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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Gamingking | LSE:GGK | London | Ordinary Share | GB0005350524 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.775 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:4733A Gamingking PLC 19 July 2007 GAMINGKING PLC PRELIMINARY FINAL RESULTS *Turnover #5.1m *EBITDA reaches #0.5m *Full-year profit from operations despite interim loss *Completion of two-year vending terminal investment programme *Acquisition in the North-East completed within the year *Successful new product trials in club market Chairman's Statement The market conditions to which the Group has been exposed during the year mirror those experienced by the majority of the UK retail leisure sector. Sales in the first half of the year were maintained at the previous year's levels, but third quarter sales were lower year-on-year, as disclosed in our February trading statement. The Group's management attempted to address this through a restructuring of the sales team including the addition of a national sales manager, further telesales recruitment and an overhaul of our promotional mailing activity. Fourth quarter sales subsequently recovered to very nearly match previous year's levels. In addition, and following the loss announced in the first half of the year, the Board took steps to reduce overheads where possible. The benefits of this are evident in the second half of 2006/07 with a profit before tax in the six month period of #69,000 despite reduced sales, against a comparative figure of #15,000 for 2005/06. In spite of the sales shortfall, full year EBITDA exceeded #500,000 for the first time in the Company's history (calculated as profit from operations of #60,000 plus depreciation and amortisation of #449,000). The effective rate of taxation in the year is 154%. This is principally due to non tax deductible expenses and underprovisions in the prior year. As disclosed in our interim statement, capital expenditure in the first half of the year was #303,000; this reduced to #147,000 in the second six months. The high level of capital spend in the last 24 months has increased the depreciation charge in our accounts from #360,000 in 2005/06 to #428,000 in 2006/07; providing a major contributor to the reduction in pre-tax profit for the year. The vast majority of this spend relates to new lottery machines, in order both to upgrade existing sites and expand into new ones, bringing expenditure on these assets to over #700,000 in the past two years. This investment programme has been fully funded from free cash flow over the past two years. The Board anticipates that the requirement for capital expenditure on our existing range of lottery machines will reduce during 2007/08, still allowing for investment in a range of new products and markets. As a point of interest, during the twelve months to 30 April 2007, consumer spend through Group-owned machines was #27,900,000, contributing profits of #5,700,000 to the non-commercial organisations in whose premises they are placed. We continue to exercise caution in relation to cash management. We began the process of repaying the loan taken out in 2005, reducing the balance outstanding by #160,000 over the course of the year. Both debtors and creditors also reduced over the twelve month period, the reduction in debtors being due to the introduction of improved credit control procedures coupled to some good work from our finance team. Acquisitions We completed a small but strategically important acquisition during March 2007, buying the club and wholesale supply business of Playprint Limited in the North-East of England. The acquisition of a geographically concentrated customer base in the North-East allows us to consolidate this operation with that of Independent Leisure Supplies, acquired in November 2005 and trading in the same area. The customer bases of both companies on acquisition showed relatively little penetration of our key lottery product lines and offered us a substantial cross-selling opportunity which has been enthusiastically pursued by the transferring staff from both companies. Products and Product Development The Group continues to develop a number of new initiatives and product concepts. All of these have been the subject of updates in my previous reports, and I feel that it is useful to continue this trend. The Reel Winner It is the Board's view that this machine has a great deal of potential. It is a lottery machine housed within a converted retro-style fruit machine cabinet. At the time of writing the regime under which the machine will operate, following the implementation of the new Gambling Act on 1 September 2007, is still unclear. The DCMS introduced a new category of machine (B3A) in June 2007 specifically to cover electronic lottery-based machines. These will be allowed to operate only in registered members' clubs, and will be subject to gaming machine regulations and specific stake/prize limits. We are continuing our dialogue with the DCMS and Gambling Commission in order to ascertain exactly how the Reel Winner fits in to the new regulatory framework. In view of this uncertainty, we have taken a cautious approach with the scale of our trials. Results so far have been encouraging with around 50 machines in the field producing average revenues in excess of those normally achieved with our traditional ticket-based lottery machines. The machine has also proven less costly to maintain and operate. The Board continues to monitor the trial closely, and will continue to assess the best way forward as the statutory regulations become clearer. Club View Network The Club View Network project, which provides an online presence and associated services to the registered club market, has proven difficult to introduce and grow. Where potential customers have been shown the concept it has generally been very well received. However the actual process of securing a subscription and the subsequent site setup is costly, time-consuming, and requires expensive third-party support. The project has produced little revenue during 2006/07, and requires significant additional investment to complete the next phase of its development. The board does not consider this project to be commercially viable in its current form, but will continue to explore its potential future development. Your "Local" Lottery This project is designed to benefit from the opportunities under the new Gambling Act for the sale of lottery tickets from machines in pubs. Hitherto, legislation has required some form of human intervention in the sales process of lottery tickets; a requirement removed with effect from 1 September 2007. At the time of our interim statement, we were seeking potential site partners for the trial of a bar-top dispenser operated by serving staff to trial the concept of ticket-based lotteries in pubs. Potential problems with cash handling and accounting were the main reasons cited for a failure to find suitable, willing sites. We have therefore developed a new wall-mounted automatic ticket vending machine specifically for the pub market. It is our intention to start trials on 1 September, the earliest date possible under the new legislation, using this new machine, and a pub-specific ticket range (including our Coronation Street branded ticket). Lotteryking Limited will operate these lotteries in conjunction with another of our subsidiaries, Creative Lotteries Limited, which holds an External Lottery Manager's certificate. We believe that the pub market, comprising over 50,000 locations in England and Wales, offers a significant growth opportunity for the Company, for the charities and societies which would benefit from this new fundraising stream, and finally for the pubs themselves for whom this might prove to be a valuable revenue source following the introduction of the smoking ban in July 2007. It should also be noted that the new legislation does not restrict the placement of lottery machines to pubs and licensed premises, and the Board is continuing to assess the suitability of other potential site types. Prospects There are potential threats and opportunities from the new Gaming Act. Your board is actively preparing for those opportunities and, through our dialogue with the DCMS and the Gambling Commission, we feel we are well placed to take positive action to best operate in the new gaming environment. We are also aware that competition for customers in our traditional markets will continue to be fierce. We will monitor carefully the effects of the smoking ban in England during the course of the new financial year. Early data from Wales does not indicate a measurable adverse effect on our sales. However, we are mindful of reports from Scotland (particularly from bingo operators) which suggest that attendances and buying patterns have been significantly affected. I believe that the changes made in the last twelve months have made the Company stronger and more able to adapt quickly to changes in the market. The Board will continue to push for sales growth whilst controlling costs in an effort to improve profitability. The Board will also work to balance the need for capital investment in new and existing projects with the need for financial prudence and security. Finally, the Board will work to investigate, assess and develop new business opportunities that it believes will deliver positive future results for shareholders. Douglas Yates Chairman 18 July 2007 Consolidated income statement For the year ended 30 April 2007 2007 2006 #000 #000 ----------- ---------- Revenue 5,131 5,287 Cost of sales (2,000) (2,171) ----------- ---------- Gross profit 3,131 3,116 Administrative expenses (3,071) (3,004) ----------- ---------- Profit from operations 60 112 Finance costs (61) (61) Investment income 12 12 ----------- ---------- Profit before taxation 11 63 Income tax expense (17) (12) ----------- ---------- (Loss)/profit for the year (6) 51 ----------- ---------- Earnings per share (0.002)p 0.017p Basic (loss)/earnings per share ----------- ---------- Diluted (loss)/earnings per share (0.002)p 0.017p ----------- ---------- Consolidated balance sheet As at 30 April 2007 2007 2006 #000 #000 Assets Non-current assets Intangible fixed assets 1,338 1,339 Property, plant and equipment 1,241 1,223 Deferred tax assets 27 39 2,606 2,601 Current assets Inventories 431 426 Receivables and prepayments 741 835 Cash and cash equivalents 392 613 1,564 1,874 Total assets 4,170 4,475 Liabilities Non-current liabilities Bank Loan 480 640 Hire purchase 4 9 484 649 Current liabilities Bank loan 160 160 Hire purchase 5 4 Trade and other payables 898 988 ------------- ------------ 1,063 1,152 Total liabilities 1,547 1,801 Net assets 2,623 2,674 Equity attributable to equity holders of the parent Share capital 2,907 2,907 Share premium 173 173 Merger reserve 1,391 1,391 Retained earnings (1,848) (1,797) Total equity 2,623 2,674 Consolidated cash flow statement For the year ended 30 April 2007 2007 2006 #000 #000 Operating activities Results for the period before tax 11 63 Depreciation and amortisation 449 381 Equity settled share options (45) 22 Loss on disposal of property, plant and 12 17 equipment Interest paid 61 61 Interest received (12) (12) Decrease/(increase) in inventories 40 (10) Decrease in receivables 94 22 (Decrease)/increase in trade payables and other (97) 124 liabilities Corporation tax paid - (33) ---------- -------- Net cash from operating activities 513 635 Investing activities Additions to property plant and equipment (450) (343) Interest received 12 12 Purchase of businesses (75) (913) ---------- -------- Net cash from investing activities (513) (1,244) Financing activities Increase/(decrease) in bank loans (160) 800 Interest paid (61) (61) ---------- -------- Net cash from financing activities (221) 739 Cash and cash equivalents at the beginning 613 483 of the period Net (decrease)/increase in cash and cash (221) 130 equivalents ---------- -------- Cash and cash equivalents at end of the 392 613 year ---------- -------- Consolidated statement of changes in equity For the year ended 30 April 2007 Share Share Merger Retained Total Capital Premium Reserve Earnings Equity #000 #000 #000 #000 #000 Balance 1 May 2005 2,661 173 1,084 (1,870) 2,048 Profit for the year - - - 51 51 Shares issued 246 - 307 - 553 Employee share based compensation - - - 22 22 ------- -------- ------- ------- -------- Balance at 30 April 2006 and 1 May 2006 2,907 173 1,391 (1,797) 2,674 Loss for the year - - - (6) (6) Employee share based compensation - - - (45) (45) ------- -------- ------- ------- -------- Balance at 30 April 2007 2,907 173 1,391 (1,848) 2,623 ------- -------- ------- ------- -------- Presentation of financial statements The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and as developed and published by the International Accounting Standards Board (IASB). Profit from Operations 2007 2006 #000 #000 Profit from operations has been arrived at after charging/ (crediting): Depreciation of property, plant and equipment 424 356 owned 4 4 hire purchase 21 21 Amortisation of intangibles 143 122 Property lease charges 81 71 Car lease rentals 7 5 Hire of plant and machinery 12 17 Loss on disposal of property, plant and equipment 16 24 Research and development costs (45) 22 Share and share option costs Auditor's remuneration: Audit services - audit fees to Company's auditor --------- --------- for audit of the Group's annual accounts 19 19 Audit of IFRS transition - 18 Other services (see below) 26 25 --------- --------- Auditor's remuneration for other services is analysed below. 2007 2006 #000 #000 Fees payable to the Company's auditor for the audit of Company's subsidiaries pursuant to legislation 14 13 Other services pursuant to legislation 7 7 Corporation tax services 5 5 --------- --------- 26 25 --------- --------- Investment income 2007 2006 #000 #000 Interest on bank deposits 12 12 --------- --------- Income tax expense 2007 2006 #000 #000 --------- --------- UK corporation tax at 19% (2006: 19%) and total current tax - (16) Adjustment in respect of prior periods 5 - Deferred tax 12 28 --------- --------- Tax on profit on ordinary activities 17 12 --------- --------- The tax assessed for the period is different from the standard rate of corporation tax in the UK at 19% (2006: 19%). The differences are explained as follows: 2007 2006 #000 #000 Profit before taxation 11 63 Profit before taxation multiplied by the standard rate of 2 12 corporation tax in the UK of 19% (2006: 19%) Effect of: Adjustment for non-deductible expenses --------- --------- relating to impairment and amortisation 3 7 other non-deductible expenses 7 3 Utilisation of tax losses not previously recognised - (15) Prior year adjustment 5 - Other - 5 --------- --------- Tax on profit on ordinary activities 17 12 Unrelieved tax losses of #280,099 (2006: #190,000) remain available to offset against future taxable trading profits. In addition the Group has capital losses of #3,107,000 (2006: #3,107,000), which can be offset against future capital gains. A resulting deferred tax asset of #590,000 (2006: #626,430) has not been recognised. 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. Options are not considered to have any dilutive effect as the options are under water. Loss 2007 Weighted Per Earnings 2006 Weighted Per average number Share average number Share of shares amount of shares amount pence pence #000 #000 Basic (loss) /earnings per share Earnings attributable to ordinary shareholders (6) 290,361,210 (0.002) 51 290,361,210 0.017 Dilutive effect of securities Options - 2,680,332 Diluted (loss)/ earnings (6) 290,361,210 (0.002) 51 293,041,542 0.017 per share The preliminary statement of results has been reviewed and agreed with the Company's auditor, Grant Thornton UK LLP, who have indicated that they will be giving an unqualified opinion in their report on the statutory financial statements. Copies of the annual report and consolidated financial statements for the year ended 30 April 2007 will be sent to shareholders in due course. Further copies will be available from the Company's offices at Cedar House, 56 Peregrine Road, Hainault, Essex IG6 3SZ. They will also be available to download from the Company's website at www.gamingking.co.uk. For further information contact: Sarah Jacobs Seymour Pierce 020 7107 8008 Mark White Gamingking plc 01442 255555 This information is provided by RNS The company news service from the London Stock Exchange END FR MGGMNKRMGNZM
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