REG - B90 Holdings PLC - Final Results
21/06/2022 07:00
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RNS Number : 5547P B90 Holdings PLC 21 June 2022
For release: 07.00, 21 June 2022
B90 Holdings plc
("B90", the "Company" or "Group")
Final Results for the year ended 31 December 2021
B90 Holdings plc (AIM: B90), the online marketing and operating company for
the gaming industry, announces its audited final results for the year ended 31
December 2021 (the "2021 Annual Report").
The 2021 Annual Report can be found on the Company's website at
www.b90holdings.com.
2021 Highlights
· Successful acquisition of Oddsen.nu in September 2021
· Acquisition and launch of Spinbookie.com in December 2021
· Successful fundraises during year for, in aggregate, €5.2
million (or £4.5 million), to facilitate the acquisitions and
provide additional working capital
· Convertible loan conversion in April 2021
· Appointment of new Executive Chairman and completion of internal
strategic review
Commenting on the results, Karim Peer, Executive Chairman, said:
"The 2021 results were adversely impacted by the implementation of local
regulatory and licensing processes, in particular in Germany where changes
were introduced from 1 July 2021 and the Netherlands where they were enforced
from 1 October 2021. Given the size of the Group at that point, the Board
decided not to apply for local licences in these territories and will keep
this decision under review as the Group grows its operations over the coming
year."
"However, I am pleased to report that we have identified four distinct
strategic pillars to help us on our journey towards profitability. The first
is the delivery of a truly scalable platform for online and e-gaming
entertainment. We will also have a sharp focus on organic growth and
acquisitions. Thirdly, we aim to take a holistic approach to all players by
offering the widest game play options. Lastly, we will employ artificial
intelligence and analytics across our operations. The Group has successfully
integrated the acquisitions made during the year and its strategic focus now
revolves around increasing revenues. We are excited about expansion into new
territories and markets, specifically in Latin America, Canada, and Europe,
supported by the development of affiliate programs through both further
acquisitions and partnerships."
Commenting on the Company's current trading and outlook, he added:
"Trading during the first five months of 2022 were in line with management
expectations, which are focused on growth. The net revenue for the first five
months of 2022 has already exceeded the revenue reported for the whole of
2021. This growth primarily comes from the entry into the Brazilian market,
where the Group launched both of its operating brands in April 2022. The
number of new players acquired in the month of April 2022 exceeded the number
of players acquired in the full year of 2021. The team is focused on further
geographic expansion, with a particular focus on other countries in the Latin
American market, and will provide further updates when appropriate."
-ends-
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended.
For further information please contact:
B90 Holdings
plc
+44 (0)1624 605 764
Karim Peer, Executive Chairman
Marcel Noordeloos, Chief Financial Officer
Strand Hanson Limited (Nominated Adviser)
+44 (0)20 7409 3494
James Harris / Richard Johnson / Rob Patrick
Whitman Howard Ltd (Broker)
Nick Lovering
Belvedere (Financial PR & IR)
+44 (0)20 3687
2754
John West / Llewellyn Angus
About B90 Holdings plc
B90 Holdings plc is a group of companies focused on the operation of its own
online Sportsbook and Casino product as well as marketing activities for other
online gaming companies.
Website: www.b90holdings.com (http://www.b90holdings.com)
Strategic Report
I am pleased to present the Annual Report for B90 Holdings plc ("B90",
"Company" or together with its subsidiaries, the "Group") for the financial
year ended 31 December 2021.
Financial and operational highlights
· Revenues: €0.8 million (2020: €0.8 million)
· Operating result: €3.3 million loss (2020: €2.2 million loss)
· Successful acquisition of Oddsen.nu in September 2021
· Acquisition and launch of Spinbookie.com in December 2021
· Successful fundraises during year for €5.2 million (£4.5 million)
in aggregate, to facilitate the acquisitions and provide additional working
capital
· Convertible loan conversion in April 2021
· Appointment of new Executive Chairman and completion of internal
strategic review
Operational review
The Group's operational results from the Bet90 Sportsbook and Casino
operations were adversely impacted by the implementation of local regulatory
and licensing processes in particular in Germany where changes were introduced
from 1 July 2021 and the Netherlands where they were enforced from 1 October
2021. Given the size of the Group at that point, the Board decided not to
apply for local licenses in these territories and will keep this decision
under review as the Group grows its operations over the coming year. At the
same time, the Group has been preparing for the expansion of its operations in
other territories, particularly in the Scandinavian and also the South
American markets, where it has now successfully launched and started operating
during the second quarter of 2022.
Fundraising
The Group completed a number of successful fundraises during the year, with
new and existing investors strengthening the balance sheet, in order to
support growth; provide working capital; and to put in place the foundation to
execute on its strategic plan. Accordingly, it announced that:
- on 17 March 2021, it had raised €1,847,000 (or approximately
£1,585,000)*;
- on 30 March 2021, it had raised €1,276,000 (or £1,092,500);
- on 30 September 2021, it had raised €1,435,000 (or £1,240,000)
in connection with the acquisition of Oddsen.nu; and
- on 22 December 2021, it had raised €685,000 (or £596,800) in
connection with the acquisition of Spinbookie.com.
*The fundraise on 17 March 2021 was under the terms of a 3-year, 5%
convertible loan note, convertible at a price of 5 pence per new Ordinary
Share (the "Convertible Loan Note"). The Convertible Loan Note (together with
the Group's 2019 and 2020 convertible loan notes) was subsequently converted
into new Ordinary Shares on 23 April 2021 having triggered the conditions of
an automatic conversion. The conversion of the convertible loan notes
removed the vast majority of the Group's indebtedness and together with the
proceeds from the recent equity ssubscription in May 2022 has left the Group
with an improved balance sheet.
Subsequent to the reported year-end, the Group announced a further equity
fundraise of €845,000 (or £731,000), leaving the Group with a much improved
balance sheet.
Operational Progress: Affiliate Deals and Acquisitions
In March 2021, the Group announced that it had entered into affiliate
agreements with both RB Journalism SIA, which trades as oddsen.nu, and E-2
Communications Ltd, to access potential new customers, and drive additional
traffic to the Bet90 platform. Oddsen is a key affiliate of the Group in
Norway, with more than 15 years of operational history, where it continues to
be very successful.
Later in the year, in August 2021, the Group signed another affiliate
marketing agreement with Nordic Group Ltd, a leading marketing and online
advertising partner, with a focus on Latin America and the Nordics, to promote
all of the Group's sportsbook and online casino services in various
territories. Nordic Group has an established and extensive marketing network
in various countries and uses a mix of content, such as blogs and websites
sharing tips and strategies, and reviews, as well as news and information
about offerings, schemes and products, across a variety of on-line and social
media. They also employ the latest search engine optimisation and digital
promotion techniques.
Subsequently in September 2021, the Group announced the acquisition of
Oddsen.nu, which has been a transformational deal for the Group. The
transaction added a valuable new domain to the Group's online real estate,
increased the Group's affiliate marketing capability, and took the Group's
operations further into Norway, an attractive, stable and well-established
market for sports betting. Oddsen's platform can also easily be rolled out
in other markets. It now also offers a major forum, where end users can
discuss sports betting related events 24-7, and generates winning odds tips
for visitors to the website.
In December 2021, the Group announced another highly complementary
acquisition: Spinbookie.com. Through this investment, the Group acquired the
domain, business agreements, IP, and all the operations of Spinbookie.com, an
online sportsbook and casino, which continues the development of the Group's
business. Spinbookie is a newly established, fully operational website
operating on BetConstruct, an industry leading gaming software developer
platform. Spinbookie, which has fully functional and compliant payment options
implemented, operates in different and complementary markets to B90's existing
operations and is expanding the Group's reach in new territories in South
America, facilitating further growth and accelerating customer acquisition.
Early indications are that Spinbookie is performing well. Marketing
agreements are already driving traffic to the site which is accelerating the
Group's timeline to profitability. The combined business is also benefitting
from the Group's existing agreement with Nordic Group, highlighted above, as
well as the acquisition of the affiliate website Oddsen.nu, which are also
being used to drive additional traffic to the Group's online assets.
Spinbookie's sportsbook products cover most major global sporting events,
including a large range of live betting markets. The casino offering includes
suites from Microgaming, Evolution and other key casino suite providers.
Spinbookie's operations are operated using the existing Bet90 operational
team, saving cost and leveraging expertise.
Financial review
The net result for the year amounted to a loss of €3.4 million (2020: €2.4
million loss), which was impacted by a number of incidental charges. The
revision of the employee stock options and cancelling previous options led to
an extra charge of €145,000. Expenses related to the two acquisitions
completed in 2021 amounted to €150,000, plus increased amortisation charges
of €27,000. Furthermore, due to expanding operations, the Group had
increased salary expenses as our number of employees grew during the year.
During 2020, the Group did receive some discounts from some of its' B2B
partners as a result of the COVID-19 pandemic, saving up to 30% of the annual
costs. For 2021 no equivalent discounts have been provided.
As a result of local regulation in countries such as Germany and the
Netherlands which took effect in 2021, sportsbook and casino revenues
decreased in 2021 compared to 2020. In order to mitigate this, the Group
launched its operations in some other territories, such as South America and
the Nordic region.
Whilst the Group has raised additional funds by way of the issue of equity
since the 2021 year-end, amounting in aggregate to €0.8 million, it remains
reliant, inter alia, on being able to manage its cash resources carefully and
trading being in line with management's expectations.
Board changes
During the year, the Group made a number of changes to its Board.
On 28 April 2021, the Group announced that Rainer Lauffs was stepping down as
Chief Operating Officer, effective 31 October 2021. At the same time, the
Group announced that Ronny Breivik had been appointed CEO of B90 Ventures Ltd,
the main operating subsidiary of the Group, and would take responsibility for
all operational activities of this Group. Ronny's career in online gaming
began 1997 when he launched the first gaming portal in Norway. While he was
at Bet24.com, Ronny introduced live betting and online poker to that Group's
product portfolio. His history of growing businesses, with a strong focus on
customer acquisition, retention and creating disruptive products based on new
technology solutions, continue to benefit the Group.
On 18 June 2021 the Group announced that it had appointed Karim Peer as
Non-Executive Director. Karim has undertaken numerous roles including
Managing Director of Open Bet, a leading provider of sportsbook, casino gaming
and betting shop technology. At Open Bet, he helped to acquire Alphameric
plc and grew annualised revenues to approximately £56m. He was also part of
the team that sold Open Bet to Vitruvian Partners in a deal worth more than
£200m
On 9 December 2021, the Group announced that Paul Duffen was stepping down
from his role as Executive Chairman. Paul helped to affect the turnaround
of the business and led the Group through a challenging period and substantial
change. He left the Group in a much stronger position, having helped to
develop a clear strategy. Karim was appointed as Non-Executive Chairman on
the same date, and was subsequently appointed Executive Chairman on 16 May
2022. Karim has the skills necessary to lead the Group as its executes its
planned growth strategy and has invaluable experience in driving new
technological solutions. He has moved the Group into a new phase of
development and has reset its focus, whilst building on the strong
foundations laid by Paul and the wider team.
The Group intends to strengthen the Board further over the coming months and
subsequent announcements will be made as appropriate.
Principal risks and uncertainties
The principal risks and uncertainties factors are included on page 12 of this
report.
Current trading and outlook
Trading during the first five months of 2022 is in line with management
expectations, which are focused on growth. The net revenue for the first five
months of the year has already exceeded the revenue reported for the whole of
2021. This growth primarily comes from our entry into the Brazilian market,
where the Group launched both of its operating brands in April 2022. The
number of new players acquired in the month of April 2022 exceeded the total
number of players acquired in the full year of 2021 and this trend is expected
to be continuing.
The team is focused on further geographic expansion with a particular focus on
other countries in the Latin American market and will provide further updates
when appropriate.
Whilst trading during the first months of 2022 has been in line with the
Board's expectations and shows a significant increase in revenues, the Group
continues to operate at a loss and expects to report a loss for the six months
to 30 June 2022, although management expects the Group to become cash flow
positive during the second half of 2022.
Summary
We have identified four distinct strategic pillars to help us on our journey
towards profitability. The first is the delivery of a truly scalable
platform for online and e-gaming entertainment. We will also have a sharp
focus on organic growth and acquisitions. Thirdly, we aim to take a holistic
approach to all players by offering the widest game play options. Lastly, we
will employ AI technology and analytics across our operations
The Group has successfully integrated its 2021 acquisitions and its strategic
focus now revolves around increasing revenues. We are excited about
expansion into new territories and markets, specifically in Latin America,
Canada, and Europe, supported by the development of affiliate programs
through both further acquisitions and partnerships.
The Group looks forward to driving growth, which will be augmented by the
Board's collective experience and gaming knowledge.
Karim Peer
Executive Chairman, B90 Holdings plc
20 June 2022
Directors' Report
The Directors present their report and consolidated financial statements for
the year ended 31 December 2021.
Principal activities and review of the business
B90 Holdings plc is the parent company of a group focused on sports betting
operations and casinos games via its wholly owned Bet90 and Spinbookie
operations, as well as generating marketing leads and entering into marketing
contracts for the activities of its partners in sports betting and casinos
games, using its newly acquired brand Oddsen.nu and Tippen4you.com.
The principal activities are focused completely on operating the online
Sportsbook and casino operation using the domains Bet90.com and spinbookie.com
Furthermore, the Group operates two affiliate platforms, currently focusing on
the German and Norwegian speaking territory, using the tippen4you.com domain
for Germany, of which it now owns 100% and Oddsen.nu for Norway, an operation
that was acquired on 30 September 2021.
Results and dividends
The Group's results for the year, after taxation, amounted to a loss of €3.4
million (2020: loss of €2.4 million).
As a result of the above, the Directors are proposing not to pay a dividend
for the year ended 31 December 2021 (2020: nil).
Future developments
Future developments are discussed in the Strategic Report.
Financial Risk Management
The Board is responsible for setting the objectives and underlying principles
of financial risk management for the Group. The Board establishes the
detailed policies such as authority levels, oversight responsibilities, risk
identification and measurement and exposure limits.
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders.
Liquidity risk
Liquidity risk exists where the Group might encounter difficulties in meeting
its financial obligations as they become due. The Group monitors its
liquidity in order to ensure that sufficient liquid resources are available to
allow it to meet its obligations.
Large wins by customers
Inherent to the business is that there is a risk that a few players and
customers might win significant amounts of money during the same period thus
reducing the earnings of the Group, in particular in regard to its sportsbook
partner which has a higher concentration of VIP players. In respect of its
marketing activities for its sportsbook partner, negative net commission
revenues in any period are carried forward and netted off against positive net
commission revenues in future periods on which commission might otherwise be
payable to the Group. Whilst the Group would not have to cover any gaming or
gambling losses in the existing marketing agreements, the percentage of
earnings retained by the Group might be greatly reduced as a result of this.
Gaming or gambling losses within the Group's own Bet90 operations would though
need to be covered by the Group as and when they occur. Under the regulation
of the Malta Gaming Authority, the Group must at all times have sufficient
cash balances available to cover liabilities to customers. In the case of a
large win by a customer, the Group would need to move funds from its current
account to the accounts that cover the liability to customers, which would
immediately negatively impact the Group's working capital and its earnings for
the period.
Currency risk
Given the expansion in the Nordics and Latin America, the Group is exposed to
foreign exchange gains and losses on its trading activities. Due to the
current size of the Group, it does not actively hedge the foreign exposure on
its trading cashflows. It monitors exposures to individual currencies, taking
remediating actions as necessary to manage any significant risks as they
arise. Due to the size of the operations in other currencies than the EURO
in 2021 the effect of a significant change in foreign currency rates would be
immaterial.
Interest rate risk
The Group's exposure to upside interest rate risk is limited. There were no
interest bearing loans on the statement of financial position as of 31
December 2021.
Credit risk
The Group's credit risk is primarily attributable to trade receivables and
cash and cash equivalents.
· Receivables: Customers, being third party sportsbook and
casino operators. The Group generates commission
revenues via its affiliate operations. Commissions invoiced are payable within
a month after the month invoiced.
· Cash and Cash equivalents: Payment service providers (PSPs).
PSPs are third-party companies that facilitate deposits and withdrawals of
funds to and from customers' virtual wallets with the Group. These are
mainly intermediaries that transact on behalf of credit card companies.
The risk is that a customer or a PSP would fail to discharge its obligation
with regard to the balance owed to the Group.
The Group reduces this credit risk by:
· Monitoring balances with customers on a regular basis;
· Monitoring balances with PSPs on a regular basis; and
· Arranging for the shortest possible cash settlement intervals
in all cases.
The Group considers that based on the factors above and on past experience,
the customers and PSP receivables used in the current businesses are of good
credit quality and there is a low level of potential bad debt as at year-end.
An additional credit risk the Group faces relates to customers in its own
operations disputing charges made to their credit cards ("chargebacks") or any
other funding method they have used in respect of the services provided by the
Group. Customers may fail to fulfil their obligation to pay, which will
result in funds not being collected. These chargebacks and uncollected
deposits, when occurring, will be deducted at source by the payment service
providers from any amount due to the Group. The Group monitors the need for
impairment provisions by considering all reasonable and supportable
information, including that which is forward-looking. For the year ended 31
December 2021, the Group has not made any provision for this, as any provision
would be immaterial.
Regulatory risk
Regulatory, legislative and fiscal regimes for betting and gaming in key
markets can change, sometimes even at short notice. Such changes could benefit
or have an adverse effect on the Group's operations and additional costs might
be incurred in order to comply with any new laws or regulations in various
jurisdictions.
The Group closely monitors regulatory, legislative and fiscal developments in
key markets allowing the Group to assess, adapt and takes the necessary action
where appropriate. Management takes external advice, which incorporates risk
evaluation of individual territories. Regulatory updates are provided to the
Board when changes are announced.
Whilst changing regulatory and tax regimes can offer opportunities to the
Group as well as posing risks, a significant adverse change in jurisdictions
in which the Group operates could have a significant impact on the Groups
future profitability and cash generation.
Going concern
After the challenges in 2020 and the impact of the global COVID-19 pandemic,
the Group raised a total of €5.2 million during 2021, which allowed the
Group to settle overdue creditors and to complete two acquisitions
(Spinbookie.com and Oddsen.nu) in order to drive additional revenues for the
Group.
The directors expect that these acquisitions will generate cash flow in 2022,
however the Group reported a net loss of €3.4 million for the year ended 31
December 2021. Furthermore, the Group had a negative cash flow from operations
of €4.5 million for the year ended 31 December 2021 and the Group expects to
report a loss for the six months ending 30 June 2022. Furthermore, as per 31
December 2021, the Group shows net current liabilities of €4.2 million.
Whilst trading during the first months of 2022 has been in line with the
Board's expectations and show a significant increase in revenues, the Group
continues to operate at a loss, although management expects the Group to
become cash flow positive during the second half of 2022, executing on its
strategic plan to grow the Group's operations and revenues in the various
verticals in a targeted manner, entering into strategic partnerships and
investing in further marketing to expand the customer base and geographical
reach. Furthermore, as a result of the recent fundraise, completed in May
2022, the Group has improved its financial position.
Notwithstanding that the Group has raised additional funds in equity since the
2021 year-end, amounting to €845,000 (or £731,000), it remains reliant,
inter alia, on being able to manage its cash resources carefully and trading
being in line with management's expectations. Should trading not be in line
with management's expectations going forward, the Group's ability to meet its
liabilities may be impacted, in which case the Group may need to raise further
funding. In such circumstance that this is needed and whilst the directors are
confident of being able to raise such funding if required, there is no
certainty that such funding will be available and/or the terms of such
funding. These conditions are necessarily considered to represent a
significant uncertainty which may cast doubt over the Group's ability to
continue as a going concern.
Whilst acknowledging this uncertainty, the Directors remain confident that the
recent fundraise will allow the Group to expand its operations and generate a
positive operational cash flow within a reasonable time or, if needed, be able
to raise additional funding when required, therefore the Directors consider it
appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern.
Your attention is drawn to the material uncertainty related to going concern
section of the Auditor's Report.
Subsequent events
Since the year-end, the Group has announced the following events:
On 13 May 2022 the Group announced that, as part of the acquisition of
Oddsen.nu in September 2021, it had settled the agreed deferred consideration
of €1.05 million, due on or before 31 March 2022, through the issue of
13,452,632 new ordinary shares at a price of 6.65p pence per share.
On 16 May 2022 the Group announced that it had raised £731,000 through a
subscription for 12,713,043 new ordinary shares at a price of 5.75 pence per
share. On the same date it announced that Karim Peer, its Non-Executive
Chairman had been appointed as the Company's new Executive Chairman.
Directors and their interest
The following Directors held shares and share options as at 31 December 2021:
Number of shares held Number of options Exercise Date of grant Vesting period
Price (£) of options of options
Marcel Noordeloos 3,659,954 2,100,000 0.05 17 March 2021 1-4 years
Marcel Noordeloos - 3,000,000 0.13 1 October 2021 1-4 years
Mark Rosman 14,419,339 550,000 0.15 14 February 2019 1-4 years
Mark Rosman - 3,000,000 0.13 1 October 2021 1-4 years
Karim Peer - 750,000 0.13 1 October 2021 1-4 Years
Directors who served during the year
Appointed Resigned
Paul Duffen 30 January 2019 8 December 2021
Mark Rosman 19 March 2014 -
Marcel Noordeloos 30 June 2016 -
Rainer Lauffs 26 March 2018 31 October 2021
Karim Peer 18 June 2021 -
The details of the Directors' remuneration have been included within note 5 on
page 42 of this annual report.
Directors' responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to keep reliable accounting records which
allow financial statements to be prepared. In addition, the Directors have
elected to prepare group financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union and applicable
law. The financial statements are required to give a true and fair view of
the state of affairs of the Group and of the profit or loss of the Group for
that year. In preparing these financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and accounting estimates that are reasonable
and prudent;
· state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the
financial statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and
prepare financial statements. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for ensuring that they meet their
responsibilities under the AIM Rules.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the Isle of Man governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
In so far as each of the Directors is aware:
· there is no relevant audit information of which the Group's
auditors are unaware; and
· the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
Auditors
The auditors of the Group are Nexia Smith & Williamson, Chartered
Accountants, who were reappointed at the 2019 Annual General Meeting and will
be proposed to be reappointed during the 2021 Annual General Meeting.
Principal risks and uncertainties
The Board evaluates the operational risks facing the Group on an ongoing basis
to monitor for changes in risks and risk impact and to set guidelines for risk
mitigation. The most significant risks identified by the Board are listed
below.
Gambling laws and regulations are constantly evolving and increasing
The regulatory framework of online gaming is dynamic and complex. Change in
the regulatory regime in a specific jurisdiction can have a material adverse
effect on business volume and financial performance in that jurisdiction.
During 2021, the Group was impacted by the changes in Gambling laws in both
Germany and the Netherlands, as disclosed in the operational review on page 4
of this report. In addition, a number of jurisdictions have regulated online
gaming, and in several of those jurisdictions the Group, or its operating
partner, either holds a licence or is planning to obtain one, if the market is
considered commercially viable. However, in some cases, lack of clarity in
the regulations, or conflicting legislative and regulatory developments, mean
that the Group may risk failing to obtain an appropriate licence, having
existing licences adversely affected, or being subject to other regulatory
sanctions, including internet service providers blocking, blocking options to
make deposits, black-listing the Group and fines.
The Group is managing this risk by consulting with legal advisers in various
jurisdictions where its services are marketed or which generate, or may
generate, significant revenue for the Group. Furthermore, the Group obtains
regular updates regarding changes in the law that may be applicable to its
operations, working with local counsel to assess the impact of any changes on
its operations. Furthermore, the Group's owned operations Bet90, blocks
players from certain "blocked jurisdictions" using multiple technological
methods as appropriate.
Reliance on VIP players
Although the focus of the Group is primarily on the operations of its own
brand Bet90, a large percentage of the commission based revenue from the
Group's marketing activities in the sportsbook and casino vertical is
generated by a small group of high net worth players, described as "VIP
Players". These are loyal players that regularly deposit high amounts on the
websites. These deposit levels vary per country and are typically the top 5%
of the players making regular deposits. The Group knows these players and
makes them feel valued, in efforts to remain an active player. A VIP player
(or also a non-VIP player) can have large winnings, in either the sportsbook
or the casino, in a certain period, which can significantly impact the
revenues on a monthly basis. A loss of any of the VIP Players could
significantly adversely affect the Group's business, financial condition,
results or future operations.
In respect of its own sportsbook and casino brands, Bet90 and Spinbookie, any
large wins by VIP players could potentially lead to recording a loss in such
cases. The Group has Terms & Conditions in place to limit the daily win of
a single player to mitigate such a risk.
Imposition of additional gaming or other indirect taxes
Revenues earned from customers located in a particular jurisdiction may give
rise to further taxes in that jurisdiction. If additional taxes are levied,
this may have a material adverse effect on the amount of tax payable by the
Group. Further taxes may include value added tax (VAT) or other indirect
taxes. The Group may be subject to VAT or similar taxes on transactions, which
have previously been treated as exempt.
The Group seeks to include geographical diversity in its operations. In order
to mitigate the risks that arise, the Group actively identifies, evaluates,
manages and monitors its tax risks and the geographies in which it operates.
The Group works with external local tax advisers to assist them in this
process.
COVID-19 Pandemic
During 2020, the Group's business was negatively impacted by the cancellation
of the vast majority of sporting events in its target markets as a result of
the global COVID-19 pandemic. Whereas the pandemic continued throughout 2021
and the majority of the global sporting events have continued already since
the summer of 2020, there is no guarantee that a future cancellation of some
sporting events in the Group's key markets will not occur, either related to
the COVID-19 pandemic, or any new pandemic. In that situation, revenue of the
Group may be significantly impacted without a proportionate reduction (if at
all) in costs. To mitigate this risk, the Group has been more actively
promoting the casino offering and is looking for external opportunities to
expand its offering to its customers.
Information Technology and Cyber risks
The Group uses third party service providers for its operations. The third
party IT systems may be impacted by unauthorised access, cyber-attacks, DDoS
(Distributed Denial of Service) attacks, theft or misuse of data by internal
or external parties, or disrupted by increases in usage, human error, natural
hazards or disasters or other events. Cyber-attack and data theft incidents
may expose the Group to "ransom" demands and costs of repairing physical and
reputational damage. Failure of third party IT systems, infrastructure or
telecommunications may cause significant cost and disruption to the business
and harm revenues. Lengthy down-time of the site (including in transitioning
to activated disaster recovery servers) could also cause the Group to breach
regulatory obligations.
Data protection risk
The Group and its third party service providers processes personal customer
data, including sensitive data such as name, address, age, bank details and
gaming / betting history. Such data could be wrongfully accessed or used by
employees, customers, suppliers or third parties, or lost, disclosed or
improperly processed in breach of data protection regulations. In particular,
the European General Data Protection Regulation ("GDPR") entered into force in
May 2018, its equivalent in the UK ("UK GDPR"), having a significant effect on
the Group's privacy and data protection practices, as it introduced various
changes to how personal information should be collected, maintained, processed
and secured. Non-compliance with the GDPR or UK GDPR may result in fines of
the higher of €20 million or 4% of the Group's annual global turnover, and
the Group will be particularly exposed to enforcement action in light of the
amount of customer data it holds and processes. In addition, various countries
in the EU have introduced domestic data protection laws incorporating the GDPR
requirements. Moreover, the Group makes use of various tracking technologies
(such as cookies, SDKs, JavaScript and other forms of local storage), which
are subject to stricter standards of consent and transparency, both under the
GDPR and the e-Privacy Directive. The Group could also be subject to private
litigation and loss of customer goodwill and confidence.
Corporate Governance Report
As an AIM-quoted company, B90 and its subsidiaries (together, the "Group") are
required to apply a recognised corporate governance code, demonstrating how
the Group complies with such corporate governance code and where it departs
from it.
The Board of Directors of the Company ("Directors" or "Board") have adopted
the QCA Corporate Governance Code (the "QCA Code"). The Board recognises the
principles of the QCA Code, which focus on the creation of medium to long-term
value for shareholders, without stifling the entrepreneurial spirit in which
small to medium sized companies, such as B90, have been created.
Application of the QCA Code
In the spirit of the QCA Code it is the Board's job to ensure that the Group
is managed for the long-term benefit of all shareholders and other
stakeholders with effective and efficient decision-making. Corporate
governance is an important part of that job, reducing risk and adding value to
the Group. The Board will continue to monitor the governance framework of the
Group as it grows.
B90 is an online marketing and operating company that seeks to grow
shareholder value through organic growth and acquisitions. B90's aim is to
build a portfolio of gaming brands through a combination of strong organic
growth as well as strategic acquisitions that complement the current business.
The Board aims to achieve these objectives through the adoption of best
working practices and by leveraging its industry knowledge and expertise. We
believe that the senior management team as well as the Board, together with
their industry leading partners and networks, have the necessary capabilities
to achieve organic and external growth in the future, as demonstrated, for
example, by the previous acquisition in 2017 of Bet90 Sports Ltd and the
acquisition of Spinbookie.com in December 2021, both operating online
sportsbook and casino. Furthermore, the Group acquired the operations of
Oddsen.nu to own its own affiliation network and driver further revenues via
that portal.
In accordance with the AIM Rules, B90 applies (and in some cases departs from)
the QCA Code in the following way:
Principle 1 - Establish a strategy and business model which promote long-term
value for shareholders
B90 is an online marketing and operating company in the gaming sector that
seeks to grow shareholder value through organic growth and acquisitions, key
aspects of which are ensuring customer satisfaction on both a B2B and B2C
basis and strengthening the B90 brand (see also page 7, Principal activities
and review of the business)
Principle 2 - Seek to understand and meet shareholder needs and expectations.
B90 has engaged in active dialogue with shareholders through regular
communication and the Company's Annual General Meeting and one-on-one
discussions. New information is released via the regulatory news service (RNS)
before anywhere else and the website is update accordingly (see also page 3-6,
Strategic report).
Principle 3 - Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Board recognises the importance of its wider stakeholders - employees,
contractors, suppliers, customers, regulators and advisors - to its long-term
success. The Board has established expectations that these key resources and
relationships are valued and monitored. In particular, the Group's business
model of outsourcing some its key activities requires reliable dialogue with
contractors to ensure the successful pursuit of its long-term strategic
objectives. Furthermore, the Board engages regularly with its corporate
advisers to ensure proactive communication regarding the Group's activities.
In doing so, the Group is able to take any feedback into account and adjust
its actions accordingly to ensure it stays focused on long-term performance.
The Board recognises that the Group operates within a competitive and fast
changing industry and strives to remain alert to developments in a wider
industry/society context.
Principle 4 - Embed effective risk management, considering both opportunities
and threats, throughout the organisation
B90 operates within a complex business environment and an industry that is
fundamentally driven by regulatory processes. The Board has set out its
understanding of the principal risks and uncertainties in this report (see
page 12 for details, going concern statement on page 9 and post year-end
fundraise on page 10) and regularly reviews its strategies for minimising any
adverse impact to the Group or its investors.
The Directors acknowledge their responsibility for the Group's system of
internal control, which is designed to ensure adherence to the Group's
policies whilst safeguarding the assets of the Group, in addition to ensuring
the completeness and accuracy of the accounting records. Responsibility for
implementing a system of internal financial control is delegated to the CFO.
The essential elements of the Group's internal financial control procedures
involve:
· Strategic business planning
The Board regularly reviews and discusses the Group's performance and
strategic objectives.
· Performance review
The Directors monitor the Group's performance through the preparation and
consideration of monthly management accounts, daily through KPIs and regular
reviews of its expenditure and projections. In addition, detailed financial
projections for each financial year are prepared and are subject to formal and
regular review against actual trading by the Board.
Principle 5 - Maintain the Board as a well-functioning, balanced team led by
the Chairman
The Board comprises of three Directors of which two are Executive and one is a
Non-Executive, reflecting a blend of different experience and backgrounds.
Considering the 2020 and 2021 fundraises, in which the Group's Non-Executive
Director Mark Rosman participated, the Board considers, at this moment, none
of the Directors to be completely independent as a Director in terms of the
QCA guidelines. Accordingly, the composition of the Board does currently not
satisfy the QCA recommendation that there are at least two independent
Non-Executive Directors on the Board. The Board is actively looking to appoint
one or two new independent Non-Executive Directors in the near term.
The Board meets throughout the year and all major decisions are taken by the
Board as a whole. The Group's day-to-day operations are managed by the
Executive Directors. All Directors have access to the Group information and
any Director needing independent professional advice in the furtherance of
his/her duties may obtain this advice at the expense of the Group.
Although the Board is satisfied that it has a suitable balance of knowledge of
the Group, experience and skills to enable it to discharge its duties and
responsibilities effectively, and that all Directors have adequate time to
fill their roles, the Group intends to appoint an independent Non-Executive
Director in due course and we will make further announcements as and when
appropriate.
The role of the Chairman is to provide leadership of the Board and ensure its
effectiveness on all aspects of its remit to maintain control of the Group. In
addition, the Chairman is responsible for the implementation and practice of
sound corporate governance.
Our Non-Executive director is expected to devote as much time as is necessary
for the proper performance of his duties. Executive directors are full-time
employees or services providers and expected to devote as much time as is
necessary for the proper performance of their duties.
During 2021 the Board held ten (10) formal meetings either in person or by
call, all of which were attended by all Directors. The Board also passed ten
(10) unanimous written resolutions.
Principle 6 - Ensure that between them the directors have the necessary up
to-date experience, skills and capabilities
The Board considers its current composition to be appropriate and suitable
with the adequate and up-to-date experience, skills and capabilities to make
informed decisions. Each member of the Board brings a different set of skills,
expertise and experience, making the Board a diverse unit equipped with the
necessary set of skills required to create maximum value for the Group.
The Board is fully committed to ensuring its members have the right skills.
Members of the Board must be re-elected by the shareholders of the Company if
they have not been re-elected at the previous two annual general meetings in
accordance with the Company's Articles of Association, thereby providing
shareholders the ability to decide on the election of the Company's Board.
The biographical details of the Directors are:
Karim Peer, Executive Chairman, aged 58, has undertaken numerous roles
including being Managing Director of Open Bet, a leading provider of
sportsbook, casino gaming and betting shop technology helping acquire
Alphameric plc and growing annualised revenues to approximately
£56m. Karim was part of the team that sold Open Bet to Vitruvian Partners
in a deal worth more than £200m. Since 2014, Karim has been CEO of
ClearLakeBlue Limited, which provides strategic consultancy and advice to
corporates and private equity. His company focuses on restructuring,
turnarounds and financial planning and works with corporates to prepare them
for growth and to assist them in raising new capital.
Marcel Noordeloos, Chief Financial Officer, aged 53, was Group Finance
Director at Playlogic International NV between 2006 and 2009 and Chief
Financial Officer at Playlogic Entertainment Inc (a company active in video
game development and publishing) during 2019 and 2020 prior to becoming Chief
Financial Officer at the Group. Marcel has held several management positions
with among others Nike EMEA (2002-2006) and PwC (1992-2001). Marcel holds an
RA Degree (Registered Accountant) from the University of Amsterdam.
Mark Rosman, Non-Executive Director, aged 55, has over 20 years of experience
advising on private equity investments and managing private equity portfolios.
Mark worked for Galladio Capital Management B.V. for eleven years and held the
role of chief operating officer from 2006 until his departure in 2010. Since
leaving Galladio, Mark has served as chief executive officer of The Nestegg
B.V., a private equity management and advisory firm that advises high net
worth individuals on the structuring and management of investments. Mark is a
law graduate from VU University Amsterdam and has an MBA from Rotterdam School
of Management.
Due to the size of the Group, the Group has not adopted a formal diversity
policy, other than looking at educational and professional backgrounds.
The Board also consults with external advisers, such as its nominated adviser
and the Company's lawyers, and with executives of the Company on various
matters as deemed necessary and appropriate by the Board.
Principle 7 - Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
B90's Board is small and extremely focussed on implementing the Group's
strategy. However, given the size and nature of the Group, the Board does not
consider it appropriate to have a formal performance evaluation procedure in
place, as described and recommended in Principle 7 of the QCA Code. The Board
will closely monitor the situation as it grows.
Principle 8 - Promote a corporate culture that is based on ethical values and
behaviours
We are committed to acting ethically and with integrity. We expect all
employees, officers, directors and other persons associated with us to conduct
their day-to-day business activities in a fair, honest and ethical manner.
For that purpose, we have adopted a Code of Business Conduct and Ethics
("Code") which applies to all our workforce personnel. Pursuant to the Code,
employees, directors and other relevant stakeholders are required to comply
with all laws, rules and regulations applicable to us. These include, without
limitation, laws covering anti-bribery, copyrights, trademarks and trade
secrets, data privacy, insider trading, illegal political contributions,
antitrust prohibitions, rules regarding the offering or receiving of
gratuities, environmental hazards, employment discrimination or harassment,
occupational health and safety, false or misleading financial information or
misuse of corporate assets. The Code also includes provisions for disclosing,
identifying and resolving conflicts of interest of the employees and Board
members.
The Code includes provisions requiring all employees to report any known or
suspected violation and ensures that all reports of violations of the Code
will be handled sensitively and with discretion. We also recognise the
benefits of a diverse workforce and are committed to providing a working
environment that is free from discrimination.
We have also adopted a share dealing code, regulating trading and
confidentiality of inside information by persons discharging managerial
responsibility and persons closely associated with them ("PDMRs").
We take all reasonable steps to ensure compliance by PDMRs and any relevant
employees with the terms of the dealing code.
The Board considers that the Company complies with the requirements set in
this principle.
Principle 9 - Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
Corporate Governance Committees
The Board has established two committees, of which the composition is as
follows:
Audit committee
Mark Rosman (Chairman)
Karim Peer
Remuneration committee
Mark Rosman (Chairman)
Karim Peer
The Audit Committee
The Audit Committee meets at least two times during the year to review the
published financial information, the effectiveness of external audit and
internal financial controls including the specific matters set out below.
The terms of reference of the Audit Committee are to assist all the Directors
in discharging their individual and collective legal responsibilities and
during the meetings to ensure that:
· The Group's financial and accounting systems provide accurate
and up-to-date information on its current financial position, including all
significant issues and going concern;
· The integrity of the Group's financial statements and any
formal announcements relating to the Group's financial performance and
reviewing significant financial reporting judgments contained therein are
monitored;
· The Group's published financial statements represent a true
and fair reflection of this position; and taken as a whole are balanced and
understandable, providing the information necessary for shareholders to assess
the Group's performance, business model and strategy;
· The external audit is conducted in an independent, objective,
thorough, efficient and effective manner, through discussions with management
and the external auditor; and
· A recommendation is made to the Board for it to put to
shareholders at a general meeting, in relation to the reappointment,
appointment and removal of the external auditor and to approve the
remuneration and terms of engagement of the external auditor.
The Audit Committee does not consider there is a need for an internal audit
function given the size and nature of the Group.
Significant issues considered by the Audit Committee during the year have been
the Principal Risks and Uncertainties (which are set out in this annual
report) and their effect on the financial statements. The Audit Committee
tracked the Principal Risks and Uncertainties through the year and kept in
contact with the Group's Management, External Service Providers and Advisers
and received regular updates. The Audit Committee is satisfied that there has
been appropriate focus and challenge on the high-risk areas.
Nexia Smith & Williamson, our external auditors, have been in office since
2013.
The external auditors are invited to attend the Audit Committee meeting to
present their findings and this provides them with a direct line of
communication to the Non-Executive Director.
The Remuneration Committee
The terms of reference of the Remuneration Committee are to:
· recommend to the Board a framework for rewarding senior
management, including Executive Directors, bearing in mind the need to
attract and retain individuals of the highest calibre and with the appropriate
experience to make a significant contribution to the Group; and
· ensure that the elements of the remuneration package are
competitive and help in underpinning the performance-driven culture
of the Group.
Principle 10 - Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining good communication with its shareholders
and in promoting effective dialogue regarding the Group's strategic objectives
and performance. Institutional shareholders and analysts have the opportunity
to discuss issues and provide feedback via meetings with the Company. The
Annual General Meeting and any other General Meetings that are held throughout
the year are for shareholders to attend and question the Directors on the
Company's performance. Regular progress reports are also made via RNS
announcements and the point of contacts are Karim Peer, Executive Chairman and
Marcel Noordeloos, CFO.
Our Audit Committee Report is included on pages 20 to 21 of this Annual
Report. Our Remuneration Committee Report is included on page 22 of this
Annual Report.
This report was authorised for issue by the Board on 20 June 2022.
Karim Peer
Executive Chairman, B90 Holdings plc
20 June 2022
Audit Committee Report
General and Composition of the Audit Committee
The Audit Committee is a sub-committee of the Board. The Audit Committee
chairman reports formally to the Board on all matters within the Committee's
duties and responsibilities and on how the Audit Committee discharges its
responsibilities.
The Audit Committee consists of two members, Mark Rosman (Chairman) and Karim
Peer.
The biographies of the Audit Committee members are on pages 16-17 under
principle six, as well as on the Company's website at
www.b90holdings.com/corporate-info .
The Audit Committee meets at twice a year at appropriate times in the
reporting and audit cycle and otherwise as required. The Audit Committee also
meets regularly with the Company's external auditors.
Purpose and Responsibilities of Audit Committee
The purpose of the Audit Committee is to assist the Board to carry out the
following functions more efficiently and fully:
· Oversight of the integrity of the Group's formal reports,
statements and announcements relating to the Group's financial
performance; and
· Reviewing compliance with internal guidelines, policies and
procedures and other prescribed internal standards of behaviour.
To achieve such purposes, the Audit Committee has been assigned with the
following responsibilities:
· Reviewing the half-year and full-year financial statements
with management and with the external auditors as necessary prior to their
approval by the Board;
· Reviewing financial results announcements of the Group and
any other formal announcements relating to the Group's financial performance
and recommending them to the Board for approval;
· Reviewing recommendations from the CFO and the external
auditors on the key financial and accounting principles to be adopted by the
Group in the preparation of the financial statements;
· Reviewing the Group's systems for internal financial
control;
· Considering and making recommendations to the Board, to put
to shareholders for approval at the AGM, the appointment, re-appointment and
removal of the Company's external auditors and oversee the relationship with
the external auditors;
· Reviewing and approving the external audit plan and regularly
monitoring the progress of implementation of the plan;
· Determining and monitoring the effectiveness and independence
of the external auditors.
Main Activities in 2021 and 2022
On 17 June 2021 the Audit Committee reviewed the financial statements for
year-end 31 December 2020.
On 29 September 2021 the Audit Committee reviewed the financial results of the
Company for the six months ended 30 June 2021. The audit committee had the
2021 audit planning meeting with our external auditors on 21 February 2022 and
a completion audit committee call was held on 14 June 2022. On 20 June 2022
the Audit Committee reviewed the financial statements for year-end 31 December
2021.
External Auditors
The external auditors of the Company are Nexia Smith & Williamson
("NS&W"). The appointment of NS&W as auditors by the Audit Committee
was based on their performance during past years. The Audit Committee review
of the external auditors confirmed the appropriateness of their reappointment
and included assessment of their independence, qualification, expertise and
resources, and effectiveness of their audit process.
Both the Board and the external auditors have safeguards in place to avoid the
possibility that the auditors' objectivity and independence could be
compromised. The services provided by the external auditors include the
Audit-related services. In recognition of public concern over the effect of
consulting services on auditors' independence, the external auditors are not
invited to general consulting work which can affect their independence as
external auditors.
The total remuneration of the external auditors for 2021 and for 2020 was as
listed in the table below:
2021 2020
Audit services €130,000 €105,000
Review of FPPP * - €35,000
*FPPP: Financial Position & Prospects Procedures Report
The Audit Committee remains mindful of the attitude investors have to the
auditors performing non-audit services. The Committee has clear policies
relating to the auditors undertaking non-audit work and monitors the
appointment of the auditors for any non-audit work, with a view to ensuring
that non-audit work does not compromise the Company's auditors objectiveness
and independence.
The Audit Committee and the auditors found that the external audit plan for
2021, the audit work of the external auditors for 2021 and the remuneration of
the external auditors for 2021 did not undermine the independence of the
external auditors.
Financial Reporting
The Group's trading performance is monitored on an ongoing basis. An annual
budget is prepared, and specific objectives and targets are set. The budget is
reviewed and approved by the Board. The key trading aspects of the business
are monitored daily and internal management and financial accounts are
prepared monthly. The results are compared to budget and prior year
performance.
The Audit Committee has taken and will continue to take further steps to
ensure the Group's control environment is working effectively and efficiently.
--------------------------------
Mark Rosman
Chairman of the Audit Committee
Remuneration Committee Report
General
The Remuneration Committee is responsible for determining and recommending to
the Board the framework for the remuneration of the Board chairman, executive
directors and other designated senior executives and, within the terms of the
agreed framework, determining the total individual remuneration packages of
such persons including, where appropriate, bonuses, incentive payments and
share options or other share awards.
The Remuneration Committee consists of two members, Mark Rosman (Chairman) and
Karim Peer. The Remuneration Committee meets at least once a year and
otherwise as required.
Key elements in Remuneration
As an AIM-quoted company, the Company is not required to comply with the
remuneration reporting requirements applicable to fully listed companies in
the UK. However, set out below are certain disclosures relating to directors'
remuneration:
· The remuneration of executive directors and certain other
senior executives is set by comparison to market rates at levels aimed to
attract, retain and motivate the best staff, recognising that they are key to
the ongoing success of the business.
· The remuneration of non-executive directors is a matter for
the Chairman and the executive directors to determine.
· No Director is involved in any decision as to his or her own
remuneration.
· The remuneration of senior management includes equity-based
payments (stock options) vested over time to retain their employment.
Responsibilities of the Remuneration Committee
The responsibilities of the Remuneration Committee include the below and other
responsibilities as set forth in the Charter of the Committee:
· Setting the remuneration policy for all executive directors.
Karim Peer is not involved in setting his own remuneration, this is
determined by Mark Rosman only;
· Recommending and monitoring the level and structure of
remuneration for senior management personnel;
· Reviewing the design of all share incentive plans for
approval by the Board and shareholders.
Share option scheme
On 17 May 2016, the Company adopted a "long term incentive senior management
and Directors' stock option plan" ("the Plan"). Options granted under the
Plan will entitle the participant to acquire Ordinary Shares at a price
determined in accordance with the rules of the Plan.
The Directors' interests in the Company's share options for the year ended 31
December 2021 are shown on page 10. Share options granted as per 31 December
2021 are shown in Note 19 on page 50.
The Committee remains committed to a fair and responsible approach to
executive pay whilst ensuring it remains in line with best practice and
appropriately incentivises executive directors over the longer term to deliver
the Group's strategy. An overview of Directors remuneration is shown in Note 5
on page 42.
---------------------------------
Mark Rosman, Chairman of the Remuneration Committee
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF B90 Holdings plc
Opinion
We have audited the financial statements of B90 Holdings plc (the 'group') for
the year ended 31 December 2021 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of
Cash Flows, and the notes to the consolidated financial statements, including
significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
· give a true and fair view of the state of the group's affairs as at 31
December 2021 and of the group's loss for the year then ended; and
· have been properly prepared in accordance with IFRSs as adopted by the
European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent
of the group in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which indicates that
whilst trading during the first months of 2022 has been in line with the
Board's expectations and show a significant increase in revenues, the Group
has made a net loss for the year of €3.4m, had net current liabilities of
€4.2m as at 31 December 2021, had cash inflow from revenues of €0.8m in
2021 and is projected to make losses for the 6-month period ending 30 June
2022.
Notwithstanding that, the Group having raised additional funds in equity since
the 2021 year-end, amounting to €845,000 (£731,000), it remains reliant,
inter alia, on being able to manage its cash resources carefully and trading
being in line with management's expectations. Should trading not be in line
with management's expectations going forward, the Group's ability to meet its
liabilities may be impacted, in which case the Group may need to raise further
funding. In such circumstance that this is needed and whilst the directors are
confident of being able to raise such funding if required, there is no
certainty that such funding will be available and/or the terms of such
funding.
These conditions represent a material uncertainty that may cast significant
doubt on the Group's ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Notwithstanding the above, in auditing the financial statements we have
concluded that the directors' use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of
the directors' assessment of the group's ability to continue to adopt the
going concern basis of accounting included:
· We challenged and reviewed management's sensitivity analysis in their
forecasts, made up to December 2023, looking at cash generation and key
assumptions such as revenue generation from major sporting events. Where
appropriate we used third party data to review and, where necessary, challenge
their inputs;
· We reviewed and challenged the disclosures in the Annual Report and
Accounts surrounding Going Concern;
· We compared the forecast results to those actually achieved in the 2022
financial period so far;
· We reviewed bank statements to monitor the cash position of the group
post year end, and obtained an understanding of significant expected cash
outflows (such as marketing expenditure) in the forthcoming 12-month period;
and
· We considered the group's funding position and requirements.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
An overview of the scope of the audit
Of the Group's 16 (2020: 14) reporting components, we subjected 5 (2020: 14)
to specific audit procedures where the extent of our audit work was based on
our assessment of the risk of material misstatement and of the materiality of
the Group.
The components within the scope of our work covered 100% of group revenue, 93%
of group loss before tax, and 100% of group assets.
Key audit matters
We identified the key audit matters described below as those that were of most
significance in the audit of the financial statements of the current period.
Key audit matters include the most significant assessed risks of material
misstatement, including those risks that had the greatest effect on our
overall audit strategy, the allocation of resources in the audit and the
direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures below which were
designed to address the matters in the context of the financial statements as
a whole and in forming our opinion thereon. Consequently, we do not provide a
separate opinion on these individual matters.
Key audit matter Description of risk How the matter was addressed in the audit
Revenue Recognition Under International Standards on Auditing there is a presumption that there We reviewed the Group's accounting policy for revenue recognition and assessed
are risks of material misstatement due to fraud in relation to revenue whether it is in line with industry and international financial reporting
recognition. Where it is assessed that a material risk of fraud exists, that standards ("IFRS").
class of transaction must be assessed as significant risk.
We evaluated the design and implementation of relevant internal controls that
Revenue is a key performance indicator of the Group. Revenue based targets the Group uses to ensure the completeness, accuracy and timing of revenue
may place pressure on management to distort revenue recognition. This may recognised.
result in overstatement to assist in meeting current targets or expectations.
We performed substantive testing including:
· Reviewed material revenue contracts with customers;
· Tested the recognition compliance with IFRS 9 & 15
· Performed detailed testing on a sample of revenue transactions,
including agreement to third party reports;
· For affiliate marketing revenues - where cash has been received, we
agreed to bank statements and remittance;
· For sportsbook and casino revenues - We have corroborated the
movements to the corresponding player liability accounts; and
· We reviewed the disclosures made by the directors in the financial
statements.
Acquisition accounting - Fair value of assets and liabilities acquired as well The Group holds significant Intangible assets, with the majority relating to We reviewed the accounting assessment for the Oddsen.nu & Spinbookie.com
as consideration paid for the Oddsen.nu and Spinbookie acquisitions the recent acquisitions of the Oddsen.nu operations and Spinbookie.com acquisitions & assessed whether it is in line with industry and
Intellectual property. international financial reporting standards ("IFRS").
We evaluated the design and implementation of relevant processes and controls
surrounding the accounting assessment, valuation of the consideration paid and
IFRS 3 requires identification of assets which are either separable or arise the fair values of the assets and liabilities acquired.
from contractual or legal rights. Therefore, significant judgments and
estimation were needed to determine the fair value of the assets and We performed substantive testing including:
liabilities acquired by the business through the purchase price allocation
("PPA") process for Oddsen.nu & Recognition of the Spinbookie.com • Corroborated the valuation of significant balances within the
intellectual property under IAS 38. acquisition balance sheet to supporting evidence to ensure these are
representative of their fair value (Including the use of our internal
valuation specialist to review the Oddsen.nu PPA assessment);
In addition, the determination of the fair value of consideration payable in • For shares issued as consideration, corroborated the value to the
relation to deferred pay-outs involved a degree of estimation on the listed share prices.
likelihood of earnout criteria being met.
• Assessed conditions attached to deferred pay-outs and reviewed:
o whether any of the amount includes payments for future employment costs
rather than consideration
o Ensured the present value computation was mathematically accurate and key
inputs were reasonable
• reviewed the appropriateness of disclosures in the Company annual
report.
Carrying value of Goodwill with indefinite useful lives and Other intangible The Group holds Goodwill with an indefinite useful life relating to the We reviewed management's accounting policy for impairment and assessed whether
assets acquisition of Bet90 Sports Limited and Oddsen.nu. it is in line with IAS 36.
Other intangible assets should be held at the lower of amortised cost or their We evaluated the design and implementation of relevant internal controls
recoverable amount. Where there is an indicator of impairment such as a loss surrounding the review process of impairment models.
being made in the financial statements, an impairment review is undertaken.
We performed substantive testing including:
· Challenged Management's assessment of the relevant CGUs with
Significant judgment is needed in order to assess the appropriateness of the reference to the guidance set out in IAS 36;
recoverable amount of these assets/CGUs to which an indicator of impairment is
noted or to which the Goodwill has been allocated, in particular with · Reviewed the assessment over indicators of impairment for other
reference to forecasted cash flows, growth rates, discount rates and intangibles with definite useful lives.
sensitivity assumptions.
· Considered the appropriateness and mathematical accuracy of the model
used to determine the recoverable amount of the Bet90 sports and Oddsen.nu
CGUs
· Considered historical trading performance by comparing both revenue
and operating profit of the Group's CGUs with projected revenues and operating
profits;
· We assessed and challenged the appropriateness of the assumptions
concerning:
o Revenue growth rates to projected player revenue models based on player
acquisition and expected net gaming revenues per player
o Costs basis to historic cost data including relevant affiliate and
platform agreements
o inputs to the discount rate against latest market expectations; and
· We challenged and evaluated management's sensitivity analysis of the
key variables included within the value in use calculations.
In performing and to support our procedures, we used our internal valuation
specialists and third-party evidence.
Our application of materiality
The materiality for the group financial statements as a whole ("group FS
materiality") was set at €128,000 (2020: €50,000). This has been
determined with reference to the benchmark of the group's net assets, which we
consider to be one of the principal considerations for members of the Group in
assessing the Group's performance. Group FS materiality represents 3.5% of the
group's net assets (2020: 2.5% of the group's gross assets) as presented on
the face of the Consolidated Statement of Financial Position. We have
determined net assets to be appropriate in the current year given the
additional acquisitions undertaken by the group.
Performance materiality for the group financial statements was set at
€102,560, being 80% (2020: 80%) of group FS materiality, for purposes of
assessing the risks of material misstatement and determining the nature,
timing and extent of further audit procedures. We have set it at this amount
to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds group FS materiality. We
judged this level to be appropriate based on our understanding of the group
and its financial statements, as updated by our risk assessment procedures and
our expectation regarding current period misstatements including considering
experience from previous audits.
Other information
The other information comprises the information included in the Annual Report
and Accounts, other than the financial statements and our auditor's report
thereon. The directors are responsible for the other information contained
within the Annual Report and Accounts. Our opinion on the financial
statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on pages 10 & 11, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below:
We obtained a general understanding of the Group's legal and regulatory
framework through inquiry of management concerning:
- their understanding of relevant laws and regulations;
- the entity's policies and procedures regarding compliance; and
- how they identify, evaluate and account for litigation claims.
We also drew on our existing understanding of the Group's industry and
regulation. We understand that the Group complies with the framework through:
- Maintaining an active licence through the Malta Gaming Authority
("MGA") by submitting monthly returns to the MGA and maintaining
records subject to random audits from the MGA.
In the context of the audit, we considered those laws and regulations:
- which determine the form and content of the financial statements;
- which are central to the Group's ability to conduct its business; and
- where failure to comply could result in material penalties.
We identified the following laws and regulations as being of significance in
the context of the Group:
- Maltese gambling laws; and
- IFRS in respect of the preparation and presentation of the financial
statements.
We evaluated potential non-compliance with these laws and regulations by:
- Reviewing current Maltese gaming service licences and monthly returns
in relation to those licences; and
- Reviewing board minutes for evidence of non-compliance.
The senior statutory auditor led a discussion with senior members of the
engagement team regarding the susceptibility of the entity's financial
statements to material misstatement, including how fraud might occur. The
areas identified in this discussion were:
- Manipulation of the financial statements, especially early recognition
of revenue, via fraudulent journal entries and management bias in relation to
the key assumptions which drive the recoverable values of the Oddsen.nu and
Quasar Holdings ltd (Bet90) CGUs.
The procedures we carried out to gain evidence in the above areas included:
- Substantive work on revenue recognition and the carrying value of
Goodwill with indefinite useful lives and Other intangible assets (see above
KAMs); and
- Testing journal entries, focusing particularly on postings to
unexpected or unusual accounts including unexpected entries.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms
part of our auditor's report.
Use of our report
This report is made solely to the Group's members, as a body, in accordance
with our engagement letter dated 15 June 2021. Our audit work has been
undertaken so that we might state to the Group's members those matters we are
required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Group and the Group's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Andrew
Bond
45 Gresham Street
Senior Statutory Auditor, for and on behalf of
London
Nexia Smith & Williamson
EC2V 7BG
Statutory
Auditor
20 June 2022
Chartered Accountants
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
Note 31 December 2021 31 December 2020
€ €
Revenue 4 826,855 813,011
Salary expense (1,306,033) (1,024,362)
Marketing and selling expense (430,095) (381,950)
General administrative expense (2,256,222) (1,564,866)
Depreciation and amortisation expense (109,325) (82,467)
Total administrative expenses (4,101,675) (3,053,645)
Operating loss (3,274,820) (2,240,634)
Finance expense (136,931) (140,820)
Loss before tax 6 (3,411,751) (2,381,454)
Taxation 7
- -
Loss for the period (3,411,751) (2,381,454)
Equity holders of the Company (3,351,507) (2,368,712)
Non-controlling interests (60,244) (12,742)
(3,411,751) (2,381,454)
Loss per share attributable to equity holders of the Company
- Basic (in €) 8 (0.0192) (0.0248)
- Diluted (in €) 8 (0.0192) (0.0248)
The Notes on pages 34 to 58 form part of these financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Year ended Year ended
31 December 31 December
2021 2020
Note
€ €
Non-current assets
Goodwill 9 3,324,531 1,410,931
Other intangible assets 10 4,793,069 169,095
Total non-current assets 8,117,600 1,580,026
Current assets
Other receivables & prepayments 13 159,999 27,496
Cash and cash equivalents 14 827,302 320,525
Total current assets 987,301 348,021
Total assets 9,104,901 1,928,047
Equity and liabilities
Share capital 15 - -
Additional paid-in capital 16 27,734,003 15,466,741
Reverse asset acquisition reserve 17 (6,046,908) (6,046,908)
Equity portion Convertible Bond 20 - 429,770
Retained earnings 18 (17,987,052) (14,907,070)
Equity attributable to owners of the parent 3,700,043 (5,057,467)
Non-controlling interests (24,388) 35,856
Total shareholders' equity 3,675,655 (5,021,611)
Non-current liabilities
Borrowings 20 - 2,199,839
Deferred tax liability 273,600 -
Total non-current liabilities 273,600 2,199,839
Current liabilities
Trade and other payables 21 5,130,869 4,725,597
Corporate income tax payable 24,777 24,222
Total current liabilities 5,155,646 4,749,819
Total equity and liabilities 9,104,901 1,928,047
Approved by the board on 20 June 2022 and signed on its behalf by:
Karim Peer
Chairman
The Notes on pages 34 to 58 form part of these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Additional Equity portion Other reserves -
Share paid in convertible Loan Reverse asset Retained Non-controlling Total
capital capital Note acquisition reserve earnings Total interest Equity
€ € € € € € € €
Balance as at 1 January 2020 - 15,162,647 149,836 (6,046,908) (8,910,238) 355,337 (2,817,990) (2,462,653)
Loss for the financial period - - - - (2,368,712) (2,368,712) (12,742) (2,381,454)
Convertible loan note - - 279,934 - - 279,934 - 279,934
Acquisition of non-controlling interest - 304,094 - - (3,670,682) (3,366,588) 2,866,588 (500,000)
Share based payments - - - - 42,562 42,562 - 42,562
Balance as at 31 December 2020 - 15,466,741 429,770 (6,046,908) (14,907,070) (5,057,467) 35,856 (5,021,611)
Loss for the financial period - - - - (3,351,507) (3,351,507) (60,244) (3,411,751)
Convertible loan note conversions - 4,569,685 (429,770) - 126,499 4,266,414 - 4,266,414
Conversion of payables - 772,100 - - - 772,100 - 772,100
Share based acquisition - 3,779,059 - - - 3,779,059 - 3,779,059
Share based payments - - - - 145,026 145,026 - 145,026
Issue of share capital - 3,385,871 - - - 3,385,871 - 3,385,871
Costs of raising capital - (239,453) - - - (239,453) - (239,453)
Balance as at 31 December 2021 - 27,734,003 - (6,046,908) (17,987,052) 3,700,043 (24,388) 3,675,655
The Notes on pages 34 to 58 form part of these financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2021 2020
€ €
Cash flows from operating activities
Operating (loss)/profit (3,274,820) (2,240,634)
Adjustments for:
Share based payments 145,026 42,562
Amortisation of intangibles 109,325 82,467
Cash flow used in operations before working capital changes (3,020,469) (2,115,605)
(Increase)/decrease in trade and other receivables (132,502) 103,389
(Decrease)/increase in trade and other payables (733,670) 437,115
Cash flow used in operations (3,886,641) (1,575,101)
Tax (paid)/received - -
Cash flow used in operating activities (3,886,641) (1,575,101)
Cash flow used in investing activities
Acquisition of non-controlling interest - (200,000)
Acquisition of intangible assets (600,000) -
Net cash outflow used in investing activities (600,000) (200,000)
Cash flow from financing activities
Interest paid - -
Proceeds of issue of new shares 3,146,418 -
Receipts from loans 1,847,000 1,665,000
Net cash inflow from financing activities 4,993,418 1,665,000
Net increase/(decrease) in cash and cash equivalents 506,777 (110,101)
Cash and cash equivalents at start of period 320,525 430,626
Cash and cash equivalents at end of period 827,302 320,525
The Notes on pages 34 to 58 form part of these financial statements
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
Note 1: General Information
Company descriptions and activities
B90 Holdings plc (the "Company") and its subsidiaries (together the "Group")
was founded in 2012 in the Isle of Man (Company number 9029V). In July 2013,
the Company listed on the AIM market of the London Stock Exchange and
completed a reverse merger in June 2016.
The Group is focused on the operation of its own online Sportsbook and Casino
product (via Spinbookie.com and Bet90.com) as well as marketing activities for
other online gaming companies (using oddsen.nu and tippen4you.com).
Significant accounting policies
The principal accounting policies as adopted by the Group in the preparation
of its consolidated financial statements for the year ended 31 December 2021
are set out below. The accounting policies have been consistently applied,
unless otherwise stated.
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance
International financial reporting standards (''IFRS") in conformity with the
requirements of the EU. The Consolidated Financial Statements have been
prepared under the historical cost convention and on a going concern basis.
Basis of consolidation
The Consolidated Financial Statements incorporate the results of B90 Holdings
plc (the "Company") and entities controlled by the Company (its subsidiaries)
(collectively the "Group"). Control is achieved where the Company has the
power over the investee, is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to use its power to
affect its returns.
The results of subsidiaries disposed of are included in the consolidated
statement of comprehensive income to the effective date of loss of control and
those acquired from the date on which control is transferred to the Group.
Going concern
After the challenges in 2020 and the impact of the global COVID-19 pandemic,
the Group raised a total of €5.2 million during 2021, which allowed the
Group to settle overdue creditors and to complete two acquisitions
(Spinbookie.com and Oddsen.nu) in order to drive additional revenues for the
Group.
The directors expect that these acquisitions will generate cash flow in 2022 ,
however the Group achieved a net loss of €3.4 million for the year ended 31
December 2021. Furthermore, the Group had a negative cash flow from operations
of €4.5 million for the year ended 31 December 2021 and the Group expects to
report a loss for the six months ending 30 June 2022. Furthermore, as per 31
December 2021, the Group shows net current liabilities of €4.2 million.
Whilst trading during the first months of 2022 has been in line with the
Board's expectations and show a significant increase in revenues, the Group
continues to operate at a loss, although management expects the Group to
become cash flow positive during the second half of 2022, executing on its
strategic plan to grow the Group's operations and revenues in the various
verticals in a targeted manner, entering into strategic partnerships and
investing in further marketing to expand the customer base and geographical
reach. Furthermore, as a result of the recent fundraise, completed in May
2022, the Group has improved its financial position.
Notwithstanding that the Group has raised additional funds in equity since the
2021 year-end, amounting to £731,000, it remains reliant, inter alia, on
being able to manage its cash resources carefully and trading being in line
with management's expectations. Should trading not be in line with
management's expectations going forward, the Group's ability to meet its
liabilities may be impacted, in which case the Group may need to raise further
funding. In such circumstance that this is needed and whilst the directors are
confident of being able to raise such funding if required, there is no
certainty that such funding will be available and/or the terms of such
funding. These conditions are necessarily considered to represent a
significant uncertainty which may cast doubt over the Group's ability to
continue as a going concern.
Whilst acknowledging this uncertainty, the Directors remain confident that the
recent fundraise will allow the Group to expand its operations and generate a
positive operational cash flow within a reasonable time or, if needed, be able
to raise additional funding when required, therefore the Directors consider it
appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern.
Note 2: Critical accounting policies, estimates and judgements
The preparation of the Consolidated Financial Statements requires the
Directors to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
Key areas of estimation uncertainty
Impairment of Goodwill and other intangible fixed assets
Determining whether goodwill and other intangible fixed assets with a definite
or indefinite useful life are impaired requires an estimation of the
value-in-use of the cash-generating units. Goodwill was recorded following the
acquisition of 51% in Quasar Holdings Ltd in 2017, in the acquisition of the
operations of Oddsen.nu in September 2021. The total balance per 31 December
2021 amounts to €3.3 million. The directors have used various estimates,
revenue forecasts and expected future cash flows. The recently completed
fundraises allow the Group to invest in marketing and the Directors believe
this will grow its overall operations to support the carrying value of
goodwill. If some of the expectations are not met, impairment of the
goodwill balance may be necessary in the future. Further details around the
estimates and assumptions used are disclosed in notes 9 and 10.
Business combinations
For business combinations, the Group estimates the fair value of the
consideration transferred, which can include assumptions about the future
business performance of the business acquired and an appropriate discount rate
to determine the fair value of any contingent consideration. Judgement is also
applied in determining whether any future payments should be classified as
contingent consideration or as remuneration for future services.
The Group then estimates the fair value of assets acquired and liabilities
assumed in the business combination, including any separately identifiable
intangible assets. These estimates also require inputs and assumptions
including future earnings, customer attrition rates and discount rates. The
Group engages external experts to support the valuation process, where
appropriate. IFRS 3 'Business Combinations' allows the Group to recognise
provisional fair values if the initial accounting for the business combination
is incomplete. Judgement is applied as to whether changes should be applied at
the acquisition date or as post-acquisition changes.
The fair value of contingent consideration recognised in business combinations
is reassessed at each reporting date, using updated inputs and assumptions
based on the latest financial forecasts for the relevant business. Fair value
movements and the unwinding of the discounting is recognised within operating
expense
Other areas of estimation
Convertible Bond Note
The Company issued a €300,000 (in September 2019), a £500,000 (€591,200
in December 2019), a €515,000 (in May 2020), a €450,000 (in September
2020), a €700,000 (in December 2020) and a €1,847,000 (in March 2021),
secured convertible bonds of 5%. Interest payable twice a year or accrued at
the request of the lender. The bonds were repayable three years from their
issue date, and could be converted at any time into shares at a price of 5p
per New Ordinary Share ("Conversion Price") at request of the holder. An
automatic conversion was triggered on 23 April 2021 as the Company's shares
were trading above 10p for 25 consecutive dealing days.
Under IAS 32, the convertible bonds were accounted for as a compound financial
instrument. For the calculation of the fair value of the loan component, the
Company has reviewed the market interest rates for a comparable unsecured
loan, with a 3 year term. The market interest rate used in the calculations
was 12%.
Share-Based Payments
Certain employees (including Directors and senior Executives) of the Company
receive remuneration in the form of share-based payment transactions.
The fair value is determined using the Black-Scholes valuation model. The
Directors believe this is appropriate considering the effects of the vesting
conditions, expected exercise period and the dividend policy of the Company.
Due to limited trading history, the expected volatility has been based on the
5-year historical volatility of a mix of share prices from other companies in
the same industry, as well as the overall market volatility.
New Standards, interpretations and amendments adopted by the Group
Several new and amendments to existing International Financial Reporting
Standards and interpretations, issued by the IASB, were effective from 1
January 2021 and have been adopted by the Group during the period with no
significant impact on the consolidated results or financial position of the
Group.
New Standards that have not been adopted by the group as they were not
effective for the year
Several new standards and amendments to existing International Financial
Reporting Standards and interpretations, issued by the IASB and adopted, or
subject to endorsement, will be effective from 1 January 2022, 2023 and 2024
and have not been adopted by the Group during the period. At this stage
management are still assessing the full impact on the consolidated results or
financial position of the Group. None are expected to have a material impact
on the consolidated financial statements in the period of initial application.
Note 3: Significant accounting policies
The principal accounting policies applied in the preparation of these
Consolidated Financial Statements are set out below. The policies have been
consistently applied to all years presented, unless otherwise stated.
Revenue
Revenue from contracts with customers is recognised when the control over the
services is transferred to the customer. The transaction price is the amount
of the consideration that is expected to be received based on the contract
terms.
In determining the amount of revenue from contracts with customers, the Group
evaluates whether it is a principal or an agent in the arrangement. The Group
is principal when the Group controls the promised services before transferring
them to the customer. In these circumstances, the Group recognises revenue for
the gross amount of the consideration. When the Group is an agent, it
recognises revenue for the net amount of the consideration, after deducting
the amount due to the principal. The Group does not record revenue when there
is uncertainty around the collection of the receivable.
Sportsbook and casino revenue
Revenue is recognised provided that it is probable that economic benefits will
flow to the Group and the revenue can be reliably measured. Revenue is
recognised in the accounting periods in which the transactions occurred and
after adding the fees and charges applied to customer accounts, and is
measured at the fair value of the consideration received or receivable.
Revenue from these activities comprises:
Sportsbook
Sport online gaming revenue comprises bets placed less pay-outs to customers,
adjusted for the fair value of open betting positions, adjusted for the fair
value of certain promotional bonuses granted to customers.
Landbased revenue comprises of the bets placed less pay-outs to customers.
Commissions paid to the shop owners are recorded as cost of sale.
Casino games
Casino, Bingo and other online gaming revenue is represented by the difference
between the amounts of bets placed by customers less amounts won, adjusted for
the fair value of certain promotional bonuses granted to customers.
The Company acts as the principal in sportsbook and casino operations.
Marketing commission revenue
In its operations which generate marketing commissions, the Group acts as the
agent. Revenue from marketing contracts with customers is recognised when
players are losing their funds on the operators' platforms on which the
Company is basing the amounts to be invoiced. In some cases customers agree to
pay a fixed fee per acquired player. All fees and commissions are invoiced on
a monthly basis. The transaction price is the commission amount of the
consideration that is expected to be received based on the contract terms. The
performance obligation of a revenue contract is satisfied at the point a
player's losses are incurred. Operators typically pay a month in arrears. This
gives rise to contract assets on a short term basis.
Administrative expenses
Administrative expenses consist primarily of staff costs (including
contractors), corporate professional expenses, and depreciation and
amortisation. All expenses are recognised on an accruals' basis.
Foreign currencies
The Group's functional and presentation currency is EURO. Transactions in
foreign currency are recorded at the rates of exchange prevailing on the dates
of the transactions. At each statement of financial position date, monetary
assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the statement of financial position
date. Any gains or losses arising on translation are taken to the profit and
loss.
Taxation
Current tax
Current tax for each taxable entity in the Group is based on the local taxable
income at the local statutory tax rate enacted or substantively enacted at the
statement of financial position date and includes adjustments to tax payable
or recoverable in respect of previous periods.
Deferred tax
Deferred taxation is calculated using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Consolidated Financial Statements. However, if the
deferred tax arises from the 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, it is not
accounted for. Deferred tax is determined using tax rates and laws that have
been enacted (or substantively enacted) by the date of the statement of
financial position and are expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.
Deferred tax liabilities are provided in full.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the profit and loss, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax
is also charged or credited directly to equity.
Intangible fixed assets
Acquired intangible assets
Intangible assets acquired separately consist of domain names and customer
lists and are capitalised at cost. Those acquired as part of a business
combination are recognised separately from goodwill if the fair value can be
measured reliably. These intangible assets are amortised over the useful
life of the assets, which is mentioned at the table below.
The cost of intangible assets acquired in a business combination is the fair
value at acquisition date. The valuation methodology used for each type of
identifiable asset category is detailed below:
Asset category Valuation methodology Useful life
Customer relationships Excess earnings 3-10 years
Domain names Relief from royalty 20 years
Licenses Cost approach 3 years
Spinbookie assets
Cost approach
10 years
Goodwill
Goodwill represents the excess of the fair value of the consideration in a
business combination over the Group's interest in the fair value of the
identifiable assets, liabilities and contingent liabilities acquired.
Consideration comprises the fair value of any assets transferred, liabilities
assumed and equity instruments issued.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the profit and loss and not subsequently reversed.
Where the fair values of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess is
credited in full to the profit and loss on the acquisition. Changes in the
fair value of the contingent consideration are charged or credited to the
profit and loss. In addition, the direct costs of acquisition are charged
immediately to the profit and loss.
Goodwill is not amortised as the Group assumes an indefinite useful life.
Non-controlling interests
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity therein. Non-controlling
interests consist of the amount of those interests at the date of the original
business combination and the non-controlling shareholder's share of changes in
equity since the date of the combination except where any non-controlling
interests have been acquired by the Group. Any share of gains or losses are
transferred to the Group's retained earnings. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Accounting for acquisition of non-controlling interests
When the Group acquires a minority interest of an entity over which the Group
already has control, the excess consideration over the fair value of the
minority interest is taken to equity reserves.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually and where applicable an
impairment loss is recognised immediately in the profit and loss. Other
non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable
amount (being the higher of value in use and fair value less costs to sell),
the asset is written down accordingly through the profit and loss.
Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the asset's cash generating unit
(i.e. the smallest group of assets to which the asset belongs for which there
are separately identifiable and largely independent cash inflows).
Equity
Equity comprises the following:
• "Share capital" represents amounts subscribed for shares
at nominal value. Nominal value per share is nil.
• "Additional paid in capital" represents amounts
subscribed for share capital in excess of nominal value.
• The "Reverse asset acquisition reserve" represents the
difference in carrying value between the Additional paid in capital of B90
Holdings plc and the Share capital of Sheltyco on the acquisition date (June
2016).
• The "Equity portion of the convertible loan note"
represents the difference between the fair value of the entire instrument and
the fair value of the liability component at initial recognition.
• "Retained earnings" represents the accumulated profits
and losses attributable to equity shareholders. This also includes issued and
vested warrants and options.
Financial instruments
Trade and other receivables
Trade receivables are held in order to collect the contractual cash flows and
are initially measured at the transaction price as defined in IFRS 15. The
Group has applied IFRS 9's simplified approach and has calculated the ECLs
based on lifetime of expected credit losses. As the contracts of the Group do
not contain significant financing components. Impairment losses are recognised
based on lifetime expected credit losses in profit or loss.
Other receivables are held in order to collect the contractual cash flows and
accordingly are measured at initial recognition at fair value, which
ordinarily equates to cost and are subsequently measured at cost less
impairment due to their short term nature. A provision for impairment is
established based on 12-month expected credit losses unless there has been a
significant increase in credit risk when lifetime expected credit losses are
recognised. The amount of any provision is recognised in profit or loss.
Cash and cash equivalents, and finance income
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months (These include Player wallets). Finance income is recognised on
bank balances as and when it is receivable.
Trade payables
Trade payables, including customer balances, are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest
method.
Financial liabilities
Financial liabilities are classified as financial liabilities measured at
amortised cost. The Group determines the classification of its financial
liabilities at initial recognition. The measurement of financial liabilities
is initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method. Amortised cost is calculated by
taking into account any issue costs and any discount or premium on
settlement. Gains and losses arising on the repurchase, settlement or
cancellation of liabilities are recognised respectively in interest and other
revenues and finance costs.
Borrowings and finance costs
Borrowings are initially recognised at fair value net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the profit and loss over the period of the borrowings
using the effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the date of the Statement of
Financial Position.
Convertible Bond Note
The proceeds received on issue of the Group's convertible bond note are
allocated into their liability and equity components. The amount initially
attributed to the debt component equals the discounted cash flows using a
market rate of interest that would be payable on a similar debt instrument
that does not include an option to convert. Subsequently, the debt component
is accounted for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the bond. The balance of the
proceeds is allocated to the equity conversion option and is recognised in the
'Equity portion of the convertible loan note' within shareholders' equity.
Issue costs incurred are allocated between liability and equity in proportion
to the value of each component.
Warrants
When warrants are issued, the fair value is determined using the Black-Scholes
valuation model. The Directors believe this is appropriate considering the
effects of the vesting conditions, expected exercise period and the dividend
policy of the Company.
Due to limited trading history, the expected volatility has been based on the
5-year historical volatility of a mix of share prices from other companies in
the same industry, as well as the overall market volatility.
The value of the issues and vested warrants is included in retained earnings
in the equity section.
Note 4: Segment reporting
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker to allocate resources to the segments and to assess
their performance. In accordance with IFRS 8, the chief operating decision
maker has been identified as the Board. The Board reviews the Group's
internal reporting in order to assess performance and allocate resources.
The Board considers that the business comprises of two activities:
1. Operating sportsbook and casino brands
2. Online marketing and promotion of online sportsbook and casino
websites, using affiliate agreements
Revenue originates from:
2021 2020
€ €
Online sportsbook and casino operations 640,690 813,011
Affiliate marketing 186,165 -
Total 826,855 813,011
The Board evaluates the operations based on the revenues metric. Revenues
consist of invoiced commissions for the marketing and player acquisition
services provided, as well as revenues generated from own operations, based in
Malta and Curaçao. The Group operates an integrated business model and,
therefore, does not allocate general operating expenses, assets and
liabilities to any of the originating segments.
Note 5: Key management remuneration
Key management remuneration for each period was as follows:
Cash based Share based payments Total Total
salary Remuneration 2021 Remuneration 2020
€ € € €
Paul Duffen 203,258 34,488 237,746 106,753
Marcel Noordeloos 155,520 35,638 191,158 147,472
Mark Rosman 50,400 20,442 70,842 40,358
Rainer Lauffs 117,000 13,592 130,592 158,646
Karim Peer 25,337 4,799 30,136 -
Total 551,515 108,959 660,474 453,229
Note 6: Profit for the year
Profit before taxation is stated after charging/(crediting):
Year ended Year ended
31 December 2021 31 December 2020
€ €
Depreciation of property, plant and equipment - -
Amortisation of intangibles 109,325 82,467
Impairment of intangibles - -
Short term lease expense - -
Share based payment charge 145,026 42,562
Foreign exchange (gains) 42,589 (823)
Note 7: Taxation
Year ended Year ended
31 December 2021 31 December 2020
€ €
Loss before tax (3,411,751) (2,381,454)
Profit before tax multiplied by the standard rate of corporation tax in Isle - -
of Man of 0%
Adjustments to tax charge in respect of previous periods - -
Effect of different tax rates in other countries
- -
Tax credit - -
Note 8: Earnings per share (basic and diluted)
Year ended Year ended
31 December 2021 31 December 2020
€ €
Earnings
Earnings for the purposes of basic and diluted earnings per share, being net
profit after tax attributable to equity shareholders
(3,351,507) (2,368,712)
Number of shares
Weighted average number of ordinary shares for the purposes of: 174,331,667 95,681,159
Basic earnings per share
Diluted earnings per share 174,331,667 95,681,159
Basic loss per share (in €) (0.0192) (0.0248)
Diluted loss per share (in €) (0.0192) (0.0248)
The Group has granted share options in respect of equity shares to be issued,
the details of which are disclosed in Note 19. Share options and warrants
outstanding are anti-dilutive due to the losses incurred in each period.
Subsequent to year-end, on 13 May 2022, the Company has issued 13,452,632
new ordinary shares to satisfy the deferred consideration of €1,050,000 as
part of the Oddsen.nu acquisition. Furthermore, on 16 May 2022, the Company
issued 12,713,043 new ordinary shares in a fundraise with certain existing
shareholders.
Note 9: Goodwill
Goodwill
€
Cost
At 1 January 2020 1,410,931
Additions -
Impairments -
At 31 December 2020 1,410,931
Additions 1,913,600
Impairments -
At 31 December 2021 3,324,531
Net Book Value
At 1 January 2020 1,410,931
At 31 December 2020 1,410,931
At 31 December 2021 3,324,531
Goodwill
Goodwill arose following:
- the acquisition of 51% in Quasar Holdings Ltd in 2017
- the acquisition of the operations of Oddsen.nu in September 2021
The addition of goodwill in 2021 is related to the Oddsen.nu acquisition.
Key assumptions and inputs used
The key assumptions and inputs used for the assessment of the value of the
goodwill are disclosed in Note 10, as well as assumptions used for the
impairment review.
Note 10: Other intangible assets
Customer database Brand and domain names Licences and other Spinbookie assets Total
€ € € € €
Cost
At 1 January 2020 61,742 4,570,103 105,000 - 4,736,845
Additions - - - - -
Disposals - - - - -
At 31 December 2020 61,742 4,570,103 105,000 - 4,736,845
Additions 337,000 2,399,000 - 1,997,299 4,733,299
Disposals (37,142) (3,076,603) - - (3,113,745)
At 31 December 2021 361,600 3,892,500 105,000 1,997,299 6,356,399
Amortisation
At 1 January 2020 (61,742) (4,325,729) (97,812) - (4,485,283)
Charge for the period - (75,279) (7,188) - (82,467)
At 31 December 2020 (61,742) (4,401,008) (105,000) - (4,567,750)
Charge for the period (21,063) (88,262) - - (109,325)
Disposals 37,142 3,076,603 - - 3,113,745
At 31 December 2021 (45,663) (1,412,667) (105,000) - (1,563,330)
Net Book Value
At 1 January 2020 - 244,375 7,188 - 251,562
At 31 December 2020 - 169,095 - - 169,095
At 31 December 2021 315,937 2,479,832 - 1,997,299 4,793,069
Customer database
The Customer database relates to the acquisition of the Oddsen.nu operations
in September 2021. Databases previously used were fully amortised and due to
the age of the database, these databases have been disposed during the year as
these databases were outdated. The estimated remaining life of the customer
database is 2.5 years.
Brand and domain names
The brand and domain names relate to the following acquisitions:
1. Quasar Holdings Ltd (owning Bet90.com) in 2017 (51%);
2. T4U Marketing ltd in 2017 (51%); and
3. Oddsen.nu in 2021 (100%).
The estimated useful life of these brand and domain names is 20 years and the
remaining estimated useful lives are between 17 and 20 years.
Brand and domain names are considered to be business operations.
The carrying value of the brand and domain names for Bet90 (Quasar Holdings
ltd acquisition) as per 31 December 2021 amounts to €110,821. It has a
remaining estimated lifetime of 2 years.
Oddsen.nu is considered to be a single cash-generating unit ("CGU"). The
carrying value of the brand and domain names for Oddsen.nu as per 31 December
2021 amounts to €2,369,013 and has a remaining estimated lifetime of 19.5
years.
Licenses and other
Licenses and other related to the MGA license which was acquired in 2017 when
the Group acquired the first 51% in Bet90. This license was amortised in 3
years and is now fully amortised.
Spinbookie assets
In December 2021, the Group acquired the business of Spinbookie.com, which is
presented under Spinbookie assets. This includes a fully operational
sportsbook and casino operation, operating using a Curacao gaming license.
Spinbookie operates on Betconstruct, a gaming software developer platform and
has various payment service providers and other operating tools implemented.
The assets will be amortised in 10 years and per 31 December 2021 therefore
has 10 years remaining.
Impairment reviews
The Directors have performed an impairment review of intangible fixed assets
and goodwill at the end of the year.
Quasar Holdings ltd (Bet90) Oddsen.nu Spinbookie .com Consolidated Totals
€ € € €
Goodwill 1,410,931 1,913,600 - 3,324,531
Other intangibles 110,821 2,684,950 1,997,299 4,793,070
Other non-current assets - - - -
CGU Carrying value at 31 Dec 2021 1,521,752 4,598,550 1,997,299 8,117,601
CGU Carrying value at 31 Dec 2020 1,580,026 - - 1,580,026
Goodwill is not amortised.
In accordance with IAS 36 and the Group's stated accounting policy, an
impairment test is carried out annually on the carrying amounts of goodwill
and a review for indicators of impairment is carried out for other non-current
assets. Where an impairment test was carried out, the carrying value is
compared to the recoverable amount of the asset or the cash-generating unit.
Only the recoverable amount for Quasar Holdings ltd (Bet90) and Oddsen.nu were
determined to be necessary given the allocation of goodwill with an indefinite
useful life requiring annual review. In each case, the recoverable amount was
the value in use of the assets, which was determined by discounting the future
cash flows of the relevant asset or cash-generating unit to their present
value.
The recoverable amount of the Quasar Holdings ltd (Bet90) and Oddsen.nu CGUs
as at 31 December 2021, of €2.5 million and €4.6 million, respectively,
has been determined based on a value in use calculation using cash flow
projections from financial budgets approved by the Directors. Key assumptions
in performing the value in use calculation are set out below.
Key assumptions and inputs used:
Cash flow projections have been prepared for a five-year period, following
which a long-term growth rate has been assumed. Underlying growth rates, as
shown in the table below for each of Quasar Holdings ltd (Bet90) and
Oddsen.nu, have been developed through projections of future player
acquisitions and net gaming revenue based on data obtained from partners and
affiliate partners
The pre-tax discount rate that is considered by the Directors to be
appropriate is based on the Group's specific Weighted Average Cost of Capital,
adjusted for tax, which is considered to be appropriate for the
cash-generating units.
Pre-tax Underlying Underlying Long-term
discount rate revenue growth rate revenue growth rate
applied year 1 growth rate year 6+
years 2-5
At 31 December 2021
Quasar Holdings ltd (Bet90) 26.0% 469% 27.8% 2%
Oddsen.nu 14.3% 1% 4.7% 2%
At 31 December 2020
Quasar Holdings ltd (Bet90) 26% 2%
Downside scenarios were applied on Quasar Holdings ltd (Bet90) of between 25%
and 40% & Oddsen.nu 5% and 10% on each year's margins.
The calculation of value in use for the Quasar Holdings ltd (Bet90) is most
sensitive to the following assumptions:
· Revenue - A reduction in the revenue cumulative annual growth rate
("CAGR") for years 1-5 from 72% down to 69% would result in the recoverable
amount equalling the carrying value.
· Weighted Average Cost of Capital - Whereas the Directors believe the
WACC rate is conservative, an increase in WACC rate to 35%, combined with the
sensitivities on profit forecast, would result in the recoverable amount
equalling the carrying value.
The calculation of value in use for the Oddsen.nu is most sensitive to the
following assumptions:
· Revenue - A reduction in the revenue cumulative annual growth rate
("CAGR") for years 1-5 from 3.9% down to 2.9% would result in the recoverable
amount equalling the carrying value.
· Weighted Average Cost of Capital - Whereas the Directors believe the
WACC rate is conservative, an increase in WACC rate to 15%, combined with the
sensitivities on profit forecast, would result in the recoverable amount
equalling the carrying value.
The annual impairment review on goodwill and the intangible fixed assets
showed that no impairment was needed for the years 2021 and 2020.
Note 11: Business Combinations
On 30 September 2021, the Group completed the acquisition of Oddsen.nu, a
Norwegian sports-bet affiliate site. Oddsen.nu ("Oddsen") has been operating
for over 20 years in its home market of Norway. Oddsen connects publishers
with affiliate programs that allow them to promote sports book
gambling-related offers. Its operations include producing media content
covering a wide range of sports news, sport events, analysis and forecasts,
which it then publishes on its website Oddsen.nu. Oddsen also offers a major
forum, where end users can discuss sports betting related events 24-7 and has
generated winning odds tips for its visitor for a number of years, free of
charge.
Details of the purchase consideration, the net assets acquired and goodwill
are as follows:
Total
€
Net assets acquired -
Oddsen.nu brand and domain name 2,399,000
Existing Players with affiliate accounts 337,000
Net identifiable assets acquired 2,736,000
Goodwill 1,913,600
Deferred tax related to the acquisition (273,600)
Total 4,376,000
Purchase consideration:
Cash 600,000
Deferred payment 1,050,000
Share based payment 2,726,000
Total Consideration 4,376,000
The goodwill is attributable to Oddsen's strong position in the Norwegian
market and its 20 years of operating history and benefits expected in relation
to the Group's own brands. The amount of goodwill that is expected to be tax
deductible is nil.
The acquired business contributed revenue of €186,000 for the 3 months of
operations in 2021. If the business was acquired on 1 January 2021, the
business would have contributed revenues of €760,000. As the Group operates
an integrated business model, it does not allocate general operating expenses,
assets and liabilities to these operations. Expenses directly related to the
Oddsen operations are immaterial.
Note 12: Property, plant & equipment
Furniture & equipment
Computers Total
€ € €
Cost
At 1 January 2020 4,500 1,005 5,505
Additions - - -
Disposals - - -
At 31 December 2020 4,500 1,005 5,505
Additions - - -
Disposals - - -
At 31 December 2021 4,500 1,005 5,505
Depreciation
At 1 January 2020 (4,500) (1,005) (5,505)
Charge for the period - - -
Disposals - - -
At 31 December 2020 (4,500) (1,005) (5,505)
Charge for the period - - -
Disposals - - -
At 31 December 2021 (4,500) (1,005) (5,505)
Net Book Value
At 1 January 2020 - - -
At 31 December 2020 - - -
At 31 December 2021 - - -
Note 13: Trade and other receivables
Year ended Year ended
31 December 2021 31 December 2020
€ €
VAT receivables 42,042 27,496
Accounts receivable 89,045 -
Other receivables and prepayments 28,912 -
Total 159,999 27,496
Credit risk arises when a failure by counter parties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the reporting date. The Group has policies in place to
ensure that provision of services is made to customers with an appropriate
credit history and monitors on a continuous basis the ageing profile of its
receivables.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. However, management also considers the
factors that may influence the credit risk of its customer base, including the
default risk of the industry and country in which customers operate. Due to
the nature of the Group's operations the Group only has a few customers.
Impairment
A provision for impairment of trade receivables is established using an
expected loss model. Expected loss is calculated from a provision matrix
based on the expected lifetime default rates and estimates of loss on default.
No impairment charge was recorded during the year ended 31 December 2020 and
31 December 2021.
Note 14: Cash and cash equivalents
Year ended Year ended
31 December 2021 31 December 2020
€ €
Cash held in current accounts and wallets 827,302 320,525
Total 827,302 320,525
Included within the cash and cash equivalents are balances held in relation to
the liabilities to customers shown in Note 21.
Note 15: Share capital
Year ended Year ended
31 December 2021 31 December 2020
€ €
Allotted, called up and fully paid
238,406,683 (2020: 95,889,492) - -
Ordinary shares
Par value of the shares nil nil
During the year the Company issued 142,517,191 New Ordinary Shares, on the
following dates:
Date: New Ordinary Shares Pursuant to:
17 March 2021 6,917,130 Conversion of liabilities
30 March 2021 7,796,427 Equity subscription
30 March 2021 10,249,101 Conversion of liabilities
30 March 2021 3,500,000 Conversion of liabilities
30 March 2021 1,600,000 Conversion of liabilities
24 April 2021 68,346,716 Conversion of convertible loan
28 April 2021 280,000 Conversion of liabilities
29 September 2021 8,888,465 Equity subscription
29 September 2021 787,102 Conversion of liabilities
29 September 2021 19,965,000 Acquisition of Oddsen.nu
21 December 2021 4,973,333 Equity subscription
21 December 2021 413,917 Conversion of liabilities
21 December 2021 8,600,000 Acquisition of Spinbookie.com
142,517,191
Note 16: Additional paid in capital
Additional paid in capital represents amounts subscribed for share capital in
excess of par value. Details of additions are described in Note 15 above.
Note 17: Reverse asset acquisition reserve
The reverse acquisition completed on 30 June 2016 has been accounted for as a
share-based payment transaction in accordance with IFRS 2. On the basis of the
guidance in paragraph 13A of IFRS 2, the difference in the fair value of the
consideration shares and the fair value of the identifiable net assets should
be considered to be payment for the services to transition to a public
company.
Note 18: Retained earnings
Retained earnings represents the cumulative net gains and losses recognised in
the consolidated statement of comprehensive income and other transactions with
equity holders.
Note 19: Share based payments
Equity-settled share option scheme
On 17 May 2016, the Group adopted a "long term incentive senior management and
Directors' stock option plan", which was amended on 30 June 2016 ("the
Plan"). Options granted under the Plan will entitle the participant to
acquire Ordinary Shares at a price determined in accordance with the rules of
the Plan.
As at 31 December 2021, the following options have been granted under the
Plan:
A total of 4,150,000 share options have a grant date of 30 June 2016, with an
exercise price of £0.25 for all of the options. During 2017, a total of
262,500 of these options were exercised, all with an exercise price of £0.25
per share, for which the Group issued new Ordinary Shares. Furthermore, during
2018, a total of 437,500 options have been exercised, all with an exercise
price of £0.25 per share, for which the Group issued new Ordinary Shares.
Also, during those years a total of 1,025,000 options were cancelled due to
employees or directors leaving the Group. The remaining options were all
cancelled on 17 March 2021.
On 22 May 2017, the Board granted 800,000 share options to key employees with
an exercise price of £0.25 for all of the options. These options expire on
its 5(th) anniversary on 22 May 2022. All options vest over 4 equal yearly
instalments starting 1 year after the grant date.
On 14 February 2019, the Board granted 2,420,000 share options to Directors
and key employees with an exercise price of £0.15 for all of the options.
1,870,000 of these options were cancelled on 17 March 2021 and the remaining
costs have been expensed in 2021. The remaining 550,000 options expire on its
5(th) anniversary on 14 February 2024.
On 17 March 2021, the Board granted 6,215,000 share options to Directors and
key employees with an exercise price of £0.05 for all of the options. These
options expire on its 5(th) anniversary on 17 March 2026. All options vest
over 4 equal yearly instalments starting 1 year after the grant date.
On 1 October 2021, the Board granted 13,530,000 share options to Directors and
key employees with an exercise price of £0.13 for all of the options. These
options expire on its 5(th) anniversary on 1 October 2026. All options vest
over 4 equal yearly instalments starting 1 year after the grant date.
As a result of the above the total of 21,095,000 options are outstanding at 31
December 2021.
Warrants
On 30 June 2016, the Company issued new Ordinary Shares in relation to funds
raised and loans converted as part of the reverse merger and re-admission of
the Group. As part of this fundraise and conversion, the Company issued 1
warrant for every 5 new Ordinary Share allotted pursuant to the conversion and
subscription agreements, exercisable at £0.31 per warrant at any time during
the period from the date of issue until the 5(th) anniversary of issue.
As a result of this a total of 758,221 warrants were issued on 30 June 2016.
On 2 September 2016, the Company issued a further 175,798 warrants at the same
conditions as part of completion of the subscription agreements in relation to
the reverse merger.
On 4 October 2017, the Company issued 109,846 warrants to Strand Hanson
Limited, on their appointment of being Nominated Adviser for the Company on 4
October 2017. These warrants have an exercise price of £0.15 per warrant and
can be exercised during the period from the date of issue until the 5(th)
anniversary, which is on 4 October 2022.
During 2017, a total of 733,521 warrants with an exercise price of £0.31 per
share were exercised, for which the Company issued new Ordinary Shares.
On 17 March 2021, the Company issued 750,000 warrants to Strand Hanson
Limited, in the process of restoring the trading of the Company's shares.
These warrants have an exercise price of £0.05 per warrant and can be
exercised during the period from the date of issue until the 3(rd)
anniversary.
No warrants have been exercised during 2020 and 2021.
As a result of the above a total of 859,846 warrants are outstanding at 31
December 2021.
Details of the share options and warrants outstanding during the period are as
follows:
Number of share options and warrants Weighted average exercise price (£)
Outstanding as at 1 January 2020 5,955,344 0.210
Exercisable as at 1 January 2020 2,585,344 0.250
Outstanding as at 31 December 2020 5,955,344 0.210
Exercisable as at 31 December 2020 3,940,344 0.235
Options Cancelled on 17 March 2021 (4,295,000) 0.206
Options granted on 17 March 2021 6,215,000 0.050
Warrants granted on 17 March 2021 750,000 0.050
Warrants lapsed on 30 June 2021 (200,498) 0.310
Options granted on 1 October 2021 13,530,000 0.130
Outstanding as at 31 December 2021 21,954,846 0.131
Exercisable as at 31 December 2021 1,797,346 0.153
The options outstanding as at 31 December 2021 had a weighted average
remaining contractual life of 4.2 years, whereas the warrants outstanding had
a weighted average remaining contractual life of 4.3 years. The value of the
options has been derived by using a Black Scholes pricing model for the
options and warrants granted on 22 May 2017, 14 February 2019, 17 March 2021
and 1 October 2021. The inputs into the pricing models were as follows:
Options granted on Options Options granted on 17 March 2021 Options granted on 1 October 2021
22 May 2017 granted on 14 February 2019
Share price at grant date £0.52 £0.0725 £0.0475 £0.13
Exercise price £0.25 £0.15 £0.05 £0.13
Volatility 34.3% 34.3% 35.6% 35.6%
Expected life 5 years 5 years 5 years 5 years
Risk free rate 2.51% 1.4% 0.79% 0.79%
Expected dividend yield 0% 0% 0% 0%
As the Company has been trading since 30 June 2016, however the liquidity in
the stock is low. Furthermore, the stock price was suspended for trading
between March 2020 and March 2021, therefore the expected volatility for all
options was determined by taking the average the Company's share price and the
historical volatility of a peer group over a 5-year period.
The total value of the options granted on 22 May 2017 is €287,272. Of this
amount, €7,655 has been charged in the financial statements for the year
ended 31 December 2021 (2020: €26,333). There is no remaining charge for
the financial statements of the year ending 31 December 2022.
The total value of the options granted on 14 February 2019 is €22,250. Of
this amount, €5,952 has been charged in the financial statements for the
year ended 31 December 2021 (2020: €6,469). The is no remaining balance to
be charged in the financial statements of the year ending 31 December 2022.
The total value of the options granted on 17 March 2021 is €108,401. Of this
amount, €44,697 has been charged in the financial statements for the year
ended 31 December 2021 (2020: nil). The remaining balance of €63,704 will
be charged in the financial statements of the years ending 31 December 2022,
2023 and 2024.
The total value of the options granted on 1 October 2021 is €660,767. Of
this amount, €86,037 has been charged in the financial statements for the
year ended 31 December 2021 (2020: nil). The remaining balance of €574,730
will be charged in the financial statements of the years ending 31 December
2022, 2023 and 2024.
Note 20: Borrowings
31 December 2021 31 December 2020
€ €
Convertible loan(1) - 2,199,839
- 2,199,839
(1) The Convertible Loan had a 3 year term, beared a 5% coupon, which was
payable in arrears at 30 June and 31 December (with the first payment due on
30 June 2020). The Loan could be converted by the note holder at any time and
would automatically convert into new Ordinary Shares when the share price
exceeds 10p for 25 consecutive days, which occurred in April 2021. The
Convertible Loan was fully converted on 16 April 2021.
Under IAS 32, the convertible bonds are accounted for as a compound financial
instrument. The value of the liability component and the equity conversion
component were determined at the date the instrument was issued. The fair
value of the liability component, included in non-current borrowings, was
calculated using a market interest rate for an equivalent instrument without
conversion option with the balance recorded as shares to be issued.
Note 21: Trade and other payables
31 December 2021 31 December 2020
€ €
Trade payables 877,141 1,823,794
Accrued expenses 267,026 676,764
Liabilities to customers 418,139 295,620
Other creditors 1,558,323 1,927,419
Deferred consideration for the acquisition of Oddsen.nu 1,050,000 -
Earn-out in relation with the acquisition of Spinbookie.com 960,240 -
5,130,869 4,725,597
Note 22: Capital commitments
At 31 December 2021 and 31 December 2020 there were no capital commitments.
Note 23: Contingent assets and liabilities
There were no contingent liabilities at 31 December 2021 or 31 December 2020.
Note 24: Financial instruments - Fair Value and Risk Management
The Group is exposed through its operations to risks that arise from use of
its financial instruments. The Board approves specific policies and procedures
in order to mitigate these risks.
The main financial instruments used by the Group, on which financial risk
arises, are as follows:
· Cash and cash equivalents;
· Trade and other receivables;
· Trade and other payables; and
· Customer deposits in case of the Bet90 operations.
Detailed analysis of these financial instruments is as follows:
2021 2020
Financial assets € €
Trade and other receivables (Note 13) 89,045 -
Cash and cash equivalents (Note 14) 827,302 320,525
Total 916,347 320,525
In accordance with IFRS 9, all financial assets are held at amortised cost.
2021 2020
Financial liabilities € €
Trade and other payables(1) (Note 21) 2,288,043 3,074,010
Deferred consideration for acquisition of Oddsen.nu 1,050,000 -
Earn-out in relation with the acquisition of Spinbookie.com 960,240 -
Payable to directors - 258,775
Compliance tax payable 565,560 716,048
Accrued liabilities 267,026 676,764
Borrowings (Note 20) - 2,199,839
Total 5,130,869 6,925,436
(1)Excludes taxes payable.
In accordance with IFRS 9, all financial liabilities are held at amortised
cost.
Capital
The capital employed by the Group is composed of equity attributable to
shareholders. The primary objective of the Group is maximising shareholders'
value, which, from the capital perspective, is achieved by maintaining the
capital structure most suited to the Group's size, strategy, and underlying
business risk. There are no demands or restrictions on the Group's capital.
The main financial risk areas are as follows:
Credit risk
Trade receivables
For the Group's operations in Bet90, the credit risk relates to customers
disputing charges made to their credit cards ("chargebacks") or any other
funding method they have used in respect of the services provided by the
Group. Customers may fail to fulfil their obligation to pay, which will
result in funds not being collected. These chargebacks and uncollected
deposits, when occurring, will be deducted at source by the payment service
providers from any amount due to the Group. The risk for the year 2020 has
been assessed by the Board to being immaterial.
Financial assets which are past due but not impaired
2021
Not yet overdue Up to 3 months over due Up to 12 Over 1 year over due Total
months over due
€ € € € €
Trade receivables 89,045 - - - 89,045
Other receivables 70,954 - - - 70,954
Total 159,999 - - - 159,999
2020
Not yet overdue Up to 3 months over due Up to 12 Over 1 year over due Total
months over due
€ € € € €
Other receivables 27,496 - - - 27,496
Total 27,496 - - - 27,496
Liquidity risk
Liquidity risk exists where the Group might encounter difficulties in meeting
its financial obligations as they become due. The Group monitors its
liquidity in order to ensure that sufficient liquid resources are available to
allow it to meet its obligations.
The following table details the contractual maturity analysis of the Group's
financial liabilities:
2021
On demand In 3 months Between 3 More than 1 year Total
months and 1 year
€ € € € €
Trade and other payables(1) 4,812,134 - - - 4,812,134
Accrued liabilities - 318,735 - - 318,735
Total 4,812,134 318,735 - - 5,130,869
(1)Excludes taxes payable.
2020
On demand In 3 months Between 3 More than 1 year Total
months and 1 year
€ € € € €
Trade and other payables(1) 4,048,833 - - - 4,048,833
Accrued liabilities - 676,764 - - 676,764
Borrowings - - - 2,199,839 2,199,839
Total 4,048,833 676,764 - 2,199,839 6,925,436
(1)Excludes taxes payable.
Note 25: List of subsidiaries
The Company held the issued shares of the following subsidiary undertakings as
at 31 December 2021:
Name of subsidiary Place of Incorporation Proportion of ownership and voting power Ownership
B90 Ventures Ltd Isle of Man 100% Direct
B90 Services BV The Netherlands 100% Direct
Sheltyco Enterprises Group Ltd British Virgin Islands 100% Direct
Sheltyco Enterprises Ltd Cyprus 100% Indirect, through Sheltyco Enterprises Group Ltd
Sheltyco Enterprises Marketing Ltd Cyprus 100% Indirect, through Sheltyco Enterprises Group Ltd
Silkline Marketing Ltd Cyprus 100% Indirect, through Sheltyco Enterprises Group Ltd
Tunegames Marketing Ltd Cyprus 100% Indirect, through Sheltyco Enterprises Group Ltd
Tunegames Holding Ltd Cyprus 100% Indirect, through Sheltyco Enterprises Group Ltd
T4U Marketing Ltd Cyprus 51% Indirect, through Sheltyco Enterprises Group Ltd
Quasar Holdings Ltd Malta 100% Indirect, through B90 Ventures Ltd
Bet90 Sports Ltd Malta 100% Indirect, through Quasar Holdings Ltd
B90 Operations Ltd Bulgaria 100% Indirect, through B90 Ventures Ltd
It's a Winner Ltd Malta 100% Indirect, through B90 Ventures Ltd
Spinbookie ltd Malta 100% Indirect, through B90 Ventures Ltd
Spintastic NV Curacao 100% Direct
Note 26: Reconciliation of debt
The Group had the following movement in the borrowings:
At 1 January 2021 Cash Conversion in Equity At 31 December 2021
€ € €
Borrowings 2,199,839 1,847,000 (4,046,839) -
2,199,839 1,847,000 (4,046,839) -
At 1 January 2020 Cash Other settlements At 31 December 2020
€ € €
Borrowings 774,891 1,424,948 - 2,199,839
774,891 1,424,948 - 2,199,839
Note 27: Related party transactions
Remuneration of Directors and key employees
Remuneration of Directors and key employees is disclosed in Note 5.
Other related party transactions
Included within other creditors, the Group has accrued for unpaid salaries
with its Directors, amounting to €nil at 31 December 2021 (2020:
€258,775).
Payables to related parties
The Group had the following amounts payable to related parties:
Year ended Year ended
31 December 2021 31 December 2020
€ €
Unpaid salaries and fees to Directors - 258,775
Total - 258,775
Intra group transactions
Transactions between Group companies have not been disclosed as these have all
been eliminated in the preparation of the Consolidated Financial Statements.
Note 28: Ultimate controlling party
As at 31 December 2021 the Directors do not believe there to be any single
controlling party.
Note 29: Subsequent events
On 13 May 2022 the Group announced that, as part of the acquisition of
Oddsen.nu in September 2021, it had settled the agreed deferred consideration
of €1.05 million, due on or before 31 March 2022, through the issue of
13,452,632 new ordinary shares at a price of 6.65p pence per share.
On 16 May 2022 the Group announced that it had raised €845,000 (or
£731,000) through a subscription for 12,713,043 new ordinary shares at a
price of 5.75 pence per share. On the same date it announced that Karim Peer,
its Non-Executive Chairman had been appointed as the Company's new Executive
Chairman.
On 20 June 2022 the Group completed a transaction with the 49% shareholder of
T4U Marketing ltd to acquire these shares for the consideration of 500,000 new
ordinary shares.
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