q3 2014 Q4 2015 vs. Q4 2014 UK Retail OTC Stakes (7.9)% (6.8)% (4.8)% (5.6)% +1.6% +1.1% OTC GW Margin 17.0% +2.1pp 15.6% (1.5)pp 15.7% (0.5)pp 16.2% (0.3)pp 15.5% (1.5)pp 17.3% +1.7pp Machine Gross Win Growth +4.9% +5.9% +12.2% +4.3% +4.6% +3.7% Machine Gross Win per shop per week +6.5% +9.8% +16.4% +8.7% +8.6% +6.4% Total Net Revenue YoY +6.0% (2.4)% +4.3% (1.7)% (1.0)% +6.5% Digital – Ladbrokes.com Sportsbook Net Revenue +58.3% (7.0)% (31.5)% (23.0)% (0.5)% +53.8% Gaming Net Revenue

  • +9.3%

+13.0% +19.1% +11.5% +10.3% Sportsbook Gross Win Margin 8.9% +2.2pp 6.5% (1.7)pp 4.0% (2.5)pp 6.3% (2.8)pp 6.8% (2.1)pp 7.0% +0.5pp

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Year ended 31 December 2015 £m 2014 £m Variance Gross win 65.3 73.0 (10.5)% Net revenue 64.2 72.2 (11.1)% Betting tax and Machine Gaming Duty (7.6) (7.7) +1.3% Operating costs (49.8) (60.1) +17.1% Operating profit 6.8 4.4 +54.5% Constant currency amounts staked increase/(decrease) +0.9% (4.5)% Constant currency gross win decrease (5.4)% (8.7)% Shop numbers at the end of the period 220 275 (55)

Ireland

P&L (ex. exceptional items)