London Clubs International, the casino operator which has rebounded from near bankruptcy four years ago, warned yesterday that profits had been hit by the London bombings and confirmed the £115m sale of its most exclusive club, Les Ambassadeurs.
In a trading update, the group said profits at the club, popular with high-rolling oil sheikhs, had never recovered from the hit they took after July's bomb attacks, which scared off hundreds of its billionaire summer visitors. Profits at Les Ambassadeurs suffered further from a run of good luck for its clientele, which hit the club's win margin. LCI also said it had between £3m and £5m of bad debts still to collect.
Shares in LCI slid 4.25p to 123.75p after analysts slashed their profit forecasts for the year that ended 31 March. The group said that excluding any exceptional profit on the sale of Les Ambassadeurs or further debt recovery, its profits would be broadly flat on last year's numbers. Douglas Jack, the leisure analyst at Panmure Gordon, cut his underlying pre-tax profit forecast for last year by more than two-thirds to £3m.
A little less than one-third of Les Ambassadeurs' normal patrons opted not to fly to London in the summer, hitting the amount of money staked, or "dropped", at its gaming tables by about 30 per cent. Normally, London is a big destination for the cash-rich Gulf Arabs who like to escape the soaring summer temperatures of the Middle East by visiting the capital. Bill Timmins, the chief executive of LCI, said: "When the fear factor went away we saw a return to normal visitation levels." He is "hopeful" the group can call in about £4m of its bad debts before its accounts are signed off.
The disposal of Les Ambassadeurs to an Indonesian cigarette billionaire is in line with LCI group's plans to focus on its regional casinos before the UK's impending gaming deregulation. It is using the proceeds to reduce its debt mountain, which peaked at £270m during the fiasco of its US expansion, to just £10m. Selling the club, whose clientele can win or lose millions of pounds in an evening, will make the group's earnings less volatile.
The club's new owner is Putera Sampoerna, one of its members. He recently netted £1.2bn after selling his family's clove-flavoured cigarette business to Altria, the US tobacco group formerly known as Philip Morris.
The group said the rest of its casino estate"traded well". It said it was well placed to take advantage of gaming deregulation, which allows casinos to advertise next year. It opens a 55,000 sq ft casino in London's Leicester Square at the end of 2007.Reuse content