Financial Results

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Financial Results
4 March 2004
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David Harding Chief Executive
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Highlights, 52 weeks to 30 December 2003

• Fourth consecutive year double digit earnings
  growth
• Product diversification and increased betting
  opportunities
• Fixed odds betting terminals
• IT and estate development
• Government and regulation

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Earnings growth gross wins
Includes other
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Earnings growth EBIT
Net of other and central costs
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Increased betting opportunities extended
opening - Retail
Betting opportunities November Thursday
2004
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Fixed odds betting terminals

• At end December we had 3239 FOBTs and 2454 AWPs
  in the estate
• Average installed base throughout the year 2400
  FOBTs, 2700 AWPs
• Average weekly net profitability per terminal
  380
• Planning assumption for 2004, 3600 FOBTs and
  1900 AWPs by mid year
• Factors influencing average profitability-

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Estate development
20 Target new licence openers 04 47 New
license applications in process
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IT development

• Retail technology programme
• - Electronic bet capture and settlement (EPOS)
• - New text information systems
• Central bookmaking/single account

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Government and regulation

• Pre-legislative scrutiny
• Gambling Commission
• Gaming issues
• Bookmaking issues
• Definitions
• Terminals
• Exchanges
• Bureaucracy

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• Tom Singer
• Group Finance Director

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Presentation in four parts
1. Financial results FY2003
2. Return of capital
3. Guidance FY2004
4. Current trading
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Summary of Financial ResultsFY03 v FY02
(pre-exceptional items)
(1) Includes casino drop and AWP cash-in-box net
of VAT (2) Includes casino drop and AWP
cash-in-box inclusive of VAT
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Summary of Earnings and DividendsFY03 v FY02
(pre-exceptional items)
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Analysis of Gross WinFY03 v FY02
(1) Includes traditional OTC business, AWPs and
FOBTs (2) Includes Sportsbook, Casino and
Poker (3) Includes greyhound stadia, Course and
Group Promotions
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Taxes and DutiesFY03 v FY02
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Net Operating ExpensesFY03 v FY02
(1) Includes printing and stationery, legal,
consultancy, cleaning and miscellaneous other
costs (2) Primarily central support functions and
property costs
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Underlying Growth in Operating ExpensesFY03 v
FY02
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Profit Conversion (trading profit as a of
gross win)FY03 v FY02
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Retail ResultsFY03 v FY02

• Continuing benefit of GPT regime/recycling
• Continuing strong growth in Numbers (virtual
  racing, FOBTs) betting
• Extended trading hours
• 13 new licences for LBOs and
• 112 other development actions

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Telephone ResultsFY03 v FY02

• 171,000 active accounts
• (31 December 2002 164,000)
• Good growth despite poor Cheltenham Festival,
  no major football championship and betting
  exchanges
• Costs down by 0.6m due to closure of Athlone
  call centre (April 2002) and improving efficiency
  in Leeds/Sheffield call centres

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Interactive (1) ResultsFY03 v FY02

• 247,000 active accounts (31 December 2002
  173,000)
• Sportsbook
• Focus switching back to UK/selected European
  markets
• Growing contribution from Arcade games
• No major football championship in 2003

• Casino and Poker
• Launch of hosted poker (January 2003)
• Launch of integrated sportsbook/casino account
  and language/Euro casinos in Autumn 2003
• Multi-supplier strategy

(1) Sportsbook, Casino and Poker
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Cash GenerationFY03 v FY02 (pre-exceptional
items)
(1) Working capital benefit in FY2003 due to
increase in GPT and PAYE creditors and client
balances
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Presentation in four parts
1. Financial results FY 2003
2. Return of capital
3. Guidance FY2004
4. Current trading
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Return of Capital

• Returning value to shareholders v flexibility
  for acquisitions
• Share buy back is but one possible solution
• Shareholder authority for
• - Buy back of up to 10 of issued share
  capital
• - Hold in treasury up to 2.5 of issued share
  capital
• Board to keep method, timing and quantum under
  review

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Presentation in four parts
1. Financial results FY 2003
2. Return of capital
3. Guidance FY2004
4. Current trading
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Guidance FY2004

• 3600 FOBTs and 1900 AWPs by June 2004
• LBO extended trading
• Cheltenham/Euro 2004
• Retail Technology Programme (RTP) revenue
  costs 3m in FY2004
• Capex RTP 10m Routine 23m
• Effective interest rate 6.5
• Effective tax rate 29

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Presentation in four parts
1. Financial results FY 2003
2. Return of capital
3. Guidance FY2004
4. Current trading
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Current Trading

• Encouraging start to the current year
• Group gross win up 17 double-digit growth
  all three channels
• Operating expenses up 13
• All three channels well positioned with clear
  strategies for growth

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Q A