Results for the four months to 31 October were satisfactory, despite weaker trading at Hard Rock since 11 September.
Gaming operating profit was ahead of last year and continues to exceed our expectations, driven by an improving turnover trend and robust margins. Increased promotional activity in bingo and later night opening at selected casinos have both proved to be successful. The London casinos have been resilient to the reduction in tourism and the Clermont has reverted to more usual margins after a weak first half. The provincial casinos are performing strongly helped by the successful relaunch of relocated premises in Birmingham, Blackpool and Great Yarmouth. The first tranche of internet games is being operationally tested and introduction to our existing gaming customer base is imminent.
Hard Rock was immediately affected by the tragic events of 11 September. Sales were severely reduced in the aftermath, particularly in the major tourist markets, but are recovering steadily, if slowly. Merchandise sales are considerably more affected than sales of food and beverage which have responded to increased local marketing initiatives. The new Birmingham cafe has opened and is meeting its targets. Although the majority of Hard Rock profit for the year had been achieved by the end of August, and the business remained profitable in September and October, operating profit for the year is expected to be some 15% lower than last year.
Deluxe results remain in line with expectations. Film processing suffered some disruption for two weeks in September as customers reconsidered their release schedules. However, any effects have been recovered by high levels of processing in October, so that cumulative volumes remain substantially ahead of last year. The new Rome film laboratory is now fully operational and trading profitably. Video duplication and distribution are achieving the expected volumes albeit at lower levels than last year.
Costs remain under strict control. Cash flow is strong and our development plans across all businesses continue unchanged.
