RNS Number:9576N
Gamingking PLC
25 July 2003
Embargoed: 7.00am - 25 July 2003
Gamingking plc
Preliminary results for the year ended 30 April 2003 and appointment of Group
Chief Executive
Highlights
- Turnover exceeding #2m for first time
- Loss before exceptional items reduced to (#20,000) from (#137,000)
- Positive cashflow before acquisitions and exceptional items
- Entry into electronic pull-tab operations
- Successful integration of acquired businesses
- Acquisition of Creative Lotteries
- Appointment of Group Chief Executive
Chairman's statement
I am delighted to be able to report a year of continued development of the
Group's core business and the integration of acquired businesses. We have also
continued to define our strategic positioning to ensure that we are equipped to
take full advantage of the expected changes in the regulatory environment and
also capitalise upon suitable new business opportunities.
We have been able to deliver growth in turnover, exceeding #2m for the first
time in our history. Our net cash before acquisition costs and exceptional items
was #207,501 in 2003 from #96,457 in 2002 and operating loss has reduced by 65%
before exceptional items.
These results underline the fact that we have now achieved a position as the
clear leader in our core market place - the distribution of lotteries to private
members' clubs. The results are particularly creditable given the relative
weakness of the economy and they serve to underline the robust nature of our
activities.
In the course of the year the company has embraced electronic pull-tab
technology, to complement its well-established paper based operations and as the
year drew to a close, the first contributions from this activity were in
evidence. In addition, through the acquisition of Creative Lotteries Ltd, we
obtained an External Lotteries Manager's Certificate, enabling us to manage
Section 5 Society Lotteries on behalf of charities and other organizations.
The Group is now actively engaged in developing a number of new business
initiatives domestically and abroad. In order to give such activities the best
chance of success the Board took the decision to recruit a Group Chief
Executive. I am pleased to announce that Nicholas Watkins, one of our
non-executives since 2000, has today agreed to accept the role. His career
history is set out below.
It is the intention of the Board to appoint a replacement non-executive director
during the course of the year.
The success of your company will continue to be very dependent upon the quality
of its staff. In Gamingking plc together with its subsidiary companies, we have
a team of individuals who are committed to success and whose contribution this
year is greatly valued. On behalf of the Board I express my thanks to them.
Leslie Hurst
Chairman
24 July 2003
Nick Watkins - Biography
Group Chief Executive - Age 52
- Joined the Board of Gamingking plc in 2000 as a non-executive director
and was appointed Chief Executive in July 2003.
- Entered the media industry in 1980 as the managing director of Rank
Video Services, taking the company to an industry leadership position.
- In 1989 he joined the Chrysalis Group Plc as the deputy group-managing
director and played an active part in the re-positioning of Chrysalis as
a major force in the media industry. He led the buy out of Chrysalis'
new media interests in 1993 and formed The First Information Group, a
venture that was eventually sold to private investors.
- In 1995 he joined Tyzack & Partners, a senior executive search firm,
becoming managing director in 1997. In 1999 he orchestrated the sale of
Tyzack to the NASDAQ quoted Headway Corporate Resources Inc.
- He was appointed Chief Executive of Panasonic Disc Services
International in November 2001, leaving 12 months later, following the
acquisition of the business by Thomson Multimedia.
Operations Review
Lotteryking Limited
A solid performance overall with Group revenues growing by 29% to #2.1m. The
paper based pull-tab operation continued to trade well with significant growth
being evidenced. During the year the company entered into an agreement with
Oasis Technologies (UK) Limited for the distribution of electronic pull-tab
machines and at the close of the year revenues from this operation were
beginning to flow. The nature of the business, entirely different from the
traditional paper based business, is such that there is a lag effect between
installation and revenue receipts but we anticipate that this operation will be
a significant contributor in 2003/04. The Littlewoods pull-tab operation,
acquired in 2002, made a strong contribution to revenue growth, Club Lottery
ticket sales were also ahead of forecast. Built upon these foundations,
demanding targets have been set for the new financial year.
Group strategy has been to grow the Lotteryking business organically and via
acquisition and those acquisitions made over the course of the past 12 months
have been successfully integrated. We shall continue to explore acquisition
possibilities where they make a good strategic fit and can be acquired at a
sensible price. Furthermore, we shall look to broaden the base of our repertoire
of service and product offering into our private members' club client base, an
environment where Lotteryking is a market leader.
The Business Information Zone Limited
With the focus now very much on building our lottery operations, thebiz.com has
been the recipient of limited investment. A small trading profit in the full
year of #7,000 was recorded on revenues of #1,000. In 2001/02 revenues were
#22,000 and the loss was #43,000. The profit for this year is principally
attributable to the write back of certain provisions no longer required and the
cash cost of the business has again been rigorously contained.
Creative Lotteries Limited
In December 2002 we acquired Creative Lotteries Limited, a privately owned
company that held an External Lottery Manager's (ELM) Certificate. The
acquisition of Creative Lotteries Limited gave the Group immediate credibility
as an External Lottery Manager, and the ability to manage Section 5 Lotteries on
behalf of third parties. Creative Lotteries Limited had no earnings stream
during the year.
Strategy
This has been an important year for the Group, a year in which our strategy and
future direction has been more clearly defined. We have laid firm foundations to
support our growth plans, which whilst centred around lotteries and lottery
management, will not be restricted to paper based products. Our ambitions are
much wider and will embrace electronic pull-tabs, mobile telephony, visual
programming and software concepts, all with an emphasis on game play. The Group
activities have been re-structured to reflect this new strategic direction and
are now divided into five separate divisions.
1. Lotteryking 2. Vendingking 3. Mediaking
The supply of vending The design, manufacture The creation,
machines, pull-tab and distribution of promotion and
lottery tickets and on vending equipment for the application of visual
line lottery solutions gaming and leisure programming and
to private members' industries. software concepts for
clubs. gaming and game
play.
4. Managementking 5. Distributionking
The provision of The provision of
professional distribution and
management and representation services
consultancy services to third party
to Societies' manufacturers and
lotteries. suppliers of gaming
related equipment and
products.
Finance Director's Review
Overview
This was a year where the Group's overall financial performance continued to
show solid improvement in terms of turnover, EBITDA and operating loss before
exceptional items and where cash flow from operations remained strong. We have
had to account for some exceptional items and Group costs have risen as we
position ourselves to expand the business.
Turnover
Turnover for the year increased to over #2m, representing an annual growth of
29% and 58% growth over 2001. This growth has been achieved primarily through
Lotteryking Limited and is due to a combination of organic growth and
acquisition, principally the Littlewoods pull-tab business.
Gross profit, EBITDA & operating loss
Gross profit increased by 21% a figure, which is arrived at after accounting for
the adverse impact of exchange rate differences and of the Business Information
Zone Limited, which generated limited sales.
The EBITDA for the Group was #196,731 compared to #182,278 in 2002. The
Lotteryking EBITDA was #710,751 compared to #539,788 in 2002.
The Group operating loss prior to this year's exceptional item was #56,588
compared to a loss in the previous year of #162,974.
Balance sheet
The tangible fixed assets have increased from #762,300 in 2002 to #1,035,185 as
a result of the acquisition of the Littlewoods pull-tab business. The
depreciation charge for the year was #339,563 in line with the Group's 5 year
depreciation policy for all machines.
The working capital has marginally increased to #253,402 compared to #193,432 in
2002. Debtor days have improved markedly and are now at 38 days, compared to 43
days in 2002. Creditor days have moved from 49 days to 51 days in 2003.
At the 2002 AGM it was agreed the share premium account be cancelled and
following the approval of the High Court of Justice the distributable reserves
of the business have increased by #1,967,094.
Cash flow
Prior to exceptional items, the Group generated an operating loss of #56,588,
compared to #162,974 in the prior year. After the depreciation add back and
allowances made for the movements in working capital and exceptional items, the
business generated #360,204 of cash, compared to #337,537 in 2002. Net fixed
asset expenditure was #165,127 in 2003, the comparative figure for 2002 was
#236,346. Net cash before acquisition costs and exceptional items was #207,501
in 2003 and #96,457 in 2002.
Exceptional items
The Group settled a long standing claim from an ex-employee in the year at a
gross cost of #151,650 inclusive of legal fees. In addition the Group concluded
negotiations with the Customs and Excise over a disputed VAT claim, which
resulted in a net inflow of #34,275. These two items are explained in more
detail in note 3 in the attached report. The net effect of both items was to
increase the loss for the year by #117,375.
Guy van Zwanenberg
Finance Director
24 July 2003
Consolidated profit and loss account for the year ended 30 April 2003
Before
exceptional Exceptional 2003 2002
items items Total Total
# # # #
Turnover 2,157,627 - 2,157,627 1,668,340
Cost of (723,730) - (723,730) (486,201)
Sales --------- --------- ---------- ---------
Gross profit 1,433,897 - 1,433,897 1,182,139
Exceptional - (117,375) (117,375) -
item
Other (1,490,485) - (1,490,485) (1,345,113)
administrative --------- --------- ---------- ---------
expenses
Total (1,490,485) (117,375) (1,607,860) (1,345,113)
administrative --------- --------- ---------- ---------
expenses
Operating (56,588) (117,375) (173,963) (162,974)
(loss)
Interest 12,424 - 12,424 25,266
receivable
-------- --------- --------- --------
(Loss) on (44,164) (117,375) (161,539) (137,708)
ordinary
activities
before
taxation
Tax on 24,576 28,813 53,389 -
ordinary --------- --------- ---------- ---------
activities
Retained (19,588) (88,562) (108,150) (137,708)
(loss) for the ========= ========= ========== =========
year
Basic (loss) (0.04)p (0.05)p
per ordinary ========= ========= ========== =========
share
Diluted (loss) - -
per share ========= ========= ========== =========
All operations are continuing.
Consolidated balance sheet as at 30 April 2003
2003 2002
# #
Fixed Assets
Intangible Assets 105,524 116,655
Tangible Assets 1,035,185 762,300
Investments 30,000 30,000
----------- ----------
1,170,709 908,955
Current Assets
Stocks 310,841 226,596
Debtors 349,149 252,556
Cash at bank and in hand 244,439 674,313
----------- ----------
904,429 1,153,465
Creditors: amounts falling due (406,588) (285,720)
within one year
----------- ----------
Net current assets 497,841 867,745
----------- ----------
Total assets less current liabilities 1,668,550 1,776,700
=========== ==========
Capital and Reserves
Called up share capital 2,530,174 2,530,174
Share premium account - 1,967,094
Merger reserve 1,084,190 1,084,190
Profit and loss account (1,945,814) (3,804,758)
----------- ----------
Shareholders' funds 1,668,550 1,776,700
=========== ==========
Consolidated cash flow statement for the year ended 30 April 2003
2003 2003 2002 2002
# # # #
Net cash inflow from 242,829 337,537
operating activities
Return on investments
and servicing
of finance
Interest received 12,424 25,266
-------- --------
Net cash inflow from 12,424 25,266
returns on
investments and
servicing of finance
Capital expenditure and
financial investment
Purchase of tangible (178,657) (236,346)
fixed assets
Proceeds of tangible 13,530 -
fixed assets
Purchase of - (30,000)
investments -------- --------
Net cash outflow from (165,127) (266,346)
capital expenditure
and financial
investments
Acquisitions
Purchase of business (500,000) (100,000)
Purchase of subsidiary (20,000) -
undertaking -------- --------
Net cash outflow from (520,000) (100,000)
acquisitions
Management of liquid
resources
Sale of short term 445,934 26,259
deposits -------- --------
Net cash inflow from 445,934 26,259
management
of liquid resources
-------- --------
Increase in cash 16,060 22,716
======== ========
Notes to the financial statements for the year ended 30 April 2003
1. Basis of preparation
The group financial statements consolidate those of the company and its
subsidiary undertakings drawn up to 30 April 2003. The results of
subsidiary undertakings acquired during the year are included from the
date of acquisition. Profits or losses on intra group transactions are
eliminated in full. On acquisition of a subsidiary, all of the
subsidiary's assets and liabilities, which exist at the date of
acquisition, are recorded at their fair values reflecting their
condition at that date.
2. Turnover
Turnover of the Group for the year has been derived from its principal
activities. Turnover arising outside the United Kingdom is not material.
2003 2002
# #
Turnover
Lotteryking 2,156,202 1,646,358
The Business Information Zone 1,425 21,982
----------- ----------
Group turnover 2,157,627 1,668,340
----------- ----------
(Loss)/profit before taxation
Lotteryking 356,339 210,820
The Business Information Zone 7,090 (42,892)
Common costs (537,392) (330,902)
----------- ----------
(173,963) (162,974)
Net interest 12,424 25,266
----------- ----------
Group (loss) before taxation (161,539) (137,708)
----------- ----------
Net assets
Lotteryking 1,531,679 2,200,877
The Business Information Zone 136,871 (424,177)
----------- ----------
1,668,550 1,776,700
=========== ==========
Turnover relating to the Littlewoods pull-tab business post acquisition
was #325,432 and the gross margin was in line with the results for the
rest of the Lotteryking business. Following the full integration into
the group's operations, it is not possible to determine its contribution
to operating profit.
3. Exceptional items
2003 2002
# #
Settlement with ex-employee inclusive of fees 151,650 -
Reversal of impairment losses (34,275) -
----------- ----------
Total 117,375 -
=========== ==========
Settlement with ex-employee
As disclosed in the contingent liabilities note in the 2002 annual
report and accounts the company was contesting a long standing claim
brought against it by a former employee in relation to share options to
which he alleged he was entitled. Whilst firmly maintaining its belief
that the claim was without merit the board of Gamingking reached an out
of court settlement with the claimant. The decision to do so was reached
after the Board had taken legal advice and carefully considered the
demands on executive time and the level of professional fees that any
protracted litigation was likely to incur. The full and final settlement
to the claimant was #125,000.
Reversal of impairment losses
At the time of the acquisition of the Business Information Zone Limited
there was some uncertainty as to the amount of VAT that could be
reclaimed on the fees incurred in connection with the transaction. The
Board took the prudent view at the time and paid all uncertain amounts
to the Customs and Excise. Following lengthy discussions a rebate net of
professional fees and interest of #34,275 has been received. This has
the effect of reducing goodwill and previously provided impairment
losses.
4. Loss per share
The calculation of the basic loss per share is based on the loss
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.
2003 Weighted
2003 Loss average number Per share
of shares amount
# Pence
Basic loss per share
Loss attributable to
ordinary shareholders (108,150) 253,017,391 (0.04)
2002 Weighted
average number Per share
2002 Loss of shares amount
# Pence
Basic loss per share
Loss attributable to
ordinary shareholders (137,708) 253,017,391 (0.05)
There is no diluted earnings per share as share options would not have a
dilutive effect on the loss for the year.
5. Net cash inflow from operating activities
2003 2002
# #
Operating loss (173,963) (162,974)
Amortisation of goodwill 31,131 31,126
Depreciation 339,563 314,126
Loss on disposal of fixed assets 52,679 88,524
(Increase) in stocks (84,245) (12,711)
(Increase) / Decrease in debtors (43,204) 36,949
Increase in creditors 120,868 42,497
--------- ---------
Net cash inflow from operating activities 242,829 337,537
========= =========
6. Reconciliation of net cashflow to movement in net funds
2003 2002
# #
Increase in cash 16,060 22,716
Cash inflow from decrease in liquid resources (445,934) (26,259)
--------- ---------
(429,874) (3,543)
Net funds at 1 May 2002 674,313 677,856
--------- ---------
Net funds at 30 April 2003 244,439 674,313
========= =========
7. Financial information
The financial information on the Group set out above does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The results for the year ended 30 April 2003 are based on the audited
consolidated financial statement of Gamingking plc which have been reported on
by the auditors and will be delivered to the Registrar of Companies. The report
of the auditors was unqualified and did not contain a statement under Section
273, Companies Act 1985.
8. Copies of the 2003 Report and Accounts
Copies of the 2003 Report and Accounts are being sent to shareholders in due
course. Copies of this announcement will be available from the office of
Gamingking plc, Cedar House, Hainault Business Park, 56-58 Peregrine Road,
Hainault, Essex IG6 3SZ for one month from the date of this announcement.
24 July 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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