TIDMBOX
RNS Number : 4162B
Boxhill Technologies PLC
06 January 2015
BOXHILL TECHNOLOGIES PLC
6 January 2015
("Boxhill", the "Group" or the "Company")
Final Results for the year to 31 July 2014 & Notice of
AGM
Boxhill Technologies (AIM:BOX) the AIM quoted lottery software
and leisure company is pleased to announce its final results for
the year ended 31 July 2014.
The Company also gives notice that it will hold its Annual
General Meeting ("AGM") at 11:30am on Thursday 29 January 2015 at
the offices of Allenby Capital Limited, 3 St Helen's Place, London,
EC3A 6AB. Copies of the notice of AGM have been sent to ordinary
shareholders of the Company today.
A copy of the Company's Annual Report and Accounts for the year
to 31 July 2014 have been posted today on the Company's website in
accordance with its articles of association and the AIM Rules.
Financial Highlights
-- Revenue GBP1,410,000 (GBP2,190,000 including discontinued operations) (GBP843,000 in 2013)
-- Operating Loss before interest GBP110,000 (GBP201,000
including discontinued operations) (a loss of GBP232,000 in
2013)
-- Net assets of GBP492,000 (GBP283,000 in 2013)
-- Loss from ordinary activities GBP187,000 (a loss of GBP254,000 in 2013)
Operational Highlights
-- Acquired technology business Pay Corporation Limited ("Pay Corp")
-- Refocused operations, final winding down of gaming operations.
Post-period Highlights
-- Successful pilot and testing of casino based services
-- Growth from fourteen payments customers to approaching fifty
-- Platform level integration into leading foreign exchange trading platforms
-- New look lottery website and improved lottery technology
Commenting on the Final Results, Chairman Lord E T Razzall
said:
"Through 2014 we have continued to deliver our long term plan of
building out the ecommerce and online transactions business.
Boxhill Technologies PLC is continuing on its transitional journey
focused on building a stable platform for growth.
Current contracted business through the payments division
continues to grow healthily; with encouraging growth in contracts
since July, with Foreign Exchange being a major focus in the short
term. Estimated group revenues for the financial year ending July
31 2015 are expected to at least double those of 2014 based on
current agreed business."
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
Financial Summary
In my review of the half-year figures to 31 January 2014 the
Company made losses of GBP128,000. I am pleased to report that the
operating loss before discontinued operations and exceptional items
for the full year has been held to GBP110,000 against GBP105,000 in
the year ending 31 July 2013. As we continue to improve the
structure and shape of our company there is often an impact of
restructuring businesses which gives rise to unavoidable
exceptional losses. In this case the resulting exceptional loss on
discontinued operations is GBP496,000, including the write down of
tangible and intangible assets. Therefore continuing operations in
summary are:
Revenue GBP1,410,000
Operating loss before interest GBP110,000
Interest payable GBP77,000
Loss from ordinary activities GBP187,000
Revenues from discontinued operations were GBP780,000 therefore
total revenues including discontinued operations grew to
GBP2,190,000 from GBP1,271,000 and on the same basis losses would
have been GBP201,000. The Board felt that the structural changes
were the appropriate way forward to reduce overlap of services,
creating a focused payments technology business and removing
unnecessary additional administrative costs.
The significant underlying growth in revenue and gross profit
figures represent the continuing hard work from all members of
staff with the biggest contributor being our payment software
business which is our largest division supported by the Lottery
business which is improving over time.
Operational Summary
The Board saw further changes during the year - with Kevin Dale
leaving in July 2014. The company intends to make further
appointments to the Board in due course, with a particular view to
adding experienced non-executives.
Prize Provision Services Ltd, which operates The Weather
Lottery, has seen significant positive change over the past year
with a strengthened team at the helm, new location in Manchester,
upgraded website, improved online services and the roll out of a
new brand. The Weather Lottery itself has given nearly GBP5 million
in prizes and raised over GBP5.3 million for good causes, providing
valuable income for the hundreds of societies it serves. In this
regard we believe the services provided really do make a difference
to the societies that employ our services. The team continues to
work closely with the Liberal Democrat Party with the development
of the Lib Dem Lottery, designed to generate funds at grassroots
level for the 393 local seats. We hope to develop this approach
with other national organisations that have a significant localised
presence.
The five-a-side business operated by Soccerdome Limited remains
closed pending completion of the GBP25,000,000 leisure development
by Nottingham City Council of the site, which is due for completion
in June 2015. We are working with Nottingham Council on proposals
for the development of the site in conjunction with this 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
involving either a straight sale or joint venture.
The Board has concluded that The Gambling Division lacked the
critical mass required to make significant returns and was wound
down.
The payments business has continued to add customers and has
grown from fourteen or so customers in July to approaching 50 as at
21(st) December 2014. The diversity of customers is important, too,
and our customers operate in gaming, foreign exchange, general
e-commerce and online secretarial services. Our goal is to continue
to focus on developing relationships with other large scale
providers, other payment gateways or service providers and of
course selected merchants directly. We expect Casino Cash to make a
positive contribution by rolling out to a number of locations in
2015 after a successful pilot at a London Casino.
Outlook
Current contracted business through the payments division
continues to grow healthily; with encouraging growth in contracts
since July, with Foreign Exchange being a major focus in the short
term. Estimated group revenues for the coming financial year are
expected to at least double based on current agreed business.
This year has therefore seen continuing changes with the
original lottery business now continuing to make improvements on an
operational front after a period of decline before the present
management were put in place. Winning new, as well as
reinvigorating existing, customers continues to be the focus for
the lottery team. The continued growth in 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. FY2015 will see a
greater focus on costs and in in particularly a reduction in the
number of consultants used with an improving balance sheet, new
products and services the group is still 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
2 January 2015
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31 July 2014
Note 2014 2013
GBP'000 GBP'000
Continuing Operations
Revenue 1,410 843
Cost of sales 6 (473) (502)
---------- ---------
Gross profit 937 341
Administrative expenses 6 (1,047) (446)
---------- ---------
Operating (loss)
before exceptional
items (110) (105)
Impairment of intangible
assets - (54)
Impairment of tangible
assets - (73)
---------- ---------
(Loss) before interest (110) (232)
---------- ---------
Finance income 10 - -
Finance costs 10 (77) (22)
---------- ---------
(Loss) before taxation (187) (254)
Income tax expense 11 - -
---------- ---------
(Loss) for year
from continuing
operations (187) (254)
========== =========
Discontinued operations
(Loss) for the year
from discontinued
operations 8 (496) (184)
---------- ---------
(Loss) for the year (683) (438)
PROFIT/(LOSS) PER
SHARE
Basic profit / (loss)
per ordinary share 12 (0.13) (0.09)
========== =========
Diluted profit /
(loss) per ordinary
share 12 (0.13) (0.09)
========== =========
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.
The Notes on pages 20 to 47 form part of these financial
statements.
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 July 2014
Note 2014 2013
GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and
equipment 15 383 378
Goodwill 13 618 505
Other intangible assets 14 28 34
--------- ---------
Total non current assets 1,029 917
--------- ---------
Current assets
Inventories 17 2 2
Trade and other receivables 18 1,651 120
Cash and cash equivalents 18 258 256
--------- ---------
Total current assets 1,911 378
========= =========
Total assets 2,940 1295
--------- ---------
Current liabilities
Trade and other payables 21 1,959 711
Bank and other borrowings 19 489 287
Current tax payable -
--------- ---------
Total current liabilities 2,448 998
Non-current liabilities
Trade and other payables
--------- ---------
Bank and other borrowings 19 - 14
--------- ---------
Deferred tax provision 23 - -
--------- ---------
Total non-current liabilities - 14
--------- ---------
Total liabilities 2,448 1012
--------- ---------
Net assets 492 283
========= =========
EQUITY
Share capital 24 1,427 795
Share premium account 25 1,723 1463
Retained earnings 25 (2,658) (1975)
--------- ---------
Equity attributable
to equity holders of
the parent 492 283
========= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 2 January 2015. They were signed on its
behalf by:
P I Jackson
Director
The Notes on pages 20 to 47 form part of these financial
statements.
BOXHILL TECHNOLOGIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2014
Called up share capital Share premium account Retained Earnings
Total Equity
GBP'000 GBP'000 GBP'000
GBP'000
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
Shares issued in year less
costs 632 260 892
(Loss) for the year (683) (683)
------------------------ ---------------------- ------------------ ---------------
Balance 31 July 2014 1,427 1,723 (2,658) 492
The Notes on pages 20 to 47 form part of these financial statements.
Year ended 31 July Year ended 31 July
2014 2013
GBP'000 GBP'000
Note
Cash Flow from operating
activities
(Loss) for the year (683) (438)
Adjustment for:
Finance costs recognised
in profit or loss 77 22
Depreciation and amortisation
of non-current assets 29 35
Loss / (profit) from discontinued
activities 496 184
Impairment of non-current
assets - 127
Expense recognised in respect
of shares issued in exchange
for consulting services 89 109
----------
691 477
Operating Cash Flow 8 39
Movement in working capital:
(Increase) / decrease in
receivables (1,327) 65
Increase / (decrease) in
payables 1,165 (171)
---------- --------- --------- ----------
(162) (106)
--------- ----------
Cash used in operations (154) (67)
Interest paid (77) (22)
----------
Net cash used by continuing
operating activities (231) (89)
Net cash (used by) / generated
from discontinued operating
activities (102) 20
--------- ----------
Net cash used in operating
activities (333) (69)
--------- ----------
Cash flows from investing -
activities:
Payment for intangible assets (6) (1)
Net cash inflow (outflow)
on acquisition of subsidiary 28 13 8
Purchases of property, plant
and equipment (34) 7
---------- --------- --------- ----------
Net cash (used in) / generated
from continuing investing
activities (27) 7
--------- ----------
Cash flows from financing
activities
Proceeds from issue of equity
instruments of the company 174 63
Payment for share issue costs - (27)
Proceeds from borrowings 394 267
Repayment of borrowings (206) (3)
---------- --------- --------- ----------
Net cash generated from continuing
financing activities 362 300
--------- ----------
Net increase in cash and
cash equivalents 2 238
Cash and cash equivalents
at 1 August 2013 256 18
------ ------
Cash and cash equivalents
at 31 July 2014 258 256
====== ======
Comprising of:
Cash and cash equivalents
per the balance sheet 258 256
Less:
Bank overdraft - -
------ ------
Cash and cash equivalents
for cash flow statement
purposes 258 256
====== ======
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.
The Notes on pages 20 to 47 form part of these financial
statements.
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 39 St James Street, London, SW1X 1JD. 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 2013.
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:
IFRS Amendment Definition of vesting condition
2
--------- ---------- -------------------------------------------------
IFRS Amendment Accounting for contingent consideration
3 and joint ventures
--------- ---------- -------------------------------------------------
IFRS Amendment Improvement review
5
--------- ---------- -------------------------------------------------
IFRS Amendment Improvement review
7
--------- ---------- -------------------------------------------------
IFRS Amendment Improvement review and aggregation and
8 reconciliation of assets
--------- ---------- -------------------------------------------------
IFRS Financial Instruments
9
--------- ---------- -------------------------------------------------
IFRS Amendment Consolidation exception and sale or contribution
10 of assets between investor and joint venture
--------- ---------- -------------------------------------------------
IFRS Amendment Accounting for acquisitions of interests
11 in joint ventures
--------- ---------- -------------------------------------------------
IFRS Amendment Investment entities and consolidation
12 exceptions
--------- ---------- -------------------------------------------------
IFRS Amendment Improvement review and portfolio exception
13
--------- ---------- -------------------------------------------------
IFRS Regulatory deferral accounts
14
--------- ---------- -------------------------------------------------
IFRS Revenue from contracts with customers
15
--------- ---------- -------------------------------------------------
IAS 1 Amendment Resulting from the disclosure initiative
--------- ---------- -------------------------------------------------
IAS16 Amendment Acceptable methods of depreciation and
and IAS amortisation and proportionate restatement
38 of accumulated depreciation on revaluation.
--------- ---------- -------------------------------------------------
IAS 19 Amendment Employee benefit contributions and improvement
review
--------- ---------- -------------------------------------------------
IAS 24 Amendment Improvement review
--------- ---------- -------------------------------------------------
IAS 27 Amendment Investment entities and equity method
--------- ---------- -------------------------------------------------
IAS 28 Amendment Consolidation exception and sale or contribution
of assets between investor and joint venture
--------- ---------- -------------------------------------------------
IAS 36 Amendment Recoverable amount disclosure for non
financial assets
--------- ---------- -------------------------------------------------
IAS 39 Amendment Novation of derivatives and continuation
of hedge accounting
--------- ---------- -------------------------------------------------
IAS 40 Amendment interrelationship with IFRS 3
--------- ---------- -------------------------------------------------
IAS 41 Amendment Agriculture - bearer plants
--------- ---------- -------------------------------------------------
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 2014, 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 the loss for the financial year.
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. 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.
Other Payables and Other Receivables
As at the year end the subsidiary Pay Corporation Limited had a
potential VAT liability of GBP1.2M and an amount owed to the
Company, by non related companies, of a similar amount. These
amounts are included within "Trade and Other Payables" and "Trade
and Other Receivables" respectively. At present there is some
uncertainty whether this liability is due in full or in part but
there is also some uncertainty as to the extent of collectability
of these debts whether in full or in part. Should amounts
recoverable amount to less than any liability claims may be made
under indemnities within the Sale and Purchase Agreement of Pay
Corporation Limited together with other individuals and/or
companies.
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 three
business segments, namely that of lottery administration, IT
payment facilities and astro-turf football pitches. The Group
operates solely in one geographical area, the United Kingdom.
The Directors consider that the On-line gaming segment and part
of the payment processing segment are classed as Discontinued
during the period
The analysis of continuing operations per segment for the year
ended 31 July 2014 is as follows:
Lottery Payment Football Unallocated Group total
Admin Processing Pitches
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 714 696 - - 1,410
--------- ------------ --------- ------------ ------------
- - - -
Amortisation -
Depreciation - 11 18 - 29
Operating
Profit /
(loss) (14) 295 (22) (369) (110)
Loss on - - - - -
Disposal
--------- ------------ --------- ------------ ------------
Finance
costs (2) - - (75) (77)
--------- ------------ --------- ------------ ------------
Profit /
(loss)
before tax (16) 295 (22) (444) (187)
Tax charge - - - - -
--------- ------------ --------- ------------ ------------
Profit /
(loss)
for the
year (16) 295 (22) (444) (187)
========= ============ ========= ============ ============
5. Segment analysis (continued)
Balance
Sheet
Total assets 397 1,518 380 645 2,940
==== ====== ==== ====== ======
Non current
asset additions 40 460 500
==== ====== ==== ====== ======
Total liabilities 390 1,339 8 711 2,448
==== ====== ==== ====== ======
The following table analyses assets and liabilities not
allocated to business segments as at 31
July 2014:
GBP'000
Assets
Intangible fixed assets 18
Tangible fixed assets
Investments 618
Other receivables 6
Cash and cash equivalents 3
--------
645
--------
Liabilities
Trade and other payables 222
Borrowings 489
--------
711
--------
6. Expenses
The following material expenses are included in cost of
sales:
2014 2013
GBP'000 GBP'000
Revenue Share - -
Fees and Integration Costs 64 -
Fees to Clients 275 664
Prizes Payable 74 129
6. Expenses (continued)
The following material expenses are included in administrative
expenses:
2014 2013
GBP'000 GBP'000
Consultancy fees 262 52
Office rent and rates (22) 50
Hotel and travel 74 42
Professional fees 182 84
Bank charges 13 12
7. Operating (loss)
Operating loss has been stated after charging / (crediting) the
following:
2014 2013
GBP'000 GBP'000
Impairment of goodwill in period - 54
Impairment of short term lease - 73
Amortisation of intangible fixed
assets - 10
Depreciation of tangible fixed assets 29 25
Operating lease charges 77 16
Auditors' remuneration - Audit services
to the parent company 10 6
Auditors' remuneration - Audit services
to the Group 15 11
========= =========
Auditors' remuneration - Taxation
services 3 2
========= =========
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 GBP663,000 (2013: loss GBP1.272.000).
8. Discontinued activities
2014 2013
GBP'000 GBP'000
Revenue 780 428
Costs and expenses (871) (357)
--------- ---------
(Loss) / profit on discontinued
activities (91) 71
(Loss) and impairment of intangibles
on discontinued activities (405) (255)
--------- ---------
(Loss) on discontinued activities (496) (184)
========= =========
9. Personnel costs
2014 2013
The average monthly number of employees No. No.
(including executive and non executive
Directors) was 12 10
======== ========
The split of employees by function
within the Group is as follows: No. No.
Administration and Sales 7 5
Management 5 5
-------- --------
Total 12 10
======== ========
2014 2013
Their aggregate remuneration comprised GBP'000 GBP'000
Wages and salaries 282 75
Social security costs 21 11
Directors remuneration 84 43
-------- --------
387 129
-------- --------
Directors' emoluments GBP'000 GBP'000
Emoluments 60 23
Sums paid to third parties for director
services 24 20
84 43
======== ========
Number of Directors accruing benefits No. No.
under money purchase schemes - -
======== ========
Aggregate emoluments of highest
paid Director 30 23
======== ========
Included within Directors' emoluments is GBP24,000 (2013:
GBP20,000) paid to directors via related companies, as detailed in
note 29.
10. Finance income and costs
2014 2013
GBP'000 GBP'000
Finance income - -
========= =========
Finance charges 77 22
========= =========
11. Income taxes
2014 2013
GBP'000 GBP'000
Current:
Current tax for the year - -
--------- ---------
Total current tax charge - -
Deferred tax credit (note 22) - -
--------- ---------
Total income taxes - -
========= =========
Tax rate reconciliation
2014 2013
GBP'000 GBP'000
Profit/(Loss) for the year (683) (438)
========= =========
Corporation tax charge thereon
at 20%) (137) (88)
Adjusted for the effects of:
Disallowed net expenses/(income)
for tax purposes 123 77
Depreciation in excess of capital
allowances - 7
Taxable losses and excess charges
carried forward 14 4
--------- ---------
Income tax expense for the year - -
========= =========
12. 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:
2014 2013
Numerator: earnings attributable
to equity (GBP'000) (683) (438)
Denominator: weighted average number
of equity shares (No.) 507,541,746 468,094,865
============ ==============
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 525,141,746 (2013: 476,194,865) and this amount is used in the
calculation of diluted earnings per share.
13. Goodwill
GBP'000
At 31 July 2013 505
Additions 460
Impairment (347)
--------
At 31 July 2014 618
========
The Group carried out an impairment test of goodwill for the
period ended 31 July 2014 as required by IFRS. The Directors
consider there to be three cash-generating units, as per note 5.
During the period one of the payment processing cash-generating
units has been impaired and part of this unit has been
discontinued.
Included within goodwill is an amount relating to the
subsidiaries Prize Provision Services Limited and Pay Corporation
Limited. The carrying amount for goodwill for these respective
subsidiaries is GBP158,000 and GBP460,000 respectively.
The principal assumptions made (in both 2014 and 2013) 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.
13. Goodwill (continued)
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 2014 reflects the Directors best estimate based
on their knowledge of the business at 2 January 2015 and reflects
all matters of which the Directors are aware as at the date of
approval of these financial statements.
14. Other intangible assets
Website and software design
and development
2014 2013
GBP'000 GBP'000
Cost
At 1 August 2013 258 258
Additions 6 -
Disposals (236) -
-------------- --------------
At 31 July 2014 28 258
============== ==============
Amortisation
At 1 August 2013 224 214
Charge for the year - 10
Disposals (224) -
============== ==============
At 31 July 2014 - 224
============== ==============
Net Book Value
At 31 July 2014 28 34
============== ==============
15. Property and office equipment
Land and buildings Office equipment Total
2014
GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 August 503 16 519
Additions - 34 34
Disposals - (1) (1)
At 31 July 503 49 552
------------------- ----------------- ========
Depreciation
At 1 August 125 16 141
Charge for the
year 18 11 29
Impairment - - -
Disposals - (1) (1)
At 31 July 143 26 169
Net Book Value
At 31 July 2014 360 23 383
------------------- ----------------- --------
At 31 July 2013 378 - 378
------------------- ----------------- ========
16. Subsidiaries
Details of the company's subsidiaries at 31 July 2014 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 Limited 03152966 Wales 100% shares Lottery provider
PayCorporation England and Ordinary
Limited 08299524 Wales 100% shares Payment processing
Soccerdome England and Ordinary Operates floodlit
Limited 02948017 Wales 100% shares pitches
Barrington England and Ordinary Payment processing
Lewis Limited 07190212 Wales 100% shares products
Ordinary Non trading
Poseve Limited 126971C Isle of Man 100% shares holding company
17. Inventories
2014 2013
GBP'000 GBP'000
Finished goods 2 2
======== ========
18. Other financial assets
Trade and other receivables
2014 2013
GBP'000 GBP'000
Trade receivables - 89
Other receivables 1,605 15
Prepayments and accrued
income 46 16
-------- --------
1,651 120
======== ========
The average credit period taken on all sales is 0 days for the
year ended 31 July 2014, 26 days for the year ended 31 July
2013.
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.(See note 4 under estimation uncertainty on page 27)
The Directors consider that the carrying amount of the
receivables approximates their fair value.
Cash and cash equivalents
2014 2013
GBP'000 GBP'000
Cash and cash equivalents 258 256
======== ========
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.
19. Borrowings
Borrowings at 31 July 2014 include loans of GBP489,000 (2013:
GBP301,000).
Included within borrowings is a loan of GBP46,875 which, on 2
September 2014 was converted at 0.1625p per share.
A further loan of approximately GBP426,000 is included in
borrowings, this loan is on flexible terms with no fixed repayment
period.
A separate loan amount included of approximately GBP16,000 is
repayable on a fixed monthly repayment basis and due for settlement
within 12 months.
20. Derivatives financial instruments and hedge accounting
At 31 July 2014 and 2013 the Group had no derivatives in place
for cash flow hedging purposes.
21. Other financial liabilities
Trade and other payables
2014 2013
GBP'000 GBP'000
Trade payables 296 260
Other payables 1,574 401
Accrued liabilities and deferred
income 89 50
--------------- --------
1,959 711
=============== ========
Other payables comprise:
GBP'000 GBP'000
Social security and other taxes 1,249 138
Other 325 263
--------------- --------
1,574 401
=============== ========
Presented as:
* Current 1,959 711
- -
* Non-current
=============== ========
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 91 days
(2013: 113 days).
22. 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 19, cash and
cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings
as disclosed in notes 24 to 25.
Gearing ratio
As at 31 July 2013 the Group gearing ratio was 15.9%. As at 31
July 2014 the gearing ratio is as follows:
GBP'000
Debt (489)
Cash and cash equivalents 258
---------
Net Debt (231)
---------
Equity 492
---------
Net debt to equity ratio 46.95%
=========
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.
22. 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.
23. Deferred taxation
A deferred tax asset has not been recognised in the years ended
31 July 2014 nor 31 July
2013 in respect of taxable losses carried forward of
approximately GBP700,000 (2013: GBP1,187,000) 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.
24. Equity share capital
2014 2013
GBP'000 GBP'000
Allotted, called up and fully paid
1,426,983,616 (2013: 795,433,397) Ordinary
Shares of 0.1p each 1,427 795
======== ========
During the year the Company issued 0.1p Ordinary shares as
follows:
-- 12,068,966 shares issued at 0.145p each to A Flitcroft.
-- 120,000,000 shares issued at 0.145 p each to Viltek Limited;
-- 125,000,000 shares issued at 0.1625p each to a syndicate of individuals;
-- 42,736,607 shares issued at 0.145p each to Lausi Trading Limited
-- 6,849,315 shares issued at 0.146p each to Allenby Capital Limited
-- 324,895,331 shares issued at 0.13p each for the acquisition of Pay Corporation Limited.
25. Other reserves
Share premium Profit and
loss
account
GBP'000 GBP'000
At 1 August 2013 1.463 (1,975)
Shares issued less costs 260 -
Result for the period - (683)
-------------- -----------
At 31 July 2014 1,723 (2,658)
============== ===========
26. 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 2014 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 3.8 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.
27. Business combinations
Subsidiaries acquired
Principal Date of acquisition Proportion Consideration
activity of voting transferred
interests GBP'000
acquired
Pay Corporation 13 September
Limited Payment processing 2013 100% 423
Consideration transferred
Pay Corporation
Ltd
GBP'000
Shares issued as consideration 423
----------------
423
================
Assets acquired and liabilities recognised at the date of
acquisition
Pay Corporation Total
Ltd GBP'000
GBP'000
Current assets
Cash and cash equivalents 13 13
Trade and other receivables 120 120
Non-current assets
Goodwill - -
Current liabilities
Trade and other payables (170) (170)
(37) (37)
================ =========
28. Goodwill arising on acquisition
Pay Corporation
Ltd Total
GBP'000 GBP'000
Consideration Transferred 423 423
Add: fair value of identifiable net
liabilities acquired 37 37
Goodwill arising on acquisition 460 460
================ ==========
Net cash inflow on acquisition
Year ended
31 July
2014
GBP'000
Consideration paid in cash -
Less: cash and cash equivalent
balances acquired 13
-----------
13
===========
29. 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 GBP24,000 (2013:
GBP19,500) in the year, for directorship services provided, via an
entity trading as R T Associates. At the year end R T Associates
was owed GBP9,600 (2013: GBP2,400).
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is as referred to above, and on page 8
within the Directors Report and in Note 9.
29. Transactions with related parties (continued)
Issue of Equity
On 11 July 2014 the Company issued the following ordinary 0.1p
shares ("Shares") in part settlement of fees due to Company
personnel to A Flitcroft, a director of the company 12,068,966
Shares in settlement of GBP17,500 fees due.
The new shares were issued at 0.145p per share, which was the 5
day average of the closing mid market price to 11 July 2014
As referred to in Note 26, 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.
30. 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:
2014 2013
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.
31. Controlling Party
No single individual has sole control of the company.
32. Events after the balance sheet date
There are no events to note after the balance sheet date.
33. Going Concern
The Group made a loss for the year of GBP683,000 (2013:
GBP438,000) and an EBITDA loss of GBP172,000 (2013: profit of
GBP1,000). The trading loss is a result of a reduction in revenue
from the lottery business and overhead costs associated with the
holding company and its listing on AIM.
The management are continuing to control costs as well as pursue
acquisitions of profitable cash generative companies, which has
been seen with the acquisition of Pay Corporation Limited. The
group is forecasting turnover growth as a result of the
acquisition.
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 EAAFKEAESEFF
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