Tote announces record trading performance.

Date: 24th November 2003

Releasing interim results for the 25 weeks ending 17 September 2003, the Tote, one of Britain’s leading bookmakers and the sole operator of horserace pool betting, announced a record trading performance with Profit before taxation up 39 per cent to £ 9.2m.

Commenting on the results Peter Jones, Chairman, said, “First half trading has been outstanding this year and shows that the Tote keeps getting stronger. Excellent turnover growth in all divisions with improved profit margins, in particular from horseracing, coupled with the introduction of fixed odds betting terminals, have played an important part in these positive financial results.”


Highlights:
Turnover up 53 per cent to £ 693m (2002: £453m)
Gross profit, after duty and levy, up 22 per cent to £ 61m (2002: £ 50m)
Profit before contribution to racing up 21 per cent to £15.2m (2002: £ 12.5m)
Contribution to racing up to £ 6.0m (2002: £ 5.8m)

Profit before taxation up 39 per cent to £ 9.2m (2002: £ 6.7m)
Acquisition of the Seymour & Story group of 41 betting shops completed in April 2003

Mr Jones concluded, “The acquisition of Seymour & Story together with our overall tight management of costs is another driver behind our strong first half performance. Despite the uncertainty facing the Tote as we work with Government and the racing industry to secure the Tote’s transition to a Racing Trust, it is a credit to the management and staff that the business has performed so well.”




The Tote today announces its results for the 25 weeks ended 17th September 2003:

Highlights:

Turnover up 53% to £693m (2002: £453m)
Gross profit up 22% to £61m (2002: £50m)
Profit before contribution to racing up 21% to £15.2m (2002:£ 12.5m)
Contribution to racing up to £6.0m (2002: £5.8m)
Profit before taxation up 39% to £9.2m (2002: £6.7m)
Successful acquisition of the Seymour & Story group of 41 betting shops in April 2003.

Review of Operations

The first 25 weeks of the financial year saw all the Tote’s businesses show excellent growth.

Tote Bookmakers benefited in particular from the acquisition of the Seymour & Story group of 41 betting shops that contributed turnover of £24.2m and gross profit of £2.4m.

Turnover overall grew by 53% to £693m with much of it due to the introduction of fixed odds betting terminals (FOBT) across Tote Bookmakers’ estate of betting shops. These are high turnover, small profit margin machines that have become popular with customers. They produced turnover of £190m (2002: £19m). Nevertheless, it’s encouraging that when excluding the impact of FOBT, the Tote group saw turnover grow by 16%.

The decision to cut deductions in the Tote Win and Place pools proved successful with turnover in the Racecourse Division up 15% to £77m and total pool turnover across all channels up 22% to £155m (2002: £127m).

Overall, the excellent turnover growth and improved bookmaking profit margins, in particular for horseracing, more than made up for the loss of margin associated with the cut in pool deductions. Gross profits therefore showed a strong rise of 22% to £61m.



Outlook

The first 25 weeks of the financial year cover the months of April to September that are the highest turnover months for the betting industry. In consequence, profits tend to be proportionately higher then as compared to the rest of the financial year. However, the very strong profit and cash flow performance of the first 25 weeks give us great confidence that the Tote’s full year performance will continue to progress and so result in a record profit year.



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 25 weeks ended 17th September 2003

25 weeks 25 weeks Year
ended ended ended
17 September 2003 18 September 2002 31 March 2003
Note
£'000 £'000 £'000
Turnover
- ongoing 668,443 452,507 916,230
- acquisitions 24,248 - -
2 692,691 452,507 916,230

Amounts payable to winning customers 609,342 383,059 784,090

Betting duty 7,813 5,762 11,789
Statutory levy 3,291 2,173 3,366
Tote Direct commissions 11,378 11,540 20,241
631,824 402,534 819,486
Gross profit
- excluding acquisitions 58,500 49,973 96,744
- acquisitions 2,367 - -
60,867 49,973 96,744

Operating expenses 46,433 38,514 80,217

Other income 1,687 1,762 2,107
Operating profit 16,121 13,221 18,634

- before exceptional items 16,320 13,221 19,104
- operating exceptional items (199) - (470)

Share of profits in joint venture 156 201 262
16,277 13,422 18,896

Net Interest payable (1,083) (913) (1,956)

Income from investments - - 1,753

Profit before contribution to racing 15,194 12,509 18,693

Contribution to Racing 3 5,950 5,844 10,686

Profit before taxation 9,244 6,665 8,007

Taxation 4 3,513 2,533 2,315

Retained profit transferred to reserves 5,731 4,132 5,692


CONSOLIDATED BALANCE SHEET
At 17th September 2003

17 September 2003 18 September 2002 31 March 2003

£'000 £'000 £'000
Fixed assets
Intangible assets 103,723 85,003 86,428
Tangible assets 38,066 37,246 37,803
Investment in joint venture 564 426 408
Investments 1,693 1,689 1,693

Total fixed assets 144,046 124,364 126,332

Current assets
Debtors 8,691 5,640 7,578
Cash at bank and in hand 7,655 3,700 4,339

Total current assets 16,346 9,340 11,917

Creditors: due within one year (52,889) (31,558) (34,545)

Net current liabilities (36,543) (22,218) (22,628)

Total assets less current liabilities 107,503 102,146 103,704


Creditors: due after more than one year 20,249 21,867 22,181

Provision for liabilities and charges 549 865 549

Reserves 86,705 79,414 80,974
107,503 102,146 103,704


CASH FLOW STATEMENT
For the 25 weeks ended 17th September 2003

25 weeks 25 weeks Year
ended ended ended
17 September 2003 18 September 2002 31 March 2003
£000 £000 £000

Net cash inflow from operating activities 18,166 8,309 12,146








Returns on investments & servicing of finance (963) (772) (107)

Taxation (1,219) (916) (2,953)

Capital expenditure & financial investment (3,894) (4,539) (8,705)

Acquisitions (3,339) (6,858) (7,666)

Cash inflow/(outflow) before management 8,751 (4,776) (7,285)
of liquid resources & financing

Financing (1,550) 8,431 10,207

Increase in cash 7,201 3,655 2,922


Reconciliation of movement in net debt


Increase in cash in the period 7,201 3,655 2,922

Cash outflow/(inflow) from movement in 1,550 (9,914) (12,013)
debt & lease financing

Loan notes repaid - 1,483 1,806


Change in debt resulting from cash flows 8,751 (4,776) (7,285)

Other movements (10,254) - (404)

Change in net debt (1,503) (4,776) (7,689)

Net debt at 1st April (32,809) (25,120) (25,120)

Net debt at period end (34,312) (29,896) (32,809)






NOTES
For the 25 weeks ended 17th September 2003

1. Basis of preparation

The interim financial statements have been prepared on the basis of the accounting policies set out in the Board's statutory accounts for the year ended 31 March 2003. The tax charge is calculated by applying the Board’s best estimate of the annual tax rate to the profit for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the statutory accounts.

The financial information set out in this document in respect of the year ended 31 March 2003 does not constitute the Board's statutory accounts. The interim financial information was approved by a duly appointed and authorised committee of the Board on 21 November 2003 and is unaudited.


2. Turnover

25 weeks 25 weeks Year
ended ended ended
17 September 2003 18 September 2002 31 March 2003
£000 £000 £000

Racecourse - on course 77,338 67,048 105,986
- Tote Direct 50,967 47,624 88,392
- other 13,178 2,670 9,509

Tote Credit 121,306 105,956 214,975

Tote Bookmakers - ongoing 405,654 229,209 497,368
- acquisitions 24,248 - -

692,691 452,507 916,230



3. Contribution to racing

25 weeks 25 weeks Year
ended ended ended
17 September 2003 18 September 2002 31 March 2003
£000 £000 £000

Sponsorship and donations 1,575 1,400 3,387
Payments to racecourses 4,205 4,287 6,976
Greyhound Racing Trust 170 157 323

5,950 5,844 10,686


4. Taxation

25 weeks 25 weeks Year
ended ended ended
17 September 2003 18 September 2002 31 March 2003
£000 £000 £000

UK corporation tax 3,466 2,619 2,518
Under/(over) provision in prior years - - 34

3,466 2,619 2,552

Share of joint venture undertaking's tax 47 60 79

Total current tax 3,513 2,679 2,631

Deferred tax
Origination and reversal of timing differences - (146) (316)

3,513 2,533 2,315



5. Analysis of net debt

At 1 April 2003 Cash flows Other changes At 17 September 2003
£000 £000 £000 £000

Cash at bank and in hand 4,339 3,316 - 7,655
Bank overdrafts (3,885) 3,885 - -
454 7,201 - 7,655
Debt due within one year:
Bank loans (2,000) 2,000 (2,417) (2,417)
Loan notes (8,346) - (10,254) (18,600)
Finance leases (736) 34 - (702)

Debt due after more than one year:
Bank loans (19,500) (751) 2,417 (17,834)
Finance leases (2,681) 267 - (2,414)
(33,263) 1,550 (10,254) (41,967)

Net debt (32,809) 8,751 (10,254) (34,312)


6. Acquisitions

On 18th April 2003, the Group acquired the Seymour & Story group of 41 betting shops.