Bingo and smooker halls operator Top Ten saw profits hit by the smoking ban and the Gambling Act and it says the outlook for the remainder of the year is unpredictable.
Operating profits fell to £1.4m for the six months to 30 September from
£2.1m last year. Revenue fell from £14.69m to £13.65m. The group said it
was unlikely to pay a dividend until trading conditions improved.
Chairman Sir Aubrey Brocklebank says: 'Despite our considerable
preparation for the smoking ban and introduction of the Gambling Act our
business has still felt the impact that the combination of this
unprecedented change has caused. Our strategy to dispose of our most
marginal clubs will leave the group better positioned to ride out
challenging market conditions.['
The group expects to be only marginally profitable for the second half
of the year. It has disposed of two small bingo clubs for £551,000 and
plans further property sales in the second half of the year. Rivals have
adopted a similar strategy with Stylus Sports closing two bingo halls at
the beginning of the month. Top Ten has also put in place a cost
reduction programme.
Top Ten saw some changes at the top with Norman Weston and Alan Weston
stepping down as executive directors. They will remain as
non-executives. Allen Walsh and Gary Bennett, currently executive
directors of subsidiary trading company Top Ten Bingo, will be appointed
to the main board.
The group is lobbying the Government to remove the double taxation of
bingo clubs, which currently have to pay VAT and Gross Profit tax (GPT)
on revenues, whereas other gambling outlets only pay GPT. The group
doesn’t believe the problem will be solved in the short-term but, if
successful, the protest could result in a repayment of VAT of around
£5.4m.
The shares were knocked just 2p to 38p, as the news had been
well-flagged in a trading statement in October. That prompted a
precipitous decline in the share price, which had already had a bad run
from mid-2006. The shares now trade at only 6.74x earnings but even so
it is difficult to see any value here. Bingo is a business in decline,
is in urgent need of a new generation of customers and is probably best
avoided by those who value their long-term wealth.
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Top Ten hit twice
Cherry Reynard, 21/11/07 12:19
Bingo and smooker halls operator Top Ten saw profits hit by the smoking ban and the Gambling Act and it says the outlook for the remainder of the year is unpredictable.
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Operating profits fell to £1.4m for the six months to 30 September from £2.1m last year. Revenue fell from £14.69m to £13.65m. The group said it was unlikely to pay a dividend until trading conditions improved.
Chairman Sir Aubrey Brocklebank says: 'Despite our considerable preparation for the smoking ban and introduction of the Gambling Act our business has still felt the impact that the combination of this unprecedented change has caused. Our strategy to dispose of our most marginal clubs will leave the group better positioned to ride out challenging market conditions.['
The group expects to be only marginally profitable for the second half of the year. It has disposed of two small bingo clubs for £551,000 and plans further property sales in the second half of the year. Rivals have adopted a similar strategy with Stylus Sports closing two bingo halls at the beginning of the month. Top Ten has also put in place a cost reduction programme.
Top Ten saw some changes at the top with Norman Weston and Alan Weston stepping down as executive directors. They will remain as non-executives. Allen Walsh and Gary Bennett, currently executive directors of subsidiary trading company Top Ten Bingo, will be appointed to the main board.
The group is lobbying the Government to remove the double taxation of bingo clubs, which currently have to pay VAT and Gross Profit tax (GPT) on revenues, whereas other gambling outlets only pay GPT. The group doesn’t believe the problem will be solved in the short-term but, if successful, the protest could result in a repayment of VAT of around £5.4m.
The shares were knocked just 2p to 38p, as the news had been well-flagged in a trading statement in October. That prompted a precipitous decline in the share price, which had already had a bad run from mid-2006. The shares now trade at only 6.74x earnings but even so it is difficult to see any value here. Bingo is a business in decline, is in urgent need of a new generation of customers and is probably best avoided by those who value their long-term wealth.
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