TIDMWEB
RNS Number : 2401V
Webis Holdings PLC
30 November 2023
For immediate release 30 November 2023
Webis Holdings plc
("Webis" or "the Group")
Annual Report and Financial Statements for the year ended 31 May
2023
Notice of Annual General Meeting
Webis Holdings plc, the global gaming group, today announces its
audited results and the publication of its 2023 Report and Accounts
("Accounts") for the year ended 31 May 2023, extracts from which
are set out below.
The Accounts are being posted to shareholders today together
with the Notice of Annual General Meeting, and will be available on
the Group's website www.webisholdingsplc.com and at the Group's
Registered Office: Viking House, Nelson Street, Douglas, Isle of
Man IM1 2AH.
The AGM will be held at The Claremont Hotel, 18/19 Loch
Promenade, Douglas, Isle of Man, at 10.00 a.m. on 30 January
2024.
Chairperson's Statement
Introduction
As previously reported in the 2022/23 interim report, released
on 24 February 2023, it has been a difficult year of trading for
our principal subsidiary, WatchandWager.com LLC in the USA. Despite
that, we remain confident of the way the business is taking shape,
and our strategy for the future. I comment more on the financial
results and our plans and aims for the business below.
Funding Update
As per the RNS dated 15th September 2023, a convertible loan
note, providing new funding of GBP 750,000, was agreed, and signed
with Galloway Limited (a related party), with the option for this
to be converted into shares in the Company. The Board consider this
to be beneficial to the Company.
Strategy
The strategy behind the investment from our main shareholder is
to support our B2C sector, which as reported below has been
performing well. We can see growth opportunities in this sector.
Increased investment and an upturn in performance can only benefit
our market capitalisation for the benefit of all shareholders.
The plan for the investment is to focus spend on software
improvements and marketing of our core website
www.watchandwager.com and the mobile product. At time of writing,
we plan to roll out the software work in the first two months of
the calendar year. We then aim to roll out our B2C marketing
campaign starting in March 2024. The marketing will be primarily
focused on social media activity and will focus on key US states
and wagering products that derive the highest margin for us. We
will be setting key performance indicators for the implementation
team and will ensure the programs are very agile. We will keep
shareholders informed as to progress.
Following the planned enhancements to our on-line offering, we
believe that the opportunity to collaborate with those established
sportsbook operators who lack a content rich and stable ADW
platform will increase, and this will be one area which we will
actively pursue during 2024.
Year End Results Review
The Group amounts wagered for the year ended 31 May 2023 were
US$ 113.4 million (2022: US$ 120.1 million). Gross Profit reported
was US $ 4.6 million (2022: US$ 5.1 million).
Operating costs were slightly reduced from last year at US$ 5.5
million (2022: US$ 5.6 million), primarily from a reduced number of
race days at Cal Expo racetrack, due to severe weather conditions
at the racetrack and its surrounding areas.
This resulted in a loss on the year of US$ 0.745 million, a
downturn on the 2022 loss of US$ 0.374 million.
Shareholder equity stands at US$ 0.6 million (2022: US$ 1.3
million). Total cash stands at US$ 3.3 million (2022: US$ 4.1
million), which includes ring-fenced funds held as protection
against our player liability as required under USA and Isle of Man
gambling legislation.
Approach to Risk and Corporate Governance
As part of the adoption of the Quoted Companies Alliance
Corporate Governance code in 2018, the Board completed an
assessment of the risks inherent in the business and defined and
adopted a statement of risk appetite, being the amount and type of
risk, it is prepared to seek, accept, or tolerate in pursuit of
value. This being: -
"The Group's general risk appetite is a moderate, balanced one
that allows it to maintain appropriate growth, profitability and
scalability, whilst ensuring full regulatory compliance."
The Group's primary risk drivers include: -
Strategic
Reputational
Credit
Operational
Market
Liquidity, Capital, and Funding
Regulatory and Compliance
Conduct
Our risk appetite is classified under an "impact" matrix defined
as Zero, Low, Medium, and High. Appropriate steps are implemented
to ensure the prudential control monitoring of risks to the Group
and the Audit, Risk and Compliance Committee oversees this
essential requirement. Further details of the Corporate Governance
Statement will be found on pages 10 to 13 of this report and should
be read in conjunction with my report.
The Board refined the Group's business plan which incorporates
the risk and compliance framework.
Performance by Sector
WatchandWager
Business-to-Consumer
www.watchandwager.com /mobile
We have been pleased with the performance in this sector which
is wagering through our main website and mobile product over the
financial year. The product has held up well against extreme
competition from all the big players in the market. We are very
confident of the scalability of our software, as per our
strategy.
We have effectively "pivoted" the business in the past two
years, for this sector to contribute 70% of our revenues, with B2B
only 30% (excluding our retail operations at Cal Expo). We consider
this to be a healthier business mix, when previously we were
vulnerable to the volatile B2B market.
Business-to-Consumer
As stated, whilst some of the software improvements have already
commenced, we are in advanced planning for the main activity
programme to start early in the New Year. It is very important that
we achieve our targets in this sector, to not only achieve
profitability, but also make the Company more attractive in merger
or acquisition opportunities.
Business-to-Business
As previously stated in February, we see this sector as a very
mature market, where the bigger are getting bigger and margins are
tightening. Simply put, the profits from the costs of sales against
the margin derived are decreasing. That said, we will continue to
service our key clients to the best of our ability, and we have
seen steady levels of performance from those clients. We will
continue to service this sector and maximise revenue as best as
possible but only with a strict attention to regulatory
compliance.
Cal Expo
It has been a difficult season at our racetrack at Cal Expo
Sacramento, primarily due to unprecedented weather conditions. This
resulted in us losing seven race meetings due to Health and Safety
concerns. This had a negative impact on financial performance as
our operating costs increased as we tried to maintain track
conditions whilst at the same time, we were not receiving any
direct wagering income. That said, we managed the situation well
with no Health and Safety issues. We remain confident for the new
season, which started 17 November and will run until 3 May 2024,
with 47 live race meets planned.
Key risk factors
During the period we have updated our Risk Assessment procedures
and will continue to do so. The Board conducts regular risk
assessments on a micro and macro level.
Licenses
During the period reported, all our licenses have been renewed
successfully in the Isle of Man and the USA. We consider our
licensed presence in all jurisdictions to be a key asset to the
Company and we fully expect all our license renewals subsequent to
the period to be approved before the calendar year end 2023.
Content
WatchandWager continues to offer the widest range of content to
its global customers of any licensed advance deposit wagering
Company in the world. As well as our licenses, we consider this
offering to be a key unique selling proposition for the Company.
All of our content agreements both domestic USA and international
are up to date into 2024, and, in a number of cases, beyond.
Compliance
There were no compliance issues across the entire operation
during the period reported.
Health & Safety
There were no Health and Safety issues across the entire
operation during the period reported.
Outlook
We are more satisfied by the performance of our main subsidiary
in the new financial year. Our performance has been stronger on key
USA and global international racetracks. Our handle has also been
strong on the UK content, and particularly the World Pool
initiative hosted by the Hong Kong Jockey Club and the UK Tote. We
look to increase that level of activity in the next year.
Board Appointments
Following the extremely sad news of the death of Sir James
Mellon in July of this year, we are actively seeking to recruit
additional Directors to the Board. Sir James brought a rigorous
commitment to all aspect of the business and his absence is sorely
missed.
Other Developments
As reported, we are still working on the Arizona Downs project,
namely, to run a racing operation at the track with a similar model
to Cal Expo. This has been difficult due to the lack of progress
with the Landlord and the Regulatory Commission, largely out of our
control. If these issues are not resolved by the end of the
calendar year 2023, we will most probably abandon the project. This
will have very little impact on our operating costs.
USA Expanded Gaming
Shareholders will have noted the failure of two draft
Californian sports betting bills in November 2022. As previously
stated, these were extremely poorly constructed draft legislation,
in fact the failure of both bills to pass is of benefit to the
Company. We continue to possess key licensed assets in California,
both land-based at Cal Expo and with our ADW license.
Acquisitions and Mergers
The announcement of the financial support of our principal
shareholder is important to the Company. This combined with our
license assets, makes us a very attractive partner in all potential
partnerships, mergers, and acquisitions within the USA. We will
keep shareholders fully informed of any meaningful developments in
this area as soon as possible.
Summary
Finally, I would like to thank all our shareholders and
customers for their continued loyalty. In addition, I would like to
thank all our staff and team for their work and commitment over the
year.
Denham Eke
Non-executive Chairperson
29 November 2023
For further information:
Webis Holdings plc Tel: 01624 639396
Denham Eke
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish/James Biddle
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2023
2023 2022
Note US$000 US$000
--------------------------------------------------- ----- --------- ---------
Amounts wagered 113,371 120,140
--------------------------------------------------- ----- --------- ---------
Revenue 1.2 50,020 53,612
Cost of sales 1.2 (45,303) (48,462)
Betting duty paid (100) (101)
--------------------------------------------------- ----- --------- ---------
Gross profit 4,617 5,049
--------------------------------------------------- ----- --------- ---------
Operating costs (5,488) (5,604)
Loss allowance on trade receivables 21 (2) 11
Other gains 34 20
Government grant 15 - (48)
Other income 247 324
Operating loss 3 (592) (248)
--------------------------------------------------- ----- --------- ---------
Finance costs 4 (153) (126)
--------------------------------------------------- ----- --------- ---------
Loss before income tax (745) (374)
--------------------------------------------------- ----- --------- ---------
Income tax expense 6 - -
--------------------------------------------------- ----- --------- ---------
Loss for the year (745) (374)
--------------------------------------------------- ----- --------- ---------
Total comprehensive loss for the year (745) (374)
--------------------------------------------------- ----- --------- ---------
Basic earnings per share for loss attributable to
the equity holders of the Company during the year
(cents) 7 (0.19) (0.10)
--------------------------------------------------- ----- --------- ---------
Diluted earnings per share for loss attributable
to the equity holders of the Company during the
year (cents) 7 (0.18) (0.09)
--------------------------------------------------- ----- --------- ---------
Statements of Financial Position
As at 31 May 2023
31.05.23 31.05.23 31.05.22 31.05.22
Group Company Group Company
Note US$000 US$000 US$000 US$000
------------------------------ ----- --------- --------- ----------- ---------
Non-current assets
Intangible assets 8 19 - 11 -
Property, equipment, and
motor vehicles 9 661 1 724 3
Investments 10 - 3 - 3
Bonds and deposits 11 100 - 100 -
------------------------------ ----- --------- --------- ----------- ---------
Total non-current assets 780 4 835 6
------------------------------ ----- --------- --------- ----------- ---------
Current assets
Bonds and deposits 11 883 - 883 -
Cash, cash equivalents and
restricted cash 12 3,285 1,227 4,139 1,266
Trade and other receivables 13 1,378 745 1,190 821
Total current assets 5,546 1,972 6,212 2,087
------------------------------ ----- --------- --------- ----------- ---------
Total assets 6,326 1,976 7,047 2,093
------------------------------ ----- --------- --------- ----------- ---------
Equity
Called up share capital 17 6,334 6,334 6,334 6,334
Share option reserve 17 42 42 42 42
Retained losses (5,803) (5,828) (5,058) (5,711)
------------------------------ ----- --------- --------- ----------- ---------
Total equity 573 548 1,318 665
------------------------------ ----- --------- --------- ----------- ---------
Current liabilities
Trade and other payables 14 3,712 78 3,640 78
Loans, borrowings, and lease
liabilities 16 462 350 109 -
------------------------------ ----- --------- --------- ----------- ---------
Total current liabilities 4,174 428 3,749 78
------------------------------ ----- --------- --------- ----------- ---------
Non-current liabilities
Loans, borrowings, and lease
liabilities 16 1,579 1,000 1,980 1,350
------------------------------ ----- --------- --------- ----------- ---------
Total non-current liabilities 1,579 1,000 1,980 1,350
------------------------------ ----- --------- --------- ----------- ---------
Total liabilities 5,753 1,428 5,729 1,428
------------------------------ ----- --------- --------- ----------- ---------
Total equity and liabilities 6,326 1,976 7,047 2,093
------------------------------ ----- --------- --------- ----------- ---------
Statements of Changes in Equity
For the year ended 31 May 2023
Called up Share option Retained Total
share capital reserve earnings equity
Group US$000 US$000 US$000 US$000
--------------------------- --------------- ------------- ---------- --------
Balance as at 31 May 2021 6,334 42 (4,684) 1,692
Total comprehensive loss
for the year:
Loss for the year - - (374) (374)
Balance as at 31 May 2022 6,334 42 (5,058) 1,318
Total comprehensive profit
for the year:
Loss for the year - - (745) (745)
Balance as at 31 May 2023 6,334 42 (5,803) 573
--------------------------- --------------- ------------- ---------- --------
Called up Share option Retained Total
share capital reserve earnings equity
Company US$000 US$000 US$000 US$000
--------------------------- --------------- ------------- ---------- --------
Balance as at 31 May 2021 6,334 42 (5,516) 860
Total comprehensive loss
for the year:
Loss for the year - - (195) (195)
Balance as at 31 May 2022 6,334 42 (5,711) 665
Total comprehensive profit
for the year:
Loss for the year - - (117) (117)
Balance as at 31 May 2023 6,334 42 (5,828) 548
--------------------------- --------------- ------------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 May 2023
Note 202 3 2022
US$000 US$000
------------------------------------------------------------ ---- -------- --------
Cash flows from operating activities
Loss before income tax (745 ) (374)
Adjustments for:
* Depreciation of property, equipment, and motor
vehicles 9 137 128
* Amortisation of intangible assets 8 5 7
* R ent concessions received 19 (18) (2)
* Lo an interest paid 101 101
* R e-recognition of PPP loan 15 - 48
* (Increase) / decrease in movement of restricted cash (60) 768
* Increase in lease liabilities 59 2 5
* Other foreign exchange movements (47) (66)
Changes in working capital:
* (Increase) / decrease in receivables (18 8) 706
* Increase / (decrease) i n payables 72 (1,355)
------------------------------------------------------------ ---- -------- --------
Net cash used in operating activities (684) (14)
------------------------------------------------------------ ---- -------- --------
Cash flows from investing activities
Purchase of intangible assets 8 (1 3 ) (6)
Purchase of property, equipment, and motor vehicles 9 ( 13) -
Net cash used in investing activities (26) (6)
------------------------------------------------------------ ---- -------- --------
Cash flows from financing activities
L oan i nterest paid (101) (101)
Payment of lease liabilities - principal 19 ( 89) ( 92)
Payment of lease liabilities - interest 19 ( 59) ( 25)
R ent concessions received 19 18 2
Repayment of loans and borrowings ( 20) ( 6)
Net cash used in financing activities 16 (251) (222)
------------------------------------------------------------ ---- -------- --------
Net ( decrease) / increase in cash and cash equivalents (961) (242)
Cash and cash equivalents at beginning of year 3,062 3,2 38
Exchange g ains / (losses) on cash and cash equivalents 47 66
Cash and cash equivalents at end of year 12 2,148 3,062
------------------------------------------------------------ ---- -------- --------
Notes to the Financial Statements
For the year ended 31 May 2023
1 Reporting entity
Webis Holdings plc (the "Company") is a company domiciled in the
Isle of Man. The address of the Company's registered office is
Viking House, Nelson Street, Douglas, Isle of Man, IM1 2AH. The
Webis Holdings plc consolidated financial statements as at and for
the year ended 31 May 2023 consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The Group's
primary activities are the provision of pari-mutuel wagering
services, through its Isle of Man and USA based subsidiaries and
the hosting of harness racing, through its USA based
subsidiary.
1.1 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with UK Adopted - International Accounting Standards.
They were authorised for issue by the Board on 29/11/2023.
The Group has consistently applied the accounting policies as
set out in note 1.2 to all periods presented in these financial
statements.
Functional and presentational currency
These financial statements are presented in US Dollars which is
the Company's functional and presentational currency. Financial
information presented in US Dollars has been rounded to the nearest
thousand, unless otherwise indicated. All continued operations of
the Group have US Dollars as their functional currency.
Other information presented
In line with the Isle of Man Companies Acts 1931-2004, the
Company also presents Parent Company Statements of Financial
Position, the Parent Company Statement of Changes in Equity and
related disclosures. The Company applies the requirements of UK
Adopted International Accounting Standards, as indicated in the
relevant accounting policies below, when preparing the Company
statement of financial position and related notes.
(b) Basis of measurement
The Group consolidated financial statements are prepared under
the historical cost convention except where assets and liabilities
are required to be stated at their fair value.
(c) Use of estimates and judgement
The preparation of the Group financial statements in conformity
with UK Adopted - International Accounting Standards requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income, and expenses. Although these estimates are
based on management's best knowledge and experience of current
events and expected economic conditions, actual results may differ
from these estimates.
The Directors consider the only critical estimate area to be as
follows:
-- Note 21 - the measurement of Expected Credit Loss ("ECL")
allowance for trade and other receivables and assessment of
specific impairment allowances where receivables are past due.
Going concern
The Group and Parent Company financial statements have been
prepared on a going concern basis.
As indicated in the statement of comprehensive income, the Group
has incurred a net loss in the current year of US $ 745,000 (2022:
loss of US $ 374,000) and due to that, net assets reduced from US $
1,318,000 to US$ 573,000. WatchandWager.com Ltd generated a profit
of US$ 99,000, while WatchandWager.com LLC incurred a loss of US$
727,000.
Based on forecasts prepared by the Directors, the Group and the
Company will sustain losses to November 2024 and is dependent on
continued financial support from Galloway Limited in order to
continue its operations and implement growth strategies. To this
end, in September 2023, Galloway Limited has agreed a new
convertible loan of GBP 750,000, which will assist in investing the
Group's business-to-customer sector, including a programme of
software developments of its main website www.watchandwager.com and
marketing the mobile product.
The Directors have also announced that the Group and the Company
will seek to further invest in key marketing techniques, especially
player recruitment and retention with special focus on online
marketing techniques.
This aligns with the Group and the Company's ongoing strategies,
which are pursued in order to help achieve and maintain its goal of
profitability and maintaining adequate liquidity in order to
continue its operations, with these strategies including:
-- broadening the Group's client base and the continued
expansion of its business to customer base;
-- continuing to renew and acquire further US state regulated
gaming licenses and continuing to develop and expand the Cal Expo
racetrack operation; and
-- taking advantage of the anticipated regulatory change in the
State of California's adoption of sports betting legislation which
will further open up opportunities for the Group.
Whilst the Directors continue to assess all strategic options in
relation to the strategies noted in the previous paragraph, the
Directors recognize that the ultimate success of strategies adopted
is difficult to predict as they require additional liquidity to
pursue the required investment, including bonds to be placed with
the relevant authorities to allow for betting on those tracks and
excess cost to be paid to service providers to add more servers to
allow for increased number of users. The Directors have prepared
cash flow forecasts for a period of 12 months from the date of
approval of these financial statements which indicate that, taking
account of reasonably possible downsides, and with consideration of
the additional financial support received from Galloway Limited in
September 2023, the Group and the Company are projected to have
sufficient funds. Projections are inherently uncertain (also
considering the history of losses) and, in that regard, Galloway
Limited has committed to extend funding in case the Group and the
Company face any difficulty in meeting their liabilities as they
fall due for that period.
The Group and the Company have, in previous years, received
financial support from Galloway Limited ( r elated entity) and
Galloway Limited has expressed its willingness to continue to make
funds available as and when needed by the Group and the Company .
The loan s from Galloway Limited stand at US $ 1,350,000 as at 31
May 202 3, with additional funding of GBP 750,000 agreed in
September 2023 .
As with any company placing reliance on other parties for
financial support, the Directors acknowledge that there can be no
certainty that this support will continue, although, at the date of
approval of these financial statements, they have no reason to
believe that it will not do so.
Based on these indications and factors, the Directors believe
that it remains appropriate to prepare the financial statements on
a going concern basis.
1.2 Summary of significant accounting policies
During the current year the Group adopted all the new and
revised IFRSs that are relevant to its operation and are effective
for accounting periods beginning on 1 June 2022. No adoptions had a
material effect on the accounting policies of the Group.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented
unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporate the results of
the Group. Subsidiaries are consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue until the date that such control ceases. Control exists
when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition-related costs are expensed as
incurred.
Inter-company transactions, balances, and unrealised gains on
transactions between the Group companies are eliminated. Unrealised
losses are also eliminated. When necessary amounts reported by
subsidiaries have been adjusted to conform with the G roup's
accounting policies.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). As the primary activities of the Group and the primary
transactional currency of the Group's customers are carried out in
US Dollars, the consolidated financial statements have been
presented in US Dollars, which is the Company's presentational and
functional currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow
hedges and qualifying net investment hedges. Foreign exchange gains
and losses that relate to borrowings are presented in the income
statement within 'Finance income' or 'Finance costs'. All other
foreign exchange gains and losses are presented in the income
statement within 'Other (losses)/gains'.
Revenue from contracts with customers
The Group generates revenue primarily from the provision of
wagering services and the hosting of races on which guests are
entitled to participate in the related wagering services. Revenue
is measured at fair value based on the consideration specified in a
contract with a customer. The Group recognises revenue when it
discharges services to a customer. Revenue has been disaggregated
by geographical locations which are consistent with the operating
segments (note 2).
Hosting fees (Racetrack operations) are recognised when the
customers participate in the Group's pari-mutuel pools and the race
audio visual signals are transmitted. Hosting fees are recorded on
a gross receipts basis.
Wagering revenue from the Group's activities as the race host is
recognised when a race on which wagers are placed is completed. The
wagering commission from the Group's commingling of its wagering
pools with a host's pool is recognised when the race on which those
wagers are placed is completed. The Group acts as a principal when
it allows customers to place wagers in the races it hosts and as an
agent when it allows customers to place wagers in other entities'
races. Where the Group acts as a principal, the entire wager is
recognised as revenue and where it is an agent the wagering
commission the Group retains is recognised as revenue.
Settlement terms for revenue where the Group acts as a host is
usually 7 days for on and off-track wagering and 30 days from month
end for ADW wagering. Where the Group acts as an agent, settlement
terms are typically 30 days from month end.
Transactions fees (ADW operations) are recognised when the Group
facilitates customers' deposit transactions into their betting
accounts. The Group recognises revenue for transaction services net
of related winnings.
Cost of sales
The Group recognises cost of sales related to the Racetrack
operations in which it is the race host. The cost of sales includes
direct costs such as purses, hub fees, import fees, pay-outs, and
other statutory distributions.
Government grants
The Group initially recognises government grants, that
compensate for expenses incurred, as deferred income at fair value
if there is a reasonable assurance that they will be received. They
are then recognised in profit or loss on a systematic basis in the
periods in which the expenses are recognised.
Segmental reporting
Segmental reporting is based on the business areas in accordance
with the Group's internal reporting structure, which allows the
individual operating segments to be identified by the disparate
nature of the principal activity they undertake. The Group
determines and presents segments based on the information that
internally is provided to the Board and Managing Director, the
Group's chief operating decision maker.
An operating segment is a component of the Group and engages in
business activities from which it may earn revenues and incur
expenses. An operating segment's operating results are reviewed
regularly by the Board and Managing Director to make decisions
about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is
available.
Current and deferred income tax
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends. Current
tax assets and liabilities are offset only if certain criteria are
met.
Deferred income tax is recognised on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill; deferred tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the
reporting date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries
except for deferred income tax liability, where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future. Only where there is an agreement in place
that gives the Group the ability to control the reversal of the
temporary difference is the liability not recognised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit
available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes, assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Intangible assets - goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in net fair value of the net identifiable assets,
liabilities, and contingent liabilities of the acquiree and the
fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units ("CGUs"), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within
the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the operating segment
level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
Intangible assets - other
(a) Trademarks and licences
Separately acquired trademarks and licences are shown at
historical cost. Trademarks and licences acquired in a business
combination are recognised at fair value at the acquisition date.
Trademarks and licences have a finite useful life and are carried
at cost less accumulated amortisation and any accumulated
impairment. Amortisation is calculated using the straight-line
method to allocate the cost of trademarks and licences over their
estimated useful lives of three years. Renewal costs are expensed
in the year they relate to.
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful
lives of three years.
(b) Website design and development costs
Costs associated with maintaining websites are recognised as an
expense as incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique
websites controlled by the Group are recognised as intangible
assets when the following criteria are met:
-- it is technically feasible to complete the website so that it
will be available for use;
-- management intends to complete the website and use it;
-- there is an ability to use the website;
-- it can be demonstrated how the website will generate probable
future economic benefits;
-- adequate technical, financial, and other resources to
complete the development and to use the website are available;
and
-- the expenditure attributable to the website during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the
website include the website employee costs and an appropriate
portion of relevant overheads.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period.
Website development costs recognised as assets are amortised
over their estimated useful lives, which do not exceed three
years.
Property, equipment, and motor vehicles
Items of property, equipment and motor vehicles are stated at
historical cost less accumulated depreciation (see below) and
impairment losses. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the Company and the cost of the item can
be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the financial position date. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount. Depreciation is calculated using the
straight-line method to allocate the cost of property, equipment,
and motor vehicles over their estimated useful lives.
The estimated useful lives of property, equipment and motor
vehicles for current and comparative periods are as follows:
Motor vehicles 5 years Fixtures and fittings 3 years
Plant and equipment 3-5 years
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
gains/(losses) - net' in the income statement.
Investment in subsidiary
A subsidiary is an entity controlled by the entity. The Company
controls an investee when the Company is exposed or has rights to
variable returns from its involvement with the investee and can
affect the return through its power over the investee. Control
exists when the Company has the power to govern the financial and
operating policies of an entity to obtain benefits from its
activities. In assessing control, potential voting rights that are
currently exercisable are considered.
Investment in subsidiaries are initially recognized at cost. At
subsequent reporting dates, the recoverable amounts are estimated
to determine the extent of impairment losses, if any, and carrying
amounts of investments are adjusted accordingly. Impairment losses
are recognized as an expense. Where impairment losses subsequently
reverse, the carrying amounts of the investments are increased to
the revised recoverable amounts but limited to the extent of
initial cost of investments. A reversal of impairment loss is
recognized in the profit or loss.
Share-based payment expense
The Group and the Company operate an equity-settled, share-based
compensation plan, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group and the Company. The fair value of the employee services
received in exchange for the grant of the options is recognised as
an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted:
-- including any market performance conditions (for example, an
entity's share price); and
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time-period).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
Equity
Share capital is determined using the nominal value of shares
that have been issued.
Equity settled share-based employee remuneration is credited to
the share option reserve until related stock options are exercised.
On exercise or lapse, amounts recognised in the share option
reserve are taken to share capital.
Retained earnings include all current and prior period results
as determined in the income statement and any other gains or losses
recognised in the Statement of Changes in Equity.
Financial instruments
Recognition and measurement
Non-derivative financial instruments include trade and other
receivables, cash and cash equivalents, bonds and deposits,
borrowings and trade and other payables.
Financial assets and financial liabilities are recognised on the
Group and the Company's balance sheet when the Group and/or the
Company become party to the contractual terms of the instrument.
Transaction costs are included in the initial measurement of
financial instruments, except financial instruments classified as
at fair value through profit or loss. The subsequent measurement of
financial instruments is dealt with below.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in bank and in
hand as well as bank deposits, money held for processors and cash
balances held on trust for the customers entitled to them. Cash
equivalents are held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes. These are
subsequently measured at amortized cost as stated under "Impairment
of financial assets" below.
Bonds and deposits
Bonds and deposits are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
Borrowings
Interest-bearing borrowings and overdrafts are recorded at the
proceeds received net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs are charged on an accrual basis using the effective
interest method and are added to the carrying amount of the
instrument.
Trade and other payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
Impairment of financial assets
The Group and the Company use an impairment model that applies
to financial assets measured at amortised cost and contract assets
and is detailed below. Financial assets at amortised cost include
trade receivables, cash and cash equivalents, bonds and
deposits.
Performing financial assets
Stage 1 (0-30 Days)
From initial recognition of a financial asset to the date on
which an asset has experienced a significant increase in credit
risk relative to its initial recognition, a stage 1 loss allowance
is recognised equal to the credit losses expected to result from
its default occurring over the next 12 months ('12-month ECL').
Stage 2 (31-90 Days)
Following a significant increase in credit risk relative to the
initial recognition of the financial asset, a stage 2 loss
allowance is recognised equal to the credit losses expected from
all possible default events over the remaining lifetime of the
asset ('Lifetime ECL'). The assessment of whether there has been a
significant increase in credit risk requires considerable judgment,
based on the lifetime probability of default ('PD'). Any financial
asset that had been outstanding for greater than 30 days would be
assessed on an individual basis to determine if it qualified as a
significant increase in credit risk. Stage 1 and 2 allowances are
held against performing loans; the main difference between stage 1
and stage 2 allowances is the time horizon. Stage 1 allowances are
estimated using the PD with a maximum period of 12 months, while
stage 2 allowances are estimated using the PD over the remaining
lifetime of the asset.
Impaired financial assets
Stage 3 (After 90 Days)
When a financial asset is considered to be credit-impaired, the
allowance for credit losses ('ACL') continues to represent lifetime
expected credit losses, however, interest income is calculated
based on the amortised cost of the asset, net of the loss
allowance, rather than its gross carrying amount.
The Group applies the ECL model to two main types of financial
assets that are measured at amortised cost:
Trade receivables, to which the simplified approach (provision
matrix) prescribed by IFRS 9 is applied. This approach requires the
recognition of a Lifetime ECL allowance on day one. In the normal
course of operations, trade receivables could be considered to be
in default after 90 days.
Other financial assets at amortised cost, to which the general
three stage model (described above) is applied, whereby a 12-month
ECL is recognised initially and the balance is monitored for
significant increases in credit risk which triggers the recognition
of a Lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. ECLs
for financial assets that are not credit-impaired at the reporting
date are measured as the present value of all cash shortfalls (i.e.
the difference between the cash flows due in accordance with the
contract and the cash flows that the Company expects to receive).
ECLs for financial assets that are credit-impaired at the reporting
date are measured as the difference between the gross carrying
amount and the present value of estimated future cash flows. ECLs
are discounted at the effective interest rate of the financial
asset which is 0% for all financial assets at amortised cost. The
maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit risk.
The measurement of ECLs considers information about past events and
current conditions, as well as supportable information about future
events and economic conditions. The Group reviews its impairment
methodology for estimating the ECLs, taking into account
forward-looking information in determining the appropriate level of
allowance. In addition, it identifies indicators and set up
procedures for monitoring for significant increases in credit
risk.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
i. As a lessee
The Group recognises a right-of-use asset and a lease liability
at the lease commencement/modification date. The right-of-use asset
is initially measured at cost, and subsequently at cost less
accumulated depreciation and impairment loss and adjusted for
certain remeasurements of the lease liability.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted at the Group's applicable incremental borrowing rate (if
the rate implicit in the lease cannot be determined). The Group has
measured the incremental borrowing as equal to external borrowing
rates. The lease liability is subsequently increased by the
interest cost of the lease liability and decreased by the lease
payment made. It is remeasured when there is a change in future
lease payments arising from a change in an index or rate, a change
in the estimate of the amount expected to be payable under a
residual value guarantee, or as appropriate, changes in the
assessment of whether a purchase or extension option is reasonably
certain to be exercised, or a termination option is reasonably
certain not to be exercised.
The Group has applied judgment to determine the lease term for
some lease contracts in which it is a lessee that include renewal
options. The assessment of whether the Group is reasonably certain
to exercise such options impacts the lease term, which affects the
amount of lease liabilities and right of use assets recognised.
The Group receives rent concessions on its racetrack lease when,
due to external factors, the number of days raced in a season is
lower than the actual number of days scheduled to be raced.
The Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources and makes
certain adjustments to reflect the terms of the lease and the type
of the asset leased.
Lease payments included in the measurement of the lease
liability comprise the following:
- Fixed payments, including in-substance fixed payments;
- Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
- Amounts expected to be payable under a residual value
guarantee; and
- The exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, if the Group
changes its assessment of whether it will exercise a purchase,
extension, or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the
definition of investment property in 'property, equipment, and
motor vehicles' and lease liabilities in 'loans, borrowings and
lease liabilities' in the statement of financial position.
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value items and short-term
leases. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease
term.
Employee benefits
(a) Pension obligations
The Group and the Company do not operate any post-employment
schemes, including both defined benefit and defined contribution
pension plans.
(b) Short-term employee benefits
Short-term employee benefits, such as salaries, paid absences,
and other benefits, are accounted for on an accrual's basis over
the period in which employees have provided services in the year.
All expenses related to employee benefits are recognised in the
Statement of Comprehensive Income in operating costs.
(c) Profit sharing and bonus plans
The Group and the Company recognises a liability and an expense
for bonuses and profit sharing, based on a formula that takes into
consideration the profit attributable to the Company's shareholders
after certain adjustments. The Group and the Company recognises a
provision where contractually obliged or where there is a past
practice that has created a constructive obligation. Any recognised
liability would be settled within 12 months of the year end.
Standards and interpretations in issue not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year and have not
been applied in preparing these consolidated financial statements.
The Directors do not expect the adoption of the standards and
interpretations to have a material impact on the Group's financial
statements in the period of initial application.
Standards Effective date
(accounting periods
commencing on
or after)
IFRS 17 Insurance Contracts 1 January 2023
Classification of liabilities as current or non-current
(Amendments to IAS 1)
Amendments to IFRS 17
Disclosure of Accounting Policies (Amendments to IAS1
and IFRS Practice Statement 2)
Definition of Accounting Estimate (Amendments to IFRS
8)
Deferred Tax related Asset and Liabilities Arising
from a Single Transaction - Amendments to IAS 12 Income 1 January 2024
Taxes
Sale or Contribution of Assets between an Investor
and its Associate or Joint Ventures (Amendments to
FRS 10 and IAS 28)
Non-current Liabilities with Covenants and Classification
of Liabilities as Current or Non-current (Amendments
to IAS 1)
Lease Liability in a Sale and Leaseback (Amendments
to IFRS 16)
Supplier Finance Arrangements (Amendments to IAS 7
and IFRS 7)
IFRS S1 General requirements for Disclosure of Sustainability-related
Financial Information and IFRS S2 Climate-related Disclosures
Lack of Exchangeability (Amendments to IAS 21) 1 January 2025
2 Operating Segments
A. Basis for segmentation
The Group has two operating segments, which are its reportable
segments. The segments offer different services in relation to
various forms of pari-mutuel racing, which are managed separately
due to the nature of their activities.
Reportable segments and operations provided
Racetrack operations - hosting of races through the management
and operation of a racetrack facility, enabling patrons to attend
and wager on horse racing, as well as utilise simulcast
facilities.
ADW operations - provision of online ADW services to enable
customers to wager into global racetrack betting pools.
The Group's Board of Directors review the internal management
reports of the operating segment on a monthly basis.
B. Information about reportable segments
Information relating to the reportable segments is set out
below. Segment revenue along with segment profit / (loss) before
tax are used to measure performance as management considers this
information to be a relevant indicator for evaluating the
performance of the segments.
Reportable segments
Corporate
operating
Racetrack ADW costs Total
2023 2023 2023 2023
US$000 US$000 US$000 US$000
------------------------------------------------ ----------- --------- ---------- --------
External revenues 47,865 2,155 - 50,020
Segment revenue 47,865 2,155 - 50,020
------------------------------------------------ ----------- --------- ---------- --------
Segment profit / (loss) before
tax 46 (674) (117) (745)
Interest expense (58) (3) (99) (160)
Depreciation and amortisation (98) (42) (2) (142)
Other material non-cash items:
* Impairment movement on trade receivables - (2) - (2)
------------------------------------------------ ----------- --------- ---------- --------
Segment assets 2,187 2,846 1,293 6,326
------------------------------------------------ ----------- --------- ---------- --------
Segment liabilities 1,523 2,802 1,428 5,753
------------------------------------------------ ----------- --------- ---------- --------
Reportable segments
Corporate
operating
Racetrack ADW costs Total
2022 2022 2022 2022
US$000 US$000 US$000 US$000
------------------------------------------------- ---------- --------- ---------- --------
External revenues 51,225 2,387 - 53,612
Segment revenue 51,225 2,387 - 53,612
------------------------------------------------- ---------- --------- ---------- --------
Segment profit / (loss) before
tax 259 (438) (195) (374)
Interest expense (22) (6) (98) (126)
Depreciation and amortisation (88) (44) (3) (135)
Other material non-cash items:
* Impairment movement on trade receivables - 11 - 11
------------------------------------------------- ---------- --------- ---------- --------
Segment assets 2,324 3,387 1,336 7,047
------------------------------------------------- ---------- --------- ---------- --------
Segment liabilities 1,522 2,779 1,428 5,729
------------------------------------------------- ---------- --------- ---------- --------
C. Reconciliations of information on reportable segments to the
amounts reported in the financial statements
2023 2022
US$000 US$000
---------------------------------------------- ------- -------
i. Revenues
Total revenue for reportable segments 50,020 53,612
---------------------------------------------- ------- -------
Consolidated revenue 50,020 53,612
---------------------------------------------- ------- -------
ii. Loss before tax
Total loss before tax for reportable segments (628) (179)
Loss before tax for other segments (117) (195)
---------------------------------------------- ------- -------
Consolidated loss before tax (745) (374)
---------------------------------------------- ------- -------
iii. Assets
Total assets for reportable segments 5,033 5,711
Assets for other segments 1,293 1,336
---------------------------------------------- ------- -------
Consolidated total assets 6,326 7,047
---------------------------------------------- ------- -------
iv. Liabilities
Total liabilities for reportable segments 4,325 4,301
Liabilities for other segments 1,428 1,428
---------------------------------------------- ------- -------
Consolidated total liabilities 5,753 5,729
---------------------------------------------- ------- -------
v. Other material items
Interest expense (160) (126)
Depreciation and amortisation (142) (135)
Impairment movement on trade receivables (2) 11
---------------------------------------------- ------- -------
There were no reconciling items noted between Segment
information and the Financial Statements.
D. Geographic information
i. Revenues
The below table analyses the geographic location of the customer
base of the operating segments.
2023 2022
US$000 US$000
--------------------- -------------- ------- -------
Revenue
Racetrack operations North America 47,865 51,225
ADW operations North America 1,701 1,833
British
ADW operations Isles 428 527
ADW operations Caribbean 26 27
50,020 53,612
------------------------------------ ------- -------
ii. Non-current assets
The geographical information below analyses the Group's
non-current assets by the Company's Country of Domicile (Isle of
Man) and the United States of America. Information is based on
geographical location of the Group's assets.
2023 2022
US$000 US$000
------------------------- ------- -------
United States of America 618 731
Isle of Man 2 4
620 735
------------------------- ------- -------
Non-current assets exclude financial instruments. During the
year, additions to non-current assets for the reportable segments
were Racetrack US$ 13,000 (2022: US$ 411,000) and ADW US$ 74,000
(2022: US$ 67,000).
E. Major customers
The Group does not earn revenue of 10% or more from any external
customer.
3 Operating loss
2023 2022
Operating loss is stated after charging: US$000 US$000
-------------------------------------------------------- ------- -------
Auditors' remuneration - audit 146 153
Depreciation of property, equipment, and motor vehicles 137 128
Amortisation of intangible assets 5 7
Exchange (gains) / losses (9) 7
Directors' fees 105 96
-------------------------------------------------------- ------- -------
4 Finance costs
2023 2022
US$000 US$000
------------------------- ------- -------
Bank interest receivable 7 -
Loan interest payable (160) (126)
------------------------- ------- -------
Net finance costs (153) (126)
------------------------- ------- -------
5 Staff numbers and cost
2023 2022
-------------------------------------------------------- ---- ------
Average number of employees - Pari-mutuel and Racetrack
Operations 50 52
-------------------------------------------------------- ---- ------
The aggregate payroll costs of these persons were as
follows:
2023 2022
Pari-mutuel and Racetrack Operations US$000 US$000
----------------------------------------------------- ------- --------
Wages and salaries 1,694 1,707
Social security costs 121 127
1,815 1,834
----------------------------------------------------- ------- --------
6 Income tax expense
(a) Current and Deferred Tax Expenses
The current and deferred tax expenses for the year were US$ Nil
(2022: US$ Nil). Despite having made losses, no deferred tax was
recognised as there is no reasonable expectation that the Group
will recover the resultant deferred tax assets.
(b) Tax Rate Reconciliation
2023 2022
US$000 US$000
-------------------------------------- ------- -------
Loss before tax (745) (374)
Tax charge at IOM standard rate (0%) - -
Adjusted for:
Tax credit for US tax losses (at 21%) (153) (91)
Add back tax losses not recognised 153 91
-------------------------------------- ------- -------
Tax charge for the year - -
-------------------------------------- ------- -------
The maximum deferred tax asset that could be recognised at year
end is approximately US$ 1,137,000 (2022: US$ 985,000). The Group
has not recognised any asset as it might not be recoverable within
the allowed period. The tax losses for tax years beginning in
January 2018 are currently permitted to be carried forward
indefinitely. Tax losses incurred prior to that period expire after
20 years.
7 Earnings per ordinary share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares, on the assumed conversion of all dilutive share
options.
An adjustment for the dilutive effect of share options in the
current period has not been reflected in the calculation of the
diluted profit per share, as the effect would have been
anti-dilutive.
2023 2022
US$000 US$000
----------------------------------------------------- ----------- -----------
Loss for the year (745) (374)
----------------------------------------------------- ----------- -----------
No. No.
----------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares in issue 393,338,310 393,338,310
Dilutive element of share options if exercised (note
17) 14,000,000 14,000,000
----------------------------------------------------- ----------- -----------
Diluted number of ordinary shares 407,338,310 407,338,310
----------------------------------------------------- ----------- -----------
Basic earnings per share (cents) (0.19) (0.10)
----------------------------------------------------- ----------- -----------
Diluted earnings per share (cents) (0.18) (0.09)
----------------------------------------------------- ----------- -----------
The earnings applied are the same for both basic and diluted
earnings calculations per share as there are no dilutive effects to
be applied.
8 Intangible assets
Software & development Total
Goodwill costs
---------------------------- --------------- ------------------------ -------------------------
Group Group Company Group Company
US$000 US$000 US$000 US$000 US$000
---------------------------- --------------- ----------- ----------- ------- ----------------
Cost
Balance at 1 June 2021 177 606 15 783 15
Additions during the year - 6 - 6 -
Balance at 31 May 2022 177 612 15 789 15
---------------------------- --------------- ----------- ----------- ------- ----------------
Balance at 1 June 2022 177 612 15 789 15
Additions during the year - 13 - 13 -
Disposals/decommissioned
assets - (8) (1) (8) (1)
Balance at 31 May 2023 177 617 14 794 14
---------------------------- --------------- ----------- ----------- ------- ----------------
Amortisation and Impairment
Balance at 1 June 2021 177 594 15 771 15
Amortisation for the year - 7 - 7 -
Balance at 31 May 2022 177 601 15 778 15
---------------------------- --------------- ----------- ----------- ------- ----------------
Balance at 1 June 2022 177 601 15 778 15
Amortisation for the year - 5 - 5 -
Disposals/decommissioned
assets - (8) (1) (8) (1)
Balance at 31 May 2023 177 598 14 775 14
---------------------------- --------------- ----------- ----------- ------- ----------------
Carrying amounts
At 1 June 2021 - 12 - 12 -
---------------------------- --------------- ----------- ----------- ------- ----------------
At 31 May 2022 - 11 - 11 -
---------------------------- --------------- ----------- ----------- ------- ----------------
At 31 May 2023 - 19 - 19 -
---------------------------- --------------- ----------- ----------- ------- ----------------
The Group reviews intangible assets annually for impairment or
more frequently if there are indications that the intangible assets
may be impaired (see note 1). The carrying amount of US$ 19,000 of
software and development costs relates primarily to development and
integration costs of the US based wagering website. These assets
will be fully amortised within the next 3 years.
9 Property, equipment, and motor vehicles
Fixtures,
Fittings
Computer & Track Motor Right-of-
Equipment Equipment Vehicles use Assets Total
Group US$000 US$000 US$000 US$000 US$000
-------------------------- ---------- ---------- --------- ----------- -------
Cost
Balance at 1 June 2021 166 321 50 473 1,010
Additions during the year - - - 472 472
Balance at 31 May 2022 166 321 50 945 1,482
-------------------------- ---------- ---------- --------- ----------- -------
Balance at 1 June 2022 166 321 50 945 1,482
Additions during the year - 13 - 61 74
Disposals/decommissioned
assets (49) - - (118) (167)
Balance at 31 May 2023 117 334 50 888 1,389
-------------------------- ---------- ---------- --------- ----------- -------
Depreciation
Balance at 1 June 2021 160 250 24 196 630
Charge for the year 3 18 7 100 128
Balance at 31 May 2022 163 268 31 296 758
-------------------------- ---------- ---------- --------- ----------- -------
Balance at 1 June 2022 163 268 31 296 758
Charge for the year 2 20 7 108 137
Disposals/decommissioned
assets (49) - - (118) (167)
Balance at 31 May 2023 116 288 38 286 728
-------------------------- ---------- ---------- --------- ----------- -------
Carrying amounts
At 1 June 2021 6 71 26 277 380
-------------------------- ---------- ---------- --------- ----------- -------
At 31 May 2022 3 53 19 649 724
-------------------------- ---------- ---------- --------- ----------- -------
At 31 May 2023 1 46 12 602 661
-------------------------- ---------- ---------- --------- ----------- -------
Fixtures
Computer &
Equipment Fittings Total
Company US$000 US$000 US$000
-------------------------- ---------- --------- -------
Cost
Balance at 1 June 2021 37 80 117
Additions during the year - - -
Balance at 31 May 2022 37 80 117
-------------------------- ---------- --------- -------
Balance at 1 June 2022 37 80 117
Additions during the year - - -
Balance at 31 May 2023 37 80 117
-------------------------- ---------- --------- -------
Fixtures
Computer &
Equipment Fittings Total
Company US$000 US$000 US$000
----------------------- ---------- --------- -------
Depreciation
Balance at 1 June 2021 31 80 111
Charge for the year 3 - 3
Balance at 31 May 2022 34 80 114
----------------------- ---------- --------- -------
Balance at 1 June 2022 34 80 114
Charge for the year 2 - 2
Balance at 31 May 2023 36 80 116
----------------------- ---------- --------- -------
Carrying amounts
At 1 June 2021 6 - 6
----------------------- ---------- --------- -------
At 31 May 2022 3 - 3
----------------------- ---------- --------- -------
At 31 May 2023 1 - 1
----------------------- ---------- --------- -------
10 Investments in Subsidiaries
Investments in subsidiaries are held at cost less impairment.
Details of investments are as follows:
2023 2022
Country of Holding Holding (%)
Subsidiaries incorporation Activity (%)
---------------------- --------------- --------------------------- --------- -------------
Operation of interactive
WatchandWager.com wagering
Limited Isle of Man totaliser hub 100 100
Operation of interactive
wagering
WatchandWager.com United States totaliser hub and harness
LLC of America racetrack 100 100
betinternet.com (IOM)
Limited Isle of Man Dormant 100 100
Technical Facilities
& Services Limited Isle of Man Dormant - 100
A wholly owned subsidiary, Technical Facilities & Services
Limited, was dissolved during the 31 May 2023 financial year. A
wholly owned subsidiary, B. E. Global Services Limited, was
dissolved during the 31 May 2022 financial year. Impairment
assessment is performed annually, and this involves assessment of
the net asset value and profitability of the subsidiaries.
11 Bonds and deposits
2023 2022
US$000 US$000
---------------------------- ------- -------
Bonds and deposits - expire
within one year 883 883
Bonds and deposits - expire
within one to two years - -
Bonds and deposits - expire
within two to five years - -
Bonds and deposits - expire
more than five years 100 100
---------------------------- ------- -------
983 983
---------------------------- ------- -------
Cash bonds of US$ 875,000 have been paid as security deposits in
relation to various US State ADW licences (2022: US$ 875,000).
These cash bonds are held in trust accounts used exclusively for
cash collateral, with financial institutions which have been
screened for their financial strength and capitalization ratio. The
financial institutions have a credit rating of A- Excellent from AM
Best credit rating agency. Therefore, these bonds are considered to
be fully recoverable. A rent deposit of US$ 100,000 is held by
California Exposition & State Fair and is for a term ending in
2030 (2022: US$ 100,000). This is held by an entity of the
Californian state government and is therefore considered fully
recoverable. Rent and other security deposits total US$ 8,167
(2022: US$ 8,227). These deposits are repayable upon completion of
the relevant lease term, under the terms of legally binding
agreements. The fair value of the bonds and deposits approximates
to the carrying value.
12 Cash, cash equivalents and restricted cash
Group Company
2023 2022 2023 2022
US$000 US$000 US$000 US$000
----------------------------- -------- ------------ ---------- -----------
Cash and cash equivalents -
Company and other funds 2,148 3,062 116 189
Restricted cash - protected
player funds 1,137 1,077 1,111 1,077
----------------------------- -------- ------------ ---------- -----------
Total cash, cash equivalents
and restricted cash 3,285 4,139 1,227 1,266
----------------------------- -------- ------------ ---------- -----------
The Group holds funds for operational requirements and for its
non-Isle of Man customers, shown as 'Company and other funds' and
on behalf of its Isle of Man regulated customers and certain USA
state customers, shown as 'protected player funds'.
Protected player funds are held in fully protected client
accounts within an Isle of Man regulated bank and in segregated
accounts within a USA regulated bank. These funds are segregated
from operational funds of the Company and are held on trust for the
customers entitled to them.
13 Trade and other receivables
Group Company
2023 2022 2023 2022
US$000 US$000 US$000 US$000
------------------------------------ --------- ----------- ---------- ------------
Trade receivables 612 395 - -
Amounts due from Group undertakings - - 680 757
Other receivables and prepayments 766 795 65 64
------------------------------------- --------- ----------- ---------- ------------
1,378 1,190 745 821
------------------------------------ --------- ----------- ---------- ------------
Included within trade receivables are impairment provisions of
US$ 68,837 (see note 21), (2022: US$ 67,293). Other receivables
include accrued and other income due to the Group, along with
sundry other debtors. Amounts due from Group undertakings are
unsecured, interest free and repayable on demand.
14 Trade and other payables
Group Company
2023 2022 2023 2022
US$000 US$000 US$000 US$000
----------------------------- --------- ----------- ---------- ------------
Trade payables 436 659 8 7
Amounts due to customers 2,089 2,037 - -
Taxes and national insurance 18 16 2 2
Accruals and other payables 1,169 928 68 69
------------------------------ --------- ----------- ---------- ------------
3,712 3,640 78 78
----------------------------- --------- ----------- ---------- ------------
Other payables include distributions and purses payable for the
racetrack operations, along with sundry other payables.
15 Deferred income (Government Grant)
The Group received a Paycheck Protection Program ("PPP") loan
for US$ 319,994, under the provisions of the US CARES Act in May
2020 to support certain incurred expenses, the provisions of which
allowed for an application for loan forgiveness. The Group had
ascertained reasonable assurance that the loan should be forgiven
in its entirety and the application for forgiveness was submitted
in June 2021, with the application agreed by the lending bank. The
grant was recognised in profit or loss in the periods that the
relevant expenses were recognised. After final review by the Small
Business Administration, it was determined that the lending bank
had calculated and advanced a loan amount greater than it should
have. The resultant difference of US$ 48,427 was recognised as a
loan (financial liability) at 31 May 2022 (see note 16). There is
no balance in deferred income at 31 May 2023.
16 Loans, borrowings, and lease liabilities
Current liabilities
Group Company
2023 2022 2023 2022
US$000 US$000 US$000 US$000
------------------------------------ -------- --------- --------- -----------
Unsecured loans (current portion) 21 20 - -
Lease liabilities (current portion) 91 89 - -
Secured loans - Galloway Limited 350 - 350 -
462 109 350 -
------------------------------------ -------- --------- --------- -----------
Non-current liabilities
Group Company
2023 2022 2023 2022
US$000 US$000 US$000 US$000
--------------------------------- ----------- ----------- -------- -----------
Unsecured loans (non-current
portion) 26 47 - -
Lease liabilities (non-current
portion) 553 583 - -
Secured loans - Galloway Limited 1,000 1,350 1,000 1,350
1,579 1,980 1,000 1,350
--------------------------------- ----------- ----------- -------- -----------
Terms and repayment schedule
Nominal 2023 2022
interest Year of Total Total
rate maturity US$000 US$000
----------------------------- ---------- ----------- -------- --------
Unsecured loans 1.00-8.90% 2025 47 67
Lease liabilities 6.00-9.50% 2023-30 644 672
Secured loan 2017 - Galloway
Limited* 7.75% 2027 500 500
Secured loan 2019 - Galloway
Limited* 7.00% 2024 350 350
Secured loan 2020 - Galloway
Limited* 7.00% 2025 500 500
-------------------------------- ---------- ----------- -------- --------
Total loans and borrowings 2,041 2,089
-------------------------------- ---------- ----------- -------- --------
During 2022, the Group received an unsecured Paycheck Protection
Program ("PPP") loan for US$ 48,427, which matures on 7 May 2025
and attracts interest at 1% per annum (see note 15).
The secured loans from Galloway Limited are secured over the
unencumbered assets of the Group, which includes the Cash and cash
equivalents - Company and other funds of US$ 2,148,000 (2022: US$
3,062,000) and Cash bonds of US$ 875,000 (2022: US$ 875,000). In
September 2023, the Group obtained additional financing from
Galloway Limited, which included the Secured loan 2017 of US$
500,000, being rolled into the new financing (see note 23).
*Based on current interest rates, the estimated fair value of
the Galloway Limited loans is US$ 1.078 million.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Other loans and
borrowings Lease liabilities Total
US$000 US$000 US$000
--------------------------------- --------------- ----------------- -------
Balance at 1 June 2021 1,375 292 1,667
--------------------------------- --------------- ----------------- -------
Changes from financing cash
flows
Proceeds from loans, borrowings,
and lease liabilities - 25 25
Repayment of borrowings (6) - (6)
Payment of lease liabilities - (117) (117)
Rent concession received - 2 2
Interest paid (101) (25) (126)
--------------------------------- --------------- ----------------- -------
Total changes from financing
cash flows (107) (115) (222)
--------------------------------- --------------- ----------------- -------
Other changes
Liability-related
Re-recognition of PPP loan 48 - 48
New leases - 472 472
Rent concession received - (2) (2)
Interest expense 101 25 126
Total liability-related other
changes 149 495 644
--------------------------------- --------------- ----------------- -------
Balance at 31 May 2022 1,417 672 2,089
--------------------------------- --------------- ----------------- -------
Balance at 1 June 2022 1,417 672 2,089
--------------------------------- --------------- ----------------- -------
Changes from financing cash
flows
Proceeds from loans, borrowings,
and lease liabilities - 59 59
Repayment of borrowings (20) - (20)
Payment of lease liabilities - (148) (148)
Rent concession received - 18 18
Interest paid (101) (59) (160)
--------------------------------- --------------- ----------------- -------
Total changes from financing
cash flows (121) (130) (251)
--------------------------------- --------------- ----------------- -------
Other changes
Liability-related
New leases 61 - 61
Rent concession received - (18) (18)
Interest expense 101 59 160
Total liability-related other
changes 162 41 203
--------------------------------- --------------- ----------------- -------
Balance at 31 May 2023 1,458 583 2,041
--------------------------------- --------------- ----------------- -------
17 Share capital
2023 2022
No. US$000 US$000
------------------------------------------------ ----------- -------- --------
Allotted, issued, and fully paid
At beginning and close of year: ordinary shares
of 1p each 393,338,310 6,334 6,334
At 31 May: ordinary shares of 1p each 393,338,310 6,334 6,334
------------------------------------------------ ----------- -------- --------
The authorised share capital of the Company is US$ 9,619,000
divided into 600,000,000 ordinary shares of GBP0.01 each (2022: US$
9,619,000 divided into 600,000,000 ordinary shares of GBP0.01
each). This is the sole class of shares authorised and issued by
the Company and these shares convey the right for shareholders to
vote at general meetings, to receive dividends and to receive
surplus assets on the liquidation of the Company. There are no
preferences or restrictions attached to these shares. Neither the
Company, nor its subsidiaries, hold any shares in the Company.
Share options are shown below.
Options
Movements in share options during the year were as follows:
2023 2022
---------------------------------------------- ---------- ----------
At start of year - number of 1p ordinary
shares 14,000,000 14,000,000
---------------------------------------------- ---------- ----------
Options granted - -
---------------------------------------------- ---------- ----------
Options lapsed - -
---------------------------------------------- ---------- ----------
Options exercised - -
---------------------------------------------- ---------- ----------
At end of year - number of 1p ordinary shares 14,000,000 14,000,000
---------------------------------------------- ---------- ----------
The options were issued on 3 March 2016 to Ed Comins, Managing
Director of the Group and vested on 3 March 2019. The options
expire on 2 March 2026. The weighted average exercise price of all
options is GBP0.01.
18 Capital commitments
As at 31 May 2023, the Group had no capital commitments (2022:
US$ Nil).
19 Leases
A. Leases as lessee
The Group leases office and racetrack facilities. The office
facility is leased until May 2023, with an average length of
renewal of between two to three years. This was renewed in 2023 for
a further two years. The racetrack facility is leased until May
2030, with extensions or renewals typically ranging between three
to five years. Extension/renewal is only available to lessor on
terms and conditions to be agreed between both parties. All
currently available options to extend have been exercised.
The Group also leases additional office facilities with contract
terms of no more than one year. These leases are short-term, and
the Group has elected not to recognise right-of-use assets and
lease liabilities for these leases.
Information about leases for which the Group is a lessee is
presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties that do not
meet the definition of investment property are presented within
property, equipment, and motor vehicles.
Property Total
Group US$000 US$000
-------------------------- -------- -------
Cost
Balance at 1 June 2021 473 473
Additions during the year 472 472
Balance at 31 May 2022 945 945
--------------------------- -------- -------
Balance at 1 June 2022 945 945
Additions during the year 61 61
Disposals during the year (118) (118)
Balance at 31 May 2023 888 888
--------------------------- -------- -------
Depreciation
Balance at 1 June 2021 196 196
Charge for the year 100 100
Balance at 31 May 2022 296 296
--------------------------- ----- -----
Balance at 1 June 2022 296 296
Charge for the year 108 108
Disposals during the year (118) (118)
Balance at 31 May 2023 286 286
--------------------------- ----- -----
Carrying amounts
At 1 June 2021 277 277
--------------------------- ----- -----
At 31 May 2022 649 649
--------------------------- ----- -----
At 31 May 2023 602 602
--------------------------- ----- -----
ii. Amounts recognised in profit or loss
2023 2022
US$000 US$000
--------------------------------------- ------- -------
Interest on lease liabilities 59 25
Depreciation expense 108 100
Rent concessions received (18) (2)
Expenses relating to short-term leases 59 71
--------------------------------------- ------- -------
iii. Amounts recognised in statement of cash flows
2023 2022
US$000 US$000
----------------------------------------- ------- -------
Payment of lease liabilities - principal (89) (92)
Payment of lease liabilities - interest (59) (25)
Rent concessions received 18 2
----------------------------------------- ------- -------
20 Related party transactions
Identity of related parties
The Parent Company has a related party relationship with its
subsidiaries (see note 10), and with its Directors and executive
officers and with Burnbrae Ltd (significant shareholder).
Transactions and balances with and between subsidiaries
Transactions with and between the subsidiaries in the Group,
which have been eliminated on consolidation, are considered to be
related party transactions. During the year, Webis Holdings plc
recharged head office costs to WatchandWager.com Ltd of US$ 238,104
(2022: US$ 248,340) and to WatchandWager.com LLC of US$ 357,156
(2022: US$ 372,511). WatchandWager.com LLC recharged support costs
of US$ 8,120 (2022: US$ 9,644) to WatchandWager.com Ltd. At the
year end, Webis Holdings plc had receivable balances with
WatchandWager.com Ltd of US$ 168,575 (2022: US$ 224,074) and with
WatchandWager.com LLC of US$ 511,166 (2022: US$ 532,548).
WatchandWager.com Ltd had a receivable balance of US$ 7,656,283
(2022: US$ 7,608,501) with WatchandWager.com LLC. There were no
impairments on these balances.
Transactions and balances with entities with significant
influence over the Group
Rental and service charges of US$ 41,617 (2022: US$ 46,914) and
Directors' fees of US$ 38,681 (2022: US$ 27,193) were charged in
the year by Burnbrae Limited, of which Denham Eke is a common
Director and Katie Errock an employee. Trade payables at the
year-end of US$ 3,580 (2022: US$ 3,752) related to rental and
service charges. The Group also had loans of US$ 1,350,000 (2022:
US$ 1,350,000) from Galloway Limited, a company related to Burnbrae
Limited by common ownership and Directors (note 16). Interest
expense of US$ 99,498 (2022: US$ 97,293) was paid on this loan.
Transactions with key management personnel
The total amounts for Directors' remuneration were as
follows:
2023 2022
US$000 US$000
----------- ------------------------------------------ ------- -------
Emoluments - salaries, bonuses, and taxable benefits 368 345
- fees 105 96
------------------------------------------------------ ------- -------
473 441
------------------------------------------------------ ------- -------
Directors' Emoluments
Basic Termination 2023 2022
salary Fees Bonus payments Benefits Total Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Executive
Ed Comins 341 - - - 27 368 345
Non-executive
Denham Eke* - 24 - - - 24 27
Sir James Mellon - 18 - - - 18 21
Richard Roberts - 48 - - - 48 48
Katie Errock* - 15 - - - 15 -
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Aggregate emoluments 341 105 - - 27 473 441
--------------------- -------- --------- -------- ------------ ----------- -------- --------
* Paid to Burnbrae Limited.
14,000,000 share options were issued to Ed Comins (see note 17)
during 2016.
21 Financial risk management
Capital structure
The Group's capital structure is as follows:
2023 2022
US$000 US$000
------------------------------ ------- -------
Cash and cash equivalents 2,148 3,062
Loans and similar liabilities (1,397) (1,417)
------------------------------ ------- -------
Net funds 751 1,645
Shareholders' equity (573) (1,318)
------------------------------ ------- -------
Capital employed 178 327
------------------------------ ------- -------
The Group's policy is to maintain as strong a capital base as
possible, insofar as can be sustained due to the fluctuations in
the net results of the Group and the inherent effect this has on
the capital structure. The Group monitors costs on an ongoing basis
and undertakes actions to grow revenue, with the aim of improving
the Group's capital base. The Group does not have any external
capital requirements imposed upon it.
The Group's principal financial instruments comprise cash and
cash equivalents, trade receivables and payables that arise
directly from its operations.
The main purpose of these financial instruments is to finance
the Group's operations. The existence of the financial instruments
exposes the Group to a number of financial risks, which are
described in more detail below.
The principal risks which the Group is exposed to relate to
liquidity risks, credit risks and foreign exchange risks.
Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet
its financial obligations as they fall due.
The Group's objective is to maintain continuity of funding
through trading and share issues but to also retain flexibility
through the use of short-term loans if required.
Management controls and monitors the Group's cash flow on a
regular basis, including forecasting future cash flow. Banking
facilities are kept under review to ensure they meet the Group's
requirements. Funds equivalent to customer balances are held in
designated bank accounts where applicable to ensure that Isle of
Man Gambling Supervision Commission player protection principles
are met. Other customer balances are covered by cash funds held
within the Group and by receivables due from ADW racetrack
settlement partners. The Directors anticipate that the business
will maintain sufficient cash flow in the forthcoming period, to
meet its immediate financial obligations.
The following are the contractual maturities of financial assets
and financial liabilities:
2023
Financial assets
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
--------------------------- -------- ----------- -------- ------- ------- -------
Cash, cash equivalents and
restricted cash 3,285 3,285 3,285 - - -
Trade receivables 612 612 612 - - -
Other receivables 645 645 645 - - -
Bonds and deposits 983 983 683 200 - 100
--------------------------- -------- ----------- -------- ------- ------- -------
5,525 5,525 5,225 200 - 100
--------------------------- -------- ----------- -------- ------- ------- -------
2022
Financial assets
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
----------------------- -------- ----------- -------- ------- ------- -------
Cash, cash equivalents
and restricted cash 4,139 4,139 4,139 - - -
Trade receivables 395 395 395 - - -
Other receivables 668 668 668 - - -
Bonds and deposits 983 983 681 202 - 100
----------------------- -------- ----------- -------- ------- ------- -------
6,185 6,185 5,883 202 - 100
----------------------- -------- ----------- -------- ------- ------- -------
2023
Financial liabilities
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
------------------------- -------- ----------- -------- ------- ------- -------
Trade payables (436) (436) (436) - - -
Amounts due to customers (2,089) (2,089) (2,089) - - -
Other payables and loans (2,153) (2,372) (815) (406) (1,151) -
Lease liabilities (644) (872) (27) (122) (493) (230)
------------------------- -------- ----------- -------- ------- ------- -------
(5,322) (5,769) (3,367) (528) (1,644) (230)
------------------------- -------- ----------- -------- ------- ------- -------
2022
Financial liabilities
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
------------------------- -------- ----------- -------- ------- ------- -------
Trade payables (659) (659) (659) - - -
Amounts due to customers (2,037) (2,037) (2,037) - - -
Other payables and loans (1,899) (2,214) (541) (58) (1,615) -
Lease liabilities (673) (952) (26) (121) (460) (345)
------------------------- -------- ----------- -------- ------- ------- -------
(5,268) (5,862) (3,263) (179) (2,075) (345)
------------------------- -------- ----------- -------- ------- ------- -------
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation.
Impairment losses on financial assets recognised in profit or
loss were as follows:
2023 2022
US$000 US$000
-------------------------------------- ------- -------
Non-credit impaired trade receivables 7 5
Credit impaired trade receivables 62 62
Total impairment losses 69 67
-------------------------------------- ------- -------
The Group's exposure to credit risk is influenced by the
characteristics of the individual racetracks and the settling
agents operating on behalf of these tracks. The racetracks
themselves are influenced by many factors, including the product
they offer, supporting sources of revenue they might generate, such
as offering simulcast, slots or sports wagering facilities, current
economic conditions, ownership structure, state laws and so on, all
of which may affect their liquidity and ability to operate.
The Group limits its exposure to credit risk by regular settling
and verification of balances due to and from settling agents, with
standard terms of one month. While there is on occasion debt that
is slower to be settled, historical settlements for at least the
last six years show that of the current trade receivable balance,
greater than 99% would be expected to be received.
In addition, the majority of the current Group customers have
transacted with the Group for five years or more and none of these
customers balances have been specifically impaired in that
period.
The Group has continued to take a conservative approach to the
assessment of the Weighted Average Loss Rate and maintained rates
that are considered to reflect the risk that exists under current
market conditions. The previous two years Weighted Average Loss
Rate was reflective of the uncertainty caused by the COVID-19
pandemic and therefore the current year rates are adjusted due to a
reduction in this associated risk.
The following table provides information about exposure to
credit risk and expected credit losses for trade receivables as at
31 May 2023:
2023 Weighted Gross Carrying N et Carrying Credit
Average Amount US$000 Loss Allowance Amount Impaired
Loss Rate US$000 US$000
(%)
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
Current (not past due) 0.50% 421 (2) 419 No
1-30 days past due 1.00% 110 (1) 109 No
31-60 days past due 3.00% 70 (2) 68 No
61-90 days past due 5.00% 6 (1) 5 No
More than 90 days past
due 7.00% 12 (1) 11 No
More than 90 days past
due 100.00% 62 (62) - Yes
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
681 (69) 612
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
2022 Weighted Gross Carrying N et Carrying Credit Impaired
Average Amount US$000 Loss Allowance Amount
Loss Rate US$000 US$000
(%)
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
Current (not
past due) 1.00% 3 74 (4) 370 No
1-30 days past
due 2.00% 9 (0) 9 No
31-60 days past
due 5.00% 1 6 (1) 15 No
61-90 days past
due 7.00% ( 1) (0) (1) No
More than 90
days past
due 10.00% 2 (0) 2 No
More than 90
days past
due 100.00% 62 (62) - Yes
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
4 62 (67) 395
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
The Group uses an allowance matrix to measure the ECLs of trade
receivables from racetracks and their settling agents, which
comprise a moderate number of balances, ranging from small to
large. The Group has reviewed its historical losses over the past
four years as well as considering current economic conditions in
estimating the loss rates and calculating the corresponding loss
allowance.
Classes of financial assets - carrying amounts
2023 2022
US$000 US$000
---------------------------- ------- -------
Cash and cash equivalents 2,148 3,062
Bonds and deposits 983 983
Trade and other receivables 1,258 1,063
---------------------------- ------- -------
4,389 5,108
---------------------------- ------- -------
Generally, the maximum credit risk exposure of financial assets
is the carrying amount of the financial assets as shown on the face
of the Statements of Financial Position (or in the notes to the
financial statements). Credit risk, therefore, is only disclosed in
circumstances where the maximum potential loss differs
significantly from the financial asset's carrying amount.
The maximum exposure to credit risks for receivables in any
business segment:
2023 2022
US$000 US$000
------------ ------- -------
Pari-mutuel 1,258 1,063
------------ ------- -------
Of the above receivables, US$ 612,000 (2022: US$ 395,000)
relates to amounts owed from racing tracks. These receivables are
actively monitored to avoid significant concentration of credit
risk and the Directors consider there to be no significant
concentration of credit risk.
The Directors consider that all the above financial assets that
are not impaired for each of the reporting dates under review are
of good credit quality. The banks have external credit ratings of
at least Baa3 from Moody's.
The credit risk for liquid funds and other short-term financial
assets is considered negligible since the counterparties are
reputable banks with high-quality external credit ratings.
Interest rate risk
The Group finances its operations mainly through capital with
limited levels of borrowings. Cash at bank and in hand earns
negligible interest at floating rates, based principally on
short-term interbank rates.
Any movement in interest rates would not be considered to have
any significant impact on net assets at the balance sheet date as
the Group and Parent Company do not have floating rate loans
payable.
Foreign currency risks
The Group operates internationally and is subject to
transactional foreign currency exposures, primarily with respect to
Pounds Sterling, Hong Kong Dollars, and Euros.
The Group does not actively manage the exposures but regularly
monitors the Group's currency position and exchange rate movements
and makes decisions as appropriate.
At the reporting date the Group had the following exposure:
USD GBP EUR HKD Total
2023 US$000 US$000 US$000 US$000 US$000
----------------------- ----------- -------- -------- -------- -------
Current assets 4,703 114 86 523 5,426
Current liabilities (3,146) (334) (43) (633) (4,156)
----------------------- ----------- -------- -------- -------- -------
Short-term exposure 1,557 (220) 43 (110) 1,270
----------------------- ----------- -------- -------- -------- -------
USD GBP EUR HKD Total
2022 US$000 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- ------- -------
Current assets 5,197 236 85 568 6,086
Current liabilities (2,705) (317) (69) (642) (3,733)
-------------------- ------- ------- ------- ------- -------
Short-term exposure 2,492 (81) 16 (74) 2,353
-------------------- ------- ------- ------- ------- -------
The following table illustrates the sensitivity of the net
result for the year and equity with regards to the Group's
financial assets and financial liabilities and the US
Dollar-Sterling exchange rate, US Dollar-Euro exchange rate and US
Dollar-Hong Kong Dollar exchange rate.
A 5% weakening of the US Dollar against the following currencies
at 31 May 2023 would have increased / (decreased) equity and profit
and loss by the amounts shown below:
GBP EUR HKD Total
2023 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- -------
Current assets 6 4 26 36
Current liabilities (17) (2) (32) (51)
-------------------- ------- ------- ------- -------
Net assets (11) 2 (6) (15)
-------------------- ------- ------- ------- -------
GBP EUR HKD Total
2022 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- -------
Current assets 12 4 28 44
Current liabilities (16) (3) (32) (51)
-------------------- ------- ------- ------- -------
Net assets (4) 1 (4) (7)
-------------------- ------- ------- ------- -------
A 5% strengthening of the US Dollar against the above currencies
would have had the equal but opposite effect on the above
currencies to the amounts shown above on the basis that all other
variables remain constant.
22 Controlling party and ultimate controlling party
The Directors consider the ultimate controlling party to be
Burnbrae Limited and its beneficial owner Jim Mellon by virtue of
their combined shareholding of 63.10%.
23 Subsequent events
In September 2023, the Group has agreed funding of GBP 1,150,000
from Galloway Limited (related entity), in the form of convertible
loan notes, which will enable the Group to further invest in its
business-to-consumer sector. The loan will accrue interest at the
rate of 11% per annum and is convertible into shares under specific
circumstances. The convertible loan notes comprise GBP 750,000 in
respect of new funding and an existing debt of GBP 400,000, after
conversion of US$ 500,000 due and outstanding by the Group to
Galloway Limited (see note 16).
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END
MSCEAFFEDFDDFFA
(END) Dow Jones Newswires
November 30, 2023 07:00 ET (12:00 GMT)
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