RNS Number:9979V
Gamingking PLC
21 December 2005
GAMINGKING PLC ("THE GROUP")
INTERIM STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2005
KEY POINTS
* Turnover increased by 71% to #2.5m
* Operating Profit increased to #73k from #6k
* No increase in corporate costs
* Kelly's Eye (No 1) Limited being consolidated with Lotteryking Limited
* Acquisition of Gemini Club Supplies & Independent Leisure Supplies
Chairman's Statement
Overview
I am pleased to report that revenue for the six months to 31st October 2005 is
#2.54m, a growth of 71% over the same period last year, yielding an operating
profit of #73k (2004 #6k) and a profit before tax of #48k (2004 #9k). The
consolidated interim financial statements have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" as stated in
note 1.
Whilst AIM listed companies are not required to prepare accounts under IFRS
until 2007 the Directors believe that in keeping with its policy to adhere to
best practice, that an early adoption is in the best interests of the
shareholders, so that a fairer comparison with other listed companies can be
made.
The Group continues to enjoy strong cash reserves. A net decrease in cash of
#86k in the first half of the year was primarily attributable to the acquisition
of Gemini Club Supplies Limited (a transaction that was successfully concluded
in late October) and corporation tax associated with the acquisition of Kelly's
Eye. Throughout the first half of the year, capital expenditure has continued to
be deployed in the manufacturing and design modifications of vending terminals
to meet demands from existing and new clients. Research and development has also
been going on in the design of vending technology for use in public places
outside the registered club environment.
The results comparison with last year has been positively affected by the
acquisition of Kelly's Eye (No 1) Limited in May 2005. The Group funded the
purchase of Kelly's Eye with a combination of a medium term loan of #800,000 and
new shares. This debt is shown separately from the cash position mentioned
above.
As reported at the time, the acquisition of Gemini affords the Group a premier
position amongst client clubs in the north west. With effect from the 1st
November 2005 the Group also completed the acquisition of Independent Leisure
Supplies (ILS), which should help consolidate the Group's position in the north
east of England.
Since the Kelly's Eye acquisition in May 2005, a great deal of effort and energy
has been expended in the consolidation of the Lotteryking and Kelly's Eye
operations. A key element of the consolidation programme has been the
introduction of a new, company wide IT reporting system. With effect from the
1st November all financial, administrative and sales functions were centred on
Hemel Hempstead and all manufacturing, research, development and technical
support services were centred on Hainault. Invariably, there are costs
associated with a consolidation programme of this nature and the majority of
these costs have been absorbed within the income statement in this interim
period. The costs have been principally in the areas of salary adjustments,
redundancy and IT systems training and development.
Critical to the continued increase in revenue and profit will be the ability of
the sales force to sell effectively across the entire product range. Additional
products are being added to the range. To support the sales force endeavours
there is a plan to introduce a new sales catalogue in early 2006 and to also
begin the gradual introduction of an online sales capability for client clubs.
The acquisition of Kelly's Eye has afforded us the opportunity to undertake a
margin analysis and it is apparent that Lotteryking was enjoying a better margin
than Kelly's Eye, and most probably better than its competitors. However the
product mix of the two companies was very different and in the first half of
this year the overall gross margin has reduced due to the change in the business
mix. We anticipate that the combined buying power of the two businesses will
enable the Group to improve its margins over the course of the next twelve
months.
The majority of Gamingking's direct competitors are privately owned businesses
which seldom finance researching new projects and machine development.
The annual Group costs associated with public status are calculated to be in the
region of #525,000. The Board is very mindful of Group costs and seeks at all
times to contain such costs. For the half-year Group costs are well below budget
with little increase over the same period last year. As part of the cost control
exercise, the Marble Arch office was closed in September.
Strategy
In May 2005, the Board completed a review of its core strategy. As a result, the
Board has agreed to focus on the Group's market leading position in the supply
of lottery and gaming products to the registered member's club environment and
also to broaden the product offering to capitalise on the Group's core area of
lottery vending expertise. The Board believes that this will optimise long term
shareholder value.
The previous strategy of developing and pursuing a wide range of lottery related
opportunities for third parties has been reduced to a much narrower range of
projects where we expect a greater chance of success in bringing a return to
shareholders.
The acquisitions of Kelly's Eye, Gemini Club Supplies and Independent Leisure
Supplies have served to re-enforce our strategy, and together with Lotteryking,
will form the bedrock of the Group, whilst we develop a range of new products
for deployment in the club market and also develop a presence in other closely
related markets.
Whilst firmly believing that this strategy, implemented by an experienced
management team, is the best way of delivering long-term shareholder value, the
Board is mindful that the core business primarily operates in a competitive
environment, where the barriers to entry are relatively low. Over the course of
the coming years, legislative changes as contained within the Gambling Act 2005,
will come into full effect and undoubtedly there will be further consolidation
in the club supply arena. The Board will continue to monitor the changing
contours of the lottery landscape, seeking ways to grasp the new opportunities,
whilst at the same time deepening its roots with client clubs in an endeavour to
secure lasting commercial relationships, such that they can withstand the
competitive impact of new marketplace entrants.
New Product Development
As previously reported, the Group continues to explore areas of product
development and this interim statement provides an ideal opportunity to inform
shareholders of developments to date.
Club View Network
The Group has been working on the creation of an internet site for clubs and
club members, acting as an information zone for club members and a
communications conduit for clubs to their members. The Club View Network, which
has been developed with only a very modest amount of capital expenditure, has
been well received and is now on trial with a select number of clubs. If the
trials prove to be successful, a more comprehensive roll out programme will be
embarked upon throughout 2006.
The Club View Network will serve to take Gamingking closer to the club member
and will offer them online game play opportunities.
Tote-All
Tote-All, the electronic tote system, developed by Lotteryking Limited, is
currently on trial in a small number of clubs, where the results have been
mixed. It is becoming apparent that whilst many clubs have paper based totes,
the operation of which is widely recognised as being time demanding, clubs tend
to operate tote systems which are unique to themselves. The Tote-All software
system therefore, requires further modification, in order to meet all
requirements. The plan is to re-launch Tote-All on a region-by-region basis in
early 2006.
SKILLS WITH PRIZES (SWPs)
SWP technology and legislation offers some interesting commercial opportunities
and in pursuit of these opportunities, a number of high quality, electronic SWP
terminals have been sited in client clubs where their player appeal and revenue
profile is being closely monitored. The Board hopes to broaden its presence in
this area over the course of the next year.
Your "LOCAL" Lottery
The Board is keen to deploy its lottery and vending expertise in areas outside
of its traditional club market and to this end has been exploring the pub
market. A concept has been developed which has met with Gaming Board (Gambling
Commission) approval and as we enter the new year, it is planned to trial the
concept in concert with a number of pub group owners.
Outlook
Traditionally the second half of the year is the stronger period but throughout
this period we will continue to bed in the recent acquisitions and arrange to
take full advantage of the synergies and cross-selling opportunities presented.
We are not anticipating those aspects of the 2005 Gambling Act that directly
impact lottery activities to come in force before September 2007.
We hope that progress will be made in a number of the developments noted above
although it is unlikely that they will be net contributors to profit in the
current financial year.
Douglas Yates
Chairman
Consolidated income statement for the six months ended 31 October 2005
6 months 6 months Year
ended 31 ended 31 ended 30
October October April
2005 2004 2005
Notes Unaudited Unaudited Unaudited
#000 #000 #000
Revenue 2 2,541 1,488 3,058
Cost of sales (1,223) (633) (1,230)
Gross profit 1,318 855 1,828
Administration expenses (1,245) (849) (1,811)
Operating profit 73 6 17
Interest payable (32) - -
Interest receivable 7 3 6
Profit before taxation 2 48 9 23
Income tax (expense)/credit 3 (4) 3 15
Profit after taxation 44 12 38
Basic earnings per ordinary share 4 0.02 0.00 0.01
Diluted earnings per ordinary 4 0.01 0.00 0.01
share
Consolidated Balance Sheet as at 31 October 2005
31 October 31 October 30 April
2005 2004 2005
Notes Unaudited Unaudited Unaudited
#000 #000 #000
Assets
Non-current assets
Goodwill 5 1,342 54 54
Other intangible assets 10 14 12
Property, plant and 6 1,142 987 1,109
equipment
Deferred tax assets 79 65 77
2,573 1,120 1,252
Current assets
Inventories 473 364 235
Receivables and prepayments 698 472 484
Cash and cash equivalents 397 157 483
1,568 993 1,202
Total assets 4,141 2,113 2,454
Liabilities
Non-current
Bank Loan 720 - -
Hire Purchase 9 - -
729 - -
Current
Bank Loan 80 - -
Hire purchase 5 - -
Trade and other payables 670 406 406
755 406 406
Total liabilities 1,484 406 406
Capital and reserves
Share capital 2,907 2,531 2,661
Share premium 173 - 173
Merger reserve 1,391 1,084 1,084
Retained earnings (1,814) (1,908) (1,870)
Total equity 2,657 1,707 2,048
Total Equities and 4,141 2,113 2,454
liabilities
Consolidated cash flow statement for the six months ended 31 October 2005
6 months 6 months Year
ended 31 ended 31 ended 30
October October April
2005 2004 2005
Notes Unaudited Unaudited Unaudited
#000 #000 #000
Operating activities
Results for the period before tax 48 9 23
Depreciation and amortisation 178 119 263
Equity settled share options 12 11 23
Profit on disposal of fixed - 1 2
assets
Interest paid 32 - -
Interest received (7) (3) (6)
(Increase) / decrease in (57) (67) 62
inventories
Decrease / (increase) in 14 (71) (82)
receivables
Increase / (decrease) in trade (74) 45 43
payables and other liabilities
Corporation Tax paid (33) - -
Net cash from operating 113 44 328
activities
Investing activities
Additions to property plant and (61) (175) (440)
equipment
Interest received 7 3 6
Purchase of business (913) - -
Net cash from investing (967) (172) (434)
activities
Financing activities
Proceeds from share issue - - 304
Increase in bank loans 800 - -
Interest paid (32) - -
Net cash from financing 768 - 304
activities
Cash and cash equivalents at the 483 285 285
beginning of the period
Net (decrease)/ increase in cash (86) (128) 198
and cash equivalents
Cash and cash equivalents at end
of the period 397 157 483
Consolidated statement of changes in equity for the six months ended 31 October
2005
Share Share Merger Retainedearnings Total
capital premium#000 Reserve #000 Equity
#000 #000 #000
Balance 1 May 2004 2,531 - 1,084 (1,931) 1,684
Profit for the period - - - 12 12
Employee share based 11 11
compensation
Balance at 31 October 2,531 - 1,084 (1,908) 1,707
2004
Balance 1 May 2004 2,531 - 1,084 (1,931) 1,684
Profit for the period - - - 38 38
Shares issued 130 173 - - 303
Employee share based - - - 23 23
compensation
Balance at 30 April 2,661 173 1,084 (1,870) 2,048
2005
Balance 1 May 2005 2,661 173 1,084 (1,870) 2,048
Profit for the period - - - 44 44
Shares issued 246 307 - 553
Employee share based - - - 12 12
compensation
Balance at 31 October 2,907 173 1,391 (1,814) 2,657
2005
Notes to the interim statement
For the six months ended 31 October 2005
1 Principal accounting policies
Statement of compliance
The consolidated interim financial statements have been prepared in accordance
with IAS 34 "Interim Financial Reporting". These are the Group's first IFRS
consolidated interim financial statements for part of the period covered by the
first IFRS annual financial statements and IFRS 1-First-time Adoption of
International Financial Reporting Standards has been applied.
The Group will prepare its first full set of IFRS financial statements for the
year ended 30 April 2006. The date of transition to IFRS for the group was 1 May
2004. A summary of the accounting policies applied in the preparation of the
financial statements is given below. These policies have been consistently
applied to all the periods presented, unless otherwise stated. The impact of the
transition from UK GAAP to IFRS is explained in note 11 to the interim
statement.
Basis of preparation
The Group's financial statements will be prepared in accordance with IFRS 1-
First-time Adoption of International Financial Reporting Standards. This interim
report is prepared in accordance with IAS 34 "Interim Financial Reporting" and
IFRS 1 as it applies to interim statements. IFRS 1 requires full retrospective
application of all applicable accounting standards, but exemptions are permitted
in specific areas and the group has elected to make use of the following
exemptions.
Business combinations
The group has elected not to apply IFRS 3-Business Combinations, retrospectively
to past business combinations prior to the date of transition.
Share-based payment transactions
The group has applied IFRS 2 share based payments retrospectively to equity
instruments granted after 7 November 2002 and vesting on or after 1 January
2005.
Basis of consolidation
The group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 31 October 2005. Profits or losses on
intra-group transactions are eliminated in full. The results of the subsidiary
undertakings acquired during the year have been included from the date of
acquisition. On acquisition of a subsidiary, all of the subsidiary's assets and
liabilities which exist at the date of acquisition are recorded at the fair
values reflecting their condition at that date. Goodwill arising on
consolidation, representing the excess of the fair value of the consideration
given over the fair values of the identifiable net assets acquired, is
capitalised net of any provisions for impairments.
Revenue
Revenue represents the invoice value of goods and services provided in the year,
net of Value Added Tax and trade discounts. Sales of pull-tab lottery tickets
are recognised at the point of delivery to the clubs. All other revenues are
recognised at the time of delivery to customers.
Intangible assets
Goodwill
All business combinations are accounted for under the purchase method and
goodwill has been recognised in acquisitions of subsidiaries. In respect of the
business combinations that have occurred since 1 May 2004, goodwill represents
the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill arising on acquisitions before 1 May 2004 has been
retained at the previous UK GAAP amounts. Goodwill is allocated to cash
generating units and is not longer amortised but tested for impairment annually
or more frequently if events or changes in circumstances indicate that it might
be impaired.
Other intangible assets
Externally purchased licenses, trademarks, brand-names, know-how and similar
intangible items are capitalised at historical cost, net of any provision for
impairment and amortised on a straight line basis over their estimated useful
economic lives which is five years.
Impairment
The Group's goodwill and other intangible assets are tested for impairment
annually or more frequently, if events or changes in circumstances indicate that
it might be impaired. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount. The recoverable
amount is based on internal discounted cash-flow evaluation. If at the Balance
Sheet date there is any indication that an impairment loss is recognised in
prior periods for an asset other than goodwill that no longer exists, the
recoverable amount is reassessed and the asset is reflected at the recoverable
amount.
Property, plant and equipment
Property, plant and equipment are stated at cost less the accumulated
depreciation on the same. Depreciation is charged over the estimated useful
lives on the costs of the assets less their residual value. The bases and
estimated useful lives are as follows:
Machines 14% straight line
Computers 33% straight line
Plant and equipment 15% reducing balance
Motor vehicles 25% reducing balance
Residual values are re-assessed annually.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Accounting for income taxes
Current income tax assets and / or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
periods, that are unpaid at the balance sheet date. They are calculated
according to the tax rates and tax laws applicable to the fiscal periods to
which they relate, based on the taxable profit for the year.
Deferred tax is recognised on all temporary differences. This involves
comparison of the carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases. Deferred tax liabilities
are provided for in full. Deferred tax assets and liabilities are calculated
without discounting, at tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (tax laws)
that have been enacted or substantially enacted by the balance sheet date. All
changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Tax losses available to be carried forward as well as other income tax credits
to the group are assessed for recognition as deferred tax assets. Deferred tax
assets are only recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be recognised and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Cash and Cash Equivalents
Cash and Cash Equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash.
Leased assets
Payments made under operating leases are charged to the income statement on a
straight line basis over the period of the lease.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Foreign exchange differences arising on retranslations are recognised in
the income statement.
Research and development expenditure
Expenditure on development activities is capitalised if the product or process
is technically and commercially feasible, the costs are separately identifiable
and the group has sufficient resources to complete development. Capitalised
development costs are stated at cost less accumulated amortisation and
impairment losses. All other research and development expenditure is written off
to the income statement in the period in which it occurred.
Share options
For all the employee share options granted after 7 November 2002 and vesting on
or after 1 January 2005, an expense is recognised in the income statement with a
corresponding credit to equity. The equity share based payment is measured at
the fair value at the grant date using the trinomial lattice model. If vesting
periods or other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number of share
options expected to vest.
Financial instruments
Financial assets and financial liabilities are recognised on the group's balance
sheet when the group becomes a party to the contractual terms of the instrument.
- Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
amounts as reduced to equal the estimated present value of the future cash
flows.
- Bank borrowings
Interest bearing bank loans and overdrafts are recorded at fair value. Finance
charges including premiums payable on settlement or redemption and direct issue
costs, are accounted for on an accruals basis to the profit and loss account
using the effective interest method and are added to the carrying value of the
instrument to the extent that they are not settled in the period in which they
arise.
- Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
- Equity instruments
Equity instruments issued by the group are recorded at the proceeds received,
net of direct costs.
2 Segment assets and liabilities
Whilst the business of the Company 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 charge of #4,000 (2004:#3,000 credit) is based on an effective tax
rate of 19% (2004:19%)
4 Earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares, on the assumed conversion of
all dilutive options and other dilutive potential ordinary shares.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
Basic Diluted
earnings per share earnings per share
6 months to 31 October 2005
Earnings #'000 44 44
Weighted average number of 290,030,039 312,255,039
shares
Per share amount pence 0.02 0.01
6 months to 31 October 2004
Earnings #'000 12 12
Weighted average number of 253,017,391 275,826,701
shares
Per share amount pence 0.00 0.00
12 months to 30 April 2005
Earnings #'000 38 38
Weighted average number of 255,201,449 277,426,449
shares
Per share amount pence 0.01 0.01
5 Intangible fixed assets
Licences Goodwill Total
#'000 #'000 #'000
Cost
At 1 May 2005 20 3,346 3,366
Additions - 1,288 1,288
At 31 October 2005 20 4,634 4,654
Amortisation
At 1 May 2005 8 3,292 3,300
Provided for in the 2 - 2
period
At 31 October 2005 10 3,292 3,302
Net book amount
At 31 October 2005 10 1,342 1,352
Net book amount
At 30 April 2005 12 54 66
6 Property, plant and equipment
During the six months ended 31 October 2005 the group has acquired property,
plant and equipment with a cost of #212,000, including #150,000 due to the
acquisition of Kelly's Eye. Depreciation of #176,000 has been charged and there
have been disposals with a net book value of #3,000.
7 Debt
During the six months ended 31 October 2005 the group has obtained a bank loan
of #800,000. This was used to fund part of the acquisition of Kelly's Eye (No 1)
Limited.
8 Equity
During the six months ended 31 October 2005 the group issued ordinary share
capital of #246,000 for a premium of #307,000. These shares were issued entirely
in relation to the acquisition of Kelly's Eye (No 1) Limited.
9 Acquisitions
On 1 May 2005 the company acquired 100% of the issued share capital of Kelly's
Eye (No 1) Limited for a consideration of #1,399,413. In connection with the
acquisition, Gamingking plc issued 24,576,132 ordinary 1 pence shares at 2.25
pence each. The provisional fair values of the assets and liabilities acquired
were as follows:
#'000
151
Property, plant and equipment
Inventories 181
Receivables and prepayments 230
Cash and cash equivalents 120
Trade and other payables (511)
171
Consideration 1,399
Goodwill 1,228
Consideration: #'000
Shares issued, at fair value 553
Cash 750
Costs associated with the acquisition 96
Total consideration 1,399
The cash outflow on acquisition is as follows:
#'000
Net cash acquired with subsidiary 120
Cash paid (846)
Net cash outflow (726)
From the date of acquisition, Kelly's Eye (No 1) Limited has contributed a loss
of #10,000 to the net profit of the group.
Also during the period the company acquired the business of Gemini Club Supplies
Limited for cash consideration of #60,000 plus associated costs. No assets or
liabilities were acquired resulting in goodwill of #60,000.
10 Related party transactions
During the period the company paid rent to Brian McCann (senior management) of
#36,352(31 October 2004: nil). At 31 October 2005 the amount owing to Brian
McCann was #1,523 (31 October 2004: nil).
11 Transition to IFRS
As stated in the note 1 these are the Group's first IFRS interim financial
statements for part of the period covered by the first IFRS annual consolidated
financial statements, prepared in accordance with IFRS. The accounting policies
have been consistently applied to all the periods presented.
IFRS 1 requires full retrospective applications of all applicable accounting
standards, but exemptions are permitted in specific areas. The Group has elected
to avail itself of the exemptions pertaining to Business Combinations and Share
Based Payment.
An explanation of how the transition from UK GAAP to IFRS has affected the
group's financial position, financial performance and cash flows is set out in
the following notes:
Reconciliation of equity for the 6 months ended 31 October 2005
1 May 2004 31 October 2004 30 April 2005
#000s #000s #000s
Note Previous Effect of IFRS Previous Effect of IFRS Previous Effect of IFRS
GAAP transition GAAP transition GAAP transition
to IFRS to IFRS to IFRS
Assets
Non current
assets
Goodwill a 54 54 38 16 54 23 31 54
Other 16 16 14 14 12 12
intangible
assets
Property, 930 930 987 987 1,109 1,109
plant and
equipment
Deferred c 60 2 62 60 5 65 70 7 77
tax assets
1,060 2 1,062 1,099 21 1,120 1,214 38 1,252
Current
Assets
Inventories 297 297 364 364 235 235
Receivables 401 401 472 472 484 484
and
prepayments
Cash and 285 285 157 157 483 483
cash
equivalents
983 983 993 993 1,202 1,202
Total 2,043 2 2,045 2,092 21 2,113 2,416 38 2,454
assets
1 May 2004 31 October 2004 30 April 2005
#000s #000s #000s
Previous Effect of IFRS Previous Effect of IFRS Previous Effect of IFRS
GAAP transition GAAP transition GAAP transition
to IFRS to IFRS to IFRS
Liabilities
Trade and 361 361 406 406 406 406
other
payables
Total
Liabilities 361 361 406 406 406 406
Equity
Share 2,531 2,531 2,531 2,531 2,661 2,661
capital
Share 173 173
premium
Merger 1,084 1,084 1,084 1,084 1,084 1,084
reserve
Retained (1,933) 2 (1,931) (1,929) 21 (1,908) (1,908) 38 (1,870)
Earnings
Total 1,684 2 1,684 1,686 21 1,707 2,010 38 2,048
Equity
Total
Equity and 2,043 2 2,045 2,092 21 2,113 2,416 38 2,454
Liabilities
Reconciliation of Profit and Loss
31 October 2004 30 April 2005
Note Previous Effect of IFRS Previous Effect of IFRS
ref GAAP transition to GAAP transition to
IFRS IFRS
Revenue 1,488 - 1,488 3,058 - 3,058
Cost of Sales (633) - (633) (1,230) - (1,230)
Gross profit 855 - 855 1,828 - 1,828
Administrative a,b (853) 4 (849) (1,819) 8 (1,811)
expenses
Operating b 2 4 6 9 8 17
Profit
Net Interest 3 - 3 6 - 6
Profit before 5 4 9 15 8 23
taxation
Income tax c 3 3 10 5 15
expense
Profit after 5 7 12 25 13 38
tax
Notes
a) Under UK GAAP goodwill arising on business combination was amortised on a
straight-line basis over its estimated economic life which ranged between five
and ten years. Under IFRS Goodwill is tested for impairment annually or more
frequently if events or changes in circumstances indicate that it might be
impaired and not amortised. The Group has elected not to apply IFRS 3
retrospectively to business combinations prior to IFRS adoption. The effect of
the above adjustment is to add back the amortisation charge to administrative
expenses by #16,000 for the six months to October 2004, and by #15,000 for the 6
months to 30 April 2005. As a result of the above carrying value of Goodwill is
increased by #16,000 as at 31 October 2004 and #31,000 as at 30 April 2005.
b) The Group applied IFRS 2 to all share options granted after 7 November 2002
and vesting on or after 1 January 2005. The group previously followed a policy
of valuing the options at the difference between exercise price and the market
value at the date of grant and accruing the same over the period to which the
benefit relates. Under IFRS the fair value is estimated by employing the
trinomial model. The resultant charges to the profit and loss account of the
respective periods under administrative expenses is #23,000 as on 30 April 2005,
#12,000 as on 31 October 2004 and correspondingly an increase in equity by the
same amount.
c) The above changes increased / decreased the deferred tax liability as follow:
30 April 2004 31 October 2004 30 April 2005
Share Options #2,000 #3,000 #5,000
The cumulative effect of the above adjustments on retained earnings is as
follows:
Note 30 April 2004 31 October 2004 30 April 2005
Goodwill a #- #16,000 #31,000
Deferred c #2,000 #5,000 #7,000
tax
Total #2,000 #21,000 #38,000
Effect on cash flow statement
The transition to IFRS has had no substantive effect on the group's cash flow
statement except in terms of presentation and the description of items therein.
12 Preparation of Interim Statements
The interim statement is unaudited but has been reviewed by the auditors and
their report is set out on pages 6 and 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 2005
prepared under UK generally accepted accounting principles on which the auditors
gave an unqualified report have been delivered to the Registrar of Companies.
13 Approval of interim Statement
The interim statement was approved by the Board of Directors on 19 December
2005. Copies of this statement will be available to members of the public, free
of charge, from the Company at Cedar House, 56 Peregrine Road, Hainault, Essex,
IG6 3SZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAXAEASASFFE
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