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London Clubs Intnl (LCI)

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Monday 12 December, 2005

London Clubs Intnl

IFRS

London Clubs International PLC
12 December 2005


London Clubs International plc

The Effect of the Adoption of International Financial Reporting Standards on
Comparative Information

In accordance with European Union regulations, all publicly listed groups in the
EU are required to adopt International Financial Reporting Standards (IFRS) for
their financial statements from 1 January 2005.  Consequently, the Group has
implemented IFRS from 28 March 2005.

This document explains how the Group's reported performance and position will be
affected by these changes.

The key headlines from the restated 2005 financial statements compared to the
previous UK GAAP are as follows:
     
•    Adoption of IFRS has no impact on the cash flows generated by the business 
     or the cash resources available for investment.  The Group's banking
     arrangements and covenants are also unaffected.  Furthermore, the adoption 
     of IFRS does not affect LCI's strategy or underlying business performance

•    Pre tax loss under IFRS translates to £2.9m from £1.4m under UK GAAP

•    Loss per share under IFRS translates to 0.8p from 0.4p under UK GAAP

•    Property and casino licences need to be included on a cost basis, within
     intangible assets.  As a result of this adjustment, the net assets of the 
     Group will reduce by £96.3m as at 27 March 2005.  A further £24.2m has been 
     provided in respect of deferred tax on the difference between accounting 
     and tax values of licences.

•    Pension charges equate to £3.3m, from £2.2m under SSAP 24,

     o    Provision for pensions of £0.3m will be replaced by a liability of
          approximately £17.3m (after deferred tax) and result in a reduction in 
          equity of £17.0m.

•    Share based payments, for the six months ended 26 September 2004 and the 
     year ended 27 March 2005, will result in charges of £86,000 and £256,000
     respectively (net of deferred tax).



                                                                12 December 2005



The Group will host a conference call for analysts covering the content of this
announcement on 13 December 2005 at 12.00 pm, on Tel 020 7365 1855.

The Group will announce interim results for the period ended 25 September 2005
on Friday, 16 December 2005.
Adoption of International Financial Reporting Standards (IFRS)
                                                                
Key features of the adoption of IFRS

The transition from UK GAAP to IFRS will have no effect on:

1.       The Group's underlying business performance.
2.       The underlying market value of the Group's casino licences.
3.       The Group's cash flow.
4.       The Group's banking arrangements and covenants.
5.       The financial resources of the Group available for investment.
6.       The Group's strategy for development and growth.


The transition will affect:

1.       The Group's reported net assets.
2.       The Group's reported operating profit.
3.       The Group's reported earnings per share.

Background to the conversion process

The financial statements of London Clubs International plc and its subsidiaries
('the Group' or 'LCI') for the year ended 27 March 2005 were prepared under UK
Generally Accepted Accounting Principles ('UK GAAP').

In accordance with European Union regulations, all publicly listed groups in the
EU are required to adopt International Financial Reporting Standards ('IFRS')
for their financial statements from 1 January 2005.  Consequently, the Group has
implemented IFRS from 28 March 2005.

The conversion project

The IFRS conversion project is overseen by the Finance Director and has followed
a three phase transition plan: preliminary assessment, detailed impact study and
implementation.  Where guidance has been required in the interpretation and
application of IFRS, this has been obtained from third party experts.

The IFRS position in this report reflects the Group's current view based on the
standards currently extant and may alter as new accounting pronouncements in
this area are developed and issued.  The Group has chosen to early adopt the
amendment to IAS19 'Employee Benefits', as published in December 2004.  As the
application and interpretation of IFRS continues to evolve, the full financial
effects of reporting under IFRS may be subject to change.

Comparative information

The first IFRS-compliant financial information to be reported by the Group will
be for the six months ended 25 September 2005.  The requirement to present
comparative information means that a balance sheet as at 28 March 2004 and
primary statements for the six months to 26 September 2004 and the year to 27
March 2005, prepared in accordance with IFRS, are also required.

The accompanying unaudited reconciliations provide details of the Group's income
statements and shareholders' equity, restated under IFRS, for the six months
ended 26 September 2004 and for the year ended 27 March 2005, and the Group's
restated equity as at 28 March 2004.

In addition to the differences in accounting treatment between UK GAAP and IFRS,
which are explained below, there will be presentational changes and changes in
terminology within the financial statements that are required as a result of
adopting IFRS.

Key impacts on the financial statements of the Group

The following areas of the Group's financial statements have been identified as
being materially impacted by adoption of IFRS.

Property and casino valuations (IAS 38)

The conversion to IFRS has no effect on the underlying market values of the
Group's assets, but requires casino licences to be carried at cost, rather than
valuation, for financial reporting purposes.

Under UK GAAP, the short leasehold properties from which the Group conducts its
casino operations were carried within tangible fixed assets at open market
value, on an existing use basis, including the benefit of casino licences.  In
line with normal Group practice, these licences were revalued triennially by an
independent firm of Chartered Surveyors, the last such valuation being in March
2003.

Under IFRS, LCI is required to hold the casino licences as intangible assets, at
cost to the Group.  For the majority of the licences, cost to the Group was
determined to be the purchase cost on acquisition at the time of the management
buyout from Grand Metropolitan ('MBO') in 1989.

Licences which LCI has developed, subsequent to the MBO, are valued at cost in
the balance sheet.

All licence costs are required to be classified as intangible assets in the
balance sheet.

The effect of this on the balance sheet as at 27 March 2005 can be summarised as
follows:


27 March 2005                                                     UK GAAP                                IFRS
                                                                       £m                                  £m
Non-current assets
Intangible assets                                                       -                                92.5
Property, plant & equipment                                         246.1                                59.1

Current assets
Development costs                                                     1.8                                   -

Total                                                               247.9                               151.6


The underlying value of the freeholds, leaseholds and licences remains
unchanged.  Under IFRS, however, LCI is required to write down net assets, for
reporting purposes, by £96.3m, to the valuation as at 1989 together with
subsequent licence acquisition costs.

The casino licences are considered to have an indefinite useful life.  No
amortisation charge is, therefore, considered necessary but the Group will be
required to conduct regular impairment reviews.

Deferred taxation (IAS 12)

The conversion to IFRS has no material effect on the amount of tax the Group has
to pay.

Under UK GAAP, a profit and loss account approach was taken, with deferred tax
provided in respect of timing differences whereas, under IFRS, a balance sheet
approach is taken and deferred tax is provided in respect of temporary
differences.
                              
This impacts the group in 2 key areas:

1.       Intangible assets (casino licences).
2.       Pensions.

Casino licences

The deferred tax liability relating to casino licences reflects the tax effect
of the difference between the carrying value for accounting purposes (i.e. the
cost of acquisition in 1989 and the costs of developing subsequent licences) and
the tax base (i.e. the actual costs of obtaining a licence).

Deferred tax is provided on this difference at a rate of 30%, even though the
licence cost will not be amortised and, due to the structure of the Group, it is
unlikely that tax would be payable on the disposal of a casino licence.

At 27 March 2005, LCI is required to recognise a deferred tax liability of
£24.2m in respect of its intangible casino licences though, as noted above, the
eventual payment of this tax is considered remote.
Pension deficit

The pension deficit of £24.7m as at 27 March 2005 (see later for details)
represents a temporary difference for the purposes of deferred taxation under
IFRS as, over time, the Group will be required to make good the deficit through
contributions or investment returns, or the deficit will change by reference to
changes in the economic assumptions underpinning the valuation.

Consequently, LCI has recognised a deferred tax asset based on 30% of the IAS 19
deficit.  This increases Group net assets by £7.4m as at 27 March 2005.

Pensions (IAS 19)

The conversion to IFRS has no effect on the underlying deficit, or future
funding, of the Group's defined benefit pension scheme.

Under UK GAAP, the Group accounted for pension costs under SSAP 24 'Accounting
for Pension Costs,' with additional disclosures provided as required by FRS 17 '
Retirement Benefits'.  The Group's pension deficit was not included in the
balance sheet.

IAS 19 takes a similar approach to FRS 17.  On transition, a deficit close to
that disclosed in the notes to the UK GAAP accounts has been brought onto the
balance sheet in place of the SSAP 24 provision.

Under IAS 19, the scheme assets are valued at fair value and the liabilities are
discounted using a high quality corporate bond rate.

Inclusion of the deficit in the scheme on the balance sheet reduces Group net
assets, as at 27 March 2005, by £24.7m (though this is offset by a £7.4m related
deferred tax asset, as detailed earlier).  Actuarial gains and losses are
recognised immediately through reserves.

For the year ended 27 March 2005, a pension charge of £2.2m was recognised under
SSAP 24, which included a charge for the amortisation of the deficit in the
London Clubs pension scheme.  Under IFRS, the equivalent pension charge is
£3.3m.

The pension provision under SSAP 24, as at 27 March 2005, of £0.3m, is written
back on adoption of IFRS.

The effect of this on the balance sheet as at 27 March 2005 can be summarised as
follows:

27 March 2005                                                     UK GAAP                                IFRS
                                                                       £m                                  £m

SSAP 24 provision                                                   (0.3)                                   -
IAS 19 pension deficit                                                  -                              (24.7)
Deferred tax asset                                                      -                                 7.4

Total                                                               (0.3)                              (17.3)

                                                                       
As a result of adopting IAS 19, Group net assets, at 27 March 2005, would have
been £17.0m lower than under UK GAAP.

The impact on equity at March 2006 is difficult to predict, as it will depend on
the market value of the pension assets and market conditions at that time.

Share based payment (IFRS 2)

Adoption of IFRS 2 has no effect on the cash flows or net assets of the Group.

Under UK GAAP, the granting of share options only generated a profit and loss
account charge if they were offered at a discount.

Under IFRS 2, LCI is required to fair value all share options and charge this to
the income statement over the life of the option.  Only options issued since 7
November 2002, which have not vested by 1 January 2005, are required to be
valued and charged to the income statement.

The value of the award equates to the perceived value to the employee, not the
cost to the company.  As such, it includes an assessment of the potential share
price growth over the life of the option and is required to be calculated using
option pricing models which consider factors such as share price growth,
volatility and the life of the option.

The assessment of the fair value is made at the date of grant of the option and
can only change by reference to non-market changes in the assumptions
underpinning the charge (such as changes in earnings per share growth or
forfeiture).  It is possible for charges to be recognised over the life of the
option, in the income statement, even if no awards actually vest.

The Group has two share based payment schemes - a long term incentive plan for
executive directors and senior managers and an Inland Revenue approved sharesave
scheme.

For the year ended 27 March 2005, IFRS 2 would have resulted in a charge of
£0.3m (net of deferred tax).

IFRS 2 has no effect on net assets as the corresponding credit is to equity.

Financial instruments (IAS 32 and 39)

Adoption of IAS 32 and IAS 39 has no effect on the cash flows of the Group, nor
will it affect the Group's hedging strategy in relation to interest rate
exposures.     

IAS 32 and 39 set out the accounting rules surrounding the recognition,
measurement, disclosure and presentation of financial instruments.

LCI has taken the IFRS 1 exemption not to restate comparatives in this area, for
the year ended 27 March 2005, and these standards have therefore been adopted by
the Group with effect from 28 March 2005.  At that date, the reduction in net
assets was £28,000 (net of deferred tax) as a result of fair valuing the Group's
interest rate collar.

Derivative financial instruments are required to be included on the balance
sheet at fair value, with changes in valuation impacting the income statement.

Summary of the financial impact of adoption of IFRS

The impact of adoption of IFRS on the previously reported net assets and profit
after taxation of the Group can be summarised as follows:


Net assets                                                      As at               As at              As at
                                                             28 March        26 September           27 March
                                                                 2004                2004               2005
                                                                   £m                  £m                 £m

As reported under UK GAAP                                        73.0               126.6              122.4

Casino licences adjusted to cost                               (96.4)              (96.4)             (96.3)
Deferred tax on casino licence cost                            (24.2)              (24.2)             (24.2)
Pension scheme deficit on balance sheet                        (25.6)              (26.1)             (24.4)
Deferred tax asset on pension scheme deficit                      7.7                 7.8                7.4
Deferred tax asset on share based payments                          -                   -                0.1

IFRS equivalent                                                (65.5)              (12.3)             (15.0)




Profit after taxation                                                      6 months ended          Year ended
                                                                             26 September            27 March
                                                                                     2004                2005
                                                                                       £m                  £m

As reported under UK GAAP                                                             3.4               (0.8)

Increase in pension charge                                                          (0.5)               (0.7)
Share based payments charge                                                         (0.1)               (0.3)

IFRS equivalent                                                                       2.8               (1.8)


Further information

IFRS 1 exemptions

In addition to the mandatory exceptions from retrospective application of IFRS,
required by IFRS 1, the Group has taken optional exemptions, where they apply to
the Group, in the following areas: business combinations, cumulative translation
differences, share-based payments and employee benefits.

Segment reporting

For management purposes, the Group is currently organised according to three
geographical divisions - United Kingdom, Africa and the Middle East.  These
divisions are the basis on which the Group will report its primary segment
information under IAS 14 'Segment Reporting'.
                                                  
Accounting policies

Basis of preparation

This financial information has been prepared in accordance with International
Financial Reporting Standards ('IFRS'), including International Accounting
Standards ('IAS'), interpretations issued by the International Accounting
Standards Board ('IASB') and its committees and with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS.  The IFRS
standards and interpretations that will be applicable at 31 March 2006,
including those that will be applicable on an optional basis, are not known with
certainty at this time.

The financial statements have been prepared under the historical cost convention
as modified by the revaluation of certain financial assets and liabilities.

A summary of the more important Group accounting policies is set out below.

Consolidation

The consolidated accounts include the results and net assets of the Company and
its subsidiary undertakings.  The results of subsidiaries and joint ventures
acquired or sold during the year are included from, or to, the effective date on
which control is acquired, or when it ceases, respectively.

Inter-company transactions and balances between Group companies are eliminated.
Accounting policies applied to subsidiaries have been changed, where necessary,
to ensure consistency with the policies adopted by the Group.

Exceptional items

Items which are both material and non-recurring in nature are presented as
exceptional items, to provide a better indication of the Group's underlying
business performance.

Revenue recognition

Revenue is measured at the fair value of the consideration receivable from
customers and is recognised as services are performed.  Revenue principally
comprises gaming income, being net winnings from customers (gross of gaming
taxes), and also includes accommodation, food, beverage, membership and other
income.

Intangible assets - licences

Casino licences are recorded at cost and are judged to have indefinite useful
lives since there is no foreseeable limit to the period over which the licences
are expected to generate net cash inflows.  As a result, casino licences are not
amortised but are subject to annual impairment reviews.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation
and impairment losses.

The directors review the book value of the Group's freehold and short leasehold
properties each year and if, in their opinion, there is any impairment in value,
it is charged to the income statement.

Assets are depreciated over their estimated useful lives, to their residual
values, on the following bases:

Leasehold improvements            - Over the remaining term of the lease. 
Fixtures and fittings             - 10 per cent to 20 per cent straight line.
Motor vehicles                    - 25 per cent reducing balance.
Freehold buildings                - 2 per cent straight line.

Freehold land and assets in the course of construction are not depreciated.

Investments

Investments, including investments in subsidiary undertakings, are valued
individually at cost less provision for any impairment losses.

Joint ventures

Joint ventures are entities over which the Group exercises joint control and are
accounted for using the 'equity method'.  The Group's investment in joint
ventures is initially recorded at cost and adjusted thereafter for the
post-acquisition change in the share of the joint ventures' net assets.  If the
Group's share of losses in a joint venture equals or exceeds its investment in
the joint venture, the Group does not recognise future losses unless it has
incurred obligations or made a payment on behalf of the joint venture.

Gains on transactions between the Group and its joint ventures are eliminated to
the extent of the Group's interest.

Financial instruments

The Group uses financial instruments to hedge its exposure to interest rate
risk.  Effective from 28 March 2005, changes in the fair value of such
instruments, which do not qualify for hedge accounting, are recognised as they
arise.
          
Taxation

The charge for taxation represents the sum of the tax currently payable and tax
that is deferred.

Current tax is based on the taxable result for the period.  This will differ
from the net profit reported in the income statement because the former excludes
items that are taxable or deductible in other years and further excludes items
that may never be taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit.  Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised where their recovery is
considered probable.

Inventories

Inventories, which comprise consumables, are stated at the lower of cost and
estimated net realisable value.

Trade receivables

Trade receivables include receivables of the overseas casino operations (where
deferred payment is permitted) net of provisions for any amounts considered
unlikely to be recoverable.  In the UK, amounts are charged to the income
statement for all unpaid gaming cheques net of any amounts recovered up to the
date of approval of the accounts.

Foreign currencies

Transactions in foreign currencies are translated into sterling at the rates
ruling at the date of the transaction.  Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the year end exchange rate.  The results of overseas operations are translated
at average exchange rates.

Exchange differences arising from the translation of the opening net assets of
overseas subsidiaries and any foreign currency borrowings used to acquire
overseas assets are taken as a movement in equity.  All other exchange
differences are taken to the income statement.

Leases

Leases where the lessor retains substantially all the risks and rewards of
ownership of the asset are classified as operating leases.  The rental charges
in respect of operating leases are taken to the income statement on a straight
line basis over the life of the lease.

Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.

For defined benefit retirement benefit schemes, the cost of providing benefits
is determined using the projected unit credit method, by independent actuaries,
at each balance sheet date.  Actuarial gains and losses are recognised in full,
in the period in which they occur, in the statement of recognised income and
expense.

The retirement benefit schemes are funded by payments to trustee administered
funds completely independent of the Group's finances.

Share-based payments

The Company issues equity-settled share-based payments to certain employees and
operates Inland Revenue approved Save As You Earn share option schemes, which
are open to all eligible employees, and allow the purchase of shares at a
discount.

The fair value of share-based payments is calculated at the date of grant.  This
fair value is expensed on a straight-line basis over the vesting period, based
on the Company's estimate of shares that will eventually vest.

Fair value is measured using the Black-Scholes pricing formula with adjustments
made to the value, having regard to market conditions applicable to the options.

Development costs

Third party expenditure relating directly to the development of new trading
operations, through licence applications or bidding processes, is written off as
incurred for projects where a successful outcome cannot be anticipated.

London Clubs International plc

Reconciliations with UK GAAP as at 28 March 2004

(a)   Reconciliation of equity


                                                      Notes          UK GAAP     Effects of          IFRS
                                                                              transition to
                                                                                       IFRS
                                                                          £k             £k            £k

Non-current assets
Intangible assets                                      a,b                 -         91,395        91,395
Property, plant and equipment                           a            240,936      (187,077)        53,859
Investments                                                              990              -           990
Deferred tax assets                                     e              3,455          7,680        11,135

                                                                     245,381       (88,002)       157,379
Current assets
Inventories                                                            1,381              -         1,381
Trade and other receivables                            b,c            14,226        (1,946)        12,280
Cash and cash equivalents                                             30,124              -        30,124

                                                                      45,731        (1,946)        43,785

Current liabilities                                                (216,497)              -     (216,497)

Net current liabilities                                            (170,766)        (1,946)     (172,712)

Total assets less current liabilities                                 74,615       (89,948)      (15,333)

Non-current liabilities                                                    -              -             -

Interest in joint venture                               c            (1,262)          1,262             -
Pension scheme                                          d                  -       (25,600)      (25,600)
Deferred tax liabilities                                e              (304)       (24,234)      (24,538)

                                                                      73,049      (138,520)      (65,471)
Shareholders' equity
Ordinary shares                                                        7,369              -         7,369
Share premium                                                         80,654              -        80,654
Other reserves                                                         5,352         10,942        16,294
Revaluation reserve                                                  107,449      (107,449)             -
Retained earnings                                                  (126,583)       (43,205)     (169,788)

Total shareholders' equity                                            74,241      (139,712)      (65,471)

Minority interest in equity                             f            (1,192)          1,192             -

Total equity                                                          73,049      (138,520)      (65,471)


London Clubs International plc

Reconciliations with UK GAAP as at 26 September 2004

(a)   Reconciliation of equity


                                                      Notes          UK GAAP     Effects of          IFRS
                                                                              transition to
                                                                                       IFRS
                                                                          £k             £k            £k

Non-current assets
Intangible assets                                      a,b                 -         91,858        91,858
Property, plant and equipment                           a            242,503      (187,100)        55,403
Investments                                                              990              -           990
Deferred tax assets                                     e              2,756          7,867        10,623

                                                                     246,249       (87,375)       158,874
Current assets
Inventories                                                            1,336              -         1,336
Trade and other receivables                            b,c            12,066        (3,382)         8,684
Cash and cash equivalents                                             30,836              -        30,836

                                                                      44,238        (3,382)        40,856

Current liabilities                                                 (25,392)              -      (25,392)

Net current assets                                                    18,846        (3,382)        15,464

Total assets less current liabilities                                265,095       (90,757)       174,338

Non-current liabilities                                            (135,778)              -     (135,778)

Interest in joint venture                               c            (2,290)          2,290             -
Pension scheme                                          d                  -       (26,100)      (26,100)
Deferred tax liabilities                                e              (470)       (24,261)      (24,731)

                                                                     126,557      (138,828)      (12,271)
Shareholders' equity
Ordinary shares                                                       11,089              -        11,089
Share premium                                                        126,345              -       126,345
Other reserves                                                         5,352         10,942        16,294
Revaluation reserve                                                  107,449      (107,449)             -
Retained earnings                                                  (122,486)       (43,513)     (165,999)

Total shareholders' equity                                           127,749      (140,020)      (12,271)

Minority interest in equity                             f            (1,192)          1,192             -

Total equity                                                         126,557      (138,828)      (12,271)


(b)  Reconciliation of the income statement for the six months ended 26
September 2004


                                                      Notes          UK GAAP     Effects of          IFRS
                                                                              transition to
                                                                                       IFRS
                                                                          £k             £k            £k

Revenue                                                               76,607              -        76,607

- Gaming taxation                                                   (23,311)              -      (23,311)
- Other operating costs before exceptional items      g,h,i         (41,214)          (891)      (42,105)
- Exceptional items                                                        -              -             -

Net operating costs                                                 (64,525)          (891)      (65,416)

Group operating profit                                                12,082          (891)        11,191

Share of post tax result of joint venture                            (1,028)              -       (1,028)
Interest payable and similar charges                                 (7,321)              -       (7,321)
Interest receivable                                                      502              -           502

Profit on ordinary activities before taxation                          4,235          (891)         3,344

Tax on profit on ordinary activities                   j,k             (790)            267         (523)

Profit on ordinary activities after taxation
transferred to reserves
                                                                       3,445          (624)         2,821

Basic earnings per share (pence)                                         1.6                          1.3
Diluted earnings per share (pence)                                       1.6                          1.3


London Clubs International plc

Reconciliations with UK GAAP as at 27 March 2005

(a)   Reconciliation of equity


                                                      Notes          UK GAAP     Effects of          IFRS
                                                                              transition to
                                                                                       IFRS
                                                                          £k             £k            £k

Non-current assets
Intangible assets                                      a,b                 -         92,524        92,524
Property, plant and equipment                           a            246,148      (187,066)        59,082
Investments                                                              990              -           990
Deferred tax assets                                     e              2,713          7,520        10,233

                                                                     249,851       (87,022)       162,829
Current assets
Inventories                                                            1,424              -         1,424
Trade and other receivables                            b,c            19,446        (5,556)        13,890
Cash and cash equivalents                                             16,137              -        16,137

                                                                      37,007        (5,556)        31,451

Current liabilities                                     d           (27,583)            326      (27,257)

Net current assets                                                     9,424        (5,230)         4,194

Total assets less current liabilities                                259,275       (92,252)       167,023

Non-current liabilities                                            (132,692)              -     (132,692)

Interest in joint venture                               c            (3,796)          3,796             -
Pension scheme                                          d                  -       (24,700)      (24,700)
Deferred tax liabilities                                e              (382)       (24,270)      (24,652)

                                                                     122,405      (137,426)      (15,021)
Shareholders' equity
Ordinary shares                                                       11,124              -        11,124
Share premium                                                        126,667              -       126,667
Other reserves                                                         5,352         10,942        16,294
Revaluation reserve                                                  107,449      (107,449)             -
Retained earnings                                                  (126,995)       (42,111)     (169,106)

Total shareholders' equity                                           123,597      (138,618)      (15,021)

Minority interest in equity                             f            (1,192)          1,192             -

Total equity                                                         122,405      (137,426)      (15,021)


(b)  Reconciliation of the income statement for the year ended 27 March 2005


                                                      Notes          UK GAAP     Effects of          IFRS
                                                                              transition to
                                                                                       IFRS
                                                                          £k             £k            £k

Revenue                                                              139,642              -       139,642

- Gaming taxation                                                   (40,017)              -      (40,017)
- Other operating costs before exceptional items      g,h,i         (87,143)        (1,476)      (88,619)
- Exceptional items                                                    2,146              -         2,146

Net operating costs                                                (125,014)        (1,476)     (126,490)

Group operating profit                                                14,628        (1,476)        13,152

Share of post tax result of joint venture               k            (2,536)              2       (2,534)
Interest payable and similar charges                                (14,304)              -      (14,304)
Interest receivable                                                      783              -           783

Loss on ordinary activities before taxation                          (1,429)        (1,474)       (2,903)

Tax on loss on ordinary activities                     j,k               594            539         1,133

Loss on ordinary activities after taxation
transferred to reserves
                                                                       (835)          (935)       (1,770)

Basic loss per share (pence)                                           (0.4)                        (0.8)
Diluted loss per share (pence)                                         (0.4)                        (0.8)


Notes to the reconciliations of equity
     
(a)  Casino licences

Under UK GAAP, the short leasehold properties from which the Group conducts its
casino operations were carried at open market value on an existing use and fully
operational basis, including the benefit of casino licences.  Under IFRS, the
Group is required to include casino licences at cost to the Group.  This results
in a reduction in the Group's net assets (£96.4m at 28 March 2004 and 26
September 2004 and £96.3m at 27 March 2005).

In addition, IFRS requires the Group to include casino licences within
intangible assets and this results in a reclassification, from property, plant
and equipment to intangible assets (£90.7m at 28 March 2004, 26 September 2004
and 27 March 2005).

(b)  Development costs

Development costs for casino licences held by the Group, prior to the
commencement of trading, were capitalised within other receivables under UK
GAAP.  Under IFRS, these costs have been reclassified within intangible assets
(28 March 2004: £0.7m, 26 September 2004: £1.1m and 27 March 2005: £1.8m).
     
(c)  Trade and other receivables

Under the equity method of accounting, the Group's interest in the retained loss
of its joint venture (28 March 2004: £1.3m, 26 September 2004: £2.3m and 27
March 2005: £3.8m) is netted against the amount receivable from the joint
venture.

(d)  Defined benefit pension scheme

Under IAS19, the deficit on the Group's defined benefit pension scheme is
recognised in full in the balance sheet (28 March 2004: £25.6m, 26 September
2004: £26.1m and 27 March 2005: £24.7m).  In addition, any amounts that had
previously been provided under SSAP 24 are reversed (28 March 2004: £nil, 26
September 2004: £nil and 27 March 2005: £0.3m).

(e)  Deferred taxation

A deferred tax liability has been provided on the difference in valuation, for
accounting and taxation purposes, of the Group's casino licences (£24.2m at 28
March 2004, 26 September 2004 and 27 March 2005).

A deferred tax asset (28 March 2004: £7.7m, 26 September 2004: £7.8m and 27
March 2005: £7.4m) has been provided on the deficit in the Group's defined
benefit pension scheme.

IFRS 2 requires share based payments to be shown as an expense in the income
statement (see note (i)).  Deferred tax assets have been provided on these
expenses (28 March 2004: £nil, 26 September 2004: £37,000 and 27 March 2005:
£110,000).

(f)  Minority interest in equity

IFRS does not permit the recognition of a minority interest debtor and
consequently the £1.2m minority interest debit balance in the Group's equity,
under UK GAAP, has been reversed.

Notes to the reconciliations of the income statements

(g)  Defined benefit pension scheme

The IAS 19 pension charges for the six months ended 26 September 2004 and the
year ended 27 March 2005 are £1.5m and £3.3m respectively.  The UK GAAP charges
for the same period were £0.7m and £2.2m respectively.

(h)  Casino licences

Under IFRS, the Group is required to include casino licences, at cost, within
intangible assets.  Licences are not amortised but are subject to annual
impairment reviews and, therefore, any depreciation that had previously been
charged under UK GAAP is reversed when the licence is reclassified as an
intangible asset.  This results in credits to the income statement for thesix
months ended 26 September 2004 and the year ended 27 March 2005 of £32,000 and
£64,000 respectively.

(i)  Share based payments

IFRS 2 requires all share based payments, including awards of options and
shares, granted since 7 November 2002, to be shown as an expense in the income
statement.  This expense is based on the fair value at the date of grant of the
award, using option pricing models, and is charged over the related vesting
period.  This results in a charge to the income statement for the six months
ended 26 September 2004 and the year ended 27 March 2005 of £123,000 and
£366,000 respectively.

(j)  Deferred taxation

A deferred tax asset has been provided on the deficit on the Group's defined
benefit pension scheme, with the movement in the asset being charged or credited
to the income statement or reserves as appropriate. The credit to the tax charge
for the six months ended 26 September 2004 and the year ended 27 March 2005 is
£240,000 and £450,000 respectively.

IFRS 2 requires share based payments to be shown as an expense in the income
statement (see note (i)).  Deferred tax has been recorded with respect to these
expenses (six months ended 26 September 2004: £37,000 and year ended 27 March
2005: £110,000).

The tax effect of reversing the UK GAAP depreciation charge for casino licences
is an increase in the tax charge for the six months to 26 September 2004 and the
year ended 27 March 2005 of £10,000 and £19,000 respectively.

(k)  Tax attributable to joint venture

Under the equity method of accounting, the Group's share of the tax attributable
to its joint venture has been separated from the Group's own tax.  This results
in a reclassification in the income statement for the six months ended 26
September 2004 and the year ended 27 March 2005 of £nil and £2,000 respectively.



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