RNS Number:9250M
Global Gaming Technologies PLC
31 January 2008
31 January 2008
Global Gaming Technologies plc
Preliminary Results for the year ended 31 July 2007
The Board of Global Gaming Technologies plc ("GGT") presents today the Group's
results for the year ended 31 July 2007. The Group recorded a loss before tax of
�878,247, after a share-based payments charge of �614,059 and the write off of
goodwill of �100,000 (2006 : �12,771,340 after a share-based payments charge of
�867,680 and the write off of goodwill of �10,539,668). There is a loss per
share of 0.46p (2006: loss per share: 6.84p).
During the year costs within the business remained under strict control
following the reorganization of the business in 2006 and the directors have
taken no salaries or fees.
Change of strategy
GGT announced on 27 April 2007 that it would be prudent to widen its remit for
potential acquisitions and to look at opportunities across a broader range of
businesses to source potential acquisitions which were not reliant on the gaming
industry and can demonstrate good potential growth characteristics. The Board
anticipates such acquisition or acquisitions will be in the natural resources
and mining sector, in Africa, the Americas, Europe or Australasia. The Board
expects such acquisition(s) to be of private companies where the existing owners
are willing to accept the Company's shares to satisfy all or part of the
purchase price. The Board expects that upon completion of any such major
acquisition, the management of the target company would take over management of
GGT and thus be an active manager of the acquired assets. The number of
acquisitions will depend, among other things, on the performance of the Company
and any acquired businesses. It is, however, expected that the number of
acquisitions will be between one and three in the 24 months following the
Company's annual general meeting referred to below (AGM).
The Board has experience of evaluating businesses across a number of sectors.
The Board will engage specialists to advise it, including geologists, production
engineers, accountants and lawyers.
At the AGM, a resolution will be proposed to approve the above strategy. If the
Company has not within 12 months of the AGM made an acquisition or acquisitions
constituting a reverse takeover or otherwise implemented its investment
strategy, the Company's trading facility on AIM will be suspended for six months
and if in that period it does not make an acquisition or acquisitions or
otherwise does not implement its strategy, its trading facility on AIM will be
cancelled.
The process of sourcing a potential acquisition has continued, however, to date
the Board has not identified a business which meets the Company's requirements.
The Board therefore remains mindful that if a suitable acquisition cannot be
concluded then an alternative solution will have to be pursued.
Loan facility
During the year the Company was provided with additional working capital via a
loan facility of up to �100,000 provided by Corvus Capital Inc. Amounts owed to
Corvus Capital Inc under this facility together with any additional advances
accrue interest at a rate of 2 per cent. above HSBC Bank plc's base rate, such
interest being payable on the date the loan is repaid. The loan is, in certain
circumstances, convertible at par into ordinary shares of the Company. Corvus
Capital Inc. already holds 43,930,196 ordinary shares in the Company
representing 22.7 per cent. of the issued share capital in the Company. As
Corvus Capital Inc is a significant shareholder, the loan arrangements
constitute a related party transaction under the AIM Rules. The Board, having
consulted Canaccord Adams, the Company's nominated adviser, consider that the
terms of the transaction are fair and reasonable insofar as the Company's
shareholders are concerned.
Voting rights
The Company's issued share capital consists of 193,294,385 ordinary shares with
a nominal value of 0.25 pence each. GGT does not hold any ordinary shares in
Treasury. Therefore, the total number of voting rights in the Company is
193,294,385 and this figure may be used by shareholders as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change to their interest in, the Company under the
Financial Service Authority's Disclosure and Transparency Rules.
Loss of capital
GGT's results show that the Company's net assets are less than half its paid up
share capital. In the circumstances the directors of the Company are obliged by
section 142 Companies Act 1985 to convene a general meeting for the purpose of
considering whether any, and if so what, steps should be taken to deal with the
Company's current financial position. We propose to consider this matter at the
Company's annual general meeting, details of which are set out below, although
no resolution will be put to the meeting on this issue.
Annual general meeting
A notice convening the AGM will be included in the 2007 annual report. The AGM
will be held at 10.00 a.m. on 4 March 2008 at the offices of Fladgate Fielder,
25 North Row, London W1K 6DJ. A form of proxy will be enclosed for use at the
AGM. Whether or not you intend to be present at the meeting, you are requested
to complete, sign and return the form of proxy to the Company's registrars as
soon as possible and in any event so as to arrive not later than 10.00 a.m. on 2
March 2008. The completion and return of a form of proxy will not preclude you
from attending the AGM and voting in person should you subsequently wish to do
so.
I will report any progress to shareholders as and when it is appropriate to do
so.
Ron Trenter
Chairman
31 January 2008
Consolidated Profit and Loss Account
For the year ended 31 July 2007
Note 2007 2006
(restated)
� �
Net trading margin - (11,646)
Impairment of goodwill (100,000) (10,539,668)
Other administrative expenses (779,673) (2,269,588)
Total administrative expenses (879,673) (12,809,256)
Other operating income - 35,585
Operating loss (879,673) (12,785,317)
Interest receivable and similar income 1,426 13,977
Loss on ordinary activities before (878,247) (12,771,340)
taxation
Tax on loss on ordinary activities 2 - -
Loss on ordinary activities after 4 (878,247) (12,771,340)
taxation
Loss per share 3 (0.46)p (6.84)p
- Basic and diluted (pence)
Consolidated Balance Sheet at 31 July 2007
Note 2007 2006
(restated)
� �
Fixed assets
Intangible assets - 100,000
Current assets
Debtors 22,898 23,799
Cash at bank and in hand 29,809 56,941
52,707 80,740
Creditors: amounts falling due within one year (216,072) (90,037)
Net current liabilities (163,365) (9,297)
Total assets less current liabilities (163,365) 90,703
Capital and reserves
Called up share capital 483,236 471,673
Share premium account 1,363,230 1,364,673
Share-based payment reserve 1,534,915 920,856
Profit and loss account (3,544,746) (2,666,499)
Shareholders' (deficit) / funds - equity 4 (163,365) 90,703
Consolidated Cash Flow Statement
For the year ended 31 July 2007
Note 2007 2006
(restated)
� �
Net cash outflow from operating activities 5 (144,553) (743,745)
Returns on investments and servicing of finance
Interest received 1,426 13,977
Net cash inflow from returns on investments and 1,426 13,977
servicing of finance
Capital expenditure and financial investment
Receipts from sales of tangible fixed assets - 380
Net cash inflow from capital expenditure and financial - 380
investment
Acquisitions and disposals
Purchase of subsidiary undertakings - 35,541
Net cash inflow from acquisitions and disposals - 35,541
Net cash outflow before financing (143,127) (693,847)
Financing
Issue of ordinary share capital 10,120 210
New loans received 105,875 -
Net cash inflow from financing 115,995 210
Decrease in cash 6 (27,132) (693,637)
1 BASIS OF PREPARATION
The preliminary announcement has been prepared in accordance with applicable
United Kingdom accounting standards and under the historical cost convention.
The principal accounting polices of the Group have remained unchanged from those
set out in the Group's 2006 annual report and financial statements apart from in
preparing the financial statements for the current year the Group has adopted
for the first time Financial Reporting Standard 20 (FRS 20) 'Share-based
payments'. With the introduction of FRS 20 there has been a change to the
treatment of share-based payments. The effects of the changes shown in note 7
to the preliminary announcement.
Going concern
The directors have prepared cashflow forecasts for the period ending 31 January
2009. The forecasts assume that an acquisition of a business will not be
completed and that minimal costs will be incurred whilst an acquisition is
sought. If a potential acquisition is identified it will only be completed if
sufficient funding is available to fund the costs of the acquisition and the
on-going working capital requirements of the enlarged group.
The forecasts also assume that Corvus Capital Inc. (Corvus) and its subsidiary
undertakings, a substantial shareholder in the Company, will not seek repayment
of its �125,853, owed by the Group at 31 July 2007 until it has sufficient funds
to repay its loan and will provide sufficient funding to support the Group's
funding requirement on the basis that no acquisition of a business is completed.
Corvus has provided written confirmation that it will not seek repayment of
amounts owed and of the additional funding to be provided.
On this basis the financial statements have been prepared on a going concern
basis. The financial statements do not include any adjustments that would result
if the assumptions detailed above are not met.
2 TAX ON LOSS ON ORDINARY ACTIVITIES
The tax charge is based on the loss for the year and represents:
2007 2006
(restated)
� �
Current tax
Loss on ordinary activities before taxation (878,247) (12,771,340)
Loss on ordinary activities before taxation multiplied by standard rate of UK (263,474) (3,831,402)
corporation tax of 30%
Effects of:
Expenses not deductible for tax purposes 214,218 3,592,047
Depreciation for period in excess of capital allowances - 3,439
Movement in tax losses 49,256 235,916
Current tax charge - -
The Group has estimated losses of �2,208,913 (2006 : �2,044,726) which are
available to carry forward against future trading profits of the same trade. No
provision has been made for corporation tax on this basis.
3 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss of ordinary
activities after taxation of �878,247 (2006 as restated: �12,771,340) and on a
weighted average number of 188,986,494 (2006 : 186,808,822) ordinary shares in
issue during the year.
There was no dilutive effect from the share options outstanding during the year
due to the losses incurred.
4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' (DEFICIT)/FUNDS
Group 2007 2006
(restated)
� �
Loss for the financial year (as previously stated) (878,247) (11,903,660)
Prior year adjustment - (867,680)
Loss for the financial year (as restated) (878,247) (12,771,340)
New share capital subscribed 10,120 210
Share-based payment charge 614,059 920,856
Net decrease in shareholders' funds (254,068) (11,850,274)
Opening shareholder's funds 90,703 11,940,977
Closing shareholders' (deficit) / funds (163,365) 90,703
5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2007 2006
(restated)
� �
Operating loss (879,673) (12,785,317)
Depreciation of tangible fixed assets - 624
Amortisation of intangible fixed assets - 572,996
Impairment of intangible fixed assets 100,000 10,539,668
Share-based payment charge 614,059 920,856
Profit on disposal of tangible fixed assets - 840
Decrease in debtors 901 31,943
Increase/(decrease) in creditors 20,160 (25,355)
Net cash outflow from operating activities (144,553) (743,745)
6 ANALYSIS OF NET FUNDS/(DEBT)
1 August 2006 Cash flow 31 July 2007
� � �
Cash at bank and in hand 56,941 (27,132) 29,809
Debt due within 1 year - (105,875) (105,875)
56,941 (133,007) (76,066)
7 PRIOR YEAR ADJUSTMENT
The Group is required to adopt the provisions of Financial Reporting Standard
20: Share-based payments, which has given rise to a charge in the profit and
loss account in the current year and prior year resulting in a prior year
adjustment.
For the year ended 31 July 2006 an estimate of the share-based payment charge of
�53,176 was processed through the profit and loss reserve, however this has been
reversed and replaced with an increase in the loss of �920,856 and the creation
in the balance sheet of a share-based payment reserve of �920,856 on adoption of
FRS 20.
For the year ended 31 July 2007 the change in accounting policy has resulted in
a charge to the profit and loss account of �614,059. At 31 July 2007, the
share-based payment reserve amounted to �1,534,915.
8 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 31 July 2007 and the summarised profit and loss
account, summarised cash flow statement and associated notes for the year then
ended have been extracted from the Group's 2007 statutory financial statements
upon which the auditors opinion is unqualified and does not include any
statement under Section 237 of the Companies Act 1985.
--------------------------
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