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Announcement
THE INTERNET GAMING CORPORATION LIMITED
(REGISTRATION NUMBER : 99/13715/06)
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
("IGAMING")
SHARE CODE: IMG
ISIN CODE: ZAE000025755
REVIEWED UNAUDITED GROUP RESULTS FOR THE TWELVE MONTHS ENDED 28 FEBRUARY
2001
and
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
SUMMARISED CONSOLIDATED INCOME STATEMENT
UNAUDITED UNAUDITED AUDITED
12 MONTHS 6 MONTHS 8 MONTHS
ENDED ENDED ENDED
28 FEBRUARY 31 AUGUST 28 FEBRUARY
2001 2000 2000
R'000 R'000 R'000
Operating Income 825 6 586 (2 949)
Net Income Before Taxation (3 047) 6 586 (2 949)
Provision For Taxation 0 (1 091) 0
Profit (Loss) Attributable to
Shareholders (3 047) 5 495 (2 949)
Number Of Shares (`000) 80 000 80 000 80 000
Earnings (Loss) Per Share (3.81) 6.87 (3.69)
Headline Earnings (Loss) Per
Share (Cents) (3.81) 6.87 (3.69)
Summarised Consolidated Balance
Sheet
Share Capital 14 775 14 775 14 775
Retained Earnings (5 997) 2 546 (2 949)
Secured Interest Free Loans 3 278 0 0
Interest Bearing Loans 960 0 0
Shareholder Funds 13 016 17 321 11 826
Fixed Assets And Domain Names 2 290 1 101 1 204
Intellectual Property 9 225 9 225 9 225
Loan - Incentive Share Trust 250 250 250
Current Assets
Receivables 781 1 196 794
Accounts Receivable 823 7 283 492
Current Liabilities
Accounts Payable 335 211 139
Provisions 0 432 0
Taxation 0 1 091 0
Bank Overdraft 19 0 0
Net Asset Value Per Share
(Cents) 16.00 21.65 14.78
Cash Flow Statement
UNAUDITED
12 MONTHS
ENDED
29 FEBRUARY
2001
R'0000
Operating Activities (3 047)
Loans Received 3 278
Net Cost of the acquisition
of Fixed Assets (410)
Cash and equivalents
changes during the period (179)
opening 960
closing 781
STATEMENT OF CHANGES IN EQUITY
FOR THE TWELVE MONTHS
ENDED 28 FEBRUARY 2001
Share Accumulated Total
Capital Profit (Loss)
R'000 R'000 R'000
Issued Share Capital
At 29 February 2000 14 775 0 14 775
Nett Profit (Loss) for
the period 0 (2 949) (2 949)
Balance as at 29 February
2000 14 775 (2 949) 11 826
Net Profit (Loss) for the
Period 0 (3 048) (3 048)
Balance as at 28 February
2001 14 775 (5 997) 8 778
COMMENTARY ON RESULTS
The Group's results were adversely affected by the mutually agreed
cancellation of a major agreement with Cybergaming.com PLC. The Group was
beset by major problems in the acceptance of credit cards on online gambling
sites, this accounting for over 90% of online gamblers' method of purchasing
credits at an online casino. This is a problem with which the entire online
gambling industry has beset of late due to wide scale credit card fraud,
abuse from gambling addicts and the denial of claims of cardholders after
gambling on online casino sites. This has created a problem whereby the bulk
of the global credit card merchant service providers will either not accept
online gambling sites as merchants or they impose unacceptable terms and
conditions upon the merchants. The resolution of this problem was time
consuming and involved much of management's time and efforts in the past few
months. This problem has subsequently been satisfactorily resolved and in
addition to that resolution, the Group has secured new and innovative
alternative internet payment processing methods to be utilized by the
Group's licensed online casinos. This will ensure that the Group's licensed
online casinos will be relatively unaffected by payment processing
technology problems facing many of its competitors at this time.
The Group formed new subsidiary companies in this period, namely TIGC
Operations (SA) (Pty) Limited, TIGC Investments (Pty) Limited, a 60%
shareholding in The Internet Bingo (Pty) Limited, a 60% shareholding in The
Internet Lottery (Pty) Limited and an 80% shareholding in Internet Gaming
(Pty) Limited.
The Group is exposed to two third parties in the amount of R3 277 710.00,
being a secured interest free loan with no fixed term of repayment. This
loan is secured by a pledge over the tangible and intangible assets of the
Group. The long term interest bearing loans in the amount of R960 000.00
refer to the total outstanding capital in respect of assets financed by the
Group.
No taxation has been provided for as the Group has significant accumulated
losses.
These financial statements for the twelve month period were unaudited but
were reviewed by the Group's Auditors, Sithole A B & T Inc Chartered
Accountants (South Africa).
SUBSEQUENT EVENTS
The Group has rationalized its overhead cost structure, closed offices and
retrenched non core employees. The Group has disposed of TIGC Operations
(Pty) Limited and TIGC Operations (SA) (Pty) Limited at no consideration
with effect from 1 March 2001. These transactions are not material save for
the reduction of the Group's liabilities and overhead costs. These
transactions were effected in order to allow the Group to focus on its core
business of the sale of fully operational Internet Casino web sites and the
subsequent collection of royalties therefrom.
The Group has outsourced most of its non core functions and expects
significant benefits to flow from the massive reduction in overhead costs.
The Group has extended its relationship with its core licensees in August
2001 and is confident that strong dollar earnings will be derived there from
in the financial year ending 30 June 2002.
The Board of Directors of the Group is satisfied that the Senior Management
and their support personnel are now well positioned and empowered to grow
and develop the Group's business in the ever expanding global online gaming
business. The Group is in the processing of extending its relationship with
licensees of Group online gaming sites and is confident that the revenue
streams what will flow from those relationships will compensate for the loss
of the agreement with Cybergaming.com PLC. All Group revenues are sourced in
United States Dollars and the weakening of the South African Rand against
the United States Dollar should impact positively upon the Group's Rand
earnings.
The Board of Directors has been restructured with the following members
having resigned, namely Mr C E P Colombotti (Non Executive Chairman), Mr R G
Purvis (Non Executive Director), Mr A Santini (Corporate Finance Director)
and Mr S C Lumb as the Group's Chief Executive Officer.
The Board of Directors are now comprised as follows :-
Mr M A Gierdien, Mr K G Metcalf, Mr G J Bunn, Mr S R Schonfeldt, Mr P N Gama
and Mr R W Gresty.
The Group's shares were suspended on the JSE Securities Exchange South
Africa due to the late submission of the Group's Interim Financial
Statements and the Group's failure to appoint a Sponsor. The Group's results
have been released later than expected due to the finalisation of the
dispute with Cybergaming.com PLC, a matter which has materially affected the
Group's earning for this period. The Group is in discussions with various
Sponsors and is hopeful that a Sponsor will be appointed without delay in
order to reinstate the Group's shares for trading on the JSE Securities
Exchange South Africa.
Igaming expects to meet its Pre-Listing forecasts for the financial year
ending 30 June 2002. Shareholders are advised that Igaming has been advised
by the holders of certain share options that they intend to exercise those
rights at such time as the Group's shares are reinstated for trading on the
JSE Securities Exchange South Africa. Should these share options as
aforesaid be exercised in full, the effect of this exercising of the share
options could result in a maximum amount of R10 000 000.00 in the form of a
cash inflow which will be utilized for the Group's marketing and promotional
expenses.
WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcements dated 18 June 2001
and 18 July 2001 and are advised that the negotiations referred to therein
have been terminated. Shareholders are advised that the proposed
transactions with Essential Beverage Holdings Limited and Oxbridge Online
Limited have been terminated.
BY ORDER OF THE BOARD OF DIRECTORS, JOHANNESBURG
13 SEPTEMBER 2001
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