The UKs third largest land based bingo firm has reported an alarming drop in profits said to be an unprecedented turmoil caused by the combination of recent changes in gambling laws and the September smoking ban.
Top Ten Holdings run thirty eight bingo clubs across Wales, the Midlands and the North-West. They have seen pre-tax profits fall by more than half to £381,000 in the six months up to September 30 th 2007.
In October their largest rival Rank, owner of the Mecca bingo chain also warned of slumping revenues since the 2005 Gambling Act came into force two months ago, they also blame the September smoking ban for the slump in turnover.
Investec analyst Matthew Gerard expects Top Ten’s full year pre-tax profits to be £500,000, compared to £2.8m previously.
He said, “We are concerned trading could deteriorate further in colder weather.”
Shares in the St Albans firm, which began the year at 87.5p, slipped 5% to a new record low of 38p today.
Top Ten chairman Sir Aubrey Brocklebank said, “Average customer spending levels and club admissions remain very unpredictable and it is difficult to discern any clear trends.”
The company is riding out the double impact of the bans and new laws with a cost-cutting plan to reduce overheads. It has also sold five less profitable clubs to lower its debt.
The benefits of the savings should be felt in the first half of the next financial year.
Top Ten called for an overhaul of “perverse” tax laws which bingo operator’s claim unfairly penalises the sector. Bingo participation fees are subject to both 17.5% in VAT and 15% gross profits tax (GPT), although bookmakers are only subject to the GPT. Top Ten has joined other operators in lobbying the Treasury for a change in the rules.
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