TIDMSCEL
RNS Number : 4880T
Sceptre Leisure PLC
29 September 2010
Sceptre Leisure plc
("Sceptre" or the "Company" or the "Group")
Final results for the 12 months to 30 April 2010
Sceptre Leisure plc, is an AIM listed company with its principal activities
centred on the provision of gaming, lottery and leisure equipment.
Continued financial progress
· Revenue increased 9% to GBP42.8m (2009: GBP39.2m)
· EBITDA rose to GBP13.8m (2009: GBP13.0m*)
· Pre tax profit up 37% to GBP1.9m (2009: GBP1.39m)
· Basic EPS up 15% to 3.0p (2009: 2.6p)
· Net debt reduced to GBP15.9m (2009: GBP19.5m)
- Share placing of GBP5.5m in July 2009
* 2009 figures restated
Positive KPI's
· Asset utilisation maintained at 95%
· Machine numbers up to 21,329 (2009: 20,921)
· Strong growth in machine contracts
· Machine week average lower at GBP35.87 (2009: GBP38.92) due to disposal
of FOBT assets
Developments
· Lotteryking and Kelly's Eye rebranded and relocated
· Acquisition of Australian 8 Ball integrated
· Disposal of non-core FOBT assets for GBP3.75m
Ken Turner, Chief Executive, said:
"This has been our 12th year of consecutive sales and profit growth. We have a
proven, scalable business that is well funded. This combined with our recent
acquisition and growth in number of contracts we service gives us a great
platform from which to continue to develop our business both organically and by
further acquisition. We remain confident for the future."
29 September 2010
Enquiries:
+-------------------------------+----------------------------------------+
| Sceptre Leisure plc | Today: 0207 457 2020 |
| Ken Turner, Chief Executive | Thereafter: 01772 694242 |
| Mark White, Finance Director | |
+-------------------------------+----------------------------------------+
+-------------------------------+----------------------------------------+
| Seymour Pierce (NOMAD and | 0207 107 8000 |
| Broker) | |
| Sarah Jacobs / Jeremy Porter | |
+-------------------------------+----------------------------------------+
+-------------------------------+----------------------------------------+
| College Hill | 0207 457 2020 |
| Matthew Smallwood / Justine | |
| Warren | |
+-------------------------------+----------------------------------------+
Chairman's Statement
Continued growth
The Group has been active during the year, which included an acquisition, a
disposal and continued organic growth. We have once again seen an increase in
turnover and profit, achieved against a backdrop of recession and economic
uncertainty in the UK.
During the course of the year the Group has achieved a number of targets.
On 5 July 2009, the Company completed a GBP5.5m share placing with Hillroad
Investments, equivalent to 29.9% of the enlarged issued share capital.
On 1 December 2009, increased banking facilities were agreed with Lloyds Banking
Group. A new GBP6.0m revolving finance facility and GBP0.5m working capital
facility replaced the GBP3m overdraft originally agreed with Bank of Scotland in
2008. These new resources have been used to invest in new machines across the
entire estate.
In spite of a difficult financial climate, we have been successful in replacing
a number of the asset finance lines lost in the previous financial year due to
the banking crisis. We retain sufficient headroom within our facilities to
continue our expansion into the new financial year.
On 15 December 2009, we announced the acquisition of Australian 8 Ball, a
single-site operator based in Dorset. This new addition to the Sceptre Leisure
plc Group was a combined cash and shares deal with a total value of GBP1.1m. The
acquired business strengthened our position in the South and South-West of
England, and has begun to offer both financial and operational benefits to the
organisation.
On 19 April 2010, we completed the sale of our Fixed Odds Betting Terminal
(FOBT) estate to Global Draw Limited, a subsidiary of Scientific Games. This
followed the end of our exclusivity deal with Videobet and Playtech plc, with
whom we had pioneered the introduction and roll-out of market-leading technology
in the licensed betting office (LBO) market. The sale, for a cash consideration
of GBP3.75m, generated a profit of GBP0.8m for the Group. The deal was
particularly timely given the increasing levels of uncertainty and regulatory
restrictions surrounding the operation of FOBTs in the UK.
That we have achieved the above during the worst recession in 50 years is
testament to the hard work and dedication of our employees across all of our
trading divisions. We continue to differentiate ourselves from the competition
by offering excellent customer service and a 'can-do' operational attitude. I
would like to place on record my thanks to all employees and Directors for their
continued efforts over the course of the year.
The year also saw a number of changes to the Board of Directors. In January
2010, Lesley Humphrys stepped down as Finance Director in order to concentrate
on the operations of Sceptre Leisure Solutions, our principal trading
subsidiary. I would like to take the time on behalf of the Board to express our
thanks for her hard work and diligence.
In May 2010, the role of Finance Director was taken over by Mark White,
previously FD of Gamingking plc, and who has been with the Group since 2006.
Finally Brian Nichols, a founder of Lotteryking Limited and main Board member
since the Group's flotation in 1996, retired from the Board in May 2010. Once
again I would like to thank Brian on behalf of the Board for his dedication and
unstinting efforts over the past 24 years. I am pleased to report that Brian
remains within the Group in an advisory capacity.
In closing, I believe that we remain well-placed to take advantage of
consolidation within the market. We have funds available to grow either
organically through contract wins, or by means of further acquisition
opportunities.
Douglas Yates
Chairman
29 September 2010
Chief Executive's Review
Building the business
I am pleased to be able to report a strong set of results for the year ended 30
April 2010.
We have continued the progress outlined in our interim results with growth in
both revenue and earnings compared to the previous year, continuing our 12-year
unbroken run of profitable growth.
Performance overview
The period under review has provided much in the way of challenge, whether due
to recession, pub closures or instability in the financial markets. However
Sceptre has continued to grow and develop operations in all areas of the
business.
We have maintained or increased our asset usage and staffing ratios, whilst
continuing to offer unrivalled service to our customers in the licensed trade
across the UK.
During the course of the year we undertook several important transactions; a
share placing, an acquisition and a strategic disposal were all successfully
completed.
I would like to take this opportunity to summarise the activities in each of our
three trading divisions.
Sceptre Leisure Solutions
Sceptre Leisure Solutions forms the backbone of our Group. It provides over 90%
of our revenues and continues to grow.
The division is the second-largest operator of amusement machines in the UK
licensed market. Like-for-like revenues and machine numbers grew during the
year, against a backdrop of continuing pub closures.
Sceptre Leisure Solutions' success is built on strict adherence to operational
ratios and key performance indicators. Average weekly rental returns fell during
the year due to two main factors.
The first was the sale of our FOBT rental business, which achieved high income
per machine but with correspondingly high maintenance cost. The second factor
was the significant decline in SWP (skills with prizes, or quiz machine) income
due to the withdrawal of certain games due to new regulations.
Weekly machine rentals in this sector fell by 17% over the course of the year.
In the face of this, an 8% overall decrease in machine week average represents a
good performance in the current market. We maintained or improved all of our
other measures, disclosed more fully in the Financial Review on page 16.
Sceptre Leisure Solutions continued to win new business during the year, with
contract awards from high-quality operators such as Whitbread, and also contract
renewals from existing customers such as SSP (which operates at train stations
across the UK).
Our success in winning and retaining business is due to a combination of
market-leading customer service and the operational know-how provided by our
experienced and dedicated operational staff.
The growth has continued into the new financial year, with a significant
contract award from Punch Pub Company. This new partnership will increase our
machine estate by around 1,000 pieces in the second half of 2010/11.
During the year ended 30 April 2010, Sceptre Leisure Solutions achieved revenue
growth of 6.6%, and machine number growth (excluding disposals) of 3.7%.
Australian 8 Ball acquisition
On 15 December 2009, Sceptre Leisure plc announced the acquisition of Australian
8 Ball Company Limited, based in Dorset, which operated in 410 sites
predominately across the South and South-West of England.
The acquisition of Australian 8 Ball strengthened Sceptre's position in the
important southern marketplace and added a strategically important depot in that
area.
As is the Sceptre way, integration of Australian 8 Ball into our business was
effected quickly and efficiently, with full operational transition into
Sceptre's market-leading systems and processes being completed within four
weeks.
The Group continues to look for similar, earnings-enhancing acquisitions within
the fragmented machine-operator market. I believe that there are a number of
such acquisitions that could be made, each of which would provide significant
benefits both operationally and financially. We remain committed to our strategy
of organic growth, coupled with selective acquisition.
Sale of Fixed Odds Betting Terminal rental assets
On 19 April 2010, the Group sold its Fixed Odds Betting Terminal (FOBT) rental
assets to Global Draw Limited for a total cash consideration of GBP3.75m.
Whilst we had worked hard in our partnership with Playtech and Video Bet to
roll-out their software platform to the UK licensed betting office (LBO) market,
we recognised two factors affecting our ability to grow further in this
particular sector. The first was growing uncertainty over the future regulatory
framework under which the FOBT machines would operate.
The second was the high level of capital investment required to grow the machine
base: a typical FOBT costs more than twice as much as a fruit machine for a pub
or club, but provides only 50% more by way of rental income.
The FOBT rental assets comprised 751 terminals and associated customer
contracts, with a net book value of GBP3.0m. The full amount of the
consideration was paid in cash on completion, and generated a one-off profit on
disposal of GBP0.8m, which is recognised in these results.
This sale of a non-core part of our business was at a significant profit. Its
disposal freed up capital and resources across the business to focus on the
roll-out of machines to our traditional markets in pubs and other leisure
outlets where we continue to see strong demand.
Share placing
On 5 July 2009, we completed the placing of 16,603,400 new Ordinary Shares with
Hillroad Investments Limited at a price of 33.1p per share thereby raising gross
proceeds of GBP5.5m. This represents 29.9% of our enlarged share capital as at
30 April 2010.
The lack of availability of asset finance had constrained us from continuing to
grow the business in the early part of the financial year. In the same period
there had been considerable consolidation in the gaming machine supply market.
This consolidation opened up significant opportunities to win additional
business with some of the major pub companies within the UK.
I am delighted to welcome Hillroad as a substantial shareholder. The additional
capital has allowed us to drive our business forward and to take advantage of
some of the significant opportunities that exist in our marketplace.
Lotteryking
The registered members' club market endured a difficult year. Footfall was down,
with many sites finding income difficult to come by.
During the year we reviewed Lotteryking's operational structure, and relocated
all telesales and administrative functions to our Preston head office. In doing
so, we incurred one-off costs totalling GBP0.5m in redundancy and provision for
future property costs at our Hainault facility.
In spite of this, Lotteryking has increased market share, with machine numbers
increasing by 15% over the course of the year.
Lotteries provide a valuable, tax-free income stream for clubs, and Lotteryking
has the largest range of tickets in the market to help them raise funds
successfully.
Lotteryking's customer base has also allowed Sceptre to begin penetrating the
club market and I would expect this steady growth to continue in the coming
months.
Kelly's Eye
In addition to private lotteries, registered members' clubs rely on the income
generated from bingo and other fundraising activities. These indoor games also
provide a popular and enjoyable pastime for members of these clubs.
We are beginning to see these activities being replicated in the pub market.
Bingo nights are becoming more popular as landlords look to gain additional
midweek custom, and Sceptre's sales and operational team is ideally-placed to
deliver these fundraising items to pubs. Over the course of the year we
introduced our 'Collectors Deliver' programme, whereby pubs could order from
their regular machine collector, and have these goods personally delivered at
the next collection.
This has proven to be a popular service, and we are now working on the
introduction of a comprehensive catalogue containing a complete range of
products for the pub or club.
The catalogue will be sent to all 12,000 of our customers during the course of
October, and will be followed up by a telesales marketing campaign to generate
new sales from our existing client base.
This catalogue will be backed by our e-commerce websites also offering the full
range of products to ensure that our customers can order goods at a time and
place that is convenient to them.
Outlook
I believe that the past year has left Sceptre well placed to take advantage of
the many opportunities that exist in the pub and club markets.
We continue to win business from the competition through our offering of
high-quality service and market-leading products. Our recent contract win with
Punch Pub Company demonstrates that Sceptre is now seen as a leading machine
operator by the UK's premium pub companies.
There are a number of acquisition opportunities within the machine operating
market which could be integrated into our existing depot infrastructure to
deliver enhanced future earnings. We will continue to assess these
opportunities, and pursue those that we feel offer the clearest benefits to our
organisation.
We have demonstrated that Sceptre can continue to grow and prosper in a
difficult market, and we remain confident that we can continue to do so in the
coming year.
Ken Turner
Chief Executive Officer
29 September 2010
Financial Review
Strong performance
Revenue
Group turnover increased by 9% to GBP42.8m, due both to acquisitions and organic
growth.
Rental income increased by 7% to GBP38.8m with other streams amounting to
GBP4.1m.
Profitability
Operating profit before exceptional items increased by 8% to GBP4.0m, whilst
profit before tax increased by 37% to GBP1.9m. The machine sales and rental
division, representing 91% of the Group revenues increased operating profit by
20% to GBP5.1m.
Corporate overheads amounted to GBP0.9m (2009: GBP0.5m) and comprised the costs
of the Board, legal, professional and other fees connected with running a public
company. The comparative cost in 2009 in this area relates to the seven months
following the reverse takeover of Gamingking plc in September 2008.
Other divisions contributed an operating loss of GBP0.9m (2009: GBP0.2m) during
the year. Much of this was due to the restructure of Lotteryking, with all
administrative and distribution processes relocating to the Preston head office
during the year. The exceptional costs relating to this are disclosed in note 4
to the financial statements, and included a provision for onerous leases on our
Hainault facility of GBP0.5m. The lease on this property was signed in 1993 with
a 25-year term and no break clauses. Given the current state of the commercial
property market, we have therefore provided in full for the remaining term of
the lease.
There was also an employee share-based payment charge recognised in the year of
GBP0.1m (2009: GBP0.1m).
Finance costs
The net finance costs charged to income were GBP1.4m (2009: GBP2.1m), of which
GBP1.4m was cash interest. The balance related to a non-cash, interest rate swap
movement of GBP0.1m gain (2009: GBP0.4m loss).
This derivative contract was a condition of the Group's banking agreements with
Bank of Scotland (now part of Lloyds Banking Group), and will continue to run
alongside this facility until the end of the term loan in October 2012.
Earnings per share
Basic earnings per share increased to 3.0p (2009: 2.6p).
Share placing
On 5 July 2009 the Company placed 16,603,400 Ordinary 5p Shares with Hillroad
Investments Limited at a price of 33.1p per share, thereby raising proceeds of
GBP5.5m. These shares represent 29.89% of the Company's issued share capital as
at the date of these accounts.
Acquisition
On 15 December 2009, Sceptre Leisure plc announced the acquisition of Australian
8 Ball Company Limited in a combined cash and shares deal. The acquisition is
disclosed in note 15 to the consolidated financial statements.
Exceptional costs
During the year the Group incurred certain one-off restructuring costs. These
centred on provisions for redundancy and onerous leases for properties which are
no longer required following a restructure of Lotteryking. All onerous lease
amounts payable have been fully provided for up to the first available term
break.
In addition, the Directors considered that the brand names of Lotteryking and
Kelly's Eye had suffered impairment during the year, giving rise to a cost of
GBP0.2m (2009: nil). Finally, the fair value adjustment under IFRS3 following
the acquisition of Australian 8 Ball Company led to the recognition of negative
goodwill of GBP0.2m. These costs are set out in note 4 to the consolidated
financial statements.
Sale of Fixed Odds Betting Terminal (FOBT) assets
On 19 April 2010 the Group sold its FOBT rental assets to The Global Draw
Limited for a total cash consideration of GBP3.75m. The business comprised
property, plant and equipment with a net book value of GBP2.8m, and intangible
assets (customer contracts) with a net book value of GBP0.2m.
Key performance indicators
The Board of Sceptre Leisure plc monitors a range of financial and non-financial
performance indicators, reported on a periodic basis, to measure performance
against expected targets. These include:
+--+---------------------------------------------------------+----------+----------+
| | Financial | 2010 | 2009 |
+--+---------------------------------------------------------+----------+----------+
| 1| Earnings per share before exceptional items | 4.1p | 3.0p |
+--+---------------------------------------------------------+----------+----------+
| 2| EBITDA | GBP13.8m | GBP13.0m |
+--+---------------------------------------------------------+----------+----------+
| | Non-financial | | |
+--+---------------------------------------------------------+----------+----------+
| 3| Machine numbers | 21,300 | 20,900 |
+--+---------------------------------------------------------+----------+----------+
| 4| Machine week average | GBP35.84 | GBP38.92 |
+--+---------------------------------------------------------+----------+----------+
| 5| Pieces/personnel ratio | 48 | 46 |
+--+---------------------------------------------------------+----------+----------+
| 6| Asset utilisation | 95% | 95% |
+--+---------------------------------------------------------+----------+----------+
Capital expenditure
Capital expenditure was GBP12.4m in 2010 (GBP14.8m). The level of capital
expenditure was proportionally higher in the first half of the year (GBP7.4m)
due to investment in new machines following the introduction of new stakes and
prizes for AWPs in July 2009. Capital expenditure remains focused on our machine
estate, with GBP11.8m of expenditure (2009: GBP13.9m). The remaining expenditure
was on improved warehousing facilities at our head office (GBP0.1m) and motor
vehicles (GBP0.2m).
Prior year adjustment
During the year, the Group revised its method of allocating interest over the
life of the lease term in order to give a better approximation of a constant
periodic rate of interest on the remaining balance of the liability in
accordance with IAS 17, leases. The effect of this restatement is to increase
the 2009 finance cost by GBP190,000, reduce profit before taxation for 2009 by
GBP190,000, increase interest bearing loans and borrowings as at 30 April 2009
by GBP248,000 and reduce net assets as at 30 April 2009 by GBP248,000. An
adjustment of GBP58,000 has also been made to reduce retained earnings as at 1
May 2008 to correct the impact on prior periods. This prior year adjustment is
also disclosed in note 5 to the consolidated financial statements.
Financing
Net debt decreased to GBP15.9m compared to GBP19.5m as at 30 April 2009. This
decrease is principally as a result of the sale of the FOBT rental assets
immediately prior to year end. At the end of April 2010 bank debt stood at
GBP12.7m (April 2009: GBP10.7m), made up of a loan of GBP6.2m, an overdraft of
GBP0.5m, and a revolving credit facility of GBP6.0m (April 2009: loan GBP8.3m,
overdraft GBP2.4m). The loan is repayable over a five-year term ending in
September 2012.
Total bank loan repayments during the year were GBP2.1m. In addition, GBP1.5m on
a vendor loan (2009: GBP2.2m) remains outstanding. This loan was created on the
acquisition of the Crown Leisure estate, and is repayable by 2012, with capital
repayments of GBP0.7m being made during the year.
The Group uses finance leasing to acquire certain of its plant and equipment. At
the end of April 2010, asset finance outstanding totalled GBP5.5m (2009:
GBP7.4m). The leases are held with various financial institutions under
differing terms, but in general machine assets are financed over a period of 24
months, with commercial vehicles financed over a period of up to 48 months.
All key financing covenants have been met for the period.
Financial risk treasury management
The majority of the Group's borrowings are fixed through a combination of fixed
rate securitised debt and interest rate swaps. The banking and covenants are
reviewed throughout the year as part of the internal reporting process with a
focus on ensuring appropriate headroom is available.
Interest rate risk
The Group uses an interest rate collar to manage its exposure to interest rate
movements on its bank borrowings. Contracts covering notional amounts equivalent
to the bank loan restrict interest payments at rates between 4.7% and 5.75% over
the life of the loan. The fair value of the collar at the reporting date is
reflected in the Group balance sheet under the derivative financial instrument
heading.
Currency rate risk
The Group buys currency at spot rate. There are few transactions in foreign
currencies and therefore the Group's exposure to foreign exchange risk is
considered to be low. The Group would look to minimise any increased exposure to
foreign exchange through the use of currency instruments, if appropriate.
Liquidity risk
The Group's approach to managing liquidity is to ensure, as far as possible,
that it has sufficient liquidity to meet its liabilities as they fall due with
surplus facilities to cope with any unexpected variances in timing of cash
flows. At 30 April 2010, the Group had undrawn borrowing facilities of GBP1.3m
(2009: GBP3.1m), of which GBP1.3m (2009: GBP1.2m) were uncommitted. In addition
to undrawn borrowing facilities, as at 30 April 2010, the Group held on deposit
cash of GBP4.2m.
Taxation
The effective tax rate for the year was 15.3% (2009: 30.3%).
Mark White
Finance Director
29 September 2010
Consolidated statement of comprehensive income
for the year ended 30 April 2010
+-----------------------------------------------------+-------+----------+------------+
| Continuing operations | Note | 30 | Restated** |
| | | April | 30 April |
| | | 2010 | 2009* |
| | | GBP000 | GBP000 |
+-----------------------------------------------------+-------+----------+------------+
| Revenue | 2,3 | 42,808 | 39,205 |
+-----------------------------------------------------+-------+----------+------------+
| Direct costs | | (29,498) | (28,068) |
+-----------------------------------------------------+-------+----------+------------+
| Gross profit | 3 | 13,310 | 11,137 |
+-----------------------------------------------------+-------+----------+------------+
| Distribution costs | | (93) | (104) |
+-----------------------------------------------------+-------+----------+------------+
| Administrative expenses - normal | | (9,748) | (7,462) |
+-----------------------------------------------------+-------+----------+------------+
| Administrative expenses - exceptional items | 4 | (803) | (236) |
+-----------------------------------------------------+-------+----------+------------+
| Profit on disposal of tangible and intangible | | 535 | 154 |
| assets | | | |
+-----------------------------------------------------+-------+----------+------------+
| Operating profit | 3 | 3,201 | 3,489 |
+-----------------------------------------------------+-------+----------+------------+
| Operating profit before exceptional items | | 4,004 | 3,725 |
+-----------------------------------------------------+-------+----------+------------+
| Exceptional items | 4 | (803) | (236) |
+-----------------------------------------------------+-------+----------+------------+
| Finance income | | 124 | - |
+-----------------------------------------------------+-------+----------+------------+
| Finance costs | | (1,414) | (2,097) |
+-----------------------------------------------------+-------+----------+------------+
| Net finance expense | | (1,290) | (2,097) |
+-----------------------------------------------------+-------+----------+------------+
| Profit before taxation | | 1,911 | 1,392 |
+-----------------------------------------------------+-------+----------+------------+
| Tax expense | 6 | (293) | (422) |
+-----------------------------------------------------+-------+----------+------------+
| Profit and total comprehensive income for the | | 1,618 | 970 |
| financial year | | | |
+-----------------------------------------------------+-------+----------+------------+
| Profit and total comprehensive income attributable | | | |
| to: | | | |
+-----------------------------------------------------+-------+----------+------------+
| - Equity holders of the parent | | 1,587 | 937 |
+-----------------------------------------------------+-------+----------+------------+
| - Non-controlling interest | | 31 | 33 |
+-----------------------------------------------------+-------+----------+------------+
| | | 1,618 | 970 |
+-----------------------------------------------------+-------+----------+------------+
| Earnings per Ordinary Share | | | |
+-----------------------------------------------------+-------+----------+------------+
| - Basic | 8 | 3.0p | 2.6p |
+-----------------------------------------------------+-------+----------+------------+
| - Diluted | 8 | 2.8p | 2.5p |
+-----------------------------------------------------+-------+----------+------------+
* Results for the year ended 30 April 2009 are Orb Holdings Limited for the full
12 months plus Gamingking plc from the date of acquisition, 29 September 2008.
**These results have been adjusted from those previously published as described
in note 5 to the financial statements.
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated balance sheet
at 30 April 2010
+-----------------+------+----------+----------+----------+----------+----------+----------+
| | Note | GBP000 | 30 | GBP000 | Restated | GBP000 | Restated |
| | | | April | | 30 April | | 29 April |
| | | | 2010 | | 2009 | | 2008 |
| | | | GBP000 | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Non-current | | | | | | | |
| assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Intangible | 9 | 5,675 | | 4,924 | | 2,166 | |
| assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Property, | 10 | 26,975 | | 26,854 | | 21,732 | |
| plant and | | | | | | | |
| equipment | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Derivative | | - | | - | | 7 | |
| financial | | | | | | | |
| instruments | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total | | | 32,650 | | 31,778 | | 23,905 |
| non-current | | | | | | | |
| assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Current assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Inventories | | 1,276 | | 1,092 | | 585 | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Trade and | | 5,771 | | 4,744 | | 2,957 | |
| other | | | | | | | |
| receivables | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Cash and cash | | 4,163 | | 719 | | 449 | |
| equivalents | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total current | | | 11,210 | | 6,555 | | 3,991 |
| assets | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total assets | | | 43,860 | | 38,333 | | 27,896 |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Current | | | | | | | |
| liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Trade and | | (7,533) | | (9,279) | | (5,331) | |
| other payables | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Corporation | | (612) | | (1,086) | | - | |
| tax | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Interest | | (7,887) | | (10,230) | | (6,074) | |
| bearing loans | | | | | | | |
| and borrowings | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total current | | | (16,032) | | (20,595) | | (11,405) |
| liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Non-current | | | | | | | |
| liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Trade and | | (130) | | (468) | | (433) | |
| other payables | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Interest | | (12,193) | | (10,020) | | (12,469) | |
| bearing loans | | | | | | | |
| and borrowings | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Deferred | | (1,976) | | (916) | | (959) | |
| taxation | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Derivative | | (290) | | (414) | | - | |
| financial | | | | | | | |
| instruments | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total | | | (14,589) | | (11,818) | | (13,861) |
| non-current | | | | | | | |
| liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total | | | (30,621) | | (32,413) | | (25,266) |
| liabilities | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Net assets | | | 13,239 | | 5,920 | | 2,630 |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Equity | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Share capital | | | 5,394 | | 4,554 | | 3 |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Share premium | | | 4,840 | | 173 | | 38 |
| account | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Merger reserve | | | (2,232) | | (2,332) | | 104 |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Retained | | | 5,166 | | 3,485 | | 2,478 |
| earnings | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Equity | | | 13,168 | | 5,880 | | 2,623 |
| attributable | | | | | | | |
| to equity | | | | | | | |
| holders of the | | | | | | | |
| parent | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Non-controlling | | | 71 | | 40 | | 7 |
| interest | | | | | | | |
+-----------------+------+----------+----------+----------+----------+----------+----------+
| Total equity | | | 13,239 | | 5,920 | | 2,630 |
+-----------------+------+----------+----------+----------+----------+----------+----------+
These financial statements were approved and authorised for issue by the Board
of Directors on 29 September 2010.
Consolidated statement of cash flows
for the year ended 30 April 2010
+------------------------------+------+----------+---------+----------+----------+
| | Note | GBP000 | 30 | GBP000 | Restated |
| | | | April | | 30 April |
| | | | 2010 | | 2009 |
| | | | GBP000 | | GBP000 |
+------------------------------+------+----------+---------+----------+----------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Profit before taxation | | 1,911 | | 1,392 | |
+------------------------------+------+----------+---------+----------+----------+
| Adjustments for: | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Depreciation | | 9,344 | | 9,002 | |
+------------------------------+------+----------+---------+----------+----------+
| Amortisation | | 372 | | 206 | |
+------------------------------+------+----------+---------+----------+----------+
| Recognition of negative | 11 | (225) | | - | |
| goodwill | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Impairment of intangible | | 227 | | - | |
| assets (brand names) | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Equity-settled share options | | 131 | | 97 | |
+------------------------------+------+----------+---------+----------+----------+
| Profit on disposal of | | (535) | | (154) | |
| property, plant and | | | | | |
| equipment and intangible | | | | | |
| assets | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Finance (gain)/loss on | | (124) | | 421 | |
| derivative financial | | | | | |
| instruments | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Finance costs | | 1,414 | | 1,676 | |
+------------------------------+------+----------+---------+----------+----------+
| Cash flows from operating | | | 12,515 | | 12,640 |
| activities before changes in | | | | | |
| working capital | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Changes in working capital: | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Increase in inventories | | | (180) | | (217) |
+------------------------------+------+----------+---------+----------+----------+
| Increase in trade and other | | | (946) | | (1,213) |
| receivables | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| (Decrease)/increase in trade | | | (2,612) | | 2,872 |
| and other payables | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Cash generated from | | | 8,777 | | 14,082 |
| operations | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Finance costs | | | (1,414) | | (1,513) |
+------------------------------+------+----------+---------+----------+----------+
| Income tax (paid)/received | | | (250) | | 7 |
+------------------------------+------+----------+---------+----------+----------+
| Net cash from operating | | | 7,113 | | 12,576 |
| activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Purchase of business net of | 11 | (996) | | (652) | |
| cash acquired | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Purchase of property, plant | 10 | (12,389) | | (14,843) | |
| and equipment | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Sale of tangible and | | 4,557 | | 1,907 | |
| intangible assets | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Net cash used in investing | | | (8,828) | | (13,588) |
| activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Movement in bank loans and | | (2,775) | | (2,225) | |
| loan notes | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Revolving credit facility | | 5,999 | | - | |
| drawdowns | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Finance lease rental | | (1,576) | | 2,268 | |
| (payments)/drawdowns | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Equity dividends paid | | (100) | | - | |
+------------------------------+------+----------+---------+----------+----------+
| New shares issued | | 5,497 | | - | |
+------------------------------+------+----------+---------+----------+----------+
| Net cash (used in)/generated | | | 7,045 | | 43 |
| from financing activities | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Net increase/(decrease) in | | | 5,330 | | (969) |
| cash and cash equivalents | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Cash and cash equivalents at | | | (1,637) | | (668) |
| start of period | | | | | |
+------------------------------+------+----------+---------+----------+----------+
| Cash and cash equivalents at | | | 3,693 | | (1,637) |
| end of period | | | | | |
+------------------------------+------+----------+---------+----------+----------+
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated statement of changes in equity
at 30 April 2010
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Restated | Share | Share | Merger | Retained | Equity | Non-controlling | Total |
| 30 April 2009 | capital | premium | reserve | earnings | attributable | interest GBP000 | equity |
| | GBP000 | account | GBP000 | GBP000 | to equity | | GBP000 |
| | | GBP000 | | | holders of | | |
| | | | | | the parent | | |
| | | | | | GBP000 | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| At 1 May 2008 | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| (as previously | 3 | 38 | 104 | 2,536 | 2,681 | 7 | 2,688 |
| reported) | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Prior year adjustment | - | - | - | (58) | (58) | - | (58) |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| At 1 May 2008 | 3 | 38 | 104 | 2,478 | 2,623 | 7 | 2,630 |
| (restated) | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Adjustments arising | 4,551 | 135 | (2,436) | - | 2,250 | - | 2,250 |
| from reverse | | | | | | | |
| acquisition | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Employee share-based | - | - | - | 97 | 97 | - | 97 |
| payments | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Taxation effect of | - | - | - | (27) | (27) | - | (27) |
| employee share-based | | | | | | | |
| payments | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Transactions with | 4,551 | 135 | (2,436) | 70 | 2,320 | - | 2,320 |
| owners | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Profit for the | - | - | - | 937 | 937 | 33 | 970 |
| financial year and | | | | | | | |
| total comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| At 30 April 2009 | 4,554 | 173 | (2,332) | 3,485 | 5,880 | 40 | 5,920 |
| (restated) | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| 30 April 2010 | Share | Share | Merger | Retained | Equity | Non-controlling | Total |
| | capital | premium | reserve | earnings | attributable | interest GBP000 | equity |
| | GBP000 | account | GBP000 | GBP000 | to equity | | GBP000 |
| | | GBP000 | | | holders of | | |
| | | | | | the parent | | |
| | | | | | GBP000 | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| At 1 May 2009 | 4,554 | 173 | (2,332) | 3,485 | 5,880 | 40 | 5,920 |
| (restated) | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Net proceeds from the | 830 | 4,667 | - | - | 5,497 | - | 5,497 |
| issue of Ordinary | | | | | | | |
| Shares | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Shares issued on the | 10 | - | 100 | - | 110 | - | 110 |
| acquisition of | | | | | | | |
| Australian 8 Ball | | | | | | | |
| Company Limited | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Employee share-based | - | | - | 131 | 131 | - | 131 |
| payments | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Taxation effect of | - | - | - | (37) | (37) | - | (37) |
| employee share-based | | | | | | | |
| payment | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Transactions with | 840 | 4,667 | 100 | 94 | 5,701 | - | 5,701 |
| owners | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| Profit for the | - | - | - | 1,587 | 1,587 | 31 | 1,618 |
| financial year and | | | | | | | |
| total comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
| At 30 April 2010 | 5,394 | 4,840 | (2,232) | 5,166 | 13,168 | 71 | 13,239 |
+-----------------------+---------+---------+---------+----------+--------------+-----------------+--------+
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes
(forming part of the financial statements)
1 Accounting policies
Basis of preparation
Sceptre Leisure plc is a company registered and resident in England and Wales.
These financial statements were authorised for issue by the Board of Directors
on 29 September 2010.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the 'Group').
The parent company financial statements present information about the Company as
a separate entity and not about its group.
The Group financial statements have been prepared and approved by the Directors
in accordance with International Financial Reporting Standards as adopted by the
EU ('Adopted IFRSs').
The financial information set out in this announcement does not constitute the
Group's statutory accounts, as defined in Section 435 of the Companies Act 2006,
for the years ended 30 April 2010 or 30 April 2009, but is derived from the 2010
Annual Report. Statutory accounts for 2009 have been delivered to the Registrar
of Companies and those for 2010 will be delivered in due course. The auditors
have reported on those accounts; their reports were unqualified.
2 Revenue
+-------------------------------------------------------------+--------+--------+
| Revenue | 30 | 30 |
| | April | April |
| | 2010 | 2009 |
| | GBP000 | GBP000 |
+-------------------------------------------------------------+--------+--------+
| Equipment sales | 377 | 307 |
+-------------------------------------------------------------+--------+--------+
| Machine rental | 38,755 | 36,361 |
+-------------------------------------------------------------+--------+--------+
| Sale of lottery, indoor gaming, and leisure products | 3,676 | 2,537 |
+-------------------------------------------------------------+--------+--------+
| Total revenues | 42,808 | 39,205 |
+-------------------------------------------------------------+--------+--------+
3 Segmental report
During the year, the Group adopted IFRS 8 Operating Segments, which replaces IAS
14 Segment Reporting. The standard is applied retrospectively. The accounting
policy for identifying segments is now based on internal management reporting
information that is regularly reviewed by the chief operating decision maker
(The Board of Directors). The Board of Directors manages the Group in three
business segments:
- machine sales and rental (Sceptre Leisure Solutions);
- the sale of lottery, indoor gaming and other products (Lotteryking and Kelly's
Eye); and
- the operation of lotteries on behalf of charities (Creative Lotteries).
During the periods under review, over 90% of the Group's activities related to
machine sales and rental, and therefore the remaining segments have been
consolidated due to materiality and classified as 'all other segments'.
All revenue reported in the period under review arose within the United Kingdom.
The accounting policies applied to inter-segment transactions are consistent
with those disclosed applied to the financial statements.
The measurement policies the Group uses for segment reporting under IFRS 8 are
the same as those used in the financial statements apart from the recognition of
the prior year adjustment as explained within note 5 to the financial
statements.
Segment performance is monitored monthly as part of the management reporting
process. The financial performance for each segment is analysed and
consolidation adjustments to reach the Group results are shown separately.
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Segmental analysis | Machine | Other | Central | 2010 | Machine | Other | Central | 2010 |
| | sales | GBP000 | corporate | Group | sales | GBP000 | corporate | Group |
| | and | | costs | GBP000 | and | | costs | GBP000 |
| | rental | | GBP000 | | rental | | GBP000 | |
| | GBP000 | | | | GBP000 | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| External revenue | 39,132 | 3,676 | - | 42,808 | 36,668 | 2,537 | - | 39,205 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Inter-segment | - | - | - | - | - | - | - | - |
| revenue | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Net revenue | 39,132 | 3,676 | - | 42,808 | 36,668 | 2,537 | - | 39,205 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Gross profit | 11,060 | 2,250 | - | 13,310 | 9,746 | 1,391 | - | 11,137 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Operating | 5,080 | (978) | (901) | 3,201 | 4,225 | (214) | (522) | 3,489 |
| profit/(loss) | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Segment assets | 38,750 | 4,986 | 124 | 43,860 | 33,075 | 5,258 | - | 38,333 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Segment | (23,066) | (1,325) | (6,230) | (30,621) | (30,438) | (1,727) | - | (32,165) |
| liabilities | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Other segment | | | | | | | | |
| information: | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Capital | 11,541 | 848 | - | 12,389 | 14,481 | 362 | - | 14,843 |
| expenditure | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Intangible assets | 1,546 | - | - | 1,546 | - | 2,964 | - | 2,964 |
| - additions | | | | | | | | |
| | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Depreciation | 9,015 | 329 | - | 9,344 | 8,829 | 173 | - | 9,002 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Amortisation | 249 | 123 | - | 372 | 120 | 86 | - | 206 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Interest expense | 1,404 | 10 | - | 1,414 | 1,661 | 15 | - | 1,676 |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Impairment | - | 227 | - | 227 | - | - | - | - |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Equity-settled | 59 | 27 | 45 | 131 | 38 | 20 | 39 | 97 |
| share options | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
| Finance | (124) | - | - | (124) | 421 | - | - | 421 |
| (gain)/loss on | | | | | | | | |
| derivative | | | | | | | | |
| financial | | | | | | | | |
| instruments | | | | | | | | |
+--------------------+----------+---------+-----------+----------+----------+---------+-----------+----------+
During the year, two customers contributed more than 10% of Group revenues, both
within the 'machine sales and rental' segment: Customer A - revenue GBP6.6m
(15.5%); Customer B - revenue GBP6.3m (14.8%)
4 Exceptional items
+-------------------------------------------------------------+--------+--------+
| | 30 | 30 |
| | April | April |
| | 2010 | 2009 |
| | GBP000 | GBP000 |
+-------------------------------------------------------------+--------+--------+
| Restructuring and redundancy | 195 | 118 |
+-------------------------------------------------------------+--------+--------+
| Provision for rentals and business rates on onerous leases | 452 | 47 |
+-------------------------------------------------------------+--------+--------+
| Impairment of intangible assets - brands | 227 | - |
+-------------------------------------------------------------+--------+--------+
| Recognition of negative goodwill on acquisition of | (225) | - |
| Australian 8 Ball Company Limited | | |
+-------------------------------------------------------------+--------+--------+
| Professional and financial expenses relating to corporate | 154 | 71 |
| restructuring | | |
+-------------------------------------------------------------+--------+--------+
| Exceptional items cost/(credit) | 803 | 236 |
+-------------------------------------------------------------+--------+--------+
5 Prior year adjustment
During the year the Group revised its method of allocating interest over the
life of the lease term in order to give a better approximation of a constant
periodic rate of interest on the remaining balance of the liability in
accordance with IAS 17, Leases. The effect of this change in accounting policy
is to increase the 2009 finance cost by GBP190,000, reduce profit before
taxation for 2009 by GBP190,000, increase interest bearing loans and borrowings
as at 30 April 2009 by GBP248,000 and reduce net assets as at 30 April 2009 by
GBP248,000. In addition, an adjustment of GBP58,000 has also been made to reduce
retained earnings as at 1 May 2008, to correct the impact on earlier periods.
The prior year adjustment reduces previously reported 2009 EPS from 3.1p to
2.6p, and diluted EPS from 3.0p to 2.5p.
6 Taxation
+--------------------------------------------+---------+--------+--------+----------+
| | | 30 | | Restated |
| | | April | | 30 April |
| | | 2010 | | 2009 |
+--------------------------------------------+---------+--------+--------+----------+
| Recognised in the statement of | GBP000 | GBP000 | GBP000 | GBP000 |
| comprehensive income | | | | |
+--------------------------------------------+---------+--------+--------+----------+
| Current tax expense: | | | | |
+--------------------------------------------+---------+--------+--------+----------+
| Current year | 863 | | 1,194 | |
+--------------------------------------------+---------+--------+--------+----------+
| Adjustments for prior years | (1,158) | | - | |
+--------------------------------------------+---------+--------+--------+----------+
| Current tax expense | | (295) | | 1,194 |
+--------------------------------------------+---------+--------+--------+----------+
| Deferred tax expense: | | | | |
+--------------------------------------------+---------+--------+--------+----------+
| Origination and reversal of temporary | (365) | | (684) | |
| differences | | | | |
+--------------------------------------------+---------+--------+--------+----------+
| Adjustments in respect of previous years | 953 | | (88) | |
+--------------------------------------------+---------+--------+--------+----------+
| Deferred tax expense | | 588 | | (772) |
+--------------------------------------------+---------+--------+--------+----------+
| Total tax expense | | 293 | | 422 |
+--------------------------------------------+---------+--------+--------+----------+
+-------------------------------------------------------------+--------+----------+
| Reconciliation of effective tax rate | 30 | Restated |
| | April | 30 April |
| | 2010 | 2009 |
| | GBP000 | GBP000 |
+-------------------------------------------------------------+--------+----------+
| Profit before tax | 1,911 | 1,582 |
+-------------------------------------------------------------+--------+----------+
| Profit before tax multiplied by standard rate of | 535 | 443 |
| corporation tax in the UK of 28% (2009: 28%) | | |
+-------------------------------------------------------------+--------+----------+
| Effects of: | | |
+-------------------------------------------------------------+--------+----------+
| Expenses not deductible for tax purposes | 61 | 53 |
+-------------------------------------------------------------+--------+----------+
| Income not taxable | (63) | - |
+-------------------------------------------------------------+--------+----------+
| Adjustments in respect of previous years | (205) | (71) |
+-------------------------------------------------------------+--------+----------+
| Movement in unrecognised deferred tax assets | (34) | - |
+-------------------------------------------------------------+--------+----------+
| Small company relief | (1) | (3) |
+-------------------------------------------------------------+--------+----------+
| Total tax expense | 293 | 422 |
+-------------------------------------------------------------+--------+----------+
7 Dividends
The Directors do not recommend the payment of a dividend in respect of the
current year. During the year the Group paid GBP100,000 in relation to a 2008
dividend declared but not paid by Orb Holdings Limited prior to the reverse
acquisition in September 2008.
8 Earnings per Ordinary Share
The calculations of earnings per share are based on the following profits and
number of shares:
+------------------------------------+--------+---------+----------+----------+
| | Basic | Diluted | Restated | Restated |
| | 30 | 30 | Basic | Diluted |
| | April | April | 30 April | 30 April |
| | 2010 | 2010 | 2009 | 2009 |
| | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | |
+------------------------------------+--------+---------+----------+----------+
| Profit for the financial year | 1,587 | 1,587 | 937 | 937 |
+------------------------------------+--------+---------+----------+----------+
| Additional disclosures: | | | | |
+------------------------------------+--------+---------+----------+----------+
| Exceptional administrative | 803 | 803 | 236 | 236 |
| expenses | | | | |
+------------------------------------+--------+---------+----------+----------+
| Taxation effect of exceptional | (225) | (225) | (66) | (66) |
| administrative expenses | | | | |
+------------------------------------+--------+---------+----------+----------+
| Profit for the financial year | 2,165 | 2,165 | 1,107 | 1,107 |
| before exceptional expenses | | | | |
+------------------------------------+--------+---------+----------+----------+
+------------------------------------+-------------+--------------+
| | 30 April | 30 April |
| | 2010 | 2009 |
| | Number of | Number of |
| | shares | shares |
+------------------------------------+-------------+--------------+
| Weighted average number of shares | | |
+------------------------------------+-------------+--------------+
| For basic earnings per share | 52,426,333 | 36,354,494 |
+------------------------------------+-------------+--------------+
| Share options | 3,617,694 | 1,793,980 |
+------------------------------------+-------------+--------------+
| For diluted earnings per share | 56,044,027 | 38,148,474 |
+------------------------------------+-------------+--------------+
The group's earnings per share are as follows:
+------------------------------------+-------------+--------------+
| | 30 April | Restated |
| | 2010 | 30 April |
| | pence | 2009 |
| | | pence |
+------------------------------------+-------------+--------------+
| - Basic | 3.0 | 2.6 |
+------------------------------------+-------------+--------------+
| - Diluted | 2.8 | 2.5 |
+------------------------------------+-------------+--------------+
| - Basic before exceptional | 4.1 | 3.0 |
| expenses | | |
+------------------------------------+-------------+--------------+
| - Diluted before exceptional | 3.9 | 2.9 |
| expenses | | |
+------------------------------------+-------------+--------------+
The Directors have adopted reverse acquisition accounting under IFRS 3 for the
period ended 30 April 2009.
To enable a meaningful comparison and in accordance with IFRS 3, the weighted
average number of shares for the periods has been calculated as follows:
For the year ended 30 April 2009, the weighted average number of shares has been
based on the 32,945,762 shares issued on 29 September 2008, as part of the
acquisition of Orb Holdings Limited by Gamingking plc for the period 1 May 2008
to 28 September 2009. The 5,813,958 shares attributable to Gamingking plc have
been included for the period beginning 29 September 2009, in order to calculate
a weighted average number of shares in issue for the year for the Group.
The total number of shares in issue at 30 April 2010 was 55,545,542.
9 Intangible assets
+-------------------------------+----------+---------------+--------+--------+
| | Goodwill | Customer | Brand | Total |
| | GBP000 | contracts | names | GBP000 |
| | | and | GBP000 | |
| | | relationships | | |
| | | GBP000 | | |
+-------------------------------+----------+---------------+--------+--------+
| Cost | | | | |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 1 May 2008 | 61 | 2,165 | - | 2,226 |
+-------------------------------+----------+---------------+--------+--------+
| Acquisitions through business | - | 2,464 | 500 | 2,964 |
| combinations | | | | |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 30 April 2009 | 61 | 4,629 | 500 | 5,190 |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 1 May 2009 | 61 | 4,629 | 500 | 5,190 |
+-------------------------------+----------+---------------+--------+--------+
| Acquisitions through business | - | 1,546 | - | 1,546 |
| combinations (note 15) | | | | |
+-------------------------------+----------+---------------+--------+--------+
| Disposals | - | (228) | - | (228) |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 30 April 2010 | 61 | 5,947 | 500 | 6,508 |
+-------------------------------+----------+---------------+--------+--------+
| Amortisation and impairment | | | | |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 1 May 2008 | - | 60 | - | 60 |
+-------------------------------+----------+---------------+--------+--------+
| Charged in the year | - | 192 | 14 | 206 |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 30 April 2009 | - | 252 | 14 | 266 |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 1 May 2009 | - | 252 | 14 | 266 |
+-------------------------------+----------+---------------+--------+--------+
| Charged in the year | - | 347 | 25 | 372 |
+-------------------------------+----------+---------------+--------+--------+
| Disposals | - | (32) | - | (32) |
+-------------------------------+----------+---------------+--------+--------+
| Impairment | - | - | 227 | 227 |
+-------------------------------+----------+---------------+--------+--------+
| Balance at 30 April 2010 | - | 567 | 266 | 833 |
+-------------------------------+----------+---------------+--------+--------+
| Net book value | | | | |
+-------------------------------+----------+---------------+--------+--------+
| At 29 April 2008 | 61 | 2,105 | - | 2,166 |
+-------------------------------+----------+---------------+--------+--------+
| At 30 April 2009 | 61 | 4,377 | 486 | 4,924 |
+-------------------------------+----------+---------------+--------+--------+
| At 30 April 2010 | 61 | 5,380 | 234 | 5,675 |
+-------------------------------+----------+---------------+--------+--------+
Goodwill and intangible asset impairment
Goodwill and intangible assets acquired in a business combination are allocated
to the cash-generating units that are expected to benefit from that business
combination.
Goodwill is not amortised but is tested annually for impairment. To the extent
that the carrying value of the cash-generating unit exceeds the value in use,
determined from estimated discounted future net cash flows, goodwill is written
down to the value in use and an impairment charge is recognised.
During the year, goodwill was tested for impairment in accordance with IAS 36
'Impairment of assets'. The recoverable amount for the cash-generating unit
exceeded the carrying amount of goodwill recorded. The recoverable amount for
the cash-generating unit has been measured on a value in use calculation.
Goodwill is allocated to the machine sales and rental cash-generating unit.
The key assumptions for the value in use calculation using projected cash flows
based on forecasts approved by management, performed for a five-year period, are
those regarding the discount rates, growth rates, and expected changes to
selling price and direct costs during the period. A growth rate of 1% (2009: 1%)
was used in the calculation over the five-year period. A pre-tax discount rate
of 8.75% (2009: 11%) was used in the value in use calculation. Changes in
selling prices and direct costs are based on management's expectations of future
changes in the market. The assumptions, used in these calculations, have
historically proved to be materially accurate.
During the year, intangible assets were tested for impairment. The review
suggested that the Lotteryking and Kelly's Eye brand names acquired in the
Gamingking reverse acquisition had suffered impairment on a value in use basis,
and an impairment charge of GBP227,000 was recognised in the statement of
comprehensive income within exceptional administrative expenses. Amortisation of
intangible assets is included within normal administrative expenses in the
statement of comprehensive income.
10 Property, plant and equipment
+------------------------------------+-----------+-----------+-----------+----------+---------+
| | Short | Plant | Fixtures, | Motor | Total |
| | leasehold | and | fittings | vehicles | GBP000 |
| | property | machinery | and | GBP000 | |
| | GBP000 | GBP000 | equipment | | |
| | | | GBP000 | | |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Cost | | | | | |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 1 May 2008 | 185 | 24,382 | 957 | 1,693 | 27,217 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Acquisitions | - | 967 | 54 | 13 | 1,034 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Additions | 68 | 13,886 | 208 | 681 | 14,843 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Disposals | - | (3,313) | - | (1,305) | (4,618) |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 30 April 2009 | 253 | 35,922 | 1,219 | 1,082 | 38,476 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 1 May 2009 | 253 | 35,922 | 1,219 | 1,082 | 38,476 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Acquisitions | - | 769 | 7 | 124 | 900 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Additions | 226 | 11,795 | 123 | 245 | 12,389 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Disposals | - | (8,407) | (96) | (91) | (8,594) |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 30 April 2010 | 479 | 40,079 | 1,253 | 1,360 | 43,171 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Depreciation | | | | | |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 1 May 2008 | 30 | 4,933 | 234 | 288 | 5,485 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Charged in the year | 42 | 8,351 | 296 | 313 | 9,002 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Disposals | - | (2,532) | - | (333) | (2,865) |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 30 April 2009 | 72 | 10,752 | 530 | 268 | 11,622 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 1 May 2009 | 72 | 10,752 | 530 | 268 | 11,622 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Charged in the year | 72 | 8,687 | 335 | 250 | 9,344 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Disposals | - | (4,613) | (96) | (61) | (4,770) |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Balance at 30 April 2010 | 144 | 14,826 | 769 | 457 | 16,196 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| Net book value | | | | | |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| At 1 May 2008 | 155 | 19,449 | 723 | 1,405 | 21,732 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| At 30 April 2009 | 181 | 25,170 | 689 | 814 | 26,854 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
| At 30 April 2010 | 335 | 25,253 | 484 | 903 | 26,975 |
+------------------------------------+-----------+-----------+-----------+----------+---------+
The net book value of plant and machinery includes GBP8,511,000 (2009:
GBP8,537,000) in respect of assets held under finance leases. Depreciation for
the year on these assets was GBP2,258,000 (2009: GBP755,000).
The net book value of fixtures, fittings and equipment includes GBP63,000 (2009:
GBP118,000) in respect of assets held under finance leases. Depreciation for the
year on these assets was GBP62,000 (2009: GBP79,000).
The net book value of motor vehicles includes GBP885,000 (2009: GBP801,000) in
respect of assets held under finance leases. Depreciation for the year on these
assets was GBP221,000 (2009: GBP79,000).
11 Acquisitions
Acquisition of Australian 8 Ball Company Limited
On 15 December 2009, the Group acquired the entire share capital of Australian 8
Ball Company Limited in a cash and shares transaction. The shares were issued at
the market price on the day of completion.
+----------------------------------------------------------------------+-------------+
| | Fair |
| | value |
| | at |
| | date |
| | of |
| | acquisition |
| | GBP000 |
+----------------------------------------------------------------------+-------------+
| Cash | 990 |
+----------------------------------------------------------------------+-------------+
| Shares in Sceptre Leisure plc (182,422 Ordinary Shares of 5p each | 110 |
| issued at 60.3p being market price) | |
+----------------------------------------------------------------------+-------------+
| Consideration | 1,100 |
+----------------------------------------------------------------------+-------------+
| Acquisition expenses | 26 |
+----------------------------------------------------------------------+-------------+
| Total consideration | 1,126 |
+----------------------------------------------------------------------+-------------+
+-----------------------------------------------------+-------------+------------+-------------+
| | Initial | Fair | Fair |
| | book | value | value |
| | value | adjustment | at |
| | at date | GBP000 | date |
| | of | | of |
| | acquisition | | acquisition |
| | GBP000 | | GBP000 |
+-----------------------------------------------------+-------------+------------+-------------+
| Intangible assets (note 9) | - | 1,546 | 1,546 |
+-----------------------------------------------------+-------------+------------+-------------+
| Property, plant and equipment | 900 | - | 900 |
+-----------------------------------------------------+-------------+------------+-------------+
| Deferred taxation | 23 | - | 23 |
+-----------------------------------------------------+-------------+------------+-------------+
| Inventories | 4 | - | 4 |
+-----------------------------------------------------+-------------+------------+-------------+
| Trade and other receivables | 83 | - | 83 |
+-----------------------------------------------------+-------------+------------+-------------+
| Cash and cash equivalents | 27 | - | 27 |
+-----------------------------------------------------+-------------+------------+-------------+
| Total assets | 1,037 | 1,546 | 2,583 |
+-----------------------------------------------------+-------------+------------+-------------+
| Cash and cash equivalents | (33) | - | (33) |
+-----------------------------------------------------+-------------+------------+-------------+
| Interest bearing loans and borrowings | (316) | - | (316) |
+-----------------------------------------------------+-------------+------------+-------------+
| Corporation tax | (63) | - | (63) |
+-----------------------------------------------------+-------------+------------+-------------+
| Trade and other payables | (387) | - | (387) |
+-----------------------------------------------------+-------------+------------+-------------+
| Deferred taxation | - | (433) | (433) |
+-----------------------------------------------------+-------------+------------+-------------+
| Total liabilities | (799) | (433) | (1,232) |
+-----------------------------------------------------+-------------+------------+-------------+
| Net assets | 238 | 1,113 | 1,351 |
+-----------------------------------------------------+-------------+------------+-------------+
| Fair value of consideration paid, including | | | 1,126 |
| transaction and adviser costs of GBP26,000 | | | |
+-----------------------------------------------------+-------------+------------+-------------+
| (Negative) goodwill on acquisition - recognised in | | | (225) |
| exceptional items within profit or loss | | | |
+-----------------------------------------------------+-------------+------------+-------------+
Owing to the immediate and successful integration of the Australian 8 Ball
Company Limited into Sceptre Leisure Solutions, it is not possible to determine
the profit attributable to the acquisition in the financial year, nor is it
possible to calculate the profit that would have been generated had the
acquisition been made on 1 May 2009.
Fair value adjustment
Under IFRS 3 at the date of acquisition a value has been applied to identifiable
intangible assets that would otherwise have been consumed within goodwill. The
fair value adjustment to intangible assets relates to the value of acquired
customer contracts and related relationships and is being amortised over five
years as management consider that the customer contracts and relationships
acquired in the Australian 8 Ball Company Limited acquisition have an estimated
useful economic life of that length. This was derived from a review of the
historical length of supply for all major customers, adjusted to take into
account those with whom the Group already had a trading relationship. Where a
trading relationship with a major customer of Australian 8 Ball Company Limited
was already in existence, the customer in question was assessed as being
equivalent to a non-contractual relationship. The overall value of customer
contracts and relationships acquired created a negative goodwill amount of
GBP225,000, which was recognised immediately as profit in accordance with the
Group's accounting policies. Negative goodwill is included in exceptional
administrative expenses in the statement of comprehensive income. The fair value
adjustment to deferred taxation relates to the recognition of the customer
contracts and related relationships asset.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUWCBUPUUAB
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