TIDMBOX
RNS Number : 2804W
Boxhill Technologies PLC
24 December 2013
24 December 2013
BOXHILL TECHNOLOGIES PLC
("Boxhill", the "Group" or the "Company")
Final Results for the year to 31 July 2013 & Notice of
AGM
Boxhill Technologies Plc (AIM:BOX), the AIM quoted lottery,
software, gaming and leisure company, is pleased to announce its
Final Results for the year ended 31 July 2013.
The Company will hold its Annual General Meeting ("AGM") at
11.00am on 17 January 2014 at the offices of Allenby Capital
Limited, 3 St Helen's Place London EC3A 6AB.
Financial Highlights
-- Operating loss before exceptional items GBP(34,000)
-- Impairment of tangible and intangible assets GBP382,000
-- Group operating loss GBP(416,000)
-- Interest payable GBP22,000
-- Loss from ordinary activities GBP(438,000)
Operational Highlights
-- Phil Jackson was appointed Chief Executive Officer
-- Acquired lottery games and payment processing technologies
firm Poseve Limited ("Poseve")
-- Refocused operations, closing FC Betz and selling Devil Fish,
while Soccerdome has been mothballed while the wider site is
redeveloped.
Post-period Highlights
-- The Company changed its name from The Weather Lottery plc to
Boxhill Technologies plc in October 2013 to reflect the range of
activities within the software, lottery, gaming and leisure sectors
- with the focus firmly on developing its Lottery and Gaming &
Payment Software divisions
-- Further acquisition of payment processing business in
September 2013
-- Appointment of Kevin Dale as Chief Operating Officer
-- Secured a convertible loan agreement for GBP250,000 from a
consortium of private investors to help fund the Company's working
capital requirements following the acquisition of Sormelle
-- David Griffiths became General Manager of the lottery in
November 2013
Commenting on the Final Results, Chairman Lord E T Razzall
said:
"The entry into ecommerce services perhaps best represents the
future of the company, with existing and proposed products ranging
from internet payment services provision to managing ewallet and
physical and virtual prepaid services moving the company into
profitability.
"With an improved balance sheet, new products and services the
group is strongly placed to build upon these foundations and the
Board continue to look for new profit sources to give much needed
shareholder value, which if achieved as expected will no doubt be
the most welcome change we will see in the coming twelve
months."
For further information contact:
Boxhill Technologies PLC 020 7618 9000
Philip Jackson, CEO
Website www.boxhillplc.com
Allenby Capital Limited (Nomad & Broker)
Nick Harriss/Nick Athanas/James Reeve 020 3328 5656
Bishopsgate Communications (Financial PR)
Nick Rome/Sam Allen 020 7562 3350
Chairman's Statement
2013 has been a transitional year, not just in name but in the
fundamental outlook for the Company. The change of name from The
Weather Lottery plc to Boxhill Technologies plc reflects a
confident move into new areas of business, principally ecommerce
and online transactions; further the new board has made some bold
moves, in closing subsidiaries that had little chance of generating
meaningful revenues.
Financial Summary
In my review of the half-year figures to 31 January 2013 the
Company made losses of GBP88,000 (EBITDA GBP41,000). Whilst these
were a considerable improvement on the previous very difficult year
I pointed out that they included a number of legacy problems from
the past and I hoped the second half would show much improvement. I
am pleased to report that the operating loss before exceptional
items for the full year has been cut to GBP34,000 against
GBP291,000 in the year ending 31 July 2012. There is often an
unavoidable impact of closing businesses and in this case resulting
in an exceptional loss of GBP382,000 through the write down of
tangible and intangible assets. Therefore in summary:
-- Revenue GBP1,271,000
-- Operating loss before exceptional items GBP(34,000)
-- Impairment of tangible and intangible assets GBP382,000
-- Group loss before interest GBP(416,000)
-- Interest payable GBP22,000
-- Loss from ordinary activities GBP(438,000)
These improved underlying figures represent the continuing hard
work in settling losses from the gambling sector, the focus on
improving the cash position of the company and improving the
balance sheet as a foundation for expanding the business into new
areas.
Operational Summary
The Board saw a few changes during the year - with Phil Jackson
joining in May 2013 and Kevin Dale joining after the year end. At
an operating level, Jeff Williams left the organisation in June
2013 and David Griffiths became General Manager of the lottery in
November 2013. The company intends to make further appointments to
the Board in due course, with a particular view to adding
experienced non-executives.
The Weather Lottery has seen change itself - with a new team at
the helm, revised website, a new ability to join online, and
improved services for the hundreds of societies and good causes it
serves. The Weather Lottery has now raised over GBP5 million for
good causes, a significant amount of money, often providing much
needed income for very small localized charities and societies who
sometimes don't have access to the large marketing budgets of
bigger charities and societies. Small societies are not the only
customers, and the team has been working closely with the Liberal
Democrat Party with an innovative new scheme to aid fund raising at
local levels - we hope this new approach will be adopted across
other national societies which have a localized presence.
The site operated by Soccerdome Limited remains closed and we
are working with Nottingham Council on proposals for the
development of the site in conjunction with the broader development
of the surrounding Harvey Hadden Sports Complex. We believe that
the site would make an attractive investment opportunity for either
an existing five-a-side operator or an entrepreneur wishing to
enter into the sport and leisure arena. The whole development is
expected to complete in 2015.
The Board has concluded that The Gambling Division lacked the
critical mass required to make significant returns. Activity in FC
Betz has now ceased following a final wind down of operations and
Devil Fish Poker was sold to Jeff Williams after the year end.
Outlook
Current contracted business through the payments division
continues to grow healthily; we have added a number of clients for
whom we are processing payments both in the UK and across Europe.
Our customers range from claims management companies, gaming and
entertainment operators and resellers of services such as visa
applications and congestion charges. Estimated revenues (based on
seven live and seven yet to go live but signed contracts) for the
final quarter of the current financial year are expected to
generate circa GBP175,000 to GBP250,000 in profit (EBIT), which
would move the company comfortably into long term
profitability.
This year has therefore seen significant changes - the lottery
business is much improved from an operational point of view and
winning new, as well as reinvigorating existing, customers continue
to be the focus for the lottery team. The entry into ecommerce
services perhaps best represents the future of the company, with
existing and proposed products ranging from internet payment
services provision to managing ewallet and physical and virtual
prepaid services moving the company into profitability. With an
improving balance sheet, new products and services the group is
strongly placed to build upon these foundations and the Board
continue to look for new profit sources to give much needed
shareholder value, which if achieved as expected will no doubt be
the most welcome change we will see in the coming twelve
months.
Lord E T Razzall
Chairman
Date 23 December 2013
CONSOLIDATED INCOME STATEMENT
For the year ended 31 July 2013
Note 2013 2012
GBP'000 GBP'000
Revenue 1,271 1,142
Cost of sales (836) (723)
--------- ---------
Gross profit 435 419
Administrative
expenses 6 (469) (705)
--------- ---------
Operating loss
before exceptional
items (34) (286)
Impairment of
intangible assets (309) -
Impairment of
tangible assets (73) -
--------- ---------
Loss before interest (416) (286)
--------- ---------
Finance income 9 - -
Finance costs 9 (22) (5)
--------- ---------
Loss before taxation (438) (291)
Income tax expense 10 - -
--------- ---------
Loss (438) (291)
========= =========
PROFIT/(LOSS)
PER SHARE
Basic profit/(loss)
per ordinary share 11 (0.06) (0.07)
Diluted profit/(loss)
per ordinary share 11 (0.05) (0.06)
All of the (loss) for the period is attributable to equity
holders of the parent company. The Group has no recognised gains or
losses for the year other than the loss for the current year.
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 July 2013
Note 2013 2012
GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and
equipment 14 378 476
Goodwill 12 505 467
Other intangible assets 13 34 44
--------- ---------
Total non current assets 917 987
--------- ---------
Current assets
Inventories 16 2 2
Trade and other receivables 17 120 101
Cash and cash equivalents 17 256 18
--------- ---------
Total current assets 378 121
========= =========
Total assets 1,295 1,108
--------- ---------
Current liabilities
Trade and other payables 20 711 805
Bank and other borrowings 18 287 37
Current tax payable - -
--------- ---------
Total current liabilities 998 842
Non-current liabilities
Trade and other payables - 40
--------- ---------
Bank and other borrowings 18 14 -
--------- ---------
Deferred tax provision 22 - -
--------- ---------
Total non-current liabilities 14 40
--------- ---------
Total liabilities 1,012 882
--------- ---------
Net assets 283 226
========= =========
EQUITY
Share capital 23 795 442
Share premium account 24 1,463 1,321
Retained earnings 24 (1,975) (1,537)
--------- ---------
Equity attributable
to equity holders of
the parent 283 226
========= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 23 December 2013. They were signed on
its behalf by:
P I Jackson
Director
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2013
Called up Share premium Retained
share capital account Earnings Total Equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance 31 July
2011 380 1,233 (1,246) 367
(Loss) for the
year - - (291) (291)
Shares issued
in year less
costs 62 88 - 150
--------------- -------------- ---------- ---------------
Balance 31 July
2012 442 1,321 (1,537) 226
Shares issued
in year less
costs 353 142 - 495
(Loss) for the
year - - (438) (438)
--------------- -------------- ---------- ---------------
Balance 31 July
2013 795 1,463 (1,975) 283
--------------- -------------- ---------- ---------------
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 July 2013
Year ended 31 Year ended 31
July 2013 July
GBP'000 2012
GBP'000
Note
Profit / (Loss) for the year (438) (291)
Adjustment for:
Finance costs recognised in
profit or loss 22 5
Depreciation and amortisation
of non-current assets 35 71
Impairment of non-current assets 382 -
Expense recognised in respect 109 -
of shares issued in exchange
for consulting services
--------
548
--------
110 (215)
Movement in working capital:
Decrease / (increase) in receivables 59 109
Increase / (decrease) in payables (216) (29)
-------- ------- -------- -------
(157) 80
-------- ------- -------- -------
Cash generated from operations (47) (135)
Interest paid (22) (5)
--------
Net cash generated / by operating
activities (69) (140)
-------- ------- -------- -------
Cash flows from investing activities: - -
Payment for intangible assets (1) - (11)
Net cash inflow on acquisition
of subsidiary 27 8 - -
Purchases of property, plant
and equipment - 7 (5) (16)
-------- ------- -------- -------
Net cash generated / (used
in) investing activities 7 (16)
-------- ------- -------- -------
Cash flows from financing activities
Proceeds from issue of equity
instruments of the company 63
Payment for share issue costs (27) 150
Proceeds from borrowings 267 -
Repayment of borrowings (3) 300 (50) 100
-------- ------- -------- -------
Net cash generated / (used
in) financing activities 300 100
-------- ------- -------- -------
Net increase/(decrease) in
cash and cash equivalents 238 (56)
Cash and cash equivalents at 1
August 2012 18 74
---- ---
Cash and cash equivalents at 31
July 2013 256 18
==== ===
Comprising of:
Cash and cash equivalents per
the balance sheet 256 18
Less:
Bank overdraft - -
---- ---
Cash and cash equivalents for
cash flow statement purposes 27 256 18
==== ===
As described in the accounting policies, bank overdrafts and
borrowings repayable on demand fluctuate from being positive to
overdrawn and are considered an integral part of the Group's cash
management for cash flow statement purposes.
There is no material difference between the fair value and the
book value of cash and equivalents.
BOXHILL TECHNOLOGIES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2013
1. General Information
Boxhill Technologies Plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address of the registered
office is 21 Knightsbridge, London, SW1X 7LY. The nature of the
Group's operations and its principal activities are described in
the Directors' Report.
These Financial Statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Group operates.
2. Adoption of new and revised International Financial Reporting Standards
In the current year, the Group has adopted all of the new and
revised Standards and Interpretations issued by the International
Accounting Standards Board (the IASB) and the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB
that are relevant to its operations and effective for accounting
periods beginning on or after 1 August 2012.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
IAS 19 - Employee Benefits
IAS 27 - Consolidated and separate financial statements
(revised)
IAS 28 - Investments in associates and joint ventures
(revised)
IFRS 9 - Financial instruments (revised 2010)
IFRS 10 - Consolidated financial statements
IFRS 11 - Joint arrangements
IFRS 12 - Disclosure of Interests in Other Entities
IFRS 13 - Fair Value Measurement
These Standards and Interpretations are not expected to have any
significant impact on the Group's Financial Statements in their
periods of initial application.
3. Significant accounting policies
Basis of Accounting
The Financial Statements, upon which this financial information
is based, have been prepared using accounting policies consistent
with International Financial Reporting Standards (IFRS).
The financial information has been prepared on a going concern
basis, as at 31 July 2013, in accordance with International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") as well as all
interpretations issued by the
International Financial Reporting Interpretations Committee
("IFRIC"). The Group has not availed itself of early adoption
options in such standards and interpretations.
The Financial Statements, upon which this financial information
is based, have been prepared under the historical cost basis except
where specifically noted. The principal accounting policies adopted
are set out below:
Going concern
The financial statements have been prepared on a going concern
basis notwithstanding a loss for the financial year of
GBP438,000.
The Directors' cashflow forecasts indicate that the Group will
be able to operate within its existing bank facilities in the
future. As with any business, there are uncertainties in the
forecast, but as at the date of approval of these financial
statements the Directors are unaware of any indications that would
suggest inappropriate assumptions have been made in relation to
trading volumes. As a result of these, the Directors are of the
opinion that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future and
have continued to adopt the going concern basis in preparing the
financial statements. The financial statements do not include any
adjustments which would result from this basis of preparation being
inappropriate.
Basis of consolidation
The consolidated Financial Statements incorporate the Financial
Statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 July each year. Control is
achieved where the Company has the power to govern the financial
and operating policies so as to obtain benefits from its
activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the Financial
Statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business Combinations
The purchase method of accounting is used for all acquired
businesses as defined by IFRS 3 - Business Combinations.
As a result of the application of the purchase method of
accounting, goodwill is initially recognised as an asset being the
excess at the date of acquisition of the fair value of the purchase
consideration plus directly attributable costs of acquisition over
the net fair values of the identifiable assets, liabilities and
contingent liabilities of the subsidiaries acquired. Where fair
values are estimated on a provisional basis they are finalised
within 12 months of acquisition with consequent changes to the
amount of goodwill.
Intangible assets
Identifiable intangible assets acquired as part of a business
combination are initially recognised separately from goodwill if
the assets fair value can be measured reliably, irrespective of
whether the asset had been recognised by the acquirer before the
business combination was affected. An intangible asset is
considered identifiable only if it is separable or arises from
contractual or other legal rights, regardless of whether those
rights are transferable or separable from the entity or from other
rights and obligations.
Intangible assets relate to the development of the lottery and
on-line gaming (software and related costs). It is considered that
the software has a finite useful life and amortisation has been
calculated so as to write off the carrying value of it over its
useful economic life of 5 years.
Goodwill
Goodwill arising on consolidation represents the excess cost of
acquisition over the Group's interest in the fair value of the
identifiable assets and liabilities of a subsidiary at the date of
acquisition. Goodwill is initially recognised as an asset and
reviewed for impairment at least annually. Any impairment is
recognised immediately in the income statement and is not
subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash generating units expected to benefit from
the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication of impairment. The
amount of the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
On disposal of a subsidiary the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Negative goodwill arising on consolidation is credited to the
income statement where the Directors consider that the fair value
of the assets is reliable and do not need adjustment and that the
negative goodwill relates to a true bargain purchase.
Revenue recognition
Lottery turnover represents takings received for entry into the
lottery prize draws. Revenue is recognised upon receipt of the
money for the period that the draw takes place. Online gaming
turnover represents commission earned on game plays. Football pitch
turnover represents cash takings received. Payment processing
turnover is recognised when transactions are processed.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profits for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and corresponding tax bases used in the
computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that is no longer
probable that sufficient taxable profits will be available to allow
all, or part, of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss. Useful
lives are reviewed annually by the Directors.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives using the straight-line
method, on the following bases:
Property - 5% per annum
Fixtures, fittings and equipment - 25% per annum
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in income.
Where there is evidence of impairment, fixed assets are written
down to their recoverable amount.
Leased assets
Rentals payable under non-onerous operating leases are expensed
in the income statement on a straight-line basis over the lease
term.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair values less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimate of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Group, and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
function currency (foreign currencies) are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical costs in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
Share based payments
Other than for business combinations, the only share based
payments of the Group are equity settled share options and certain
liability settlements. The Group has applied the requirements of
IFRS 2 Share-based Payments.
For share options granted an option pricing model is used to
estimate the fair value of each option at grant date. That fair
value is charged on a straight line basis as an expense in the
income statement over the period that the holder becomes
unconditionally entitled to the options (vesting period), with a
corresponding increase in equity.
For shares issued in settlement of fees and/or liabilities, the
Directors estimate the fair value of the shares at issue date and
that value is charged on a straight line basis as an expense in the
income statement (for fees) or reduction in the balance sheet
liability (for liabilities) with a corresponding increase in
equity.
Inventories
Inventories are stated at the lower of cost and net recognised
value. Cost comprises direct materials using the first in first out
(FIFO) basis. Net recognised value represents the estimated selling
price less estimated costs of completion, marketing and
selling.
Cash and cash equivalents
Cash and cash equivalents comprise of cash on hand and demand
deposits and are subject to an insignificant risk of changes in
value.
Trade receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit and loss
when there is objective evidence that the asset is impaired. The
allowance recognised is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows discounted at the effective interest rate compound at
initial recognition.
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Financial liability and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual agreements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments are recognised at the amount of
proceeds received net of costs directly attributable to the
transaction. To the extent that those proceeds exceed the par value
of the shares issued they are credited to a share premium
account.
Bank borrowings
Interest-bearing bank loans 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 accounted for on an accrual basis in profit or
loss using effective interest rate method and are added to the
carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Trade payables
Trade payables are not interest-bearing and are stated at their
nominal value.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
4. Critical accounting judgements and key sources of estimation uncertainty
In application of the Group's accounting policies above, the
Directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities.
These estimates and assumptions are based on historical experience
and other factors considered relevant. Actual results may differ
from estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period which the estimate is revised if the revision affects
only that period or in the period of the revision and future
payments if the revision affects both current and future
periods.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation
of the value in use of cash generating units to which goodwill has
been allocated. The value in use calculation requires the entity to
estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value.
Share-based payments
Share-based payments are measured at grant date fair value. For
share options granted to employees, in many cases market prices are
not available and therefore the fair value of the options granted
shall be estimated by applying an option pricing model. Such models
need input data such as expected volatility of share price,
expected dividends or the risk-free interest rate for the life of
the option. The overall objective is to approximate the
expectations that would be reflected in a current market price or
negotiated exchange price for the option. Such assumptions are
subject to judgements and may turn out to be significantly
different to expected.
5. Segment analysis
The primary reporting format is by business segment, based on
the different services offered by the operating companies within
the Group. The Directors consider that the Group now has four
business segments, namely that of lottery administration, on-line
gaming, IT facilities and astro-turf football pitches. The Group
operates solely in one geographical area, the United Kingdom.
The Directors consider that none of the operations are classed
as Discontinued and hence all operations are considered to be
Continuing throughout the period. Since the year end the online
gaming segment has discontinued following the sale of Devil Fish
Poker Limited.
The analysis of operations per segment for the year ended 31
July 2013 is as follows:
Lottery On-line IT Facilities Football Unallocated Group total
Gaming Pitches
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 798 35 394 44 - 1,271
--------- --------- -------------- --------- ------------ ------------
Amortisation - 10 - - - 10
Depreciation - - - 24 1 25
Impairment - 309 - 73 - 382
Operating
profit/(loss) (30) (255) 35 (55) (111) (416)
Finance
costs - - - - (22) (22)
--------- --------- -------------- --------- ------------ ------------
Profit/(loss)
before tax (30) (255) 35 (55) (133) (438)
Tax charge - - - - - -
--------- --------- -------------- --------- ------------ ------------
Profit/(loss)
for the
year (30) (255) 35 (55) (133) (438)
========= ========= ============== ========= ============ ============
Balance
sheet
Total assets 254 11 124 378 528 1,295
========= ========= ============== ========= ============ ============
Non current
asset additions - - - - - -
========= ========= ============== ========= ============ ============
Total liabilities 349 13 351 12 287 1,012
========= ========= ============== ========= ============ ============
5. Segment analysis (continued)
The following table analyses assets and liabilities not
allocated to business segments as at 31
July 2013:
GBP'000
Assets
Intangible fixed assets 18
Tangible fixed assets -
Investments 488
Other receivables 22
Cash and cash equivalents -
--------
528
--------
Liabilities
Trade and other payables 273
Borrowings 14
--------
287
--------
6. Expenses
The following material expenses are included in cost of
sales:
2013 2012
GBP'000 GBP'000
Revenue Share - 91
Processing and Transaction Fees - 32
Fees to Clients 664 389
Prizes Payable 129 111
Player Rake Back 5 28
The following material expenses are included in administrative
expenses:
2013 2012
GBP'000 GBP'000
Consultancy fees 52 190
Office rent and rates 50 37
Hotel and travel 42 25
Professional fees 84 80
Bank charges 12 34
7. Operating (loss)
Operating loss has been stated after charging/(crediting) the
following:
2013 2012
GBP'000 GBP'000
Impairment of goodwill in period 309 -
Impairment of short term lease 73 -
Amortisation of intangible fixed
assets 10 40
Depreciation of tangible fixed assets 25 32
Operating lease charges 16 37
Auditors' remuneration - Audit services
to the parent company 6 1
Auditors' remuneration - Audit services
to the Group 11 10
========= =========
Auditors' remuneration - Taxation
services 2 1
========= =========
As permitted by Section 408 of the Companies Act 2006, the
holding company's profit and loss account has not been included in
these financial statements. The loss for the period after taxation
was GBP1,272,000 (2012 - GBP196,000).
8. Personnel costs
2013 2012
The average monthly number of employees No. No.
(including executive and non executive
Directors) was 10 7
========== ==========
The split of employees by function
within the Group is as follows: No. No.
Administration and Sales 5 3
Management 5 4
---------- ----------
Total 10 7
========== ==========
2013 2012
Their aggregate remuneration comprised GBP'000 GBP'000
Wages and salaries 75 80
Social security costs 11 9
Sums paid to third parties for services 23 64
---------- ----------
109 153
---------- ----------
8. Personnel costs (continued)
Directors' emoluments GBP'000 GBP'000
Emoluments 23 24
Sums paid to third parties for director
services 20 64
43 88
========== ==========
Number of Directors accruing benefits No. No.
under money purchase schemes - -
========== ==========
Aggregate emoluments of highest
paid Director 23 31
========== ==========
Included within Directors' emoluments is GBP20,000 (2012 -
GBP64,000) paid to directors via related companies, as detailed in
note 28. All of the Directors' emoluments relate to short-term
employee benefits
9. Finance income and costs
2013 2012
GBP'000 GBP'000
Finance income - -
========= =========
Finance charges 22 5
========= =========
10. Income taxes
2013 2012
GBP'000 GBP'000
Current:
Current tax for the year - -
--------- ---------
Total current tax charge - -
Deferred tax credit (note 22) - -
--------- ---------
Total income taxes - -
========= =========
10. Income taxes (continued)
Tax rate reconciliation
2013 2012
GBP'000 GBP'000
Profit/(Loss) for the year (438) (291)
========= =========
Corporation tax charge thereon
at 20%) (88) (58)
Adjusted for the effects of:
Disallowed net expenses/(income)
for tax purposes 77 (25)
Depreciation in excess of capital
allowances 7 26
Taxable losses and excess charges
carried forward 4 57
--------- ---------
Income tax expense for the year - -
========= =========
11. Earnings per share
The calculation is based on the earnings attributable to
ordinary shareholders divided by the weighted average number of
Ordinary Shares in issue during the period as follows:
2013 2012
Numerator: earnings attributable
to equity (GBP'000) (438) (291)
Denominator: weighted average number
of equity shares (No.) 468,094,865 404,312,311
============== ==============
In June 2010 the Company issued 24 million options to subscribe
for Ordinary shares of 0.1p each. At the year end 8.1 million
options were outstanding. None of these options were exercised in
either the prior or the current period, but had they been they
would have increased the weighted average number of equity shares
to 476,194,865 (2012 - 428,312,311) and this amount is used in the
calculation of diluted earnings per share.
12. Goodwill
GBP'000
At 31 July 2012 467
Additions 347
Impairment (309)
--------
At 31 July 2013 505
========
12. Goodwill (continued)
The Group carried out an impairment test of goodwill for the
period ended 31 July 2013 as required by IFRS. The Directors
consider there to be four cash-generating units, as per note 5.
During the period impairment of the on-line gaming and football
pitches cash-generating units have been impaired.
Included within goodwill is an amount relating to the
subsidiaries Prize Provision Services Limited and Poseve Limited.
The carrying amount for goodwill for these respective subsidiaries
is GBP158,000 and GBP330,000 respectively.
The principal assumptions made (in both 2013 and 2012) in
determining the value in use of the cash-generating unit were:
-- Basis on which recoverable amount determined - value in
use;
-- Period covered by management plans used in calculation - 1
year;
-- Pre-tax discount rate applied to cashflow projection -
5%;
-- Growth rate used to extrapolate cashflows beyond management
plan - 3%;
-- Difference between above growth rate and long term rate for
UK - 0.5%
The calculation of value in use shown above is most sensitive to
the assumptions on discount rates and growth rates. The assumptions
used are considered to be realistically achievable in light of
economic and industry measures and forecasts. The Directors believe
that any reasonable possible change in the key assumptions on which
the recoverable amount is based would not cause its carrying amount
to exceed its recoverable amount.
Whilst there can be no certainty that the forecasts used in the
impairment calculation will be achieved, the carrying value of
goodwill at 31 July 2013 reflects the Directors best estimate based
on their knowledge of the business at 20 December 2013 and reflects
all matters of which the Directors are aware as at the date of
approval of these financial statements.
13. Other intangible assets
Website and software design
and development
2013 2012
GBP'000 GBP'000
Cost
At 1 August 2012 258 247
Additions - 11
-------------- --------------
At 31 July 2013 258 258
============== ==============
Amortisation
At 1 August 2012 214 174
Charge for the year 10 22
Impairment - 18
============== ==============
At 31 July 2013 224 214
============== ==============
Net Book Value
At 31 July 2013 34 44
============== ==============
14. Property and office equipment
Land and buildings Office equipment Total
2013
GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 August 503 16 519
Additions - - -
------------------- ----------------- --------
At 31 July 503 16 519
------------------- ----------------- ========
Depreciation
At 1 August 28 15 43
Charge for the
year 24 1 25
Impairment 73 - 73
------------------- ----------------- --------
At 31 July 125 16 141
Net Book Value
At 31 July 2013 378 - 378
------------------- ----------------- --------
At 31 July 2012 475 1 476
------------------- ----------------- ========
15. Subsidiaries
Details of the company's subsidiaries at 31 July 2013 are as
follows:
Place of Proportion
incorporation of ownership
(or registration) interest
Name of Subsidiary Company number and operation & voting Holding Principal activity
power held
Prize Provision England and Ordinary
Services 03152966 Wales 100% shares Lottery provider
England and Ordinary Online gaming
FC Betz Limited 07304154 Wales 100% shares activities
Clicknow Holdings England and Ordinary
Limited 05391900 Wales 100% shares Dormant company
Devil Fish
Poker England and Ordinary Commission earned
Limited 05529624 Wales 100% shares via website
Soccerdome England and Ordinary Operates floodlit
Limited 02948017 Wales 100% shares pitches
England and Ordinary Operator of community
Click Now Limited 05391900 Wales 100% shares search engine
Barrington England and Ordinary Payment processing
Lewis Limited 07190212 Wales 100% shares products
Ordinary Non trading holding
Poseve Limited 126971C Isle of Man 100% shares company
16. Inventories
2013 2012
GBP'000 GBP'000
Finished goods 2 2
======== ========
17. Other financial assets
Trade and other receivables
2013 2012
GBP'000 GBP'000
Trade receivables 89 2
Other receivables 15 44
Prepayments and accrued
income 16 55
-------- --------
120 101
======== ========
The average credit period taken on all sales is 26 days for the
year ended 31 July 2013, 1 day for the year ended 31 July 2012.
The Group has provided fully for all receivables which are not
considered recoverable. In determining the recoverability of all
receivables, the Group considers any change in the credit quality
of the receivable up to the reporting date. As at the year end date
there were no receivables past due which were either not provided
against nor not covered by set-off arrangements with trade
payables.
The Directors consider that the carrying amount of the
receivables approximates their fair value.
Cash and cash equivalents
2013 2012
GBP'000 GBP'000
Cash and cash equivalents 256 18
======== ========
Cash and cash equivalents comprises cash held by the Group and
short-term bank deposits with an original maturity of 6 months or
less. The carrying amount of these assets approximates their fair
value.
18. Borrowings
Borrowings at 31 July 2013 include bank loans of GBP301,000
(2012 : GBP14,000). All of the loans are repayable on a fixed
monthly repayment basis.
GBP14,000 of the borrowings are due for settlement after 12
months but within 5 years, with GBP287,000 being due for settlement
within 12 months.
Included within borrowings is a loan of GBP250,000 which can be
converted at any point to 31 December 2014, at the lenders
discretion, into ordinary shares at a fixed sum of 0.11p per share
to repay the outstanding loan and any additional interest and
fees.
19. Derivatives financial instruments and hedge accounting
At 31 July 2013 and 2012 the Group had no derivatives in place
for cash flow hedging purposes.
20. Other financial liabilities
Trade and other payables
2013 2012
GBP'000 GBP'000
Trade payables 260 395
Other payables 401 349
Accrued liabilities and deferred
income 50 101
-------- --------
711 845
======== ========
Other payables comprise:
GBP'000 GBP'000
Social security and other taxes 138 29
Other 263 320
-------- --------
401 349
======== ========
Presented as:
* Current - 805
* Non-current 711 40
======== ========
Accrued liabilities and deferred income represents miscellaneous
contractual liabilities that relate to expenses that were incurred,
but not paid for at the year-end and income received during the
period, for which the Group had not supplied the goods or services
at the end of the year.
The Directors consider that the book value of trade payables,
accrued liabilities and deferred income approximates to their fair
value at the balance sheet date.
The average credit period taken for trade purchases is 113 days
(2012 : 95 days).
21. Financial instruments: information on financial risks
Financial risks are discussed in the Directors' Report and
below.
Capital risk management
The Group manages its capital to ensure that the Group as a
whole will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes the borrowings disclosed in note 18, cash and
cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings
as disclosed in notes 23 to 24.
Gearing ratio
As at 31 July 2012 the Group gearing ratio was 8.4%. As at 31
July 2013 the gearing ratio is as follows:
GBP'000
Debt (301)
Cash and cash equivalents 256
--------
Net Debt (45)
--------
Equity 283
--------
Net debt to equity ratio 15.9%
========
Debt is defined as long and short-term borrowings.
Equity includes all capital and reserves of the Group
attributable to equity holders of the parent.
Financial risk management objectives
The main market risks to which the Group is exposed are interest
rates. There is also exposure to credit risk and liquidity risk.
The Group monitors these risks and will take appropriate action to
minimize any exposure.
Credit risk
The Group's exposure to credit risk is minimal due to turnover
being in the main recognised upon cash receipt, hence the amount of
trade receivables is negligible.
21. Financial instruments: information on financial risks
(continued)
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group's short,
medium and long-term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
Regulatory compliance risk
Regulatory compliance risk is the risk of material adverse
impact resulting from failure to comply with laws, regulations,
codes of conduct or standards of good practice governing the sector
in which the Group operates. The Group is monitored by the
financial director who is responsible for meeting regulatory and
compliance obligations.
Interest rate risk
The Group's exposure to interest rate risk mainly concerns
financial assets and liabilities, which are subject to floating
rates in the Group. At presents the Group's loans are on fixed rate
interest rates and hence it is not exposed to risk on these should
rates move.
22. Deferred taxation
A deferred tax asset has not been recognised in the years ended
31 July 2013 nor 31 July
2012 in respect of taxable losses carried forward of
approximately GBP1,187,000 (2012 GBP1,166,000) as there is
insufficient historic evidence that it will be recoverable in full
against taxable profits during the next 12 months.
There are not considered to be any material temporary
differences associated with investments in subsidiaries for which
deferred tax liabilities have not been recognised.
23. Equity share capital
2013 2012
GBP'000 GBP'000
Allotted, called up and fully paid
795,433,397 (2012: 441,627,159) Ordinary
Shares of 0.1p each 795 442
======== ========
During the year the Company issued 0.1p Ordinary shares as
follows:
-- 236,656,580 shares issued at 0.1479p each on 30 May 2013 to J
Rose in exchange for the entire share capital of Poseve
Limited;
-- 74,149,659 shares issued at 0.1479p each on 30 May 2013 to
Allenby Capital Limited, A J A Flitcroft, J M Botros, Lord E T
Razzall and J Williams to pay outstanding creditors.
-- 42,999,999 shares issued at 0.1479p each on 30 May 2013 to new individual investors.
24. Other reserves
Share premium Profit and
loss
account
GBP'000 GBP'000
At 1 August 2012 1,321 (1,537)
Shares issued less costs 142 -
Result for the period - (438)
-------------- -----------
At 31 July 2013 1,463 (1,975)
============== ===========
25. Share-based payments
Certain Directors and key management were issued with share
options on 8 June 2010, exercisable immediately at a price fixed at
the date of issue. If the options remain unexercised after a period
of seven years from the date of grant the options expire.
Details of options granted to date and still outstanding at the
end of the year are as follows:
Date of Grant 2013 Exercise price Exercise period
No.
GBP'000
8 June 2010 to 2 June
8 June 2010 2,700,000 0.75p 2017
8 June 2010 to 2 June
8 June 2010 2,700,000 1.0p 2017
8 June 2010 to 2 June
8 June 2010 2,700,000 1.25p 2017
All of the above options were outstanding at the year end. The
options had a weighted average exercise price of 1p and a remaining
contractual life of 4.8 years. The Directors consider that the
estimated fair values of the options at grant date was GBPnil due
to the prevailing market price being lower than the exercise price.
As the fair value is currently considered to be GBPnil, no amount
has been recognised in either the income statement or in equity in
respect of these options.
As detailed in note 23, during the year shares were issued to
third parties as settlement for certain liabilities to the value of
GBP109,000.
26. Business combinations
Subsidiaries acquired
Principal Date of acquisition Proportion Consideration
activity of voting transferred
interests GBP'000
acquired
Non trading
Poseve Limited holding company 22 May 2013 100% 350
Consideration transferred
Poseve
Limited
GBP'000
Shares issued as consideration 350
---------
350
=========
Assets acquired and liabilities recognised at the date of
acquisition
Poseve Total
Limited GBP'000
GBP'000
Current assets
Cash and cash equivalents 8 8
Trade and other receivables 78 78
Non-current assets
Goodwill 16 16
Current liabilities
Trade and other payables (82) (82)
20 20
========= =========
27. Goodwill arising on acquisition
Poseve
Limited Total
GBP'000 GBP'000
Consideration Transferred 350 350
Less: fair value of identifiable
net assets acquired 20 20
Goodwill arising on acquisition 330 330
========= ==========
Net cash inflow on acquisition
Year ended
31 July
2013
GBP'000
Consideration paid in cash -
Less: cash and cash equivalent
balances acquired (8)
-----------
(8)
28. Transactions with related parties
The transactions set out below took place between the Group and
certain related parties.
Lord E T Razzall
Lord E T Razzall, a director, charged the Group GBP19,500 (2012
GBP13,750) in the year, for directorship services provided, via an
entity trading as R T Associates. At the year end R T Associates
was owed GBP2,400 (2012 GBP1,600).
J M Botros
J M Botros, the Company Secretary, charged the Group GBP42,677
(2012 GBP80,000) in the year, for Company Secretarial and legal
services provided. At the year end there was no balance outstanding
(2012: GBP35,000).
A J A Flitcroft
A J A Flitcroft, a director charged the group GBP30,000 in the
year for accountancy services. At the year end a balance of
GBP26,530 was outstanding.
28. Transactions with related parties (continued)
J S Williams
J S Williams, a former director of the group, charged the Group
GBP36,250 (2012: GBP51,250) in the year for his services provided,
via FCBid Limited and interest of GBP7,200 on a loan he provided to
the company. A balance of GBP60,000 was owed to the company (2012:
(GBP13,023)) at the year end.
Issue of Equity
On 30 May 2013 the Company issued the following ordinary 0.1p
shares ("Shares") in part settlement of fees due to Company
personnel.
-- The Right Honourable Lord E T Razzall CBE, Non-Executive
Chairman, 14,965,986 Shares in settlement of GBP22,000 fees
due.
-- J M Botros, Company Secretary and Legal Adviser, 23,809,524
Shares in settlement of GBP35,000 fees due.
-- J S Williams, General Manager, 14,965,986 Shares in settlement of GBP22,000 fees due.
-- A Flitcroft, a director of the company 13,605,442 Shares in
settlement of GBP20,000 fees due.
The new shares were issued at 0.147p per share, which was the 5
day average of the closing mid market price to 16 May 2013.
As referred to in Note 25, share options were granted in 2010 to
Directors and key management, all of which were outstanding at the
year end. The following options were held by the Directors and key
management at the year end:
Options No. Option details
Lord E T Razzall 3,200,000 See A below
J M Botros 4,800,000 See B below
A - 1,100,000 at 0.75p, 1,100,000 at 1p and 1,000,000 at
1.25p
B - 1,600,000 at 0.75p, 1,600,000 at 1p and 1,600,000 at
1.25p
All of the options are exercisable by 2 June 2017.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is as referred to above, on page 8 within
the Directors Report and in Note 7.
29. Operating lease commitments
At the balance sheet date, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2013 2012
GBP'000 GBP'000
Land and buildings:
Within one year - -
In the second to fifth years
inclusive 16 16
After five years - -
Other: - -
Within one year - -
In the second to fifth years - -
inclusive
-------- --------
After five years 16 16
======== ========
Operating lease payments represent rentals payable by the Group
for office premises. Leases are negotiated over the term considered
most relevant to the individual subsidiary and rentals are fixed
where possible for that term.
30. Controlling Party
No single individual has sole control of the company.
31. Events after the balance sheet date
Following the year end the company issued 324,895,331 0.1p
ordinary shares to acquire the entire share capital of Sormelle
Limited.
During September 2013 the company sold Devil Fish Poker Limited
to a former director J S Williams.
32. Going Concern
The Group made a loss for the year of GBP438,000 (2012:
GBP291,000) and an EBITDA profit of GBP1,000 (2012: (GBP231,000)).
The significant trading loss is a result of an impairment charge of
GBP382,000 from the impairment of goodwill and the value of a
leasehold on the football pitches business.
The management are continuing to control costs as well as pursue
acquisitions of profitable cash generative companies, which has
been seen with the acquisitions of Poseve Limited and Sormelle
Limited. The group is forecasting turnover growth as a result of
the acquisitions, with turnover of GBP4m expected and cash reserves
being built up.
Given these changes made to the Group's ongoing operations,
together with the additional capital available from the supporting
shareholders, the Directors consider that the Group continues to be
a going concern and they forecast that that there is sufficient
funding in place to enable the continuance of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKADALADFFF
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