RECOMMENDED MERGER OF PADDY POWER AND BETFAIR 2 Agenda - PowerPoint PPT Presentation

RECOMMENDED MERGER OF PADDY POWER AND BETFAIR

2 Agenda Transaction highlights Transac nsacti tion on Overvi view Combination of two industry leading Groups Merger would create a stronger combined Group Greater scale drives growth Merger r Rationa nale Complementary products, capabilities, brands, channels & geographic mixes Significant cost synergies Financial highlights Other er Items ms Timetable / next steps

3 Transaction Highlights  Paddy Power shareholders to own 52% 1 , Betfair shareholders to own 48% 1  Equates to 0.4254 Paddy Power Betfair plc shares for each Betfair plc share Key Terms ms  Immediately prior to completion, Paddy Power shareholders to receive € 80m special dividend  Merger recommended by Boards of Paddy Power and Betfair  All share merger implemented by Scheme of Arrangement  Headquartered in Dublin with significant presence maintained in Ireland & UK Transac nsacti tion on  Subject to certain customary regulatory conditions Structure ructure  Premium Listing on London Stock Exchange, secondary listing on Irish Stock Exchange 2  Expect to be eligible for inclusion in FTSE 100 Non-Ex Exec ecutiv utive e Chair irman an: Gary McGann, Chairman of Paddy Power Non-Ex Executiv ecutive e Direct ector ors Three e Executiv utive e Direc ector ors Board d &  CEO: Breon Corcoran, CEO of Betfair  To be nominated equally by Paddy Power Management ent and Betfair  COO: Andy McCue, CEO of Paddy Power Team  CFO FO: Alex Gersh, CFO of Betfair Combined management team will draw best talent from both companies 1 Of the existing fully diluted share capital of Paddy Power plc and Betfair plc 2 As an overseas company under Chapter 11 of the Irish Listing Rules

4 Combination of Two Industry Leading Groups  Sportsbetting and online-led, multi-channel operator  Sportsbetting-led, online only operator  >2.4m online active customers 1  >1.7m active customers 1 Group up  >99% of revenues from regulated markets 2  86% of revenues from regulated markets 4 Overvi view  592 shops; stakes per shop >2x market average 3  No.1 global betting Exchange operator  Proprietary, exclusive gaming content  Strong technology heritage; >500 in-house developers 2015 Interim im Result ults (Aug 2015) Q1 FY16 Trading ing Update e (Aug 2015) Revenues ues EBITDA Revenues ues EBITDA +27% +19% +33% +15% £41.0m € 106.1m £135m € 528m Strong ng £117m £34.5m € 83.7m Momentum tum € 396m Post Post € 32m in £12.8m new taxes in new & product taxes 6 fees 5 H1 2014 H1 2015 H1 2014 H1 2015 Q1 FY15 Q1 FY16 Q1 FY15 Q1 FY16 1 Active customers are for 2014 for Paddy Power and FY15 for Betfair 2 H1 2015; regulated markets are UK, Ireland, Australia and Italy on a B2C basis and France, Canada and Slovakia on a B2B basis 3 Source: Irish Revenue Betting Duty tax returns; quoted UK competitors’ disclosures 4 Q1 FY16; regulated markets are UK, USA, Bulgaria, Denmark, Gibraltar, Ireland, Italy, Malta and Spain on a B2C basis and Australia on a B2B basis 5 Comprises € 25.0m from UK Point of Consumption Tax, € 3.5m from increased rates of Australian product fees, € 2.0m from increased Machine Gaming Duty rate and € 1.9m from introduction of VAT on eGaming with Irish customers. 6 Comprises UK Point of Consumption Tax

5 Merger Rationale Merger Would Create a Stronger Combined Group Greater r scale leads s to highe gher r ret eturns urns on invest stment ent across ss existing sting and new mark rkets ets Leading ng operati tiona nal capabilities s and talent nt Proprie rietar tary y techno hnology y and gaming ng content, nt, with h differe rent ntiated ed products oducts Signi nifi fica cant nt presenc sence in largest st regulat ated d mark rkets ets globally Strong, ng, distinctiv stinctive and comp mplem ementar entary y brands ds Signi nifi fica cant nt cost t synergi rgies Highl hly cash-gener enerati ative and str trong ng balance sheet et

6 Merger Rationale Greater Scale Drives Growth Techno nology gy & Online ne Scale Creati ting ng Value Mark rketi eting ng Scale 2 Online Revenues LTM 1 £m Bet365 1284 £0.2bn Invest in + 1002 product & Amaya 713 brand + William Hill 662 Better 507 Grow profit acquisition £0.2bn 495 & retention Bwin.Party 457 Unibet 315 = 888 286 Operational Grow gearing revenues Betsson 271 Proforma £0.4b 4bn Gala Coral 234 Spend Ladbrokes 222 Sky Bet 210 GVC 186 Greater r scale leads s to highe gher r ret eturns urns on product & marketing investment …….. …..and pays back across existing & new markets 1 Last twelve months. Source: Public filings. Amaya is H1 2015 grossed up for full year reflecting significant changes in business structure. Bet365 is the year ended March 2014, Betfair is 12 months to July 2015, Gala Coral is the four quarters ending 4 th July 2015; all others are 12 months to June 2015. For companies whose reporting currency is not GBP, revenues have been converted to GBP at the weighted average spot rate in the applicable period. 2 Proforma spend including people costs for 12 month periods ended 30 April 2015 for Betfair and 30 June 2015 for Paddy Power. Technology spend includes capital expenditure.

7 Merger Rationale Complementary Products & Capabilities Provide Revenue Opportunities No.1 Global Bet etti ting ng Exchange nge Propri riet etary y Gaming ng Product uct High Qualit lity Conten ent  >£50bn pa volume traded PP.com H1’15 monthly revenue per game  Truly differentiated product  Non- risk model: “ Winners are x2 welcome ”  Risk management benefits  Facilitates Sportsbook features (e.g. in-running horseracing, Third Party Proprietary Price Rush) Games Games Multi ti-cha channe nnel Pooled Capabiliti ties es & Talent % UK Online Sportsbook Market PP’s 592 shops have Spend from Multi-channel  Product development Customers 1 55% 55% disproportionate reach: Risk & Trading 42% 42%   Turnover 2x peers 2  Online marketing  c.50% of GB population within 5  Social media miles of a PP shop  Customer operations 2012 2014 1 Source: Kantar, H2GC and internal Paddy Power analysis 2 Source: Irish Revenue Betting Duty tax returns; quoted UK competitors’ disclosures

8 Merger Rationale Complementary Channel & Geographic Mix Revenue nue Mix 1 Global Online ne Mark rkets ets - Presenc ence in Largest st Regulat ated d Mark rkets ets Total Online Gambling Revenues 2 2014 (£bn) Paddy Power B2C licensed Retail & Other Online Phones Paddy Power B2B 14% 35% Betfair B2C licensed 86% 3.8 65% Regulated Online Regulated Online Paddy Power & Betfair B2C licensed Other markets 1.9 Retail & Phones B2B 1.3 B2B 20% Other 0.9 B2B 6% 0.9 Online 0.7 0.7 0.6 74% 0.5 0.4 0.4 0.4 0.3 Regulated Online UK USA Australia France Germany Italy Canada Sweden Ireland Finland Spain Norway Denmark 1 Paddy Power H1 2015; Betfair Q1 FY16 2 Source: H2GC; includes offshore online and lotteries

9 Merger Rationale Strong, Distinctive and Complementary European Brands Distincti stinctive e Brand nd Attri tribut utes es Limit mited ed Cust stome mer r Overlap UK regular ular online ine bettor ors brand d usage Brand d associat iation: ion: vs Playful • Only 3% of regular bettors bet with both brands Sociable 7% Stylish • 74% of regular bettors 1.8% don’t bet with either Cool 6% brand 1.6% Reliable 6% 74% Authentic 4% Serious Other online operators Knowledgeable 0% 10% 20% 30% 40% Source: Kantar Q3’14 to Q2’15, Betfair and Paddy Power analysis Source: Betfair internal analysis, July 2015; % of customers selecting descriptions of each brand Distincti stinctive e Cust stome mer r Percepti ptions ns Comp mpleme menta ntary y Sports ts Mix Custome tomer r perc rceiv eived ed relati tive e strengths gths Product range / market range Attractiveness of odds Relat ativ ive e strengt engths hs 66% Quality of mobile app 35% Foot otba ball ll 50% Common n streng ngths hs Football Look and feel of web site Racin ing 20% 15% Brand appeal Racing 14% Other Other Customer service Relat ativ ive e strengt engths hs Attractiveness of promotions % of gross win; paddypower.com and Betfair Sportsbook Source: SKP Partners, Betfair and Paddy Power analysis

10 Merger Rationale Significant Cost Synergies  Dual European brands but with more focused positioning Integ egrati ration n  Shared technology Princi nciples es  Shared operations  Shared corporate function Cost t Synergies rgies  Approximately £50m annualised on a pre-tax basis Imp mplem ementa entati tion on  One-off cash costs of approximately 1.3x recurring synergies Cost Timi ming ng  Full benefit of synergies to be achieved in year three post completion