INCAGOLD PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
CHAIRMAN'S REPORT
Following restructuring in the year to 31 December 2007, the Company has
consolidated its trading in the licensed sales market, but remains in a loss
making position before interest and tax. Overheads have been brought down
significantly to a more sustainable level, and the Board has applied cost
management procedures to control the cost base.
The Board continues to explore alternative avenues to expand revenues on this
limited cost base. On 10 June 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 within the international money transfer
industry.
To support the ongoing activities of the business, the Company agreed a working
secured loan with Fox Capital Limited ("Fox") whereby Fox made available to the
Company a working capital facility of up to £30,000 to secure the Company's
cash flow.
Roy Tilleard
Non-Executive Chairman
29 September 2008
CHIEF EXECUTIVE OFFICER'S REPORT
As reported in the Annual Report to 31 December 2007, in a fundamental
restructuring the trading assets of the parent Company were transferred to the
Swiss subsidiary (IncaGold GmbH) in January 2008. This has allowed the Company
to improve its focus on its trading activities.
Financial overview
Turnover of £115,100 has stabilised on the reduced customer base, but remains
35 percent below revenues in the six months to June 2007 (£176,500). As a
result of cost cutting measures undertaken, the loss before interest and tax is
£46,000 compared to a loss of £133,100 in the six months to June 2007,
reflecting management's has continued to focus on cost reduction.
At half year, the Group had net liabilities of £200 (June 2007: net assets £
122,000). However, the Group remained in a net cash position of £15,000 (June
2007: net overdraft £97,100) and further funding was available from a secured
loan provided by Fox Capital Limited ("Fox"). Under the terms of the facility,
Fox made available to the Company a working capital facility of up to £30,000
to secure the Company's cash flow as was disclosed in the Annual Report to
December 2007. A first drawing of £11,500 was made on 28 August 2008 in support
of the Group's trading activities.
Outlook
Trading conditions remain difficult which reflects the reduced customer base of
the Group and the prevailing macroeconomic conditions in our key markets in
Europe. The Board will continue to focus on its existing strategy for licensing
into the PC and mobile games sectors while exploring alternative sources of
income to expand the revenue base.
In line with this proposal, on 10 June 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 within the international money
transfer industry where such opportunities arise.
R M Holmes
Chief Executive Officer
29 September 2008
For further enquiries, please contact:
Justin Martin, Director, IncaGold plc
01624 820020
James Caithie, Dowgate Capital Advisers Limited
020 7492 4777
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
Notes 6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2007
2008 2007
£'000 £'000 £'000
Revenue 115.1 176.5 277.7
Cost of sales (66.7) (105.3) (187.0)
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Gross profit 48.4 71.2 90.7
Administrative expenses (94.0) (204.3) (347.9)
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Operating loss (45.6) (133.1) (257.2)
Impairment of intangibles - - (106.4)
Income from a guarantee - - 100.8
agreement
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Loss on ordinary activities (45.6) (133.1) (262.8)
before interest and taxation
Interest receivable - - -
Interest payable (0.1) (3.9) (11.6)
Loss on ordinary activities ******* ******* *******
before taxation (137.0)
(45.7) (274.4)
Tax on loss on ordinary - - -
activities
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Loss on ordinary activities (45.7) (137.0) (274.4)
after taxation
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All amounts relate to continuing operations. The profit and loss account has
been prepared on the basis that all operations are continuing operations. There
were no recognised gains and losses for 2007 other than those reported in the
profit and loss account.
BASIC AND DILUTED LOSS PER 6 months 6 months Year ended
SHARE ended ended
31 December
30 June 30 June 2007
2008 2007
Basic loss per share (£) 0.0001 0.0008 0.0015
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Loss attributable to ordinary 45.7 137.0 274.4
shareholders (£)
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Weighted average of ordinary 377,424,845 177,424,844 182,904,297
shares in issue in year
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UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008
Notes 6 months 6 months Year ended
ended ended
31
30 June 30 June December
2008 2007 2007
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 4 - 122.8 5.4
Property, plant and 5 2.2 5.5 1.4
equipment
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2.2 128.3 6.8
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CURRENT ASSETS
Inventories 3.0 43.4 4.4
Trade and other receivables 278.1 301.4 299.9
Cash and cash equivalents 15.0 1.5 10.2
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296.1 346.3 314.5
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TOTAL ASSETS 298.3 474.6 321.3
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EQUITY
Called up share capital 6 3.8 1.8 3.8
Share premium account 1,585.3 1,537.3 1,585.3
Profit and loss account (1,589.3) (1.417.1) (1,543.6)
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TOTAL EQUITY 7 (0.2) 122.0 45.5
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CURRENT LIABILITIES
Trade and other payables 298.5 352.6 275.8
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TOTAL LIABILITIES 298.3 474.6 321.3
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UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 30 JUNE 2008
£'000 £'000 £'000 £'000
Share Share Retained Total
earnings
capital premium
account
Balance at 1 January 2007 1.8 1,537.3 (1,269.2) 269.9
Changes in equity for 2007
Loss for the year - - (274.4) (274.4)
Capital introduced 2.0 48.0 - 50.0
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Balance at 31 December 2007 3.8 1,585.3 (1,543.6) 45.5
Changes in equity for 2008
Loss for the 6 months - - (45.7) (45.7)
Capital introduced
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Balance at 30 June 2008 3.8 1,585.3 (1,589.3) 0.2
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UNAUDITED CONSOLIDATED CASHFLOW STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2008
6 months 6 months Year ended
ended ended
31 December
30 June 30 June 2007
2008 2007
£'000 £'000 £'000
Operating activities
Operating loss (45.6) (133.1) (257.2)
Adjusted for:
Depreciation of tangible 0.6 1.3 6.3
assets
Amortisation of intangible 5.4 20.0 40.0
assets
Loss on disposal of tangible - - 1.0
assets
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6.0 21.3 47.3
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Operating loss before changes (39.6) (111.8) (209.9)
in working capital and
provisions
(Increase)/decrease in 1.4 42.9 81.8
inventories
Decrease/(increase) in trade (28.2) (71.7) (11.2)
and other receivables
Increase in trade and other 22.7 82.8 95.7
payables
Cash received from a - - 100.8
guarantee agreement
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(4.1) 54.0 267.1
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Cash generated from / (used (43.7) (57.8) 57.2
in) operations
Taxation paid - - -
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Cash flows from operating (43.7) (57.8) 57.2
activities
Investing activities
Payments to acquire tangible (1.4) - -
assets
Payments to acquire - - -
investments
Receipts from sales of - - -
tangible assets
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Cash flows from investing (1.4) - -
activities
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Cash flows before financing (45.1) (57.8) 57.2
Financing
Issue of ordinary share 50.0 - -
capital
Cost of share issue - -
Interest paid (0.1) (3.9) (11.6)
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Net cash inflow from 49.9 (3.9) (11.6)
financing
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Increase/(Decrease) in cash 4.8 (61.7) 45.6
and cash equivalents in the
year ******* ******* *******
Cash and cash equivalents at 10.2 (35.4) (35.4)
the beginning of the period
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Cash and cash equivalents at 15.0 (97.1) 10.2
the end of the period
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2008
1. ACCOUNTING POLICIES AND FUNDAMENTAL CONCEPT
a) The principal accounting policies adopted in the preparation of the
financial statements are set out in the Annual Report of IncaGold Plc to
31 December 2007. The policies have been consistently applied to all the
periods presented and are in accordance with International Financial
Reporting Standards.
b) The Company is dependent on the continued financial support of its
major shareholder to enable it to continue operating and to meet its
liabilities as they fall due (Note 3). The lenders have agreed to continue
to provide financial support to the Company and accordingly the directors
have prepared the accounts under the going concern concept. Should these
funds not be available, the going concern basis would be invalid and
adjustments would have to be made to revise the value of assets to their
realisable amount and to provide for any liabilities which might arise.
2. OPERATING LOSS
The operating loss is stated after charging:
6 months 6 months Year ended
ended ended
31
30 June 30 June December
2007
2008 2007
£'000 £'000 £'000
Amortisation of intangible assets 5.4 20.0 40.0
Depreciation of tangible assets 0.6 1.3 6.3
Auditors' remuneration 8.8 10.4 17.9
Directors' emoluments and other 5.5 47.1 73.7
benefits
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3. BORROWINGS
As disclosed in the Annual Report to 31 December 2007, on 30 May 2008, the
Company entered into a Secured Loan Agreement with Fox Capital Limited ("Fox")
whereby Fox made available to the Company a working capital facility of up to £
30,000 to secure the Company's cash flow. 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 to Fox of 25% of the maximum amount drawn down during
the Loan Period which shall be paid to Fox on the repayment date.
The repayment date is defined as the earlier of seven years from today's date
or either when the loan is repaid on full, or at any time after the first
anniversary of the Secured Loan Agreement, at the election of Fox and on the
giving of one month's written notice to the Company. In order to provide
security for the Secured loan agreement, the Company has also 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.
A first drawing of £11,500 was made against this facility on 28 August 2008.
4. INTANGIBLE ASSETS - GROUP
Games Technology Total
Portfolio
£'000 £'000 £'000
Cost
At 1 January and 31 December 175.0 116.8 291.8
2007
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Amortisation
At 1 January 2008 (169.6) (116.8) (286.4)
Charge for the period (5.4) - (5.4)
Impairment - -
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At 30 June 2008 (175.0) (116.8) (291.8)
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Net book value
At 30 June 2008 - - -
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At 31 December 2007 5.4 - 5.4
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At 30 June 2007 115.0 16.8 131.8
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In December 2007, the carrying amount of the games portfolio and technology
intangible assets was written down to the net realisable value. Negative
goodwill on the balance sheet at 31 December 2007 and 30 June 2007 was written
to reserves as an IFRS adjustment in December 2007.
5. TANGIBLE FIXED ASSETS - GROUP
Fixtures Computer Total
fittings & software
equipment
£'000 £'000 £'000
Cost
At 1 January 2008 24.0 18.3 42.3
Additions - 1.5 1.5
Disposals - -
Translation differences - -
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At 30 June 2008 24.0 19.8 43.8
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Amortisation
At 1 January 2008 (22.7) (18.3) (41.0)
Charge for the period (0.6) - (0.6)
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At 30 June 2008 (23.3) (18.3) (41.6)
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Net book value
At 30 June 2008 0.7 1.5 2.2
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At 31 December 2007 1.3 - 1.3
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At 30 June 2007 5.4 - 5.4
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6. RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET FUNDS/(DEBT)
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2007
2008 2007
£'000 £'000 £'000
Increase/(Decrease) in cash in the year 4.8 (61.7) 45.6
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Movement in net funds/(debt) in the year 4.8 (61.7) 45.6
Opening net (debt)/funds 10.2 (35.4) (35.4)
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Closing net funds/(debt) 15.0 (97.1) 10.2
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7. SHARE CAPITAL AND RESERVES
6 months 6 months Year ended
ended ended
31
30 June 30 June December
2007
2008 2007
£'000 £'000 £'000
Authorised
750,000,000 ordinary shares of 7.5 2.5 7.5
0.001p each
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Allotted, called up and fully paid
377,424,845 ordinary shares of 3.8 1.8 3.8
0.001p each
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8. RELATED PARTY TRANSACTIONS AND POST BALANCE SHEET EVENTS
During July 2008, 77,482,317 ordinary shares in the Company had been
transferred to Fox Capital Limited as final settlement of a claim brought by
Roy Tilleard against Richard Holmes and Ataraxia Investments Limited. Fox
Capital Limited, which is jointly owned by its principals, Justin Martin and
Roy Tilleard, both of whom are directors of the Company, now has a beneficial
interest in the Company of 288,489,274 ordinary shares representing 76.44% of
the issued share capital.
END
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