London Clubs International PLC
21 July 2006
London Clubs International plc
Preliminary results (unaudited) for the year ended 31 March 2006
London Clubs International plc is an operator of 6 casinos in the UK and 3
overseas. The Company has been awarded a further 6 licences in Manchester,
Glasgow, Nottingham, Blackpool, Leeds and for a prestigious site in London's
Leicester Square.
Key points
Financial
• 2005/6 has again been a year of significant change and progress. The
sale of Les Ambassadeurs for £115m has de-geared the Group and positioned it
well financially for the development of its existing licences and new licences
which will benefit most from full deregulation
• Profit for the year attributable to shareholders of £97.8 million which
includes the profit on disposal of £99.5 million generated by the sale of
Les Ambassadeurs
• Operating profit from continuing operations increased to £12.3m (2005 £11.1m)
• Loss before tax from continuing operations of £3.6m (2005 loss of £5.0m)
• Group basic earnings per share 43.9p (2005 loss per share 0.7p)
Operations
• Les Ambassadeurs had its lowest trading performance for a number of years
• London casinos benefited from recent refurbishment and relocation.
Rendezvous had another record year
• Fifty was profitable in the second half during its first full year of
operation post refurbishment and repositioning
• Brighton performed strongly although Southend experienced a lower than
normal win percentage
• Overseas casinos had another strong year
• Developments
- Manchester scheduled to open in autumn 2006 and Leicester Square in
the first quarter of 2007
- Glasgow, Nottingham and Leeds to form part of the second phase
- Group to apply for further licences under the 2005 Act
• Current Trading
- London now improving after a relatively slow start, Provinces seen
increases in attendance, Overseas again ahead of the same period last year
• Merger talks with Stanley Leisure Plc progressing
Michael Beckett, Chairman of London Clubs, commented:
'This has been a transformational year for the Company with the sale of Les
Ambassadeurs. The Group is financially strong with funds to develop its
future expansion and is therefore well positioned to take advantage of the clear
benefits of a deregulating marketplace.'
An analysts' conference call will be held at 8.30am today, details of which can
be obtained from Jamie Ramsay of College Hill on 020 7457 2048. The analyst
presentation will be available on www.manchester235.com.
21 July 2006
Enquiries:
London Clubs International plc
Bill Timmins, Chief Executive +44 (0)20 7518 0000
Barry Hardy, Deputy Chairman and Finance Director
College Hill Associates
Matthew Smallwood +44 (0)20 7457 2020
Introduction
2005/6 has again been a year of significant change and progress for the Group,
with the disposal of Les Ambassadeurs and the award of two new licences in Leeds
and London's Leicester Square.
The sale of Les Ambassadeurs, for £115 million, represents excellent value to
the Group, particularly in the context of the recent trading at the high end of
our business. With LCI significantly de-geared, the Company has put in place a
new £81.7 million refinancing package to support the roll out of the development
portfolio in London's Leicester Square, Manchester, Glasgow, Nottingham and
Leeds.
From a regulatory perspective, we have also seen significant progress, with
casinos permitted to offer 20 slot machines from October 2005 and increased
stakes and prizes from November 2005. The results from the Group's electronic
operations have increased significantly year on year and are expected to be an
increasingly important source of revenue for the Group.
In addition, the removal of the 24 hour rule in October 2005 has driven
significant attendance growth, especially in the Sportsman, the Golden Nugget
and in our provincial operations. These trends strongly support the Group's
development strategy of providing better quality, more customer friendly
operations in big city locations.
As highlighted at the Annual General Meeting in September 2005, the July
bombings in London adversely impacted business during the first half of the year
though, as reported at the interim announcement in December 2005, the Group has
seen improved drop and win levels in the second half of the year.
Results
These results are the first full year to be prepared in accordance with IFRS.
Revenue from continuing operations grew substantially during the year to £126.1
million (2005: £103.3 million). Revenue from discontinued operations, at Les
Ambassadeurs, fell from £35.7 million in 2004/5 to £27.4 million this year.
The Group generated operating profit from continuing operations of £12.3 million
(2005: £11.1 million) and operating profit from discontinued operations of £0.9
million (2005: £2.4 million). Loss before tax from continuing operations was
£3.6 million (2005: loss of £5.0 million) and profit before tax from
discontinued operations, including the gain on disposal, was £100.4 million
(2005: £2.4 million).
Included within the results for 2005/6 are exceptional items associated with the
sale of Les Ambassadeurs (profit of £99.5 million) and unsecured creditor
receipts from the Aladdin (£1.0 million). 2004/5 included £2.1 million of
exceptional gain associated with the sale of unused gaming positions in South
Africa.
Interest payable and similar charges of £15.5 million (2005: £14.4 million)
includes £4.0 million of unamortised costs associated with our previous banking
facilities, which were required to be written off when those facilities were
repaid on 31 March 2006.
Basic earnings per share was 43.9p (2005: loss per share 0.7p).
London casinos
Les Ambassadeurs had its lowest trading performance with a number of players
enjoying success at the tables resulting in a lower than usual win percentage.
Revenues were down by £8.3 million from the previous year.
2005/6 was the first full year of trading at the Sportsman, following its
relocation from Bryanston Street to Old Quebec Street in 2004/5. Trading at the
enlarged premises has continued to grow strongly and the operation has achieved
a satisfactory result for the year.
The Golden Nugget was substantially refurbished during the year which, whilst
causing some disruption to our summer business, has already resulted in
increased attendances and enabled us to recapture lost market share.
The Rendezvous London achieved another record result during the year, with a
substantial increase from the previous year's record level.
Provincial casinos
The Rendezvous Brighton again performed strongly during the year, with
substantial increases in both attendances and revenue. The ongoing development
of the Marina site continues to benefit the business.
After four years of growth, the Rendezvous at the Kursaal, Southend fell short
of last year's result, mainly due to a lower than normal win percentage.
Joint venture - Fifty
Following an extensive refurbishment in the prior year, the year to 31 March
2006 represented Fifty's first full year of trading in its new form as a joint
venture between LCI and Robert Earl's Celebrity Gaming. The new product has
attracted substantial interest and has enabled the Group to extend its
operations into a new, affluent market.
Membership of the club has grown rapidly and the venue has received a number of
awards, particularly in respect of the now world-renowned Salvatore's Bar.
The operation's first half trading was impacted by a lower than normal win
percentage - this improved, and Fifty traded profitably during the second half
of 2005/6.
Overseas
The Ramses Hilton and Nile Hilton casinos again performed strongly during the
year, having benefited from Middle Eastern visitors choosing to visit Cairo
rather than the UK during the summer, due to the effect of the July London
bombings.
The Emerald Casino Resort in South Africa has once again enjoyed a record year,
with strong performances from all areas of the resort, and continues to be a
major profit contributor to the Group.
Deregulation
The Gambling Commission has now announced the shortlisted locations for the
proposed Regional Casino, the 8 Large Casinos and the 8 Small Casinos. The
Group will participate fully in applications for licences which it considers
will be of most benefit to the Group.
It is anticipated that the new Gambling Commission, which replaces the former
Gaming Board for Great Britain, and will be responsible for the regulation of
most forms of gambling, will be fully established by September 2007. At this
time, the Group will then be able to market its operations more effectively to
let both our current and potential customers know what facilities our casinos
have to offer.
The removal of the requirement to operate as members' clubs will also enable us
to compete on a level playing field with other types of leisure offering,
broadening the appeal of casinos.
Developments
The Group's property in Manchester is now well into its development phase, with
opening anticipated in the autumn of this year. Branded as 'Manchester 235', it
will offer a unique entertainment combination which will set it apart from other
casinos with luxury, contemporary interiors, state of the art gaming, bar
facilities, two restaurants and a live music venue.
The development of the Group's Leicester Square casino is also progressing well
and we anticipate trading commencing towards the end of the first quarter of
2007. As with Manchester, the casino will be positioned as a destination venue
with a unique restaurant, gaming and entertainment offering.
The Group's other licences in Glasgow and Nottingham are currently undergoing
landlord's enabling works and will form part of the Group's second phase of
development with openings scheduled for summer and autumn 2007. Our licence in
Leeds is currently anticipated to be opening towards the latter end of 2007/8.
Board
Linda Lillis resigned as Finance Director of the Company in April 2006.
The Board expresses its thanks to Linda for her valuable contribution to the
business and wishes her well in her future career.
Current trading
After a relatively slow start in the initial months of 2006/7, business levels
in London have started to improve, with win levels and cash drop all ahead of
last year. Attendances have shown substantial increases over 2005/6 and
electronic gaming revenues, in particular, have grown strongly.
The provincial casinos in Brighton and Southend have also seen substantial
increases in attendances. Overall trading levels are in line with last year,
with the increase in attendances offset by lower overall spend per head levels.
Overseas, the casinos in Cairo are performing well ahead of the same period last
year, having benefited from the relatively quiet start to trading in London.
The Emerald Casino continues to trade extremely well and remains an important
and material contributor to the Group's earnings.
Merger
As announced on 26 June 2006, the Company has been in discussion with Stanley
Leisure plc concerning the possibility of a nil premium merger of the two
groups. Such a merger would result in the combined group being the largest
casino operator in the UK and well positioned to benefit from the opportunities
afforded by further deregulation.
Whilst discussions are progressing, there can be no certainty that they will
lead to a transaction. The Company will keep shareholders informed of
developments.
Outlook
With the Group's portfolio of licences well into development, the Board remains
optimistic about the future. Licences have been secured in good locations in
large cities across the UK and, with a focus on strong design and high quality,
we expect them to be successful and attract significant additional business.
Casino gaming is entering a new era and, with the high quality premises we plan
to operate, focusing not only on gaming but also on entertainment, restaurants
and bars, we anticipate continued growth in the Group's revenue, profitability
and customer base.
Les Ambassadeurs has been a significant but volatile contributor to the Group's
historical earnings and its disposal has now enabled the Group to focus on
operations which are most likely to benefit from gaming industry deregulation.
We would like to express our thanks to all our former colleagues at Les
Ambassadeurs for the excellent contribution they have provided to the Group and
our customers since 1991.
Consolidated income statement
for the year ended 31 March 2006
Year ended Year ended
31 March 27 March
2006 2005
£'000 £'000
Continuing operations
Revenue 126,127 103,263
Net operating costs
- Gaming taxation (35,142) (27,995)
- Other operating costs before exceptional items (79,658) (66,289)
- Exceptional items 992 2,146
(113,808) (92,138)
Operating profit 12,319 11,125
Share of post-tax loss of joint venture (766) (2,534)
Interest payable and similar charges (15,494) (14,374)
Interest receivable 340 783
Loss on ordinary activities before taxation (3,601) (5,000)
Taxation 996 129
Loss for the year from continuing operations (2,605) (4,871)
Discontinued operation
Profit for the year before exceptional item 949 3,416
Exceptional item relating to discontinued operation - profit 99,485 -
on disposal
Profit for the year from discontinued operation 100,434 3,416
Profit / (loss) for the year attributable to equity 97,829 (1,455)
shareholders
Earnings per share
Basic earnings / (loss) per share 43.9p (0.7)p
Diluted earnings / (loss) per share 43.5p (0.7)p
Consolidated balance sheet
as at 31 March 2006
31 March 27 March
2006 2005
£'000 £'000
Assets
Non-current assets
Intangible assets 76,240 89,136
Property, plant and equipment 64,239 60,895
Investments 495 990
Deferred tax assets 11,266 9,788
152,240 160,809
Current assets
Inventories 824 1,334
Trade and other receivables 10,331 13,826
Cash and cash equivalents 14,575 21,190
25,730 36,350
Liabilities
Current liabilities
Trade and other payables (20,251) (17,820)
Current tax liabilities (4,219) (2,607)
Borrowings (2,327) (12,207)
(26,797) (32,634)
Net current (liabilities) / assets (1,067) 3,716
Non-current liabilities
Financial liabilities
- Borrowings (22,688) (132,692)
- Derivative financial instruments (16) -
Pension scheme (17,900) (24,700)
Deferred tax liabilities (20,552) (23,069)
(61,156) (180,461)
Net assets / (liabilities) 90,017 (15,936)
Shareholders' equity
Ordinary shares 11,136 11,124
Share premium 126,747 126,667
Other reserves 16,294 16,294
Retained earnings (64,160) (170,021)
Total equity 90,017 (15,936)
Consolidated cash flow statement
for the year ended 31 March 2006
Year ended Year ended
31 March 27 March
2006 2005
£'000 £'000
Cash flows from operating activities
Cash generated from operations 23,242 3,536
Interest received 363 783
Tax paid (374) (388)
Net cash from operating activities 23,231 3,931
Cash flows from investing activities
Gross proceeds from sale of subsidiary 115,000 -
Payment of sale expenses (52) -
Cash disposed of with subsidiary (421) -
Proceeds from the sale of property, plant and equipment - 183
Purchase of property, plant and equipment (6,906) (8,225)
Licence development costs (1,096) (1,076)
Net cash from investing activities 106,525 (9,118)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 90 49,768
New bank loans 15,365 134,871
Repayment of borrowings (134,585) (178,358)
Interest paid (13,254) (15,536)
Net cash from financing activities (132,384) (9,255)
Effects of exchange rate changes 216 (87)
Net decrease in cash and cash equivalents (2,412) (14,529)
Cash and cash equivalents at the beginning of the year 15,595 30,124
Cash and cash equivalents at the end of the year 13,183 15,595
Analysed as:
Cash at bank and in hand 14,575 21,190
Overdrafts (1,392) (5,595)
13,183 15,595
Consolidated statement of recognised income and expense
for the year ended 31 March 2006
Year ended Year ended
31 March 27 March
2006 2005
£'000 £'000
Profit / (loss) for the year attributable to equity shareholders 97,829 (1,455)
Exchange difference on retranslation of net assets of subsidiary 3,064 364
undertakings
Actuarial gain on valuation of pension scheme 6,200 2,400
Deferred tax on actuarial gain on valuation of pension scheme (1,860) (720)
Total recognised income for the year 105,233 589
Recognition of fair value of derivative financial instruments (net (29) -
of tax)
1. Basis of preparation
The financial statements attached do not constitute the full financial
statements within the meaning of Section 240 of the UK Companies Act 1985. Full
accounts for London Clubs International plc for the year ended 27 March 2005,
prepared under UK GAAP, have been delivered to the Registrar of Companies. The
auditors' report on these accounts was unqualified and did not contain a
statement under Section 237(2) or Section 237(3) of the UK Companies Act.
For the year ended 31 March 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 28 March 2005.
Further information in relation to the Standards adopted by the Group, together
with restated information, is available on the Group's website at
www.lciclubs.com.
The preliminary announcement of the results for the year to 31 March 2006 is
unaudited and was approved by the Board on 21 July 2006.
2. Segmental analysis
Year ended 31 March 2006
Continuing operations London UK provincial Africa Middle East Group
£'000 £'000 £'000 £'000 £'000
Revenue
Gaming income 65,144 11,156 22,892 19,568 118,760
Other income 935 1,916 3,558 958 7,367
66,079 13,072 26,450 20,526 126,127
Operating profit / (loss) before exceptional 2,275 (810) 7,086 2,776 11,327
items
Exceptional items 992 - - - 992
Operating profit 3,267 (810) 7,086 2,776 12,319
Share of post-tax results of joint ventures (766)
Interest payable and similar charges (15,494)
Interest receivable 340
Loss before taxation (3,601)
Taxation 996
Loss for the year from continuing operations (2,605)
Discontinued operation
Revenue
Gaming income 27,080 - - - 27,080
Other income 313 - - - 313
27,393 - - - 27,393
Operating profit before exceptional items 922 - - - 922
Exceptional items 99,485 - - - 99,485
Segment result 100,407 - - - 100,407
Interest receivable 23
Profit before taxation 100,430
Taxation 4
Profit for the year from discontinued operation 100,434
Year ended 27 March 2005
Continuing operations London UK Africa Middle Group
provincial East
£'000 £'000 £'000 £'000 £'000
Revenue
Gaming income 48,202 11,047 20,292 17,037 96,578
Other income 1,269 1,763 2,925 728 6,685
49,471 12,810 23,217 17,765 103,263
Operating profit / (loss) before exceptional items 333 (65) 6,407 2,304 8,979
Exceptional items - - 2,146 - 2,146
Operating profit 333 (65) 8,553 2,304 11,125
Share of post-tax results of joint ventures (2,534)
Interest payable and similar charges (14,374)
Interest receivable 783
Loss before taxation (5,000)
Taxation 129
Loss for the year from continuing operations (4,871)
Discontinued operation
Revenue
Gaming income 35,461 - - - 35,461
Other income 234 - - - 234
35,695 - - - 35,695
Operating profit 2,430 - - - 2,430
Interest payable (18)
Profit before taxation 2,412
Taxation 1,004
Profit for the year from discontinued operation 3,416
3. Exceptional items
Year ended Year ended
31 March 27 March
2006 2005
£'000 £'000
Unsecured creditor receipt from Aladdin 992 -
Profit on sale of South African gaming rights - 2,146
992 2,146
On 23 September 2005, the Group received US$1.8 million (£992,000 net of costs)
as an unsecured creditor distribution from the Aladdin Gaming Creditors' Trust.
The exceptional credit in the year ended 27 March 2005 relates to the sale of
unutilised gaming rights held by the Emerald Casino Resort in South Africa.
4. Dividends
No dividend is proposed for the year ended 31 March 2006 (2005: nil).
5. Net finance costs
Year ended Year ended
31 March 27 March
2006 2005
£'000 £'000
Continuing operations
Interest payable on bank loans and overdrafts 11,519 12,548
Interest payable under finance leases 38 88
Amortisation of issue costs of bank loans (see note below) 3,962 889
Movement in fair value of interest rate collar (25) -
Interest payable on guaranteed senior loan notes - 158
Exchange loss on guaranteed senior loan notes - 691
Total Group interest payable 15,494 14,374
Group interest receivable (340) (783)
Net finance costs for continuing operations 15,154 13,591
Discontinued operation
Interest (receivable) / payable (23) 18
Total finance costs 15,131 13,609
Issue costs of £4.0 million were amortised during the year (2005: £0.9 million),
following the refinancing of the Group's UK borrowings on 31 March 2006. These
costs had been incurred as part of the previous refinancing of the Group's
borrowings on 23 April 2004.
6. Earnings per share
Basic earnings per share for each year has been calculated on profit
attributable to equity shareholders divided by the weighted average number of
ordinary shares deemed to be in issue during the year.
Diluted earnings per share has been calculated in accordance with IAS 33
(Earnings Per Share). The increase of 2,300,000 in the weighted average number
of shares, included in the diluted earnings per share calculation, is attributed
to warrants granted to members of the Aladdin banking syndicate (1,623,000
shares), share options under the Company's sharesave schemes (639,000 shares)
and share options under the Company's executive share option scheme (38,000
shares).
The basic earnings per share before exceptional items is considered, by the
directors, to be an additional useful measure of the Group's performance for the
year under review. This measure is calculated by excluding post-tax exceptional
income of £100.4 million (2005: income of £2.1 million) from the Group's
earnings for the year and results in a decrease in basic earnings per share of
45.1 pence (2005: decrease of 0.9 pence).
The earnings and weighted average number of shares used in the calculation of
basic and diluted earnings per share are as follows:
Year ended 31 March 2006
Continuing Discontinued Group
operations operations
Basic (loss) / earnings per share (pence) (1.2) 45.1 43.9
Earnings (£'000) (2,605) 100,434 97,829
Weighted average number of shares ('000) 222,594 222,594 222,594
Diluted (loss) / earnings per share (pence) (1.2) 44.7 43.5
Earnings (£'000) (2,605) 100,434 97,829
Weighted average number of shares ('000) 224,894 224,894 224,894
Basic (loss) / earnings per share before exceptional items (1.6) 0.4 (1.2)
(pence)
Earnings (£'000) (3,597) 949 (2,648)
Weighted average number of shares ('000) 222,594 222,594 222,594
Year ended 27 March 2005
Continuing Discontinued Group
operations operations
Basic (loss) / earnings per share (pence) (2.2) 1.5 (0.7)
Earnings (£'000) (4,871) 3,416 (1,455)
Weighted average number of shares ('000) 218,880 218,880 218,880
Diluted (loss) / earnings per share (pence) (2.2) 1.5 (0.7)
Earnings (£'000) (4,871) 3,416 (1,455)
Weighted average number of shares ('000) 220,915 220,915 220,915
Basic (loss) / earnings per share before exceptional items (3.2) 1.6 (1.6)
(pence)
Earnings (£'000) (7,017) 3,416 (3,601)
Weighted average number of shares ('000) 218,880 218,880 218,880
This information is provided by RNS
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