We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cyberview | LSE:CYBV | London | Ordinary Share | COM SHS USD0.001 (REGS) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 193.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
RNS Number : 9141V
Cyberview Tech Inc
04 June 2008
4 June 2008
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
Cyberview Technology, Inc. ("Cyberview" or the "Company"), a leading provider of downloadable Server-Based Gaming ("SBG") systems to the
Betting and Gaming industry, announces its preliminary results for the year ending 31 December 2007.
Financial Highlights
* Turnover for the year was £26.5m (2006: £24.7m).
* Loss on ordinary activities before taxation was £782,000 (2006: profit £41,000). Excluding share-
based payments and exceptional items, the loss on ordinary activities before taxation was £43,000
(2006: profit £243,000).
* Cash balances at 31 December 2007 was £11.0m (2006: £15.9) and net funds stood at £11.0m (2006:
£15.8).
Business Highlights
* Delivered the remaining 4,000 'Lara' terminals to Ladbrokes of 7,000 ordered in 2006 plus an additional 100 terminals ordered in
early 2007.
* Delivered a further 1,500 'Lara' terminals to Ladbrokes in Q4 which have been used to replace Amusement with Prize machines
(AWPs).
* Amended agreement with Ladbrokes in order to incorporate changes in commercial and compliance terms to reflect the ongoing
requirements under new UK gaming regulations.
* Successfully adapted our server-based gaming platform to comply with the new UK gaming regulations, which came into effect on 1
September 2007.
* Changes in UK gaming regulations since 1 September 2007 have resulted in increased transaction levels and higher recurring revenue
potential.
* Upgraded a number of independent UK LBO client estates with new 'Lara' terminals.
* Agreed a commercial trial to supply Betfred with Category B2/B3 gaming machines, which started at the end of May 2008.
* Secured an Agreement with the Independent Bookmakers Association ("IBA") to supply Category B2/B3 gaming machines to its members.
* Sold a further 440 'Lara' terminals in the Czech Republic.
* Order received for 200 'Lara' terminals to be used in Spain and Italy as self service betting terminals. 100 terminals were
delivered in 2007 and the remainder were delivered in Q1 2008.
* Progressed gaming license applications in key US jurisdictions; the Company postponed the potential granting of these as a result
of the discussions with IGT.
* Completed business review and restructure of operations, which will result in annualised savings of £0.7m.
For further information, please contact:
Cyberview Technology, Inc.
Seamus McGill +1 702 696 9870
Mark Nanovich +44 (0)20 7761 3000
Arbuthnot Securities +44 (0) 20 7012 2000
Nominated Advisor and Broker to Cyberview
James Steel / Paul Vanstone
Hogarth Partnership +44 (0) 20 7357 9477
Public Relations to Cyberview
Fiona Noblet
Strategic Overview
2007 was a year of progress for Cyberview and we achieved several key objectives, namely:
* Successful modification of our system to comply with new UK gaming legislation introduced in September 2007;
* Cost restructuring and elimination of less profitable ventures;
* Improvement of our recurring revenue model and gross profit margins;
* Positioning Cyberview as the preferred choice in the server-based gaming ("SBG") market;
* Forging "partnership" relationships with existing and new customers;
* Progressing with our North America strategy;
* Enhancing our technology solutions and Intellectual Property ("IP") portfolio; and
* Optimising our international opportunities.
These achievements were made despite a significant amount of management and the Board's time being spent on an approach to purchase the
Company, which was aborted in Q4 2007.
Markets
In 2007, we continued to focus our attention in the following key market territories, namely:
* UK;
* Europe (Czech Republic) and
* North America.
Our overall view of the above markets is that SBG solutions are being explored by incumbent operators and suppliers. Cyberview is well
positioned to optimise the opportunities as they emerge.
Our business model
Our business model remains, as previously reported, to supply our patented server-based gaming technology to clients on a 'recurring
revenue' basis:
* Either as a complete 'turnkey' solution to gaming operators in various markets, such as Casinos, Licensed Betting Shops (LBOs),
Bingo Halls, dedicated gaming locations, Lottery venues; or
* Supply either key components of our technology or IP under licensing agreements to gaming operators or manufacturers.
Chief Executive Officer's review
UK Business
2007 was important for the Company, and several key objectives were achieved, namely:
* Preparing for the new UK gaming legislation introduced in September and continuing to provide our UK clients with market leading
server-based gaming solutions;
* Forging 'partnership' relationships with existing and new clients;
* Restructure and reorganise our management team; and
* Further strengthening our portfolio of server-based gaming technology products and game content.
In the first half of 2007, Cyberview supplied 4,100 next generation terminals ("Lara") to Ladbrokes that completed their initial orders
of 7,100 terminals. In Q3 Ladbrokes placed an additional order for a further 1,500 terminals which were delivered in Q4 and replaced legacy
(analogue based) Amusement with Prize machines ("AWP"), previously supplied by another company. The success of the Lara terminal has enabled
the Company to increase its footprint with Independent Bookmakers and cement our reputation in the industry for delivering reliable, low
maintenance machines with exceptional game content.
Sales of our bet capture units performed strongly and we achieved our expectations. Trials of our Self-Service Betting Terminals
("SSBT's") in UK Licensed Betting Offices ("LBO") are continuing. The initial results of these trials have been encouraging and we expect to
receive orders later in 2008.
On 1 September 2007, significant regulatory changes took place in the UK gaming industry. The new regulations required the Company to
obtain a UK Gaming Operator License and upgrade the game content across our entire estate to comply with new regulations. The Company was
successful in being granted a UK Gaming Operator Licence then, in time for the new regulation on 1st September, remotely enabled our
server-based terminals to comply with the new regulations ensuring that our clients suffered no disruption to their business. In addition,
the Company simultaneously rolled out an entire new suite of Category B3 games which are generating extremely favourable results. Our
ability to respond to these challenges exemplifies not only the advantages of our system over others in the industry, but additionally
demonstrates our enduring commitment to the highest quality customer service.
We are pleased to report that the Company's recurring revenue from its UK operations has increased post 1 September 2007 as a result of:
* the increase in the number of transactions as a result of B3 games being introduced in LBO's;
* the extended hours of permitted business in LBO's;
* an increase in our installed base of terminals; and
* a positive improvement to our existing client agreements.
We expect that the success of the Lara terminal and our new range of B3 content will enable the Company to grow its footprint in the UK
market. Our recurring revenues from this business are expected to be stronger in 2008 as a result of the full impact of the regulatory
changes outlined earlier.
The Company is pleased to announce that it commenced a commercial trial with the UK's leading Independent bookmaker, Betfred, which
started at the end of May 2008. In addition, the Company has also secured an agreement with the Independent Bookmakers Association ("IBA")
to supply the Lara terminal to its members. IBA members own over 800 betting shops in the UK and have plans to grow to over 1,200 by the end
of 2008. The Company will continue to actively pursue further opportunities to procure the supply of its terminals with other larger LBO
operators, including William Hill and Coral.
North America
North America (with over 800,000 gaming machines) is the largest gaming market in the world and one where server-based technology is
widely viewed as the imminent replacement for the current technology. In anticipation of this vast market, Cyberview invested over £3.5
million during the year in US market initiatives including, but not limited to, significant Intellectual Property lead initiatives, which
the Company believes will consolidate its future role as a leader of server-based products in this market. The Company was scheduled to be
granted gaming licenses in key US jurisdictions in Q1 and Q2 of 2008, which it postponed as a result of the approach from IGT. This
postponement will delay the commercial rollout of the Company's product in this market.
The Company's strategy in the US incorporates the provision of turnkey solutions and the licensing or partnering with major incumbent
operators. We are extremely confident that our technical capabilities, experience of bringing server-based gaming to the market and
prospering US relationships with key customers will strongly position the Company for entry into the US market subsequent to the granting of
certain gaming licenses.
Europe (Czech Republic)
In the Czech Republic, Cyberview sold 440 "Lara" terminals in the first half of 2007. Although the initial rollout has been slower than
anticipated, we are now seeing considerable and encouraging improvements in not only our recurring revenues, but also in the speed and
efficiency of the rollout.
Ongoing trials in Slovakia are progressing well and plans include an increase in the number of terminals supplied to at least 200 by
early Q3 2008. Ongoing trials in Malta with two separate operators have been converted into a full scale commercial rollout. Currently
around 100 terminals have been installed and the potential is for a rollout of 400.
In the second half of the year we received orders for 200 SSBT's for use in the Spanish and Italian gaming markets.
During the year the Company entered into an agreement to supply its server-based gaming systems into Central Europe. The rollout of
1,000 terminals is subject to regulatory approval that is expected later this year.
Patents and IP
The Company continued to invest heavily in its patent portfolio and was granted further key patents during the year. The Company's
portfolio of patents will be key to its success in being able to penetrate the North American markets, which is dependent on a protected IP
base. Examples of recent developments include being granted a further patent in the US titled "Modular Entertainment and Gaming Systems
Configured to Consume and Provide Network Services" and the development of a "Time Gaming" concept based on our patented technology.
Outlook
As announced today the Company has entered into a conditional agreement for the sale of the Company's entire business and operations
(including cash balances but excluding certain assets and liabilities) and license of certain intellectual property to International Game
Technology ("IGT") and proposed liquidation and dissolution of the Company.
In the event these proposals are not passed by the Shareholders the Company expects that:
* Subsequent to being granted licenses in key US jurisdictions, the Company will begin to generate revenues from both terminal sales
and recurring revenue streams.
* The success of the Lara terminal and our Category B2/B3 gaming content offering will enable the Company to grow its footprint in
the UK market. Our recurring revenues from this business are expected to be stronger in 2008 as a result of the full impact of the changes
outlined earlier, post 1 September 2007 regulatory changes.
* The Company will seek to enter the low stake and prize ("AWP") market via strategic alliances to license its server-based gaming
technology to existing small and large suppliers with a presence in sectors such as Pub's, Adult Gaming Centres ("AGC"), Bingo Halls and
Casinos. Negotiations with incumbent suppliers have commenced.
* Progress with various international trials is expected to continue and the Company will seek to convert these into long-term
commercial contracts, as it has recently done in Malta and Slovakia and will continue to pursue commercial opportunities for server-based
gaming technology in other targeted international markets.
* The Company continues to enhance its server-based gaming technology in order to derive additional revenues from new SBG products
which provide its customers greater profitability and efficiency from the use of its extensive suite of games and unique software tools such
as Remote Diagnostic Application ("RDA") and Scheduler.
Seamus McGill
Chief Executive Officer Finance Director's review
Turnover
Turnover for 2007 totalled £26.5m (2006: £24.7m) which consisted of £24.4m (2006: £14.3m) for FOBTs/Bet Capture; £2.1m (2006: £4.4m) for
VLTs; £nil (2006: £5.6m) for license fees and £nil (2006: £0.4m) for IBS. The license fees in 2006 represented non-recurring sums. The
increase in turnover from the FOBTs/Bet Capture business was primarily attributable to the non-recurring revenues in 2007 from the sale of
5,700 terminals to Ladbrokes compared to 3,000 terminals in 2006. Turnover from the video lottery operations decreased in line with the
number of terminals sold during 2007 (440 compared to 747 in 2006). However, this was partially offset by the uplift in recurring revenues
from the underlying increase in the installed base.
Gross profit
The decrease in gross profit to £8.9m (2006: £10.3m) was largely attributable to the absence of the license fees. This was partially
offset by the margin from the increase in sales of FOBT terminals.
Operating expenditure
Investment in research and development during the year was £4.7m (2006: £5.5m). Under IFRS certain development costs totalling £1.0m
were capitalized during the year. This expenditure was primarily focused on adapting our server-based platform for the new UK gaming
regulations, the development of a casino style terminal and platform and associated tools for the US market.
Sales and marketing costs declined to £2.1m (2006: £2.4m) as a result of restructure programme and management focusing on commercially
sound projects. Administrative expenses of £2.1m were broadly in line with the prior year (2006: £2.2m).
The average monthly number of employees for the year was 135 (2006: 134). Average staff numbers at our Czech Republic operations
decreased by 1 to 26 and our US personnel, which are involved in activities across the Group, increased by 10 to 32. Investment in US
activities during the year was approximately £3.5m. Average staff numbers in the UK decreased by 10 to 74 as part of the review and
restructure of operations.
A compensation charge of £354,000 (2006: £281,000) arose on options issued to employees and directors accounted for under IFRS 2
"Share-based payments". There is no cash impact from this new expense, and no impact on net assets, since the charge is taken to reserves.
The exceptional items include a £681,000 write down in the book value of gaming terminals and associated components which have been
replaced by next generation terminals. Exceptional items also included £260,000 relating to aborted transaction costs, comprising advisory
and legal fees net of break fee, received in connection with an offer for the Company. The potential transaction was aborted.
Balance Sheet
The Group cash balance as at 31 December 2007 was £11.0m and net funds stood at £10.9m. The marked decrease in the value of inventory to
£2.1m (2006: £7.1m) was due to the completion of the Lara terminals and component parts associated with the supply of 4,100 terminals to
Ladbrokes in Q1 2007. Similarly, the decrease in creditor balances (trade payables, accruals and deferred income, social security and other
taxes, and customer deposits) falling due within one year to £3.5m (2006: £12.8m) is linked to the supply of Lara terminals. The debtors
balance (trade debtors, other receivables and prepayments) decreased to £3.8m (2006: £6.2m) as a result of the payment of the license fee of
£2.6m.
IFRS
As an AIM listed company Cyberview has adopted International Financial Reporting Standards ("IFRS") for our financial statements for the
periods beginning 1 January 2007.
Mark Nanovich
Finance Director CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec 2006
2007
Restated
Notes £'000 £'000
Revenue 3 26,483 24,739
Cost of sales (17,615) (14,461)
Gross profit 8,868 10,278
Research and development costs (4,664) (5,454)
Sales and marketing expenses (2,109) (2,422)
Administrative expenses (2,138) (2,159)
Share-based payment (354) (281)
Exceptional items 4 (941) (543)
Operating loss 3 (1,338) (581)
Operating (loss)/profit before exceptional (43) 243
items and share-based compensation
Exceptional Items:
Aborted transaction costs 4 (260) -
Obsolete inventory 4 (681) -
Impairment of plant and equipment 4 - (331)
Provision against business assets 4 - (212)
Share-based payment (354) (281)
Operating loss (1,338) (581)
Finance costs (12) (11)
Finance income 568 633
(Loss)/profit before taxation (782) 41
Income tax expense 5 (253) (19)
(Loss)/profit for the year 11 (1,035) 22
(Loss)/profit per share (pence)
Basic 6 (6.82) 0.15
Diluted 6 (6.82) 0.13
All amounts arise from continuing operations.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2007
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec 2006
2007
Restated
Notes £'000 £'000
Exchange differences on translation of foreign 11 (144) (1,208)
operations
Net expense recognised directly in equity (144) (1,208)
Loss for the year (1,035) (121)
Total recognised expense for the year 11 (1,179) (1,329)
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
Unaudited Unaudited
as at as at
31 Dec 2007 31 Dec 2006
Restated
Notes £'000 £'000
Non-current assets
Intangible assets 7 1,859 974
Property, plant and equipment 8 2,577 1,673
Trade and other receivables 527 -
4,963 2,647
Current assets
Inventories 2,099 7,112
Trade and other receivables 2,805 4,687
Prepayments 952 1,758
Cash and cash equivalents 11,018 15,885
16,874 29,442
Total assets 21,837 32,089
Current liabilities
Trade payables 2,026 7,120
Accruals and deferred income 1,035 1,129
Social security and other taxes 442 1,172
Current income tax liabilities 149 10
Obligations under finance leases 44 42
Customer deposits - 3,415
Provisions for liabilities and - 80
charges
3,696 12,968
Non-current liabilities
Obligations under finance leases 7 50
Provisions for liabilities and 120 120
charges
127 170
Total liabilities 3,823 13,138
Net assets 18,014 18,951
Shareholders' equity
Called up share capital 11 9 9
Share premium account 11 34,014 34,126
Equity option reserve 11 738 384
Currency translation reserve 11 (774) (630)
Retained earnings 11 (15,973) (14,938)
Total equity 11 18,014 18,951
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2007
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec 2006
2007
Restated
Notes £'000 £'000
Cash flows from operating activities
Loss from operations (782) (41)
Adjustments for:
Depreciation of property, plant and equipment 972 569
Amortisation of intangible assets 302 136
Obsolete inventory 681 -
Impairment of intangible assets 37 30
Impairment of rental equipment - 331
Impairment of business assets - 212
Share-based payment 354 281
(Decrease)/increase in provisions (35) 20
Finance Income net (556) (622)
Operating cash flows before movements
in working capital 973 998
Decrease/(increase) in inventories 4,212 (5,119)
Decrease/(increase) in receivables 2,146 (4,584)
(Decrease)/increase in payables (9,245) 10,021
Cash (used in)/generated from operations (1,914) 1,316
Income taxes paid (114) (20)
Interest paid (12) (11)
Net cash (used)/from operating activities (2,040) 1,285
Investing activities
Interest received 557 664
Purchase of property, plant and equipment 8 (1,843) (1,526)
Expenditure on patents and trademarks (228) (268)
Expenditure on product development (1,005) (384)
Net cash used in investing activities (2,519) (1,514)
Financing activities
Proceeds on issue of shares 10 6
Repurchase of shares (122) -
Repayment of obligations under finance leases (48) (53)
Loans from directors - (175)
Net cash used in financing activities (160) (222)
Net decrease in cash and cash equivalents (4,719) (451)
Cash and cash equivalents at beginning of year 2 15,885 16,732
Effect of foreign exchange rate differences (148) (396)
Cash and cash equivalents at end of year 2 11,018 15,885
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2007
1. Basis of accounting
This preliminary financial information has not been audited and does not constitute statutory accounts of the Group within the meaning
of section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2006 were prepared under the historical cost
convention and in accordance with applicable accounting standards in the United Kingdom (UK GAAP). The auditor's report on those accounts
was unqualified and did not contain a statement under section 237 of the Companies Act 1985.
The AIM Rules for Companies require that the annual consolidated financial statements of the Company for the year ending 31 December
2007 be prepared in accordance with International Financial Reporting Standards adopted for use in the EU ("IFRS").
Consequently these preliminary financial statements have been prepared on the basis of the recognition and measurement requirements of
IFRS in issue that are either endorsed by the EU and effective (or available for early adoption) at 31 December 2007, the Group's first
annual reporting date at which it is required to use IFRS.
In preparing the 2007 unaudited consolidated preliminary financial information management has amended certain accounting and valuation
methods applied in the UK GAAP financial statements to comply with IFRS. The Group's transition date is 1 January 2006 and the comparative
figures for 2006 have been based on audited UK GAAP results which have been restated to reflect these adjustments.
An explanation of how the transition to IFRS has affected the reported financial position and financial performance of the group is
provided in Appendix 1 - Restatement of Financial Information under International Financial Reporting Standards. This includes
reconciliations of equity, profit or loss and cash flows for the comparative periods under UK GAAP to those reported for those periods under
IFRS. Note 2 provides a summary of significant accounting policies under IFRS.
This preliminary statement is unaudited.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2007
2 . Significant accounting policies
Basis of consolidation
The consolidated financial statements incorporate the financial information of the Company and all of its subsidiaries which are all
wholly owned as at the end of the year.
All inter-company transactions are eliminated as part of the consolidation process. Where necessary, adjustments are made in the
financial statements of subsidiaries to bring accounting policies used into line with those used by the Group.
Significant accounting estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.
Estimates and underlying assumptions are considered to be reasonable and appropriate and are based upon management's best judgement having
consideration to historical experience and other relevant factors. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
The key estimates and assumptions relate to the capitalisation of development costs, dilapidation provisions and IFRS 2 share-based
payments. Details are set out as appropriate in the accounting policies and detailed notes.
Revenue recognition
The Group recognises revenue when persuasive evidence of an arrangement exists, the seller's price to the buyer is fixed or
determinable, collectability is reasonably assured and delivery has occurred.
Product sales:
Product sales are accounted for separately from license and transaction fees. The Group generally recognises revenue upon delivery of
its products to customers and upon fulfilment of acceptance terms, if any, and when no significant contractual obligations remain and
collection of the related receivable is reasonably assured. Amounts received prior to recognition of revenue are recorded within creditors
as customer deposits.
License and transaction fees:
Transaction fees are based on either a predetermined percentage of the net win of each machine or a usage fee based on the return to
player on a game by game basis, over an agreed period of time and is recognised as revenue when the transaction takes place. Amounts not
invoiced at the year end are included within debtors as accrued income.
License fees consist of a flat fee for the provision of services and are recognised rateably over the term of the contract. However, the
Group defers recognition of revenue for software license agreements that include multiple elements until the fair value of the delivered
elements can be fairly established or all essential elements of the arrangement have been delivered. Amounts received for license fees prior
to revenue recognition are recorded as deferred revenue. Amounts not invoiced at the year end are included within debtors as accrued
income.
Rental fees:
Revenue under operating type rental agreements, which specify a fixed fee, is recognised rateably over the term of the agreement.
Compliance fees:
Compliance fees consist of a fee for the terminals and associated content, hardware and services to be compliant with all applicable
legislation. Revenue is recognised in proportion to the terminals, licence fees and transaction fees.
Property, plant and equipment
All property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is
directly attributable to the acquisition of the items.
Depreciation on assets is calculated using the straight-line method to allocate the cost of each asset less its residual value over its
estimated useful life as follows:
Furniture, fixtures and fittings - 25% per year
Computer equipment - 33.3% per year
Rental and trial machines - 25% per year
Plant and machinery - 33.3% per year
Leasehold improvements - 20% per year
Motor vehicles - 25% to 33.3% per year
Impairment
Property, plant and equipment and intangible assets in use with a definite useful life are assessed at each reporting date to determine
if there is any indication that an asset may be impaired. If any such indication exists, an impairment review will be undertaken.
For intangible assets not yet in use, intangible assets with definite useful life and goodwill an impairment review is undertaken both
annually and when there is any indication regarding the recoverability of the carrying amount.
Where necessary, an adjustment will be made to reduce the carrying value of the asset to its recoverable value for an impairment loss.
An assessment is made at each reporting date to determine if there is any indication that an impairment loss recognised in prior periods
for an asset other than goodwill may no longer exist or may have decreased. Where necessary, an adjustment will be made to reverse an amount
previously impaired up to the recoverable amount of that asset. The increased carrying amount of an asset other than goodwill attributable
to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation or
depreciation) had no impairment loss been recognised for the asset in prior years. No reversal of an impairment loss for goodwill is made.
Deferred income
Represents licence fees payable by customers for the provision of various services subject to third party finance arrangements. The
third party funds in advance the licence fees due over the term of the contract. The Group recognises the licence fees as revenue rateably
over the term of the contract.
Intangible assets
Patents
The legal and filing costs in the registering of patents and trademarks are treated as intangible assets. Amortisation is provided in
order to write off these costs over the life of the patent on a straight line basis. The Directors review the carrying values for impairment
annually.
Research and development expenditure
Expenditure on research and development is recognized as an expense in the period in which it is incurred with the exception of
expenditure on the development of certain major new products where the outcome of these products is assessed as being reasonably certain as
regards to economic viability and technical feasibility. Such expenditure is recognised as an intangible asset and amortised on a straight
line basis over the useful economic life once the related product or enhancement is available for use.
Computer software costs
Where computer software is not integral to an item of property, plant or equipment, its costs are capitalised and categorized as
intangible assets. Amortisation is provided on a straight-line basis over its economic useful life being three years.
Inventories
Inventories are stated at the lower of cost incurred in bringing each product to its present location, and net realisable value.
Provision is made for obsolete, slow moving or defective items where appropriate. Net realisable value is based upon estimated selling price
less any further costs expected to be incurred to completion and sale.
Pension costs
An approved stakeholder pension scheme to which the Group does not contribute is available to all UK employees. As at 31 December 2007
no employees had joined the scheme. Contributions to a defined contribution pension scheme are made on behalf of two senior employees.
For US employees, the Group operates a 401(k) retirement plan scheme. Contributions into the scheme by the Group match the employee's
contribution up to a maximum of 3% of the employee's salary, the assets of the scheme are held separately from those of the Group in an
independently administered fund.
No pension scheme or contributions are available for employees outside the UK or US.
The Group's pension contributions are charged to the income statement in the year in which they become payable.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their face value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance
sheet as a finance lease obligation. Lease payments are apportioned between finance charges and the reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Such
assets are depreciated over the shorter of their estimated useful lives or the length of the lease. Assets purchased under hire purchase are
accounted for similarly, except that these assets are depreciated over the estimated useful lives.
Rentals under operating leases are charged to income on a straight-line basis over the term of the relevant lease
Deferred taxation
Deferred tax is provided in full on temporary differences that arise between the carrying amounts of assets and liabilities for
financial reporting purposes and their corresponding tax bases. Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the assets can be offset. Deferred tax is measured on an undiscounted basis using the
tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Current and deferred tax are recognised in the
income statement, except when the tax relates to items charged or credited directly to equity, in which case the tax is also dealt with
directly in equity.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash at hand, deposits held at call with banks and other
short term highly liquid investments with original maturities of three months or less.
Trade and other receivables
Trade receivables are stated initially at fair value and then at amortized cost. Trade receivable are first assessed individually for
impairment, or collectively where the receivables are not significant. Where there is no objective evidence of impairment for an individual
receivable, it is included in a group of receivables with similar credit risk characteristics and these are collectively assessed for
impairment. Movements in the provision for doubtful trade receivables are recorded in the income statement.
Trade and other payables
Trade and other payables are initially measured at fair value and subsequently at amortized cost.
Foreign currencies
Assets and liabilities of subsidiaries in foreign currencies are translated into sterling at rates of exchange ruling at the end of the
financial period or the contracted rate where appropriate and the results of foreign subsidiaries are translated at average rates of
exchange for the period. Differences on exchange arising from retranslation of the opening net investment in subsidiary companies, and from
the translation of the results of those companies at average rates, are taken directly to a separate component of equity, the currency
translation reserve.
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated at the rate of exchange prevailing at that date.
Gains and loses arising on translation are included in the income statement.
Financial instruments
All borrowings are initially stated at the fair value of the consideration received and subsequently at amortized cost. Accrued finance
costs attributable to borrowings are included in accrued charges within current liabilities, unless finance cost is only repayable on
redemption, in which case the accrued finance costs are included within the carrying value of borrowings.
Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based payment'. In accordance with the transitional provisions, IFRS 2 has been
applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2006.
The Group grants share options and warrants to Directors, employees and certain consultants. Equity-settled share-based payment
transactions are measured at fair value at the date of grant and expensed on a straight-line basis over the expected life of the option or
warrant, based on the estimated number of options or warrants that will eventually vest. The share options or warrants granted have varying
performance criteria required for the option or warrants to vest and these are considered in the method of measuring the fair value. Where
it is considered appropriate, the fair value is measured using the Black Scholes model.
Provisions policy
Provisions are recognised when the Group has a present obligation as a result of a past event. It is probable that a transfer of
economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
3. Segmental Reporting
The Group's principal activity is the provision of gaming equipment (server-based systems) and associated services to the gaming
industry, and the licensing of its technology.
Analysis of revenue and operating (loss)/profit by business activity
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
£'000 £'000
Revenue
Supply of gaming equipment and services 26,483 19,273
Sales of licences - 5,466
26,483 24,739
Operating (loss)/profit
Supply of gaming equipment and services (1,338) (6,047)
Sale of licences - 5,466
(1,338) (581)
Geographical analysis of revenue by destination
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
£'000 £'000
United Kingdom and Europe 26,318 18,900
America and rest of the world 165 5,839
26,483 24,739
4. Exceptional items
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
£'000 £'000
Aborted transaction costs 260 -
Obsolete Inventory 681 -
Impairment of plant and equipment - 331
Provision against business assets - 212
941 543
The aborted transaction costs comprise of advisory and legal fees net of break fee received in connection with an offer the Company
received during the year. The potential transaction was aborted.
Obsolete inventory comprises of gaming terminals and associated components which the company has replaced with its next generation
terminals
The impairment of plant and equipment arose on the supply of equipment to a customer on a profit share basis (owned by the Group), on a
contract that was not renewed.
The provision against business assets is against assets associated with the Group's IBS venture in Venezuela and was raised due to
uncertainty over the recoverability of monies owing.
5. Taxation
(a) Analysis of tax charge comprises:
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
Current tax: £'000 £'000
UK corporation tax charge 64 3
Foreign tax:
- Foreign corporation tax charge 83 -
- US State tax charge 7 16
Adjustment in respect of prior years:
UK corporation tax credit (6) -
Foreign corporation tax charge 105 -
Total current charge 253 19
(b) Factors affecting the tax charge for the year:
The tax assessed on the loss for the year differs from the standard rate of corporation tax in the UK. The differences are reconciled
below:
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
£'000 £'000
Loss on ordinary activities before tax (782) (102)
Tax on Group loss at standard UK Corporation tax
rates of 30% (2006: 30%) (235) (31)
Effect of :
Permanent differences 629 (520)
Timing differences between capital allowances and (46) 357
depreciation
Other short term timing differences (26) 9
Tax losses carried forward - 238
Utilisation of tax losses carried forward (149) (48)
Adjustment in respect to foreign taxes (22) -
Marginal relief (5) (2)
Adjustments to tax charge in respect of prior years 100 -
State tax charges 7 16
Tax charge for the year 253 19
The Group has taxable losses and other timing differences in the United Kingdom and the United States which arose as a result of the
research and development incurred during the start-up of the Group's activities. These losses are available for offset against future
taxable profits in those territories. A deferred tax asset has not been recognised in respect of these losses and other temporary
differences since the Group does not anticipate generating sufficient taxable profits to utilise these losses within the immediate future
and consequently the recoverability of the deferred tax asset is uncertain. The Group has estimated tax losses of £6.2 million at 31
December 2007 (2006: £6.7 million) available for relief against future profits in the UK. Additionally, the Group has tax losses of £9.1
million at 31 December 2007 (2006: £9.6 million) for relief against future profits in the United States
The total amount of deferred tax asset not recognised measured at 28%, the rate of corporation tax in the United Kingdom effective from
1st April 2008 (2006: 30%) is approximately £2.1 million of which £0.4 million related to temporary differences and £1.7 million was in
respect of losses (2006: approximately £2.5 million, of which £0.5 million related to temporary differences and £2.0 million was in respect
of losses).
6. Loss per share
Unaudited Unaudited
Year ended Year ended
31 Dec 31 Dec
2007 2006
Restated
£'000 £'000
Earnings
(Loss)/profit attributable to equity holders of (1,035) 22
the Company
Number of shares
Basic weighted average number of shares in issue 15,165,958 15,147,238
Dilutive effect of share options and warrants in 2,733,723 2,151,206
issue
Diluted weighted average number of shares in 17,899,681 17,298,444
issue
Basic (loss)/earnings per share (pence) (6.82) 0.15
Fully diluted (loss)/earnings per share (pence) (6.82)* 0.13
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of common shares in issue during the year.
Fully diluted earnings per share is calculated by adjusting the weighted average number of common shares in issue during the year by
existing share options and warrants, assuming dilution through conversion of all existing options and warrants.
* The loss and weighted average number of shares for the purpose of calculating the diluted loss per share are identical to those used
for the basic loss per share, as the exercise of share options and warrants would have the effect of reducing the loss per share and is
therefore not dilutive.
7. Intangible assets
Patents and Pre-production Software£*000 Development Total£*000
trademarks£*000 costs£*000 costs£*000
Cost
At 1 January 2007 805 384 106 - 1,295
Additions 228 - - 1,005 1,233
Disposals - - (25) - (25)
Impairment (37) - - - (37)
Exchange differences (13) - - - (13)
At 31 December 2007 983 384 81 1,005 2,453
Amortisation
At 1 January 2007 228 43 50 - 321
Charge for the year 64 128 26 84 302
Disposals - - (25) - (25)
Impairment - - - - -
Exchange differences (4) - - - (4)
At 31 December 2007 288 171 51 84 594
Net book amount
At 31 December 2007 695 213 30 921 1,859
At 31 December 2006 577 341 56 - 974
8. Property, plant and equipment
Furniture, fixtures Leaseholdimprovement Plant Rental and Motor vehicles£*000 Total
and equipment£*000 s£*000 andmachinery£*000 trialmachines£*000 £*000
Cost
At 1 January 2007 749 662 451 647 197 2,706
Additions 92 - 131 1,620 - 1,843
Disposals (199) - (272) - - (471)
Exchange differences 15 - (6) 31 25 65
At 31 December 2007 657 662 304 2,298 222 4,143
Depreciation
At 1 January 2007 344 42 326 234 87 1,033
Charge for the year 197 90 63 551 69 970
Disposals (199) - (272) - - (471)
Exchange differences 12 - (5) 9 18 34
At 31 December 2007 354 132 112 794 174 1,566
Net book amount
At 31 December 2007 303 530 192 1,504 48 2,577
At 31 December 2006 405 620 125 413 110 1,673
All assets included as motor vehicles are held under finance leases. No other assets are held under finance lease agreements.
9. Related party transactions
There have been no related party transactions during the year.
10. Dividends
There have been no dividends paid or declared during the year.
11. Statement of changes in equity
Share Share Equity option Currency translation Retained Total
capita premiu reserve reserve earnings
l m
accoun
t
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2006 9 34,120 103 578 (14,960) 19,850
Profit for the year - - - - 22 22
Exchange differences arising - - - (1,208) - (1,208)
on translations of foreign
operations
Total recognised income and - - - (1,208) 22 (1,186)
expense for the year
Exercise of share options - 6 - - - 6
Share-based payment - - 281 - - 281
Balance at 31 December 2006 9 34,126 384 (630) (14,938) 18,951
Loss for the Year - - - - (1,035) (1,035)
Exchange differences arising - - - (144) - (144)
on translations of foreign
operations
Total recognised expense for - - - (144) (1,035) (1,179)
the year
Exercise of share options - 10 - - - 10
Repurchase of shares - (122) - - - (122)
Share-based payment - - 354 - - 354
Balance at 31 December 2007 9 34,014 738 (774) (15,973) 18,014
Appendix 1 - Restatement of Financial Information under International Financial Reporting Standards
Adoption of IFRS in 2007
The accounting policies were changed on 1 January 2007 to comply with IFRS. The transition to IFRS is accounted for in accordance with
IFRS 1 'First-Time Adoption of International Financial Reporting Standards' with 1 January 2006 as the date of transition. The adoption of
IFRS did not result in substantial changes to the Group's accounting policies under UK Accounting Standards as set out in the Group's
audited financial statements for the year ended 31 December 2006. The changes in accounting policies as a consequence of the transition to
IFRS are described below, along with reconciliations of the effects of the transition to IFRS.
The transition to IFRS resulted in the following changes in accounting policies:
a) IAS 38 *Intangible Asset* requires computer software to be reclassified from property, plant and equipment to intangible assets
and the related depreciation expense reclassified to amortisation in the income statement.
b) Under IAS 19 *Employee Benefits*, a provision for holiday to which employees are entitled, but not yet taken, is required. This
charge was not required under UK GAAP.
c) IAS 16 *Property, Plant and Equipment* requires the initial estimate of costs of restoring leased premises to be recorded as a
tangible fixed asset with the value being depreciated over the life of the lease.
d) Recognition as revenue of long term receivables.
The Group elected to apply the exemptions granted in IFRS 1 in respect of business combinations that occurred prior to the transition
date of 1 January 2006.
To explain the impact of the transition, reconciliations have been included that show the changes made to the statements previously
reported under UK GAAP.
The following unaudited reconciliations are included:
* Reconciliation of Consolidated UK GAAP balance sheet to the Consolidated IFRS balance sheet at 1 January 2006
* Reconciliation of Consolidated UK GAAP balance sheet to the Consolidated IFRS balance sheet at 31 December 2006
* Reconciliation of the Consolidated UK GAAP profit and loss account to the Consolidated IFRS income statement for the year ended 31
December 2006
* Reconciliation of Consolidated UK GAAP cash flow to the Consolidated IFRS cash flow for the year ending 31 December 2006
* Notes on financial impact on adoption of IFRS statements
Reconciliation of Consolidated UK GAAP balance sheet to the Consolidated IFRS balance sheet at 1 January 2006
Audited Effect of transition Unaudited
UK GAAP to IFRS IFRS
in IFRS format
Notes £'000 £'000 £'000
Non-current assets
Intangible assets a 503 33 536
Property, plant and equipment a 1,422 (33) 1,389
Trade and other receivables c - 131 131
1,925 131 2,056
Current assets
Inventories 2,488 - 2,488
Trade and other receivables 1,582 - 1,582
Prepayments 789 - 789
Cash and cash equivalents 16,732 - 16,732
21,591 - 21,591
Total assets 23,516 131 23,647
Current liabilities
Trade payables 1,563 - 1,563
Accruals and deferred income b 1,191 88 1,279
Social security and other 464 - 464
taxes
Customer deposits 69 - 69
Current income tax liabilities 12 - 12
Borrowings 188 - 188
Obligations under finance 22 - 22
leases
Provisions for liabilities and 60 - 60
charges
3,569 88 3,657
Non-current liabilities
Obligations under finance 41 - 41
leases
Accruals and deferred income 99 - 99
140 - 140
Total liabilities 3,709 88 3,797
Net assets 19,807 43 19,850
Shareholders' equity
Called-up share capital 9 - 9
Share premium account 34,120 - 34,120
Equity option reserve - 103 * 103
Currency translation reserve - 578 * 578
Retained earnings (14,322) (638) (14,960)
Total equity 19,807 43 19,850
Total equity under UK GAAP 19,807
Accruals - Employee holiday (88)
pay entitlements
Recognition as revenue - long 131
term receivables
Total equity under IFRS 19,850
* Reclassification adjustment - classified within retained earnings under UK GAAP
Reconciliation of Consolidated UK GAAP balance sheet to the Consolidated IFRS balance sheet at 31 December 2006
Audited Effect of transition
UK GAAP to IFRS Unaudited
in IFRS format IFRS
Notes £'000 £'000 £'000
Non-current assets
Intangible assets g 918 56 974
Property, plant and equipment e 1,617 56 1,673
Trade and other receivables c - 295 295
2,535 407 2,942
Current assets
Inventories 7,112 - 7,112
Trade and other receivables 4,392 - 4,392
Prepayments 1,758 - 1,758
Cash and cash equivalents 15,885 - 15,885
29,147 - 29,147
Total assets 31,682 407 32,089
Current liabilities
Trade payables 7,120 - 7,120
Accruals and deferred income b 1,028 101 1,129
Social security and other 1,172 - 1,172
taxes
Customer deposits 3,415 - 3,415
Current income tax liabilities 10 - 10
Obligations under finance 42 - 42
leases
Provisions for liabilities and 80 - 80
charges
12,867 101 12,968
Non-current liabilities
Obligations under finance 50 - 50
leases
Provisions for liabilities and d - 120 120
charges
50 120 170
Total liabilities 12,917 221 13,138
Net assets 18,765 186 18,951
Shareholders' equity
Called-up share capital 9 - 9
Share premium account 34,126 - 34,126
Equity option reserve - 384 * 384
Currency translation reserve - (630) * (630)
Retained earnings (15,370) 432 (14,938)
Total equity 18,765 186 18,951
Total equity under UK GAAP 18,765
Accruals - Employee holiday (101)
pay entitlements
Recognition as revenue - long 295
term receivables
Amortisation - estimate of
costs to
restore leased premises (8)
Total equity under IFRS 18,951
* Reclassification adjustment - classified within retained earnings under UK GAAP
Reconciliation of the Consolidated UK GAAP profit and loss accounts to the Consolidated IFRS income statements for the year ended 31
December 2006
Audited Effect of Unaudited
UK GAAP Transitio IFRS
in IFRS format n
to IFRS
Notes £'000 £'000 £'000
Revenue c 24,575 164 24,739
Cost of sales (14,461) - (14,461)
Gross profit 10,114 164 10,278
Research and development costs (5,454) - (5,454)
Sales and marketing expenses (2,422) - (2,422)
Administrative expenses f (2,138) (21) (2,159)
Share-based payment (281) - (281)
Exceptional items (543) - (543)
Operating loss (724) 143 (581)
Operating profit before 100 143 243
exceptional items and
share-based compensation
Exceptional items:
Impairment of plant and (331) - (331)
equipment
Provision against business (212) - (212)
assets
Share-based payment (281) - (281)
Operating loss (724) 143 (581)
Finance costs (11) - (11)
Finance income 633 - 633
(Loss)/profit before taxation (102) 143 41
Income tax expense (19) - (19)
(Loss)/profit for the year (121) 143 22
(Loss)/earnings per share
(pence)
Basic (0.80) 0.15
Diluted (0.80) 0.13
Reconciliation of Consolidated UK GAAP cash flow to the Consolidated IFRS cash flow for the year ending 31 December 2006
Audited Effect of transition Unaudited
UK GAAP to IFRS IFRS
in IFRS format
Notes £'000 £'000
Cash flows from operating
activities
Loss from operations (724) 143 (581)
Adjustments for:
Depreciation of property, f 561 8 569
plant and equipment
Amortisation of intangible 136 - 136
assets
Impairment of intangible 30 - 30
assets
Impairment of rental equipment 331 - 331
Impairment of business assets 212 - 212
Share-based payment 281 - 281
(Decrease)/increase in 20 - 20
provisions
Operating cash flows before
movements
in working capital 847 151 998
Decrease/(increase) in (5,119) - (5,119)
inventories
Decrease/(increase) in c (4,420) (164) (4,584)
receivables
(Decrease)/increase in b, f 10,008 13 10,021
payables
Cash (used in)/generated from 1,316 - 1,316
operations
Income taxes paid (20) - (20)
Interest paid (11) - (11)
Net cash (used)/from operating 1,285 - 1,285
activities
Investing activities
Interest received 664 - 664
Purchase of property, plant (1,526) - (1,526)
and equipment
Expenditure on patents and (268) - (268)
trademarks
Expenditure on product (384) - (384)
development
Net cash used in investing (1,514) - (1,514)
activities
Financing activities
Proceeds on issue of shares 6 - 6
Loans from directors (175) - (175)
Repayment of obligations under (53) - (53)
finance leases
Net cash used in financing (222) - (222)
activities
Net decrease in cash and cash (451) - (451)
equivalents
Cash and cash equivalents at 16,732 - 16,732
beginning of year
Effect of foreign exchange (396) - (396)
rate differences
Cash and cash equivalents at 15,885 - 15,885
end of year
Notes on financial impact on adoption of IFRS statements
a) Adjustment represents reclassification of software acquired from third parties from property, plant and equipment to intangible
assets.
b) Adjustments represents employee holiday entitlements. Accrued entitlements at 1st January 2006 were £88,000 which increased by
£13,000 during 2006 resulting in a balance at 31 December 2006 of £101,000.
c) Comprises recognition of revenue as long term receivable:
£*000
- Year ending 31 December 2005 131
- Year ending 31 December 2006 164
295
This adjustment is not a GAAP difference it relates to the interpretation of a sales contract in the Czech Republic. The directors have
determined that the contract binds the customer to a payment at the end of the contract and have therefore restated revenue in relation to
the machines sold.
d) Represents obligation to restore leased premises on vacation of the property.
e) Additional amortisation charge on cost of restoring leased premises recorded an a tangible fixed asset
f) Comprises:
£*000
- Amortisation charge on obligation to restore leased premises 8
- Increase in employee holiday entitlements 13
21
g) Comprises:
£*000
- Reclassification of software costs (56)
- Estimate of costs to restore leased premises 120
- Amortisation charge on obligation to restore leased premises (8)
56
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOORRWKRNRUR
1 Year Cyberview Chart |
1 Month Cyberview Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
