PRELIMINARY RESULTS YEAR ENDED 31 DECEMBER 2013 25 FEBRUARY 2014 - PowerPoint PPT Presentation

PRELIMINARY RESULTS YEAR ENDED 31 DECEMBER 2013 25 FEBRUARY 2014

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Ladbrokes Preliminary Results Agenda Financial Overview Ian Bull, CFO Business Update Richard Glynn, CEO Q&A 3

Group Performance Summary Year ended 31 December 2013 Year ended 31 December FY13 £m FY12 £m B+/W- Net revenue (1) 1,111.2 1,053.3 +5.5% Net revenue ADJ (1) (2) 1,111.2 1,117.7 -0.6% Operating profit (1)(3) -32.9% 138.3 206.1 Finance costs (25.0) (29.7) +15.8% Profit before tax (1) -35.8% 113.3 176.4 Effective tax rate 5.1% 5.2% High Rollers 5.9 30.0 n/a Underlying EPS (1) 11.7p 18.4p -36.4% Dividend 8.9p 8.9p n/a Net Debt 398.6 386.9 -3.0% Continuing operations before exceptional items (1) Excluding High Rollers (2) 2012 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 £4.0m in 2013 and £2.6m in 2012 4

Group Operating Profit down 33% £(46.8)m £206.1m £(23.6)m £7.3m £(4.6)m £(0.1)m £138.3m FY12 EBIT UK Retail Digital European Retail Telephone Corp Costs, net FY13 EBIT savings  UK Retail – net revenue flat (1) ,content cost and tax headwinds  Digital – reflects timing of investment ahead of revenue growth  European Retail – decline driven by Ireland  Telephone – £1.6m loss, stakes 30% lower post intro. of minimum stake per call  Corporate costs – bonus, share based payments and one-off credits (1) Retail net revenue up 8.3% as reported, but down 0.3% after adjusting 2012 machine revenue to reflect 2013 move to MGD from VAT 5

UK Retail Operating Profit Net revenue broadly flat (1) , machine growth offset by OTC + 6.6% in line with guidance £(1.4)m £(12.9)m £(9.1)m £(5.8)m £(18.2)m OTC Gross win down 1.0% £180.7m Stakes down 2.1% £0.6m GW % up 0.2% ppts £133.9m FY12 EBIT Gross profit MGD & VAT LFL Content Other LFL New shops SIS income FY13 EBIT costs costs costs  OTC – gross win -1.0% driven by -7.2% in Q3 (soft margin across sector)  Operating costs – in line with H1 guidance at +6.6% (£13.8m cost savings)  Strong free cash flow – at £124.8m post £44.7m capex investment (1) Reflects adjusted machine revenue which whilst up 20.2% as reported, was up only 1.2% after adjusting 2012 machine revenue to reflect 2013 move to MGD from VAT 6

UK Retail Gross Win Stable Gross Win per Shop Analysis (1) (£’000) 2013  Q3 had discernible impact 96 93 95 92 100 94 95 89 89 90 91 88 85 80  OTC staking broadly stable 60  Machine growth from more shops 40 20 2014  Q1 strong GW comparative 0 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 (18.9%) OTC GW per shop Machine GW per shop  New machines full benefit in H2 Machine Gross Win Growth Total machine Machine gross win  Optimise return from investment gross win per shop per week in SSBTs, Wifi, content H1 2013 3.2% (0.5)% Q3 2013 0.7% (5.0)%  YTD down due to sector wide Q4 2013 2.6% (2.4)% weak Jan results FY13 2.4% (2.1)% (1) Analysis excludes greyhound tracks 7

UK Retail Costs – controlled despite headwinds Non annualised cost of LFL up 3.0% FY12 + FY13 net openings £(3.7)m £(3.5)m £(5.9)m £(6.5)m £(18.2)m £13.8m £(9.1)m £(535.6)m £(517.4)m £(502.5)m FY12 Content Staff costs Property Marketing Other Mitigating 2013 LFL Development FY13 operating costs costs costs actions operating costs costs 2013  Overall cost growth of 6.6% within guidance  c.£14m (2.8%) saved through action on resourcing, facilities, bonus 2014  Expecting c.5% total operating cost increase in 2014  c.2% relating to 2013 openings costs (incl. £5m of depreciation)  c.3% LFL inc. additional levy payment and SIS Irish racing pictures 8

UK Retail 2014 – focus on optimisation 2013  Recent openings contributing average £66k p.a. (IRR projected c.30%)  Estate quality improved  Impairment: prudent approach, shop by shop basis 2014  Lower growth expected in UK betting shop market – brands benefit from scale  Optimisation: reduce tail and focus on core – expect 40/50 closures  Retail capex reduction benefiting free cash flow 9

Digital 2013 – profit decline revenue driven £16.8m or 9.4% down like-for-like £3.1m or 1.7% off inc. Aus/Betdaq £(16.8)m Op.costs £147.1m (1) 1.6% up on 2012 Australia £(2.9)m £(1.2)m £31.8m Betdaq £(0.4)m £(5.4)m £3.1m £(3.3)m £8.2m £11.5m FY12 EBIT NGR Betting tax Depn Other Costs FY13 PBIT Betdaq & FY13 EBIT LFL Australia  LFL Revenue – down 9.4% (1) across sportsbook and gaming  LFL Operating costs – £147.1m (1) indicative of forward run rate  LFL Profit (1) – decline as expected  Marketing costs – at 28% of NGR (1) Excludes Australia and Betdaq 10

Digital – 2014 growth H2 weighted Revenue  Full integration into Playtech systems not complete until Q2 – rev. benefit H2  Very high margin comp – 9.6% Q1 ’13  Well publicised sector losses from football and horseracing in January this year  Some benefit from World Cup (Q finals onwards fall into H2)  Modest growth expected for H1 2014 vs. H2 2013 Costs – run rate operating costs c £150m  Expecting to increase marketing in H1, FY c.25-30% of net revenue  Additional £7m depreciation in 2014  Cost of POC factored into plans at 15% of gross win from Dec 2014  Launch of Belgium online during H1 – expect small loss Digital H1 2014 impact  Target sequential revenue growth vs H2 2013, EBITDA broadly similar Note: Digital excludes Australia and Betdaq 11