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Christopher Bell Chief Executive Investor Day – 4 October 2006

Christopher Bell Chief Executive Investor Day – 4 October 2006. Team structure. Chris Bell Chief Executive. Mike Noble Company Secretary. Rosemary Thorne Finance. Julian Arlett Investor Relations. John O’Reilly Remote Gaming. Bryan Taker Human Resources. Mike O’Kane

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Christopher Bell Chief Executive Investor Day – 4 October 2006

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  1. Christopher BellChief ExecutiveInvestor Day – 4 October 2006

  2. Team structure Chris Bell Chief Executive Mike Noble Company Secretary Rosemary Thorne Finance Julian Arlett Investor Relations John O’Reilly Remote Gaming Bryan Taker Human Resources Mike O’Kane Trading Alan Ross Retail David Briggs eGaming Mike Nuttall Casinos Alex Kovach International Richard Ames UK Retail Steve Maxwell IT

  3. Objectives Meet with senior and operational management Workshops covering major strategic initiatives Appreciate how we will grow and stay ahead See and touch our leading edge technology

  4. Betting and Gaming sector Ongoing change: Regulation and legislation – UK / Europe / USA Technology Product and service innovation Internet a catalyst for change around the world

  5. Ladbrokes core activities Retail - Growth in UK from improvement of shop estate, technology, increased product range, and 2005 Gambling Act - Irish estate will continue to grow in size eGaming - Growth through product pipeline, localisation of product and geographic expansion Telephone - Growing core business, added value from High Rollers International - China and Russia important emerging markets - Italy – a significant opportunity - ‘Another Italy’ will realise in excess of the 3-5 year £20-40m EBIT target Casino - 17 new UK casinos – focus on selected locations

  6. Agenda Presentations Alan Ross - MD European Retail John O’Reilly - MD eGaming and Telephone Steve Maxwell - Chief Information Officer Workshops Richard Ames - Retail (MD UK Retail) David Briggs - eGaming (MD eGaming) Mike O’Kane - Trading (Trading Director) Alex Kovach - International (Development Director) Q&A session Visit to Paddington casino

  7. Alan RossManaging Director, European RetailRetail strategy

  8. Team structure Alan Ross Managing Director European Retail International Alex Kovach & Kevin Hopgood Casinos Mike Nuttall IT Steve Maxwell Ireland & Belgium UK Retail Richard Ames

  9. Key themes for Retail strategy • Drive Retail Gross Win • Control Cost Structures • Key areas of Focus • Customer • Competitiveness • Contribution • All actions are facilitated or underpinned by Technology

  10. Retail Gross Win

  11. Customer • Target biggest growth opportunity markets • 18-34 year olds • Local marketing • Modern Shops • New shop designs and formats • Evening opening • No Smoking Betting Shops • Gambling Act Opportunities • Product marketing / advertising

  12. Competitiveness • Differentiated Product Proposition • Ladbrokes Xtra • Xtra Screens, Xtra Content, Xtra Choice • V6 EPOS • International Pools • Enhanced Betting in Play proposition - Quickslips • FOBTS • Twin screen games, Casino grade note & coin mechanisms • Self Service Betting Terminals • Ladbrokes.com on a touch screen terminal

  13. Contribution • Driving Gross Win • Increase customer loyalty • Increase betting opportunities • Controlling Costs • Continuing focus on company cost reduction programmes • Efficiencies in shop and field management processes • Continuing focus on individual shop contribution

  14. Ireland • Increase size of shop estate • Eire • Northern Ireland • Like for like Gross Win increase in current estate • Introduction of Ladbrokes Xtra Gold Service and V6 EPOS • FOBT opportunity

  15. International Retail • Focus on largest regional markets • Focus on core countries within regions • Products • Fixed odds betting • Existing remote products • Poker, casino, games • Sports lotteries • Wherever possible, enter markets with multiple channels • Retail, Internet, Franchise (Sportsbook in casino)

  16. John O’ReillyManaging Director Ladbrokes RemoteeGaming strategy

  17. Team structure John O’Reilly Managing Director Remote Telephone Betting Hugh Carr Vernons Steve Roberts Finance Jo Boydell PR / PA Ciaran O’Brien Compliance Sue Harley International Business Dev. Alex Kovach Ladbrokes International Jim Falconer eGaming David Briggs IT Steve Maxwell

  18. Through rapid innovation (e.g. single wallet, best of breed banking solutions etc) an overall operating loss of £10m in 2000 was converted to a profit of £41.4m in 2005 (CAGR of 90% since 2001) • Operating profit of £19.8m in H1 2006 eGaming Gross Win

  19. Ladbrokes eGaming currently operates: • 18 currencies • 12 languages • 21 payment methods, with single wallet • 200+ staff in UK and Gibraltar • Growth through product and market development • Online sportsbook • 200+ casino games • 46 ‘soft’ games • Poker Registrations

  20. Product development Feb 2000 Ladbrokes.com Mar 2000 Interactive TV Service Oct 2000 Ladbrokescasino.com Nov 2000 Ladbrokes.com betting portal July 2001 Balls! Feb 2002 Sky iTV Service May 2002 Ladbrokespoker.com May 2003 Rio Bay Casino Nov 2003 One Account facility rolled out Dec 2003 Ladbrokesgames.com Dec 2003 Multi table Poker Nov 2004 Affiliate programme Jan 2005 Games Roulette Feb 2005 Live Dealer Casino Mar 2005 ATR Video streaming Aug 2005 Ladbrokes Financials Nov 2005 ‘One-click’ Casino Jan 2006 Mahjong April 2006 Bingo May 2006 Backgammon July 2006 ‘Deal or No Deal!’ Sep 2006 Pontoon bet Coming Soon New Sportsbook Multilingual Poker Next generation Poker Multi-Player / P2P Casino DiTV roulette

  21. Market development • Far East, Scandinavia, Mediterranean countries, Africa (selected countries) • Localised products, services and A&P investment • Pressing for free movement of services (and freedom of establishment) in Europe • Legal Update – Netherlands, Germany, Norway, Sweden, Denmark, Italy • Impact of US Port Security Bill

  22. Growth prospects • Strong management team – UK and International • World’s biggest (non-US) sportsbook • International betting in play • Single account across Telephone / Interactive / Retail • Advanced Casino software, rapid game development, localised services, affiliate and cross-sell programmes • Next generation Poker software • P2P and branded (licensed) Games • New product and channel developments

  23. Steve MaxwellChief Information OfficerLadbrokes’ technology core

  24. Business Systems Environment

  25. Business Applications Architecture • Insourced strategy and management • Insourced project management • Insourced technology services and operations (IS, Engineering, …) • Outsourced software development (leveraging specialist expertise) • Contract with key technology suppliers qualified to partner with Ladbrokes

  26. 1st Class Technology Partners Infrastructure Application Software Technical Software Servers Servers Betting Sun Dell HP Alphameric Orbis Sun Microsoft EMC IBM Oracle MS MGS Cyberview Orbis Gaming Storage Data Mgmt Cisco BT Cisco Network Network Alphameric Various Content Internap BT MCI Gibtel Bandwidth Datacash PSPs Banks Payments

  27. Retail Betting - Russian Casino Model EPOS Software Players place bets by calling over their bet, and their receipt prints a bar-coded receipt. Payout of winning bets is by scanning the players unique bar coded receipt……multi-language, multi-channel, multi-payment methods Screen Systems The content delivery systems enable distribution of screen content across the screen systems which are installed within the gaming venue… multi-. Handheld Terminals Handheld terminals enable cashiers to accept bets directly from players on the gaming floor delivering sports betting opportunities to customers on the casino floor via the casino’s promotional staff

  28. ‘International’ Retail Betting Model Content Presentation Online Mobile Back Office POS Betting Shops, Casinos, Hospitality…

  29. Retail Betting Model Betting Shops with Mobile and Internet Gaming

  30. Richard AmesManaging Director UK RetailLadbrokes Retail

  31. Notes

  32. Notes

  33. Notes

  34. David BriggsManaging Director eGamingThe Ladbrokes eGaming experience

  35. Team structure David Briggs Managing Director eGaming Product Units Marketing Services International Development Finance, HR, Legal… Systems

  36. How does the structure work? HR, Finance, Compliance International Development Product Business Units Marketing Services Systems & Projects

  37. Multi-product offering, but single product focus Sportsbook Poker Casino Games

  38. Interactive breakout session • Illustration of the Ladbrokes Sportsbook, Casino, Poker and Games experience • Making technology work for the customer • The international dimension • Innovation at the core of what we do

  39. Mike O’KaneTrading DirectorLadbrokes’ trading strategy

  40. Trading Strategy • Key element of the business: • Market making • Liability management • Client service principles • Price competition • Department structure reflects product and business profile • Horseracing & greyhounds • Sports

  41. Trading Structure Mike O’Kane Trading Director Horse & Greyhound Product Director Sports Product Director Trading Development Manager Racecourse Liability Manager • Liability Management H/D All Channels • H/D Odds Compilation • Bet Acceptance, Retail, Net, Phone, Eire, Vernons • Odds Compilation and Liability Management • Sports • Football • European • Market Development • Trading Analysis • Performance Reporting • Systems Development • Customer Management • Racecourse Representation • Hedging Activity

  42. Trading Strategy • Strong product range across all channels: • Further development of Betting In Play to cover all live television sport • European focus across all sports with continued expansion of sports portfolio to match geographical footprint of customers • All UK and Ireland horseracing priced every day

  43. Trading Strategy • Liability Management: • Systems based market management using EPOS and Telephone / Internet • Customer management process identifies opportunities to grow business as well as managing risk • Hedging into racecourse and exchanges • Visit to Trading floor

  44. Alex KovachInternational Business Development DirectorLadbrokes’ International strategy

  45. Estimated regional market size Total amount gambled 2005 (US$Bn) Source: GBGC

  46. Our International growth opportunity • Faced with competition from illegal and online bookmakers, numerous international governments are reviewing sportsbetting as a revenue generator, controlled by the state or the licensed lottery operator • The opportunity for Ladbrokes to export its core fixed odds betting capability is often to work with state governments / monopoly lottery operators

  47. International strategy – Products & Channels • Fixed odds betting • Existing remote products • Poker • Casino • Games • Sports lotteries • Exclude: • Offline casinos • Slots • Racetracks • Where possible enter markets with multiple channels • Retail • Internet • Franchise (Sportsbook in Casino)

  48. International strategy – Geography • Focus on largest regional markets • Europe • Asia • Focus on core countries within regions • Ambition • Market share 1st / 2nd / 3rd • Investment • M&A and JV opportunities • Build brand through marketing investment • Invest in building relations and a reputation with governments worldwide • Product • Localise • Exclude: • Africa • South America • Middle East

  49. European market map 11.5 Poland Italy Easier Slovakia 10.5 Russia Belgium Ireland Nordics Spain 9.5 Greece Czech E. Europe Hungary Ease of entry 8.5 Turkey Portugal France 7.5 Netherlands Austria 6.5 Harder Germany 5.5 20,000,000,000 0 5,000,000,000 10,000,000,000 15,000,000,000 Size of Market (US$) Size of bubble indicates gambling spend per person, Source: CIA website, 2006 GBGC

  50. Christopher BellChief Executive

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