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2005 Preliminary Results 23 February 2006

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Title: 2005 Preliminary Results 23 February 2006


1
2005 Preliminary Results 23 February 2006
2
Sir Ian Robinson Chairman
3
David Michels Group Chief Executive
4
Brian Wallace Deputy Group Chief Executive and
Finance Director
5
Summary of Performance
Year to 31 December
2005 m
2004 m
Variance B(W)
Continuing Operations
Betting 266.6 272.8 (2.3) Central costs and
income (18.1) (14.1) (28.4) Operating profit (1)
248.5 258.7 (3.9) Finance costs
(16.9) (34.1) 50.4 Profit before tax (1)
231.6 224.6 3.1 Hotels (1) (2) 187.5
159.0 17.9 Finance costs (5.2) (6.9) 24.6
Profit before tax (1) 182.3 152.1 19.9
413.9 376.7 9.9
Discontinued Operations
Group profit before tax
(1) Before non-trading items
6
Summary of Performance
Year to 31 December
Variance B(W)
2005
2004
Group effective tax rate 15.0 15.5 EPS
Continuing Operations (1) 11.9p 11.5p 3.5 EPS
Total Group (1) 22.0p 20.2p 8.9 Net
Debt 397.9m 971.9m
(1) Before non-trading items
7
Hotels Worldwide Revpar 2005 vs 2004
Like for Like Hotels, Constant Currencies
March and April results have been combined due to
the timing of Easter.
8
Hotels Summary of Results
2005
2004
Revenue m
Revenue m
Profit m
Profit m
UK 630.9 81.3 655.1 88.1 Europe
Africa 1,249.3 82.7 1,138.3 58.2 MEAP 726.9 27.0 6
52.7 18.5 Americas 263.6 24.0 236.0 18.9 LivingWel
l 52.7 4.2 50.0 6.3 2,932.4 219.2 2,732.1 190.0 C
entral Costs 1.7 (31.7) 0.4 (31.0) 2,925.1 187.5
2,732.5 159.0
9
Hilton Group plc Cash Flow
2004 m
2005 m
Year to 31 December
Cash generated by operations 553.4 549.6 Interest
, tax and dividends paid (251.7) (243.1) Cash
flow before capex 301.7 306.5 PPE expenditure
Betting (66.6) (47.3) PPE expenditure
Hotels (130.3) (127.6) Intangible additions
(1) (45.4) (40.7) Acquisitions (2) (78.0) - Cash
flow after capex (18.6) 90.9 Disposals (3)
540.9 40.1 Exchange and other movements
(4) 51.7 44.8 Net borrowings movement 574.0 175.8
Opening net borrowings (971.9) (1,147.7) Closing
net borrowings (397.9) (971.9)
  • Includes 38.0m licence additions (2004 23.2m)
  • Includes 2005 acquisition of Jack Brown for
    76.5m
  • Includes 537.5m on hotel disposals in 2005
    (2004 38.0m)
  • (4) Includes 5.8m adverse exchange (2004 17.8m
    favourable) and 38.1m inflow from share capital
    issue (2004 7.8m)

10
Cash Return
m
Hotels disposal proceeds 3,298.4 Cash float
adjustment (30.0) Pension contribution (55.5) Ot
her costs and income (55.6) Incremental debt
raised 698.4 Cash return to shareholders (1)
3,855.7 Dividend per share (2) 2.40
  1. Based upon current issued share capital.
    Assuming full conversion of the Groups
    convertible bonds and the exercise of all
    outstanding employee share options, the aggregate
    amount of the return of value to shareholders
    will amount to approximately 4,227 million
  2. Comprises proposed final dividend of 6.6 pence
    and proposed special dividend of 233.4 pence

11
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12
Rosemary Thorne Finance Director
13
Betting and Gaming
Gross Win
Operating Profit
2005 m
2005 m
2004 m
Year to 31 December
2004 m
UK Retail 683.6 652.5 207.8 214.7 Ireland
Belgium 71.0 69.0 11.7 13.2 eGaming 123.1
89.3 41.4 21.3 Telephone Betting 21.0 46.1
(0.1) 17.8 Vernons 19.3 20.2 5.8
5.8 Betting and Gaming 918.0 877.1 266.6 272.8
14
UK Retail - Results
2005 m
2004 m
Variance B(W)
Year to 31 December
OTC gross win 484.5 474.7 2.1 Machines gross
win 199.1 177.8 12.0 Total gross win 683.6
652.5 4.8 VAT / Gross profits tax (101.3)
(96.4) (5.1) Staff costs (171.4) (156.3) (9.7) Pr
operty costs (1) (78.2) (68.6) (14.0) Content
costs (2) (53.4) (48.0) (11.3) Other costs (inc.
depn) (3) (71.5) (68.5) (4.4) Operating
profit 207.8 214.7 (3.2)
(1) Rent, rates and utilities
(2) Pictures, data, levy, Sky
(3) Depreciation 29.8m (2004 28.2m)
15
UK Retail - KPIs
Variance B(W)
2005
2004
Year to 31 December
Like for like total gross win growth 0.4 12.0 Li
ke for like OTC gross win growth (2.3) 4.4 Like
for like machines gross win growth 7.7 39.3 OTC
margin 16.1 16.2 Like for like total costs (1)
increase 5.2 6.1 Like for like shop staff costs
increase 7.3 15.4 Stake per slip (2) 8.47
8.47 - Average number of FOBTs
6,403 5,146 24.4 Average weekly
gross win per FOBT 545
584 (6.7)
(1) Excludes VAT and Gross profits tax
(2) Slips exclude machines
16
eGaming - Gross win
2005 m
2004 m
Variance B(W)
Year to 31 December
Sportsbook 33.0 26.5 25 Poker 41.4 23.1 79 Casino
39.1 33.6 16 Games 9.6 6.1 57 Gross win 123.1
89.3 38
17
eGaming - Results
2005 m
2004 m
Variance B(W)
Year to 31 December
age of Gross win
age of Gross win
Gross win 123.1 89.3 38 Gross profits
tax (5.8) 4.7 (4.9) 5.5 Levy (1.5) 1.2 (1.6) 1.8
Staff costs (10.2) 8.3 (7.7) 8.6 (32) Software
geographical partners (1) (26.9) 21.9 (18.0) 20.2
(49) Marketing (inc. affiliates) (21.1) 17.1 (21.6
) 24.2 Banking chargebacks (5.3) 4.3 (3.0) 3.4 (
77) Other costs (inc. depn) (10.9) 8.9 (11.2)
12.5 Operating profit 41.4 33.6 21.3 23.9 94
(1) Payments to third party software and
platform providers and geographical partners
18
Telephone Betting - Results
2005 m
2004 m
Variance B(W)
Year to 31 December
Gross win exc. High Rollers 30.5 39.8 (23.4) High
Rollers gross win (9.5) 6.3 Total gross win
21.0 46.1 (54.4) Gross profits tax (3.1)
(6.8) Levy (2.1) (3.5) Staff costs (8.1) (8.6) 5
.8 Direct operating costs (1) (3.0) (3.0) Other
costs (inc. depn) (4.8) (6.4) Operating
profit (0.1) 17.8
(1) Direct operating costs include telephone,
bandwidth and banking costs
19
Telephone Betting - KPIs
Variance B(W)
2005
2004
Year to 31 December
No. of calls (000s) (1) 7,290 6,659 9.5 Agent
cost per call 63p 69p 8.7 Margin (exc. High
Rollers) 7.3 8.7 Active customers (000s)
(2) 125.3 125.2 0.1
  1. Numbers of calls (excluding customer service
    calls)
  2. Active customers are those who placed a bet
    during the period

20
Analysis of 2005 Capital Expenditure
2005 m
2004 m
Capex UK Development (1) 37.7 16.2 Xtra 4.1 - Ire
land 3.2 5.0 Other (including IT 3.1m, 2004
9.5m FOBTs) 11.1 24.7 Retail 56.1 45.9 eGaming /
Telephone betting 4.1 6.3 Total (Operating
assets 54.9m, intangibles 5.3m) 60.2 52.2 Acq
uisitions Jack Brown 80.3 - Other (UK 43.1m,
Ireland 1.4m) 44.5 24.7 124.8 24.7
(1) Development new licences, relocations and
refurbishments
21
Capital Structure
m
Opening adjusted net debt at 1 January 2006
(397.9) Incremental debt raised for return to
shareholders (698.4) Pro forma adjusted net
debt following cash return (1) (2)
(1,096.3) Ongoing target net debt to EBITDA
range of 3.5 to 3.75 times Group Defined Benefit
Pension scheme deficit of nil
(1) Estimated net debt immediately following cash
return to shareholders and transaction costs (2)
Assumes no conversion of convertible bond or
outstanding share options
22
Pro Forma Ladbrokes PLC
m
Year to 31 December
Betting Gaming (2005 Result) 266.6 Proforma
Central Costs (1) (15.0) Operating Profit
251.6 Proforma Finance Costs
(2) (57.0) Profit Before Tax (3) 194.6 Estima
ted ongoing effective tax rate of 25 -
30 Estimated dividend cover of 2.0x
  1. 2006 estimate
  2. Based upon estimated net debt of 1.1 billion,
    GBP LIBOR rates at 51 bps spread, excludes IFRS
    pension interest. Refinancing the 300m
    convertible bond with bank debt will increase
    this charge by approximately 6m
  3. Excludes non-trading items and results of
    discontinued activities

23
Christopher Bell Chief Executive Officer
24
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25
UK Retail Gross Win Margin
2005 2005 2005 2005 2005 2004 2003 02-04 3 year Av.
Q4 Q3 Q2 Q1 2005 2004 2003 02-04 3 year Av.
Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2
Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5
OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3
Horse overround per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75
1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4
margin lost at Aintree / Epsom Derby 0.6 - - n/a
all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown
26
UK Retail Gross Win Margin
2005 2005 2005 2005 2005 2004 2003 02-04 3 year Av.
Q4 Q3 Q2 Q1 2005 2004 2003 02-04 3 year Av.
Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2
Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5
OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3
Horse overround per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75
1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4
margin lost at Aintree / Epsom Derby 0.6 - - n/a
all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown
27
UK Retail Gross Win Margin
2005 2005 2005 2005 2005 2004 2003 02-04 3 year Av.
Q4 Q3 Q2 Q1 2005 2004 2003 02-04 3 year Av.
Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2
Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5
OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3
Horse overround per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75
1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4
margin lost at Aintree / Epsom Derby 0.6 - - n/a
all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown
28
UK Retail Gross Win Margin
2005 2005 2005 2005 2005 2004 2003 02-04 3 year Av.
Q4 Q3 Q2 Q1 2005 2004 2003 02-04 3 year Av.
Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2
Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5
OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3
Horse overround per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75
1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4
margin lost at Aintree / Epsom Derby 0.6 - - n/a
all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown all figures exclude Jack Brown
29
(No Transcript)
30
Shop Development UK Ireland
  • No. Shops 05 06 pipeline
  • Acquisitions 191 ?
  • New licences 30 43
  • Relocations 81 84
  • Extensions 12 28
  • Refurbishments 178 55
  • Total 492 210

31
eGaming
Year to 31 December 2005 2005 2004 Variance B(W)
Average monthly active player days(000s) Average monthly active player days(000s) Average monthly active player days(000s) Average monthly active player days(000s) Average monthly active player days(000s)
- Sportsbook - Sportsbook 471 417 13
- Poker - Poker 411 195 111
- Casino - Casino 64 56 14
- Games - Games 54 39 38
Average weekly Poker rake Average weekly Poker rake 793k 443k 79
Average weekly Casino drop Average weekly Casino drop 749k 644k 16
Sportsbook gross win Sportsbook gross win 33.0m 26.5m 25
Gross win conversion Gross win conversion 33.6 23.9
32
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33
Taxation and Regulation
  • FOBTs
  • Amusement Machine Licence Duty
  • Gaming Machines From Autumn 2007
  • REMOTE GAMING
  • Regulation
  • Taxation
  • 500 Jackpot Machines from Autumn 2007

34
Outlook
35
Our Future
  • International experience in 200 countries, 18
    currencies, 12 languages
  • Ladbrokes, the strongest brand
  • Management skills and people
  • Huge retail footprint 2,583 shops
  • Leading edge technology

36
(No Transcript)
37
Casino Developments
  • 17 New Casinos 2005 Act
  • Ladbrokes Casino and Sports Bar
  • Ladbrokes Palace of Light, Blackpool

38
Brand Awareness - Sweden
39
(No Transcript)
40
Our Future
  • Strong International brand
  • Depth and breadth of management
  • Clear focused strategy
  • Expansion
  • Cash generative

41
2005 Preliminary Results 23 February 2006
42
Appendix
43
Taxation
m
Normal tax charge Tax charge at 15 on Group
profit before tax and non-trading items
62.1 Allocated Continuing Operations 40.9 Disco
ntinued Operations 21.2 Non-trading tax
charge Tax charge on non-trading items
0.9 Total tax charge 63.0
44
Hotels - Like for Like Profit
Year to 31 December
2005 m
2004 m
Variance B(W)
Reported profit (1) 187.5 171.3 9.5 IFRS
adjustment to 2004 numbers - (12.3) Revised
profit 187.5 159.0 17.9 Non comparable entities
at constant currencies (9.6) (10.0) St Lucia
Termination payment (2.3) - Foreign exchange
(0.9) - Like for like profit (1) 174.7
149.0 17.3
(1) Before goodwill amortisation and exceptional
items
45
Hotels - Cost Management
Like for Like Hotels, Constant Currencies

Hotels Increasing revenue m
Hotels Declining revenue m
LivingWell Subs m
Year to 31 December
Total Hilton m
Revenue increase / (decrease) 155.3 189.9 (33.9) (
0.7) GOP increase / (decrease)(1) 83.3 109.9 (23.0
) (3.6) Incremental conversion 53.6 57.9 32.2
Rental Owners return (49.1) Property taxes /
rates (4.7) Other (3.8) Operating profit increase
(1) 25.7
(1) Before non-trading items
46
Europe (Hilton brand) - Revpar By Country
Like for Like Hotels, Constant Currencies
9.2
6.4
1.2
2004
2004
2004
2005
2005
2005
47
Scandic Revpar 2005 vs 2004
Like for Like Hotels, Constant Currencies,
Scandic Acquired Revpar growth 2005
vs 2004
March and April results have been combined due to
the timing of Easter.
48
Worldwide Revpar by Ownership Type
Like for Like Hotels, Constant Currencies
Revpar growth 2005 vs 2004
4.4
8.1
8.4
2004
2004
2004
2005
2005
2005
49
Yield Premium - Hilton vs London Market
Cumulative Year to Date Revpar Premium
Market Source PKF Hotel Consultancy
Services Market is 8 competitor chains - Marriott
International, InterContinental, De Vere,
Millennium Copthorne, Thistle, Le Meridien,
Whitbread, Sheraton
50
Yield Premium - Hilton vs UK Provincial Market
Cumulative Year to Date Revpar Premium
Market Source PKF Hotel Consultancy
Services Market is 8 competitor chains - Marriott
International, InterContinental, De Vere,
Millennium Copthorne, Thistle, Le Meridien,
Whitbread, Sheraton
51
Hotels - Analysis by Contract Type
Fixed Lease
Contingent Lease
Owned
Total
Year to 31 December
Managed
LivingWell
Franchise
No. of hotels 41 39 154 127 29 n/a 390 No. of
rooms 13,475 8,919 33,538 37,052 8,807 n/a 101,791
m
Revenue 541.8 277.4 912.9 1,133.1 5.5 52.7 2,923.4
Gross operating profit 171.1 104.1 317.2 429.8 5
.5 18.2 1,045.9 Less Rental/owners
return (8.9) (65.9) (197.6) (382.6) - (4.3) (659.3
) Depreciation (39.6) (19.7) (28.4) - - (5.0
) (92.7) Other costs/income (25.2) (5.9) (37
.4) - (1.5) (4.7) (74.7) 2005 Profit 97.4 12.6 53.
8 47.2 4.0 4.2 219.2 2004 Profit 99.7 6.6 36.5 38
.0 2.7 6.3 190.0
52
Geographical Revpar by Ownership Type
Like for Like Hotels, Constant Currencies
Managed
Owned Fixed Lease
Contingent Lease
UK 1.4 1.5 0.6 Europe Africa 7.3 10.5 4.6
Middle East Asia Pacific 0.0 7.1 9.2 Ameri
cas 2.3 18.4 18.2 Total 4.4 8.4 8.1
53
Appendix
54
UK Retail - Shop Numbers
Number of shops
  • Plus
  • 73 relocations
  • 172 refurbs
  • 11 extensions

55
Ireland Belgium
2005 m
2004 m
Variance B(W)
Year to 31 December
Gross win 71.0 69.0 2.9 Betting tax (17.2)
(17.4) Other costs (42.1) (38.4)
(9.6) Operating profit 11.7 13.2 (11.4) Shop
numbers - Ireland 148
138 7.2 Shop numbers - Belgium
301 310 (2.9)
56
Vernons
2005 m
2004 m
Variance B(W)
Year to 31 December
Gross win 19.3 20.2 (4.5) Gross profits
tax (2.8) (3.0) Other costs (10.7) (11.4)
6.1 Operating profit 5.8 5.8 - Customer
recruitment (000s) New customers
71 72 (1.4) Reactivated customers 68 83 (18.1)
57
eGaming - KPIs
Variance B(W)
2005
2004
Year to 31 December
Total registrations (000s) (1) 479 375 28
Average monthly active player days (000s)
Sportsbook 471 417 13
Casino 64 56 14 Poker 411 195 111
Games 54 39 38 Customer acquisition costs
(2) 32.10 44.25 27
(1) Total successful registrations
(2) Marketing costs less CRM costs divided by
total successful registrations
58
eGaming - KPIs
Variance B(W)
2005
2004
Year to 31 December
Sportsbook stake per bet 17.01 14.44 18 Sports
book margin 6.8 8.3 Average weekly Poker
rake 793k 443k 79 Average weekly Casino
drop 749k 644k 16 Average weekly Games
drop 185k 118k 57
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