INTERIM RESULTS Half year ended 30 June 2015 11 August 2015 - PowerPoint PPT Presentation

INTERIM RESULTS Half year ended 30 June 2015 11 August 2015

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 b eliefs concerning future events and are subject to a number of known and unknown risks and uncertainties beyond the Company’s control that coul d 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 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. 2

Introduction Jim Mullen, Chief Executive

Organic plan under way to address key challenges  Long-term focus with specific KPIs for FY17  UK Retail: increase net revenue (1) and EBIT (2) per shop on FY14  Ladbrokes.com: grow actives to at least 1.3m  Australia: at least double NGR on FY14  Digital: target a 30% contribution  Steps taken since strategy announcement  New Desktop product launched  Scottish football sponsorship  Increased presence in red tops and new TV deals  Retail value: BOG, TTTP, five team ACCA  Multi-channel roll-out  Australia new product launches (1) Excludes revenue from greyhound tracks (2) After adjusting for higher Machine Games Duty and excludes greyhound tracks, associate income and exceptional items 4

Financial Overview Ian Bull, CFO

Group Financial Performance Summary £m 15H1 14H1 Variance (1)  Net revenue growth: Net revenue 585.4 577.8 +1.3% +4.2% ex. World Cup 2014 and High Rollers (1)(2) Operating profit (31.5)% 38.9 56.8  Operating profit: (1)(2)(3) Operating profit ADJ 38.9 39.1 (0.5)%  Broadly flat when adjusted for regulatory headwinds (MGD, POC, grey markets) Finance costs (14.2) (12.8) (10.9)%  Significant margins/HVC impact in Digital (1) Profit before tax 24.7 44.0 (43.9)%  Tax: 10% in line with guidance Effective tax rate 10.2% 10.0%  2015 dividend: 1p interim and 2p final High Rollers 2.8 10.7 n/a  Net debt: stable on 31 Dec 14 (£419.2m) (1) Underlying EPS 2.4p 4.3p (44.2)% Interim dividend (76.7)% 1.0p 4.3p Net debt 414.3 425.9 (2.7)% Before exceptional items (1) Excluding High Rollers (2) Includes amortisation of acquisition related intangible assets of £2.7m in 15H1 and £2.7m in 14H1 (3) Underlying decline of 0.5% reflects adjusting H1 2014 operating profit on a pro forma basis for POC, increase in MGD to 25% (for 6 Mar-Jun) and grey market withdrawals.

UK Retail – Operating Profit £57.6m £(8.8)m £3.3m £56.9m £17.6m £(12.8)m £48.8m 14H1 EBIT GPT/MGD Adjusted OTC net revenue Machines net Costs/SIS 15H1 EBIT revenue  OTC  Net revenue: staking trends improve (2) supported by SSBT (H1 net rev. +98%, staking per terminal per wk +71%) and better Royal Ascot; continued estate optimisation  Gross win margin 16.0% (-0.4ppts): improved in 15Q2 but slightly below target  Machines: 5 th consecutive quarter of growth (1) driven by lower staking slots  Costs: in line with guidance in February  Estate optimisation: 40 closures in H1; c.20 scheduled for H2 (1) On per shop per week basis (2) Adjusted for World Cup 7

UK Retail – Machines growth driven by slots +16.4% £50+ B2 regulation implementation +12.2% ABB Code implementation/ +9.8% Clarity roll-out +8.7% +6.5% +5.9% +4.9% +4.3% +2.2% +1.5% +0.4% (1.1%) Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Machine GW yoy growth Machine GW per shop per week yoy growth  New machines plus regular new product launches continued to deliver growth  Lower staking B3 slot products the key driver (15H1 38% of machine gross win vs. 14H1 30%)  Q2 impacted by £50+ B2 gaming regulation from April 2015. GWPTPW Q2 £1,011 vs Q1 £1,033  Higher MGD from 1 March 2015  Now target net revenue growth of c.3-4% for FY15 including DCMS impact 8

Digital – Net Revenue +6.9% driven by Australia £1.5m £(4.1)m £11.8m £112.2m £105.0m £0.2m £8.2m Sportsbook margin (2) £(8.7)m £3.3m World Cup HVC loss £(5.0)m £5.2m 14H1 NGR Headwinds .com .com Gaming Exchanges Australia Other Grey market 15H1 NGR Sportsbook ex. Regulated exits headwinds  Sportsbook: staking +20.1% (Mobile +65.0%); margins remained weak (Q1 HVC losses and H1 results)  Gaming: 3 rd consecutive quarter of growth for both NGR and actives  Australia: another strong performance, staking +64% (1) compounded with GW margin +1.5ppts  Other Regulated markets: ladbrokes.be the driver capitalising on long-standing retail presence (1) Constant currency statutory data reflecting Betstar from April 2014 (2) Calculated by comparing 2015Q1/Q2 margin vs. normalised margin of 7.5% 9

Digital – Operating Profit impacted by POC, margin £3.0m £(21.8)m £(11.5)m POC £(8.9)m Grey markets £(2.2)m £(0.1)m £2.8m £6.3m HVC loss £(5.0)m £(2.0)m £3.3m Sportsbook margin (2) £(8.7)m 14H1 EBIT Headwinds Underlying EBIT Sportsbook NGR, Gaming NGR, net .com Operating Australia yoy EBIT Other Regulated 15H1 EBIT net of POC of POC costs/GPT/VAT yoy EBIT  Significant headwinds: POC, grey market exits, 15Q1 HVC loss and weak Sportsbook margin  Underlying growth: Sportsbook +7.1%; Gaming +16.9%  Costs: Ladbrokes.com plus Exchanges in line with expectations  Australia: revenue growth and full six month benefits from Betstar (1) converting to profit  Exchange/Other Regulated: steady performance (1) Acquired in April 2014 (2) Calculated by comparing 2015Q1/Q2 margin vs. normalised margin of 7.5% 10

Digital – Ladbrokes Australia strong momentum Actual Pro forma (2)  Challenger strategy enhanced by Betstar 15H1 14H1 Var. Var. acquisition completed in April 2014 AUDm (1) AUDm  Continued strong staking growth of 64% Staking 652.0 398.4 +64% +40% (+40% on pro forma basis) Gross win 62.8 32.4 +94% +67%  Actives 68k (+82%) targeting recreational Gross win 9.6% 8.1% +1.5ppts +1.5ppts customers margin Net revenue 49.4 25.0 +98% +66%  Emphasis on retail customers delivered higher GW margin (+1.5ppts) Operating costs (44.2) (25.2) (75)% (55)%  H2 2015 increases marketing intensity to Operating 5.2 (0.2) n/a +275% >30% of NGR to drive actives profit (1) Statutory data reflecting Betstar from April 2014 (2) Pro forma data includes Betstar for six months 11