Stanley Leisure hits the jackpot with 40% increase in profits

The casino and betting group Stanley Leisure hit the jackpot yesterday with 40 per cent annual profit growth and news that it had bought Tower Casino Group in a cash and stock deal, pushing its shares higher.

The company, chaired by Leonard Steinberg, said the acquisition for £44.3m of Tower, which operates five casinos, would bolster its position as Britain's leading casino operator, with three in London and 37 around the rest of the country.

Stanley, which also owns more than 600 betting shops, is placing 8.8 million new shares to raise £29.6m to help pay for the deal. It is also paying Tower's owner, the privately owned Bell Holdings, with the issue of 2.6 million new shares worth £9m and a further £5.7m in cash.

Stanley Leisure's chief executive, Bob Wiper, told the news agency Reuters that payback from the acquisitions would start this year. "With this one, the number of acquisitions by us in the last 10 months has risen to nine. All will begin to perform this year," he said.

The company, which also hopes to reap the benefits of betting on the football World Cup during this financial year, said it was well placed for future growth.

Mr Wiper said maintaining 40 per cent profit growth consistently was tough, but added the company expected a comfortable year ahead. Stanley Leisure's pre-tax profits before goodwill amortisation was £37.5m for the year to 28 April, up from £26.8m the previous year, and beat the consensus of market forecasts of about £34m.

Its shares, which have outperformed the FTSE leisure index by 42 per cent in the past year, ended 7 per cent higher at 367p. Stanley said its turnover last year increased 21 per cent to £743m, reflecting a 23 per cent jump in its betting division and a 17 per cent rise in the gaming division.

The company said its betting division received a boost from the removal of a betting tax last October, while better management of its gaming division resulted in improved margins.

Outstanding debts continued to be a worry, though marginally lower than in the first half.

Mr Wiper said the company's collectibles or outstanding debts had fallen slightly to £1.9m at the end of the year, down from £2m in the first half.

"My instinct is we should be able to collect some £700,000 this year, but regrettably not the rest," he said.

The company proposed a final dividend of 7.1p a share, up 22 per cent from 6p in the previous year.