Sceptre Leisure

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28/10/2010 Ben Jaglom

Gaming group Sceptre Leisure has reported an impressive £3.6m increase in sales to £42.8m for the year to April.

Preston-headquartered Sceptre, which also unveiled improved annual pre-tax profits of £1.9m (2009: £1.4m), is the business behind a number of brands including Sceptre Leisure Solutions, which provides fruit machines for hire to pubs and leisure venues across the UK, lottery ticket company Lotteryking and Kellys Eye, the supplier of bingo, darts and poker to registered members clubs.

Last December saw the company acquire Dorset-based amusement machine supplier Australian 8 Ball in a £1.1m deal, which the company’s CEO Ken Turner insists 'strengthened Sceptre’s position in the important southern marketplace.' Turner adds Sceptre ‘continues to look for similar, earnings-enhancing acquisitions within the fragmented machine-operator market.’

A highly cash-generative business, Sceptre nonetheless faces the challenges of increasing pub closures – pubs represent the majority of its machine locations – as well as the squeezed consumer, while sizeable debts of £15.9m, though standing against substantial assets, nonetheless represent a sizeable risk at a time in which access to finance is tightening.

Analysts at Edison are forecasting adjusted pre-tax profits of £2.5m on sales down £1.8m for the year to April 2011, with earnings per share forecast to stay flat at 3.4p. Recommended by Growth Company Investor at 33p in early 2009, Sceptre Leisure's shares went as high as 72p but have recently fallen back to 29.5p, where they are worth holding onto for their recovery potential.