Stanley Leisure PLC
20 July 2006
20 July 2006
STANLEY LEISURE PLC
Audited Preliminary Results
'Maximising Deregulation Opportunities'
Stanley Leisure plc ('Stanley' or 'the Group') today announces its audited
preliminary results for the year ended 30 April 2006.
Highlights:
• Continuing operations:
- Turnover up 2% to £224.8m (2005: £220.0m)
- Operating profit before exceptional items up 11% at £33.4m (2005:
£30.2m)
- Profit before tax and exceptional items(1) up 97% to £ 31.9m (2005:
£16.2m)
• Basic earnings per share 383.3p (2005: 20.8p)
• Fully diluted adjusted earnings per share(2) up 22% to 25.1p (2005: 20.5p)
• Final dividend per share up 11% to 8.3p (2005: 7.5p) - total dividend for
the year up 10% to 11.6p (2005: 10.5p)
• Post 'early freedoms' Provincial attendance up 17%
• Strong development pipeline:
- Three new licences granted
- Five licences being progressed
- Two relocations
Commenting on the results, Bob Wiper, Chief Executive said:
' I am pleased to report another satisfactory performance for the Group in a
strategically important year.
We have made significant progress in our five year development programme and
this combined with Stanley Leisure's strong pipeline of new licences, positions
the Group well to capture further benefits arising from deregulation.
The Board looks forward to delivering further growth for shareholders.'
An analysts' presentation will be held at 9.30am this morning at the offices of
JP Morgan Cazenove, 20 Moorgate, London EC2R. The analyst presentation will be
available from that time on the Stanley Leisure plc investor relations website
at www.stanleyleisure.com.
ENQUIRIES:
Stanley Leisure plc Tel: 020 7796 4133 on Thursday 20 July 2006 only
Bob Wiper, Chief Executive 0151 237 6000 thereafter
Colin Child, Finance Director
Hudson Sandler Tel: 020 7796 4133
Sandrine Gallien
Kate Hough
Notes:
1. Exceptional items comprise gains or losses on disposal or closure of
businesses, fixed asset write offs and finance expenses relating to disposals.
2. Adjusted earnings per share is defined as profit before exceptional items
(i.e. gains or losses on disposal or closure of businesses, fixed asset
write offs and finance expenses relating to disposals), after tax and
minority interests divided by the weighted average number of shares in
issue. It includes the Group's share of associates' post-tax profit and the
profits or losses of discontinued operations up to the date of disposal or
closure.
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report a satisfactory performance for the Group in a
strategically important year.
The Group's Retail Betting Operation was successfully sold on 18 June 2005 for
£504m producing a profit before tax on disposal of £340.1m. Shortly after
finalising the disposal the Group returned £327m of surplus funds to
shareholders, equivalent to 250p per share, and completed a share consolidation.
As a consequence of the disposal of the Retail Betting Operation, the Group is
now predominantly a gaming operator with the leading position in the UK. We
have continued to build on this position through the acquisition of casinos in
Southend, Bristol and since the year end Southampton. I am pleased to report
that today we have 45 casinos operating in the UK - four in London and 41 in the
provinces - with a further three licences recently approved and five licence
applications being progressed.
FINANCIAL HIGHLIGHTS
The Group has achieved a turnover on continuing operations of £224.8m (2005 :
£220.0m), an increase of 2 per cent, with profit before tax on continuing
operations of £19.1m (2005 : £16.2m).
After adjusting for exceptional items of £9.9m in respect of fixed assets
written off as part of the casino refurbishment programme and exceptional
finance charges of £2.9m, profit before exceptionals and tax on continuing
operations was £31.9m (2005 : £16.2m).
Profit before exceptional items and tax for continuing and discontinued
operations was £38.2m (2005 : £39.3m), a reduction of 3 per cent.
Basic earnings per share were 383.3p (2005 : 20.8p). After adjusting for
exceptional items, namely gains or losses on the disposal or closure of
businesses, fixed assets written off and finance charges, fully diluted adjusted
earnings per share were 25.1p (2005: 20.5p), an increase of 22 per cent.
At the beginning of the year the Group had net debt of £203.6m. With cash
inflows from operating activities, the disposal of the Retail Betting Operation
and the return of £327m of surplus funds net debt at the year-end was £68.3m.
DIVIDEND
The Board is proposing a final dividend of 8.3p, an increase of 11 per cent on
the previous year. The total dividend for the year is therefore 11.6p, a 10 per
cent increase on the total dividend of 10.5p in 2005. The final dividend will
be paid on 20 September 2006 to shareholders on the register on 18 August 2006.
GAMING DIVISION
Financial Results - Continuing Operations
Gaming Division turnover fell by one per cent to £192.8m (2005 : £194.8m)
reflecting a fall in turnover at our London casinos. Despite this, operating
profit before exceptional items of £9.9m was £34.1m (2005 : £33.9m).
London Casinos
In common with other operators, our four London casinos were adversely affected
by the security issues in July 2005. We experienced a significant decline in
attendance levels and turnover in August which continued in September and
October. This lower level of activity caused results in the first half to be
depressed. However, attendance levels recovered in the second half with
operating profits of £4.1m (2005 : £1.4m). This strong second half performance
mitigated the impact of the disappointing first half, resulting in an operating
profit for the year of £12.2m (2005 : £15.0m).
The refurbishment of Crockfords, our flagship casino in Mayfair, was completed
in July 2005 at a cost of £4.0m. This investment will ensure that Crockfords'
reputation as one of the most high quality and exclusive casinos in the world is
maintained.
At the Palm Beach casino, we have recently reached agreement with our neighbour,
the refurbished Radisson Mayfair, for direct access between the hotel and the
casino. The agreement also allows guests to register automatically with the
casino at the same time as they check into the hotel.
The Colony and The Mint casinos both performed satisfactorily. The process of
relocating the Mint to Earls Court continues. Our recent application received
Planning Officer's approval but was turned down by the local authority's
Planning Committee. We have appealed against this decision.
Provincial Casinos
The Provincial casino estate enjoyed a year of record growth fuelled by the
'early freedoms' of deregulation introduced in October 2005. In the second half
of the year attendance levels grew by an unprecedented 17 per cent with our
recently refurbished casinos reporting a 23 per cent growth in attendance.
These strong growth statistics are reflected in the trading results for the
Provincial casinos with operating profit, before exceptional items, of £21.9m
(2005 : £18.9m) including a contribution of £0.6m from the acquisition of two
casinos in Southend and one in Bristol.
The increase in attendance levels and the expected lower drop per head from new
players has had an impact on 'win per admission' for the year which fell by 7
per cent to £39 (2005 : £42). However, as a result of careful cost control and
other efficiencies, earnings before interest and tax ('EBIT') per admission has
grown 2 per cent to £8.03 (2005 : £7.84).
We are increasingly focusing on 'win per admission' and 'EBIT per admission' as
key performance indicators. Drop per head - solely reflecting activity on table
games - is becoming a less appropriate measure as machine income grows.
Deregulation
Following the introduction of the 'early freedoms', including the removal of the
24 hour membership rule and increased machine numbers, we rapidly installed the
permitted additional slot machines. These new machines have proved very popular
and even though the number of machines has more than doubled the average EBIT
per machine has quickly returned to over £300 per week.
We are working hard to maximise further benefits arising from deregulation.
Smoking Ban
Since 26 March 2006, smoking has been prohibited in public places in Scotland.
To date, with careful management, this has not had a material effect on our four
casinos in Scotland. With a similar ban very likely to be introduced in England
in 2007 we are modifying our casinos to enable access to external areas, where
possible, for players who wish to smoke.
Licences
Although the 2005 Gambling Act was enacted in April 2005, it was possible, until
April 2006, to continue to apply for licences under the 1968 Act. We have
applied for eight such new casino licences. Of these, three - Nottingham,
Sheffield and Liverpool - have been granted. We have outstanding licence
applications on a further five locations - Cardiff, Hull, Reading, Glasgow and
Leeds - all of which are being progressed.
In its 2005/06 Annual Report the Gambling Commission stated that the number of
casino licences in issue or being progressed under the 1968 Act at the end of
April 2006 was:
Operating casinos 139
Licensed but not operating 27
Licensing applications in progress 30
Certificate of consent applications in progress 54
250
As no further licence applications under the 1968 Act are possible, if all the
applications being progressed were successful, the maximum number of 1968 Act
casino licences would be 250. However, we believe this maximum is likely to be
materially overstated, as a number of applications will fail. Trade objections
to new licences remain high and the Licensing Authorities continue to apply the
demand criterion. So, although an increase in capacity from outstanding
applications is expected, we believe it will be tempered by the continued
enforcement of the demand criterion.
Under the 2005 Act, 17 new licences are to be awarded - eight Small, eight Large
and one Regional - or 'Super' - casino. These new casinos will enjoy a number
of benefits compared with existing casinos, including increased number of
machines. We intend to tender for all 17 of these new 2005 Act licences,
working closely with Genting wherever appropriate.
INTERNATIONAL BETTING
Our International Betting operation reported good results for the financial year
with turnover up 27 per cent to £32.0m (2005 : £25.2m) and operating profit up
90 per cent at £5.5m (2005 : £2.9m). These strong results reflect favourable
sporting results and a more stable operating environment.
The agency network in Italy has grown and we have made good progress on
establishing and developing agents in other countries such as Belgium and
Germany. We remain confident that the agency model can be successfully
replicated in a number of other European countries.
BOARD CHANGES
Lord Steinberg has indicated his intention to retire as Chairman at the end of
the year. The growth of the Stanley Group since he established the Company with
just two betting shops in Belfast 48 years ago has been remarkable. From these
humble beginnings the Group became, until the sale of the domestic Retail
Betting Operation, the fourth largest bookmaker in the UK with 624 shops and it
remains the largest operator of casinos in the UK.
I am delighted that, although retiring from the Board, he has agreed to accept
the position of Life President of the Group.
DISCUSSIONS WITH LONDON CLUBS INTERNATIONAL
On 26 June 2006 we announced that we were in discussions with the Board of
London Clubs International plc ('LCI') concerning the possibility of a merger of
Stanley and LCI. Discussions are ongoing and there is no certainty that they
will lead to a transaction.
CURRENT TRADING
Overall, the new financial year has started satisfactorily. The Provincial
estate continues to benefit from the 'early freedoms' introduced in October 2005
with attendance levels continuing to grow. The London casinos have followed
their normal seasonal pattern and enjoyed good attendance and drop. However,
there have been a number of material losses to major players which, although
within normal limits, have caused our win margin for the first three months of
the year to be lower than we had budgeted. As stated previously, our results in
London can change quickly depending on our luck and the luck of our players.
The International Betting operation has experienced record levels of business
for the first quarter, driven by the FIFA World Cup. Unfortunately, with much
of this business being generated through our Italian agents, the results of many
of the games were not good from our point of view and has led to a negative
contribution from this tournament.
Consolidated Income Statement
for the year ended 30 April 2006
Year ended 30 April 2006
Before Exceptional Total Year to
exceptional items 1 May
items
2006 2006 2006 2005
Restated
notes £m £m £m £m
Continuing Operations
Revenue - gross win 2 224.8 - 224.8 220.0
Cost of sales 2,3 (175.9) (9.9) (185.8) (177.7)
Gross profit 2,3 48.9 (9.9) 39.0 42.3
Administrative expenses 2 (15.5) - (15.5) (12.1)
Operating profit 2,3 33.4 (9.9) 23.5 30.2
Interest receivable 2 3.5 - 3.5 0.3
Interest payable and similar charges 2,3 (5.0) (2.9) (7.9) (14.2)
Share of post-tax losses from interests
in joint ventures and associates - - - (0.1)
Profit before tax 2,3 31.9 (12.8) 19.1 16.2
Taxation on profit on ordinary activities 2,3,4 (11.3) 4.0 (7.3) (4.5)
Profit for the year from continuing operations 2,3 20.6 (8.8) 11.8 11.7
Profit for the year from discontinued operations 2,3 5.7 338.0 343.7 15.9
Profit before tax - continuing operations 31.9 (12.8) 19.1 16.2
Profit before tax - discontinued operations 6.3 342.6 348.9 23.1
Profit before tax - continuing and discontinued
operations 38.2 329.8 368.0 39.3
Taxation - continuing operations 3,4 (11.3) 4.0 (7.3) (4.5)
Taxation - discontinued operations 3,4 (0.6) (4.6) (5.2) (7.2)
Taxation - continuing and discontinued
operations 4 (11.9) (0.6) (12.5) (11.7)
Profit for the year 26.3 329.2 355.5 27.6
- continuing operations 20.6 (8.8) 11.8 11.7
- discontinued operations 5.7 338.0 343.7 15.9
Profit attributable to:
Minority interests 2.8 - 2.8 1.0
Equity holders of the Company 23.5 329.2 352.7 26.6
26.3 329.2 355.5 27.6
Continuing Operations
Basic earnings per share 6 19.3p 9.8p 8.4p
Diluted earnings per share 6 19.0p 9.6p 8.2p
Discontinued Operations
Basic earnings per share 6 6.2p 373.5p 12.4p
Diluted earnings per share 6 6.1p 367.2p 12.3p
Continuing and Discontinued Operations
Basic earnings per share 6 383.3p 20.8p
Diluted earnings per share 6 376.8p 20.5p
Adjusted earnings per share - basic 6 25.5p 20.8p
- diluted 6 25.1p 20.5p
The analysis of the comparative results between continuing and discontinued
operations is shown in note 2.
Balance Sheet
as at 30 April 2006
2006 2005
Restated
£m £m
Assets
Non-current assets
Goodwill 13.6 13.6
Intangible assets 245.0 222.6
Property, plant and equipment 175.1 158.8
Other investments 5.9 5.9
Retirement benefit asset 0.6 -
Total non-current assets 440.2 400.9
Current assets
Inventories 1.6 1.5
Trade and other receivables 8.9 3.7
Cash and cash equivalents 26.9 16.3
Total current assets 37.4 21.5
Assets classified as held for sale - 167.7
Total assets 477.6 590.1
Liabilities
Current liabilities
Bank overdraft and borrowings (3.1) (8.3)
Trade and other payables (35.6) (12.3)
Current taxation (6.0) (6.2)
Total current liabilities (44.7) (26.8)
Non-current liabilities
Loan capital and borrowings (92.1) (215.6)
Retirement benefit obligation - (4.8)
Deferred tax liability (98.4) (99.4)
Provisions for other liabilities and charges (4.5) -
Total non-current liabilities (195.0) (319.8)
Liabilities directly associated with current - (22.8)
assets classified as held for sale
Total liabilities (239.7) (369.4)
Total net assets 237.9 220.7
Equity
Called up share capital 17.5 32.3
Share premium account 70.8 67.3
Capital redemption reserve 15.3 -
Revaluation reserve 38.5 38.5
Capital reserve 5.3 5.3
Other reserves 23.9 23.9
Retained earnings 63.2 50.1
Equity shareholders' funds 234.5 217.4
Minority interest in equity 3.4 3.3
Total equity 237.9 220.7
Consolidated Statement of Recognised Income and Expense
for the year ended 30 April 2006
2006 2005
£m £m
Profit for the year 355.5 27.6
Exchange differences on translation of foreign operations - 0.2
Actuarial gain recognised in the pension scheme 0.8 -
Net gains recognised in the financial year 356.3 27.8
Attributable to:
Minority interest 2.8 1.0
Equity shareholders of the parent 353.5 26.8
356.3 27.8
Historical Cost Profits and Losses
There is no material difference between the reported profit before taxation and
the historical cost profit before taxation.
The financial information contained in this announcement for the year ended 30
April 2006 does not amount to full accounts within the meaning of Section 254 of
the Companies Act 1985 but is taken from those Financial Statements, which have
received an unqualified report by the auditors and will be delivered to the
Register of Companies. Full accounts for the year ended 1 May 2005, which
included an unqualified auditors' reports did not contain a statement under
either Section 237(2) or 237(3) of the Companies Act 1985, have been delivered
to the Register of Companies.
Subject to approval at the Annual General Meeting, the proposed final dividend
of 8.3p will be paid on 20 September 2006 to shareholders on the register at the
close of business on 18 August 2006.
Key dates:
20 July 2006 Announcement of results
18 August 2006 Record date for final dividend
14 September 2006 Annual General Meeting
20 September 2006 Final dividend paid
Consolidated Cash Flow Statement
for year ended 30 April 2006
2006 2005
notes £m £m
Cash flows from operating activities A 39.5 50.1
Cash flows from investing activities B 437.3 (24.9)
Cash flows from financing activities - continuing operations
Issue of share capital 4.0 2.6
Repayment of borrowings (115.0) (10.6)
Capital element of finance lease rental payments (11.6) (4.3)
Dividends paid to equity holders (93.9) (12.5)
Dividends paid to minority interests (2.7) (0.6)
Purchase of 'B' shares (247.5) -
Net cash flows used in financing activities (466.7) (25.4)
Net increase/(decrease) in cash and cash equivalents 10.1 (0.2)
Movement in cash and cash equivalents
Net cash and cash equivalents at beginning of year 16.6 16.8
Net increase/(decrease) in cash and cash equivalents 10.1 (0.2)
Cash and cash equivalents at end of year C 26.7 16.6
Reconciliation of net increase/(decrease) in cash and cash equivalents to
movements in net debt
Net debt at 2 May 2005 as restated under IFRS (203.6) (218.1)
Net increase/(decrease) in cash and cash equivalents 10.1 (0.2)
Decrease in debt 126.6 14.9
Other non-cash and cash equivalent movements (1.4) (0.2)
Net debt at end of year (68.3) (203.6)
Other non-cash changes represent the amortisation of debt finance costs.
Notes to the Consolidated Cash Flow Statement
Note A
Cash flows from operating activities
2006 2005
Continuing operations £m £m
Operating profit 23.5 30.2
Gaming asset write down 9.9 -
Depreciation (net of gain on disposal of fixed assets of £0.6m (2005: £0.1m)) 8.2 12.1
Change in working capital 10.9 21.4
Interest paid (7.2) (13.4)
Interest received 3.5 0.4
Tax paid (11.4) (12.0)
Costs of share based payments 1.0 -
Net cash inflow from operating activities 38.4 38.7
Discontinued operations
Operating profit 5.6 23.0
Depreciation 0.9 5.1
Change in working capital (5.4) (16.1)
Interest received - 0.1
Tax paid - (0.7)
Net cash inflow from operating activities 1.1 11.4
Cash generated/(expensed) from operations 39.5 50.1
Note B
Cash flows from investing activities
2006 2005
Continuing operations £m £m
Purchase of property, plant and equipment (25.0) (10.2)
Sale of property, plant and equipment 1.3 0.5
Purchase of investment in joint venture - (5.5)
Purchase of subsidiaries (30.5) (0.1)
Sale of subsidiaries (net of cash disposed) 491.5 -
Net cash flows used in investing activities 437.3 (15.3)
Discontinued operations
Purchase of property, plant and equipment - (10.5)
Sale of property, plant and equipment - 1.0
Deferred consideration in respect of prior year acquisitions - (0.1)
Net cash flows used in investing activities - (9.6)
Cash flows from investing activities 437.3 (24.9)
Note C
Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and other short-term highly liquid
investments with a maturity of three months or less and overdrafts
2006 2005
£m £m
Continuing operations
Cash at bank and in hand 18.7 10.2
Short term deposits 8.2 6.1
Bank overdrafts (included within bank overdraft and borrowings
within current liabilities) (0.2) (3.7)
26.7 12.6
Discontinued operations
Cash at bank and in hand (included within assets classified as held for sale) - 4.2
Short term deposits (included within assets classified as held for sale) - 0.8
Bank overdrafts (included within liabilities directly associated with current assets
held for sale) - (1.0)
- 4.0
Total
Cash at bank and in hand 18.7 14.4
Short term deposits 8.2 6.9
Bank overdrafts (0.2) (4.7)
26.7 16.6
Notes to the Financial Statements
1. Basis of preparation
The financial information set out in this announcement does not constitute the Group's statutory Financial Statements
for the years ended 30 April 2006 or 1 May 2005 but is derived from the 30 April 2006 Financial Statements. The Group
Annual Report and Financial Statements for 2005, which were prepared under UK GAAP, have been delivered to the
Registrar of Companies and the Group Annual Report and Financial Statements for 2006, prepared under IFRS, will be
delivered to the Registrar of Companies in due course. The auditors have reported on those Financial Statements and
have given an unqualified report which does not contain a statement under Section 237(2) or 237(3) of the Companies Act
1985.
For the year ended 30 April 2006, the Group has prepared its Financial Statements under International Financial
Reporting Standards (IFRS) adopted for use in the European Union. These are those Standards and related
interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by
the European Commission at the year end.
The comparative information presented in this document has been restated for IFRS except for the adoption of IAS 32
and IAS 39 where implementation was deferred until 2 May 2005. However, under UK GAAP the betting division turnover
represented stakes placed by customers, whereas under IAS 39 turnover represents gross win. i.e stakes less payouts.
The 2005 comparatives have been presented on a comparable basis. There is no impact on gross profit. Gaming division
turnover represented gross win both under UK GAAP and IAS 39.
The Group has also early adopted IFRS 5 from 1 May 2005 in accordance with the transitional provisions of IFRS 5.
Further information in relation to the Standards adopted by the Group, together with restated information is available
on the Group's website www.stanleyleisure.com
2. Segmental information
Primary format - business segments
Continuing operations
2006 2005
Revenue - gross win £m £m
Gaming division - London 83.9 92.4
- Provincial 108.9 102.4
International Betting operation 32.0 25.2
Total 224.8 220.0
Cost of sales (175.9) (177.7)
Gross profit 48.9 42.3
Administrative expenses (15.5) (12.1)
Operating profit before exceptional items 33.4 30.2
Exceptional items (9.9) -
Operating profit after exceptional items 23.5 30.2
Interest receivable 3.5 0.3
Interest payable and similar charges (5.0) (14.2)
Exceptional finance charges (2.9) -
Share of post tax losses of joint ventures and associates - (0.1)
Profit before tax 19.1 16.2
Taxation (7.3) (4.5)
Profit for the year 11.8 11.7
Profit attributable to minority interests (2.8) (1.0)
Net profit attributable to equity shareholders 9.0 10.7
Analysis of operating profit after exceptional items by business segment
Gaming division - London 12.2 15.0
- Provincial (after exceptional items of £9.9m) 12.0 18.9
International Betting operation 5.5 2.9
Other activities (central costs) (6.2) (6.6)
Operating profit 23.5 30.2
2. Segmental information (continued)
Discontinued operations
2006 2005
Revenue - gross win £m £m
Retail Betting Operation 24.3 152.4
Telebetting and internet betting operations 0.1 0.6
E-gaming operation 1.1 0.9
Total 25.5 153.9
Cost of sales (20.0) (129.3)
Gross profit 5.5 24.6
Administrative expenses 0.1 (1.5)
Operating profit before exceptional items 5.6 23.1
Exceptional items 342.6 -
Operating profit after exceptional items 348.2 23.1
Interest receivable - -
Interest payable and similar charges - -
Share of post tax profits of joint ventures and associates 0.7 -
Profit before tax 348.9 23.1
Taxation (5.0) (7.2)
Taxation on joint ventures and associates (0.2) -
Profit for the year 343.7 15.9
Profit attributable to minority interests - -
Net profit attributable to equity shareholders 343.7 15.9
Analysis of operating profit after exceptional items by business segment
Retail Betting Operation 346.0 26.7
Telebetting and internet betting operations (0.6) (2.1)
E-gaming operation 1.3 (1.5)
Maxims casino 1.5 -
Operating profit 348.2 23.1
The Group's domestic Retail Betting Operation was sold on 18 June 2005. The internet sports betting and telebetting
activities ceased trading on 9 July 2005 following the disposal. The e-gaming operation was sold on 14 October 2005.
Maxims casino was sold on 10 March 2006.
2. Segmental information (continued)
Continuing operations
Gaming International Other Total
division Betting activities
operation
2006 £m £m £m £m
Assets and liabilities
Segment assets 426.7 12.5 7.9 447.1
- London 177.6
- Provincial 249.1
Other segment assets* 24.6 - - 24.6
451.3 12.5 7.9 471.7
Interests in associates and joint ventures - 0.4 5.5 5.9
Total assets 451.3 12.9 13.4 477.6
Segment liabilities* 148.7 7.3 83.7 239.7
* Certain segment assets and liabilities are managed in total across the Gaming division, and have not therefore been
split by London and Provincial
Other segmental information
Capital expenditure (including acquisitions)
- property, plant and equipment 34.4 1.1 - 35.5
- intangible assets 22.4 - - 22.4
Depreciation 7.2 0.9 0.7 8.8
Capital expenditure on property, plant and equipment of £34.4m comprises £5.4m for London casinos and £29.0m for
Provincial casinos. Capital expenditure on intangible assets of £22.4m relates to Provincial casinos. Depreciation
of £7.2m comprises £1.4m for London casinos and £5.8m for Provincial casinos.
Gaming International Other Total
division Betting activities
operation
2005 £m £m £m £m
Assets and liabilities
Segment assets 385.4 9.0 6.1 400.5
- London 162.6
- Provincial 222.8
Other segment assets* 16.0 - - 16.0
401.4 9.0 6.1 416.5
Interests in associates and joint ventures - 0.4 5.5 5.9
Total assets 401.4 9.4 11.6 422.4
Segment liabilities* 135.8 3.8 207.0 346.6
* Certain segment assets and liabilities are managed in total across the Gaming division, and have not therefore been
split by London and Provincial
Other segmental information
Capital expenditure (including acquisitions)
- property, plant and equipment 7.9 0.7 0.9 9.5
- intangible assets - 0.1 6.7 6.8
Depreciation 7.1 0.7 4.3 12.1
Capital expenditure on property, plant and equipment of £7.9m comprises £1.9m for London casinos and £6.0m for
Provincial casinos. Depreciation of £7.1m comprises £1.1m for London casinos and £6.0m for Provincial casinos.
2. Segmental information (continued)
Discontinued operations
Retail Telebetting and E-gaming Other Total
Betting internet betting operation activities
Operation operations
2006 £m £m £m £m £m
Assets and liabilities
Segment assets - - - - -
Interests in associates and joint ventures - - - - -
Total assets - - - - -
Segment liabilities - - - - -
Other segment information
Capital expenditure (including acquisitions)
- property, plant and equipment - - - - -
- intangible assets - - - - -
Depreciation 0.9 - - - 0.9
Retail Telebetting E-gaming Other Total
Betting and internet operation activities
Operation betting
operations
2005 £m £m £m £m £m
Assets and liabilities
Segment assets* 148.4 0.4 0.7 11.7 161.2
Interests in associates and joint ventures - - - 6.5 6.5
Total assets 148.4 0.4 0.7 18.2 167.7
Segment liabilities** 22.1 0.6 0.1 - 22.8
Other segment information
Capital expenditure (including acquisitions)
- property, plant and equipment 9.6 0.2 0.2 - 10.0
- intangible assets - - - - -
Depreciation 4.1 0.2 0.8 - 5.1
* Included within assets classified as held for sale
**Included within liabilities directly associated with current assets classified as held for sale
2. Segmental information (continued)
Secondary format - geographical segments
Continuing operations
Revenue Segment Capital
assets expenditure
2006 £m £m £m
United Kingdom 192.8 459.2 56.8
Europe 32.0 12.5 1.1
Total 224.8 471.7 57.9
Revenue Segment Capital
assets expenditure
2005 £m £m £m
United Kingdom 194.8 407.5 15.5
Europe 25.2 9.0 0.8
Total 220.0 416.5 16.3
Discontinued operations
Revenue Segment Capital
assets expenditure
2006 £m £m £m
United Kingdom 22.3 - -
Europe 2.2 - -
Rest of World 1.0 - -
Total 25.5 - -
Revenue Segment Capital
assets expenditure
2005 £m £m £m
United Kingdom 138.5 131.9 8.9
Europe 14.4 28.6 0.9
Rest of World 1.0 0.7 0.2
Total 153.9 161.2 10.0
2006 2005
3. Exceptional Items notes £m £m
Continuing operations
Gaming division - assets written down (9.9) -
Financial expenses incurred following the disposal
of the Retail Betting Operation 3a (2.9) -
Taxation 4.0 -
Total (8.8)
Discontinued operations
Profit on disposal of Retail Betting Operation 3a 340.1 -
Profit on disposal of e-gaming operation 3a 1.0 -
Profit on disposal - Maxims casino 3a 1.5 -
Taxation 3a (4.6) -
Total 338.0 -
Total exceptional adjustments 329.2 -
The Group has incurred an exceptional write down of £9.9m in respect of fixed
assets that have been replaced as part of the casino refurbishment programme.
The Retail Betting Operation was sold on 18 June 2005. Following the disposal,
the Group incurred financial expenses in relation to the early termination of
finance leases attached to assets included in the sale, and also in relation to
the early termination of three interest rate swaps following the reduction in
the Group's borrowing facility.
The e-gaming operation was sold on 14 October 2005.
Retail Betting E-gaming Maxims casino Total
Operation* operation
3a. Profit on disposal
£m £m £m £m
The profit on disposal of the discontinued operations this period is calculated as follows:
Sale proceeds before working capital adjustments 504.0 1.7 8.1 513.8
Working capital adjustments (2.6) 0.2 0.4 (2.0)
Sale proceeds net of working capital adjustments 501.4 1.9 8.5 511.8
Less: professional fees (5.8) (0.1) - (5.9)
other disposal costs (7.0) (0.1) - (7.1)
488.6 1.7 8.5 498.8
Net assets disposed of (148.5) (0.7) (7.0) (156.2)
340.1 1.0 1.5 342.6
Financial expenses incurred following the disposal
of the discontinued operations (2.9) - - (2.9)
Pre tax profit on disposal 337.2 1.0 1.5 339.7
Taxation (4.6) - - (4.6)
Post tax profit on disposal 332.6 1.0 1.5 335.1
*Includes the costs relating to the closure of the telebetting and internet
betting operations that closed following the disposal of the Retail Betting
Operation.
2006 2005
4. Taxation on profit on ordinary activities £m £m
Analysis of charge in year:
Current tax
U.K. Corporation tax 13.2 12.4
- continuing operations 7.8 5.2
- discontinued operations 5.4 7.2
Adjustments in respect of prior years 0.7 (0.1)
- continuing operations 1.5 (0.1)
- discontinued operations (0.8) -
13.9 12.3
Foreign tax, including adjustments in respect of prior years 0.4 0.2
Total current tax 14.3 12.5
Deferred taxation
Origination and reversal of timing differences (1.8) (0.8)
- continuing operations (2.4) (0.8)
- discontinued operations 0.6 -
12.5 11.7
Reported as:
- continuing operations 7.3 4.5
- discontinued operations 5.2 7.2
12.5 11.7
The taxation charge on discontinued operations is made up of:
Tax on gain on discontinuance 4.6 -
Tax on ordinary activities of discontinued operations 0.6 7.2
5.2 7.2
The tax charge for the year is lower than the standard rate of U.K. corporation
tax. The differences are explained as follows:
2006 2005
£m £m
Profit before taxation 368.0 39.3
Expected taxation on profits at 30% 110.4 11.8
Adjustments to current taxation charge in respect of prior years 0.7 (0.1)
Adjustments to deferred taxation charge in respect of prior years (0.9) (0.4)
Accounting profit on disposal of subsidiaries not taxable (102.6) -
Other expenses, including goodwill, not deductible for taxation purposes 2.2 1.4
Benefit of overseas tax at lower rates than the U.K. rate - (0.2)
Effect of adopting IAS 12 (1.6) (0.8)
Tax on disposal and pre sale dividend strip 4.3 -
Tax charge for the year 12.5 11.7
2006 2005
5. Dividends £m £m
Return of surplus funds: 250p per A share 81.8 -
Final paid: 7.5p (2005:6.75p) per 25p share 9.8 8.6
Interim paid: 3.3p (2005: 3.0p) per 25p share 2.3 3.9
93.9 12.5
The Directors are proposing a final dividend in respect of the year ended 30
April 2006 of 8.3p per share. It will be paid on 20 September 2006 to
shareholders who are on the register of members on 18 August 2006. Under IFRS
these accounts do not provide for dividends proposed.
The dividend of £81.8m was paid on 16 September 2005 in respect of 32,709,393 '
A' shares as part of the £327m return of surplus funds to shareholders.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the year.
The calculation of diluted earnings per share is based on the profit for the
financial year and the weighted average number of shares in issue, adjusted to
assume the exercise of options over shares.
2006 2005
Pence Pence
Basic EPS
Continuing operations 9.8 8.4
Discontinued operations 373.5 12.4
Continuing and discontinued operations 383.3 20.8
Effect of exceptional items - continuing operations 9.5 -
- discontinued operations (367.3) -
Adjusted* 25.5 20.8
Diluted EPS
Continuing operations 9.6 8.2
Discontinued operations 367.2 12.3
Continuing and discontinued operations 376.8 20.5
Effect of exceptional items - continuing operations 9.4 -
- discontinued operations (361.1) -
Adjusted* 25.1 20.5
Earnings £m £m
Continuing operations 9.0 10.7
Discontinued operations 343.7 15.9
Continuing and discontinued operations 352.7 26.6
Effect of exceptional items - continuing operations 8.8 -
- discontinued operations (338.0) -
Adjusted* 23.5 26.6
Shares ('000) ('000)
Weighted average number of shares in issue during the year** 92.0 127.8
Dilutive effect of share incentive awards 1.6 1.9
Diluted weighted average number of shares in issue during the year 93.6 129.7
* After adjusting for exceptional items (namely gains or losses on disposal or closure of businesses, fixed assets
written off and exceptional finance charges).
**Reduced following share reorganisation (see note 7).
7. Return of Surplus Funds
On 8 August 2005 the Company announced that it intended returning 250p per
existing ordinary share to shareholders in conjunction with a reorganisation of
the Company's share capital. This return was structured to give shareholders a
choice between receiving funds in the form of capital or income.
The return of surplus funds was approved by shareholders at an Extraordinary
General Meeting held on 8 September 2005.
Shareholders holding 32,709,363 ordinary shares elected, or were deemed to have
elected, for A shares, which entitled the holders of those shares to a 250p
dividend per share and, accordingly, on 16 September 2005, a total dividend of
£81.8m was paid. Shareholders holding 98,060,487 ordinary shares elected to
receive B shares. B shareholders were entitled to have the B shares repurchased
for 250p each, or to retain them. 95,637,695 B shares have been repurchased
pursuant to which payments totalling £239.1m were made. The remaining B shares
were repurchased for 254.2p each (including 4.2p of accrued interest) on 27
April 2006, with payments totalling £6.2m
Following the approval of the return of surplus funds on 8 September 2005 a
share reorganisation was effected. Shareholders received 8 new ordinary shares
for every 15 ordinary shares held prior to the reorganisation. As a result,
69,743,920 new ordinary shares were issued and 130,769,850 ordinary shares were
cancelled.
This information is provided by RNS
The company news service from the London Stock Exchange
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