Interim Results 24 August 2006

1 Sir Ian Robinson Chairman

2 Rosemary Thorne Group Finance Director

3 Summary of Performance 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) (19.9) (12.1) (64.5) % 26.0% p 5.7p N/A (1) Before non-trading items 2006 £m 2005 £m Variance % B(W) Half year to 30 June

4 Betting and Gaming UK Retail Ireland & Belgium eGaming Telephone Betting Vernons Central costs --(7.3)(8.9) Total Gross Win £m £m Operating Profit £m £m Half year to 30 June

5 UK Retail - Results 2006 £m 2005 £m Variance % B(W) Half year to 30 June (2) Rent, rates and utilities (3) Pictures, data, levy, Sky (4) Depreciation = £16.3m (2005: £14.7m) OTC gross win Machines gross win Total gross win Adjustments to gross win (1) (14.8) (0.5) Net revenue Gross profits tax(38.5) (49.3) 21.9 Staff costs(91.5)(84.4)(8.4) Property costs (2) (41.4)(36.7)(12.8) Content costs (3) (28.3) (25.4)(11.4) Other costs (inc. depn) (4) (40.4) (37.0)(9.2) Operating profit (1) Fair value adjustments, VAT, associate income

6 UK Retail - KPIs Variance % B(W) Like for like total gross win growth1.0%(0.9)% Like for like OTC gross win growth1.4%(6.7)% Like for like machines gross win growth0.1% 16.8% OTC margin16.9%15.8% Like for like total costs (1) increase3.2%5.9% Like for like shop staff costs (de)/increase(0.3)%12.0% Stake per slip (2) £8.36 £8.54 (2.1) Average number of FOBTs 6,797 6, Average weekly gross win per FOBT £548 £576 (4.9) Half year to 30 June (1) Excludes VAT and Gross profits tax (2) Slips exclude machines

7 eGaming - Gross win 2006 £m 2005 £m Variance % B(W) Sportsbook Poker Casino Games Gross win Half year to 30 June

8 eGaming - Results 2006 £m 2005 £m Variance % B(W) Gross win Fair value adjustments (1) (6.0)(3.4) Net revenue Gross profits tax(3.8) 5.7 (3.2) 5.9 Levy(0.8) 1.2 (0.6) 1.1 Staff costs(5.1) 7.7 (4.9) 9.0 Software & geographical partners (2) (15.0) 22.5 (12.4) 22.7 Marketing (inc. affiliates)(10.5) 15.8 (7.9) 14.5 Banking & chargebacks(4.8) 7.2 (2.5) 4.6 Other costs (inc. depn)(6.8) 10.2 (5.6) 10.3 Operating profit Half year to 30 June (2) Payments to third party software and platform providers and geographical partners %age of net revenue %age of net revenue (1) Adjustments for free bets, promotions and bonuses

9 eGaming - KPIs Variance % B(W) Half year to 30 June (2) A new player who has registered and deposited funds during the period Unique active players (000’s) (1) Real money sign-ups (000’s) (2) Cost per acquisition (3) £81.83£78.05(4.8) Adjusted cost per acquisition (4) £50.65£ (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 (1) A player who has contributed to rake and/or placed a wager during the period

10 Telephone Betting - Results 2006 £m 2005 £m Variance % B(W) Half year to 30 June (1) Direct operating costs include telephone, bandwidth and banking costs Gross win exc. High Rollers Fair value adjustments(0.1)(0.2) Net revenue exc High Rollers High Rollers’ net revenue Net revenue Gross profits tax(5.1) (3.3) Levy(1.8)(1.2) Staff costs(4.5) 22.3 (4.1) 26.5 Direct operating costs (1) (1.7) 8.4 (2.3) 14.8 Other costs (inc. marketing and depn)(3.8) 18.8 (2.0) 12.9 Operating profit %age of net revenue excl. High Rollers %age of net revenue excl. High Rollers

11 Telephone Betting - KPIs (1)Numbers of calls (excluding customer service calls) (2)A player who has placed a wager during the period Variance % B(W) No. of calls (000’s) (1) 4,0593, Agent cost per call55p 65p 15.4 Gross win margin (exc. High Rollers)8.8%5.9% Unique active players (000’s) (2) Average monthly active player days (000’s) Half year to 30 June

12 Analysis of 2006 Capital Expenditure Capex UK development (1) Xtra Ireland Other (including IT £5.3m; £2.2m) Retail eGaming / Telephone Betting Total Acquisitions Jack Brown5.3- Other (UK: £1.7m, Ireland: £7.2m) £m (1) Development = new licences, relocations and refurbishments 2005 £m Half year to 30 June

13 Disposal of Hotels £m Cash proceeds (1) Assets disposed Related cost of disposal Foreign exchange Profit on disposal 3,241 (2,769) (97) £m 3,298 as announced on 23 February 2006 (57) debt and working capital adjustment 3,241 (1)

14 Cash Flow Cash generated by operations Interest and tax(0.9) PPE capital spend (1) (38.4) Intangibles(2.3) Acquired subsidiaries (6.2) Total capital spend (1) (46.9) Cash flow after interest, tax and capital80.0 Hotels disposal proceeds 3,241.4 Dividends paid(4,179.6) Proceeds from issue of shares, convertibles and options339.5 Exchange and other movements (8.1) Net borrowings movement (526.8) Opening net borrowing (397.9) Closing net borrowings (924.7) Annualised net debt to EBITDA* ratio for continuing operations3.0 *H plus H (1) Continuing operations only 2006 £m Half year to 30 June

15 Christopher Bell Chief Executive Officer

16 Key Developments Technology World Cup 2006 International expansion - Italy Sportsbetting margins The 2005 Gambling Act

17 First Half Good sportsbetting margins Record World Cup Integration of Jack Brown Continued growth in shop numbers Strong performance in Telephone Betting Increased International development activity New Paddington Casino and Sportsbar

18 Retail Ladbrokes Xtra installed Renewal of EPOS systems Testing of self-service terminals New FOBT estate (starts in Q3) Continuing shop development Smoking ban

19 World Cup rds of favourites won over the whole tournament, with few upsets A number of high profile draws at the knockout stages Tournament contributed £17.5m gross win across all channels (H1: £10.6m, H2: £6.9m) 220,000 new recruits to eGaming and Telephone in first half 2 3

20 International Pianeta Scommesse Joint Venture: –Government licensed provider –Around €100m capex in Retail, eGaming and Telephone 300 shops in China, in 2 provinces (Beijing and Tianjin) Sportsbetting in Russian casinos JV with Intralot to tender for the Turkish lottery Final bidders for football betting in Vietnam US review ongoing

21 UK Retail Gross Win Margin % 2006 HY FY Av. Horses Football OTC Horse overround per runner* %1 st /2 nd favs *Overround – Theoretical profit margin set by the bookmaker on every “book” made

22 eGaming Solid first half Good Sportsbook performance Good Casino and Games growth Competition in the Poker market place New customer acquisition cost remains low at £51 Offline events continuing

Gambling Act Fully in force from Autumn 2007 Winter evening opening for 7 months £500 AWP Jackpot machines 17 new UK casinos

24 Ladbrokes Xtra installed 2006 Retail Developments Jack Brown refurbishment New screen systems installed Betting into PMU French Pools Virtual football Sports Xtra (All internet markets) New EPOS system Betting into US Pools New dual screened FOBTs £1m virtual events Self Service Betting Terminals Q1 Q4 Q3 Q2

eGaming Developments Q1 Q4 Q3 Q2 BackgammonLadbrokes Financials (Currencies) BingoAdditional payment method - Ukash New Casino & Games products Mah Jong Extended ‘Betting in Running’ Poker School and 2 nd Poker Cruise Additional payment method - Paypal Pokerbet Updated download CasinoUpdated Poker site Complete new SportsbookNext generation Poker software New Ladbrokes Financials markets (Brent) Wireless hospitality betting Updated mobile phone Sportsbook New mobile phone Casino Pontoon Bet New Casino & Games products ‘Deal or No Deal’ New Ladbrokes Financials markets (NYMEX) Poker leaderboardsViewable virtual racing

Interim Results 24 August 2006

27 Appendix

28 UK Retail - Shop Numbers Plus: 32 relocations 27 refurbs 13 extensions

29 eGaming – Net Revenue 2006 £m 2005 £m Variance % B(W) Sportsbook Poker Casino Games Net revenue Half year to 30 June

30 eGaming – KPIs Variance % B(W) Half year to 30 June Sportsbook Gross win margin6.7%7.1% Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) Poker Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) (28.4) Casino Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) (6.1) Games Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) 81105(22.9) (1) Net revenue per unique active player for the period

31 Ireland Gross win Fair value adjustments (0.1) - Net revenue Duty / Gross profits tax (3.3) (2.0) Other costs (12.9) (11.8) (9.3) Operating profit Shop numbers (1) 17.0 (1) Shop numbers at 31 December 2005: 148 Half year to 30 June 2006 £m 2005 £m Variance % B(W)

32 Belgium Gross win (3.7) Duty / Gross profits tax (6.7) (6.9) Other costs (9.6) (9.2) (4.3) Operating profit (34.6) Shop numbers (1) (2.3) (1) Shop numbers at 31 December 2005: 301 Half year to 30 June 2006 £m 2005 £m Variance % B(W)

33 Gross win / Net revenue (6.1) Duty / Gross profits tax(1.3) (1.4) Other costs(5.9) (5.4) (9.3) Operating profit (32.3) Customer recruitment (000’s): New customers (17.4) Reactivated customers Vernons 2006 £m 2005 £m Variance % B(W) Half year to 30 June

34 Taxation £m Normal tax charge: Tax charge at 24% on continuing operations profit before tax and non-trading items Tax charge at 35% on discontinued operations profit before tax and non-trading items Tax charge at 24.7% for Total Group Non-trading tax charge: Tax credit on non-trading items: Total tax charge (6.6) 34.5

World Cup – Gross Win £m H1H2Total UK Retail Ireland & Belgium eGaming Telephone Betting Total

36 Cash flow after interest, tax and capital Profit before tax and finance costs - continuing151.3 Profit before tax and finance costs - discontinued11.2 Profit before tax and finance costs - total162.5 Depreciation and amortisation20.0 Decrease in retirement benefit obligation (60.2) Other non cash movements5.5 Cash generated by operations127.8 Income taxes paid (33.3) Finance costs paid(11.4) Net cash inflow from operating activities83.1 Interest received 43.8 Total capital spend (1) (46.9) Cash flow after interest, tax and capital 80.0 (1) Continuing operations only Half year to 30 June 2006

37  Definition of Revenue - IFRS (1) =gains and losses from betting and gaming net of discounts (free bets, bonuses, promotions) and VAT.  - UK GAAP=amounts staked. Amounts staked = “UK GAAP” Revenue 6, , ,500.0 Gross win Free bets, promotions, bonuses (7.0) (4.1) (8.2) VAT (2) (15.6) (1.3) (4.4) Associate income Net revenue (1)Referred to as net revenue (2)FOBT subject to VAT from December 2005 Revenue Under IFRS H £m H £m FY 2005 £m