RNS Number:5102U
Stanley Leisure PLC
22 January 2004
22 January 2004
STANLEY LEISURE plc
INTERIM RESULTS
FOR THE HALF YEAR TO 26 OCTOBER 2003
Highlights
* Group turnover up by 59% to #752m (2002: #473m)
* Group profit before tax pre goodwill amortisation down 13% to #21.5m
(2002: #24.7m), reflecting Crockfords only breaking even (2002:
#10.6m profit)
* Group profit after goodwill amortisation down 14% to #20.6m (2002:
#23.8m)
* EPS pre goodwill amortisation down 18% to 11.2p (2002: 13.6p)
* EPS after goodwill amortisation down 19% to 10.5p (2002: 12.9p)
* Interim dividend per share up 10% to 2.75p (2002: 2.5p)
Betting division
* Turnover up 73% to #661m (2002: #382m)
* Divisional operating profit up 44% to #15.6m (2002: #10.9m)
* Continued strong trading in the retail business
* Dramatic increase in turnover and profit from machines business, with
1,120 FOBTs deployed at the half year
* Encouraging growth of International operations
Gaming division
* Turnover maintained at #91.6m (2002: #91.5m)
* Core divisional operating profit pre goodwill amortisation down 31%
to #15.1m* (2002: #21.7m), reflecting a significant reduction in win
margin at Crockfords against a record half year performance in 2002
* Satisfactory performance at other London casinos
* Significant profit increase in provincial casinos
* Successful launch of the largest casino in Great Britain at Star
City in Birmingham at the beginning of second half
(*) before charging #1.0m of pre-opening costs
Leonard Steinberg, Chairman, comments:
"I am pleased with the overall performance of the Group in the first half of the
year. The reduction in profit before taxation and goodwill amortisation to
#21.5m reflects the lower win margin at Crockfords which only broke even in the
first half against a record profit achieved in the first half of 2002. Betting
shop turnover and profitability continued to improve while our International
betting operations moved forward. Provincial casinos have shown improvement and
our latest acquisition, the Palm Beach casino, has performed satisfactorily.
Both our betting and gaming businesses are preparing for deregulation as
evidenced by the successful launch of the Star City casino and we believe we are
well positioned to benefit from forthcoming industry changes. We remain
confident of an encouraging outcome for the full year".
Note:
There is an analysts' presentation at the offices of Cazenove, 20 Moorgate,
London EC2R at 9.30 a.m. on 22 January 2004. A slide pack will also be
available from that time on the Stanley Leisure plc investor relations website,
www.stanleyleisure.com .
Enquiries:
Stanley Leisure plc Tel: 020 7796 4133 on Thursday 22 January only
Bob Wiper, Chief Executive Tel: 0151 237 6000 thereafter
Michael Riddy, Finance Director
Hudson Sandler Limited Tel: 020 7796 4133
Michael Sandler
Noemie de Andia
Notes to Editors
Stanley Leisure plc is the largest casino operator in Great Britain, with 37
provincial casinos and four in London, including the prestigious world-renowned
Crockfords. Stanley Leisure is also the fourth largest operator of licensed
betting offices in the British Isles, with a portfolio of over 600 shops. The
Company has pursued a focused policy of expanding its betting and gaming
divisions through organic growth and a steady acquisition programme. Stanley
Leisure is regarded as one of the companies best placed to take advantage of the
forthcoming deregulation of the gaming and betting industries.
The 41 Stanley casinos are located in:
Birmingham (3) Luton (2)
Blackpool Lytham St. Annes
Bolton Manchester (3)
Bournemouth Margate
Brighton Newcastle
Bristol Plymouth
Coventry (2) Portsmouth
Derby (2) Reading
Edinburgh (3) Southampton
Glasgow Southport
Great Yarmouth Stoke-on-Trent
Leicester (2) Torquay
Liverpool (2) Wirral
London (4)
CHAIRMAN'S STATEMENT
I am pleased with the overall performance of the Group in the first half of the
year. The reduction in profit before taxation and goodwill amortisation to
#21.5m reflects the lower win margin at Crockfords which only broke even in the
first half against a record profit achieved in the first half of 2002. Betting
shop turnover and profitability continued to improve while our International
betting operations moved forward. Provincial casinos have shown improvement and
our latest acquisition, the Palm Beach casino, has performed satisfactorily.
Financial Highlights
Group turnover grew by 59% to #752m, up from #473m. Profit before taxation was
down 14% from #23.8m to #20.6m. Profit before taxation and goodwill
amortisation reduced by 13% from #24.7m to #21.5m, reflecting a significant win
margin reduction at Crockfords, our high end London casino. These figures are
after charging #1.0m of pre-opening costs incurred at our newly opened state of
the art casino at Star City in Birmingham. Earnings per share were down 19%,
from 12.9p per share to 10.5p. Before goodwill amortisation, earnings per share
fell 18% from 13.6p per share to 11.2p. The Board's confidence remains high,
and we have therefore decided to increase the interim dividend from 2.5p to
2.75p, an increase of 10%. This will be paid on 27 February 2004 to
shareholders on the register at the close of business on 30 January 2004.
Betting
The trading environment was a great deal more favourable in the first half of
the year than it was in the financial year 2002/03. Turnover grew by 73% to
#661m (2002: #382m), fuelled by growth from all three parts of the business:
retail, machines and International operations. Profit growth has also been
significant, with all three areas fusing together; divisional profit was up 44%
to #15.6m (2002: #10.9m). Our net profit margin decreased from 2.8% to 2.4% as
anticipated, as the industry continues to shift to being a high turnover, low
margin business.
With the variety of products we now have on offer, the divisional gross win
proportion from horseracing has fallen to below 50% in the period. The movement
in gross margin away from horseracing towards other products is likely to
continue as our product range grows.
Retail
In our retail betting business (excluding machines), turnover continued to climb
by a further 10% over last year, from #353m to #388m. This was achieved by the
combination of 4% more slips and a 5.5% increase in stake per slip. The move to
Gross Profits Tax, coupled with an increased product offer and an extension in
shop opening hours is providing a mix of ingredients which is very popular with
our customers. Retail betting profitability increased by 20% to #7.8m (2002:
#6.5m). The profit growth was driven by the combination of improved results and
cost efficiencies.
Machines
Our machines business saw the most dramatic increases in both turnover (up
sixteen-fold from #15m to #247m) and profit (up 91% from #3.3m to #6.3m), due to
the rollout and popularity of Fixed Odds Betting Terminals (FOBTs). We have
accelerated the roll out of FOBTs across our estate and the weekly average of
machines deployed increased to 937 (against fewer than 100 machines last year),
with 1,120 being deployed in 572 shops at the end of the first half. We welcome
the recent introduction of a Code of Practice governing the use of FOBTs within
licensed betting offices. We shall continue to increase machine numbers where
possible, adjusting the mix where appropriate.
The total shop numbers have hardly changed during the first half but we
commenced our three year programme of core estate development. This #30m
development programme will provide momentum to both retail and machine profits
going forward. We shall create more space per shop by either extending or
relocating as appropriate. We plan to complete around 50 shops per year in the
next three years. 12 were completed in the half year, with a further 31 planned
so far for the second half.
International operations
Our International operations have also grown in the period. In Italy, where we
own 50% of the business, turnover grew 91% to #26.0m (2002: #13.6m), and we
ended the first half with over 200 agents. In Croatia, where we have a 28.3%
share in a shop business, we ended the half with 89 shops trading. In Romania
we have a 25% share in a shop business, and the first shop opened for trade on 7
January 2004. Profit from our International operations, before minority
interests, increased 36% to #1.5m (2002: #1.1m).
The near-doubling of International turnover has come principally from an
increase in the number of Italian agents. Last year included some World Cup
turnover at good margins. However, even without this, over 80% of our
International turnover came from betting on football. Trading margins returned
to near-normal levels, but profit grew somewhat slower than turnover, as we
absorbed the cost of our successful legal challenges, particularly the case we
took to the European Court of Justice, the so-called "Gambelli" case, on which
favourable judgement was given on 6 November 2003.
We are encouraged by the potential for growth in this area and shall continue to
invest in our existing operations in conjunction with investigating the
potential of other countries. Investment levels in these businesses have so far
been below #1.0m but will grow in keeping with our development plans.
Gaming
Our gaming division also comprises three elements: London casinos, provincial
casinos and the development of casinos in readiness for the forthcoming
deregulation.
The division has been hard pressed to match last year's record half year
performance, even with the first time benefit from the Palm Beach acquisition.
Turnover was in line at #91.6m, but profit pre goodwill amortisation was 31%
below last year at #15.1m (before charging #1.0m of pre-opening costs incurred
at our new operation at Star City) (2002: #21.7m).
London casinos
The reduction in profit at our core London casinos (excluding Palm Beach) to
#4.1m (2002: #14.3m) was solely due to trading at Crockfords, which broke even
against a record profit of #10.6m last year. Both attendance and drop at
Crockfords were satisfactory but we experienced a significant reduction in the
win margin. Crockfords, being a high end casino, will always be relatively
volatile. The Colony Club and the Mint both traded above last year. The Palm
Beach casino, which we acquired on 23 May 2003, had a good first half. We
extended both the trading hours and the range of games on offer and were pleased
with the profit of #2.0m. Strategically, we now have casinos in each of the four
segments of the London market.
Provincial casinos
In our provincial casinos the changes we made last year to provide consistency
of offer across the estate have helped to produce a 22% profit increase to #9.0m
(2002: #7.4m). We are pleased with the progress in profitability from the Tower
casinos, acquired in July 2002.
The key provincial metric of drop per head increased by 12% to #211 (2002:
#188). Our revised food and beverage offering has contributed to this growth,
complemented by more product being available on the gaming floor. The win margin
also moved forward to 17.0% (2002: 16.6%).
Our provincial estate now comprises over 250,000 square feet of licensed gaming
space and over 500,000 square feet of total space: more tables, more automated
roulette positions and more machines than any of our competitors. We have the
largest provincial casino - Star City - and the second largest - the Circus,
together with the potential for expanding a number of our casinos between now
and deregulation.
Deregulation
The third and key part of our gaming division is the development of casinos in
readiness for the forthcoming deregulation. Although certain important elements
of deregulation remain unclear, including eventual timing, the Joint Scrutiny
Committee is currently going through the detail of the Bill and is expected to
report in early April 2004.
Current trading and outlook
The strong trading performance has continued across the betting division since
the end of the first half.
In the gaming division, the picture at the half year has continued into the
second half, although Crockfords has seen some improvement in win margin. The
provincial casinos have continued the good progress they made in the first half
and are moving forward in line with expectations.
The third element of our gaming business - capitalising on the forthcoming
deregulation - is illustrated by the opening of the new 70,000 square feet
casino at Star City in Birmingham. This casino, which opened on 22 November
2003, is already handling the highest attendance and drop of any of our
provincial casinos, with our new members enjoying a taste of 'The Vegas
Experience'. We do not anticipate a profit in this financial year, but are
encouraged by the early customer response.
The competitive landscape will change in the deregulated environment, with our
own development plans contributing to the change. We are ready for this change
and believe that we are well positioned to benefit from any first mover
advantage deregulation will bring. We remain confident of an encouraging
outcome for the full year.
Leonard Steinberg
Chairman
Summarised Financial Highlights
for the half year to 26 October 2003
Half year to Half year to Year to
26 October 27 October 27 April
2003 2002 2003
#m #m #m
Turnover 752.2 473.1 1,001.1
Profit before taxation 20.6 23.8 39.5
Profit before taxation pre goodwill amortisation 21.5 24.7 41.3
Earnings per share 10.5p 12.9p 22.6p
Earnings per share pre goodwill amortisation 11.2p 13.6p 24.1p
Dividend per share 2.75p 2.50p 8.60p
Equity shareholders' funds 569.5 328.0 558.3
Consolidated Profit Statement
for the half year to 26 October 2003
Half year Half year Year
to to to
Continuing 26 October 27 October 27 April
operations Acquisitions 2003 2002 2003
Notes #'000 #'000 #'000 #'000 #'000
Turnover 1 740,646 11,576 752,222 473,123 1,001,098
Cost of sales (including #1 million (712,326) (9,540) (721,866) (439,764) (942,343)
pre-opening costs)
Gross profit 28,320 2,036 30,356 33,359 58,755
Net operating expenses 1 (3,944) - (3,944) (3,892) (8,372)
Operating profit - pre goodwill amortisation 25,256 2,036 27,292 30,347 52,142
Operating profit - goodwill amortisation (880) - (880) (880) (1,759)
Operating profit 24,376 2,036 26,412 29,467 50,383
Income from interests in associated 219 - 219 132 413
undertakings
Profit/(loss) on disposal of fixed assets (34) - (34) 32 (108)
Profit on ordinary activities before 1 24,561 2,036 26,597 29,631 50,688
interest
Net interest payable (6,024) (5,829) (11,187)
Profit on ordinary activities before 20,573 23,802 39,501
taxation
Taxation on profit on ordinary activities 2 (6,731) (7,774) (10,326)
Profit on ordinary activities after taxation 13,842 16,028 29,175
Minority equity interests (517) (405) (1,214)
Profit for the period 13,325 15,623 27,961
Dividends 3 (3,535) (3,754) (11,438)
Retained profit for the period 9,790 11,869 16,523
EBITDA 34,617 36,087 64,290
Dividend per share 3 2.75p 2.50p 8.60p
Basic earnings per share 4 10.5p 12.9p 22.6p
Diluted earnings per share 4 10.5p 12.7p 22.4p
Earnings per share before goodwill 4 11.2p 13.6p 24.1p
amortisation
Statement of Total Recognised Gains and Losses
for the half year to 26 October 2003
Half year Half year Year
to to to
26 October 27 October 27 April
2003 2002 2003
#'000 #'000 #'000
Profit for the period 13,325 15,623 27,961
Surplus on revaluation of properties - - 224,316
Currency translation (33) 221 941
Total net gains recognised in the period 13,292 15,844 253,218
Consolidated Balance Sheet
as at 26 October 2003
26 October 27 October 27 April
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Intangible assets - Goodwill 18,806 20,565 19,686
Tangible assets 805,930 523,265 759,587
Investments 1,263 71 268
825,999 543,901 779,541
Current assets
Stocks 1,738 1,458 1,325
Debtors 8,946 7,094 9,602
Investments 3 3 3
Cash at bank and in hand 17,890 15,038 13,995
28,577 23,593 24,925
Creditors
Amounts falling due within one year (50,358) (72,539) (223,958)
Net current liabilities (21,781) (48,946) (199,033)
Total assets less current liabilities 804,218 494,955 580,508
Creditors
Amounts falling due after more than one year (228,800) (162,839) (16,555)
Provisions for liabilities and charges
Deferred taxation (4,980) (3,676) (4,663)
Net assets 570,438 328,440 559,290
Capital and reserves
Called up share capital 31,683 31,401 31,467
Deferred equity share capital 150 150 150
Share premium account 58,493 55,842 56,469
Revaluation reserve 319,890 95,724 319,890
Capital reserve 5,304 5,304 5,304
Other reserves 23,922 23,922 23,922
Profit and loss account 130,083 115,632 121,096
Equity shareholders' funds 569,525 327,975 558,298
Minority equity interests 913 465 992
Total funds employed 570,438 328,440 559,290
Reconciliation of movements in equity shareholders' funds
Profit for the period 13,325 15,623 27,961
Dividends (3,535) (3,754) (11,438)
9,790 11,869 16,523
Issue of share capital including share premium 2,240 40,942 41,635
Contributions in respect of shares issued under (770) (36) (96)
Qualifying Employee Share Ownership Trust
Surplus on revaluation of properties - - 224,316
Currency translation (33) 221 941
Net addition to equity shareholders' funds 11,227 52,996 283,319
Goodwill written back on disposal of business
Surplus on revaluation -
Opening equity shareholders' funds 558,298 274,979 274,979
Closing equity shareholders' funds 569,525 327,975 558,298
Consolidated Cash Flow Statement
for the half year to 26 October 2003
26 October 27 October 27 April
2003 2002 2003
Notes #'000 #'000 #'000
Net cash inflow from operating activities 1 38,368 37,583 61,078
Dividends received from associates 219 132 413
Returns on investments and servicing of finance 2 (6,836) (5,440) (11,254)
Taxation (3,277) (6,215) (14,586)
Capital expenditure and financial investment 2 (16,936) (11,707) (28,322)
Acquisitions 2 (15,638) (8,558) (8,717)
Total dividends paid 2 (7,729) (6,279) (9,425)
Net cash outflow before use of liquid resources
and financing (11,829) (484) (10,813)
Financing - issue of ordinary shares 1,470 6,715 7,348
- increase/(decrease) in debt 2 25,202 (11,003) (10,527)
Net cash inflow/(outflow) from financing 2 26,672 (4,288) (3,179)
Increase/(decrease) in cash in the period 3 14,843 (4,772) (13,992)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the period 3 14,843 (4,772) (13,992)
(Increase)/decrease in debt in the period (25,202) 11,003 10,527
(Increase)/decrease in net debt resulting from cash flows 3 (10,359) 6,231 (3,465)
Loans acquired with subsidiary undertakings 2 (22,164) (10,035) (10,035)
Loan notes issued 3 - - -
Other non-cash changes 3 (362) (281) (562)
Currency translation 3 (3) 27 52
Increase in net debt in the period (32,888) (4,058) (14,010)
Net debt at start of the period (181,687) (167,677) (167,677)
Net debt at end of the period 3 (214,575) (171,735) (181,687)
Note 1 to the Consolidated Cash Flow Statement
26 October 27 October 27 April
2003 2002 2003
#'000 #'000 #'000
Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit 26,412 29,467 50,383
Depreciation 7,106 5,608 11,735
Amortisation 880 880 1,759
(Increase)/decrease in stocks (301) (13) 123
(Increase)/decrease in debtors 1,231 1,727 (1,097)
Increase/(decrease) in creditors 3,040 (86) (1,825)
Net cash inflow from operating activities 38,368 37,583 61,078
Note 2 to the Consolidated Cash Flow Statement
26 October 27 October 27 April
2003 2002 2003
#'000 #'000 #'000
Returns on investments and servicing of finance
Interest received 57 68 131
Interest paid (5,734) (4,804) (9,853)
Interest element of finance lease repayments (563) (263) (809)
Dividends paid to minority shareholders (596) (441) (723)
Net cash outflow from returns on investments and servicing of (6,836) (5,440) (11,254)
finance
Capital expenditure and financial investment
Purchase of tangible fixed assets (17,205) (12,001) (28,840)
Sale of tangible fixed assets 269 294 518
Net cash outflow for capital expenditure and financial investment (16,936) (11,707) (28,322)
Acquisitions
Purchase of subsidiary undertakings (see note below) (14,460) (8,588) (8,744)
Cash acquired with subsidiary undertakings 347 30 27
Purchase of fixed asset investments (995) - -
Deferred consideration in respect of prior year acquisitions (530) - -
Net cash outflow for acquisitions (15,638) (8,558) (8,717)
Total dividends paid
Equity dividends paid (7,729) (6,279) (9,425)
Financing
Debts due within one year
Loans raised - - -
Repayment of loans - - -
Repayment of loan notes - - -
Issue of ordinary shares (net of share issue costs) 1,470 6,715 7,348
Debts due within one year:
Finance lease - sale and leaseback of equipment 134 1,616 2,834
Repayment of loans (187,664) (10,035) (29,244)
Debts due after more than one year:
Finance lease - sale and leaseback of equipment 621 12,200 17,594
Loans raised (net of Finance fees #1,232,250) 213,768 - -
Repayment of loans - (14,000) -
Capital element of finance lease repayments (1,657) (784) (1,711)
25,202 (11,003) (10,527)
Net cash inflow/(outflow) from financing 26,672 (4,288) (3,179)
Note: Purchase of subsidiary undertakings #'000
Provisional fair value of assets acquired:
Tangible fixed assets 37,127
Cash at bank and in hand 347
Inter company indebtedness (22,164)
Net liabilities (850)
Total 14,460
Satisfied by:
Cash 14,460
Tangible fixed assets include an increase in respect of fair value adjustments
of #14,836,000.
Upon acquisition, the Group immediately repaid the inter company indebtedness of
#22,164,000, in addition to the consideration detailed above.
Note 3 to the Consolidated Cash Flow Statement
Acquisitions
(excluding Other
27 April cash and non-cash Currency 26 October
2003 Cash flow overdrafts) changes translation 2003
#'000 #'000 #'000 #'000 #'000 #'000
Analysis of net debt
Cash at bank and in hand 13,995 3,898 - - (3) 17,890
Overdrafts (11,460) 10,945 - - - (515)
2,535 14,843 - - (3) 17,375
Debts due within one year (164,938) 187,664 (22,164) (562) - -
Debts due after more than one year - - 200 - (213,568)
(213,768)
Finance leases (19,284) 902 - - - (18,382)
Total (181,687) (10,359) (22,164) (362) (3) (214,575)
Other non-cash changes represent the amortisation of debt finance costs.
Notes to the Consolidated Profit Statement
Half year Half year Year to
Continuing to to 27 April
operations Acquisitions 26 October 27 October 2003
2003 2002
1 Segmental information #'000 #'000 #'000 #'000 #'000
Turnover
Gaming division 80,033 11,576 91,609 91,533 179,832
Betting division 660,568 - 660,568 381,531 821,142
Other activities 45 - 45 59 124
Total 740,646 11,576 752,222 473,123 1,001,098
Cost of sales (including #1 million pre-opening costs) (712,326) (9,540) (721,866) (439,764) (942,343)
Gross profit 28,320 2,036 30,356 33,359 58,755
Net operating expenses
Administration expenses (3,410) (3,387) (7,301)
Other operating income 346 365 678
Income from listed investments - 10 10
Net operating expenses - pre goodwill amortisation (3,064) (3,012) (6,613)
Administration expenses - goodwill amortisation (880) (880) (1,759)
Net operating expenses (3,944) (3,892) (8,372)
Operating profit 26,412 29,467 50,383
Income from interests in associated undertakings 219 132 413
Profit/(loss) on disposal of tangible fixed assets (34) 32 (108)
Profit on ordinary activities before interest 26,597 29,631 50,688
Total administration expenses amount to #4,290,000 (half year to 27 October 2002
#4,267,000; year to 27 April 2003 #9,060,000)
Half year to Half year Year to
Continuing 26 October to 27 April
operations Acquisitions 2003 27 October 2003
2002
#'000 #'000 #'000 #'000 #'000
Analysis of profit on ordinary activities before
interest by division:
Gaming division
Pre goodwill amortisation 12,076 2,036 14,112 21,760 36,715
Goodwill amortisation (880) - (880) (880) (1,759)
Including goodwill amortisation 11,196 2,036 13,232 20,880 34,956
Betting division 15,618 - 15,618 10,869 20,273
Other activities (2,253) - (2,253) (2,118) (4,541)
Profit on ordinary activities before interest 24,561 2,036 26,597 29,631 50,688
Net interest payable (6,024) (5,829) (11,187)
Profit on ordinary activities before taxation 20,573 23,802 39,501
Notes to the Consolidated Profit Statement
2 Taxation
The taxation charge reflects the full year's estimated effective rate of 32.7% (2002 - 32.7%).
3 Dividends
The directors have declared an interim dividend of 2.75p per share on 126,732,999 shares in issue at 26 October 2003.
The dividend will be paid on 27 February 2004 to all shareholders on the Register at the close of business on 30
January 2004.
A dividend reinvestment plan has been introduced by the Company to enable shareholders to receive future dividends as
shares rather than cash. Full details of the plan are available on our website.
4 Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders of #13,325,000
by the weighted average of 126,624,394 shares in issue during the period.
Diluted earnings per share are calculated by dividing the profit attributable to ordinary shareholders of #13,325,000
by the weighted average of 127,473,857 shares issued and issuable.
Earnings per share before goodwill amortisation are calculated by adjusting the profit attributable to ordinary
shareholders of #13,325,000 for goodwill amortisation of #880,000. This total is then divided by the weighted average
of 126,624,394 shares in issue during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFLALSILFIS
