Companies: TTH   

Expansionist bingo club operator Top Ten Holdings, which has doubled interim profits to £1 million pre-tax, says it is negotiating a significant further acquisition in the north of England and looking for acquisition opportunities in the south-west, writes Robert Tyerman.

AIM-quoted Top Ten increased pre-tax profits 99 per cent to £1 million in the six months to 26 September on turnover 43 per cent ahead at £6.9 million, reflecting exceptional costs and profits of selling, acquiring and opening clubs. Without these, the St Albans-based company raised pre-tax profits 80 per cent to £957,000, with like-for-like operating profits up 34 per cent.

Capital expenditure, including re-fitting a recently acquired Billingham club for its September opening, exceeded £1 million, £250,000 more than planned, says managing director Alan Weston. But admissions have averaged 3,500 a week, against 2,000 budgeted, and Weston expects the total to settle down to between 2,500 and 2,800.

That would boost pre-tax profits by up to £350,000 in a full year. Refurbishing has lifted average spending per user 25 per cent at one club, Silkworth near Sunderland.

Top Ten, which raised £4.5 million last year at 5p, has funded most spending from cashflow and retains £2.5 million of a £4 million bank facility. Chairman Sir Aubrey Brocklebank calls this 'dry powder' for acquisitions.

Analysts suggest the company could increase pre-tax profits 54 per cent to £1.85 million in the year to March. Brocklebank says Top Ten, which has doubled its business in two years, could repeat that in the coming two years, with profits going up twice as fast.

He is loath to predict the impact of the Gaming Bill until its provisions are clarified, though he suggests high-rolling US gambling groups are unlikely to target Top Ten's downmarket provincial locations. At present bingo halls can offer 'Section 21' games for prizes, but not 'FOBT' roulette-on-machine-type games, while the Bill would allow casinos to offer bingo.

At 6.25p, up 0.5p this morning but less than half their price in autumn last year, Top Ten shares have speculative appeal.