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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| 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 |
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RNS Number:5214I
Gamingking PLC
26 November 2007
Gamingking plc
Interim statement
For the six months ended 31 October 2007
KEY POINTS
* Turnover maintained at #2.5m
* Capital expenditure concentrated on new projects
* Trials of lottery terminals in public houses commenced September 2007
* Programme to consolidate operating locations
* Net cash from operating activities maintained in spite of trading loss
Enquiries:
Gamingking Plc
Guy Van Zwanenberg Tel: +44 (0) 118 940 4924
Seymour Pierce Limited
David Newton/Sarah Jacobs Tel: +44 (0) 207 7107 8000
Chairman's Statement
Overview
The six months to the end of October 2007 offered difficult conditions for the
Group, resulting in our trading statement on 22 October 2007. Two events, the
introduction of the smoking ban in England and the implementation of the 2005
Gambling Act, each provided their own challenges.
At the time of writing my full year statement in July, the smoking ban in Wales
had produced no noticeable effect on the Group's operations and the ban in
England was too new for any effect to be evident; in fact sales for the first
quarter were slightly ahead of the prior year. However, August and September
sales saw a reduction of some 9% compared to the same months in 2006. October
however showed an increase, and sales revenue for the full six month period
ended in line with the prior year. It is unclear to what extent this patchy
sales performance is due to the smoking ban: anecdotal evidence from our client
clubs suggests that they are currently operating in an uncertain and volatile
environment, with attendances and customer spend varying greatly when compared
to prior years.
The 2005 Gambling Act was fully implemented with effect from 1 September 2007.
The new legislation created an opportunity to place lottery terminals in
locations hitherto forbidden. We started trials of Your "Local" Lottery,
offering charitable lotteries for sale in pubs, as soon as the new rules
allowed. These trials continue, and are discussed at length below.
We have also continued with the trials of our Reel Winner electronic lottery
machine. We currently have over 50 sited, and their performance, together with
recent legislative changes, is also expanded upon later in my statement.
Bearing in mind the current climate, we continue to examine our cost base.
Whilst expenditure on new projects, and consolidation of the Playprint
acquisition made in March 2007, has seen overheads increase year-on-year, we are
in the process of consolidating our operations into fewer locations with lower
staffing levels - a process that should be completed in the current financial
year.
Financial Summary
Sales for the six months to 31 October 2007 were #2.52m (2006: #2.51m),
generating a gross profit of #1.56m (2006: #1.56m). Administrative costs of
#1.67m (2006: #1.59m) resulted in a loss before interest and tax of #110,000
(2006: #33,000).
The increase in administrative costs is principally attributable both to
expenditure on the Your "Local" Lottery project of #31,000 (2006: #nil), and to
operating costs associated with the integration of the Playprint club business
acquisition made in March this year of #25,000 (2006: #nil). During the period,
we also incurred over #15,000 (2006: #2,000) in costs for specialist legal
advice received about issues surrounding the Gambling Act and its
implementation.
Capital expenditure in the period totalled #247,000 (2006: #303,000), with
#178,000 of this spend relating to the Your "Local" Lottery and Reel Winner
projects, and #40,000 spent on lottery machines for the registered club market.
The depreciation charge for the six months rose to #226,000 (2006: #205,000) as
a consequence.
We continued the process of repaying the bank loan taken out in 2005, with a
further #80,000 reduction in the balance leaving a total outstanding of #560,000
as at 31 October 2007 (2006: #720,000). Recent interest rate rises resulted in
the interest charge for the period of #26,000 (2006: #31,000) not fully
reflecting the reducing loan balance.
The Group's cash holdings reduced during the period, although net cash from
operating activities rose slightly to #197,000 (2006: #194,000) in spite of the
increased trading loss. We continue to exercise caution in relation to cash
management, with an emphasis on debtor and stock control to ensure efficient use
of our working capital.
Consolidation of Operations
As reported in my last full year statement, we have begun a programme to
consolidate all of the production, warehousing and distribution of our goods for
resale into one location. This process will be completed during the current
financial year, and will offer cost and operational benefits.
We have also brought the assembly process for our lottery terminals in-house,
giving us improvements in timescale and flexibility for their production.
Although the UK is not traditionally seen as a low-cost production location, our
terminals are produced in short runs to proprietary designs using components
from various sources and this does not lend itself to an offshore
mass-manufacturing approach.
Projects & Product Development
The Reel Winner
During the summer the Department for Culture, Media and Sport (DCMS) introduced
a new category of gaming machine (B3A) specifically to cover electronic
lottery-based machines. This decision obliged us to apply (at short notice) for
a gaming machine technical licence from the Gambling Commission in order to
operate the machines in compliance with the Gambling Act. I am happy to say that
the licence was issued, and that our trials of these machines were able to
continue uninterrupted.
We have continued our trials in registered members clubs, and over the course of
the last six months the Reel Winner machines have generated #26,000 in revenue
for the Group. The machines have been well received by players, and continue to
prove themselves less costly to maintain and operate than a traditional
ticket-based lottery terminal. The results of the trial continue to be
encouraging, and we plan to expand the number of machines in the field over the
coming months.
On 30 October 2007 the Gambling Commission launched a consultation process
regarding technical standards for B3A machines. We will be fully involved in the
consultation, which is due to finish on 11 December 2007, with an aim to ensure
that the standards agreed provide a viable framework under which to operate
these machines.
Finally, HM Revenue and Customs Commissioners issued a decision with regard to
class B3A machines at the end of September 2007. They ruled that takings from
such machines should be subject to VAT, and that they should also be subject to
Amusement Machine Licence Duty (AMLD) at a rate commensurate with their stakes
and prizes. It is our opinion that this decision is incorrect on a number of
grounds; not least that the B3A machine's definition is that it may only offer
gaming based on lotteries, which are specifically excluded from VAT or other
gaming duties. We are in the process of appealing the decision, which we feel
would unfairly restrict a valuable fundraising opportunity for non-commercial
registered members' clubs. Our traditional ticket-based lottery machines are
unaffected by this decision.
We have also developed games for the Reel Winner that will allow it to operate
free of AMLD whilst still giving players very similar playability and payout
characteristics, and will introduce these into sites where we feel they may be
of benefit.
Your "Local" Lottery
The introduction of the Gambling Act with effect from 1 September 2007 allowed
the placement of lottery ticket vending machines in locations other than
registered members' clubs. The lotteries sold through these machines generate
funds for charities and are regulated by the Gambling Commission.
We commenced trials in pubs as soon as the new legislation permitted, using a
number of locations in both managed and tenanted pubs around the country, and
more recently in a number of licensed bookmakers' offices. As far as we are
aware, we remain the only operator of such machine-sold lotteries in the UK, and
our continuing contacts with major pub companies indicate a good deal of
interest in the trial's results.
The lottery terminals offer a number of benefits to the site: the prizes on
offer are significantly higher than those available from normal fruit machines,
there is no requirement for a machine licence, and the commission paid to the
site is free of VAT.
Our intention is to continue growing to around 120 sites until Christmas whilst
assessing the business model. It is clear, however, that pubs and other
age-controlled or licensed premises offer a significant new market for our
products under the new legislation.
Prospects
The last six months have been challenging in terms of trading, regulation and
operational change management. The loss for the reporting period is
disappointing, and we continue to look at ways of reducing cost wherever
possible. Historically, the second half of our financial year is stronger than
the first, but we may see the true effects of the smoking ban over a winter
period.
We will continue to operate the trials for our new projects with an aim to
translate any successful trial into profitable growth for the Group. It is
likely that such a project roll-out would require capital investment, and we
will continue to explore the most effective methods of funding any such
developments.
Your board continues to seek a course for the Company which will provide
profitable growth for the future.
Douglas Yates
26 November 2007
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
October 2007 which comprises the consolidated income statement, consolidated
balance sheet, consolidated cash flow statement, consolidated statement of
changes in equity and the related notes. We have read the other information
contained in the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained
in APB Statements of Standards for Reporting Accountants "International Standard
on Review Engagements (UK and Ireland) 2410". Our review work has been
undertaken so that we might state to the company those matters we are required
to state to them 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 half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM listing rules.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, ''Interim Financial Reporting,'' as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 October 2007 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM listing rules.
Grant Thornton UK LLP
Chartered accountants
London
26 November 2007
Consolidated inciome statement for the six months ended 31 October 2007
Notes 6 months ended 31 6 months ended 31 Year ended 30
October 2007 October 2006 April 2007
Unaudited Unaudited Audited
#000 #000 #000
Revenue 2 2,517 2,506 5,131
Cost of sales (958) (950) (2,000)
-------- -------- --------
Gross profit 1,559 1,556 3,131
Administration expenses (1,669) (1,589) (3,071)
-------- -------- --------
Operating (loss) / profit (110) (33) 60
Interest payable (26) (31) (61)
Interest receivable 6 6 12
-------- -------- --------
(Loss) /
profit before
taxation 2 (130) (58) 11
Income tax
credit /
(expense) 3 5 (9) (17)
-------- -------- --------
Loss after
taxation (125) (67) (6)
-------- -------- --------
Basic loss per
ordinary share
(pence) 4 (0.043) (0.023) (0.002)
-------- -------- --------
Diluted loss
per ordinary
share (pence) 4 (0.043) (0.023) (0.002)
-------- -------- --------
Consolidated Balance Sheet as at 31 October 2007
Notes 31 October 31 October 30 April
2007 2006 2007
Unaudited Unaudited Audited
#000 #000 #000
Assets
Non-current assets
Intangible
fixed assets 5 1,325 1,328 1,338
Property,
plant and
equipment 6 1,262 1,310 1,241
Deferred tax
asset 33 31 27
------------ -------- --------
2,620 2,669 2,606
Current assets
Inventories 408 435 431
Receivables
and
prepayments 697 714 741
Cash and cash
equivalents 242 399 392
------------ -------- --------
1,347 1,548 1,564
------------ -------- --------
Total assets 3,967 4,217 4,170
------------ -------- --------
Liabilities
Non current
liabilities
Bank loan 7 370 560 480
Hire purchase 1 5 4
------------ -------- --------
371 565 484
------------ -------- --------
Current liabilities
Bank loan 7 190 160 160
Hire purchase 5 5 5
Trade and
other payables 903 925 898
------------ -------- --------
1,098 1,090 1,063
------------ -------- --------
Total
liabilities 1,469 1,655 1,547
------------ -------- --------
Capital and
reserves
Share capital 2,907 2,907 2,907
Share premium 173 173 173
Merger reserve 1,391 1,391 1,391
Retained
earnings (1,973) (1,909) (1,848)
------------ -------- --------
Total equity 2,498 2,562 2,623
------------ -------- --------
Total Equity
and
liabilities 3,967 4,217 4,170
------------ -------- --------
Consolidated cash flow statement for the six months
ended October 2007
6 months 6 months Year ended
ended 31 ended 31 30 April
October October 2007
2007 2006
Unaudited Unaudited Audited
#000 #000 #000
Operating activities
Results for the period
the period before tax (130) (58) 11
Depreciation and amortisation 239 216 449
Equity settled share options - (45) (45)
Loss on disposal of property
plant and equipment - 10 12
Interest paid 26 31 61
Interest received (6) (6) (12)
Decrease / (increase) in
inventories 23 (9) 40
Decrease in receivables 44 121 94
(Decrease) /
increase in trade payables
and other liabilities 1 (66) (97)
-------- -------- --------
Net cash from
operating
activities 197 194 513
Investing activities
Additions to
property plant
and equipment (247) (303) (450)
Interest received 6 6 12
Purchase of business - - (75)
-------- -------- --------
Net cash from
investing activities (241) (297) (513)
Financing activities
Decrease in
bank loans (80) (80) (160)
Interest paid (26) (31) (61)
-------- -------- --------
Net cash from
financing activities (106) (111) (221)
Cash and cash
equivalents at
the beginning
of the period 392 613 613
Net decrease
in cash and
cash equivalents (150) (214) (221)
-------- -------- --------
Cash and cash
equivalents at
end of the
period 242 399 392
-------- -------- --------
Consolidated statement of changes in equity for the six months
ended 31 October 2007
Share Share Merger Retained Total
capital premium reserve earnings Equity
#000 #000 #000 #000 #000
Balance 1 May
2006 2,907 173 1,391 (1,797) 2,674
Loss for the
period - - - (67) (67)
Equity settled
share options - - - (45) (45)
------- ------- ------- ------- --------
Balance at 31
October 2006 2,907 173 1,391 (1,909) 2,562
------- ------- ------- ------- --------
Balance 1 May
2006 2,907 173 1,391 (1,797) 2,674
Loss for the
period - - - (6) (6)
Equity settled
share options - - - (45) (45)
------- ------- ------- ------- --------
Balance at 30
April 2007 2,907 173 1,391 (1,848) 2,623
------- ------- ------- ------- --------
Balance 1 May
2007 2,907 173 1,391 (1,848) 2,623
Loss for the
period - - - (125) (125)
------- ------- ------- ------- --------
Balance at 31
October 2007 2,907 173 1,391 (1,973) 2,498
------- ------- ------- ------- --------
Notes to the interim statement
1 Principal accounting policies
Statement of compliance
The consolidated interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) IAS 34 for Interim
Financial Reporting. They do not include all of the information required for
full annual financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the year ended 30
April 2007.
The accounting policies applied in the preparation of these financial statements
are the same as those used in the Group consolidated financial statements for
the year ended 30 April 2007.
2 Segment assets and liabilities
Whilst the business of the Group is conducted from various different locations,
the Board of Directors treats the Group as one unit for management purposes and
hence no segmental reporting is considered applicable. The Group only sells
products in the United Kingdom.
3 Tax on profit on ordinary activities
Tax on profits on ordinary activities is calculated at the small companies' rate
of corporation tax in the United Kingdom of 19%.
The taxation credit of #5,000 (2006: charge of #9,000) is based on an effective
tax rate of 21% (2006:19%). The current year's credit relates to the
amortisation of intangible assets offset by an increase in the tax rate in
future years. Last year's taxation charge was an adjustment in the deferred tax
charge arising from the write back on the equity settled options.
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 period.
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.
Basic Diluted
earnings per share earnings per share
6 months to 31 October 2007
Loss #'000 (125) (125)
Weighted average number
of shares 290,697,869 290,697,869
-------------- --------------
Per share amount pence (0.043) (0.043)
-------------- --------------
6 months to 31 October 2006
Loss #'000 (67) (67)
Weighted average number
of shares 290,697,869 290,697,869
-------------- --------------
Per share amount pence (0.023) (0.023)
-------------- --------------
12 months to 30 April 2007
Loss #'000 (6) (6)
Weighted average number
of shares 290,697,869 290,697,869
-------------- --------------
Per share amount pence (0.002) (0.002)
-------------- --------------
5 Intangible fixed assets
Brand Name Customer Lists Licences Goodwill Total
#'000 #'000 #'000 #'000 #'000
Cost
At 1 May 2007 and
at 31 October 2007 130 120 20 1,118 1,388
------ -------- -------- -------- --------
Amortisation
At 1 May 2007 13 21 16 - 50
Provided in the
period 3 6 4 - 13
------ -------- -------- -------- --------
At 31 October 2007 16 27 20 - 63
------ -------- -------- -------- --------
Net book amount
At 31 October 2007 114 93 - 1,118 1,325
------ -------- -------- -------- --------
Net book amount
At 30 April 2007 117 99 4 1,118 1,338
------ -------- -------- -------- --------
6 Property, plant and equipment
During the six months ended 31 October 2007 the group acquired property, plant
and equipment with a cost of #247,000. (2006: #303,000). Depreciation of
#226,000 (2006 #205,000) has been charged and there have been disposals with a
net book value of #2,000 (2006: #10,000).
7 Debt
During the six months ended 31 October 2007 the group has repaid #80,000 of the
bank loan of #800,000 that was obtained in 2005. The total outstanding as at 31
October 2007 was #560,000.
8 Related party transactions
During the period the company paid rent to Brian McCann (senior management and a
substantial shareholder) and Marion McCann (a substantial shareholder) of
#35,952 (31 October 2006: #35,952). At 31 October 2007 the amount owing to Brian
McCann was #nil (31 October 2006: #1,523).
During the period the company traded with MBM Fabrications Limited, a company in
which Brian McCann and Mark White (a director of Gamingking plc) are
shareholders. The company bought goods for resale and components for lottery
terminals to the value of #62,227 (2006: #13,046). At 31 October 2007 the amount
owing to MBM Fabrications Limited was #10,105 (2006: #9,169).
9 Preparation of Interim Statement
The interim statement is unaudited but has been reviewed by the auditors and
their report is set out on pages 6-7. The financial information does not
constitute statutory accounts within the meaning of section 240 of the Companies
Act. Statutory accounts for Gamingking Plc for the year ended 30 April 2007 on
which the auditors gave an unqualified report have been delivered to the
Registrar of Companies.
10 Judgements and Estimates
At the year end the Group made judgements in the following areas:
Impairment of goodwill and other intangibles.
Valuation of brand names and customer lists.
There have been no changes to these judgements at the interim period.
11 Approval of Interim Statement
The interim statement was approved by the Board of Directors on 26 November
2007. Copies of this statement will be available to members of the public, free
of charge, from the Company at Duxons Turn, Maylands Avenue, Hemel Hempstead,
Herts, HP2 4SB or Cedar House, Peregrine Road, Hainault, Essex IG6 3SZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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