1

2006 Interim Results24 August 2006

2

Sir Ian RobinsonChairman

3

Rosemary ThorneGroup Finance Director

4

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)

151.3 134.7 12.3

(19.9) (12.1) (64.5)

24.0 - -

155.4 122.6 26.8

24.0% 26.0%

171.3 152.9 12.0

9.8p 5.7p N/A(1) Before non-trading items

2006£m

2005£m

Variance% B(W)Half year to 30 June

5

Betting and Gaming

UK Retail 366.4 342.1 111.5 108.8

Ireland & Belgium 41.2 35.6 8.6 5.7

eGaming 72.6 58.0 19.8 17.5

Telephone Betting 33.6 21.6 16.6 8.5

Vernons 9.3 9.9 2.1 3.1

Central costs - - (7.3) (8.9)

Total 523.1 467.2 151.3 134.7

Gross Win 2006 2005 £m £m

Operating Profit 2006 2005 £m £m

Half year to 30 June

6

UK Retail - Results2006£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 261.8 242.5 8.0

Machines gross win 104.6 99.6 5.0

Total gross win 366.4 342.1 7.1

Adjustments to gross win (1) (14.8) (0.5)

Net revenue 351.6 341.6 2.9

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 111.5 108.8 2.5(1) Fair value adjustments, VAT, associate income

7

UK Retail - KPIs

2006 2005Variance% B(W)

Like for like total gross win growth 1.0% (0.9)%

Like for like OTC gross win growth 1.4% (6.7)%

Like for like machines gross win growth 0.1% 16.8%

OTC margin 16.9% 15.8%

Like for like total costs (1) increase 3.2% 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 6,087 11.7

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

8

eGaming - Gross win2006£m

2005£m

Variance% B(W)

Sportsbook 24.6 16.0 53.8

Poker 21.3 18.5 15.1

Casino 21.4 18.4 16.3

Games 5.3 5.1 3.9

Gross win 72.6 58.0 25.2

Half year to 30 June

9

eGaming - Results2006£m

2005£m

Variance% B(W)

Gross win 72.6 58.0 25.2

Fair value adjustments (1) (6.0) (3.4)

Net revenue 66.6 54.6 22.0

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 19.8 29.7 17.5 32.1 13.1

Half year to 30 June

(2) Payments to third party software and platform providers and geographical partners

%age ofnet

revenue

%age ofnet

revenue

(1) Adjustments for free bets, promotions and bonuses

10

eGaming - KPIs2006 2005

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) 420 306 37.3

Real money sign-ups (000’s) (2) 197 144 36.8

Cost per acquisition (3) £81.83 £78.05 (4.8)

Adjusted cost per acquisition (4) £50.65 £57.73 12.3

(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

11

Telephone Betting - Results2006£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 20.3 15.7 29.3

Fair value adjustments (0.1) (0.2)

Net revenue exc High Rollers 20.2 15.5 30.3

High Rollers’ net revenue 13.3 5.9

Net revenue 33.5 21.4 56.5

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 16.6 8.5 95.3

%age ofnet revenue excl. High

Rollers

%age ofnet revenue excl. High

Rollers

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Telephone Betting - KPIs

(1) Numbers of calls (excluding customer service calls)

(2) A player who has placed a wager during the period

2006 2005Variance% B(W)

No. of calls (000’s) (1) 4,059 3,751 8.2

Agent cost per call 55p 65p 15.4

Gross win margin (exc. High Rollers) 8.8% 5.9%

Unique active players (000’s) (2) 100.1 99.8 0.3

Average monthly active player days (000’s) 218.6 213.1 2.6

Half year to 30 June

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Analysis of 2006 Capital ExpenditureCapexUK development (1) 14.515.8Xtra 4.30.7Ireland 1.71.8Other (including IT £5.3m; 2005 - £2.2m) 9.74.8Retail 30.223.1eGaming / Telephone Betting 2.51.7Total 32.724.8

AcquisitionsJack Brown 5.3 -Other (UK: £1.7m, Ireland: £7.2m) 8.938.2

46.963.0

2006£m

(1) Development = new licences, relocations and refurbishments

2005£mHalf year to 30 June

14

Disposal of Hotels

£m

Cash proceeds (1)

Assets disposed

Related cost of disposal

Foreign exchange

Profit on disposal

3,241

(2,769)

(97)

4

379

£m

3,298 as announced on 23 February 2006

(57) debt and working capital adjustment

3,241

(1)

15

Cash FlowCash generated by operations 127.8Interest 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 capital80.0Hotels disposal proceeds 3,241.4Dividends paid(4,179.6)Proceeds from issue of shares, convertibles and options339.5Exchange 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*H1 2006 plus H2 2005(1)Continuing operations only

2006£mHalf year to 30 June

16

Christopher BellChief Executive Officer

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Key Developments• Technology

• World Cup 2006

• International expansion - Italy

• Sportsbetting margins

• The 2005 Gambling Act

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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

19

Retail• Ladbrokes Xtra installed

• Renewal of EPOS systems

• Testing of self-service terminals

• New FOBT estate (starts in Q3)

• Continuing shop development

• Smoking ban

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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

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21

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

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UK Retail Gross Win Margin %2006

HY

03-05

3 FY Av.

Horses 15.2 14.0

Football 19.1 21.9

OTC 16.9 16.2

Horse overround

per runner* 1.50 1.62

%1st/2nd favs 51.0 51.3

*Overround – Theoretical profit margin set by the bookmaker on every “book” made

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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

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2005 Gambling Act• Fully in force from Autumn 2007

• Winter evening opening for 7 months

• £500 AWP Jackpot machines

• 17 new UK casinos

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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

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2006 eGaming DevelopmentsQ

1Q

4Q

3Q

2 Backgammon Ladbrokes Financials (Currencies)

Bingo Additional payment method - Ukash

New Casino & Games products

Mah Jong

Extended ‘Betting in Running’

Poker School and 2nd Poker Cruise

Additional payment method - Paypal

Pokerbet

Updated download CasinoUpdated Poker site

Complete new Sportsbook Next 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 leaderboards Viewable virtual racing

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2006 Interim Results24 August 2006

28

Appendix

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UK Retail - Shop Numbers

2,134

0

2,137

(2)

(7)11

1

01-Jan-06 Acquisitions New licences Closures Disposals 30-Jun-06

Nu

mbe

r of

sh

op

s

Plus:

• 32 relocations

• 27 refurbs

• 13 extensions

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eGaming – Net Revenue2006£m

2005£m

Variance% B(W)

Sportsbook 23.8 15.6 52.6

Poker 18.4 17.6 4.5

Casino 19.4 16.4 18.3

Games 5.0 5.0 0.0

Net revenue 66.6 54.6 22.0

Half year to 30 June

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eGaming – KPIs

2006 2005Variance% B(W)Half year to 30 June

Sportsbook Gross win margin 6.7% 7.1% Unique active players (000s) 318 223 42.6 Average monthly active player days (000s) 644 450 43.1 Yield per unique active player (£) (1) 75 70 7.1

Poker Unique active players (000s) 114 78 46.2 Average monthly active player days (000s) 496 356 39.3 Yield per unique active player (£) (1) 161 225 (28.4)

Casino Unique active players (000s) 58 46 26.1 Average monthly active player days (000s) 72 55 30.9 Yield per unique active player (£) (1) 336 358 (6.1)

Games Unique active players (000s) 62 48 29.2 Average monthly active player days (000s) 70 54 29.6 Yield per unique active player (£) (1) 81 105 (22.9)

(1) Net revenue per unique active player for the period

32

Ireland

Gross win 23.2 16.9 37.3

Fair value adjustments (0.1) -

Net revenue 23.1 16.9

Duty / Gross profits tax (3.3) (2.0)

Other costs (12.9) (11.8) (9.3)

Operating profit 6.9 3.1 122.6

Shop numbers 165 141(1) 17.0

(1) Shop numbers at 31 December 2005: 148

Half year to 30 June2006£m

2005£m

Variance% B(W)

33

Belgium

Gross win 18.0 18.7 (3.7)

Duty / Gross profits tax (6.7) (6.9)

Other costs (9.6) (9.2) (4.3)

Operating profit 1.7 2.6 (34.6)

Shop numbers 299 306 (1) (2.3)

(1) Shop numbers at 31 December 2005: 301

Half year to 30 June2006£m

2005£m

Variance% B(W)

34

Gross win / Net revenue 9.3 9.9 (6.1)

Duty / Gross profits tax (1.3) (1.4)

Other costs (5.9) (5.4) (9.3)

Operating profit 2.1 3.1 (32.3)

Customer recruitment (000’s):

New customers 66.0 79.9 (17.4)

Reactivated customers 35.3 34.2 3.2

Vernons2006£m

2005£m

Variance% B(W)Half year to 30 June

35

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

37.3

3.8

41.1

(6.6)

34.5

36

2006 World Cup – Gross Win £m H1 H2 Total

UK Retail 6.0 4.6 10.6

Ireland & Belgium 0.9 0.4 1.3

eGaming 3.4 1.2 4.6

Telephone Betting 0.3 0.7 1.0

Total 10.6 6.9 17.5

37

Cash flow after interest, tax and capitalProfit before tax and finance costs - continuing 151.3 Profit before tax and finance costs - discontinued 11.2Profit before tax and finance costs - total162.5Depreciation and amortisation20.0Decrease in retirement benefit obligation (60.2)Other non cash movements5.5Cash generated by operations127.8Income taxes paid (33.3)Finance costs paid(11.4)Net cash inflow from operating activities83.1Interest 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

38

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 6,359.5 5,709.6 11,500.0

Gross win 523.1 467.2 918.0

Free bets, promotions, bonuses (7.0) (4.1) (8.2)

VAT(2) (15.6) (1.3) (4.4)

Associate income 1.6 1.3 3.1

Net revenue 502.1 463.1 908.5 (1) Referred to as net revenue

(2) FOBT subject to VAT from December 2005

Revenue Under IFRS

H1 2006£m

H1 2005£m

FY 2005£m