News blog
Sceptre Leisure
- BY: Andrew Hore |
- POSTED: 15/12/2010 |
It was a tough first half for Sceptre Leisure but the gaming machines operator managed to keep its overheads down and it remained strongly cash generative.
Revenue fell 7% to £19.7m in the six months to October 2010. The decline was due to the sale of the fixed odds betting terminal operation and the closure of pubs that had 510 machines on their premises. That was offset by the inclusion of American 8 Ball Company which was bought in the second half of last year. Machine utilisation was maintained at 95% but the average weekly rental per machine fell 3% to £34.75 due to legislative changes. Sceptre was operating 21,100 machines at the end of October 2010.
Stripping out a higher amortisation charge, the pre-tax profit declined from £1.04m to £898,000.
The lottery operations are less than 10% of revenue but they managed to move into profit in the first half.
Net capital expenditure of £4.96m was level with cash generated from operations so net debt was similar to the end of April 2010 at £15.8m.
At the end of November, Sceptre bought the 925 machines on 277 sites in the south of England that were owned by RV Smith. Sceptre paid £1.2m in cash and shares for the assets. They have already been integrated into the group. Sceptre is looking for further add-on acquisitions.
The second half always tends to be stronger and there are signs that both the gaming machines and lottery businesses should do better in the rest of the year. Sceptre has already rolled-out 800 machines for the new Punch Tavern’s contract. However, there is uncertainty about the effect of the VAT increase to 20% at the beginning of 2011.
At 25.5p a share, Sceptre is valued at £14.5m.
Download the December edition of AIM Journal at http://www.hubinvest.com/AIMPDFDecember2010_15.pdf
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