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

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Introduction John Kelly, Chairman

Jim Mullen, Chief Executive

Strategy for 2017 based on four key pillars UK: UK: AUSTRALIA: INCREASE GROW UK: GROW FOOTFALL DEVELOP RECREATIONAL MARKET IN MULTI-CHANNEL CUSTOMER SHARE RETAIL BASE Encouraging progress in H2 2015

Focus on 2017 targets – backed by performance driven approach 2017 Targets 2015 2014 Performance Actual Net revenue per shop (1) > FY14 UK Retail £377k £356k EBIT per shop (2) > FY14 £51k £42k 30% of Group net revenue (3) Digital 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. 6 (3) Excludes High Rollers.

Financial Overview Ian Bull, CFO

Group Financial Performance Summary  Net revenue growth (1) : +5.3% ex. W’ Year ended 31 December 2015 2014 Variance Cup £m £m (1) Net revenue 1,195.5 1,158.9 +3.2%  Operating profit:  Increased direct taxes (MGD/POC) (1)(2) Operating profit (35.7)% 80.6 125.4 and marketing investment in H2 as outlined in the strategic plan Finance costs (28.1) (27.4) (2.6)%  H1 weak margin/HVC impact in (1) Profit before tax 52.5 98.0 (46.4)% Ladbrokes.com High Rollers 3.3 14.2 (76.8)%  Tax: lower underlying rate than guidance. Tax credit from accelerated (1)(3) Underlying EPS 9.1p 10.1p (9.9)% use of losses Dividend (66.3)% 3.0p 8.9p Net debt 304.1 419.2 (27.5)%  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 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 8 (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

Group Operating Profit KPIs on track; Q4 performance delivers better PBIT outturn £( 37.8)m £125.4m £87.6m £(22.9)m £(4.2)m £1.8m £0.5m £18.9m £(1.1)m £80.6m FY14 EBIT Tax / FY 14 H2 UK Retail Digital European Telephone Corp Costs FY15 EBIT Regulation(1) Adjusted Marketing(2) Retail  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 9 (2) Additional marketing spend in Ladbrokes.com, Australia and UK Retail

UK Retail – Operating profit ahead of expectations £3.0m £(5.5)m £119.3m £(16.6)m £8.6m £116.1m £2.5m £17.6m £(12.8)m £102.7m H2 H1 FY14 EBIT MGD Adjusted H1 OTC net revenue H1 Machines net H2 OTC net revenue H2 Machines net Costs/GPT/MGD/SIS H2 Marketing FY15 EBIT revenue revenue  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: 7 th 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 10 (1) On per shop per week basis

UK Retail – trends supportive of our FY17 targets Total Net Revenue Per Shop Trends (1)(2) Inc. World Cup Net revenue per shop grows in 2015 191 186 180 180  Gaming machines; lower staking play 176  SSBT net revenue +144%  Effective estate optimisation 12-13 Ave. 14 H1 14 H2 15 H1 15 H2 OTC net revenue per shop (£000) Machine net revenue per shop (£000)  Regular product launches continue to +12.2% ABB Code implementation/ £50+ B2 regulation deliver growth Clarity roll-out implementation  Lower staking slot products the key +5.9% +4.9% +4.6% driver (slots FY15 39% of machine +4.3% +3.7% gross win vs. FY14 31%) +2.2% +1.5%  Growth slowing following £50+ Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 staking regulations from April Machine GW yoy growth (1) 2013 net revenue has been restated for the MGD/VAT impact to enable like for like comparison 11 (2) Excludes revenue from greyhounds tracks

UK Retail – cost savings generate room for investment Costs guidance delivered  Staff costs – investment in retail team; sports betting champions; FY15/16 Year ended 2015 2014 Variance increases provide protection against NLW 31 December £m £m  Rent – well managed renewal process; Staff 205.0 200.5 +2.2% environment remains favourable Property 112.8 115.8 (2.6)% Content 91.1 96.8 (5.9)%  Content – benefit from shop closures Marketing 23.6 18.1 +30.4%  Marketing investment as per strategic plan Depreciation 37.6 39.3 (4.3)% includes staff incentives payments for multi-channel Other 79.8 79.7 (0.1)% Operating Costs 549.9 550.2 (0.1)%  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 12