TIDMWEB
RNS Number : 0344X
Webis Holdings PLC
21 November 2017
For immediate release 21 November 2017
Webis Holdings plc
("Webis" or "the Group")
Annual Report and Financial Statements for the year ended 31 May
2017
Notice of Annual General Meeting
Webis Holdings plc, the global gaming group, today announces its
audited results and the publication of its 2017 Report and Accounts
("Accounts") for the year ended 31 May 2017, extracts from which
are set out below.
The Accounts are being posted to shareholders today together
with the Notice of Annual General Meeting, and will be available on
the Group's website www.webisholdingsplc.com and at the Group's
Registered Office: Viking House, Nelson Street, Douglas, Isle of
Man IM1 2AH.
The AGM will be held at The Claremont Hotel, 18/19 Loch
Promenade, Douglas, Isle of Man, at 11.00 a.m. on 20 December
2017.
Chairman's Statement
Introduction
I am pleased to report a continued significantly improved
trading performance from our core business, WatchandWager.com
("WatchandWager") over the financial year, with a substantial
increase in turnover and gross profit. This resulted in a reversal
of previous losses, and an important return to overall
profitability, albeit a small one. This continues the positive
trends that we reported in the second half of the previous
financial year and the first six months of this year. In short
there is some sustained momentum behind the various sectors of the
business from our various US bases, and we are optimistic for the
future.
Most importantly, WatchandWager's two core business units,
namely "Business to Consumer" and "Business Trading" both performed
well with marked increases in turnover and gross profit returned
from both sectors. Our core website, watchandwager.com and our
mobile product performed well, with an increase in player numbers
using the site, and particularly on mobile. This unit remains our
core focus going forward. That said Business Trading also performed
very well, with a large increase in turnover across the period.
Against that our racetrack operation at Cal Expo harness racing
experienced a tougher year, with poor weather in the Northern
California area during the months that we ran the races, so
increasing our costs and limiting betting turnover.
Year End Results Review
Group turnover for the year ended 31 May 2017 was US$ 371.9
million (2016: US$224.3 million) - a growth of over 65% on
operations. Gross Profit increased by 30.6% to US$5.3 million
(2017: US$4.1 million), reversing the decline of prior year. This,
in turn, led to a small profit on the year, against a loss of over
US$1.2m in financial year 2016.
Operating costs were US$5.3 million: up 5% on 2016 (2016: US$
5.0 million). The increase in costs included further investment in
new staff, particularly in Lexington, as well as the costs of
meeting global compliance and regulatory requirements, a vital area
for the prudential growth of the business.
As a result, our Profit from operations was US$5 thousand, a
turnaround from the 2016 loss of US$1.2 million. This provided a
basic and diluted breakeven per share for continuing operations
(2016: loss of 31 cents).
Shareholder equity remains constant at US$1.9 million (2016:
US$1.9 million). Total cash stands at US$15.1 million (2016: US$6.4
million), which includes a ring-fenced amount of US$1.2 million
(2016: US$0.9 million) held as protection against our player
liability as required under Isle of Man gambling legislation. An
amount of US$3.0 million (2016: US$2.6 million) is held as bonds
and deposits with other regulatory authorities on behalf of
players.
WatchandWager
Business to Consumer
www.watchandwager.com/mobile
We continue to make satisfactory progress in this area,
initially only allocating a relatively modest marketing budget to
new player acquisition. Our core success has been in reactivating
our lapsed database, and we have seen good growth from this
initiative. This growth has been augmented by carefully judged
bonusing and promotional offers to our clients, utilising SMS, mail
and social media outlets, with a content focus on daily cash back
and bonuses to clients, hence our slogan "Get Paid to Play", where
we believe we have a competitive advantage.
We continue to make big improvements in payment processing, with
improved acceptance rates from our USA suppliers across most
methods, and now have a range of payment options which are at least
on a par if not superior to our competitors. All our providers are
based in North America and this has assisted successful acceptance
rates with US banks.
On the technology front, our new website/mobile site was
launched on July 17, 2017. We are pleased with the performance of
the new product and our team continue to make good progress in
content acquisition. As a result, we are widely regarded as having
the most comprehensive racecourse content of any operator in our
sector in the world.
As a result of this, in early 2017 we launched a sub-brand named
"WatchandWager Worldwide" aimed at promoting international racing
to our US player base. This has been well received both by our US
players, and equally importantly, by our content providers who wish
to see new regular US players betting their product.
During the year, we won new licenses in the States of Kentucky
and New York, as well as renewing multiple other licenses in the
US. This is integral to our growth strategy in this area.
Business to Business ("Business Trading")
WatchandWager recently rebranded the Business to Business sector
of its operations as Business Trading to more accurately reflect
its operations, namely the provision of pari-mutuel (pool) wagering
to high-roller clients, many of whom specialise in algorithmic or
computer assisted trading on a wide range of global racetracks.
The turnover for the full year was boosted by significant
high-volume player activity through its access into pools,
primarily with the Hong Kong Jockey Club and the French PMU, but
also other markets in the USA, Canada, Australia, UK and
Ireland.
Business to Business ("Business Trading")
We have proved successful in broadening our relationships
directly with known player groups. As a result, our spread of risk
and reliance on one group or player is now considered to be at a
more acceptable level.
The Business to Business high volume wagering sector has become
increasingly competitive over the years, with other operators and
player agents providing third party services, and increased
racetrack fees being charged in return for access to racetrack
wagering and video streaming rights. In addition, the sector
remains volatile, with it always being subject to changes in player
or aggregator activities, as well as changes in the policies of key
content providers. This is further commented upon in the Outlook
section.
Cal Expo Racetrack
Cal Expo, our Sacramento based harness racetrack operation,
unfortunately had a weaker October to May season than previously
experienced and budgeted during the fourth year of operation under
our control.
There were several factors leading to this downturn, the major
one being the poor weather in the Sacramento area during the
period, with the much reported El Ni o-driven Northern California
winter. This not only disrupted race days, reduced field sizes, but
most importantly increased our operating costs, especially in
providing replacement staff and equipment at short notice. This
situation is hopefully a one-off for the Sacramento area.
The other concern was the general decline in betting handle
throughout California from other tracks, which reduced our
commissions off the track and is a concern for the industry
generally.
On a more positive note, our staff performed excellently during
a tough winter, and it was a credit to the operation that there
were no major Health & Safety issues throughout the entire
season.
Post Year, Strategy and Regulatory Developments
The Board is pleased to confirm that the positive progress
across the business has continued into the first four months of the
new Financial year - namely the four months ending September
2017.
We have made satisfactory progress in our Business to Consumer
operation, and as stated, finally relaunched our website and mobile
product in early July 2017. The new product has proved very stable
and well received by clients. Based on that we increased our level
of marketing spend through the summer of key Festival race days in
the USA and were rewarded by a record number of active players on
the site, with our marketing focused on Travers Stakes day at
Saratoga New York in August 2017.
We see Business to Consumer as critical to the success of the
company. In the short term, we are focused on core Autumn/Winter
race promotions and increasing our social Media presence especially
via Facebook. We are aware that we need to bolster our team and
level of expertise in this area, either through direct hires or
agency relationships, and this is something the Executive team are
actively working on.
In relation to Business Trading, turnover has continued to grow
in the first four months of the year. That said, we are aware of
the volatile and competitive nature of this business sector, and
our need to expand our range of clients to reduce risk. As a
result, we have recently relaunched a new informational website,
namely wawbusiness trading. This is an informative site, designed
to bring new players into the market focused on appealing to day
traders or other algorithmic traders, perhaps new to horse betting
pools. It is early days with this initiative, but we will be
testing some marketing of the site via social media in the
forthcoming months.
During the period, we also renewed our two key software and
middleware contracts, namely with i-neda, based in Farnborough, UK
and AmTote International, based in Maryland, USA respectively. We
continue to enjoy good working relationships with these companies,
both of whom are vested in our success.
In August 2017, we successfully renewed our five-year license
with the Isle of Man Gambling Supervision Commission. In addition,
we have been busy renewing our multiple core USA licenses for 2018,
many of which are annually renewable. We expect all these renewals
to be approved in line with expectations.
USA regulated gaming
The Board continued to regularly monitor the progress of
properly licensed gambling in the USA, but without committing funds
to lobbying. This has proved a successful strategy over the past
five years as progress has been slow on a Federal and State
level.
We have been encouraged by recent progress and the forthcoming
Supreme Court hearing on Sports betting, likely to be held early
December, the outcome of which could become a game changer for the
USA industry. As a licensed US operator with multiple business
strands across almost all the key regulated States in the USA, as
well as being well connected in international markets, the Board
are aware we stand in an advantageous position to exploit
opportunities as they arise.
Within the US and international pool betting market, the Board
is very aware that consolidation is a key factor with the bigger
getting bigger, similar to the trends being seen in Europe. As a
result, the Board continues to assess acquisition opportunities
that will assist in developing those economies of scale and for the
additional benefit of shareholders.
Summary Outlook
In summary, the Board are encouraged by the increase in
activity, turnover and most importantly a reversal of previous
losses into a profit, albeit small. We believe the company has
turned a corner in relation to performance, although are mindful of
some of the challenges that may lie ahead. Most importantly the
Board believe the strategies for growth are the correct ones, and
are regulatory compliant, which is critical in this sector.
I would like to thank all our staff, our customers and our
shareholders for their continued support throughout the year.
Denham Eke
Non-executive Chairman
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information:
Webis Holdings plc Tel: 01624 639396
Denham Eke
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish/James Biddle
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2017
2017 2016
Note US$000 US$000
----------------------------------------------- ----- --------- ---------
Continuing operations
Turnover 2 371,938 224,313
Cost of sales (366,095) (219,826)
Betting duty paid (497) (393)
----------------------------------------------- ----- --------- ---------
Gross profit 5,346 4,094
----------------------------------------------- ----- --------- ---------
Operating costs (5,295) (5,042)
----------------------------------------------- ----- --------- ---------
Operating profit/(loss) 3 51 (948)
----------------------------------------------- ----- --------- ---------
Other losses - net - (50)
----------------------------------------------- ----- --------- ---------
Re-organisational costs, impairments
and one-off costs (36) (231)
----------------------------------------------- ----- --------- ---------
Finance income 4 - -
Finance costs 4 (10) (1)
----------------------------------------------- ----- --------- ---------
Finance costs (10) (1)
----------------------------------------------- ----- --------- ---------
Profit/(loss) before income tax 5 (1,230)
----------------------------------------------- ----- --------- ---------
Income tax expense 6 - -
----------------------------------------------- ----- --------- ---------
Profit/(loss) from continuing operations 5 (1,230)
----------------------------------------------- ----- --------- ---------
Discontinued operations
Loss from discontinued operations 7 - (12)
----------------------------------------------- ----- --------- ---------
Profit/(loss) for the year 5 (1,242)
----------------------------------------------- ----- --------- ---------
Other comprehensive income:
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences on
disposal of foreign subsidiaries - -
----------------------------------------------- ----- --------- ---------
Other comprehensive income for the - -
year
----------------------------------------------- ----- --------- ---------
Total comprehensive income for the
year 5 (1,242)
----------------------------------------------- ----- --------- ---------
Basic earnings per share for loss attributable
to the equity holders of the Company
during the year (cents) - all operations 8 0.00 (0.32)
----------------------------------------------- ----- --------- ---------
Diluted earnings per share for loss
attributable to the equity holders
of the Company during the year (cents)
- all operations 8 0.00 (0.31)
----------------------------------------------- ----- --------- ---------
Basic and diluted earnings per share
for loss attributable to the equity
holders of the Company during the year
(cents) - continuing operations 8 0.00 (0.31)
----------------------------------------------- ----- --------- ---------
Statements of Financial Position
As at 31 May 2017
31.05.17 31.05.17 31.05.16 31.05.16
Group Company Group Company
Note US$000 US$000 US$000 US$000
----------------------------- ----- --------- --------- ----------- ---------
Non-current assets
Intangible assets 9 105 - 113 -
Property, equipment
and motor vehicles 10 109 16 160 4
Investments 11 - 7 - 3
Bonds and deposits 12 103 - 105 -
----------------------------- ----- --------- --------- ----------- ---------
Total non-current
assets 317 23 378 7
----------------------------- ----- --------- --------- ----------- ---------
Current assets
Bonds and deposits 12 2,863 - 2,499 -
Trade and other receivables 14 3,071 35 2,671 37
Cash and cash equivalents 13 15,072 2,414 6,445 4,974
----------------------------- ----- --------- --------- ----------- ---------
Total current assets 21,006 2,449 11,615 5,011
----------------------------- ----- --------- --------- ----------- ---------
Total assets 21,323 2,472 11,993 5,018
----------------------------- ----- --------- --------- ----------- ---------
Equity
Called up share capital 17 6,334 6,334 6,334 6,334
Share option reserve 17 2 2 - -
Retained losses (4,397) (5,374) (4,402) (5,352)
----------------------------- ----- --------- --------- ----------- ---------
Total equity 1,939 962 1,932 982
----------------------------- ----- --------- --------- ----------- ---------
Current liabilities
Trade and other payables 15 18,884 1,010 10,061 4,036
----------------------------- ----- --------- --------- ----------- ---------
Total current liabilities 18,884 1,010 10,061 4,036
----------------------------- ----- --------- --------- ----------- ---------
Non-current liabilities
Loans 16 500 500 - -
----------------------------- ----- --------- --------- ----------- ---------
Total non-current
liabilities 500 500 - -
----------------------------- ----- --------- --------- ----------- ---------
Total liabilities 19,384 1,510 10,061 4,036
----------------------------- ----- --------- --------- ----------- ---------
Total equity and liabilities 21,323 2,472 11,993 5,018
----------------------------- ----- --------- --------- ----------- ---------
Statements of Changes in Equity
For the year ended 31 May 2017
Share
Called up option Retained Total
share capital reserve earnings equity
Group US$000 US$000 US$000 US$000
---------------------- --------------- --------- ---------- --------
Balance as at 31
May 2015 6,334 - (3,160) 3,174
Total comprehensive
income for the year:
Loss for the year - - (1,242) (1,242)
Transactions with
owners:
Share-based payment
expense - - - -
Balance as at 31
May 2016 6,334 - (4,402) 1,932
Total comprehensive
income for the year:
Profit for the year - - 5 5
Transactions with
owners:
Share-based payment
expense - 2 - 2
---------------------- --------------- --------- ---------- --------
Balance as at 31
May 2017 6,334 2 (4,397) 1,939
---------------------- --------------- --------- ---------- --------
Share
Called up option Retained Total
share capital reserve earnings equity
Company US$000 US$000 US$000 US$000
---------------------- --------------- --------- ---------- --------
Balance as at 31
May 2015 6,334 - (5,119) 1,215
Total comprehensive
income for the year:
Loss for the year - - (233) (233)
Transactions with
owners:
Share-based payment
expense - - - -
Balance as at 31
May 2016 6,334 - (5,352) 982
Total comprehensive
income for the year:
Loss for the year - - (22) (22)
Transactions with
owners:
Share-based payment
expense - 2 - 2
---------------------- --------------- --------- ---------- --------
Balance as at 31
May 2017 6,334 2 (5,374) 962
---------------------- --------------- --------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 May 2017
Note 2017 2016
US$000 US$000
--------------------------------------------------------- ---- -------- --------
Cash flows from operating activities
Profit/(loss) before income tax 5 (1,242)
Adjustments for:
Depreciation of property, equipment and motor vehicles 10 71 74
Amortisation of intangible assets 9 66 107
Finance costs 10 1
Share option reserve movement 2 -
Foreign exchange losses on exchange movements 508 143
Changes in working capital:
Increase in receivables (400) (92)
Increase in payables 8,823 1,620
--------------------------------------------------------- ---- -------- --------
Cash flows from operations 9,085 611
Finance income - -
Bonds and deposits placed in the course of operations 12 (362) 41
Net cash generated from operating activities 8,723 652
--------------------------------------------------------- ---- -------- --------
Cash flows from investing activities
Purchase of intangible assets 9 (60) (51)
Purchase of property, equipment and motor vehicles 10 (26) (118)
Cost of closure of discontinued operation - (12)
Net cash used in investing activities (86) (181)
--------------------------------------------------------- ---- -------- --------
Cash flows from financing activities
Interest paid (10) (1)
Loans received 16 500 -
Net cash generated from / (used in) financing activities 490 (1)
--------------------------------------------------------- ---- -------- --------
Net increase in cash and cash equivalents 9,127 470
Cash and cash equivalents at beginning of year 6,445 6,103
Exchange losses on cash and cash equivalents (500) (128)
--------------------------------------------------------- ---- -------- --------
Cash and cash equivalents at end of year 15,072 6,445
--------------------------------------------------------- ---- -------- --------
Notes to the Financial Statements
For the year ended 31 May 2017
1 Reporting entity (the "Company")
Webis Holdings plc is a company domiciled in the Isle of Man.
The address of the Company's registered office is Viking House,
Nelson Street, Douglas, Isle of Man, IM1 2AH. The Webis Holdings
plc consolidated financial statements as at and for the year ended
31 May 2017 consolidate those of the Company and its subsidiaries
(together referred to as the "Group").
1.1 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and its interpretations as adopted by the European
Union.
Adoption of new and revised IFRS
During the current year the Group adopted all the new and
revised IFRS that are relevant to its operation and are effective
for accounting periods beginning on 1 June 2016. This adoption did
not have a material effect on the accounting policies of the
Group.
Standards and interpretations in issue not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year, and have not
been applied in preparing these consolidated financial
statements:
New/revised International Accounting Effective date
Standards / International Financial (accounting periods
Reporting Standards ("IAS/IFRS") commencing on
or after)
------------------------------------------ ---------------------
Annual improvements to IFRS 2014-2016 1 January 2017
(Amendments to IFRS12)
Disclosure Initiative (Amendments 1 January 2017
to IAS7)
Amendments resulting from Annual 1 January 2017
Improvements 2014-2016 Cycle (clarifying
scope)
IFRS 9 Financial Instruments 1 January 2018
IFRS 15 Revenue from Contracts with 1 January 2018
Customers
IFRS 16 Leases 1 January 2019
------------------------------------------ ---------------------
The Directors do not expect the adoption of the standards and
interpretations to have a material impact on the Group's financial
statements in the period of initial application.
There has been no material impact on the Group financial
statements of new standards/interpretations that have come into
effect during the current reporting period.
Functional and presentational currency
These financial statements are presented in US Dollars which is
the Group's primary functional currency and its presentational
currency. Financial information presented in US Dollars has been
rounded to the nearest thousand. All continued operations of the
Group have US Dollars as their functional currency.
(b) Basis of measurement
The Group consolidated financial statements are prepared under
the historical cost convention except where assets and liabilities
are required to be stated at their fair value.
(c) Use of estimates and judgement
The preparation of the Group financial statements in conformity
with IFRS as adopted by the EU requires management to make
judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities, income
and expenses. Although these estimates are based on management's
best knowledge and experience of current events and expected
economic conditions, actual results may differ from these
estimates.
The Directors believe the models and assumptions used to
calculate the fair value of the share-based payments, outlined in
note 17, are the most appropriate for the Group.
The Directors consider the only critical judgement area to be
the valuation of share options, as disclosed in note 17.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements.
Going concern
As noted within the Chairman's Statement, the Group has returned
to profitability and continues to report strong growth in the
period to date. Further broadening its client base and expanding
its business to customer base are key priorities for the Group in
achieving its goal of profitability and maintaining adequate
liquidity in order to continue its operations. The Directors
continue to assess all strategic options in this regard, albeit
that the ultimate success of strategies adopted is difficult to
predict. Notwithstanding the losses incurred in previous years, the
Directors have prepared projected cash flow information for the
next 12 months and believe that the Group has adequate resources to
meet its obligations as they fall due. Accordingly, the Directors
consider that it is appropriate that the financial statements are
prepared on a going concern basis.
1.2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented
unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporate the results of
the Group. Subsidiaries are consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue until the date that such control ceases. Control exists
when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition-related costs are expensed as
incurred.
Inter-company transactions, balances and unrealised gains on
transactions between the Group companies are eliminated. Unrealised
losses are also eliminated. When necessary amounts reported by
subsidiaries have been adjusted to conform with the Group's
accounting policies.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
US Dollars, which is also the Group's functional currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash
flow hedges and qualifying net investment hedges. Foreign
exchange gains and losses that relate to borrowings and cash and
cash equivalents are presented in the income statement within
'Finance income' or 'Finance costs'. All other foreign exchange
gains and losses are presented in the income statement within
'Other losses - net'.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the
transactions); and
(iii) all resulting exchange differences are recognised in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
Revenue recognition and turnover
Turnover represents the amounts staked in respect of bets placed
by customers on events which occurred during the year. Cost of
sales represents pay-out to customers, together with betting duty
payable and commissions and royalties payable to agents and
suppliers of software.
Segmental reporting
Segmental reporting is based on the business areas in accordance
with the Group's internal reporting structure. The Group determines
and presents segments based on the information that internally is
provided to the Board and Managing Director, the Group's chief
operating decision maker.
An operating segment is a component of the Group and engages in
business activities from which it may earn revenues and incur
expenses. An operating segment's operating results are reviewed
regularly by the Board and Managing Director to make decisions
about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is
available.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period
in which they are incurred.
Current and deferred income tax
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the reporting date in
the countries where the Group operates and generates taxable
income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to
the tax authorities.
Deferred income tax is recognised on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill; deferred tax is not accounted for
if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the reporting date
and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is
settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries
except for deferred income tax liability, where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future. Only where there is an agreement in place
that gives the Group the ability to control the reversal of the
temporary difference is the liability not recognised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit
available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes, assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Discontinued operation
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations; and
-- is part of a single co-ordinated plan to dispose, or
discontinue, a separate major line of business or geographic area
of operations.
Classification as a discontinued operation occurs at the earlier
of disposal, permanent cessation of activities or when the
operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
Intangible assets - goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units ("CGUs"), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within
the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the operating segment
level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
Intangible assets - other
(a) Trademarks and licences
Separately acquired trademarks and licences are shown at
historical cost. Trademarks and licences acquired in a business
combination are recognised at fair value at the acquisition date.
Trademarks and licences have a finite useful life and are carried
at cost less accumulated amortisation. Amortisation is calculated
using the straight-line method to allocate the cost of trademarks
and licences over their estimated useful lives of three years.
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful
lives of three years.
(b) Website design and development costs
Costs associated with maintaining websites are recognised as an
expense as incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique
websites controlled by the Group are recognised as intangible
assets when the following criteria are met:
-- it is technically feasible to complete the website so that it
will be available for use;
-- management intends to complete the website and use it;
-- there is an ability to use the website;
-- it can be demonstrated how the website will generate probable
future economic benefits;
-- adequate technical, financial and other resources to complete
the development and to use the website are available; and
-- the expenditure attributable to the website during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the
website include the website employee costs and an appropriate
portion of relevant overheads.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period.
Website development costs recognised as assets are amortised
over their estimated useful lives, which do not exceed three
years.
Property, equipment and motor vehicles
Items of property, equipment and motor vehicles are stated at
historical cost less accumulated depreciation (see below) and
impairment losses. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are
incurred.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the financial position date. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount. Depreciation is calculated using the
straight-line method to allocate the cost of property, equipment
and motor vehicles over their estimated useful lives of three
years.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
(losses)/gains - net' in the income statement.
Impairment of assets
Goodwill arising on acquisitions and other assets that have an
indefinite useful life and are not subject to amortisation are
reviewed at least annually for impairment.
Other intangible assets, property, plant and equipment are
reviewed for impairment whenever there is an indication that the
carrying amount of the asset may not be recoverable. If the
recoverable amount of an asset is less than its carrying amount, an
impairment loss is recognised. Recoverable amount is the higher of
fair value less costs to sell and value in use.
If at the financial position date there is any indication that
an impairment loss is recognised in prior periods for an asset
other than goodwill that no longer exists, the recoverable amount
is reassessed and the asset is reflected at the recoverable
amount.
Share-based payments
The Group operates an equity-settled, share-based compensation
plan, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of the employee services received in exchange for the
grant of the options is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an
entity's share price); and
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the income statement on a
straight-line basis over the period of the lease. The Group is not
party to any leases that are classified as finance leases.
Equity
Share capital is determined using the nominal value of shares
that have been issued.
Equity settled share-based employee remuneration is credited to
the share option reserve until related stock options are exercised.
On exercise or lapse, amounts recognised in the share option
reserve are taken to retained earnings.
Retained earnings include all current and prior period results
as determined in the income statement and any other gains or losses
recognised in the Statement of Changes in Equity.
Financial instruments
Non-derivative financial instruments include trade and other
receivables, cash and cash equivalents, loans and borrowings and
trade and other payables. Ante-post sports bets are recognised when
the Company becomes party to the contractual agreements of the
instrument.
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes party to the
contractual terms of the instrument. Transaction costs are included
in the initial measurement of financial instruments, except
financial instruments classified as at fair value through profit
and loss. The subsequent measurement of financial instruments is
dealt with below. The carrying value of all financial instruments
is deemed to equate to their fair value.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in bank and in
hand as well as bank deposits, money held for processors and cash
balances held on behalf of players. Cash equivalents are held for
the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
Borrowings
Interest-bearing borrowings and overdrafts are recorded at the
proceeds received net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs are charged on an accrual basis using the effective
interest method and are added to the carrying amount of the
instrument to the extent they are not settled in the period in
which they arise.
Trade and other payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
Employee benefits
(a) Pension obligations
The Group does not operate any post-employment schemes,
including both defined benefit and defined contribution pension
plans.
(b) Short-term employee benefits
Short-term employee benefits, such as salaries, paid absences,
and other benefits, are accounted for on an accruals basis over the
period in which employees have provided services in the year. All
expenses related to employee benefits are recognised in the
Statement of Comprehensive Income in operating costs.
(c) Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses and
profit sharing, based on a formula that takes into consideration
the profit attributable to the Company's shareholders after certain
adjustments. The Group recognises a provision where contractually
obliged or where there is a past practice that has created a
constructive obligation.
2 Segmental analysis
2017 2016
US$000 US$000
---------------------------------------- ------------- ------- -------
Turnover
Pari-mutuel and Racetrack Operations Asia Pacific 269,462 130,777
North
America 91,683 81,273
Europe 6,403 7,353
British
Isles 4,390 4,910
371,938 224,313
------------------------------------------------------ ------- -------
Total comprehensive income - continuing
operations
Pari-mutuel and Racetrack Operations 34 (1,071)
Group (29) (159)
------------------------------------------------------- ------- -------
5 (1,230)
------------------------------------------------------ ------- ---------
2017 2016
US$000 US$000
-------------------------------------- ------- -------
Net assets
Pari-mutuel and Racetrack Operations 877 843
Group 1,062 1,089
--------------------------------------- ------- -------
1,939 1,932
-------------------------------------- ------- -------
3 Operating profit/(loss)
Operating profit/(loss) is stated after 2017 2016
charging: US$000 US$000
-------------------------------------------- ------- -------
Auditors' remuneration - audit 87 80
Depreciation of property, equipment and
motor vehicles 71 74
Amortisation of intangible assets 66 107
Exchange losses - 50
Operating lease rentals - other than
plant, equipment and Harness Racetrack - 16
Operating lease rentals - Harness Racetrack 86 94
Directors' fees 66 77
-------------------------------------------- ------- -------
4 Finance costs
2017 2016
US$000 US$000
------------------------- ------- -------
Bank interest receivable - -
------------------------- ------- -------
Finance income - -
------------------------- ------- -------
Bank interest payable - -
Loan interest payable (10) (1)
------------------------- ------- -------
Finance costs (10) (1)
------------------------- ------- -------
Finance costs (10) (1)
------------------------- ------- -------
5 Staff numbers and cost
2017 2016
------------------------------------------ ---- ------
Average number of employees - Pari-mutuel
and Racetrack Operations 68 58
------------------------------------------ ---- ------
The aggregate payroll costs of these persons
were as follows:
2017 2016
Pari-mutuel and Racetrack Operations US$000 US$000
--------------------------------------------- ------- --------
Wages and salaries 1,939 1,871
Social security costs 132 135
2,071 2,006
--------------------------------------------- ------- --------
6 Income tax expense
2017 2016
US$000 US$000
-------------------------------------------- ------- -------
Profit/(loss) before tax 5 (1,242)
Tax charge at IOM standard rate (0%) - -
Adjusted for:
Tax credit for US tax losses (at 15%) (62) (161)
Add back deferred tax losses not recognised 62 161
-------------------------------------------- ------- -------
Tax charge for the year - -
-------------------------------------------- ------- -------
The maximum deferred tax asset that could be recognised at year
end is US$547,000 (2016: US$485,000). The Group has not recognised
any asset.
7 Discontinued operations
In March 2015, the Group ceased its Sportsbook and Casino
operations transacted through betinternet.com (IOM) Ltd, B.E.
Global Services Ltd and betinternet.com N.V., due to regulatory
changes in its primary geographical market that would have affected
its ability to remain competitive and profitable.
The comparative Consolidated Statement of Comprehensive Income
shows the discontinued operation separately from continuing
operations.
(a) Results of discontinued operations
2017 2016
US$000 US$000
-------------------------------------------- ------- -------
Turnover - -
Expenses - (12)
-------------------------------------------- ------- ---------
Results from operating activities - (12)
Fixed assets written off - -
Other comprehensive income:
Currency translation differences on closure
of foreign subsidiaries - -
-------------------------------------------- ------- -------
Loss for the year - (12)
-------------------------------------------- ------- ---------
The result from discontinued operations of US$Nil (2016: loss of
US$12,000) is attributable entirely to the owners of the Company.
The profit from continuing operations of US$5,000 (2016: loss of
US$1,230,000) is also attributable entirely to the owners of the
Company.
(b) Cash flows used in discontinued operations
2017 2016
US$000 US$000
-------------------------------------- ------- -------
Net cash used in operating activities - (12)
Net cash used in investing activities - -
-------------------------------------- ------- -------
Net cash flow for the year - (12)
-------------------------------------- ------- ---------
(c) Effect of discontinued operations on the financial position of the Group
2017 2016
US$000 US$000
-------------------------------------- ------- -------
Closure costs paid from Group funds - (12)
Net liabilities - (12)
Cash and cash equivalents disposed of - -
-------------------------------------- ------- -------
Net cash outflow - (12)
-------------------------------------- ------- ---------
The above represents costs met by Group in relation to the
administration costs of the discontinued operations at the year
end.
8 Earnings per ordinary share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares, on the assumed conversion of all dilutive share
options.
An adjustment for the dilutive effect of share options and
convertible debt in the previous period has not been reflected in
the calculation of the diluted loss per share, as the effect would
have been anti-dilutive.
2017 2016
US$000 US$000
-------------------------------------------- ------- ---------
Profit/(loss) for the year - all operations 5 (1,242)
-------------------------------------------- ------- -------
Profit/(loss) for the year - continuing
operations 5 (1,230)
-------------------------------------------- ------- -------
Profit/(loss) for the year - discontinued
operations - (12)
-------------------------------------------- ------- -------
No. No.
-------------------------------------------- ----------- -------------
Weighted average number of ordinary shares
in issue 393,338,310 393,338,310
Dilutive element of share options if
exercised (note 17) 14,000,000 4,536,500
-------------------------------------------- ----------- -------------
Diluted number of ordinary shares 407,338,310 397,874,810
-------------------------------------------- ----------- -------------
Basic earnings per share - all operations 0.00 (0.32)
-------------------------------------------- ----------- -----------
Diluted earnings per share - all operations 0.00 (0.31)
-------------------------------------------- ----------- -----------
Basic and diluted earnings per share -
continuing operations 0.00 (0.31)
-------------------------------------------- ----------- -----------
Basic earnings per share - discontinued
operations 0.00 (0.01)
-------------------------------------------- ----------- -----------
The earnings applied are the same for both basic and diluted
earnings calculations per share as there are no dilutive effects to
be applied.
9 Intangible assets
Software & development Total
Goodwill costs
---------------------------- -------- ------------------------- ---------------------------
Group Group Company Group Company
US$000 US$000 US$000 US$000 US$000
---------------------------- -------- ------- ---------------- ------- ----------------
Cost
Balance at 31 May
2016 177 1,296 50 1,473 50
Additions during the
year - 60 - 60 -
Currency translation
differences - (2) - (2) -
---------------------------- -------- ------- ---------------- ------- ----------------
Balance at 31 May
2017 177 1,354 50 1,531 50
---------------------------- -------- ------- ---------------- ------- ----------------
Amortisation and Impairment
At 31 May 2016 177 1,183 50 1,360 50
Amortisation for the
year - 66 - 66 -
Impairment of goodwill - - - - -
At 31 May 2017 177 1,249 50 1,426 50
---------------------------- -------- ------- ---------------- ------- ----------------
Net book value
At 31 May 2017 - 105 - 105 -
---------------------------- -------- ------- ---------------- ------- ----------------
At 31 May 2016 - 113 - 113 -
---------------------------- -------- ------- ---------------- ------- ----------------
The goodwill balance brought forward relates to the historical
acquisition of subsidiary businesses. The goodwill balances were
fully impaired during the year ended 31 May 2015. The Group tests
intangible assets annually for impairment or more frequently if
there are indications that the intangible assets may be impaired
(see note 1).
10 Property, equipment and motor vehicles
Fixtures,
Fittings
Computer & Track Motor
Equipment Equipment Vehicles Total
Group US$000 US$000 US$000 US$000
--------------------------------- ---------- ---------- --------- -------
Cost
At 31 May 2016 582 561 47 1,190
Additions during the year 1 21 4 26
Currency translation differences (4) (2) - (6)
At 31 May 2017 579 580 51 1,210
--------------------------------- ---------- ---------- --------- -------
Depreciation
At 31 May 2016 535 474 21 1,030
Charge for the year 11 51 9 71
At 31 May 2017 546 525 30 1,101
--------------------------------- ---------- ---------- --------- -------
Net book value
At 31 May 2017 33 55 21 109
--------------------------------- ---------- ---------- --------- -------
At 31 May 2016 47 87 26 160
--------------------------------- ---------- ---------- --------- -------
Fixtures
Computer &
Equipment Fittings Total
Company US$000 US$000 US$000
--------------------------------- ---------- --------- -------
Cost
At 31 May 2016 401 141 542
Additions 18 - 18
Currency translation differences - (2) (2)
--------------------------------- ---------- --------- -------
At 31 May 2017 419 139 558
--------------------------------- ---------- --------- -------
Depreciation
At 31 May 2016 401 137 538
Charge for the year 2 2 4
--------------------------------- ---------- --------- -------
At 31 May 2017 403 139 542
--------------------------------- ---------- --------- -------
Net book value
At 31 May 2017 16 - 16
--------------------------------- ---------- --------- -------
At 31 May 2016 - 4 4
--------------------------------- ---------- --------- -------
11 Investments
Investments in subsidiaries are held at cost. Details of
investments at 31 May 2017 are as follows:
Country of Holding
Subsidiaries incorporation Activity (%)
---------------------- --------------- ------------------------- -------
Operation of interactive
WatchandWager.com wagering
Limited Isle of Man totaliser hub 100
Operation of interactive
wagering
WatchandWager.com United States totaliser hub and
LLC of America harness racetrack 100
Technical Facilities
& Services Limited Isle of Man Dormant 100
betinternet.com (IOM)
Limited Isle of Man Dormant 100
Netherlands
betinternet.com NV Antilles Dormant 100
B.E. Global Services
Limited Isle of Man Dormant 100
12 Bonds and deposits
Group Company
2017 2016 2017 2016
US$000 US$000 US$000 US$000
--------------------------- ------- ------- ------- -------
Bonds and deposits which
expire within one year 2,863 2,499 - -
Bonds and deposits which
expire within one to two
years 2 - - -
Bonds and deposits which
expire within two to five
years 101 105 - -
2,966 2,604 - -
--------------------------- ------- ------- ------- -------
A rent deposit of US$100,000 is held by California Exposition
& State Fair and is for a term of 5 years (2016: US$100,000).
Cash bonds of US$925,000 has been paid as security deposits in
relation to various US State ADW licences (2016: US$500,000). Rent
and other security deposits total US$12,081 (2016: US$71,462).
Under the terms of the licencing agreement with the Hong Kong
Jockey Club the Company is required to hold a retention amount of
US$1,929,285 / HK$15,000,000 (2016: US$1,932,019 /
HK$15,000,000).
13 Cash and cash equivalents
Group Company
2017 2016 2017 2016
US$000 US$000 US$000 US$000
-------------------------------- ------- ------- ------- -------
Cash and cash equivalents
- company and other funds 13,827 5,538 1,169 4,067
Cash and cash equivalents
- protected player funds 1,245 907 1,245 907
-------------------------------- ------- ------- ------- -------
Total cash and cash equivalents 15,072 6,445 2,414 4,974
-------------------------------- ------- ------- ------- -------
The Group holds funds for operational requirements and for its
non-Isle of Man customers, shown as 'company and other funds' and
on behalf of its Isle of Man regulated customers, shown as
'protected player funds'.
Protected player funds are held in fully protected client
accounts within an Isle of Man regulated bank.
14 Trade and other receivables
Group Company
2017 2016 2017 2016
US$000 US$000 US$000 US$000
---------------------------------- ------- ------- ------- -------
Trade receivables 2,275 1,546 - -
Other receivables and prepayments 796 1,125 35 37
---------------------------------- ------- ------- ------- -------
3,071 2,671 35 37
---------------------------------- ------- ------- ------- -------
15 Trade and other payables
Group Company
2017 2016 2017 2016
US$000 US$000 US$000 US$000
---------------------------------- ------- ------- ------- -------
Trade payables 18,439 9,724 11 15
Amounts due to Group undertakings - - 962 3,994
Taxes and national insurance 31 52 2 2
Accruals and other payables 414 285 35 25
---------------------------------- ------- ------- ------- -------
18,884 10,061 1,010 4,036
---------------------------------- ------- ------- ------- -------
Amounts due to Group undertakings are unsecured, interest free
and repayable on demand. Included within trade payables are amounts
due to customers of US$18,324,542 (2016: US$9,656,431).
16 Loans
Group Company
2017 2016 2017 2016
US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- -------
Loan - Galloway Ltd 500 - 500 -
500 - 500 -
-------------------- ------- ------- ------- -------
A loan of $500,000 was received from Galloway Ltd in February
2017, to provide financing for cash-backed bonding agreements. The
loan is for a term of five years, attracts interest at 7.75% per
annum and is secured over the unencumbered assets of the company
(see note 20).
17 Share capital
2017 2016
No. US$000 US$000
--------------------------------- ----------- -------- --------
Allotted, issued and fully paid
At beginning and close of year:
ordinary shares of 1p each 393,338,310 6,334 6,334
At 31 May: ordinary shares of 1p
each 393,338,310 6,334 6,334
--------------------------------- ----------- -------- ----------
The authorised share capital of the Company is US$9,619,000
divided into 600,000,000 ordinary shares of GBP0.01 each (2016:
US$9,619,000 divided into 600,000,000 ordinary shares of GBP0.01
each).
Options
Movements in share options during the year ended 31 May 2017
were as follows:
No.
------------------------------------ ----------
At 31 May 2016 - 1p ordinary shares 14,000,000
------------------------------------ ----------
Options granted -
------------------------------------ ----------
Options lapsed -
------------------------------------ ----------
Options exercised -
------------------------------------ ----------
At 31 May 2017 - 1p ordinary shares 14,000,000
------------------------------------ ----------
During the previous year the Group established an equity-settled
share based option program. The fair value of options granted is
recognised as an expense, with a corresponding increase in equity.
The fair value is measured at grant date using a Black-Scholes
model and is spread over the vesting period. The amount recognised
in equity is adjusted to reflect the actual number of share options
which are expected to vest. The volatility of the options is
calculated at 75%, with a risk free interest rate of 0.86%.
The options were issued on 3 March 2016 to Ed Comins, Managing
Director of the Group. The fair value of each option on the grant
date was estimated as being GBP0.0022. The options are able to be
exercised from 3 March 2019 and expire on 2 March 2026. The
weighted average exercise price of all options is GBP0.01.
The charge for share options recorded in profit and loss for the
year was US$1,986 (2016: US$457), with the corresponding amount
reflected in the share option reserve in the Statement of Financial
Position and Statement of Changes in Equity.
18 Capital commitments
As at 31 May 2017, the Group had capital commitments of
US$53,500, of which US$32,500 related to a new player website and
US$21,000 to a new player management system (2016: US$Nil).
19 Operating lease commitments
At 31 May 2017, the Group was committed to future minimum lease
payments of:
2017 2016
US$000 US$000
--------------------------------------- ------- -------
Payments due within one year 88 86
Payments due between one to five years 351 345
Payments due beyond five years - 86
--------------------------------------- ------- -------
20 Related party transactions
Identity of related parties
The Group has a related party relationship with its subsidiaries
(see note 11), and with its Directors and executive officers and
with Burnbrae Ltd (significant shareholder).
Transactions with and between subsidiaries
Transactions with and between the subsidiaries in the Group,
which have been eliminated on consolidation, are considered to be
related party transactions.
Transactions with entities with significant influence over the
Group
Rental and service charges of US$48,719 (2016: US$60,038) and
Directors' fees of US$46,748 (2016: US$54,002) were charged in the
year by Burnbrae Limited, of which Denham Eke and Nigel Caine are
common Directors. The Group also received a loan
in February 2017 of US$500,000 (2016: US$Nil) from Galloway Ltd,
a company related to Burnbrae Limited by common ownership and
Directors (note 16).
Transactions with key management personnel
The total amounts for Directors' remuneration were as
follows:
2017 2016
US$000 US$000
----------- ----------------------------------------- ------- -------
Emoluments - salaries, bonuses and taxable benefits 343 332
- fees 66 77
----------------------------------------------------- ------- -------
409 409
----------------------------------------------------- ------- -------
Directors' Emoluments
Basic Termination 2017 2016
salary Fees Bonus payments Benefits Total Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Executive
Ed Comins 310 - - - 33 343 332
Non-executive
Denham Eke* - 26 - - - 26 30
Nigel Caine* - 21 - - - 21 24
Sir James Mellon - 19 - - - 19 23
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Aggregate emoluments 310 66 - - 33 409 409
--------------------- -------- --------- -------- ------------ ----------- -------- --------
* Paid to Burnbrae Limited.
14,000,000 share options were issued to Ed Comins (see note 17),
during the previous financial year.
21 Financial risk management
Capital structure
The Group's capital structure is as follows:
2017 2016
US$000 US$000
-------------------------- ------- -------
Cash and cash equivalents 15,072 6,445
Loans and similar income (500) -
-------------------------- ------- ---------
Net funds 14,572 6,445
Shareholders' equity (1,939) (1,932)
-------------------------- ------- ---------
Capital employed 12,633 4,513
-------------------------- ------- ---------
The Group's principal financial instruments comprise cash and
cash equivalents, trade receivables and payables that arise
directly from its operations.
The main purpose of these financial instruments is to finance
the Group's operations. The existence of the financial instruments
exposes the Group to a number of financial risks, which are
described in more detail below.
The principal risks which the Group is exposed to relate to
liquidity risks, credit risks and foreign exchange risks.
Liquidity risks
Liquidity risk is the risk that the Group will be unable to meet
its financial obligations as they fall due.
The Group's objective is to maintain continuity of funding
through trading and share issues but to also retain flexibility
through the use of short-term loans if required.
Management controls and monitors the Group's cash flow on a
regular basis, including forecasting future cash flow. Banking
facilities are kept under review to ensure they meet the Group's
requirements. Funds equivalent to customer balances are held in
designated bank accounts where applicable to ensure that Isle of
Man Gambling Supervision Commission player protection principles
are met. The Directors anticipate that the business will continue
to generate sufficient cash flow in the forthcoming period to meet
its financial obligations.
The following are the contractual maturities of financial
liabilities:
2017
Financial liabilities
Carrying Contractual 6 months Up to 1-5
amount cash flow or less 1 year years
US$000 US$000 US$000 US$000 US$000
------------------------ -------- ----------- -------- ------- -------
Trade creditors 18,439 (18,439) (18,439) - -
Income tax and national
insurance 31 (31) (31) - -
Other creditors and
loans 665 (665) (165) - (500)
------------------------ -------- ----------- -------- ------- -------
19,135 (19,135) (18,635) - (500)
------------------------ -------- ----------- -------- ------- -------
2016
Financial liabilities
Carrying Contractual 6 months Up to 1-5
amount cash flow or less 1 year years
US$000 US$000 US$000 US$000 US$000
------------------------ -------- ----------- -------- ------- -------
Trade creditors 9,724 (9,724) (9,724) - -
Income tax and national
insurance 52 (52) (52) - -
Other creditors and
loans 35 (35) (35) - -
------------------------ -------- ----------- -------- ------- -------
9,811 (9,811) (9,811) - -
------------------------ -------- ----------- -------- ------- -------
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation.
Classes of financial assets - carrying amounts
2017 2016
US$000 US$000
---------------------------- ------- -------
Cash and cash equivalents 15,072 6,445
Bonds and deposits 2,966 2,604
Trade and other receivables 2,952 2,551
---------------------------- ------- -------
20,990 11,600
---------------------------- ------- -------
Generally, the maximum credit risk exposure of financial assets
is the carrying amount of the financial assets as shown on the face
of the balance sheet (or in the notes to the financial statements).
Credit risk, therefore, is only disclosed in circumstances where
the maximum potential loss differs significantly from the financial
asset's carrying amount.
The maximum exposure to credit risks for receivables in any
business segment:
2017 2016
US$000 US$000
------------ ------- -------
Pari-mutuel 2,950 2,549
2,950 2,549
------------ ------- -------
Of the above receivables, US$2,275,000 (2016: US$1,546,000)
relates to amounts owed from racing tracks. These receivables are
actively monitored to avoid significant concentration of credit
risk and the Directors consider there to be no significant
concentration of credit risk.
The Directors consider that all the above financial assets that
are not impaired for each of the reporting dates under review are
of good credit quality. No amounts were considered past due at the
year-end (2016: US$Nil).
The credit risk for liquid funds and other short-term financial
assets is considered negligible, since the counterparties are
reputable banks with high-quality external credit ratings.
Interest rate risk
The Group finances its operations mainly through capital with
limited levels of borrowings. Cash at bank and in hand earns
negligible interest at floating rates, based principally on
short-term interbank rates.
Any movement in interest rates would not be considered to have
any significant impact on net assets at the balance sheet date.
Foreign currency risks
The Group operates internationally and is subject to
transactional foreign currency exposures, primarily with respect to
Pounds Sterling, Hong Kong Dollars and Euros.
The Group does not actively manage the exposures but regularly
monitors the Group's currency position and exchange rate movements
and makes decisions as appropriate.
At the reporting date the Group had the following exposure:
HKD GBP EUR USD Total
2017 US$000 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- ------- --------
Current assets 8,734 164 7,752 4,356 21,006
Current liabilities (8,629) (145) (6,976) (3,634) (19,384)
-------------------- ------- ------- ------- ------- --------
Short-term exposure 105 19 776 722 1,622
-------------------- ------- ------- ------- ------- --------
HKD GBP EUR USD Total
2016 US$000 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- ------- --------
Current assets 4,673 464 2,106 4,372 11,615
Current liabilities (5,099) (389) (1,824) (2,749) (10,061)
-------------------- ------- ------- ------- ------- --------
Short-term exposure (426) 75 282 1,623 1,554
-------------------- ------- ------- ------- ------- --------
The following table illustrates the sensitivity of the net
result for the year and equity in regards to the Group's financial
assets and financial liabilities and the US Dollar-Sterling
exchange rate, US Dollar-Euro exchange rate and US Dollar-Hong Kong
Dollar exchange rate.
A 5% weakening of the US Dollar against the following currencies
at 31 May 2017 would have increased/(decreased) equity and profit
and loss by the amounts shown below:
GBP EUR HKD Total
2017 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- ---------
Current assets 8 388 436 832
Current liabilities (7) (349) (431) (787)
-------------------- ------- ------- ------- ---------
Net assets 1 39 5 45
-------------------- ------- ------- ------- ---------
GBP EUR HKD Total
2016 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- -------
Current assets 23 105 234 362
Current liabilities (20) (91) (255) (366)
-------------------- ------- ------- ------- -------
Net assets 3 14 (21) (4)
-------------------- ------- ------- ------- -------
A 5% strengthening of the US Dollar against the above currencies
would have had the equal but opposite effect on the above
currencies to the amounts shown above on the basis that all other
variables remain constant.
22 Controlling party and ultimate controlling party
The Directors consider the ultimate controlling party to be
Burnbrae Limited and its beneficial owner Jim Mellon by virtue of
their combined shareholding of 63.10%.
23 Subsequent events
To the knowledge of the Directors, there have been no material
events since the end of the reporting period that require
disclosure in the accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANFEAAAXFFF
(END) Dow Jones Newswires
November 21, 2017 02:00 ET (07:00 GMT)
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