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22 February 2007

Sir Ian Robinson Chairman. 22 February 2007. Rosemary Thorne Group Finance Director. Summary of performance. Year to 31 December. 2006 £m 268.1 (45.6) 24.0 246.5 17.8% 310.5 22.0p. 2005 £m 249.0 (16.9) - 232.1 17.6% 286.2 12.0p. Variance B(W)% 7.7

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22 February 2007

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  1. Sir Ian Robinson Chairman 22 February 2007

  2. Rosemary Thorne Group Finance Director

  3. Summary of performance Year to 31 December 2006£m 268.1 (45.6) 24.0 246.5 17.8% 310.5 22.0p 2005£m 249.0 (16.9) - 232.1 17.6% 286.2 12.0p Variance B(W)% 7.7 (169.8) - 6.2 8.5 N/A Continuing operations Operating profit(1) Net finance costs (1) Interest income on Hotels sale proceeds Profit before tax(1) Effective tax rate(1) EBITDA(1) EPS(1) (1) Before non-trading items

  4. Betting and Gaming Gross Win Operating Profit 2006£m 195.4 17.3 47.0 17.7 5.9 (15.2) 268.1 2005£m 207.8 11.7 41.4 (0.1) 5.8 (17.6) 249.0 VarianceB(W)% (6.0%) 47.9% 13.5% n/a 1.7% 13.6% 7.7% 2006£m 715.8 84.0 144.4 46.1 18.6 - 1,008.9 2005£m 683.6 71.0 123.1 21.0 19.3 - 918.0 VarianceB(W)% 4.7% 18.3% 17.3% 119.5% (3.6)% 9.9% Year to 31 December UK Retail Ireland & Belgium eGaming Telephone Betting Vernons Central Costs Total

  5. UK Retail – Results 2006 £m 510.5 205.3 715.8 (27.9) 687.9 (75.0) (183.7) (89.1) (58.6) (86.1) 195.4 2005 £m 484.5 199.1 683.6 (2.0) 681.6 (96.9) (171.4) (78.2) (53.4) (73.9) 207.8 Variance B(W)% 5.4 3.1 4.7 0.9 22.6 (7.2) (13.9) (9.7) (16.5) (6.0) Year to 31 December OTC gross win Machines gross win Total gross win Adjustments to gross win (1) Net revenue Gross profits tax Staff costs Property costs (2) Content costs (3) Other costs (inc. depn and FOBT tax) (4) Operating profit (1) Fair value adjustments, VAT, associate income (2) Rent, rates and utilities (3) Pictures, data, levy, Sky (4) Depreciation = £34.7m (2005: £29.8m), FOBT tax = £5.6m (2005:£nil)

  6. UK Retail – KPIs Variance B(W)% (0.9) 5.3 (1.3) 20060.8% 1.1% 0.1% 16.9% 4% 2.9% £8.39 6,743 £538 20050.4% (2.3)% 7.7% 16.1% 5% 7.3% £8.47 6,403 £545 Year to 31 December Like for like Total gross win growth Like for like OTC gross win growth Like for like machines gross win growth OTC margin Like for like total costs (1) increase Like for like shop staff costs increase Stake per slip (2) Average number of FOBTs Average weekly gross win per FOBT (1) Excludes VAT, Gross profits tax and FOBT tax (2) Slips exclude machines

  7. Ireland 2006£m 48.9 (0.4) 48.5 (5.1) (29.1) 14.3 195 2005£m 34.3 (0.2) 34.1 (3.8) (23.4) 6.9 148 VarianceB(W)% 42.6 (24.4) 107.2 31.8 Year to 31 December Gross win Fair value adjustments Net revenue Duty / Gross profits tax Other costs Operating profit Shop numbers

  8. eGaming – Gross win 2006£m 46.4 40.3 44.7 13.0 144.4 2005£m 33.0 41.4 39.1 9.6 123.1 VarianceB(W)% 40.6 (2.7) 14.3 35.4 17.3 Year to 31 December Sportsbook Poker Casino Games Gross Win

  9. eGaming – Results %age of net revenue 5.1 1.6 8.2 21.6 12.9 5.8 9.7 35.0 %age of net revenue 5.0 1.3 8.8 23.1 12.2 4.6 9.4 35.6 Year to 31 December 2006£m 144.4 (10.3) 134.1 (6.9) (2.1) (11.0) (29.0) (17.3) (7.8) (13.0) 47.0 2005£m 123.1 (6.9) 116.2 (5.8) (1.5) (10.2) (26.9) (14.2) (5.3) (10.9) 41.4 VarianceB(W)% 17.3 15.4 13.5 Gross win Fair value adjustments (1) Net revenue Gross profits tax Levy Staff costs Software & geographical partners (2) Marketing (inc. affiliates) Banking and chargebacks Other costs (inc. depn) Operating profit (1) Adjustments for free bets, promotions and bonuses (2) Payments to third party software and platform providers and geographical partners

  10. eGaming – KPIs 2005435 247 £85 £62 VarianceB(W)% 26.2 22.7 (7.1) 9.7 Year to 31 December 2006549 303 £91 £56 Unique active players (000s) (1) Real money sign-ups (000s) (2) Cost per acquisition (3) Adjusted cost per acquisition (4) (1) A player who contributed to rake and/or placed a wager during the period (2) A new player who has registered and deposited funds during the period (3) Total of all online and offline marketing spend and affiliate expenses divided by the aggregate real money sign-ups (4) Total of all online and offline marketing spend less any CRM spend divided by the total real money sign-ups

  11. Telephone Betting – Results %age of net revenue 25.0 9.8 19.3 %age of net revenue 26.9 10.0 14.6 Year to 31 December 2006£m 33.9 (0.3) 33.6 12.2 45.8 (7.3) (2.6) (8.4) (3.3) (6.5) 17.7 2005£m 30.5 (0.4) 30.1 (9.5) 20.6 (3.1) (2.1) (8.1) (3.0) (4.4) (0.1) VarianceB(W)% 11.1 11.6 122.3 Gross win exc. High Rollers Fair value adjustments Net revenue exc. High Rollers High Rollers’ net revenue Net revenue Gross profits tax Levy Staff costs Direct operating costs Other costs (inc. marketing and depn) Operating profit (1) Direct operating costs include telephone, bandwidth and banking costs

  12. Telephone Betting – KPIs Year to 31 December VarianceB(W)% 7.4 6.3 (0.7) 2.5 20057,290 63p 7.3% 125.3 204 20067,832 59p 7.2% 124.4 209 No. of calls (000s) (1) Agent cost per call Gross win margin (exc. High Rollers) Unique active players (000s) (2) Average monthly active player days (000s) (1) Number of calls (excluding customer service calls) (2) A player who has placed a wager during the period

  13. Analysis of 2006 capital expenditure 2006£m38.8 15.7 6.3 3.7 17.8 82.3 5.1 87.4 - 32.4 119.8 2005£m37.7 - 4.1 3.2 11.1 56.1 4.1 60.2 80.3 44.5 185.0 Year to 31 December CapexUK Development (1) FOBTs and EPOS Xtra Ireland Other (including IT: £8.0m; 2005 - £3.1m) Retail eGaming / Telephone Betting Total AcquisitionsJack Brown Other (UK: £2.1m, Ireland: £25.6m, Italy: £4.7m) (1) Development = new licences, relocations and refurbishments (inc. Jack Brown)

  14. Specific Items FY£m (12) (9) (8) (3) H1£m (13) (5) (7) (1) 2006 gross win impacts High Rollers World Cup (1) 2007 incremental costs FOBT tax (2) Gambling Commission (1) Assumes 50% substitution (2) The incremental cost expected in 2007 over 2006

  15. Cash Flow 2006£m 264.7 (53.5) (119.8) 91.4 3,241.4 (4,208.4) 344.5 (19.9) (551.0) (397.9) (948.9) 3.1 Year to 31 December Cash generated by operations Interest and tax PPE capital spend (1) Intangibles Acquired subsidiaries Total capital spend (1) Cash flow after interest, tax and capital Hotels disposal proceeds Dividends paid Proceeds from issue of shares, convertibles and options Exchange and other movements Net borrowings movement Opening net borrowings Closing net borrowings Net debt to EBITDA ratio for continuing operations (84.8) (9.0) (26.0) (1) Continuing operations only

  16. Christopher Bell Chief Executive

  17. Overview • Good World Cup • Continued eGaming growth • Successful year with Telephone High Rollers

  18. Agenda • 2006 performance • Strategic overview, including: • International progress • Casino ambitions • Current trading

  19. UK Retail Gross Win Margin %

  20. Retail Estate Number of shops ’06 ’07 pipeline Acquisitions 44 9 New licences 27 33 Relocations 91 42 Extensions 25 11 Refurbishments 67 17 Total 254 112

  21. Shops • New Dual screen FOBT estate • EPOS renewal completed by April • Winter evening opening from September • £500 Jackpot machines from September • Self service terminals being tested • Largest retail estate in Ireland • No negative impact from Scottish smoking ban

  22. eGaming • Continued organic growth • Poker competitive but improvement in Q4 • Good year for Casino and Games • Strong Sportsbook growth • Growing global market enabled by broadband • Turnaround for Telephone Betting

  23. Strategy • Targeted shop investment • Online expansion • International expansion • New UK Casino operation

  24. International • Italy • 3 shops at year end (now 4 shops) • 58 sports and 33 horseracing licences • 51 in shop/café-bar kiosks • eGaming and Telephone Betting licences • JV with Pianeta Scommesse • 200 outlets in the next 3 years

  25. International • Spain • Madrid first to regulate fixed odds betting • Virtually a green field for fixed odds betting • Large existing lottery, bingo, casino and slots market • JV with market leading Cirsa Slot

  26. International • Asia • Vietnam • First time regulation of sports betting expected in Q2 • China • Happy Pool single match betting shops • Shops in three provinces • JV with Asia Gaming Technologies • Scandinavia • Acquisition of Sponsio

  27. Casinos • Paddington Casino and Sports Bar • Targeting to operate a number of the 17 new casinos • Will bid for Manchester

  28. Summary • Strong, highly motivated company • World class brand, people and technology • Continually evolving the Ladbrokes business • Maintain future sustainability and grow earnings

  29. Current Trading • Trading satisfactory to date • Good football results • More race cancellations than 2006 • eGaming performing strongly • Telephone Betting in line with our expectations • International plans on track, positive contribution in 2008

  30. Q&As

  31. Appendix

  32. eGaming – Net revenue 2006 £m 2005 £m Variance % B(W) Year to 31 December Sportsbook 45.5 32.4 40.4 Poker 35.0 39.2 (10.7) Casino 41.0 35.2 16.5 Games 12.6 9.4 34.0 Net revenue134.1 116.2 15.4

  33. eGaming – KPIs Variance % B(W) 2006 2005 Year to 31 December Sportsbook Gross win margin 6.4% 6.8% Unique active players (000s) 398 305 30.5 Average monthly active player days (000s) 610 451 35.3 Yield per unique active player (£) (1) 114 106 7.5 Poker Unique active players (000s) 154 128 20.3 Average monthly active player days (000s) 461 411 12.2 Yield per unique active player (£) (1) 227 306 (25.8) Casino Unique active players (000s) 90 77 16.9 Average monthly active player days (000s) 72 64 12.5 Yield per unique active player (£) (1) 454 455 (0.2) Games Unique active players (000s) 126 78 61.5 Average monthly active player days (000s) 99 54 83.3 Yield per unique active player (£) (1) 100 120 (16.7) (1) Net revenue per unique active player for the period

  34. Belgium Year to 31 December 2006 2005 Variance £m £m B(W)% Gross win 35.1 36.7 (4.4) Duty / Gross profits tax (13.3) (13.4) Other costs (18.8) (18.5) (1.6) Operating profit 3.0 4.8 (37.5) Shop numbers 286 301 (5.0)

  35. Vernons 2006 £m 2005 £m Variance B(W)% Year to 31 December Gross win / Net revenue 18.6 19.3 (3.6) Duty / Gross profits tax (2.6) (2.8) Other costs (10.1) (10.7) 5.6 Operating profit5.9 5.8 1.7 Customer recruitment (000’s): New customers 53 71 (25.4) Reactivated customers 65 68 (4.4)

  36. Taxation £m Normal tax charge: Tax charge at 17.8% on continuing operations profit before tax and non-trading items* Tax charge on discontinued operations profit before tax and non-trading items Tax charge for Total Group Non-trading tax charge: Tax charge on non-trading items: Total tax charge *Include prior year settlement with HMRC credit 43.9 3.8 47.7 4.9 52.6

  37. Cash proceeds(1) Assets disposed Cost of disposal Foreign exchange Profit on disposal Profit on disposal of non- current assets Disposal of Hotels £m 3,241 (2,766) (95) 4 384 28 412 (1) £m 3,298 as announced on 23 February 2006 (57) debt and working capital adjustment 3,241

  38. Specific Items – effect on operating profit FY£m (10) (7) (8) (3) H1£m (11) (4) (7) (1) 2006 operating profit impacts High Rollers World Cup (1) 2007 incremental costs FOBT tax (2) Gambling Commission (1) Assumes 50% substitution (2) The incremental cost expected in 2007 over 2006

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