RNS Number:2966U
Gaming Insight PLC
15 January 2004
Gaming Insight Plc
Results for the 12 months ended 31 December 2002
The Chairman's Statement
Gaming Insight Plc ("Gaming Insight" or "the Group"), the digital media rights
and interactive gaming group announces results for the twelve months ended 31
December 2002.
Extracts from the Chairman's statement and the Report of the directors
2002 was a challenging year for Gaming Insight in which considerable effort was
expended in laying the foundations for the Group's interactive gaming business,
Gobarkingmad, to be launched in June. As a consequence the Group reduced its
interests in on-line casino gaming. In June 2002 I highlighted the fact that the
pioneering nature of operating the world's first interactive racing business
meant that forecasting its likely performance was difficult, and that additional
funding would be required with which to steer the business through its start-up
phase and beyond. This did in fact prove necessary and during the year a series
of fund raisings were undertaken to raise #3.2 million in aggregate.
Gobarkingmad experienced significant difficulties and, having failed to realise
its potential, in June 2003 the Board regretfully announced that the business
was to be put into liquidation.
During the year Mr. Ian Ryden and Mr. Ian Hayes resigned as Directors, and Mr.
Tom Betts resigned as a non-Executive Director. After the year-end, Mr. David
Sanderson, Mr. Stuart Polak and Mr. Victor Chandler resigned as Directors. The
Company thanks them all for their efforts.
Interactive Racing Division Review
Gobarkingmad announced in January 2002 that stress testing on the interactive TV
betting system was continuing in the run-up to launch. The service launched on
24 June 2002 on the Sky digital television network and was the world's first
interactive racing channel. Early results were encouraging with over 10,000
players registering in the first month, and an average of over 17,000 weekly
bets being placed. Revenue growth was initially steady, bolstered by a 3-month
deal with Euro Off-Track, which gave the channel rights to broadcast the Paddy
Power Irish Derby series and other high quality race meetings from Ireland. The
Board believed that broadcasting Irish racing would help encourage the BGRB
(British Greyhound Racing Board) to sanction UK racing on the channel. However,
the continued impasse between the UK Bookmaking Industry and the BGRB prevented
such broadcast rights being granted. As a consequence revenue growth slowed and
the Board began to explore new strategies to develop the business.
The decision was reached to add a fixed odds betting revenue stream to the
business and to explore securing individual UK track rights. To achieve this
Gobarkingmad reached agreement with Victor Chandler International to provide a
fixed odds telephone and Internet betting service to Gobarkingmad's UK
customers. In addition, Gobarkingmad rebranded the channel as "Red Button
Racing", in order to define more clearly its purpose, and began work in
developing "Lucky 8's" - an archive racing game - to be broadcast between live
racing sessions on the channel. The business also secured its first
international distribution contract with NSAB in Norway. A range of additional
distribution opportunities were also examined and evaluated. However, the lack
of UK or Irish racing proved a major inhibitor to delivering revenue growth.
Casino Division Review
The Casino division made a significant contribution to Group turnover in 2002,
and continued to pursue additional consumer brand partners with which to develop
casino franchises. New proprietary 3D software was completed and launched behind
schedule in April 2002, by which time similar software packages from other
developers had significantly increased the competition in the market. This has
meant that no additional casino franchise contracts had been secured. In
November 2002 it was announced that our interests in on-line gaming would be
reduced to increase our strategic focus on the Interactive Racing Division.
Consequently, the Harrods casino ceased to be operated in October 2002.
Racing Network
2002 was a year of significant achievement for the Racing Network culminating in
the launch of the first interactive horseracing form guide on BSkyB's Sky Active
Win Zone. During the period a 5 year exclusive deal to provide betting advice
services to the Victor Chandler International customer base was also secured. We
are currently reviewing our strategic options with regard to the Racing Network.
Post Period
In January 2003 Mr. Haresh Kanabar, Mr. Victor Chandler and Mr. David Warren
were appointed to the Board as Finance Director and non-Executive Directors
respectively.
On 8th January 2003 the Company announced that #2 million had been raised by way
of issuing 200 million new ordinary shares. Seymour Pierce were appointed
brokers and nominated adviser to the Company in place of Nomura.
In January 2003 the Board announced a deal with PA News enabling Red Button
Racing the right to broadcast race cards, form and results from some of the
leading UK race tracks. However, third parties within the UK racing industry
successfully lobbied PA News to withdraw the rights granted to Red Button
Racing.
The inability to secure the necessary UK racing rights adversely affected
revenue generation, which in turn put considerable pressure on the commercial
viability of Gobarkingmad Limited. Consequently the Group decided no longer to
support Gobarkingmad Limited and the Board of Gobarkingmad Limited was left with
no alternative but to allow the company to go into liquidation.
The Group's shares have been suspended since the 12 June 2003 but, the Group is
actively working towards a lifting of the suspension and a resumption of trading
of its shares on the AIM market.
A Notice convening the Annual General Meeting of the Company (the "AGM") is set
out in the Company's financial statements for the year ended 31 December 2002.
The AGM will be held at 10am on 16 February 2004 at Holiday Inn Mayfair, 3
Berkeley Street, London, W1J 8NE.
Because the net assets of the Company are now less than half its called-up share
capital we are obliged under section 142 of the Companies act 1985 to convene an
Extraordinary General Meeting of the company (the "EGM"). The purpose of the
meeting is to consider whether any, and if so what, steps should be taken to
deal with the situation.
Outlook
External Consultants with considerable gaming expertise have been working with
the Group since March 2003 to assist the board in developing future strategy.
The Group has been looking at a variety of potential new businesses in the same
sector. The future of the Group depends on our ability to successfully implement
a new strategy and raise additional funds as required.
Results and dividends
The consolidated profit and loss account shows the loss for the year.
No dividend is recommended in respect of the year.
Principal activities, trading review and future developments
Details of the principal activities and a review of trading and future
developments are included in the Chairman's report of the Annual Report.
Nigel Robertson
Chairman
14 January 2004
Extracts from the Financial Statements as at 31 December 2002
Consolidated profit and loss account for the year 31 December 2002
2002 2001
#'000 #'000
Turnover 12,345 12,989
Cost of sales (11,371) (12,204)
_______ _______
Gross profit 974 785
Administrative expenses (14,722) (20,339)
_______ _______
Operating loss (13,748) (19,554)
Interest receivable and similar income 5 27
Interest payable (72) (150)
_______ ______
Loss on ordinary activities before taxation (13,815) (19,677)
Taxation on loss on ordinary activities - -
_______ _______
Loss for the financial year (13,815) (19,677)
_______ _______
Loss per share
- Basic and diluted (4.1)p (9.05)p
_______ _______
All amounts relate to continuing activities.
All recognised gains and losses have been included in the profit and loss
account.
Consolidated and company balance sheet at 31 December 2002
Group Group Company Company
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets - 9,410 - -
Tangible assets 36 549 18 18
Investments in subsidiary
undertakings - - - 25,474
_______ _______ _______ _______
Current assets 36 9,959 18 25,492
Debtors 897 1,143 405 564
Cash at bank and in hand 126 551 12 196
_______ _______ _______ _______
1,023 1,694 417 760
Creditors: amounts falling due
within one year 3,577 2,241 1,535 533
_______ _______ _______ _______
Net current (liabilities)/assets (2,554) (547) (1,118) 227
_______ _______ _______ _______
Total assets less current
liabilities (2,518) 9,412 (1,100) 25,719
Creditors: amounts falling due
after more than one year - 1,600 - 1,000
_______ _______ _______ _______
Net (liabilities)/assets (2,518) 7,812 (1,100) 24,719
_______ _______ _______ _______
Capital and reserves
Called up share capital 5,970 2,526 5,970 2,526
Deferred share capital 36,657 36,657 36,657 36,657
Share premium account 9,804 9,763 9,804 9,763
Profit and loss account (54,949) (41,134) (53,531) (24,227)
_______ _______ _______ _______
Shareholders' (deficit)/funds (2,518) 7,812 (1,100) 24,719
_______ _______ _______ _______
Included within Group and Company shareholders' funds is an amount of
#36,657,000 (2001 - #36,657,000) in respect of non-equity interests.
Consolidated cash flow statement for the year 31 December 2002
2002 2002 2001 2001
#'000 #'000 #'000 #'000
Net cash outflow from operating
activities (3,485) (8,430)
Returns on investments and
servicing of finance
Interest received 5 27
Interest paid (72) (150)
_______ _______
Net cash outflow from returns on
investments and servicing of finance (67) (123)
Tax paid - -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (70) (679)
_______ _______
Net cash outflow from capital
expenditure
and financial investment (70) (679)
Financing
Redemption of loan notes (76) -
Issue of shares 1,300 6,775
Expenses paid in connection with
shares issued - (399)
Issue of loans 1,973 3,235
_______ _______
Net cash inflow from financing 3,197 9,611
_______ _______
(Decrease)/increase in cash (425) 379
_______ _______
Notes to the financial statements
1. Accounting policies
The financial information set out above has been prepared using accounting
polices consistent with those used in the preparation of the full statutory
accounts.
Basis of consolidation
The consolidated financial statements incorporate the results of Gaming Insight
plc and all of its subsidiaries as at 31 December 2002 using the acquisition
method of accounting. The results of subsidiary undertakings are included from
the date of acquisition and until the date of disposal.
Goodwill
Goodwill represents the difference between the fair value of the consideration
paid on acquisition of a business and the fair value of its identifiable net
assets at the date of acquisition, less any provision for impairment. It is
capitalised and amortised through the profit and loss account over the
directors' estimate of its useful economic life which is three years.
Impairment of fixed assets and goodwill
The need for any fixed asset impairment write down is assessed by comparison of
the carrying value of the asset against the higher of realisable value and value
in use.
Development costs
Development costs in respect of websites and software are charged to the profit
and loss account in the year of expenditure, unless individual projects satisfy
all of the following criteria:
* the project is clearly defined and related expenditure is separately
identifiable;
* the project is technically feasible and commercially viable;
* current and future costs are expected to be exceeded by future sales; and
* adequate resources exist for the project to be completed.
In such circumstances the costs are carried forward and amortised over the
directors' estimate of the useful life, commencing in the year the company
starts to benefit from the expenditure.
2. Loss per share
Year Ended Year Ended
31 December 31 December
2002 2001
Basic (4.1p) (9.05p)
The calculation of loss per share is based on the loss for the year of
#13,815,000 (2001 - #19,677,000) and on the weighted average number of shares
in issue during the year of 338,674,564 (2001 - 217,328,293). A diluted earnings
per share is not presented because the options referred to are non-dilutive.
3. Post balance sheet events
On 14 January 2003 the company completed a placing of 200,000,000 new ordinary
shares to raise #2 million before expenses. In the same month Victor Chandler,
David Warren and Haresh Kanabar joined the board as non-executive director's and
finance director respectively. David Sanderson resigned as Chief executive and
director on 19 September 2003. Stuart Polak Resigned as Non Executive Director
on 17 June 2003. Victor Chandler resigned as Non-Executive Director on 10
December 2003.
On 11 June 2003 the Board requested AIM to suspend trading in the Company's
shares pending clarification of its financial position. On 17 June 2003 the
company announced that it would not oppose a compulsory winding up petition
against its principal trading subsidiary Gobarkingmad Limited and on 18 June
2003 Gobarkingmad was put into liquidation. The Liquidator is now managing the
affairs of Gobarkingmad. As a result of the liquidation, assets with a net book
value of #322,000 were impaired at the year end. This impairment has been
reflected in the financial statements for 31 December 2002.
In June 2003 Highland Fund Advisors loaned the company #325,000 at an interest
rate of 5% per annum. This amount is repayable within 12 months from the date of
the loan. Furthermore, in December 2003, Highland fund advisors and Brookspey
Limited entered into an agreement with the company to lend #500,000 split
equally between them to the company. #100,000 was paid on 10 December 2003,
#300,000 was paid on 13 January 2004 and #100,000 was paid on 14 January 2004.
The loan carries an interest rate of 5% per annum and is repayable within 12
months from the date of the loan.
Consultants have been working with the board with a view to developing the
future strategy of the company. The future of the group is dependent upon the
successful implementation of the new strategy and also raising the required
funds. Discussions with potential funding providers are ongoing.
4. Fundamental uncertainty - going concern
The report of the independent auditors included the following explanation of the
fundamental uncertainty with regards to going concern:
In forming our opinion we have considered the adequacy of the disclosures made
in note 27 to the financial statements relating to the future of the group. The
financial statements have been prepared on a going concern basis which assumes
that the group will remain in operational existence for the foreseeable future.
This assumption depends on the ability of the directors to raise the funding
required to support the group's operations. In view of the significance of this
uncertainty we consider that it should be drawn to your attention but our
opinion is not qualified in this respect.
The financial information for the period ended 31 December 2001 is extracted
from the Group's full statutory financial statements to that date, which
received an unqualified audit report and have been filed with the Registrar of
Companies.
Enquiries:
Haresh Kanabar
Finance Director, Gaming Insight plc
tel: 020 7070 7283
This information is provided by RNS
The company news service from the London Stock Exchange
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