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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sceptre | LSE:SCEL | London | Ordinary Share | GB00B3BNQD36 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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