Key financials
Group net revenue up 6.4% or 0.9% when adjusted to reflect change in machine taxation from VAT to MGD
Group operating profit £85.7 million down 19.8%
Underlying EPS of 7.2p down 23.4%
Interim dividend maintained at 4.30 pence
Net debt of £375.5 million reduced by £11.4 million
H1 exceptional cost of £21.8 million (FY est. £33 million) largely driven by transition to Playtech product and platforms
H1 impacted by Retail cost headwinds and slowdown in machines growth / Digital profit down but in line
Digital profit down but in line with expectations
Increased machine taxation and like for like content costs in UK Retail total c.£9 million in H1 as expected
Decline in OTC gross win per shop driven by Q1 staking decline; Q2 trend improved
Machine gross win up 3.2% driven by expansion in number of shops and increase in density
Slowdown in machines market greater than expected; decline in gross win per shop per week of 0.5% for H1
Machine Q1 exit rate of c. 3% like for like growth not maintained and inconsistent in Q2 with 5.5% decline in June
Digital now well positioned for earnings growth
Transformational product and marketing services agreement signed with Playtech - integration progressing well
Ladbrokes Israel operational from 1 May, now with circa 60 employees
'Vegas' tab launched with 70 new games on line and 25 available on mobile
Foundation release of new mobile offer on Mobenga platform completed
New Openbet agreement facilitates use of Playtech's IMS back office, for sportsbook
Recent product agreement with Net Entertainment broadens further our range of games for online and mobile
UK Retail resilient
Underlying metrics positive - stability of footfall and gross win per shop; customer profile getting younger
New shops continue to deliver compelling payback (c. 30% IRR) - net 73 opened during H1, c. 30 expected in H2
H2 rollout of over 1,500 Self Service Betting Terminals, Sky Sports and improved broadcast capability on track
Full rollout of new 4 screen machine cabinet in Q1 2014 expected to drive growth
Trading changes deliver enhanced margin
Investment in trading capability delivering improved gross win margin and enabling greater focus on customer value
Strong cash flow and balance sheet
Continued strong cash flow drives further net debt reduction (net debt : EBITDA (1) 1.6x)
Balance sheet strength allows flex in dividend cover
