Half year results 6 months ended 31 January 2012 Analyst presentation 29 February 2012 • Highlights • Financial review • Operational review • Regulatory update • Summary and outlook 29/02/2012 Highlights • Australian Centrebet acquisition completed August 2011. Integration progressing well • Acquisition of Danish online betting operators January 2012 • Disposal of Turkish business November 2011 • In the first half amounts wagered up 18.4% • Strong growth in Australia • EBITDA down from £25.8m to £25.2m impacted by £7.9m of new tax and disposal of Turkey • In:play at an industry leading margin of 10.1% • Cost reductions in response to European tax and economic conditions 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 3 Financial review Income Statement H1 2012 £m H1 2011 £m 1,266.2 1,069.2 Total revenue 110.9 107.9 Costs (93.5) (88.3) Operating profit* 17.4 19.6 Share option charge (0.3) (0.5) Amortisation (0.9) (0.9) (24.0) - Turkey profit from disposal 2.6 - Net finance (cost) / income (2.0) 1.4 Tax (3.1) 1.7 (10.3) 17.9 2.2p 3.7p Amounts wagered Exceptional items Profit for the period Fully diluted EPS* * Before share option charge, exceptional items and amortisation of other intangible assets 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 4 4 Financial review Operating profit reconciliation £m H1 2010/11 £m 19.6 Turkey disposal (9.7) Spanish and Greek taxes (7.9) Centrebet acquisition 4.7 Centrebet synergies 2.7 Australia trading 5.1 European trading (5.3) Cost reductions 5.6 Share of Turkey 2.6 H1 2011/12 17.4 5 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 5 Financial review Balance sheet Non-current assets Working capital Liabilities 31 January 2012 £m 31 January 2011 £m 153.2 41.6 Tangible and intangible assets 53.6 54.2 Trade and other receivables 29.9 16.0 Cash and cash equivalents 63.2 54.4 Derivative asset 0.5 - Other payables* (88.5) (51.0) Interest bearing loans and borrowings (53.7) (11.6) - (0.1) 158.2 103.5 Share capital / share premium 60.8 60.5 Retained earnings 91.4 43.0 158.2 103.5 Goodwill Derivative liability Equity 6 * Includes client liabilities of £30.2m (2010/11 : £21.1m) 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 6 Financial review H1 cash flow £m £m Gross cash as at 1 August 2011 180.2 EBITDA 25.2 Working capital (7.9) 17.3 Acquisitions / Centrebet (99.6) Capex (10.8) Tax (1.9) DOJ payment (7.5) Dividend (7.3) Convertible loan interest (2.3) Exceptional cost (4.9) Net cashflow (117.0) Gross cash as at 31 January 2012 63.2 Finance leases (2.7) Bank loan (4.0) Customer liabilities (30.2) (12.2) GST claim Net cash as at 31 January 2012 29/02/2012 Sportingbet Plc – Half year results for the period . ended 31 January 2012 14.1 7 7 Operational review Underlying strategy remains unchanged • Focus on sport • Industry leading breadth of product offering • Something to bet on every minute of every hour of every day • Achieve consistently above average margin whilst maintaining price competitiveness • Supported by • Comprehensive supplemental revenue streams of poker, casino and games • Tailored offer branded for local markets • Goal of moving to a fully regulated offer 8 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 8 Operational review Group geographical breakdown (post-tax gaming revenue) Geographical diversification spreads regulatory and economic risk Turkey 12.1% (23.6%) Aus 39.9 (17.19%) Greece amounts wagered down 22% due to economic issues NGR down 41% with poker and casino particularly hard hit Poland 3.2% (3.4%) Emerging Markets 4.8% (3.9%) Germany 4.4% (4.5%) Australia NGR up 127% due to strong growth in online / acquisition of Centrebet UK 3.4% (4.5%) Spain 9.4% (13.4) Greece 8.7% (15%) Spain amounts wagered down 11% and NGR down 28% Emerging markets NGR up 23% 9 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 9 Highlights Group product breakdown Sports 75% (2010: 71%) Sports betting continues to drive the business with sports NGR up 9% Soccer 37% Casino/games NGR down 8% as affected by economic conditions in key markets Casino & games 19% (2010: 21%) Poker NGR down 34% Poker 5.9% (2010: 7.6%) Aus horse racing 40% Other 14% Tennis Mixed sport multiples 2.9% 2.7% Horse racing 0.6% Basketball 2.7% 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 10 Operational review Europe - sports (GGR before betting taxes) 40.0 35.0 Sports actives Average bet size 30.0 Bets per customer 25.0 Yield per sports actives H1 2012 H1 2011 +/- 287,009 319,213 -10% £12.21 £15.11 -19% 139 132 +5% £148 £197 -25% 20.0 Q2 impacted by disposal of Turkey, recession and lower margin than last year 15.0 10.0 5.0 Q1 Q2 Q3 Q4 Q1 08/09 08/09 08/09 08/09 09/10 Q2 09/10 Q3 09/10 In:Play 29/02/2012 Q4 09/10 Q1 10/11 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 Pre-Match Sportingbet Plc – Half year results for the period ended 31 January 2012 11 11 Operational review Number of In:play Events vs. Avg. Markets Per Event Sportingbet provides customers with a strong balance between the breadth of event coverage and a variety of markets to bet on in an individual event 55 William Hill 50 45 Avg. Markets per Event 40 35 30 Ladbrokes Sportingbet 25 Bwin Paddy Power 20 15 10 Unibet 5 0 250 300 350 Number of Events Source: Gambling Data In-Play Tracker Winter 2012; Sample data captured snapshots between Sat 26th – Fri 9th Dec 2011 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 400 New in:play • First phase now live in the UK • Other major domains live in March • Better showcases huge variety of betting opportunities • Greater customer personalisation improves engagement • Not built in Flash technology, allowing enhancements to be viewed on tablets and desktop devices • In-house development rather than third-party buy 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 New in:play 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 In:play tutorial 29/02/2012 Operational review Australia (Sportingbet) (pre-tax gaming revenues) H1 2012 H1 2011 +/- 16.3m 12.8m +27% 0.6m 0.8m -13 70,930 71,103 - 20.0 Internet bets 18.0 Telephone bets Sports actives 16.0 14.0 Amounts wagered on the internet up 33% at constant currency 12.0 10.0 Amounts wagered on the telephone down 10% at constant currency 8.0 6.0 Significant brand exposure in Australian market through offline marketing 4.0 2.0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07/08 08/09 08/09 08/09 08/09 09/10 09/10 09/10 09/10 10/11 10/11 10/11 10/11 11/12 11/12 Phone (£'m) Internet (£'m) Mobile (£'m) 16 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 16 Operational review Australia (Total) (pre-tax gaming revenues) H1 2012 H1 2011 +/- 21.7m 12.8m +70% 0.8m 0.8m +7% 146,518 71,103 +106% 35.0 Internet bets Telephone bets 30.0 Sports actives 25.0 20.0 15.0 10.0 5.0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07/08 08/09 08/09 08/09 08/09 09/10 09/10 09/10 09/10 10/11 10/11 10/11 10/11 11/12 11/12 Phone (£'m) Internet (£'m) Mobile (£'m) Centrebet 17 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 17 Australia • • • • • • • • • Acquisition of Centrebet completed 31 August 2011 Senior management team appointed and operational (Sept ‘11) IT Platform decided upon (Sept ‘11) All operations (except IT platform) fully integrated (Jan ‘12) Combined business in new single Sydney office (May ‘12) Single IT platform (May/June ‘12) Integration complete (July ‘12) Integration ahead of plan at this stage No material issues 18 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 18 Mobile: % of turnover Sportingbet Australia Sep ‘11 Jan ‘12 13% 20% 5% 13% 11% 15% 9% 13% Centrebet UK Spain 19 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 19 Regulatory update • We welcome regulated markets • Continuity of future revenue • Consumer protection • Growth in overall size of market • Stable payment processing • 29/02/2012 Group will apply for a licence where • Market is economically viable • Regulatory environment is stable • Equitable tax system • Severe penalties for non-compliance For Internal purposes only. This is confidential information and is property of Sportingbet Plc. 20 Current regulation • Greece • Opted into tax regime • Spain • Applied for license • Denmark • Awarded license • Italy • Awarded license 21 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 21 Summary and outlook • Long-term growth prospects of industry are good • Demographics • Broadband penetration • Confidence in transacting • Sport’s ever increasing global popularity • Geographic expansion continuing • Mobile route to market promising • Move to regulation promising and beneficial in the long term • Solid start to Q3 22 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 22 Q&A Analyst presentation 29 February 2012 Appendix 24 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 24 Net gaming revenue H1 2012 H1 2011 % change £m £m Sports (8.7% vs 9.9%) 42.5 62.9 -32% Casino & games 22.5 24.7 -9% 7.1 9.0 -21% 72.1 96.6 -25% 47.8 21.1 +127% Gaming revenues (post gaming taxes) 119.9 117.7 +2% Customer bonus adjustment (10.5) (10.9) +4% Net gaming revenue 109.4 106.8 +2% Europe Poker Australia Sports (63.5% vs 5.2%) 25 29/02/2012 Sportingbet Plc – Half year results for . the period ended 31 January 2012 25 Australia KPI’s 2012 2011 +/- 146,518 71,103 +106% 21.7m 12.8m +70% 116 193 -40% Sports bet size A$37 A$26 +43% Sports margin (post tax) % 7.6% 7.1% +7% 0.8m 0.8m +7% 39 57 -32% A$455 A$453 +1% 3.1% 3.2% -4% Sports actives Internet (incorporating Mobile results) Sports bets Sports bets / active Telephone Sports bets Sports bets / active Sports bet size Sports margin (post tax) % 26 29/02/2012 Sportingbet Plc – Half year results for . the period ended 31 January 2012 26 Europe KPI’s H1 2011 H1 2011 +/- 287,009 319,213 -10% 40.0m 42.2m -5% 139 132 +5% £12.21 £15.11 -19% 8.7% 9.9% -12% Yield per sports active £148.08 £197.25 -25% Casino and games bets 314.4m 316.7m -1% Casino and games bet size £2.43 £2.39 +2% Casino margin % 2.9% 3.3% -10% £38.7k £48.7k -20% Sports actives Sports bets Sports bets / active Sports bet size Sports margin % Poker – average daily rake 27 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 27 Financial review Costs H1 2012 £m % of margin H1 2011 £m % of margin • reported 32.9 27.1 32.2 27.1 • customer bonuses 10.5 8.6 10.9 9.2 43.4 35.7 43.1 36.3 Payment processing costs 10.6 8.7 12.6 10.6 Product commissions 10.2 8.4 9.9 8.3 Employees 24.2 19.9 18.4 15.5 Depreciation 7.8 6.4 6.2 5.2 Other admin 7.8 6.4 9.0 7.6 104.0 85.7 99.2 83.5 17.4 14.3 19.6 16.5 Marketing Operating profit margin * Before share option charge, exceptional items and amortisation of other intangible assets 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 28 28 Financial review Operating profit reconciliation £m H1 2011 operating profit Europe sports 19.6 • Volume • Margin (10.4% vs 9.9%) Australia sports £m • Volume • Margin (7.7% vs 6.5%) • Betting taxes Casino and gaming effect (15.5) 2.7 (12.8) 28.7 3.6 32.3 (12.9) (12.9) - Poker effect (1.9) Increase in costs* (4.6) H1 2012 operating profit 17.4 * Before share option charge, exceptional items and amortisation of other intangible assets 29 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012 29 Disclaimer These slides and this presentation are provided to you for information only. These slides and this presentation do not constitute, or form part of, any invitation or offer to any person to subscribe for, otherwise acquire, or dispose of any shares in Sportingbet Plc (the “Company”). These slides and this presentation do not constitute a recommendation regarding the shares of the Company. Recipients of these slides and this presentation should conduct their own investigation, evaluation and analysis of the business, data and property described therein. Certain statements within this presentation constitute forward looking statements. Such forward looking statements are subject to risks and other factors, which may not be in the Company’s control, which may cause the actual events, results, achievements or performance expressed or implied by such forward looking statements to differ. Such risks and other factors include, but are not limited to, general economic and business conditions, changes in governmental laws and regulations or practices, currency fluctuations, competition, changes in plans and other risks. There can be no assurance that the results and events contemplated by the forward looking statements contained in this presentation will, in fact, occur and no representation is made in this respect. These forward-looking statements represent honestly held views of the Company only as at the date of delivery of this presentation. The Company is not under any obligation to release publicly any revisions to these forward looking statements to reflect events, circumstances and unanticipated events occurring after the date of this presentation except as required by law or by regulatory authority (including pursuant to the UK Listing Rules and the Disclosure Rules and Transparency Rules of the Financial Services Authority). No statement in this presentation in intended as a profit forecast or a profit estimate and no statement in this presentation should be interpreted to mean that earnings per share for the current or future financial years will match or exceed historical earnings per share. The distribution of this presentation or any information contained in it may be restricted by the laws of certain jurisdictions. Persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. Failure to do so may constitute a violation of the laws of any such jurisdiction. By accepting these slides and/or attending this presentation, you agree to be bound by the provisions and the limitations set out above. All financial information and KPIs in this presentation are unaudited. 30 29/02/2012 . Sportingbet Plc – Half year results for the period ended 31 January 2012 30 The End 29/02/2012 Sportingbet Plc – Half year results for the period ended 31 January 2012. 31