RNS Number : 3711U
Leisure & Gaming plc
14 May 2008
14 May 2008
Leisure & Gaming plc
Preliminary Results for the year ended 31 December 2007
Leisure & Gaming plc ("L&G", "the Company" or "the Group"), the online betting and gaming group, today announces its preliminary results
for the year ended 31 December 2007. The results are in line with the announcement that the Company made on 14 January 2008.
2007 Results
* Net Win of EUR25.0m
* Gross Profit of EUR3.5m
* EBIT loss of EUR1.6m
* Successful restructuring of the Company's direct cost structure, including changes to its affiliate commissions
* Strengthening of the Company's risk management process and team
* The opening of a new operations centre in Italy, encompassing a customer service call centre
Post period end developments
* Trading continues to be in line with management expectations; profitable growth continues in 2008
* Launch of a new marketing partner in Greece to exclusively promote Betshop.com
* Appointment today of Richard Creed to the Board as Finance Director, replacing Michael Baird
* Appointment today of Neil Craven to the Board as a non-executive director; Benjamin Shaw today steps down from the Board as a
non-executive director
Henry Birch, Chief Executive of Leisure & Gaming plc, said:
"Having made changes to the cost and operational structure of our business, we believe the business is in a stronger position than a
year ago and are confident that the Company will continue to deliver growth and profitability into 2008.
"With the end of the 2007/8 football season drawing to a close and with trading in line with management expectations, we can look
forward Euro 2008 in June providing additional betting opportunities in what is normally a quiet month. Over the summer months we will
continue to strengthen the business with ongoing operational initiatives and focus on our strategy of product and geographic
diversification."
For further information, please contact:
Henry Birch, Chief Executive, Leisure & Gaming plc
Tel: 020 7248 6343
Jonathon Brill/Billy Clegg/Caroline Stewart, Financial Dynamics
Tel: 020 7831 3113
William Vandyk, Blue Oar Securities Plc
Tel: 020 7448 4400
BUSINESS REVIEW
Operations
Leisure & Gaming plc has two subsidiaries: Betshop Group (Europe) Limited ("Betshop"), the holding company for the Betshop group of
companies; and Grouse Entertainment NV ("Grouse"), the legal entity for Acropolis Casino.
Betshop is entirely focused on Europe and comprises three main business units:
(a) Betshop Italia, an online sports betting service supported by a franchised chain of approximately 470 Betshop- branded shops
and retail outlets offering sports betting via terminals across Italy;
(b) Betshop.com, a pan-European online sports betting and casino gaming operating in eight languages; and
(c) GoalsLive.com, a soccer information and results portal service for internet and mobile phone users.
Acropolis Casino is a small online casino running on Playtech software with no specific geographic focus. Given its size and positioning
it is likely that the Group will either subsume it into another operation or divest of it.
Financial and Operational Review
Total Group turnover totalled EUR109.1m and produced EUR24.7m net win, gross profit of EUR3.5m and an EBIT loss of EUR1.6m. A
consolidated Group comparison with performance in 2006 bears little insight as 2006 accounts incorporated a 9 month contribution from L&G's
former US-facing businesses and a 6 month contribution from Betshop (acquired in June 2006) and a retained loss of $104.5m resulting from
the disposal of the US-facing businesses.
Despite top line year-on-year revenue growth, Betshop's profitability was impacted by a series of losses resulting from adverse sports
results in Italian and European football. This was further impacted by a direct cost structure that increased these losses. In the course of
the year, management undertook a restructuring of the cost structure of the business - principally addressing commission structures paid to
its retail network - and made other operational improvements. These changes addressed volatility of earnings in the business and delivered
stability and profitability in the fourth quarter of 2007, which has continued into 2008 with the Company continuing to trade in line with
management expectations.
Over the last five years the Italian sports betting market has spawned a large number of retailers operating on an affiliate/franchise
basis on behalf of branded bookmakers. Betshop has become the clear market leader building the largest network of retail affiliates of this
kind in Italy. In mid 2007 it had more than 1,100 affiliates signed up to its network and approximately 800 outlets in operation.
Historically the industry practice for such affiliates saw them sharing a percentage of net win (what the customer loses less taxes) paid on
a weekly basis. However, if in a given week the bookmaker incurred losses the affiliate would not bear any of those losses and they would
not be netted off against any future profitable weeks. If levels of net win are uniformly distributed week by week this model delivers
consistent profitability for the bookmaker. Conversely, if there is volatility of net win (intermittent weeks of losses) the bookmaker ends
up retaining a far lower percentage than would be expected in any given month/quarter. 2007 saw high levels of volatility and, with the standard weekly commission schedule in place, Betshop and
others in the Italian industry saw their profitability severely impacted.
In the course of the latter half of 2007 the Company set about changing its commission structures. This involved reducing the percentage
of net win paid as commission on a weekly basis, incentivising affiliates to move (and in some cases forcibly moving them) to bi-weekly and
monthly commission schedules - whereby a losing week would net off against a subsequent winning week - and removing any loss making
affiliates. In the course of this process Betshop reduced its network from approximately 800 to 470 outlets. It should be noted that during
the course of 2007, Betshop's top 200 affiliates delivered more than 80% of its net win and the vast majority of these affiliates have
remained within the Betshop network.
Betshop also made other changes to improve its profit margin and service including strengthening its risk management team and process
and opening a new operations centre in Italy. The operations centre in southern Italy relocated functions from London and Rome, including
customer service, telephone betting and affiliate administration.
In September 2007, Betshop saw the opening of the first shop operating under its 59 new "Bersani" licences. These licences allow for a
wider product range and cash betting over the counter (versus the account-based terminal betting of the "punti remoti" operating under
Betshop's old licence). In common with the industry, roll-out of shops under the new licences has been slower than expected. This has been
the result of delays with the regulator releasing software protocols to connect with the tax authorities and with local planning and site
issues encountered by Betshop affiliates. However, the Company now has 27 of these shops open with the remainder to open in the coming
months.
Regulatory Developments
Regulation remains a dominant issue for the gambling industry. Currently there are only two major European markets - the UK and Italy -
where private operators can obtain land-based and online betting licences. Even in Italy regulation appears to be evolving as the market
grows and evolves.
In June 2007 AAMS (the Italian betting regulator) issued proposed new guidelines to come into force in January 2008 concerning the
regulation of "punti remoti" (the system under which Betshop operates the majority of its outlets). These regulations were designed to
clarify existing regulation and place some operational restrictions on punti remoti. The regulations were immediately subject to a legal
challenge and the process of reaching a judgement or compromise has now lasted for nearly a year during which time operators have continued
their business as usual. Given that the punti remoti pay standard betting tax to the government and constitute up to 30% of Italy's betting
tax revenue, the Company sees little prospect of a scenario whereby punti remoti cease to exist. Whether or not any changes are ever
implemented, the Company believes that any changes would not have a materially negative impact on the performance of the Betshop business.
Outside of Italy there continues to be pressure from the European Commission on EU member states to open up their markets to
competition. Despite some seemingly backward steps in this regard, most notably in the case of Germany, the Company believes that
liberalisation of betting markets will proceed. With the widespread existence of online betting, a protectionist stance struggles to be
effective. Governments are increasingly realising that, in a country where there is a large "grey" or "black" betting market, consumers are
often not adequately protected and the government loses out on valuable tax revenue.
Outlook
With the 2007/8 football season drawing to a close and with trading this year in line with management expectations, the Company is
well-placed to continue to grow and develop its existing business as well as look at new business streams. Euro 2008 in June will provide
additional football betting opportunities in what is normally a quiet month and, in a wider context, the continuing increased funding and
promotion of sport will invariably lead to increased demand for sports betting.
The Company continues to look to product and geographic diversification to develop its business both through organic and acquisitive
growth. Italy remains the focus for the Company and will likely continue to deliver the vast majority of revenue and profitability in the
short and medium term. As resource, capital and regulation permit, the Company will continue to look to repeat the success of its Italian
business model in other markets. Greece, Cyprus and Romania remain the most significant markets for the Company outside of Italy.
The introduction of new products into Betshop's Italian business is currently dictated by the regulatory authorities. Since the
implementation of a relevant licence structure, the Italian betting industry has been waiting for more than a year for the ability to offer
poker and skill games as well as casino games. Poker looks set to be approved in the course of 2008 and Betshop will launch a poker service
as soon as it is authorised to do so. The Company expects gaming products, such as poker and casino, to have a significant positive impact
on the Betshop Italia business as they are fixed margin products that should increase the yield per customer of Betshop Italia's more than
100,000 registered customer base.
The Company is confident that the measures and restructuring that it undertook in the latter half of 2007 together with ongoing
operational initiatives will continue to deliver profitability throughout 2008.
*Note for these Accounts
Information in this preliminary announcement does not constitute statutory accounts of the Group within the meaning of Section 240 of
the Companies Act 1985.
The figures for the year ended 31 December 2007 are unaudited. Statutory accounts for the year ended 31 December 2006 have been filed
with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under Section 237
(2) or (3) of the Companies Act 1985. It did contain however an emphasis of matter dealing with a significant uncertainty relating to going
concern.
The auditor is yet to sign their report on the statutory accounts for the year ended 31 December 2007 but have indicated that their
auditor's report may be modified by the inclusion of an emphasis of matter paragraph which highlights the existence of a material
uncertainty which may cast significant about the company's and group's ability to continue as a going concern although their opinion is not
qualified in this respect.
Leisure & Gaming PlcUnaudited Consolidated Income StatementYear ended 31
December 2007
2007 2006
Notes EURm EURm
Amounts staked (see note below) 5 109.1 58.8
Revenue
Net win 5 24.7 14.3
Other income 0.3 0.1
25.0 14.4
Cost of sales (21.5) (12.8)
Gross profit 3.5 1.6
Share option charge (0.1) (0.4)
Exceptional restructuring costs - (2.8)
Impairment of goodwill - (2.9)
Other administrative expenses (5.1) (5.4)
Operating loss (1.7) (9.9)
Net interest and similar costs (0.3) (0.4)
Loss before tax (2.0) (10.3)
Tax 10 0.2 (0.2)
Loss from continuing operations (1.8) (10.5)
Loss attributable to discontinued operations 11 - (72.4)
Loss for the period attributable to equity holders of (1.8) (82.9)
the parent
Earnings per share (cents)
Basic and diluted 12 (2.3c) (132.2c)
From continuing operations
Basic and diluted 12 (2.3c) (16.7c)
Amounts staked does not represent the Group's statutory revenue and comprises the total amount staked by customers on sports betting and
net win on gaming activities.
The Income Statement for 2006 includes the Bet Shop Group business from the date of acquisition on 23 June 2006 to 31 December 2006.
Leisure & Gaming PlcUnaudited Consolidated Balance
SheetAs at 31 December 2007
31 Dec 31 Dec
2007 2006
Notes EURm EURm
ASSETS
Non-current assets
Property, plant and equipment 0.1 0.1
Goodwill 13 18.7 20.4
Other intangibles 1.8 0.2
20.6 20.7
Current assets
Trade and other receivables 14 2.3 1.9
Cash and cash equivalents 15 1.3 4.9
3.6 6.8
Total assets 24.2 27.5
LIABILITIES
Current liabilities
Borrowings 16 (1.7) (1.8)
Trade and other payables 17 (2.3) (5.2)
Deferred income 18 (1.7) -
Client funds 19 (1.1) (1.2)
Current tax liabilities 10 - (0.3)
Loan notes 21 (0.5) -
(7.3) (8.5)
Non-current liabilities
Deferred and contingent consideration 20 - -
Borrowings 16 - (0.5)
Loan notes 21 - (0.5)
- (1.0)
Total liabilities (7.3) (9.5)
Net Assets 16.9 18.0
EQUITY
Share capital 22 27.1 23.4
Share premium 77.6 76.2
Share option reserve 0.6 0.5
Shares to be issued 0.6 3.2
Foreign exchange reserve (7.4) (5.6)
Retained earnings (81.6) (79.7)
Equity attributable to equity holders of the parent 16.9 18.0
Leisure & Gaming PlcUnaudited Statement of changes in Equity
Share Share Share Shares Foreign Retained
Capital Premium Option to be exchange earnings
Reserve issued translation
EURm EURm EURm EURm EURm EURm
Balance as at 31 December 2005 21.6 67.8 - 3.8 (0.2) 4.7
Loss for the period - - - - (82.9)
Foreign exchange movements - - - - (5.4) -
Total recognised income and - - - - (5.4) (82.9)
expense
Issue of ordinary shares 1.8 8.4 - (1.5) - -
Share option charge - - 0.5 - - (0.1)
Fair value adjustment to - - - - - (1.4)
management incentive shares
Future issue of ordinary - - - 3.3 - -
shares
Release from future share - - - (2.4) - -
issue commitments
Net change directly in equity 1.8 8.4 0.5 (0.6) - (1.5)
Balance as at 31 December 2006 23.4 76.2 0.5 3.2 (5.6) (79.7)
Loss for the period - - - - - (1.8)
Foreign exchange movements - - - - (1.8) -
Total recognised income and - - - - (1.8) (1.8)
expense
Issue of ordinary shares 3.7 1.6 - (2.6) - -
Share option charge 0.1 (0.1)
Costs attributable to share - (0.2) - - - -
issue
Net change directly in equity 3.7 1.4 0.1 (2.6) - (0.1)
Balance as at 31 December 2007 27.1 77.6 0.6 0.6 (7.4) (81.6)
Leisure & Gaming PlcUnaudited Cash Flow StatementYear ended 31 December 2007
2007 2006
EURm EURm EURm EURm
Operating (loss) (1.7) (9.9)
Adjustments for:
Decrease / (Increase) in trade and other (0.4) 6.7
receivables
(Decrease) / Increase in trade and other payables (2.9) 1.3
(Decrease) / Increase in deferred income 1.7
Impairment of investment in subsidiary - 2.8
Management incentive shares - 1.3
Other costs settled in shares - 0.2
Depreciation and amortisation 0.1 0.1
Share option charge 0.1 0.4
Net cash from operating activities (3.1) 2.9
Tax paid (0.3) (0.3)
Investing activities
Purchases of subsidiary undertakings (net of cash - (8.7)
acquired)
Settlement of deferred consideration - (4.2)
Sale of US facing businesses (net of cash - (4.8)
disposed)
Purchases of intangible assets (1.7) (2.9)
Purchases of property, plant and equipment (0.1) (0.2)
Net cash used in investing activities (1.8) (20.8)
Financing activities
Proceeds from issue of ordinary shares 2.5 -
Bank loan - 16.8
Repayment of bank loan (0.6) (14.4)
Interest paid (0.3) (0.2)
Net cash from financing activities 1.6 2.2
Cash and cash equivalents at beginning of period 4.9 20.9
Cash and cash equivalents at end of period 1.3 4.9
Significant non-cash transactions in 2006 related to acquisitions of subsidiary undertakings; consideration
of EUR19.5m was in the form of equity instruments and obligations to pay deferred and contingent consideration.
Leisure & Gaming Plc
Unaudited Notes
Year ended 31 December 2007
Summary of significant accounting policies
1. Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use
in the European Union. The financial statements have been prepared on the historical cost basis.
The principal accounting policies adopted are set out below.
2. Going concern
The Directors have considered the detailed business projections to 30th June 2009 and general business expectations into the foreseeable
future.
The achievement of the projections is dependent on the two main assumptions:
- Achieving the volume of business which assumes a growing portfolio of shops and agents, and
- Achieving forecast margins which, for sports betting is highly dependent on the outcome of sporting fixtures.
The Bank loan and loan note repayments have been re-scheduled to ensure the cash generated by the business is sufficient to pay these
and ongoing commitments.
The projections show that the Group Directors has adequate resources to continue in operation for the foreseeable future, so the going
concern basis is appropriate.
3. Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and the entities controlled by
the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
Subsidiaries
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition.
Contingent consideration is recognised to the extent that it is probable that it will result in the issue of
additional equity instruments or the transfer of economic value.
The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
4. Foreign currency
Functional and presentation currency
The consolidated financial statements are presented in Euro, which is the Group's functional and presentational currency.
Items included in the financial statements of each of the Group's entities are measured using the functional currency of that entity.
Transactions and balances
Transactions in currencies other than Euro are recorded at the rates of exchange prevailing on the dates of the transactions or
translated at the average rates for the period. Exchange rate differences resulting from the settlement of transactions denominated in
foreign currency are included in the income statement using the exchange rate ruling at that date.
At the balance sheet date, the monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing
on the balance sheet date.
Foreign currency gains and losses from the translation of assets and liabilities are reflected in the income statement.
Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentational currency
are translated into the presentation currency as follows:
i. Assets and liabilities for each balance sheet presented are translated at the closing rate at the balance sheet date.
ii. Income and expenses for each income statement are translated at the average exchange rates for the period; and
iii. All resulting exchange differences are recognised as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
5. Amounts staked, Revenue and gross profit
Amounts staked represents the total amount placed by customers in respect of bets placed on sports events, the net amount held by the
house for casino products and commission taken for poker, which is known as rake.
Revenue represents net win and other income.
Net win represents the net amount won (or lost) by the house in respect of bets placed on sports events, the net amount held by the
house for casino products and commission (rake) taken for poker.
Other income is recognised on delivery of the service provided
Cost of sales includes all direct costs attributable to generating net win such as bonuses, commissions, betting duty and processing
fees.
Gross profit is the net win less the cost of sales.
Revenue and associated costs are recognised in the period in which they are realised.
Overhead and non-direct expenses are allocated to the reporting period to which they relate.
6. Key assumptions and estimates
The key assumptions and estimates that could have the most significant impact on the carrying value of assets and liabilities in future
accounting periods are:
- Goodwill carrying value of EUR18.7m. The Goodwill carrying value has been reduced by EUR10.8m, being management's assessment that the
amounts payable by way of deferred consideration, will not be paid.
(See below for explanation on deferred consideration). No impairment loss has been charged against this asset based on the cash flows
projections arising from the asset over the next 10 years. The projections show a value considerably in excess of the carrying value, so
only significant variations to the key assumptions would result in an impairment loss arising now or in the future.
- Gaming licenses EUR1.8m. This represents the cost of licenses issued, however, the terms and conditions of these licenses could change
in future years which could give rise to a reduction in their carrying value. In view of the considerable betting duties paid in respect of
these licenses, the management considers it unlikely that any changes will arise over the term of the licenses.
-Deferred tax asset. The Group has significant tax losses as shown in Note 5 to the financial statements. The management considers it is
inappropriate to recognise an asset in respect of these losses because of the uncertainty over the timing and extent of their recovery.
- Deferred and contingent consideration - This is based on BSG achieving certain minimum earnings targets to qualify for any earn out or
contingent consideration. On the acquisition of this business and to incentivises the vendor, Gabriel Chaleplis, targets were set which
would trigger additional consideration.
The minimum earnings target for 2007 was EUR3.6m EBIT, which was not met.
The minimum earnings target for 2008 is EUR6.9m EBIT which, based on management's forecast will not be met. Based on this, the fair
value of the deferred consideration has been adjusted to nil, resulting in the adjustment to goodwill, referred to above.
7. Adoption of International Financial Reporting Standards
Amendments to published standards effective for the year ended 31 December 2007
The Group has adopted IFRS 7 "Financial Instruments; Disclosures" and the related amendment to IAS1 "Presentation of Financial
Statements" for the first time in the year ended 31 December 2007.
This has resulted in additional disclosures for financial instruments and capital for both the current and preceding years, however, it
has had no impact on the primary statements for either year.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early in either the current or the preceding financial years.
Standards, amendments and interpretations effective in 2007 but not relevant
IFRIC 7 - Applying the Restatement Approach under IAS29 Financial Reporting in Hyperinflationary Economies
IFRIC 8 - Scope of IFRS 2
IFRIC 9 - Reassessment of Embedded Derivatives
IFRIC 10 - Interim Financial Reporting and Impairment
Interpretations to existing standards and new standards that are not yet effective and have not been adopted early by the Group
IFRS 8 - Operating Segments (effective for periods beginning on or after 1 January 2009)
IFRIC 11 - IFRS 2: Group and Treasury Share Transactions (effective for periods beginning on or after 1st March 2007)
IFRIC 12 - Service Concession Arrangements (effective for periods beginning on or after 1 January 2008)
IFRIC 13 - Customer Loyalty Programmes (effective for periods beginning on or after 1 July 2008)
IFRIC 14 - IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for periods
beginning on or after 1 January 2008)
8. Segmental information
The Directors review the business activities by products offered.
There is no benefit gained from differentiating between bets placed at shops and online as bets placed in shops are by means of
electronic transmission and encourage customers to transact online.
The three key products are:
Amount staked
Net win
2007 2006 2007 2006
EURm EURm EURm EURm
Sports book 100.1 53.4 20.9 11.6
Horses 7.2 3.6 1.9 0.9
Casino 1.8 1.8 1.9 1.8
109.1 58.8 24.7 14.3
Other income 0.3 0.1 0.3 0.1
109.4 58.9 25.0 14.4
Cost of sales (mainly agents (21.5) (12.8)
fees and betting duty)
Gross profit 3.5 1.6
Overheads:
Subsidiaries (4.5) (2.7)
Parent company (0.6) (2.7)
Total overheads before share options charge, exceptions and impairment (5.1) (5.4)
Net profit before tax, share options charge, exceptions and impairment (1.6) (3.8)
Geographic analysis of net win EURm EURm
Italy 23.8 13.9
Greece 0.7 0.2
Other EU countries 0.2 0.2
24.7 14.3
Allocation of assets and
liabilities
It is not possible to allocate the assets and liabilities of the Group
between differing business segments as all
activities are run on
common systems and use common customer wallets.
9. Loss before tax
Loss before tax is stated 2007 2006
after charging
EURm EURm
Amortisation of goodwill 0.1 2.9
Depreciation of property, 0.0 0.1
plant and equipment
Lease costs 0.3 0.2
Foreign exchange 0.0 (0.2)
gains/(losses)
10. Taxation 2007 2006
EURm EURm
Current tax:-
UK corporation tax 0.2 -
Foreign tax - (0.2)
0.2 (0.2)
Deferred tax:-
Current year - -
Total tax expense 0.2 (0.2)
The tax expense for the year can be reconciled to the profit/(loss) in the income statement as follows:
2007 2006
EURm % EURm %
(Loss) before tax (1.9) (10.3)
Tax at corporation tax rate of 30% (0.6) 30% (3.1) 30%
Tax effect of UK losses not relieved 0.8 30% 3.1 30%
Effect of different tax rates of subsidiaries operating in other
jurisdictions - (0.1) 2%
Share option charge - (0.1) 1%
0.2 (0.2)
Factors that may affect future tax charges
Currently, the Group has not taken credit for any Italian tax relief available on UK losses.
Under EU law, such relief should be available but, until such time as the Italian authorities enact legislation to facilitate such
relief, no value is attributed to the losses.
On 1st April 2008, the rate of corporation tax that applies to the UK companies in the Group will fall from 30% to 28%.
As at the balance sheet date, the Group had unrecognised deferred tax assets in respect of tax losses of EUR26.0m (2006: EUR24.4m). The
losses do not expire.
11. Discontinued operations
The Group incurred a loss attributable to the disposal of various businesses in 2006 which were predominantly comprised of the write off
of goodwill attributable to those businesses.
On 13th October 2006, ahead of the signing into US law of the Unlawful Internet Gambling Enforcement Act, the Group sold all of its US
facing operations for a nominal sum of $1.
12. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year.
2007 2006
(Loss) attributable to equity holders of the (EUR1.7m) (EUR82.9m)
Company
Weighted average number of ordinary shares 78,563,172 62,678,352
Basic and diluted earnings per share (2.3) (132.3)
Since the conversion of potential ordinary shares to ordinary shares would decrease the net loss per share, they are not dilutive.
Accordingly, diluted loss per share is the same as basic loss per share.
13. Goodwill
At cost or valuation EURm
At 31 December 2005 (as 59.2
originally stated)
Prior year adjustment (10.8)
48.4
Additions and costs 31.2
Disposals and foreign exchange (56.8)
At 31 December 2006 22.8
Foreign exchange movements (1.7)
At 31 December 2007 21.1
Impairment
At 31 December 2005 -
Charge in 2006 2.4
At 31 December 2006 and 2007 2.4
Net book value at 31 December 20.4
2006
Net book value at 31 December 18.7
2007
The investment in Grouse Entertainment NV of EUR2.4m has been fully impaired.
The goodwill in respect of the Betshop Group acquisition has been reviewed for impairment and the
recoverable amount has been determined based on the assets' value in use over the next 10 years.
The value in use has been derived from the forecasts of cash flow.
The key assumptions that impact on this are amounts staked and net win. The forecast amounts staked
is based on expected future growth, derived from new outlets being opened, historical statistics and
management expectations; the net win is based on historic
performance.
14. Trade and other receivables
2007 2006
EURm EURm
Trade receivables 1.0 1.4
Prepayments - 0.3
Other receivables 1.3 0.2
2.3 1.9
Other receivables includes cash held in escrow with the Italian Government to provide a guarantee for payment of betting duties.
Trade receivables predominantly comprises credit given to customers. The average credit period is 14 days. No allowances have been made
for estimated irrecoverable amounts.
No impairments against trade and other receivables have been made.
No balances were overdue at 31 December 2007.
No receivables are denominated in currencies other than Euros.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
15. Cash and cash equivalents
2007 2006
EURm EURm
Cash at bank and in hand 1.3 3.7
Cash held in escrow - 1.2
1.3 4.9
Cash is held in short term deposits, and save for the amounts held in escrow, is available for immediate use
The Directors consider that the carrying amount of cash and cash equivalents approximates to their. fair value.
Non-
16. Borrowings
Current current
2007 EURm EURm
Bank loan (1.0) -
Bank overdraft (0.7) -
(1.7) -
Non-
Current current
2006 EURm EURm
Bank loan (1.8) (0.5)
Bank overdraft - -
(1.8) (0.5)
An analysis of borrowings by currency
Sterling US$ Total
2007 EURm EURm EURm
Bank loan (1.0) - (1.0)
Bank overdraft (0.7) - (0.7)
(1.7) - (1.7)
Sterling US$ Total
2006 EURm EURm EURm
Bank loan - (2.3) (2.3)
Bank overdraft - - -
- (2.3) (2.3)
The weighted average interest rates paid were:- 2007 2006
Bank loan
Bank overdraft
The bank loan represent a loan facility from Barclays Bank Plc. The loan is repayable in monthly instalments by 31 December 2007.
Barclays Bank Plc borrowings are secured on the assets of the Group through a floating charge.
The Group has an overdraft facility of EUR0.7m available to it.
The Directors estimate that the fair value of the Group's borrowings is not significantly different to the carrying value.
17. Trade and other payables
2007 2006
EURm EURm
Trade payables (1.7) (3.8)
Other payables and accruals (0.6) (1.4)
(2.3) (5.2)
Trade and other payables comprise amounts payable in respect of trade purchases and other ongoing costs including betting duty. The
average credit period is 14 days for betting duty and 35 days for trade purchases; these amounts are non-interest bearing and primarily
denominated in Euros.
The Directors estimate that the fair value of the Group's trade and other payables is not significantly different to the carrying
value.
18. Deferred income
2007 2006
EURm EURm
Deferred income (1.7) -
The right to use the gaming licenses is sold to agents and the consideration is recorded under deferred income, which is written off
over the period of the license.
19. Client funds
2007 2006
EURm EURm
Client funds (1.1) (1.2)
Client funds represent deposits held; they are non-interest bearing, repayable on demand and denominated in Euros.
20. Deferred and contingent consideration
2007 2006
EURm EURm
Deferred and contingent consideration - -
The deferred and contingent consideration was originally EUR10.8m for 2006. This has been adjusted to nil following completion of the
initial accounting.
This has resulted in an equal adjustment to goodwill
21. Loan notes
2007 2006
Loan notes EURm EURm
Current (0.5) -
Non-current - (0.5)
(0.5) (0.5)
The loan notes accrue interest at 2% above Barclays Bank Plc base rate and mature on 30 June 2008
22. Share Capital
On 30 May 2007, by way of a special resolution, the Company redesignated its authorised share capital of £50,000,000 consisting of
200,000,000 ordinary shares of 25p into
- 714,219,392 ordinary shares of 5p each, and
- 71,445,152 deferred shares of 20p each.
Existing shareholders converted their 25 p ordinary share into
- one ordinary share of 5p each and
- one deferred share of 20p each.
The ordinary share of 5p each has the same rights and restrictions as the 25p ordinary share.
The deferred shares are not entitled to receive any dividend or other distribution and on a winding up, are entitled to receive a sum
equal to the nominal capital paid up after the sum of £1,000,000 per ordinary share has been distributed. Deferred shares do not carry any
voting rights.
Authorised:
2007
714,219,392 ordinary shares of
5p each
71,445.152 deferred share of 20
p each
2006
200,000,000 ordinary shares of
25p each.
Allotted, issued and fully Ordinary Deferred Ordinary EURm
paid:
25p 20p 5p
No. No. No.
At 31 December 2005 59,332,689 21.6
Deferred consideration to 798,950 0.2
vendors of English Harbour
Issued vendors of BSG 3,788,639 1.4
Exercise of option 24,874 0
Issued to brokers in settlement 500,000 0.2
of invoiced fees
At 31 December 2006 64,445,152 23.4
Shares issued to Employee 7,000,000 2.7
Benefit Trust
Share split (71,445,152) 71,445,152 71,445,152 0
Placing 13,461,540 1.0
At 31 December 2007 0 71,445,152 84,906,692 27.1
7,000,000 shares are held by an employee benefit
trust.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFWFUDSASEFI
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