-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PEK3nXagbri179nSg2326IkLS/1m8RvGOO+y1UEak0QXk6EPVDXZ2SWPQw51mhuH uyIm0KqkLfezgrbVHTjTpg== 0000950123-98-006283.txt : 19980629 0000950123-98-006283.hdr.sgml : 19980629 ACCESSION NUMBER: 0000950123-98-006283 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980626 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GTECH HOLDINGS CORP CENTRAL INDEX KEY: 0000857323 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 050450121 STATE OF INCORPORATION: DE FISCAL YEAR END: 0223 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-11250 FILM NUMBER: 98654739 BUSINESS ADDRESS: STREET 1: 55 TECNOLOGY WAY CITY: WEST GREENWICH STATE: RI ZIP: 02817 BUSINESS PHONE: 4013921000 MAIL ADDRESS: STREET 1: 55 TECHNOLOGY WAY STREET 2: LEGAL DEPARTMENT CITY: WEST GREENWICH STATE: RI ZIP: 02817 10-K/A 1 AMENDED FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: February 28, 1998 Commission file number 1-11250 GTECH Holdings Corporation (Exact name of registrant as specified in its charter) Delaware 05-0450121 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 55 Technology Way, West Greenwich, Rhode Island 02817 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (401) 392-1000 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Common Stock $.01 par value Name of Each Exchange on which Registered: New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No On June 16, 1998, there were outstanding 41,302,059 shares of the registrant's Common Stock. 2 The purpose of this amendment to Form 10-K is to include the audited financial statements of Camelot Group plc, a significant equity method foreign investee, pursuant to rule 3.09 of Regulation S-X which requires such financial statements to be filed as an amendment to the Company's Annual Report on Form 10-K not later than six months following the end of Camelot Group plc's 1998 fiscal year. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Financial Statement Schedules and Exhibits:
Page(s) ------- (1) Report of Ernst & Young LLP, Independent Auditors (2) Report of Price Waterhouse, Independent Accountants The following consolidated financial statements of GTECH Holdings Corporation and subsidiaries are included in Item 8: Consolidated Balance Sheets at February 28, 1998 and February 22, 1997 Consolidated Income Statements Fiscal year ended February 28, 1998, Fiscal year ended February 22, 1997 and Fiscal year ended February 24, 1996 Consolidated Statements of Shareholders' Equity Fiscal year ended February 28, 1998, Fiscal year ended February 22, 1997 and Fiscal year ended February 24, 1996 Consolidated Statements of Cash Flows Fiscal year ended February 28, 1998, Fiscal year ended February 22, 1997 and Fiscal year ended February 24, 1996 Notes to Consolidated Financial Statements
3 The following financial statements of Camelot Group plc are included in Item 14: Report of Independent Accountants Profit and Loss Account For the period ended 31 January 1998 For the period ended 1 February 1997 For the period ended 3 February 1996 Balance Sheet 31 January 1998 1 February 1997 Cash Flow Statement For the period ended 31 January 1998 For the period ended 1 February 1997 For the period ended 3 February 1996 Notes to Financial Statements All other financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 4 (3) Exhibits: 3.1 Restated Certificate of Incorporation of Holdings, as amended (incorporated by reference to Exhibit 3.1 to the Form S-l of Holdings and GTECH Corporation ("GTECH"), Registration No. 33-31867 (the "1990 S-1"). 3.2 Certificate of Amendment to the Certificate of Incorporation of Holdings (incorporated by reference to Exhibit 3.2 to the Form S-1 of Holdings, Registration No. 33-48264 (the "July 1992 S-1")). 3.3 Amended and Restated By-Laws of Holdings (incorporated by reference to Exhibit 3.3 of Holdings' 1997 10-K). 4.1 Amended and Restated Credit Agreement, dated as of June 18, 1997, among GTECH, certain lenders and Bank of Montreal, Banque Paribas, Fleet National Bank, The Bank of Nova Scotia and BankBoston, N.A., as Co-Agents; The Bank of New York, as Documentation Agent, and NationsBank, as Administrative Agent (incorporated by reference to Exhibit 4.1 of Holdings' 10-Q for the quarterly period ended May 31, 1997.) 4.2 Note and Guarantee Agreement, dated as of May 15, 1997, among GTECH, Holdings and certain financial institutions (incorporated by reference to Exhibit 4.2 of Holdings' 10-Q for the quarterly period ended May 31, 1997). 4.3 Specimen Form of certificate for Common Stock (incorporated by reference to Exhibit 4.18 of the December 1992 S-1). 4.4 Management Equity Agreement dated as of January 23, 1998 among Holdings and certain Investors signatory thereto (incorporated by reference to Exhibit (b)(9) to the Schedule 13E-3 filed by the Company, GTECH, GTEK Acquisition, DLJCC, Victor Markowicz and Guy B. Snowden, File No. 0-12604, a copy of which may be obtained from the Public Reference Bureau of the Securities and Exchange Commission). 4.5 First Amendment dated as of July 31, 1990 to the Management Equity Agreement dated as of January 23, 1998 among Holdings and certain Investors signatory thereto (incorporated by reference to Exhibit 4.16 to the 1990 S-1, File No. 0-12604, a copy of which may be obtained from the Public Reference Bureau of the Securities and Exchange Commission). 4.6 Amendment No. 2 dates as of May 1, 1990, and Amendment No. 3 dated as of May 6, 1990, to the Management Equity Agreement dated as of January 23, 1990 among the Company and certain Investors signatory thereto (incorporated by reference to Exhibit 10.3 to GTECH's 1991 10-K). 5 4.7 Amendment No. 4, dated as of September 15, 1993, to the Management Equity Agreement dated as of January 23, 1990, among the Company and certain Investors signatory thereto (incorporated by reference to Exhibit 4.13 of the Company's 1994 10-K). 4.8 Amendment No. 6, dated as of October 29, 1993, to the Management Equity Agreement dated as of January 23, 1990 among the Company and certain Investors signatory thereto (incorporated by reference to Exhibit 4.14 of the Company's 1994 10-K). 10.1 Employment Agreement dated as of January 23, 1990 between GTECH, Holdings and Victor Markowicz (incorporated by reference to Exhibit (b) (11) to the Schedule 13E.3 filed by GTECH Corporation, Holdings, GTEK Acquisition, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJCC"), Victor Markowicz and Guy B. Snowden, File No. 0-12604).* 10.2 Amendment to the Employment Agreement dated as of January 23, 1990 between GTECH, Holdings and Victor Markowicz (incorporated by reference to Exhibit 10.2 to the July 1992 S-1).* 10.3 Confirmation of Waiver respecting certain provisions of the Employment Agreement dated as of January 23, 1990 between GTECH, Holdings and Victor Markowicz, dated February 13, 1996 (incorporated by reference to Exhibit 10.3 of Holdings' 1996 10-K).* 10.4 Second Amendment to Employment Agreement dated February 12, 1997 among GTECH, Holdings and Victor Markowicz (incorporated by reference to Exhibit 10.4 of Holdings' 1997 10-K).* **10.5 Severance Agreement and Release dated as of February 28, 1998 by and among GTECH, Holdings and Victor Markowicz.* 10.5 Employment Agreement dated as of January 23, 1990 between GTECH, Holdings and Guy B. Snowden (incorporated by reference to Exhibit (b) (12) to the Schedule 13E.3 filed by GTECH, Holdings, GTEK Acquisition, DLJCC, Victor Markowicz and Guy B. Snowden, file no. 0-12604).* 10.6 Amendment to the Employment Agreement dated as of January 23, 1990 between GTECH, Holdings and Guy B. Snowden (incorporated by reference to Exhibit 10.4 of the July 1992 S-1).* 10.7 Confirmation of Waiver respecting certain provisions of the Employment Agreement dated as of January 23, 1990 between GTECH, the Company and Guy B. Snowden, dated February 13, 1996 (incorporated by reference to Exhibit 10.6 of Holdings' 1996 10-K).* 6 10.8 Second Amendment to Employment Agreement dated as of February 12, 1997 among GTECH, Holdings and Guy B. Snowden (incorporated by reference to Exhibit 10.8 of Holdings' 1997 10-K).* **10.9 Severance Agreement and Release dated as of February 3, 1998 by and among GTECH, Holdings and Guy B. Snowden.* 10.10 Amended and Restated Employment Agreement dated September 19, 1997 between GTECH, Holdings and William Y. O'Connor (incorporated by reference to Exhibit 10.1 of Holdings' 10-Q for the quarterly period ended August 30, 1997).* **10.11 First Amendment to Employment Agreement dated as of April 6, 1998 between GTECH, Holdings and William Y. O'Connor.* **10.12 Amended and Restated Employment Agreement dated as of December 1, 1995 between GTECH and Laurance W. Gay.* 10.13 Agreement dated July 15, 1997 between Holdings and Laurance W. Gay (incorporated by reference to Exhibit 10.3 of Holdings' 10-Q for the quarterly period ended August 30, 1997).* **10.14 Severance Agreement and Release dated March 9, 1998 between GTECH, Holdings and Laurance W. Gay. 10.15 Agreement dated July 15, 1997 between Holdings and Thomas J. Sauser (incorporated by reference to Exhibit 10.4 of Holdings' 10-Q for the quarterly period ended August 30, 1997).* 10.16 Agreement dated July 15, 1997 between Holdings and Michael R. Chambrello (incorporated by reference to Exhibit 10.2 of Holdings' 10-Q for the quarterly period ended August 30, 1997).* 10.17 GTECH Corporation Executive Perquisites Program (incorporated by reference to Exhibit 10.8 of Holdings' 1993 10-K).* 10.18 Form of Indemnification Agreement (incorporated by reference as Exhibit 10.14 of GTECH's 1992 10-K). 10.19 List of Indemnification Agreement signatories and dates (incorporated by reference to Exhibit 10.17 of Holdings' 1996 10-K). **10.20 Form of Executive Separation Agreement and Schedule of Recipients (form of Executive Separation Agreement incorporated by reference to Exhibit 10.18 of Holdings' 1996 10-K).* 7 **10.21 Supplemental Retirement Plan effective January 1, 1992 and List of participants (form of Supplemental Retirement Plan incorporated by reference to Exhibit 10.16 of GTECH's 1992 10-K).* 10.22 Contract for the Texas Lottery Operator for the State of Texas between GTECH and the Texas Comptroller of Public Accounts--Lottery Division, dated March 7, 1992 (incorporated by reference to Exhibit 10.44 of GTECH's 1992 10-K). 10.23 Amendment to the Contract for the Texas Lottery Operator for the State of Texas between GTECH and the Texas Comptroller of Public Accounts--Lottery Division, dated June 1, 1994 (incorporated by reference to Exhibit 10 of Holdings' 10-Q for the quarterly period ended May 25, 1996). 10.24 Second Amendment to the Contract for the Texas Lottery Operator for the State of Texas between GTECH and the Texas Comptroller of Public Accounts--Lottery Division, dated May 28, 1996 (incorporated by reference to Exhibit 10.1 to the Form S-3 of Holdings, Registration No. 333-3602). 10.25 Purchase and Sale Agreement dated 8 February 1994 between Camelot Group plc and GTECH (incorporated by reference to Exhibit 10.31 of Holdings' 1995 10-K). 10.26 Terminals Supply Agreement dated 8 February 1994 among Camelot Group plc, International Computers Limited and GTECH (incorporated by reference to Exhibit 10.32 of the Company's 1995 10-K). 10.27 Field Services Agreement dated 8 February 1994 among Camelot Group plc, International Computers Limited and GTECH (incorporated by reference to Exhibit 10.33 of Holdings' 1995 10-K). 10.28 Lottery Technology Support Services Agreement dated 8 February 1994 between Camelot Group plc and GTECH (incorporated by reference to Exhibit 10.34 of Holdings' 1995 10-K). 10.29 Letter dated March 31, 1998 to William Y. O'Connor, Chairman and Chief Executive Officer of GTECH, from Tim Holley, Chief Executive Officer of Camelot Group plc (incorporated by reference to Exhibit 10.1 of Holdings' 8-K filed on May 5, 1998). 10.30 Letter dated April 1, 1998 to William Y. O'Connor, Chairman and Chief Executive Officer of GTECH, from Tim Holley, Chief Executive Officer of Camelot Group plc (incorporated by reference to Exhibit 10.2 of Holdings' 8-K filed on May 5, 1998). 10.31 Agreement dated April 20, 1998 between Camelot Group plc and GTECH U.K. Limited for the purchase by Camelot Group plc of 11,250,000 of its own shares (incorporated by reference to Exhibit 10.3 of Holdings' 8-K filed on May 5, 1998). 8 10.32 Deed of Variation, dated April 20, 1998, between De La Rue plc, Racal Electronics plc, Cadbury Schweppes plc, International Computers Limited, GTECH UK Limited, Holdings, Camelot Group plc, the Director General of the National Lottery and the Secretary of State for Culture, Media & Sport (incorporated by reference to Exhibit 10.4 of Holdings' 8-K filed on May 5, 1998). 10.33 Exit Agreement between De La Rue plc, Racal Electronics plc, GTECH U.K. Limited, Cadbury Schweppes Public Limited Company, International Computers Limited, GTECH Corporation and Camelot Group (incorporated by reference to Exhibit 10.5 of Holdings' 8-K filed on May 5, 1998). 10.34 Amended and Restated Agreement of Limited Partnership by and among GTECH, GP Technology Associates, L.P. and GP Technology, Inc. dated August 26, 1993; Certificate of Limited Partnership of West Greenwich Technology Associates, L.P. dated August 26, 1993; Amended and Restated Indenture of Lease between GTECH and West Greenwich Technology Associates, L.P. dated August 26, 1993 (incorporated by reference to Exhibit 10.24 of Holdings' 1994 10-K). 10.35 Business Agreement dated December 28, 1990 between Digital Equipment Corporation and GTECH; Work Statement Number NED91188 dated March 11, 1991 to GTECH from Digital Equipment Corporation; First Addendum dated March 19, 1991 to Digital Work Statement Number NED91188 dated March 11, 1991 to GTECH from Digital Equipment Corporation (incorporated by reference to Exhibit 10.57 of the July 1992 S-1). 10.36 Maintenance Agreement Number 117A dated December 1, 1989, between GTECH and Concurrent Computer Corporation (incorporated by reference to Exhibit 10.58 of the July 1992 S-1). 10.37 Restricted Rights Arrangement between Holdings and Mr. O'Connor (incorporated by reference to Exhibit 10.44 of Holdings' 1995 10-K).* 10.38 1992 Outside Directors' Director Stock Unit Plan (incorporated by reference to Exhibit 10.55 of Holdings' 1993 10-K).* 10.39 1994 Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.1 of Holdings' 10-Q for the quarterly period ended May 31, 1997).* 10.40 1996 Non-Employee Directors' Stock Option Plan, as amended (incorporated herein by reference to Exhibit 10.2 of Holdings' 10-Q for the quarterly period ended May 31, 1997).* 10.41 1997 Stock Option Plan (incorporated herein by reference to the Appendix of Holdings' 1997 Notice of Annual Meeting and Proxy Statement).* **21.1 Subsidiaries of the Company. 9 +23.1 Consent of Ernst & Young, LLP. +23.2 Consent of Price Waterhouse. **27.1 Fiscal 1998 Financial Data Schedule. **27.2 Fiscal 1997 Financial Data Schedule. - ------------------------------------------------------- + Filed herewith. ** Filed with original Fiscal 1998 Form 10-K. * Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. Certain instruments defining the rights of holders of long-term debt have not been filed pursuant to item 601(b)(4)(iii)(A) of Regulation SK. Copies of such instruments will be furnished to the Commission upon request. (b) Reports on Form 8-K: A report on Form 8-K was filed by the Company on May 5, 1998. 10 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized on June 26, 1998. GTECH HOLDINGS CORPORATION Date June 26, 1998 By /s/ Robert J. Plourde ---------------------- Robert J. Plourde, Vice President and Corporate Controller 11 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- CAMELOT GROUP PLC ACCOUNTS FOR THE PERIOD ENDED 31 JANUARY 1998 REGISTERED NUMBER: 2822203 12 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS Camelot Group plc has a financial year end of 31 March and prepares its annual report and accounts for that period to comply with the Companies Act 1985. These accounts have been prepared specifically to enable GTECH Corporation, a shareholder in the company, to prepare its own consolidated financial statements and do not represent the results or statutory accounts of the company for its own financial year. In preparing these accounts, the directors are required to: - - select suitable accounting policies and then apply them consistently; - - make judgements and estimates that are reasonable and prudent; - - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; - - prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 1985. They are also responsible for taking reasonable steps to safeguard the assets of the company and to prevent and detect fraud and other irregularities. The directors confirm that they have complied with these requirements, and, having a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, have adopted the going concern basis in preparing the accounts. 13 REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CAMELOT GROUP PLC We have audited the accompanying balance sheets of Camelot Group plc as of 31 January 1998 and 1 February 1997 and the related profit and loss accounts and cash flow statements, for the periods ended 31 January 1998, 1 February 1997, and 3 February 1996, all expressed in pounds sterling. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United Kingdom which do not differ in any material respect from auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements audited by us present fairly, in all material respects, the financial position of Camelot Group plc at 31 January 1998 and at 1 February 1997 and the results of its operations and cash flows for the periods ended 31 January 1998, 1 February 1997 and 3 February 1996 in conformity with generally accepted accounting principles in the United Kingdom. Accounting principles generally accepted in the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of net income expressed in pounds sterling for the periods ended 31 January 1998, 1 February 1997 and 3 February 1996 and the determination of shareholders' equity and financial position also expressed in pounds sterling at 31 January 1998 and 1 February 1997 to the extent summarised in Note 24 to the financial statements. Price Waterhouse Chartered Accountants London, England 23 March 1998 14 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
PROFIT AND LOSS ACCOUNT For the period ended 31 January 1998 -------------------------------------------------------------------------------------------------------------------------- 31 January 1 February 3 February Notes 1998 1997 1996 pounds sterling m pounds sterling m pounds sterling m -------------------------------------------------------------------------------------------------------------------------- TURNOVER - CONTINUING OPERATIONS On-line 4,718.1 3,684.9 3,588.6 Instants 799.1 908.3 1,399.8 -------------------------------------------------------------------------------------------------------------------------- 5,517.2 4,593.2 4,988.4 COST OF SALES Prizes (2,743.8) (2,319.8) (2,509.2) Lottery duty (662.1) (551.2) (598.6) National Lottery Distribution Fund (1,554.1) (1,240.0) (1,350.9) Retailers' commission (281.9) (235.1) (253.7) Terminal and data communication costs (100.0) (101.0) (104.7) -------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 175.3 146.1 171.3 Operating costs (95.7) (93.8) (96.7) Other operating income 1.2 1.2 1.1 -------------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT - CONTINUING OPERATIONS 1 80.8 53.5 75.7 Net interest receivable 4 6.1 11.5 8.8 -------------------------------------------------------------------------------------------------------------------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 86.9 65.0 84.5 Tax on profit on ordinary activities 5 (28.2) (22.3) (29.1) -------------------------------------------------------------------------------------------------------------------------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 58.7 42.7 55.4 Dividends 6 (35.0) (18.9) (9.5) -------------------------------------------------------------------------------------------------------------------------- PROFIT RETAINED FOR THE PERIOD 16 23.7 23.8 45.9 --------------------------------------------------------------------------------------------------------------------------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains or losses other than its profit for the period. HISTORICAL COST PROFITS There are no differences between the results disclosed above and the results on an unmodified historical cost basis. 15 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
BALANCE SHEET At 31 January 1998 - --------------------------------------------------------------------------------------------------------------------------- 31 January 1 February Notes 1998 1997 pounds sterling m pounds sterling m - --------------------------------------------------------------------------------------------------------------------------- FIXED ASSETS Tangible assets 7 72.9 91.7 - --------------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS Stocks 8 5.1 1.4 Debtors: amounts falling due within one year 9 99.1 98.2 Debtors: amounts falling due after more than one year 9 30.8 44.9 Amounts recoverable from the Operational Trust in respect of 10a 78.1 81.0 prizes Trust reserve account 10b 11.0 11.0 Cash at bank and in hand 10c 232.5 159.8 - --------------------------------------------------------------------------------------------------------------------------- 456.6 396.3 CURRENT LIABILITIES Creditors: amounts falling due within one year 12 (362.0) (341.7) - --------------------------------------------------------------------------------------------------------------------------- NET CURRENT ASSETS 94.6 54.6 - --------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS LESS CURRENT LIABILITIES 167.5 146.3 Creditors: amounts falling due after more than one year 12 (1.0) (1.4) Provision for liabilities and charges 13 (26.4) (28.5) - --------------------------------------------------------------------------------------------------------------------------- 140.1 116.4 - --------------------------------------------------------------------------------------------------------------------------- CAPITAL AND RESERVES Called up share capital 15 50.0 50.0 Profit and loss account 16 90.1 66.4 - --------------------------------------------------------------------------------------------------------------------------- Equity shareholders' funds 17 140.1 116.4 - ---------------------------------------------------------------------------------------------------------------------------
Approved by the Board TIM HOLLEY PETER C M MURPHY CHIEF EXECUTIVE DIRECTOR OF BUSINESS OPERATIONS 23 MARCH 1998 23 MARCH 1998 16 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
CASH FLOW STATEMENT For the period ended 31 January 1998 - ------------------------------------------------------------------------------------------------------------------------- 31 January 1 February 3 February Notes 1998 1997 1996 pounds pounds pounds sterling m sterling m sterling m - ------------------------------------------------------------------------------------------------------------------------- NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 11a 102.5 (14.1) 249.8 - ------------------------------------------------------------------------------------------------------------------------- RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 16.2 10.7 8.8 Interest paid (3.3) - - Interest element of finance lease payments (0.2) (0.3) (0.4) - ------------------------------------------------------------------------------------------------------------------------- 12.7 10.4 8.4 - ------------------------------------------------------------------------------------------------------------------------- TAXATION Taxation paid (9.4) (25.0) (4.2) Consortium relief payments (0.7) (10.6) - - ------------------------------------------------------------------------------------------------------------------------- (10.1) (35.6) (4.2) - ------------------------------------------------------------------------------------------------------------------------- PAYMENT TO THE TRUST RESERVE ACCOUNT 10b - (6.0) - - ------------------------------------------------------------------------------------------------------------------------- CAPITAL EXPENDITURE Purchase of tangible fixed assets (2.0) (14.5) (44.2) - ------------------------------------------------------------------------------------------------------------------------- EQUITY DIVIDENDS PAID 6 (35.0) (18.9) (9.5) - ------------------------------------------------------------------------------------------------------------------------- MANAGEMENT OF LIQUID RESOURCES (Increase)/decrease in term deposits 11c (74.0) 100.0 (203.4) - ------------------------------------------------------------------------------------------------------------------------- FINANCING Capital element of finance lease payments 11b (0.6) (0.6) (0.4) Increase in amounts borrowed 1.0 - - - ------------------------------------------------------------------------------------------------------------------------- 0.4 (0.6) (0.4) - ------------------------------------------------------------------------------------------------------------------------- (DECREASE)/INCREASE IN CASH 11d (5.5) 20.7 (3.5) - -------------------------------------------------------------------------------------------------------------------------
17 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- ACCOUNTING POLICIES a. BASIS OF ACCOUNTING The accounts are prepared under the historical cost convention and in accordance with all applicable UK accounting standards. These accounts have been prepared solely for the purpose of providing results for the period from 2 February 1997 to 31 January 1998 for GTECH UK Limited, one of the five shareholders and do not constitute the statutory accounts of the company within the meaning of the Companies Act 1985 of Great Britain for any of the periods presented. b. GROUP ACCOUNTS The accounts presented are for Camelot Group plc only. Camelot Group plc has three 100% equity owned subsidiaries. These have not been consolidated as they are dormant and are not material for the purposes of giving a true and fair view. c. TURNOVER On-line turnover comprises lottery ticket sales with adjustments being made for on-line multidraw and subscriptions tickets. Turnover for the periods ended 1 February 1997 and 3 February 1996 include sales for 52 draws. Turnover for the period ended 31 January 1998 includes 104 draws following the launch of the mid week draw on 5 February 1997. Instant ticket sales are recognised once the pack of tickets is settled. A pack becomes settled on the earlier of 15 days after the first ticket is sold or when 60% of the prizes are validated. All turnover is derived from and originates in the United Kingdom. d. TAXATION The charge for taxation is based on the profit for the period. Deferred taxation is accounted for in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts. All deferred tax liabilities are fully provided. e. VALUE ADDED TAX All costs include the attributable value added tax to the extent that it is not recoverable. f. FIXED ASSETS AND DEPRECIATION Fixed assets are stated at cost less depreciation. The company's policy is to write off the cost of assets evenly over the shorter of the estimated useful life of the asset or the remaining section 5 licence period. The principal rates of depreciation used are as follows: Short leasehold improvements The shorter of the lease period and the remaining licence period. Computer hardware 25% Fixtures and fittings 20% Terminals and network The shorter of seven years and the installation remaining licence period. Permanent point of sale 50% equipment Other plant and equipment 20% - 50%
18 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- g. LEASING Operating lease rentals are charged to the profit and loss account as incurred. Tangible fixed assets acquired under finance leases are included in the balance sheet at their equivalent capital value and are depreciated over their useful lives. The corresponding liabilities are recorded as a creditor and the interest element of the finance lease rentals is charged to the profit and loss account. h. STOCKS Stocks consist of Instants tickets, terminal rolls and playslips. They are valued at cost using the first-in first-out method or at net realisable value, whichever is the lower. i. PENSIONS The company operates a defined contribution scheme. The cost of the contributions is charged to the profit and loss account in the period to which they relate. j. CASH AND LIQUID RESOURCES In the cash flow statement, cash comprises cash in hand, overdrafts and overnight term deposits. Liquid resources comprise term deposits maturing within twelve months from inception, other than overnight term deposits. k. ESCROW ACCOUNT The escrow account is a fund held for the sole benefit of the National Lottery Distribution Fund. Amounts paid or payable to the escrow account are allocated to the profit and loss account evenly over the period of the licence, commencing from the first day of ticket sales. l. ADVERTISING AND MARKETING COSTS Advertising and marketing costs are charged to the profit and loss account when they are incurred. 19 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
1998 1997 1996 pounds pounds pounds 1. OPERATING PROFIT sterling m sterling m sterling m ----------------------------------------------------------------- ---------- ----------- ---------- Operating profit is stated after charging: Depreciation on owned assets 20.3 23.4 17.0 Depreciation on assets under finance leases 0.8 0.7 0.6 Loss on disposal of fixed assets 0.9 1.9 - Auditors' remuneration - audit 0.1 0.1 0.2 - prize draw attendance 0.2 0.2 0.2 - other services 0.3 0.2 0.2 Operating lease rentals - land and buildings 1.2 1.2 1.5 - plant and equipment 1.8 1.2 0.9 ----------------------------------------------------------------- ---------- ----------- ---------- 2. EMPLOYEE NUMBERS AND COSTS ----------------------------------------------------------------- ---------- ----------- ---------- EMPLOYEE COSTS (INCLUDING DIRECTORS' EMOLUMENTS) Wages and salaries 19.2 15.5 14.2 Social security costs 1.6 1.4 1.4 Pension costs 1.1 0.6 1.0 ----------------------------------------------------------------- ---------- ----------- ---------- Total 21.9 17.5 16.6 ----------------------------------------------------------------- ---------- ----------- ----------
1998 1997 1996 NUMBER Number Number Average number of employees 681 625 553 ----------------------------------------------------------------- ---------- ----------- ----------
3. DIRECTORS' REMUNERATION --------------------------------------------------------------------------- The emoluments of the executive directors are determined by a remuneration committee consisting exclusively of non-executive directors. The committee is constituted in accordance with the Cadbury and Greenbury committees' guidelines. The five non-executive directors and their alternates nominated by the shareholder companies do not receive any emoluments from Camelot. The emoluments of the other three non-executive directors are determined by the shareholder companies. All emoluments are paid to the directors out of the amount retained by Camelot under the terms of the Licence to run The National Lottery after paying all prizes, duties and contributions to the National Lottery Distribution Fund. The executive directors are eligible for annual bonuses if target returns to the National Lottery Distribution Fund and profit to Camelot are met. These bonuses are capped at 50% of annual base salary. On-target performance yields 30% of annual base salary. The first annual bonus was paid in the period to 3 February 1996 based on the results for the period from 1 June 1994 to 30 June 1995. Bonuses paid in the period ended 1 February 1997 were based on the results for the period ended 31 March 1996. Bonuses paid in the period ended 31 January 1998 were based on the results for the year ended 31 March 1997. 20 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- In order to drive the long term performance of the company and returns to The National Lottery Distribution Fund, and in the absence of a share option scheme, the remuneration committee authorised a long-term incentive plan for the executive directors and other senior executives. Bonuses paid under this plan were based upon cumulative funds generated for the National Lottery Distribution Fund and cumulative pre-tax profits over the period 1 June 1994 to 30 September 1997. The on-target bonus payable for this scheme was 100% of annual base salary. The maximum amount payable was 140% of annual base salary. This bonus is non pensionable. Performance related bonuses below include final payments relating to this scheme.
Performance Salary/ related Benefits 1998 1997 1996 fees bonuses in kind Total Total Total pounds pounds pounds pounds pounds pounds sterling sterling sterling sterling sterling sterling 000 000 000 000 000 000 - -------------------------------------------------- ----------- --------------- ---------- ---------- --------- ---------- CHAIRMAN Sir George Russell (appointed 27.4.95) 70 - - 70 70 38 Sir Ron Dearing (resigned 27.4.95) - - - - - 10 CHIEF EXECUTIVE Tim Holley 282 328 28 638 586 383 EXECUTIVE DIRECTORS David Clark 154 179 18 351 350 241 Norman Hawkins (resigned 30.9.96) - - - - 338 212 Peter Murphy 169 206 46 421 352 201 David Rigg (resigned 3.10.97) 106 190 16 312 325 170 Dianne Thompson (appointed 3.2.97) 152 65 18 235 - - NON-EXECUTIVE DIRECTORS Mary Baker 22 - - 22 20 20 Jim Butler 22 - - 22 20 20 Sir Peter Imbert 22 - - 22 20 20 - -------------------------------------------------- ----------- --------------- ---------- ---------- --------- ---------- 999 968 126 2,093 2,081 1,315 - -------------------------------------------------- ----------- --------------- ---------- ---------- --------- ----------
No other non-executive director received remuneration of any kind. Included in performance related bonuses is an amount of pounds sterling 601,674 relating to the long-term incentive plan. The total emoluments of the directors including pension contributions were as follows:-
1998 1997 1996 pounds pounds pounds sterling sterling sterling 000 000 000 - -------------------------------------------------------------------------- ------------- ------------ ------------ Executive directors' salaries and benefits 989 905 833 Executive directors' performance related payments 968 1,046 374 Non-executive directors' fees 66 60 70 Chairman's salary and benefits 70 70 38 Pension contributions - money purchase schemes 144 97 120 Pension contributions - defined benefits schemes 118 139 212 - -------------------------------------------------------------------------- ------------- ------------ ------------ 2,355 2,317 1,647 - -------------------------------------------------------------------------- ------------- ------------ ------------
Retirement benefits accrued to four directors including the chairman under a money purchase pension scheme and to two directors under a defined benefits scheme. The emoluments of Sir George Russell, the chairman for the year comprise salary of pounds sterling 70,417 (1997: pounds sterling 68,750, 1996: pounds sterling 37,500) and benefits in kind of nil (1997: pounds sterling 1,000, 1996: nil). Sir George Russell accrued pension contributions of pounds sterling 45,834 (1997: pounds sterling 27,083, 1996: pounds sterling 18,750). The emoluments of the chief executive, who was the highest paid director, comprise salary of pounds sterling 281,533 (1997: pounds sterling 258,250, 1996: pounds sterling 243,264), benefits in kind of pounds sterling 27,920 (1997: pounds sterling 24,976, 1996: pounds sterling 17,252) excluding pension contributions, and performance related bonuses of pounds sterling 327,898 (1997: pounds sterling 302,890, 1996: pounds sterling 123,000). The company made pension contributions of pounds sterling 102,603 (1997: pounds sterling 94,448, 1996: pounds sterling 157,028) on his behalf into a defined benefit scheme. His accrued pension benefit at 31 January 1998 was pounds sterling 146,802 (1997: pounds sterling 128,677). 21 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
1998 1997 1996 4. NET INTEREST RECEIVABLE pounds pounds pounds sterling m sterling m sterling m ----------------------------------------------------------------------- ---------- ---------- ----------- Interest receivable 16.2 11.8 9.2 Interest payable on finance leases (0.2) (0.3) (0.4) Other Interest payable (9.9) - - ----------------------------------------------------------------------- ---------- ---------- ----------- 6.1 11.5 8.8 ----------------------------------------------------------------------- ---------- ---------- ----------- 5. TAX ON PROFITS ON ORDINARY ACTIVITIES ----------------------------------------------------------------------- ---------- ---------- ---------- UK corporation tax based on the profit for the year 33.7 1.9 32.4 Deferred taxation (credit)/charge (5.5) 20.4 (3.3) ----------------------------------------------------------------------- ---------- ---------- ---------- 28.2 22.3 29.1 ----------------------------------------------------------------------- ---------- ---------- ----------
The corporation tax charge and deferred tax charge or credit is based on a corporation tax rate of 33% up to 31 March 1997 and 31% from 1 April 1997 onwards. DEFERRED TAXATION ----------------------------------------------------------------------- ---------- ---------- ---------- Timing differences between capital allowances and depreciation (0.1) (3.3) 6.2 Other timing differences (5.4) 23.7 (9.5) ----------------------------------------------------------------------- ---------- ---------- ---------- (5.5) 20.4 (3.3) ----------------------------------------------------------------------- ---------- ---------- ----------
Other timing differences mainly relate to an amount paid in respect of the escrow account (see note 14). 6. DIVIDENDS ----------------------------------------------------------------------- ----------- ---------- ---------- Final dividend paid for the financial year ended 31 March 1997: 10p 5.0 8.9 - per share (1997: 17.8p per share, 1996: nil) Interim dividends paid for the financial year ending 31 March 1998: 60p per share (1997: 20p per share, 1996: 19p per share) 30.0 10.0 9.5 ----------------------------------------------------------------------- ----------- ---------- ---------- TOTAL 35.0 18.9 9.5 ----------------------------------------------------------------------- ----------- ---------- ----------
22 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
Short leasehold Plant and improvements equipment Total pounds pounds pounds 7. TANGIBLE ASSETS sterling m sterling m sterling m ------------------------------------------------------ ---------------- --------------- ----------------- COST At 2 February 1997 6.6 127.7 134.3 Additions 0.1 3.1 3.2 Disposals - (2.1) (2.1) ------------------------------------------------------ ---------------- --------------- ----------------- AT 31 JANUARY 1998 6.7 128.7 135.4 ------------------------------------------------------ ---------------- --------------- ----------------- ACCUMULATED DEPRECIATION At 2 February 1997 1.8 40.8 42.6 Provision for the period 0.9 20.2 21.1 Disposals - (1.2) (1.2) ------------------------------------------------------ ---------------- --------------- ----------------- AT 31 JANUARY 1998 2.7 59.8 62.5 ------------------------------------------------------ ---------------- --------------- ----------------- NET BOOK AMOUNT At 2 February 1997 4.8 86.9 91.7 AT 31 JANUARY 1998 4.0 68.9 72.9 ------------------------------------------------------ ---------------- --------------- -----------------
The net book amount of plant and equipment held under finance leases is pounds sterling 1.9m (1997: pounds sterling 1.6m).
1998 1997 8. STOCKS pounds pounds sterling m sterling m ----------------------------------------------------------------------------- -------------- --------------- Instant tickets 3.8 1.2 Playslips, terminal rolls and other consumables 1.3 0.2 ----------------------------------------------------------------------------- -------------- --------------- 5.1 1.4 ----------------------------------------------------------------------------- -------------- --------------- 9. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR ----------------------------------------------------------------------------- -------------- -------------- Trade debtors 67.9 68.1 Advance corporation tax recoverable - 4.7 Corporation tax - 0.9 Escrow deferred expense (see note 14) 14.1 14.1 Prepayments and accrued income 17.1 10.4 ----------------------------------------------------------------------------- -------------- -------------- 99.1 98.2 ----------------------------------------------------------------------------- -------------- -------------- Trade debtors represent amounts due from retailers. DEBTORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR ----------------------------------------------------------------------------- -------------- -------------- Escrow deferred expense (see note 14) 30.8 44.9 ----------------------------------------------------------------------------- -------------- --------------
23 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- 10. TRUST ACCOUNTS AND CASH ----------------------------------------------------------------------- In order to protect the interests of prize winners and players, Camelot has established trust accounts operated by an independent trustee, The Law Debenture Trust Corporation plc. There are a number of trust accounts operated in order to separate funds to be paid for prizes and amounts received from players in respect of future draws from Camelot's own funds. a. AMOUNTS RECOVERABLE FROM THE TRUST IN RESPECT OF PRIZES - OPERATIONAL TRUST Funds in the operational trust represent the outstanding prize liability. Camelot is reimbursed retrospectively as prizes are paid. The balance of any interest arising on this account (after expenses of the trust) is for the benefit of The National Lottery Distribution Fund. The operational trust account balance of pounds sterling 78.1m (1997: pounds sterling 81.0m) represents the amounts recoverable from the trust in respect of prizes paid by the company and is shown as a current asset. b. TRUST RESERVE ACCOUNT Camelot transferred pounds sterling 5m into a trust account at the launch of the on-line game. During the year ended 1 February 1997 Camelot transferred a further pounds sterling 6m into the trust account at the launch of the midweek on-line game. The amount (or the relevant part) will be repayable to Camelot at the end of the section 5 licence period in accordance with the trust deed. This amount is recoverable after more than one year. c. CASH AT BANK AND IN HAND The split of Camelot's cash balances between Camelot accounts and other trust accounts is as follows:
1998 1997 CASH AT BANK AND IN HAND pounds sterling m pounds sterling m --------------------------------------------------------------------------- ------------- ------------- Camelot bank accounts and short term deposits 202.3 130.0 Other trust bank accounts 30.2 29.8 --------------------------------------------------------------------------- ------------- ------------- 232.5 159.8 --------------------------------------------------------------------------- ------------- -------------
SUBSCRIPTION TRUST Amounts transferred to the subscription trust are those amounts received from players relating to future draws, whether by subscription or by using the multidraw facility. Camelot is reimbursed after the draw to which the funds relate. The subscription trust balance is included in trust bank accounts in the table above. The trust accounts and interest received thereon are subject to first fixed and floating charges in favour of the trustee. Floating charges have been given in respect of certain Camelot assets to the trustee and to Camelot's bankers, The Royal Bank of Scotland plc. 24 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
1998 1997 1996 pounds pounds pounds 11. NOTES TO THE CASH FLOW STATEMENT sterling m sterling m sterling m -------------------------------------------------------------------- ------------- ------------ ---------- A. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES -------------------------------------------------------------------- ------------- ------------ ---------- Operating profit 80.8 53.5 75.7 Depreciation 21.1 24.1 17.6 Loss on disposal of fixed assets 0.9 1.9 - MOVEMENT IN WORKING CAPITAL (Increase)/decrease in stocks (3.7) 4.0 (1.9) Decrease/(increase) in debtors 7.7 1.7 (91.1) Decrease/(increase) in amount recoverable from the Trust in 2.9 (13.8) (39.6) respect of prizes (Decrease)/increase in creditors (7.2) (85.5) 289.1 -------------------------------------------------------------------- ------------- ------------ ---------- NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 102.5 (14.1) 249.8 -------------------------------------------------------------------- ------------- ------------ ----------
Share Finance capital leases pounds pounds B. ANALYSIS OF CHANGES IN FINANCING DURING THE PERIOD sterling m sterling m -------------------------------------------------------------------- ------------- ------------ AT 2 FEBRUARY 1997 50.0 2.0 Inception of finance lease contracts 1.1 Cash outflow from finance lease payments (0.6) -------------------------------------------------------------------- ------------- ------------ AT 31 JANUARY 1998 50.0 2.5 -------------------------------------------------------------------- ------------- ------------
C. ANALYSIS OF CHANGES IN CASH AND LIQUID RESOURCES DURING THE PERIOD 1998 1997 1996 pounds pounds pounds sterling m sterling m sterling m CASH -------------------------------------------------------------------- ------------- ------------ ---------- AT BEGINNING OF PERIOD 34.8 14.1 17.6 (Decrease)/increase in period (1.3) 20.7 (3.5) -------------------------------------------------------------------- ------------- ------------ ---------- AT END OF PERIOD 33.5 34.8 14.1 -------------------------------------------------------------------- ------------- ------------ ---------- TERM DEPOSITS -------------------------------------------------------------------- ------------- ------------ ---------- AT BEGINNING OF PERIOD 125.0 225.0 21.6 Increase/(decrease) in period 74.0 (100.0) 203.4 -------------------------------------------------------------------- ------------- ------------ ---------- AT END OF PERIOD 199.0 125.0 225.0 -------------------------------------------------------------------- ------------- ------------ ---------- -------------------------------------------------------------------- ------------- ------------ ---------- TOTAL CASH AT BANK AND IN HAND 232.5 159.8 239.1 -------------------------------------------------------------------- ------------- ------------ ----------
25 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
D. ANALYSIS OF NET FUNDS At 2 Cash flow Other non - At 31 January February 1997 cash changes 1998 pounds sterling m pounds sterling m pounds sterling m pounds sterling m -------------------------------- -------------- ----------------- ---------------- ---------------- ----------------- Cash in hand, at bank 34.8 (1.3) 33.5 Overdrafts - (4.2) (4.2) ----------------- ----------------- (5.5) ----------------- ----------------- Debt due within 1 year - (1.0) (1.0) Finance leases (2.0) 0.6 (1.1) (2.5) ----------------- (0.4) ----------------- ----------------- Liquid resources 125.0 74.0 199.0 ----------------- -------------------------------- -------------- ----------------- ---------------- ---------------- TOTAL 157.8 68.1 (1.1) 224.8 -------------------------------- -------------- ----------------- ---------------- ----------------
E. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS pounds sterling m ----------------------------------------------------------------------------------------------- ----------------- Decrease in cash in the period (5.5) Cash inflow from increase in debt and lease financing (0.4) Cash outflow from increase in liquid resources 74.0 --------------- Change in net funds resulting from cash flows 68.1 New finance leases (1.1) --------------- Movement in net funds in the period 67.0 Net funds at 2 February 1997 157.8 --------------- NET FUNDS AT 31 JANUARY 1998 224.8 ---------------
26 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
1998 1997 12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR pounds sterling m pounds sterling m ------------------------------------------------------------------- -------------- ------------- Bank loans and overdrafts 5.2 - Trade creditors 13.3 23.4 Accruals 20.5 20.1 Fixed asset creditors - 0.4 Lottery duty 63.9 49.9 Amounts payable to the National Lottery Distribution Fund 36.4 22.6 Advance receipts for future draws 23.5 12.3 Prize liability 91.6 99.1 Outstanding prize liability commitment 88.0 113.3 Taxation payable 18.1 - Obligations under finance leases 1.5 0.6 ------------------------------------------------------------------- -------------- ------------- 362.0 341.7 ------------------------------------------------------------------- -------------- -------------
Advance receipts for future draws represent the multidraw and subscription payments relating to future draws. The prize liability represents unclaimed prizes. At 31 January 1998 Camelot had transferred pounds sterling 78.1m into the trust to meet these liabilities (1997: pounds sterling 81.0m). The outstanding prize liability commitment represents the difference between the target prize payout commitment and the actual payout. Any amounts not utilised for the payment of prizes are for the benefit of the National Lottery Distribution Fund and will be paid over to the National Lottery Distribution Fund in July 1998.
1998 1997 CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR pounds pounds sterling m sterling m ------------------------------------------------------------------- -------------- -------------- Obligations under finance leases payable within five years 1.0 1.4 ------------------------------------------------------------------- -------------- --------------
At 31 January 1998 the company had a total of pounds sterling 19m of undrawn borrowing facilities (1997: pounds sterling 20m). This is analysed between a pounds sterling 10m (1997: pounds sterling 10m) undrawn committed revolving credit facility and a pounds sterling 9m (1997: pounds sterling 10m) undrawn money market facility. In addition there is an undrawn overdraft facility of pounds sterling 25.8m (1997: pounds sterling 30m) available to the company. The loan was denominated in sterling at a fixed interest rate.
Deferred Other taxation provisions Total 13. PROVISIONS FOR LIABILITIES AND CHARGES pounds pounds pounds sterling m sterling m sterling m ------------------------------------------------------------------- ------------ ------------ ---------- At 1 February 1997 17.1 11.4 28.5 Utilised in the period (5.5) (1.6) (7.1) Provided in the period - 5.0 5.0 ------------------------------------------------------------------- ------------ ------------ ---------- AT 31 JANUARY 1998 11.6 14.8 26.4 ------------------------------------------------------------------- ------------ ------------ ----------
27 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- 14. ESCROW ACCOUNT ----------------------------------------------------------------------- The licence provides for Camelot to make a payment to an escrow account based on a percentage of 2.5% applied to previous financial years' sales levels less pounds sterling 40m. The balance is held in this account for the benefit of The National Lottery Distribution Fund. As stated in the accounting policy note, amounts payable to the escrow account are allocated to the profit and loss account evenly over the period of the licence, commencing from the first day of ticket sales. In 1998 pounds sterling 14.1m was charged to the profit and loss (1997: pounds sterling 14.1m, 1996: pounds sterling 14.1m). The first payment to the escrow account of pounds sterling 90.4m was made on 12 April 1996. The difference between the payment and the cumulative charge to profit has been treated as a deferred expense and is disclosed within debtors. The payment gives rise to a deferred tax charge (see note 5).
1998 1997 15. SHARE CAPITAL pounds pounds sterling m sterling m --------------------------------------------------------------------------- -------------- -------------- AUTHORISED 100,000,000 ordinary shares of pounds sterling 1 each 100.0 100.0 ALLOTTED, CALLED UP AND FULLY PAID Ordinary shares in issue 50.0 50.0 --------------------------------------------------------------------------- -------------- --------------
ANALYSIS OF SHAREHOLDING Shareholding Number of % Shares --------------------------------------------------------------------------- -------------- -------------- Cadbury Schweppes plc 22.5 11,250,000 De La Rue plc 22.5 11,250,000 GTECH UK Limited 22.5 11,250,000 International Computers Limited 10.0 5,000,000 Racal Electronics plc 22.5 11,250,000 --------------------------------------------------------------------------- -------------- --------------
1998 1997 16. RESERVES pounds pounds sterling m sterling m --------------------------------------------------------------------------- -------------- -------------- Profit and loss account at the beginning of the period 66.4 42.6 Retained profit for the period 23.7 23.8 --------------------------------------------------------------------------- -------------- -------------- PROFIT AND LOSS ACCOUNT AT THE END OF THE PERIOD 90.1 66.4 --------------------------------------------------------------------------- -------------- --------------
28 Camelot Group plc - accounts at 31 January 1998 - --------------------------------------------------------------------------------
1998 1997 1996 17. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS pounds pounds pounds STERLING m sterling m sterling m --------------------------------------------------------------------- -------------- --------------- --------------- Profit for the period 58.7 42.7 55.4 Dividends (35.0) (18.9) ( 9.5) --------------------------------------------------------------------- -------------- --------------- --------------- Retained profit for the period 23.7 23.8 45.9 Balance at the beginning of the period 116.4 92.6 46.7 --------------------------------------------------------------------- -------------- --------------- --------------- BALANCE AT THE END OF THE PERIOD 140.1 116.4 92.6 --------------------------------------------------------------------- -------------- --------------- ---------------
18. FINANCIAL COMMITMENTS AND CONTINGENT LIABILITIES ------------------------------------------------------------------------ There was no outstanding commitment for capital expenditure which had been contracted for (1997: nil). 19. CONTINGENT LIABILITIES ------------------------------------------------------------------------ If the licence is revoked for any reason, Camelot will be liable for a payment of pounds sterling 40m to The National Lottery Distribution Fund. The shareholders have provided unconditional and irrevocable guarantees to pay this amount. Fixed and floating charges have been given on certain assets to the trustee and to The Royal Bank of Scotland plc. See note 10 for further details.
1998 1998 1997 1997 Land and Plant and Land and Plant and buildings equipment buildings equipment 20. OPERATING LEASES pounds pounds pounds pounds sterling m sterling m sterling m sterling m --------------------------------------------- ------------ ---------- ------------ ----------- Payments to be made in the following year relating to annual operating lease commitments expiring: Between two and five years 1.2 1.1 1.2 1.2 --------------------------------------------- ------------ ---------- ------------ -----------
21. PENSION ARRANGEMENTS ------------------------------------------------------------------------- The company operates a defined contribution scheme. Employees who transferred from shareholder companies have continued to participate in their respective shareholder pension plans via an agreed deed of participation. All amounts payable under these schemes are charged to the profit and loss account as they fall due. The total amount charged in respect of pensions to the profit and loss account in 1998 was pounds sterling 1.1m (1997: pounds sterling 0.6m, 1996: pounds sterling 1.0m). 29 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- 22. RELATED PARTY TRANSACTIONS -------------------------------------------------------------------------- Camelot has a number of contracts with its shareholders, their parent and/or their subsidiary companies. The main services provided during the period were: Cadbury Schweppes plc: Consultancy services. De La Rue plc: Consultancy services regarding the supply of consumables and Instants tickets. GTECH Corporation: Supply of Instants terminals. Warranty for on-line and Instants terminals. Supply of software and software support. General consultancy. International Computers Terminal maintenance. Limited: Retailer training. Racal Electronics plc: Network communications and maintenance.
The amounts included in the accounts for the period to 31 January 1998 excluding VAT are given below:-
---------------------------------------------------------------------------------------------------------------- Purchases of Amounts revenue items Purchases of payable/(prepaid) and stock capital items at 31 January 1998 pounds pounds pounds sterling m sterling m sterling m ---------------------------------------------------------------------------------------------------------------- CADBURY SCHWEPPES PLC 0.6 - - DE LA RUE PLC 0.7 - - GTECH CORPORATION 30.8 - 4.6 INTERNATIONAL COMPUTERS LIMITED 6.7 - (0.5) RACAL ELECTRONICS PLC 20.0 - (6.9) ----------------------------------------------------------------------------------------------------------------
The agreements with De La Rue plc for the supply of consumables and Instants tickets, and Cadbury Schweppes plc for consultancy services were terminated during the period for sums of pounds sterling 0.7 million and pounds sterling 0.6 million respectively. These amounts have been charged against profit and are included in the above table. In addition a payment of pounds sterling 0.7m was paid to International Computers Limited in respect of consortium taxation relief. The amounts included in the accounts for the period to 1 February 1997 excluding VAT are given below:-
---------------------------------------------------------------------------------------------------------------- Purchases of revenue items Purchases of Amounts and stock capital items payable/(prepaid) pounds pounds at 1 February 1997 sterling m sterling m pounds sterling m ---------------------------------------------------------------------------------------------------------------- Cadbury Schweppes plc 0.6 - 0.2 De La Rue plc 7.8 - - GTECH Corporation* 26.1 0.9 4.7 International Computers Limited* 7.9 7.6 (0.5) Racal Electronics plc 21.5 5.1 4.4 ----------------------------------------------------------------------------------------------------------------
30 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- The amounts included in the accounts for the period to 3 February 1996 excluding VAT are given below:-
--------------------------------------------------------------------------------------------------------- Purchases of Amounts payable revenue items Purchases of at 3 February and stock capital items 1996 pounds pounds pounds sterling m sterling m sterling m --------------------------------------------------------------------------------------------------------- Cadbury Schweppes plc 0.5 - 0.2 De La Rue plc 17.3 - 0.2 GTECH Corporation* 25.9 3.8 3.6 International Computers Limited* 8.5 11.1 0.6 Racal Electronics plc 14.1 8.1 3.1 ---------------------------------------------------------------------------------------------------------
* On-line terminal kits were supplied by GTECH Corporation (the parent company of GTECH UK Limited) to International Computers Limited and then sold by International Computers Limited to Camelot Group plc. 23. SUBSIDIARY UNDERTAKINGS ---------------------------------------------------------------------- Camelot Group plc owns the entire equity share capital of the following dormant companies: ------------------------------------------------- Camelot Lotteries Limited National Lottery Enterprises Limited Camelot International Services Limited ------------------------------------------------- These subsidiaries have share capital of pounds sterling 5 in total. This amount represents Camelot's cost of investment in these subsidiaries. They are not material for the purpose of giving a true and fair view for these financial statements and have not been consolidated. 31 Camelot Group plc - accounts at 31 January 1998 - -------------------------------------------------------------------------------- 24. Summary of significant differences between generally accepted accounting principles in the United Kingdom and the United States --------------------------------------------------------------------------
2 February 1997- 4 February 1996- 31 January 1998 1 February 1997 pounds sterling m pounds sterling m ----------------- ----------------- Profit on ordinary activities after taxation in accordance 58.7 42.7 with UK GAAP Deferred pre-operating costs (3.4) (4.3) Deferred tax -- (0.5) Deferred tax on US GAAP adjustments 1.2 1.4 ----- ----- - ---------------------------------------------------------------------------------------------------------- Net income in accordance with US GAAP 56.5 39.3 ----- ----- - ---------------------------------------------------------------------------------------------------------- Equity shareholders' funds in accordance with UK GAAP 140.1 116.4 Amortisation of pre-operating costs -- 3.4 Deferred tax -- -- Deferred tax on US GAAP adjustments -- (1.2) ----- ----- - ---------------------------------------------------------------------------------------------------------- Net assets under US GAAP 140.1 118.6 ----- ----- - ----------------------------------------------------------------------------------------------------------
The US GAAP reconciliation is prepared to show the significant differences between accounting principles generally accepted in the United Kingdom and those generally accepted in the United States as they apply to Camelot. These are as follows: (a) Capitalisation of certain costs Under UK GAAP certain pre-operating costs incurred prior to the launch of the National Lottery did not meet the definition of an asset and were written off as incurred. Such costs, to the extent that they are incremental to the ongoing costs and are expected to be recovered over the license period, may be deferred and amortised to profit and loss in future periods under US GAAP. These costs are amortised over a period of three years for US GAAP purposes. (b) Deferred tax Under UK GAAP, deferred taxes are only provided where it is considered probable that such tax will become payable in the foreseeable future. Under US GAAP deferred tax must be provided on all timing differences (including those arising from other US GAAP adjustments) irrespective of the amount and timing of future tax payments. EX-23.1 2 CONSENT OF ERNST AND YOUNG LLP 1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-88426 and Form S-8 No. 333-27835) pertaining to the 1994 Stock Option Plan and in the Registration Statement (Form S-8 No. 333-27831), pertaining to the 1996 Non-Employee Directors' Stock Option Plan and the 1992 Outside Directors' Stock Unit Plan, of GTECH Holdings Corporation of our report dated April 1, 1998 (except for Note R, as to which the date is April 20, 1998) with respect to the consolidated financial statements of GTECH Holdings Corporation included in its Annual Report (Form 10-K/A, Amendment No. 1) for the fiscal year ended February 28, 1998, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP Boston, Massachusetts June 24, 1998 EX-23.2 3 CONSENT OF PRICE WATERHOUSE 1 Exhibit 23.2 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statements Form S-8 (Nos. 33-88426, 333-27835 and 333-27831) of GTECH Holdings Corporation of our report dated March 23, 1998, with respect to the financial statements of Camelot Group plc which appears in this Annual Report on Form 10-K/A (Amendment No. 1) of GTECH Holdings Corporation. Price Waterhouse London, England June 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----