Interim Results
December 05 2003 - 2:00AM
UK Regulatory
RNS Number:8994S
Gamingking PLC
05 December 2003
Gamingking plc
Interim Statement for the six months ended 31 October 2003
KEY POINTS
* Turnover increased by 49% to #1.36m from #0.91 million
* Gross profit increased by 26% to #798,000 from #631,000
* Gross margin decreased to 58% from 69%
* Lotteryking EBITDA increased by 23% to #224,000
* Common costs increased by 35%
* Launch of new gaming website planned for early in the New Year
* Further performance related options granted to CEO
Chairman's statement
Consolidated turnover of #1.36 million for the six months shows a substantial
increase compared to the same period last year (#0.9 million). The six month
figures show a loss after tax of #60,000 compared to #32,000 loss in the same
period last year. This is a reflection of our strategy of maximising use of our
free cashflow in the search for business development opportunities. Common costs
increased by a further #72,000 largely as a result of the additional resource
being deployed for this purpose. There are now a number of interesting
initiatives in active development. However it is too early in the development
cycle to predict which of the projects will yield success but the position
should be clearer by the year end.
Our turnover has increased by 49% in the half year as against the same period
last year. The improvement is a combination of the impact of the first full six
months of trading from the Littlewoods sites acquired from Sportech plc coupled
with an underlying growth in the overall business. Gross profit from operations
increased by 26% to #798,000. The lower percentage increase compared with the
turnover line is due to a change in the sales mix of the business generating a
lower average gross margin.
The balance sheet for the half-year shows a stable net cash position as against
the figure at the year end. This indicates that we are maintaining an acceptable
balance between the amount of positive cash being generated by the operating
business and the amount we are expending in our efforts to generate long term
sources of new revenues. Our net current assets position has improved by 4%
compared with the year-end figure.
The Lotteryking business has traded very satisfactorily and has produced another
good half-year result. We now have nearly 3000 machines installed (including 200
of the Oasis on-line terminals). The Lotteryking earnings before interest,
depreciation and amortisation increased by a further 20% against the
corresponding period last year which itself was a 22% increase. Cashflow from
the Lotteryking operations (before group costs, costs of thebiz and capital
expenditure) was #377,000against #291,000 in the corresponding period last year.
The publishing operations under the Biz.com banner continue to be
non-performing. As we begin to develop our mobile communications and online
activities independently of the biz, so your Board is presently engaged in
reviewing the future options for the biz. In recent times we have been active in
the SMS communications arena and we are also preparing the launch of a
Lotteryking game play website which I hope to be able to report more on at our
year-end.
The board has resolved to grant further share options to the Chief Executive
under an unapproved share option scheme. The grant entitles him to a maximum of
13,500,000 shares under the unapproved scheme in addition to the 6,500,000
already granted under the EMI scheme. These unapproved options can only be
exercised if, on the date of exercise, the average of the middle market closing
quotations for Gamingking ordinary shares on each day over the preceding six
months is at a given level which runs from 6p for the first additional option
tranche through to a price of 16p if the whole of the options now granted are to
be exercised. Other usual conditions governing the grant also apply.
Your board believes that this arrangement is highly desirable as a mechanism for
incentivising the Chief Executive. It sets demanding performance targets
requiring very substantial increases in market capitalisation over a sustained
period of time before the options can be exercised. This arrangement properly
reflects the aspirations of our shareholders.
At the time of writing the Half Year statement, the Government has published its
draft Gambling Bill and we are in the process of reviewing it to assess the
implications for our business including additional opportunities which may be
open to us once it becomes law. Changes such as the ability to offer rollovers
in society lotteries and the ability to vend lottery tickets in public places
should assist us in the further development of our business.
Leslie Hurst
Chairman
5 December 2003
Independent review report to Gamingking plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 October 2003 which comprises the consolidated profit and
loss account, consolidated balance sheet, consolidated cash flow statement, and
notes 1 to 10. We have read the other information contained in the interim
report, which comprises only the key points and the chairman's statement and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information. Our responsibilities do not
extend to any other information.
This report is made solely to the company, in accordance with guidance contained
in APB Bulletin 1999/4 "Review of Interim Financial Information". Our review
work has been undertaken so that we might state to the company those matters we
are required to state to it in a review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company, for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority, which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom auditing standards and therefore provides a lower level of assurance
than an audit. Accordingly, we do not express an audit opinion on the financial
information.
The maintenance and integrity of the Gamingking website is the responsibility of
the directors: the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in other jurisdictions.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 October 2003.
GRANT THORNTON
CHARTERED ACCOUNTANTS
LONDON
5 December 2003
Consolidated profit and loss account
For the six months ended 31 October 2003
Notes 6 months ended 6 months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
Turnover 2 1363 913 2,158
Cost of sales (565) (282) (724)
-------------------------------------
Gross profit 798 631 1,434
Exceptional items (117)
Other administration
expenses (860) (673) (1,490)
Total administration
expenses (860) (673) (1,607)
------------------------------------
Operating (loss) (62) (42) (174)
Net interest 2 10 12
------------------------------------
(Loss) on ordinary activities
before taxation 2 (60) (32) (162)
Tax on (loss)on ordinary
activities 3 - - 54
--------------------------------------
Retained (loss) for the
period (60) (32) (108)
======================================
Basic (loss) per ordinary
share 4 (0.02) (0.013) (0.04)
=======================================
Diluted (loss) per ordinary
share 4 - - -
====================================
Consolidated Balance Sheet
As at 31 October 2003
Notes At 31 October At 31 October At 30 April
2003 Unaudited 2002 Unaudited 2003 Audited
#000 #000 #000
Fixed assets
Intangible assets 90 101 106
Tangible assets 971 931 1,035
Investments 30 30 30
----------------------------------
1,091 1,062 1,171
Current assets
Stocks 228 529 311
Debtors 446 313 349
Cash at bank and in hand 239 258 244
----------------------------------
913 1,100 904
Creditors:amounts falling due
within one year (396) (418) (407)
Net current assets 517 682 497
----------------------------------
Total assets less current
liabilities 1,608 1,744 1,668
==================================
Capital and reserves
Share capital 2,530 2,530 2,530
Merger reserve 1,084 1,084 1,084
Special reserve - 460 -
Profit and loss account (2,006) (2,330) (1,946)
-----------------------------------
Shareholders'funds 8 1,608 1,744 1,668
===================================
Consolidated Cashflow Statement
For the six months ended 31 October 2003
Notes 6 months ended 6 months ended Year ended 30
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
Net cash inflow from
operating activities 5 133 152 243
Return on investments and
servicing of finance
Interest received 2 10 12
----------------------------------------
Net cash inflow from returns
on investments and servicing
of finance 2 10 12
Capital expenditure
Purchase of tangible
fixed assets (140) (78) (179)
Proceeds of tangible
fixed assets - - 14
--------------------------------------
(140) (78) (165)
Acquisitions
Purchase of business - (500) (500)
Purchase of subsidiary
undertaking - - (20)
--------------------------------------
Net cash outflow from
acquisitions - (500) (520)
--------------------------------------
Management of liquid resources
Sales/(Purchase) of short term
deposits (42) 368 446
Increase/(Decrease) in cash 6 (47) (48) 16
=====================================
Notes to the Interim Statement
1. Basis of preparation
The interim financial statements have been prepared in accordance with
applicable United Kingdom accounting standards and under the historical cost
convention. The principal accounting policies have remained unchanged from
those set out in the group's 2003 annual report and financial statements.
The interim financial statements have been reviewed by the company's
auditors. A copy of the auditors' review report is attached to this interim
statement.
2. Segmental information
6 months ended 6 months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
Turnover
Lotteryking 1,363 913 2,156
The Business Information
Zone - - 2
------------------------------------
Group turnover 1,363 913 2,158
------------------------------------
(Loss) before taxation
Lotteryking 224 182 356
The Business Information
Zone (13) (23) 7
Common costs (273) (201) (537)
-------------------------------------
(62) (42) (174)
Net interest 2 10 12
------------------------------------
Group (loss) before
taxation (60) (32) (162)
=====================================
Turnover arising outside the United Kingdom is not material.
3. Taxation
No provision for taxation has been made due to the availability of losses.
4. Earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares, on the assumed
conversion of all dilutive options and other dilutive potential ordinary
shares.
Reconciliations of the earnings and weighted average number of shares used
in the calculations are set out below.
Earnings
attributable to
ordinary
shareholders
6 months to 31 October 2003
Earnings #000 (60)
Weighted average number of shares 253,017,391
Per share amount pence (0.02)
============
6 months to 31 October 2002
Earnings #000 (32)
Weighted average number of shares 253,017,391
Per share amount pence (0.01)
===========
12 months to 30 April 2003
Earnings #000 (108)
Weighted average number of shares 253,017,391
Per share amount pence (0.04)
===========
There is no diluted earnings per share as share options would not
have a dilutive effect on the loss for the period
5. Net cash /inflow from operating activities
6 months ended 6 months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
Operating (loss) (62) (42) (174)
Depreciation and amortisation 198 165 371
Loss on disposal of fixed assets 21 24 52
Decrease/(increase) in stock 83 (66) (84)
(Increase) in debtors (97) (61) (43)
(Decrease)/increase in creditors (10) 132 121
---------------------------------------
Net cash inflow from
operating activities 133 152 243
=======================================
6. Reconciliation of net cashflow to movement in net funds
6 months ended 6 months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
(Decrease)/increase in cash (47) (48) 16
Cash inflow from decrease
in liquid reserves 42 (368) (446)
------------------------------------------
(5) (416) (430)
-------------------------------------------
Net funds at 1 May 2003 244 674 674
------------------------------------------
Net funds at 31 October 2003 239 258 244
==========================================
7. Analysis of net funds
At 1 May 2003 Cashflow At 31 October
Audited Unaudited 2003
Unaudited
#000 #000 #000
Cash at bank
and in hand 142 (47) 95
Liquid resources -
cash deposits 102 42 144
---------------------------------------------
244 (5) 239
=============================================
8. Reconciliation in movement of shareholders' funds
6 months ended 6 months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Unaudited Unaudited Audited
#000 #000 #000
(Loss) for the period and
(decrease) in shareholders'
funds (60) (32) (108)
Opening shareholders'funds 1,668 1,776 1,776
-------------------------------------------
Closing shareholders'funds 1,608 1,744 1,668
===========================================
9. Publication of non-statutory accounts
The financial information set out in this interim statement does not
constitute statutory accounts as defined by section 240 of the Companies Act
1985. The figures for the year ended 30 April 2003 have been extracted from
the statutory financial statements which have been filed with the Registrar
of Companies. The auditors' report on those financial statements was
unqualified and did not contain a statement under section 237(2) of the
Companies Act 1985.
The interim report was approved by the Board on 5 December 2003.
Copies of this interim statement will be sent to shareholders in due course.
Further copies will be available from the company's nominated adviser, Smith
& Williamson Corporate Finance Limited, No 1 Riding House Street, London
W1A 3AS, free of charge, for one month from the date of this announcement.
5 December 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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