Sceptre Leisure, the amusement and gaming machines supplier, has reported a drop in revenue for the six months to 31 October, but said that it continued to trade “robustly”.
Group income for the period fell £1.7m to £18.01m on the back of Skills With Prizes (SWP) machine income reductions; lower royalty charges on pub company contracts within Sceptre Leisure Solutions; and reduced sales to registered members' clubs through its Lotteryking platform.
Pre-tax profit for the period saw a slight gain, up from £609,000 to £629,000, while operating profit before exceptional items climbed to £1.3m against £1.2m in 2010, as the group said that an increased focus on cost control was delivering further efficiencies.
The group said that the HMRC regulatory changes to SWP games in April 2010 reduced the income from the group’s estate of 3,000 SWP machines, resulting in a reduction of £600,000 over the six months. The group said that SWP income was considerably lower year-on-year with an average weekly income of £17.88 per machine, down from an average of £25.23 last year.
It said that the revenue from these machines had now stabilised and that it was adjusting its “operating ratios and methodology accordingly to minimise the effect on gross margin”.
A further impact to sales came from the industry-wide move away from the traditional royalty-based model that has affected royalties charged and repaid as part of machine operating contracts.
It said that during the six months this resulted in a reduction of £500,000 reduction in both revenue and cost of sales when compared to the prior year.
Despite the above factors, the group’s machine rental division report increased profitability, contributing £1.4m (2010: £1.1m) of pre-tax profit in the period.
Over the period it extended contracts with existing customers such as Marston's, Joseph Holt and De Vere Hotels. In addition to this, it has also been awarded a new four-year contract with Rileys to be the sole supplier to its 120 pool and snooker halls nationwide.
Capital expenditure for the six months stood at £4.3m compared with £5.1m in the same period in 2010, of which £800,000 was attributable to the contract win with Rileys, the machines for which were installed during October 2011. The group said that this four-year contract would begin to contribute income during the second half of the current financial year.
Net debt reduced to £14m from £15.8m a year ago but was slightly up from £13.4m at 30 April 2011.
It said that sales of its full catalogue of indoor gaming and consumables to pubs and through its online e-commerce sites continued to grow year-on-year.
The company said that its contract pipeline within the machine rentals division remained strong and that its continued success at winning new business had driven performance improvements during the period.
It said it would continue to pursue organic growth over the remainder of the year and was confident of its ability to progress further in this area.
Sceptre said it also continue to explore and assess acquisition opportunities as the second strand of its growth strategy. It said it remained keen to complete such transactions where “both the price and the operational fit are right for us”.
Ken Turner, chief executive, said: “Our business has continued to trade robustly, successfully extending existing and winning new contracts with major operators. Our focus on reducing costs for operators while maintaining an industry-leading level of service has made our offering even more attractive and is helping us to continue being the leading operator of amusement and gaming machines in the licensed retail market. We are confident that we can continue to grow our business organically and through acquisitions, should the right opportunities arise.”
Yesterday, Sceptre announced it had signed a new agreement with the Gauselmann Group, which will enable it to offer its pub customers a fully integrated digital solution and strengthen its position in the developing digital games market in the UK.
Under the agreement Sceptre will act as the sole supplier of the Gauselmann Group and its UK-based business Blueprint Gaming’s range of digital gaming machines to the UK pub market
