TIDMIGD
RNS Number : 8341U
IncaGold Plc
30 June 2009
30 June 2009
INCAGOLD PLC (THE "COMPANY")
Preliminary Results
The Company announces its results for the year ended 31 December 2008
CHAIRMAN'S REPORT
I have pleasure reporting the annual results for the year ended 31 December
2008.
Financial overview
Turnover of the Group, principally emanating from IncaGold GmbH and its computer
games publishing business, of GBP214,310 has stabilised on the reduced customer
base, but remains 23 per cent. below revenues in the prior year (2007:
GBP277,747). As a result of cost cutting measures undertaken, the loss before
interest and tax was reduced by 51% to GBP129,803 compared to a loss of
GBP262,822 in the prior year, reflecting management's continued focus on cost
reduction.
At 31 December 2008 the Group had net liabilities of GBP84,330 (2007: net assets
GBP45,473). However, the Group remained in a net cash position of GBP5,308
(2007: GBP10,162) and further funding is available from the facility provided by
Fox Capital Limited.
Auditor's Disclaimer on view given by the financial statements
As noted below, the trading assets of the business were transferred to the Swiss
subsidiary in January 2008. Within the operating structure of the subsidiary, a
number of individual royalty and distribution contracts were held by the
subsidiary's developers and salesmen throughout Europe and were not collated at
a single location.
As a result completed, signed contracts were not readily available for review by
the auditors in all cases, leading to the disclaimer in the Independent
Auditor's Report on the basis of a limitation of work. This point is noted by
the Directors and has been referred to the subsidiary and measures are being
taken to correct the deficiency as part of a wholesale review of key controls in
the business.
Post balance sheet event: Issue of new shares
On 29 June 2009, it was resolved that the loan from Fox Capital Limited, which
stood at GBP25,956 at 31 December 2009 and at GBP97,386 as at 29 June 2009
inclusive of interest and fees, be fully repaid by the issue of an allotment of
71,830,615 New Ordinary Shares to Fox Capital Limited (see note 21).
Change of Activities
As previously reported, the trading assets of the parent Company were
transferred to the Swiss subsidiary (IncaGold GmbH) in January 2008, and on 29
June 2009 the Directors subsequently resolved to seek shareholder permission to
dispose of the Company's interest in IncaGold GmbH pursuant to a Business
Transfer Agreement, (the "Agreement") entered into in February 2008.
The Directors expect shortly to issue a circular to shareholders seeking
shareholders authority to dispose of the Company's interest in IncaGold GmbH as
a going concern. Trading within the subsidiary is ongoing and results will be
incorporated into the consolidated numbers of the Group until such time as the
sale is completed.
In October 2008, the Board sought and subsequently received shareholder approval
to alter the focus of the activities of the Company to enable it to take
advantage of opportunities within the cosmetic surgery insurance market where
such opportunities arise. This change in focus began with an application being
made to the UK's Financial Services Authority ("FSA") to become authorised and
licensed as a general insurance broker. We await the outcome of our application
and if successful will shortly thereafter conclude agreements with one or more
insurance underwriters operating in this arena.
From when the sale is completed, the Company will be treated as a cash shell by
AIM until its insurance broker licence is approved, or another business focus or
transaction is approved by shareholders, or until a period of 12 months has
elapsed, when it will be delisted.
Outlook
Following the decision to dispose of the subsidiary, IncaGold GmbH, the Company
will be divesting itself of a loss making business and moreover, this action
together with remedial actions taken to improve key controls, mean that the
grounds for the disclaimer noted in the Auditor's Report have been removed.
Furthermore, as at 29 June 2009, the Company has cleared its loan position with
Fox Capital Limited while retaining the working capital facility of GBP100,000.
This puts the Company on a sound footing to take advantage of opportunities
available in the cosmetic surgery insurance business.
The Directors also intend to rebrand the Company from IncaGold to Surgisure, as
this name together with its logo better identifies the goods and services we
intend to offer, creating influence within the marketplace and generating value.
To this end the Directors have applied for and been granted approval in
principle to change the name of the Company to Surgisure PLC and have applied
for Community Trade Mark protection of both the name and logo. Shareholder
approval for this change of name will be sought alongside approval for the
disposal of IncaGold GmbH
The Company accounts will be posted to shareholders and be made available for
download on the Company's website. Notice of the Annual General Meeting will be
circulated in a separate document and the statutory accounts will be filed at
Companies House once approved by shareholders.
The last year has been a difficult period but the Directors would like to thank
all shareholders for their patience.
R. W. TILLEARD
Chairman
30 June 2009
Enquiries:
Justin Martin, Incagold plc; Tel: 01624 820 040
Ross Andrews, Zeus Capital Limited; Tel: 0161 831 1512
Tom Rowley, Zeus Capital Limited; Tel: 0161 831 1512
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF INCAGOLD PLC
We have audited the group and parent company financial statements (the
"financial statements") of IncaGold Plc for the year ended 31 December 2008
which comprise the consolidated income statement, the consolidated and company
balance sheets, the consolidated and company cash flow statements, the
consolidated and company statement of changes in equity and the related notes.
These financial statements have been prepared under the accounting policies set
out therein.
Our report has been prepared pursuant to the requirements of section 15 of the
Isle of Man Companies Act 1982 and for no other purpose. No person is entitled
to rely on this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of the Isle of Man Companies Act
1982 or has been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to any other
person or for any other purpose and we hereby expressly disclaim any and all
such liability.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the annual report and group and
parent company financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRS's) as adopted by the European
Union are set out in the statement of directors' responsibilities. Our
responsibility is to audit the financial statements in accordance with relevant
legal and regulatory requirements and International Standards on Auditing (UK
and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and have been properly prepared in accordance with the Isle Of Man
Companies Acts 1931 to 2004 and whether the information given in the Report of
the Directors is consistent with those financial statements. We also report to
you if, in our opinion, the company has not kept proper accounting records, if
we have not received all the information and explanations we require for our
audit, or if information specified by law regarding directors' remuneration and
other transactions is not disclosed.
We read other information contained in the annual report, and consider whether
it is consistent with the audited financial statements. This other information
comprises only the directors' report, the Chairman's Report, the report on
Corporate Governance and the reports of the Audit Committee, the Remuneration
Committee and the AIM Compliance Committee. We consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not
extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's and company's circumstances, consistently applied and adequately
disclosed.
We planned our audit so as to obtain all the information and explanations which
we considered necessary in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. However,
the evidence available to us was limited with respect of the results of the
subsidiary company. Due to the lack of contractual records provided to us, we
have been unable to verify income of GBP214,310, expenditure of GBP49,699,
debtors of GBP192,720 and creditors of GBP67,179.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion:
* the Parent Company Financial Statements give a true and fair view, in accordance
with IFRS's as adopted by the European Union, of the state of the Company's
affairs as at 31 December 2008;
Opinion: disclaimer on view given by the financial statements
Because of the possible effect of the limitation in evidence available to us
regarding the results of the subsidiary, IncaGold GMBH, we are unable to form an
opinion as to whether:
* the Group Financial Statements give a true and fair view, in accordance with
IFRS's as adopted by the European Union, of the state of the Group's affairs as
at 31 December 2008 and of its loss for the year then ended;
* the Financial Statements have been properly prepared in accordance with the Isle
Of Man Companies Acts 1931 to 2004; and
In respect solely of the limitation of our work referred to above regarding the
results of the subsidiary, IncaGold GMBH:
* we have not obtained all the information and explanations that we considered
necessary for the purpose of our audit December 2008; and
* we were unable to determine whether proper accounting records have been
maintained.
Notwithstanding our disclaimer on the view given by the financial statements, in
our opinion the information given in the Directors' Report is consistent with
the financial statements.
Emphasis of matter - change of strategy
We have considered the disclosure in Note 21 regarding the application for a
licence to operate as an insurance broker, and draw your attention to the
criticality of this licence to the future operation of the business, and the
limited life of the company as a listed cash shell.
Greystone LLC
Chartered Accountants &
Registered Auditors
Douglas
Isle of Man
30 June 2009
INCAGOLD PLC
CONSOLIDATED INCOME STATEMENT
FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
+-------------------------------------------------+-------+----------------+---------------+
| | | | |
+-------------------------------------------------+-------+----------------+---------------+
| | Note | 2008 | 2007 |
+-------------------------------------------------+-------+----------------+---------------+
| Revenue | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Continuing operations | | - | - |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations | | 214,310 | 277,747 |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| | | 214,310 | 277,747 |
+-------------------------------------------------+-------+----------------+---------------+
| Cost of sales | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Continuing operations | | - | - |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations | | (91,286) | (187,023) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| | | (91,286) | (187,023) |
+-------------------------------------------------+-------+----------------+---------------+
| GROSS PROFIT | | ------- | ------- |
| | | 123,024 | 90,724 |
+-------------------------------------------------+-------+----------------+---------------+
| Administrative expenses | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Continuing operations - recurring | | (64,888) | (135,644) |
+-------------------------------------------------+-------+----------------+---------------+
| | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations - | | (182,399) | (212,325) |
| recurring | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations - | 2 | - | (106,406) |
| Impairment of intangibles | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations - Income | 2 | - | 100,829 |
| from a guarantee agreement | | | |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| Total administrative expenses | 2 | (247,827) | (353,546) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| LOSS FROM OPERATIONS | | (124,263) | (262,822) |
+-------------------------------------------------+-------+----------------+---------------+
| | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Financial expenses | 6 | | |
+-------------------------------------------------+-------+----------------+---------------+
| Continuing operations | | (5,530) | (11,570) |
+-------------------------------------------------+-------+----------------+---------------+
| Discontinued operations | | (10) | - |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| | | (5,540) | (11,570) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| LOSS BEFORE TAXATION | | (129,803) | (274,392) |
+-------------------------------------------------+-------+----------------+---------------+
| Income tax on loss on ordinary activities | 7 | - | - |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| LOSS AFTER TAXATION - CONTINUING OPERATIONS | | (70,418) | (147,214) |
+-------------------------------------------------+-------+----------------+---------------+
| LOSS AFTER TAXATION - DISCONTINUED OPERATIONS | | (59,385) | (127,178) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------- | ------- |
+-------------------------------------------------+-------+----------------+---------------+
| LOSS FOR THE PERIOD | | (129,803) | (274,392) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------ | ------ |
+-------------------------------------------------+-------+----------------+---------------+
+-------------------------------------------------+-------+----------------+---------------+
| BASIC AND DILUTED EARNINGS PER SHARE | | | |
+-------------------------------------------------+-------+----------------+---------------+
| | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Loss per share - Basic | 9 | (GBP0.0003) | (GBP0.0015) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------ | ------ |
+-------------------------------------------------+-------+----------------+---------------+
| | | | |
+-------------------------------------------------+-------+----------------+---------------+
| Loss per share - Diluted | 9 | (GBP0.0003) | (GBP0.0015) |
+-------------------------------------------------+-------+----------------+---------------+
| | | ------ | ------ |
+-------------------------------------------------+-------+----------------+---------------+
INCAGOLD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| GROUP | Note | Share | Share | Foreign | Convertible | Share | Retained | Total |
| | | Capital | Premium | Exchange | Loan Notes | Based | Earnings | Equity |
| | | | | Reserve | | Payments | | |
| | | | | | | Reserve | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| 2008 | | | | | | | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| | | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| Total equity at 1 | | 3,775 | 1,585,336 | - | - | - | (1,543,638) | 45,473 |
| January 2008 | | | | | | | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| | | | | | | | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| Loss for the year | | - | - | - | - | - | (129,803) | (129,803) |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| Issue of ordinary | | - | - | - | - | - | - | - |
| shares | | | | | | | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| | | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| Total equity at 31 | | 3,775 | 1,585,336 | - | - | - | (1,673,441) | (84,330) |
| December 2008 | | | | | | | | |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
| | | ------ | ------ | ------ | ------ | ------ | ------- | ------ |
+---------------------+------+---------+-----------+----------+-------------+----------+-------------+------------+
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| 2007 | | | | | | | | |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| | | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| Total equity at 1 | | 1,775 | 1,537,336 | - | - | - | (1,269,246) | 269,865 |
| January 2007 | | | | | | | | |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| | | | | | | | | |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| Loss for the year | | - | - | - | - | - | (274,392) | (274,392) |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| Issue of ordinary | 18 | 2,000 | 48,000 | - | - | - | - | 50,000 |
| shares | | | | | | | | |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| | | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| Total equity at 31 | | 3,775 | 1,585,336 | - | - | - | (1,543,638) | 45,473 |
| December 2007 | | | | | | | | |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
| | | ------ | ------- | ------ | ------ | ------- | ------- | ------ |
+---------------------+-----+----------+-----------+----------+----------+----------+-------------+------------+
INCAGOLD PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| COMPANY | Note | Share | Share | Convertible | Share | Retained | Total |
| | | Capital | Premium | Loan Notes | Based | Earnings | Equity |
| | | | | | Payments | | |
| | | | | | Reserve | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| 2008 | | | | | | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| | | GBP | GBP | GBP | GBP | GBP | GBP |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| Total equity at 1 | | 3,775 | 1,585,336 | - | - | (1,608,641) | (19,530) |
| January 2008 | | | | | | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| | | | | | | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| Loss for the year | | - | - | - | - | (72,974) | (72,974) |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| Issue of ordinary | | - | - | - | - | - | - |
| shares | | | | | | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| | | ------- | ------- | ------- | ------- | ------- | ------- |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| Total equity at 31 | | 3,775 | 1,585,336 | - | - | (1,681,615) | (92,504) |
| December 2008 | | | | | | | |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
| | | ------ | ------ | ------ | ------ | ------- | ------ |
+----------------------+------+------------+------------+-------------+------------+-------------+------------+
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| 2007 | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| Total equity at 1 | | 1,775 | 1,537,336 | - | - | (1,264,552) | 274,559 |
| January 2007 | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| Loss for the year | | - | - | - | - | (344,089) | (344,089) |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| Issue of ordinary | 18 | 2,000 | 48,000 | - | - | - | 50,000 |
| shares | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| | | ------- | ------- | ------- | ------- | ------- | ------- |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| Total equity at 31 | | 3,775 | 1,585,336 | - | - | (1,608,641) | (19,530) |
| December 2007 | | | | | | | |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
| | | ------ | ------ | ------ | ------ | ------- | ------ |
+----------------------+------+------------+------------+------------+------------+-------------+------------+
CONSOLIDATED AND COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2008
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | GROUP | COMPANY |
+-------------------------------------+------+-----------------------------+----------------------------+
| |Note | 2008 | 2007 | 2008 | 2007 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | GBP | GBP | GBP | GBP |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| NON-CURRENT ASSETS | | | | | |
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Investment in subsidiary | 10 | - | - | - | - |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Intangible assets | 11 | 1 | 5,415 | - | 5,415 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Property, plant and equipment | 12 | 1,485 | 1,360 | - | 1,360 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | 1,486 | 6,775 | | 6,775 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| CURRENT ASSETS | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Inventories | 13 | 4,377 | 4,395 | - | 4,395 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Trade and other receivables | 14 | 202,169 | 299,913 | 9,330 | 236,138 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Cash and cash equivalents | | 5,308 | 10,162 | 4,732 | 4,341 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | 211,854 | 314,470 | 14,062 | 244,874 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| TOTAL ASSETS | | 213,340 | 321,245 | 14,602 | 251,649 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------ | ------ | ------ | ------ |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| EQUITY | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Share capital | 18 | 3,775 | 3,775 | 3,775 | 3,775 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Share premium | 18 | 1,585,336 | 1,585,336 | 1,585,336 | 1,585,336 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Retained earnings | | (1,673,441) | (1,543,638) | (1,681,615) | (1,608,641) |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| TOTAL EQUITY | | (84,330) | 45,473 | (92,504) | (19,530) |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| CURRENT LIABILITIES | 15 | 271,714 | 275,772 | 80,610 | 271,179 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| NON-CURRENT LIABILITIES | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| Long term borrowings | 16 | 25,956 | - | 25,956 | - |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| TOTAL LIABILITIES | | 297,670 | 275,772 | 106,566 | 271,179 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------- | ------- | ------- | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | | | | |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| TOTAL EQUITY AND LIABILITIES | | 213,340 | 321,245 | 14,062 | 251,649 |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
| | | ------ | ------ | ------ | ------- |
+-------------------------------------+------+--------------+--------------+--------------+-------------+
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | GROUP | COMPANY |
+--------------------------------------+------+------------------------+-----------------------+
| Operating Activities |Note | 2008 | 2007 | 2008 | 2007 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | GBP | GBP | GBP | GBP |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Loss from Operations | | (124,263) | (257,245) | (67,444) | (326,943) |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Depreciation of property, plant and | 12 | 1,320 | 6,313 | - | 6,313 |
| equipment | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Loss on disposal of tangible assets | 12 | - | 975 | - | 975 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Amortisation of intangible assets | 11 | 5,414 | 40,000 | - | 40,000 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash received from a guarantee | | - | 100,829 | - | 100,829 |
| agreement | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Gain on transfer of assets to | | - | - | (39,923) | - |
| subsidiary | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------ | ----- |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash flows from operating activities | | (117,529) | (109,128) | (107,367) | (178,826) |
| before changes in working capital | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| (Increase) / decrease in inventories | | 18 | 81,810 | - | 81,810 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| (Increase) / decrease in receivables | | 47,744 | (11,225) | 62,541 | 45,537 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Increase / (decrease) in payables | | (4,058) | 95,721 | (24,209) | 104,550 |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------ | ----- |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash (absorbed in) / generated from | | (73,826) | 57,178 | (69,035) | 53,071 |
| operations | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Interest paid | | (84) | (11,570) | (74) | (11,570) |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------- | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Net cash (absorbed in) /generated | | (73,909) | 45,608 | (69,109) | 41,501 |
| from operating activities | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------- | ----- |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash flows from investing activities | | | | | |
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Net cash transferred on disposals to | | - | - | (1,000) | - |
| subsidiary | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Purchases of property, plant and | 12 | (1,445) | - | - | - |
| equipment | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------ | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Net cash absorbed in investing | | (1,445) | - | (1,000) | - |
| activities | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------ | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash flows from financing activities | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Proceeds of borrowings | 16 | 20,500 | | 20,500 | - |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Repayment of borrowings | | - | (36,955) | - | (38,669) |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Proceeds from issue of ordinary | | 50,000 | | 50,000 | - |
| shares | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------- | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Net cash raised / (repaid) by | | 70,500 | (36,955) | 70,500 | (38,669) |
| financing activities | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------- | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Net (decrease)/increase in cash and | | (4,854) | 8,653 | 391 | 2,832 |
| cash equivalents | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash and cash equivalents at | | 10,162 | 1,509 | 4,341 | 1,509 |
| beginning of period | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------- | ------ | ------- | ------ |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| Cash and cash equivalents at end of | | 5,308 | 10,162 | 4,732 | 4,341 |
| the period | | | | | |
+--------------------------------------+------+------------+-----------+-----------+-----------+
| | | ------ | ------ | ------ | ----- |
+--------------------------------------+------+------------+-----------+-----------+-----------+
The consolidated cash-flow statement includes cash-flows relating to
discontinued operations. See note 8 for details of these cash-flows.
Proceeds from share issues of GBP50,000 were in respect of shares issued on 21
December 2007 and received in the current year. Net cash of GBP1,000 was
transferred on disposal of the trading assets in IncaGold Plc to IncaGold GmbH.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
1. ACCOUNTING POLICIES
+-----+------------+-----------------------------------------------------------------------------+
| | 1.1 | Basis of preparation of financial statements |
+-----+------------+-----------------------------------------------------------------------------+
| | | The financial statements have been prepared in accordance with |
| | | International Financial Reporting Standards ("IFRS") and IFRIC |
| | | interpretations as adopted by the European Union and with those parts of |
| | | the Isle of Man Companies Acts 1931 to 2004 applicable to companies |
| | | reporting under IFRS. The financial statements have been prepared under the |
| | | historical cost convention. A summary of the more important Group |
| | | accounting policies is set out below. |
| | | The preparation of financial statements in conformity with IFRS requires |
| | | the use of estimates and assumptions that affect the reported amounts of |
| | | assets and liabilities at the date of the financial statements and the |
| | | reported amounts of revenues and expenses during the reporting period. |
| | | Although these estimates are based on management's best knowledge of the |
| | | amount, event or actions, actual results ultimately may differ from those |
| | | estimates. |
| | | The financial statements are prepared on a going concern basis, the |
| | | validity of which is dependent on the raising of finance by the conversion |
| | | of loans as described in notes 20 and 21. . |
| | | The Company has elected to take the exemption under Section 230 of the Isle |
| | | Of Man Companies Acts 1931 to 2004 to not present the parent company income |
| | | statement. The amount of the loss for the 12 months, after taxation, |
| | | accounted for within the parent company income statement amounted to |
| | | GBP72,974 (2007: GBP344,091 loss). |
+-----+------------+-----------------------------------------------------------------------------+
+-----+------------+-----------------------------------------------------------------------------+
| | 1.2 | Foreign currency translation |
+-----+------------+-----------------------------------------------------------------------------+
| | | Functional and presentation currency |
| | | Items included in the financial statements of each of the Group's entities |
| | | are measured using the currency of the primary economic environment in |
| | | which the entity operates (the "functional currency"). The consolidated |
| | | financial statements are presented in Sterling, which is the Company's |
| | | functional and presentation currency. |
| | | Transactions and balances |
| | | Foreign currency transactions are translated into the functional currency |
| | | using the exchange rates prevailing at the dates of the transactions. |
| | | Foreign exchange gains and losses resulting from the settlement of such |
| | | transactions and from the translation at year end exchange rates of |
| | | monetary assets and liabilities denominated in foreign currencies are |
| | | recognised in the income statement. |
| | | Group companies |
| | | The results and financial position of all the Group entities (none of which |
| | | has the currency of a hyperinflationary economy) that have a functional |
| | | currency different from the presentation currency are translated into the |
| | | presentation currency as follows: |
| | | * |
| | | assets and liabilities for each balance sheet presented are translated at |
| | | the closing rate of that balance sheet;* |
| | | income and expenses for each income statement are translated at average |
| | | exchange rates (unless this average is not a reasonable approximation of |
| | | the cumulative effect of the rates prevailing on the transaction dates, in |
| | | which case income and expenses are translated at the rate on the dates of |
| | | the transaction); and* |
| | | all resulting changes are recognised as a separate component of equity. |
+-----+------------+-----------------------------------------------------------------------------+
+-----+------------+-----------------------------------------------------------------------------+
| | 1.3 | Revenue |
+-----+------------+-----------------------------------------------------------------------------+
| | | Revenue represents sales of licences and boxed software to external |
| | | customers. Revenue comprises the fair value of the consideration for the |
| | | sale of goods and services, net of value added tax, rebates and discounts. |
| | | Revenue from the sale of goods and services is recognised on delivery of |
| | | the respective goods and services, when the Company has transferred risks |
| | | and rewards of ownership to the customer, the amount of revenue can be |
| | | measured reliably and collectability of the related receivables is |
| | | reasonably assured. |
+-----+------------+-----------------------------------------------------------------------------+
+-----+------------+-----------------------------------------------------------------------------+
| | 1.4 | Discontinued operations |
+-----+------------+-----------------------------------------------------------------------------+
| | | A discontinued operation is a component of the Group's business that |
| | | represents a separate major line of business or geographical area of |
| | | operations that has been disposed of, has been abandoned or meets the |
| | | criteria to be classified as held for sale. |
| | | Discontinued operations are presented on the income statement as separate |
| | | lines and are shown net of tax. |
+-----+------------+-----------------------------------------------------------------------------+
+-----+------------+-----------------------------------------------------------------------------+
| | 1.5 | Business Combinations |
+-----+------------+-----------------------------------------------------------------------------+
| | | The acquisition of subsidiaries is accounted for using the purchase method. |
| | | The cost of the acquisition is measured at the aggregate of the fair |
| | | values, at the date of exchange, of assets given, liabilities incurred or |
| | | assumed, and equity instruments issued by the Group in exchange for control |
| | | of the acquiree, plus any costs directly attributable to the business |
| | | combination. The acquiree's identifiable assets, liabilities and contingent |
| | | liabilities that meet the conditions for recognition under IFRS 3 are |
| | | recognised at their fair value at the acquisition date. |
+-----+------------+-----------------------------------------------------------------------------+
+-----+-------------------------------------------------------------------------------+
| | 1.6Investments in subsidiaries |
+-----+-------------------------------------------------------------------------------+
| | |
+-----+-------------------------------------------------------------------------------+
| | Investments in subsidiaries are stated at cost less provision for impairment, |
| | if any. |
+-----+-------------------------------------------------------------------------------+
+-----+------------+----------------------------------------------------------------------------+
| | 1.7 | Intangible assets |
+-----+------------+----------------------------------------------------------------------------+
| | | Intangible assets arise on the Group's portfolio of games and on |
| | | technology developed by the Group. Intangible fixed assets are stated at |
| | | cost less amortisation. Amortisation is provided at rates calculated to |
| | | write off the cost of these fixed assets, less their estimated residual |
| | | value, over their expected useful lives. |
| | | Impairment reviews are performed at the end of the first full financial |
| | | year following initial recognition and, thereafter, if subsequent events |
| | | or changes in circumstances indicate that the carrying value may not be |
| | | recoverable. Where appropriate, the intangible fixed assets are then |
| | | written down to their recoverable amount. |
+-----+------------+----------------------------------------------------------------------------+
+-----+-+----------+-+-+------------------------------------+------+--------+-+-------------------+
| | 1.8 | Property, Plant and Equipment | |
+-----+--------------+------------------------------------------------------+---------------------+
| | Property, plant and equipment are stated at cost less accumulated depreciation. |
| | Regular purchases and sales are accounted for at the trade date. Depreciation is |
| | provided on all property, plant and equipment at rates calculated to write off |
| | the cost less residual value of each asset over its expected useful life, as |
| | follows: |
+-------+-----------------------------------------------------------------------------------------+
| | |
+-------+-----------------------------------------------------------------------------------------+
| | | | Computer equipment | 33% | Straight | |
| | | | | | line | |
| | | | | | basis | |
+-------+----------+---+------------------------------------+------+----------+-------------------+
| | | | Fixtures and Fittings | 33% | Straight | |
| | | | | | line | |
| | | | | | basis | |
+-----+-+----------+-+-+------------------------------------+------+--------+-+-------------------+
+-----+------------+--------------------------------------------------------------------------+
| | 1.9 | Inventories |
+-----+------------+--------------------------------------------------------------------------+
| | | Inventories consist of games in the course of development. Inventories |
| | | are stated at the lower of cost and net realisable value. Costs |
| | | represent all direct expenditure and an appropriate proportion of fixed |
| | | and variable overheads. It excludes borrowing costs. Net realisable |
| | | value is the estimated selling price in the ordinary course of business, |
| | | less applicable variable selling expenses. |
+-----+------------+--------------------------------------------------------------------------+
+-----+-------------+--------------------------------------------------------------------------+
| | 1.10 | Royalty payments |
+-----+-------------+--------------------------------------------------------------------------+
| | | Where the company acquires games under licence, royalty payments may be |
| | | payable on future sales under terms agreed with the vendor. In certain |
| | | cases, royalty payments may be made in advance of sales. Such payments |
| | | will be carried forward on the balance sheet until the game is released |
| | | or for a maximum of twelve months. When the game is released, royalties |
| | | arising on sales will be charge to the profit and loss account. Any |
| | | remaining balances of advances which have not been fully covered by |
| | | royalties payable on sales after twelve months will be reviewed and |
| | | written off if necessary. |
+-----+-------------+--------------------------------------------------------------------------+
+-----+-------------+--------------------------------------------------------------------------+
| | 1.11 | Taxation |
+-----+-------------+--------------------------------------------------------------------------+
| | | Income tax comprises current and deferred tax (if applicable). It is |
| | | recognised in the income statement except to the extent that it relates |
| | | to items recognised directly in equity, in which case it is recognised |
| | | in equity. |
+-----+-------------+--------------------------------------------------------------------------+
| | | |
+-----+-------------+--------------------------------------------------------------------------+
| | | Current tax, including UK corporation tax and foreign tax, is provided |
| | | at amounts expected to be paid (or recovered) using the tax rates that |
| | | have been enacted or substantively enacted by the balance sheet date. |
+-----+-------------+--------------------------------------------------------------------------+
| | | |
+-----+-------------+--------------------------------------------------------------------------+
| | | Deferred income tax is provided in full, using the liability method, on |
| | | temporary differences arising between the tax bases of assets and |
| | | liabilities and their carrying amounts in the financial statements. |
| | | Deferred income tax is determined using tax rates (and laws) that have |
| | | been enacted or substantively enacted by the balance sheet date and are |
| | | expected to apply when the related deferred income tax asset is realised |
| | | or the deferred income tax liability is settled. |
+-----+-------------+--------------------------------------------------------------------------+
| | | |
+-----+-------------+--------------------------------------------------------------------------+
| | | The following temporary differences are not provided for: the initial |
| | | recognition of goodwill; the initial recognition of assets and |
| | | liabilities that affect neither accounting nor taxable profit, other |
| | | than in a business combination; and differences relating to investments |
| | | in subsidiaries to the extent that they will probably not reverse in the |
| | | foreseeable future. |
+-----+-------------+--------------------------------------------------------------------------+
| | | |
+-----+-------------+--------------------------------------------------------------------------+
| | | Deferred income tax assets are recognised to the extent that it is |
| | | probable that future taxable profits will be available against which the |
| | | temporary differences can be utilised. |
+-----+-------------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.12 | Financial assets |
+-----+------+--------------------------------------------------------------------------+
| | | Financial assets are recognised in the Group's balance sheet when the |
| | | Group becomes a party to the contractual provisions of the instrument. |
| | | Financial assets are classified into the following specified categories: |
| | | financial assets at 'fair value through the profit and loss' (FVTPL), |
| | | 'held-to-maturity' investments (HTM), 'available-for-sale' (AFS) |
| | | financial assets, and loans and receivables. The classification depends |
| | | on the nature and purpose of the financial assets and is determined at |
| | | the time of initial recognition. No FVTPL or HTM assets or liabilities |
| | | are held. |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Loans and receivables |
+-----+------+--------------------------------------------------------------------------+
| | | Trade receivables, loans and other receivables that are non-derivative |
| | | instruments having fixed or determinable payments that are not quoted in |
| | | an active market are classified as loans and receivables. Loans and |
| | | receivables are initially recognised at fair value less directly related |
| | | transaction costs. They are subsequently measured at amortised cost |
| | | using the effective interest method less any impairment. Interest income |
| | | is recognised by applying the effective interest rate, except for |
| | | short-term receivables when the recognition of interest would be |
| | | immaterial. |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Available for sale |
+-----+------+--------------------------------------------------------------------------+
| | | Financial assets that are not classified as held-to-maturity; |
| | | held-for-trading; designated as fair value through the profit and loss; |
| | | or loans and receivables are classified as available-for-sale. |
| | | Available-for-sale assets are initially recognised at fair value plus |
| | | directly related transaction costs. They are subsequently measured at |
| | | fair value. Unquoted equity investments whose fair value cannot be |
| | | measured reliably are carried at cost and are classified as |
| | | available-for-sale financial assets. Impairment losses and exchange |
| | | differences resulting from re-translating the amortised cost of currency |
| | | monetary available-for-sale assets are recognised in profit and loss |
| | | together with interest calculated using the effective interest method. |
+-----+------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.13 | Financial liabilities |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Financial Liabilities |
+-----+------+--------------------------------------------------------------------------+
| | | Financial liabilities are recognised in the Group's balance sheet when |
| | | the Group becomes a party to the contractual provisions of the |
| | | instrument. All the Group's financial liabilities are classified as |
| | | measured at amortised cost. |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Other financial liabilities |
+-----+------+--------------------------------------------------------------------------+
| | | Other financial liabilities including borrowings are initially measured |
| | | at fair value, net of transaction costs. Other financial liabilities are |
| | | subsequently measured at amortised cost using the effective interest |
| | | method, with interest expense recognised on an effective yield basis. |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Short term and long term borrowings |
| | | Short term and long term borrowings are |
| | | initially measured at fair value and, are |
| | | subsequently measured at amortised cost, |
| | | using the effective interest rate method. |
| | | Any difference between the proceeds (net of |
| | | transaction costs) and the settlement or |
| | | redemption of borrowings is recognised over |
| | | the term of the borrowings in accordance |
| | | with the Group's accounting policy for |
| | | borrowing costs (see below). |
| | | Borrowing costs |
| | | Borrowings are recognised initially at fair |
| | | value, net of transaction costs incurred. |
| | | Borrowings are subsequently stated at |
| | | amortised cost; any difference between the |
| | | proceeds (net of transaction costs) and the |
| | | redemption value is recognised in the income |
| | | statement over the period of the borrowings |
| | | using the effective interest method. |
| | | Interest is not capitalised within property, |
| | | plant and equipment. |
| | | |
| | | The effective interest method |
| | | The effective interest method is a method of |
| | | calculating the amortised cost of a |
| | | financial asset or financial liability (or |
| | | group of financial assets or liabilities) |
| | | and of allocating the interest income or |
| | | interest expense over the expected life of |
| | | an asset or liability. The effective |
| | | interest rate is the rate that exactly |
| | | discounts estimate future cash flows to the |
| | | instrument's initial carrying amount. |
| | | |
+-----+------+--------------------------------------------------------------------------+
| | 1.14 | Interest Expense |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | Interest expense is recognised in the income statement on an accruals |
| | | basis using the effective interest method. |
+-----+------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.15 | Impairment of assets |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | At each reporting date, the Company assesses whether there is any |
| | | indication that an asset may be impaired. Where an indicator of |
| | | impairment exists, the Company makes an estimate of recoverable amount. |
| | | Where the carrying value of an asset exceeds its recoverable amount the |
| | | asset is written down to its recoverable amount. Recoverable amount is |
| | | the higher of fair value less costs to sell and value in use and is |
| | | deemed for an individual asset. If the asset does not generate cash |
| | | flows that are largely independent of those from other assets or groups |
| | | of assets, the recoverable amount of the cash generating unit to which |
| | | the asset belongs is determined. Discount rates reflecting the asset |
| | | specific risks and the time value of money are used for the value in use |
| | | calculation. |
+-----+------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.16 | Share-Based Payments |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | The Group has applied the requirements of IFRS 2 Share-based Payments. |
| | | The Group issues equity-settled share based payments to certain |
| | | employees. Equity-settled share based payments are measured at fair |
| | | value at the date of the grant. The fair value determined at the grant |
| | | date of the equity-settled share-based payments is expensed on a |
| | | straight-line basis over the vesting period, based on the Group's |
| | | estimate of shares that will eventually vest and adjusted for the effect |
| | | of non market-based vesting conditions. |
| | | |
+-----+------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.17 | Key sources of estimation uncertainty |
+-----+------+--------------------------------------------------------------------------+
| | | The following are the key assumptions concerning the future, and other |
| | | key sources of estimation and uncertainty at the balance sheet date, |
| | | that have significant risk of causing a material adjustment to the |
| | | carrying amounts of assets and liabilities within the next financial |
| | | year: |
| | | Recoverability of intangible assets |
| | | During the year, the Directors reconsidered the recoverability of the |
| | | Group's intangible asset arising from its licenses and technology. Given |
| | | the trading environment continues to be challenging the Group's |
| | | technology assets were impaired and a charge of GBP5,414 was recognised |
| | | in the profit and loss account to write these assets down to a nominal |
| | | value of GBP1. |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
+-----+------+--------------------------------------------------------------------------+
| | 1.18 | New IFRS standards and interpretations effective in the current period |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
| | | The following new accounting standards, amendments and interpretations |
| | | became effective for periods beginning on or after 1 January 2008: |
| | | IAS 39 and IFRS 7 Reclassification of financial instruments |
| | | IFRIC 12 Service concession arrangements |
| | | IFRIC 14 The limit on a defined benefit asset, minimum funding |
| | | requirements and their Interaction |
| | | The implementation of these new interpretations did not have any |
| | | significant impact on the Group's accounting policies or treatments. |
| | | The following standards, amendments and interpretations to existing |
| | | international standards have been published but are not yet mandatory |
| | | for the Group and have not been adopted early. |
| | | IFRS 2 Amendment to IFRS 2 Vesting conditions and cancellations |
| | | IFRS 3 (Revised) Business combinations |
| | | IFRS 8 Operating segments |
| | | IAS 1 (Revised) Presentation of Financial Statements |
| | | IAS 23 (Revised) Borrowing costs |
| | | IAS 27 (Revised) Consolidated and separate Financial Statements |
| | | IAS 32 (Revised) Financial Instruments: Presentation |
| | | Not relevant to the Group: |
| | | IFRIC 13 Customer loyalty programmes |
| | | IFRIC 15 Agreement for the construction of real estate |
| | | IFRIC 16 Hedges of a net investment in a foreign operation |
| | | IFRIC 17 Distribution of non-cash assets to owners |
| | | IFRIC 18 Transfer of assets from customers |
+-----+------+--------------------------------------------------------------------------+
| | | |
+-----+------+--------------------------------------------------------------------------+
2. OPERATING LOSS
The operating loss is stated after charging
+--+--+----------------------------------------------+----------------+----------------+
| | | | 2008 | 2007 |
+--+--+----------------------------------------------+----------------+----------------+
| | | | GBP | GBP |
+--+--+----------------------------------------------+----------------+----------------+
| | | Net foreign exchange (gains) / losses | (5,341) | 1,317 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Depreciation of tangible fixed assets: | 1,320 | 6,313 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Amortisation of intangible assets | 5,414 | 40,000 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Developer subcontractors | 87,373 | 30,110 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Professional fees | 61,824 | 54,569 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Travel and accommodation expenses | 17,203 | 10,335 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Telephone and internet | 10,698 | 11,867 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Auditors remuneration | 10,000 | 17,850 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Directors emoluments and other benefits | 10,000 | 73,673 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Wages and salaries | - | 63,226 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Office rents and rates | 7,152 | 10,791 |
+--+--+----------------------------------------------+----------------+----------------+
| | | Bad debts | 25,593 | 22,493 |
+--+--+----------------------------------------------+----------------+----------------+
| | | | | |
+--+--+----------------------------------------------+----------------+----------------+
| | | | ------ | ------ |
+--+--+----------------------------------------------+----------------+----------------+
The cost of inventory recognised as an expense was nil (2007: GBP41,130). As the
Group moved to a licensed based model in 2008 all existing box games stocks were
written off on 31 December 2007. No research and development expenditure was
recognised during the year (2007: nil).
Exceptional items
Following the restructuring of the business and the transfer of the core trading
assets and liabilities from IncaGold Plc to IncaGold GmbH in January 2008, the
associated intangible assets in respect of Mobile Technology and the Games
Portfolio were written down to their realisable value. The charge of GBP106,406
was recorded in the year to 31 December 2007 and is shown as an exceptional item
in administrative expenses
On 12 December 2007, under the terms of an overdraft guarantee facility, the
Group received an injection of GBP100,829 from Ataraxia Investments Limited, a
company controlled by a director of the Company at that time.
These items are included in the comparative figures for 2007.
+--+--+----------------------------------------------+-----------------+----------------+
| | | | | |
+--+--+----------------------------------------------+-----------------+----------------+
| | | The analysis of auditors' | 2008 | 2007 |
| | | remuneration is as follows: | | |
+--+--+----------------------------------------------+-----------------+----------------+
| | | | GBP | GBP |
+--+--+----------------------------------------------+-----------------+----------------+
| | | Fees payable to the Company's auditors for | | |
| | | the audit of the Company's annual accounts | | |
+--+--+----------------------------------------------+-----------------+----------------+
| | | | | |
+--+--+----------------------------------------------+-----------------+----------------+
| | | Total audit fees | 10,000 | 17,850 |
+--+--+----------------------------------------------+-----------------+----------------+
| | | | ------ | ------ |
+--+--+----------------------------------------------+-----------------+----------------+
No fees were payable to the Company's auditors for other services provided to
the Group
3. SEGMENTAL REPORTING
The Group's primary reporting format for reporting segment information is
geographic segments and the segments are defined as Europe, Rest of the
World and Head Office as this split coincides with a geographical origin split
of activities. No secondary segment exists. The turnover assets and operating
expenses by geographical location are as follow:
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | 2008 | 2007 |
+--+--+-------------------+-------------------------------------------------------+----------------------------------------------------------------------+
| | | | Discontinued | Discontinued | Continuing | | Discontinued | Discontinued | Discontinued | Continuing | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Allocated | Europe | Rest of | Head | Total | Europe | Rest of | Head | Head | Total |
| | | | | the World | Office | | | the World | Office | Office | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | GBP | GBP | | GBP | GBP | GBP | GBP | | GBP |
| | | | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Turnover | 158,937 | 55,373 | - | 214,310 | 253,113 | 24,634 | - | - | 277,747 |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Cost of sales | (83,190) | (8,096) | - | (91,286) | (170,436) | (16,587) | - | - | (187,023) |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Gross margin | 75,747 | 47,277 | - | 123,024 | 82,677 | 8,047 | - | - | 90,724 |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Administrative | | | | | | | | | |
| | | expenses | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Recurring | (182,399) | - | (64,888) | (247,287) | (212,325) | - | - | (135,644) | (347,969) |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Impairment of | - | - | - | - | - | - | (106,406) | - | (106,406) |
| | | intangibles | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Income | - | - | - | - | - | - | 100,829 | - | 100,829 |
| | | from | | | | | | | | | |
| | | guarantee | | | | | | | | | |
| | | agreement | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Total | (182,399) | - | (64,888) | (247,827) | (212,325) | - | (5,577) | (135,644) | (353,546) |
| | | administrative | | | | | | | | | |
| | | expenses | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Segmental | (106,652) | 47,277 | (64,888) | (124,263) | (129,648) | 8,047 | (5,577) | (135,644) | (262,822) |
| | | Operating loss | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Net | (10) | - | (5,530) | (5,540) | - | - | - | (11,570) | (11,570) |
| | | finance | | | | | | | | | |
| | | expense | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | Loss on ordinary | (106,662) | 47,277 | (70,418) | (129,803) | (129,648) | 8,047 | (5,577) | (147,214) | (274,392) |
| | | activities before | | | | | | | | | |
| | | tax | | | | | | | | | |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
| | | | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+--+--+-------------------+--------------+--------------+------------+------------+--------------+--------------+--------------+------------+------------+
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | | | 2008 | | | 2007 |
+--+--+---------------------+--------------+--------------+-----------------------------+--------------+--------------+-----------------------------+
| | | | Discontinued | Discontinued | Continuing | | Discontinued | Discontinued | Continuing | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Allocated | Europe | Rest of the | Head Office | Total | Europe | Rest of the | Head Office | Total |
| | | | | World | | | | World | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Balance Sheet | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Total Assets | 199,278 | - | 14,062 | 213,340 | 69,596 | - | 251,649 | 321,245 |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Total | (191,104) | - | (106,566) | (297,670) | (4,593) | - | (271,179) | (275,772) |
| | | liabilities | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | _________ | _________ | _________ | _________ | _________ | _________ | _________ | _________ |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Net Assets | 8,174 | - | (92,504) | (84,330) | 65,003 | | (19,530) | (45,473) |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Capital | 1,445 | - | - | 1,445 | - | - | - | - |
| | | Expenditure | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | Depreciation | 1,320 | - | - | 1,320 | - | - | 6,313 | 6,313 |
| | | & | | | | | | | | |
| | | Amortisation | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | | |
+--+--+---------------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+--------------+
Prior to 1 January 2008 sales invoicing, credit control and supplier management
were the responsibility of Head Office. In the month to January 2008, in a
fundamental restructuring, the trading assets of the parent Company were
transferred to the Swiss subsidiary (IncaGold GmbH).
4. STAFF COSTS
Staff costs, including directors' remuneration, were as follows:
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 2008 | 2007 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Group | GBP | GBP |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Wages and salaries | - | 63,226 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Emoluments paid to directors | 10,000 | 73,673 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Social security costs | - | 4,882 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------- | ------- |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 10,000 | 141,781 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Company | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Wages and salaries | - | 63,226 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Emoluments paid to directors | 2,192 | 73,673 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Social security costs | - | 4,882 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------- | ------- |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 2,192 | 141,781 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+----------------------------------------------------------+-------------------+
The average monthly number of employees during the year, including the
directors, was as follows:
+-----------------------------------------+-------------------+-------------------+
| | 2008 | 2007 |
+-----------------------------------------+-------------------+-------------------+
| | No. | No. |
+-----------------------------------------+-------------------+-------------------+
| Group | | |
+-----------------------------------------+-------------------+-------------------+
| Administration and sales | 2 | 3 |
+-----------------------------------------+-------------------+-------------------+
| Directors | 1 | 1 |
+-----------------------------------------+-------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+-------------------+-------------------+
| Company | | |
+-----------------------------------------+-------------------+-------------------+
| Administration and sales | - | - |
+-----------------------------------------+-------------------+-------------------+
| Directors | - | - |
+-----------------------------------------+-------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+-------------------+-------------------+
5. DIRECTORS' REMUNERATION
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 2008 | 2007 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | GBP | GBP |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Emoluments paid to directors | 10,000 | 73,673 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+----------------------------------------------------------+-------------------+
The Company does not provide the directors with any post-employment or related
pension arrangements or other short-term or long-term employee benefits.
Details of the directors' service agreements are provided in the Report of the
Remuneration Committee of the Annual Report.
6. FINANCIAL EXPENSES
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 2008 | 2007 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | GBP | GBP |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Bank interest payable | 5,540 | 11,570 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+----------------------------------------------------------+-------------------+
7. TAXATION
Factors affecting tax charge for the 12 months
The Group has no UK corporation tax charge for the period due to the loss before
tax suffered by the Group. The non-assessable items in the reconciliation below
refer to exchange differences and amortisation, the temporary differences and
tax losses amounts arise from other operating items contributing to the
Company's losses. There is no Swiss corporation tax charge on the subsidiary due
to the losses suffered by this company in the current and prior years.
Factors that may affect future tax charges
No deferred income tax asset has been recognised in these financial statements
for these tax losses as a result of uncertainty over recoverability.
A reconciliation of income tax expense applicable to accounting loss before
income tax at the statutory income tax rate to income tax expense at the
Company's effective income tax rate for the years ended 31 December 2008 and 31
December 2007 is as follows:
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | 2008 | 2007 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | GBP | GBP |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Accounting loss before income tax | 129,803 | 274,392 |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| At the statutory income tax rate of 0% | - | - |
| (2007: 0%) | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Effects of: | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Temporary differences and tax losses | - | - |
| not brought to account as a deferred | | |
| tax asset | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Less: | | |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Non assessable items | - | - |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------- | ------- |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Income tax expense | - | - |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| | ------ | ------ |
+-----------------------------------------+----------------------------------------------------------+-------------------+
| Effective rate of income tax | 0% | 0% |
+-----------------------------------------+----------------------------------------------------------+-------------------+
There was no taxation in respect of discontinued operations in the current or
prior year.
8. DISCONTINUED OPERATION
In the month to January 2008, in a fundamental restructuring, the trading assets
of the parent Company were transferred to the Swiss subsidiary (IncaGold GmbH).
On 26 June 2009, the Company minuted its intention to sell IncaGold GmbH, to the
directors of the subsidiary. As IncaGold GmbH represented a separate business
segment, it was treated as a discontinued operation in the consolidated income
statement.
The operating loss of the subsidiary is stated after charging
+--+--+--------------------------------------------------+-------------+----------------+
| | | | 2008 | 2007 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | | GBP | GBP |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Net foreign exchange (gains) / losses | (5,341) | 1,317 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Depreciation of tangible fixed assets: | 1,320 | 6,313 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Amortisation of intangible assets | 5,414 | 40,000 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Developer subcontractors | 87,373 | 30,110 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Travel and accommodation expenses | 17,203 | 10,335 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Telephone and internet | 10,698 | 11,867 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Wages and salaries | - | 63,226 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Office rents and rates | 7,152 | 10,791 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | Bad debts | 25,593 | 22,493 |
+--+--+--------------------------------------------------+-------------+----------------+
| | | | | |
+--+--+--------------------------------------------------+-------------+----------------+
| | | | ------ | ------ |
+--+--+--------------------------------------------------+-------------+----------------+
Segmental analysis
The Group's revenue from discontinued operations by destination is shown with
the Group segmental analysis (note 3).
Assets and liabilities of discontinued operations
The total assets and total liabilities in respect of discontinued operations by
destination are shown with the Group segmental analysis (note 3). Prior to the
transfer in January 2008 of the trading assets to the subsidiary IncaGold GmbH,
key trading activities were conducted though the Company. As a result no
separate balance sheet comparative is presented for the discontinued operations
in the year to 31 December 2007.
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | 2008 |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | GBP |
+-------------------------------------+------+------------+-----------+----------+-----------+
| ASSETS | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| Intangible | | | | | 1 |
| assets | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| Property, | | | | | 1,485 |
| plant and | | | | | |
| equipment | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| Inventories | | | | | 4,377 |
+-------------------------------------+------+------------+-----------+----------+-----------+
| Trade and | | | | | 192,838 |
| other | | | | | |
| receivables | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| Cash and | | | | | 576 |
| cash | | | | | |
| equivalents | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | ------- |
+-------------------------------------+------+------------+-----------+----------+-----------+
| TOTAL ASSETS | | | | | 199,277 |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | ------ |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| CURRENT | | | | | 191,104 |
| LIABILITIES | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | ------- |
+-------------------------------------+------+------------+-----------+----------+-----------+
| TOTAL | | | | | 191,104 |
| LIABILITIES | | | | | |
+-------------------------------------+------+------------+-----------+----------+-----------+
| | | | | | ------ |
+-------------------------------------+------+------------+-----------+----------+-----------+
Cash flows from discontinued operations
In the cash flow statement, the operating cash flows of the subsidiary for the
period ended 31 December 2008 were aggregated with the continuing operations,
but are shown separately below. Prior to the transfer in January 2008 of the
trading assets to the subsidiary IncaGold GmbH, key trading activities were
conducted though the Company. As a result no separate cash flow comparative is
presented for the discontinued operations in the year to 31 December 2007.
+-----------------------------------------------------+--+-------------+----------------+
| Operating Activities | | | 2008 |
+-----------------------------------------------------+--+-------------+----------------+
| | | | GBP |
+-----------------------------------------------------+--+-------------+----------------+
| Loss from Operations | | | (56,820) |
+-----------------------------------------------------+--+-------------+----------------+
| | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Depreciation of | | | 1,320 |
| property, plant and | | | |
| equipment | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Amortisation of | | | 5,414 |
| intangible assets | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Revaluation on transfer | | | 39,923 |
| of assets to subsidiary | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ----- |
+-----------------------------------------------------+--+-------------+----------------+
| Cash flows from | | | (10,163) |
| operating activities | | | |
| before changes in | | | |
| working capital | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Decrease in inventories | | | 18 |
+-----------------------------------------------------+--+-------------+----------------+
| Increase in receivables | | | 4,625 |
+-----------------------------------------------------+--+-------------+----------------+
| Increase in payables | | | 730 |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ----- |
+-----------------------------------------------------+--+-------------+----------------+
| Cash absorbed in | | | (4,790) |
| operations | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Interest paid | | | (10) |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ----- |
+-----------------------------------------------------+--+-------------+----------------+
| Net cash absorbed in | | | (4,800) |
| operating activities | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ----- |
+-----------------------------------------------------+--+-------------+----------------+
| Cash flows from investing activities | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Net cash transferred on | | | 1,000 |
| disposal of activities | | | |
| to subsidiary | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Purchases of property, | | | (1,445) |
| plant and equipment | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ------ |
+-----------------------------------------------------+--+-------------+----------------+
| Net cash absorbed in | | | (445) |
| investing activities | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ------ |
+-----------------------------------------------------+--+-------------+----------------+
| Net decrease in cash | | | (5,245) |
| and cash equivalents | | | |
+-----------------------------------------------------+--+-------------+----------------+
| Cash and cash equivalents at beginning of period | | | 5,821 |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ------ |
+-----------------------------------------------------+--+-------------+----------------+
| Cash and cash | | | 576 |
| equivalents at end of | | | |
| the period | | | |
+-----------------------------------------------------+--+-------------+----------------+
| | | | ----- |
+-----------------------------------------------------+--+-------------+----------------+
| | | | |
+-----------------------------------------------------+--+-------------+----------------+
9. EARNINGS PER SHARE
Basic loss per share has been calculated by dividing the loss for the
financial period attributable to ordinary shareholders amounting to
GBP129,803 (2007: GBP274,392) by 377,424,845 (2007: 182,904,297) ordinary
shares, the weighted average number of ordinary shares in issue during the
period.
Diluted loss per share has been calculated by dividing the loss for the
financial period attributable to ordinary shareholders by 381,424,845 (2007:
186,904,297), the weighted average number of shares taking into account share
options granted to Directors 2,740,000 (2007: 2,740,000) and to employees of
1,260,000 (2007: 1,260,000).
The average number of shares in issue during the period ended 31 July 2007 was a
reflection of the capital structure appropriate to both the continuing and the
discontinued operations.
10. INVESTMENTS IN SUBSIDIARY
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| COMPANY | | | | | | Total |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| | | | | | | GBP |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| Cost | | | | | | |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| At | | | | | | 9,090 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
| and at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| | | | | | | ------ |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| Amortisation and | | | | | | |
| impairment | | | | | | |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| At | | | | | | 9,090 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
| and at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
| | | | | | | ------ |
+---------------------------------------+-----------+--------+----------+-----------+----------+-----------+
The Company's investments comprise the entire share capital of IncaGold GmbH, a
company incorporated in Switzerland and acquired on 13 December 2004 for
GBP9,090. Full provision was made for the investment in 2005. On 26 June 2009,
the Company minuted its intention to sell its Swiss subsidiary, IncaGold GmbH,
to the directors of the subsidiary. As IncaGold GmbH represented a separate
business segment, it was treated as a discontinued operation in the consolidated
income statement (see also note 8).
11. INTANGIBLE ASSETS
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| GROUP | | | | Games | Technology | Total |
| | | | | Portfolio | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | GBP | GBP | GBP |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Cost | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 175,000 | 116,821 | 291,821 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Additions | | | | - | - | - |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 175,000 | 116,821 | 291,821 |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Amortisation and | | | | | | |
| impairment | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 169,586 | 116,820 | 286,406 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Impairment | | | | 5,414 | - | 5,414 |
| | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 175,000 | 116,820 | 291,820 |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Net | | | | | | |
| book | | | | | | |
| value | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | - | 1 | 1 |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ----- | ------ | ------ |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 5,414 | 1 | 5,415 |
| 31 | | | | | | |
| December | | | | | | |
| 2007 | | | | | | |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ----- | ------ | ------ |
+-----------------------------------------+-----------+--------+----------+-----------+------------+-----------+
Following the transfer in January 2008 of the trading assets to the subsidiary,
all intangible assets as at 31 December 2008 were in respect of discontinued
operations.
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| COMPANY | | | | Games | Technology | Total |
| | | | | Portfolio | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | GBP | GBP | GBP |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Cost | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 175,000 | 116,821 | 291,821 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Transfer | | | | (175,000) | (116,821) | (291,821) |
| to | | | | | | |
| subsidiary | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | - | - | - |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Amortisation | | | | | | |
| and | | | | | | |
| impairment | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 169,586 | 116,820 | 286,406 |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Transfer | | | | (169,586) | (116,820) | (286,406) |
| to | | | | | | |
| subsidiary | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | - | - | - |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ------ | ------- | ------- |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| Net | | | | | | |
| book | | | | | | |
| value | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | - | - | - |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ----- | ------ | ------ |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| At | | | | 5,414 | 1 | 5,415 |
| 31 | | | | | | |
| December | | | | | | |
| 2007 | | | | | | |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
| | | | | ----- | ------ | ------ |
+------------------------------------------+-----------+--------+----------+-----------+------------+-----------+
All intangible assets held in the Company as at 31 December 2007 were
transferred to the subsidiary IncaGold GmbH in January 2008.
12. PROPERTY, PLANT AND EQUIPMENT
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | GROUP | Fixtures & | Computer | Total |
| | | | fittings | equipment | |
| | | | | & software | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | GBP | GBP | GBP |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Cost | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 1 January 2007 | 24,031 | 18,319 | 42,350 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Additions | - | 1,445 | 1,445 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Intercompany transfers | (1,360) | 1,360 | - |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Disposals | - | (18,319) | (18,319) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | 22,671 | 2,805 | 25,476 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Accumulated Depreciation | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 1 January 2007 | 22,671 | 18,319 | 40,990 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Charge for the period | - | 1,320 | 1,320 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Disposals | - | (18,319) | (18,319) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | 22,671 | 1,320 | 23,991 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Net Book Value | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | - | 1,485 | 1,485 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------ | ------ | ------ |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2007 | 1,360 | - | 1,360 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------ | ------ | ------ |
+--+--+-----------------------------------------+------------+--------------+-------------+
Following the transfer in January 2008 of the trading assets to the subsidiary,
all plant property and equipment and related depreciation as at 31 December 2008
was in respect of discontinued operations.
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | COMPANY | Fixtures & | Computer | Total |
| | | | fittings | equipment | |
| | | | | & software | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | GBP | GBP | GBP |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Cost | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 1 January 2007 | 17,268 | 18,319 | 35,587 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Transfers to subsidiary | (17,268) | - | (17,268) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Disposals | - | (18,319) | (18,319) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | - | - | - |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Accumulated Depreciation | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 1 January 2007 | 15,908 | 18,319 | 34,227 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Transfers to subsidiary | (15,908) | - | (15,908) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Disposals | - | (18,319) | (18,319) |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | - | - | - |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------- | ------- | ------- |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | Net Book Value | | | |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2008 | - | - | - |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------ | ------ | ------ |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | At 31 December 2007 | 1,360 | - | 1,360 |
+--+--+-----------------------------------------+------------+--------------+-------------+
| | | | ------ | ------ | ------ |
+--+--+-----------------------------------------+------------+--------------+-------------+
All fixtures and fittings held in the Company as at 31 December 2007 were
transferred to the subsidiary IncaGold GmbH in January 2008.
13. INVENTORIES
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GROUP | COMPANY |
+--+--+--------------------------------+-------------------------+-------------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GBP | GBP | GBP | GBP |
| | | | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Games in the course of | 4,378 | 4,395 | - | 4,395 |
| | | development | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------ | ------ | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+------------+
Games in the course of development are in respect of discontinued operations.
14. TRADE AND OTHER RECEIVABLES
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GROUP | COMPANY |
+--+--+--------------------------------+-------------------------+-------------------------+
| | | Amounts due within one year | 2008 | 2007 | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GBP | GBP | GBP | GBP |
| | | | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Trade receivables | 110,049 | 128,074 | - | 70,679 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Other receivables | 86,665 | 155,952 | 3,790 | 155,952 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Prepayments and accrued | 5,455 | 15,887 | 5,540 | 9,507 |
| | | income | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------- | ------- | ------- | ------- |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | 202,169 | 299,913 | 9,330 | 236,138 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------ | ------ | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+------------+
Included within other receivables in 2007 was GBP50,000 in respect of deferred
consideration for shares issued on 21 December 2007. Provisions for receivables
were GBP70,775 (2007: 29,058).
15. CURRENT LIABILITIES
Amounts falling due within one year
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GROUP | COMPANY |
+--+--+--------------------------------+-------------------------+-------------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GBP | GBP | GBP | GBP |
| | | | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Trade payables | 95,405 | 116,822 | 51,641 | 116,822 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Social security and | 88 | 863 | 88 | 863 |
| | | other taxes | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Amounts due to | - | 39,717 | - | 39,717 |
| | | Directors | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Accruals and deferred | 176,221 | 118,370 | 14,579 | 113,778 |
| | | income | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Amounts due from subsidiary | - | - | 14,301 | - |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------- | ------- | ------- | ------- |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Trade and other | 271,714 | 275,772 | 80,609 | 271,180 |
| | | payables | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------ | ------ | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+------------+
Average creditor days as at 31 December 2008 were 103 (2007: 69).
It is the Group's policy that provided a supplier is complying with the relevant
terms and conditions, including prompt and complete submission of required
documentation, payment will be made wherever possible in accordance with the
agreed terms and conditions of service or purchase of goods
16. BORROWINGS
Amounts falling due after one year
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GROUP | COMPANY |
+--+--+--------------------------------+-------------------------+-------------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | GBP | GBP | GBP | GBP |
| | | | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Loans | 25,956 | - | 25,956 | - |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | ------ | ------ | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+------------+
On 9 May 2008 the Company entered into a loan agreement with Fox Capital Limited
("Fox") whereby Fox made available to the Company a working capital facility of
up to GBP30,000. The principal terms are that in addition to paying interest at
a rate of 1.5% above the HSBC base rate, the Company shall pay a fee of 25% of
the maximum amount drawn down during the loan period which shall be paid to Fox
at the Repayment date.
The Repayment date is defined as the earlier of seven years from the date of
agreement, or at any time after the first anniversary of the Secured Loan
Agreement at the election of Fox and on giving of one month's written notice to
the Company. In order to provide security for the Secured loan agreement, the
Company entered into a debenture agreement whereby any amounts outstanding and
unpaid under the Secured Loan Agreement are secured on the Company's fixed and
floating assets.
On the Repayment Date, Fox may elect to subscribe for the new ordinary shares in
the Company, converting the total amount of the loan outstanding together with
any accrued interest and the fee described above at the subscription price
equivalent to the mid market price on the close of business on the trading day
immediately preceding the date on which the Secured Loan agreement was entered
into.
Under AIM Rule 13, the Secured Loan Agreement constituted a Related Party
Transaction as Fox is a related party as disclosed in related party disclosures
note 20.
17. SHARE-BASED PAYMENTS
Equity-settled share option scheme
Share options granted to the directors and employees during the year to 31
December 2008 are set out below. In addition further options totalling 9,000,000
shares were issued to a director, M Evans, on 14 April 2009.
During 2005 share options were granted to a number of directors and employees
according to the share plan approved by the Board on 17 May 2005.
The options were granted on 19 May 2009 when the price per share was 3 pence per
ordinary share. Under the terms of the Option Agreement, options must be
exercised between 19 May 2006 and 19 May 2015 and the exercise price shall be 3
pence per ordinary share. The options were granted in recognition of past
services and the vesting period expires after a period of 10 years from the date
of grant.
Under the terms of the agreement, these options were forfeit in the year as the
employees left the Group. Details of the share options outstanding during the
year are as follows:
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | |Number of share options |
+--+--+--------------------------------+-------------------------+-------------------------+
| | | | | | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | J G Martin - Director | | | 1,040,000 | 1,040,000 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Employees | | | 2,960,000 | 2,960,000 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | | | ------- | ------- |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | | | 4,000,000 | 4,000,000 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | | | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+------------+
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | | | | 2008 | 2007 |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | Outstanding at beginning of | | | 4,000,000 | 6,000,000 |
| | | period | | | | |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | Granted during the period | | | - | - |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | Forfeit during the period | | | - | (2,000,000) |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | | | | ------- | ------- |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | Outstanding at the end of the | | | 4,000,000 | 4,000,000 |
| | | period | | | | |
+--+--+--------------------------------+------------+------------+------------+-------------+
| | | | | | ------ | ------ |
+--+--+--------------------------------+------------+------------+------------+-------------+
The options outstanding at 31 December 2008 had a weighted average remaining
contractual life of 6.3 years. The fair value of the options granted and in
existence in the year is calculated using the Black-Scholes model. The key
inputs to the model are shown below:
+--+--+--------------------------------+------------+------------+------------+------------+
| | | | | | | 2008 |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Weighted average share price | | | | 0.15 pence |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Weighted average exercise | | | | 3 pence |
| | | price | | | | |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Expected volatility | | | | 50% |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Vesting period | | | | 2 years |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Life of an option | | | | 10 years |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Risk free rate | | | | 3.50% |
+--+--+--------------------------------+------------+------------+------------+------------+
| | | Expected dividend yield | | | | 0.00% |
+--+--+--------------------------------+------------+------------+------------+------------+
The expected volatility was determined based on the historical four year average
of comparable quoted technology and software companies. The Monte Carlo
Simulation takes account of early exercise behaviour using assumptions of
normally distributed prices.
Based on the share price of 0.7p at 31 December 2008 and the performance of
the Group, the directors consider the total fair value of options granted to be
immaterial and accordingly no provision has been recognised to date.
17. SHARE-BASED PAYMENTS (Continued)
Equity-settled share option scheme
In addition to the shares noted above, options over a further 9,000,000 shares
were issued to a director, M Evans, on 14 April 2009. Under the terms of the
Option Agreement, after vesting, the options will be exercisable at any time
until 1 April 2014, and the exercise price shall be 3 pence per ordinary share
which is at a premium to the mid-market price as at the close of business on 9
April 2009 which was 0.275p.
The options will vest in three tranches as follows:
* 3,000,000 options will vest on the first anniversary of his appointment;
* 3,000,000 options will vest on the second anniversary of his appointment; and
* 3,000,000 options will vest on the third anniversary of his appointment.
18. SHARE CAPITAL AND RESERVES
+--+--+-------------------------------------------------------+------------+-------------+
| | | | 2008 | 2007 |
+--+--+-------------------------------------------------------+------------+-------------+
| | | Share capital | GBP | GBP |
+--+--+-------------------------------------------------------+------------+-------------+
| | | | | |
+--+--+-------------------------------------------------------+------------+-------------+
| | | Authorised | | |
+--+--+-------------------------------------------------------+------------+-------------+
| | | 750,000,000 ordinary shares of 0.001p each | 7,500 | 7,500 |
+--+--+-------------------------------------------------------+------------+-------------+
| | | | ------ | ------ |
+--+--+-------------------------------------------------------+------------+-------------+
| | | Allotted, called up and fully paid | | |
+--+--+-------------------------------------------------------+------------+-------------+
| | | 377,424,845 ordinary shares of 0.001p each | 3,775 | 3,775 |
+--+--+-------------------------------------------------------+------------+-------------+
| | | | ------ | ------ |
+--+--+-------------------------------------------------------+------------+-------------+
Fully paid ordinary shares carry one vote per share and carry a right to a
dividend.
On 21 December 2007 200,000,000 shares were issued to Fox Capital Limited at a
price of 0.025p per ordinary share.
In January 2006, the Company entered into a contract by which intellectual
property rights relating to digital distribution technology were acquired. The
total purchase consideration was GBP250,000.
The contract was signed in December 2005 and finalised in January 2006.
Under the terms of the agreement, GBP50,000 was paid in cash and ordinary shares
were issued in January 2006 at an issue price of GBP0.0525 each in respect of a
further GBP50,000. The remaining balance of GBP150,000 is subject to certain
conditions which, if fulfilled, will be satisfied by the issue of further
ordinary shares at the same issue price of GBP0.0525 each.
19.FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT
The Group's financial instruments comprise borrowings, cash and cash
equivalents, and financial assets and various items such as trade receivables,
trade payables and accruals that arise directly from its operations. The main
purpose of these financial instruments is to finance the Group's operations.
The Board reviews and agrees policies for managing the level of foreign
exchange and other risks arising from the Group's financial instruments. These
are summarised below.
Foreign exchange risk - The key concentration of risk arises on the Group's
exposure to foreign exchange movements. The Group operates internationally with
key operations in the Euro Area and is exposed to foreign exchange risk arising
primarily from the Euro and the Swiss Franc. Exposure to volatile currencies is
minimised by invoicing mainly in Euros, US dollars and Sterling. Wherever
possible, the Group seeks to mitigate exchange risk by matching revenues and
expenses. The Group's exposure to movements in exchange rates is regularly
reviewed with reference to the net assets.
Group policy is to recognise gains and losses on intergroup payables and
receivables in profit and loss. A net gain of GBP5,341 was recognised in the
operating loss (2007: loss GBP1,317) due to the fall in sterling against the
Euro and US dollar.
Interest rate risk - The Group has various bank facilities in Sterling and
other European currencies. The Group's exposure to movements in interest rates
is regularly reviewed.
Liquidity risk - Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
The Group's policy regarding liquidity is to ensure sufficient cash
resources are maintained to meet short-term liabilities and to maintain an
overdraft facility with its bankers. The Group's operations are financed by a
mixture of equity and bank overdrafts. Working capital requirements are met
principally out of equity by conversion of the loans to Fox Capital Ltd (see
note 20). In addition, various financial instruments such as trade debtors and
trade creditors arise directly from the Company's operations.
The only significant financial asset the Group has is cash at bank. Cash is
held either on current or on short term deposits at floating rates of interest
determined by the relevant bank's prevailing base rate.
Credit risk - The risk of financial loss due to a counterparty's failure to
honour its obligations arises principally in relation to transactions where the
Group provides goods and services on deferred terms. The Group's policies are
aimed at minimising such losses, and require that deferred terms are granted
only to customers who demonstrate an appropriate payment history and satisfy
creditworthiness procedures.
Individual exposures are monitored with customers subject to credit terms to
ensure that the Group's exposure to bad debts is minimised. Goods may be sold on
a cash with order basis to mitigate credit risk. In some cases bad debt
insurance is purchased where the cost is not excessive when compared to the
risks covered. The Directors review receivables for impairment on a case-by-case
basis. Where receivables are not considered recoverable and the Directors
consider that there is evidence for impairment a charge is made in part or in
whole to the allowance account.
Market risk - The Group operates in a fast-moving games publishing business and
aims to be the leading provider of promotional giveaways based on digital
content delivered to mass-market consumers. As the Group's activities remain
focussed on this domain, the Group is exposed to rapid changes in technologies
and consumer tastes. To mitigate this risk, the Directors actively monitor the
games markets and where necessary explore alternative markets for growth (note
21 - Post Balance Sheet Events).
All financial assets are designated as loans and receivables and all financial
liabilities are measured at amortised cost.
Financial assets and liabilities
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Group | Loans and Receivables | Financial |
| | | | | liabilities amortised at |
| | | | | cost |
+--+--+---------------------------+---------------------------+---------------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | | GBP | GBP | GBP | GBP |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Current assets | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Trade and other | 211,854 | 299,913 | - | - |
| | | receivables | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Cash and cash equivalents | 5,308 | 10,162 | - | - |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Current liabilities | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Loan | - | - | 25,956 | - |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Other liabilities | - | - | 271,714 | 275,772 |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
Financial assets and liabilities
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Company | Loans and Receivables | Financial liabilities |
| | | | | amortised at cost |
+--+--+---------------------------+---------------------------+---------------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | | GBP | GBP | GBP | GBP |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Current assets | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Trade and other | 9,330 | 236,138 | - | - |
| | | receivables | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Cash and cash equivalents | 4,732 | 4,341 | - | - |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Current liabilities | | | | |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Loan | - | - | 25,956 | - |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
| | | Other liabilities | - | - | 80,610 | 271,179 |
+--+--+---------------------------+-------------+-------------+-------------+-------------+
Available for Sale Assets
The only available for sale asset is the investment in the subsidiary that is
held at nil value and as result has not been disclosed above
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less and bank overdrafts and are classified as assets
available-for-sale. Bank overdrafts are shown as borrowings within current
liabilities on the balance sheet.
Fair value:
The carrying amounts of the Group's and Company's financial assets and
non-fixed rate liabilities are not materially different to the fair values shown
above.
Maturity of long term borrowings
The Group held the following financial liabilities at 31 December 2008:
+----------------------------------------------+-----------------+-----------------+
| | 2008 | 2007 |
| | GBP | GBP |
+----------------------------------------------+-----------------+-----------------+
| | | |
+----------------------------------------------+-----------------+-----------------+
| In more than one year but not more than two | 25,956 | - |
| years | | |
+----------------------------------------------+-----------------+-----------------+
All Group borrowings relate to the borrowings held by the Company and as a
result there is no difference in maturity between Group and Company borrowings.
Amounts outstanding include interest of GBP5,456 (2007: nil).
Sensitivity analysis
The functional currency of the Swiss subsidiary IncaGold GmbH is Sterling and as
a result there is considered to be no exposure of the balance sheet to foreign
exchange fluctuations. The sensitivity analysis has been prepared on the
assumption that the amount of net debt and the ratio of fixed to floating
interest rates of the debt are constant. The table below shows the sensitivity
of the Group's operating expense to movements in the Sterling/Euro exchange
rate.
+--+--+--------------------+------------+----------------+----------------+----------------+
| | | | 2008 | 2007 |
+--+--+--------------------+-----------------------------+---------------------------------+
| | | | | Increase in | | Increase in |
| | | | | operating | | Operating |
| | | | | expense | | expense |
+--+--+--------------------+------------+----------------+----------------+----------------+
| | | | | GBP | | GBP |
+--+--+--------------------+------------+----------------+----------------+----------------+
| | | 10% appreciation | | 18,239 | | 21,809 |
| | | of the Euro | | | | |
+--+--+--------------------+------------+----------------+----------------+----------------+
| | | | | | | |
+--+--+--------------------+------------+----------------+----------------+----------------+
Company
All Group trading denominated in foreign currencies relates to IncaGold GmbH and
as a result the Company is not subject to fluctuations in foreign exchange
rates.
The Group has no external borrowings and as a result is not exposed to movements
in interest rates.
Capital management
The Group deploys a combination of equity capital annual cash flows and whenever
necessary borrowings to maximise returns on capital to shareholders. Equity
capital comprises its ordinary share capital, share premium account, other
reserves and accumulated retained earnings. The Group applies to Shareholders
for consent to issue further shares for cash, to issue shares in connection with
acquisitions and to repurchase shares either for cancellation or to hold as
Treasury Shares. The Shareholder consents allow the Board flexibility to take
advantage of market opportunities to make small changes in the equity capital
base, where these are considered to be of benefit to Shareholders.
It is expected that Shareholders will achieve the majority of their return
through an increase in the capital value. There have been no significant changes
to the Group's long-term capital management objectives, policies and processes
in the year, nor has there been any change in what the Group considers to be its
capital.
The net debt to equity ratio at 31 December 2008 is 31% negative on account of
the Groups, net liability position. The group had net cash at 31 December 2007.
20. RELATED PARTY TRANSACTIONS
Control
On 4 July 2008 10,711,190 ordinary shares in the Company had been transferred to
Fox Capital Limited as part settlement of a claim brought by Roy Tilleard
against Richard Holmes and Ataraxia Investments Limited, a company controlled by
Richard Holmes. On 15 July 2008, 66,771,127 further ordinary shares were
transferred to Fox Capital Limited from Ataraxia Investments Limited as final
settlement of the claim.
Of the Companies issued share capital at 31 December 2008, 288,489,274 (2007:
211,006,957 ) shares are held by Fox Capital Limited on 21 December 2007, a
company controlled by R W Tilleard representing 76.43% (2007: 55.9%) of the
issued ordinary share capital.
Loan agreement
On 9 May 2008 the Company entered into a loan agreement with Fox Capital Limited
("Fox") whereby Fox made available to the Company a working capital facility of
up to GBP30,000. The terms of the Loan are set out in Borrowings - note 16. On 3
June 2009 the Company announced an amendment to the agreement whereby the
facility was extended to GBP100,000, and on 29 June converted its loan into
shares (note 21) such that the entire GBP100,000 facility became once again
available to the Company.
Under AIM Rule 13, the Secured Loan Agreement constituted a Related Party
Transaction as Fox is a related party because it is a substantial shareholder,
and two of its directors, Roy Tilleard and Justin Martin, are directors of the
Company. Richard Holmes who was the only independent director for these purposes
at the time of entering into the loan, considered, having consulted with Dowgate
Capital Advisors Limited, the Company's nominated advisor at the time, that the
terms of the of the Secured Loan Agreement are fair and reasonable insofar as
the Company's shareholders are concerned. The loan extension was approved as
fair and reasonable by Jonathan Ely and Michael Evans as independent director
after consultation with Zeus Capital Limited, the Company's current advisers.
21. POST BALANCE SHEET EVENTS
On 31 October 2008, the Board sought and received shareholder approval to alter
the sector focus of the activities of the Company to enable it to take advantage
of opportunities arising within the cosmetic surgery insurance industry.
Following this approval from shareholders, the Directors commenced talks with
various U.K. based insurance underwriters operating in the healthcare arena, and
in April 2009 an application was made to the United Kingdom Financial Services
Authority for a licence to operate as an insurance broker. This application is
still progressing and the receipt of the licence is critical to the future of
the business.
To assist in implementation of this strategy, Michael Evans was appointed to the
Board on 14 April 2009. Michael Evans has extensive experience in the insurance
industry spanning over 35 years. The Company has agreed to grant Michael Evans
options over 9,000,000 ordinary shares at an exercise price of 0.3p per share on
certain future dates subject to his remaining a director of the Company (see
note 17 share options).
On 29 June 2009 the board of Directors passed a resolution to transfer the games
business of the Company to the subsidiary, IncaGold GmbH under the terms of the
Business Transfer Agreement dated 1 February 2008, and subsequently to sell the
subsidiary to the director of IncaGold GmbH, subject to shareholder approval,
for total consideration of GBP1 with guarantee from the purchaser for all sums
in relation to the liabilities and indemnifies the Company against any sums
which the vendor may be compelled to pay in connection with the liabilities of
the subsidiary. Accordingly they have reclassified the Company's games business
as a discontinued operation and prepared the accounts on that basis. From when
the sale is completed, the Company will be treated as a cash shell by AIM until
its insurance broker licence is approved, or another business focus or
transaction is approved by shareholders or until a period of 12 months has
elapsed, when it will be delisted.
Also on that date the Board resolved to approve the conversion of loans from Fox
Capital Limited into shares (see note 20). The loan, which was GBP97,386
inclusive of interest and fees as at the 29 June 2009, was fully repaid by the
allotment of 71,830,615 New Ordinary Shares be issued to Fox Capital
Limited. This existing loan facility from Fox Capital limited of GBP100,000
remains in place and available to the Company
22. GROUP COMPANIES
+------------+--------------------------+-----+----------------------+---------------+
| | | | |
+------------+--------------------------+-----+--------------------------------------+
| Company | | | Country of | |
| Name | | | incorporation | |
+------------+--------------------------+-----+----------------------+---------------+
| | | | | |
+------------+--------------------------+-----+----------------------+---------------+
| IncaGold | | | UK | |
| Plc | | | | |
+------------+--------------------------+-----+----------------------+---------------+
| IncaGold | 100% subsidiary | | Switzerland | |
| GmbH | | | | |
+------------+--------------------------+-----+----------------------+---------------+
| | | | | |
+------------+--------------------------+-----+----------------------+---------------+
23. AVAILABILITY OF ACCOUNTS
Copies of the full Report and Accounts for the period ended 31 December 2008 are
being sent to shareholders and will be simultaneously posted on the Company's
website. Further copies will be available from the Company's registered office,
which is Lorne House, Castletown, Isle of Man, British Isles IM9 1AZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EBLFXKQBLBBK
Incagold (LSE:IGD)
Historical Stock Chart
From May 2024 to Jun 2024
Incagold (LSE:IGD)
Historical Stock Chart
From Jun 2023 to Jun 2024
