REG - Webis Holdings PLC - Final Results
29/11/2024 07:00
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RNS Number : 1217O Webis Holdings PLC 29 November 2024
For immediate
release
29
November 2024
Webis Holdings plc
("Webis" or the "Group")
Annual Report and Financial Statements for the year ended 31 May 2024
Webis Holdings plc, the global gaming group, today announces its audited
results and the publication of its 2024 Report and Accounts ("Accounts") for
the year ended 31 May 2024, extracts from which are set out below.
The Accounts are being posted to shareholders today and will be available on
the Group's website www.webisholdingsplc.com (http://www.webisholdingsplc.com)
and at the Group's Registered Office: Viking House, Nelson Street, Douglas,
Isle of Man IM1 2AH.
For further information:
Webis Holdings plc Tel:
01624 639396
Denham Eke
Beaumont Cornish Limited Tel: 020 7628
3396
Roland Cornish/James Biddle
Nominated Adviser
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
Chair's Statement
Introduction
As reported in the 2023/24 Interim Report released in February 2024, it has
been a difficult year of trading for our principal subsidiary,
WatchandWager.com LLC in the USA. Following our statement in February, whilst
business has improved it has not reached the targets for which we were aiming.
There are many reasons for this which are outlined later in this report.
Funding Update
Shareholders will note the additional funding for the Company from our
principal shareholder, which has now been signed with Galloway Limited (a
related party) and was released to the markets on 18 November 2024.
Circular re delisting of Webis (WEB) from AIM
Shareholders will also note the Circular and Statement regarding the above,
released on 22 November 2024, entitled "Proposed cancellation of admission of
Ordinary Shares to trading on AIM and Notice of General Meeting". This
document is important and requires shareholders immediate attention.
Following an in-depth review, the Board has unanimously agreed that it is in
the best interests of the Company and its Shareholders to delist from AIM. The
Company continues to believe WatchandWager has a unique position in the USA as
one of the top five licensed operators in our sector and the Board believes
that the Cancellation will reduce costs and protect shareholder value as the
Group seeks to grow its business in North America and deliver on strategic
goals.
In reaching this conclusion, the Board has considered the following key
factors:
(a) the significant cost savings to be achieved by the Cancellation;
(b) the Directors do not believe that the Company's share price reflects
the underlying value of the Company's assets (most notably, the value of
certain licenses owned by the Group);
(c) the free float of the Company is only 36.9 per cent. and trading
volumes in respect of the Shares are very low and this illiquidity prevents
Shareholders from trading in meaningful volumes or with any frequency;
(d) the Company has not utilised its admission on AIM to raise fresh
capital or issue Shares as consideration to fund acquisitions since January
2013;
(e) the Company remains reliant on its major shareholder, Mr Mellon, for
funding to meet its ongoing working capital needs and despite several efforts
it has been unable to attract capital on acceptable terms from third party
investors, in particular through equity issues on AIM;
(f) the management time and the legal and regulatory burden associated
with maintaining the Company's admission to trading on AIM is, in the
Directors' opinion, disproportionate to the benefits to the Company; and
(g) the Directors believe that trading of the Ordinary Shares on AIM
significantly inhibits flexibility of the business.
Strategy
We are aware that the Company continues to retain key assets in the USA,
particularly in California where we are licensed and run live racetrack and
advanced deposit wagering operations.
Also, we have multiple other licenses in the USA, as mentioned in this report,
and we hold the largest number of content license agreements of any advance
deposit wagering company globally.
Whilst our market capitalisation at time of writing is very low, we plan to
use these assets for business development for those interested in entering the
USA gaming market. In addition, we believe our platform and unique positioning
is attractive to potential partners or even merger and acquisition
opportunities, especially post the delisting, if approved.
The point is that for a new entrant to enter the USA market, it would cost
them significant sums of money. As shareholders are aware, the USA gaming
market continues to be the land of opportunity, and we find that our platform
and positioning are of interest to some of the key players in the market. We
will keep shareholders fully informed on progress on these strategic matters.
Year End Results Review
The Group amounts wagered for the year ended 31 May 2024 were US$ 110.5
million (2023: US$ 113.4 million). Gross Profit reported was US $ 4.4 million
(2023: US$ 4.6 million).
Operating costs were consistent with last year at US$ 5.5 million (2023: US$
5.5 million).
This resulted in a loss on the year of US$ 1.063 million, a downturn on the
2023 loss of US$ 0.745 million.
Shareholder equity stands at US$ (0.5) million (2023: US$ 0.6 million). Total
cash stands at US$ 3.4 million (2023: US$ 3.3 million), which includes
ring-fenced funds held as protection against our player liability as required
under USA and Isle of Man gambling legislation.
Approach to Risk and Corporate Governance
As part of the adoption of the Quoted Companies Alliance Corporate Governance
code in 2018, the Board completed an assessment of the risks inherent in the
business and defined and adopted a statement of risk appetite, being the
amount and type of risk, it is prepared to seek, accept, or tolerate in
pursuit of value. This being: -
"The Group's general risk appetite is a moderate, balanced one that allows it
to maintain appropriate growth, profitability and scalability, whilst ensuring
full regulatory compliance."
The Group's primary risk drivers include: -
Strategic
Reputational
Credit
Operational
Market
Liquidity, Capital, and Funding
Regulatory and Compliance
Conduct
Our risk appetite is classified under an "impact" matrix defined as Zero, Low,
Medium, and High. Appropriate steps are implemented to ensure the prudential
control monitoring of risks to the Group and the Audit, Risk and Compliance
Committee oversees this essential requirement. Further details of the
Corporate Governance Statement will be found on pages 10 to 13 of this report
and should be read in conjunction with my report.
The Board refined the Group's business plan which incorporates the risk and
compliance framework.
Performance by Sector
WatchandWager
Business-to-Consumer
www.watchandwager.com/mobile
Overall, we have been pleased with the performance in this sector which is of
course wagering through our principal website and mobile product. We have been
hampered by poor weather conditions which created an unprecedented number of
racetrack cancellations. This seems to be the new global norm and is now
something that we need to allow for.
We have also seen an increasing level of competitor activity due to the
growing legalisation of sports betting in multiple states in the USA. We are
seeing some of the big operators simply burning money to recruit and retain
new players. This is something with which we cannot reasonably compete.
That said, whilst competitor activity has created problems for our financial
results, it creates an opportunity for us from a strategic perspective. Most
of the major USA operations are paying large sums on cost per acquisition.
What is interesting is that these operators are increasingly looking to horse
racing products to stabilise their operations. This leaves our operation
attractive to new investment as external companies are concerned about missing
out on these gaming opportunities.
We continue to invest in our own website and mobile product so that we have
the best-in-breed site for future marketing and investment opportunities.
Business-to-Business
This sector has performed in line with expectations with a steady flow of
commissions from our key customers. That said, the margins continue to
decrease in this sector due to increased costs from partner tracks and indeed
regulatory authorities. We will continue to serve the sector and maximise
revenue as best as possible, but only with a strict attention to regulatory
compliance.
Cal Expo
We had a good season of racing at our racetrack at Cal Expo Sacramento and we
expect to continue to operate this track in a profitable manner.
This year, we have decided to slightly adjust our racetrack programme so that
we work more proactively with other California tracks. As a result, we plan to
race from early December 2024 to May 2025 with a planned number of 39 race
nights over the season.
Cal Expo continues to be a key asset to the Company. As a reminder to
shareholders, we have a long-term contract with our landlord, who are the
Californian State, until 2030.
Key risk factors
During the period we have updated our Risk Assessment procedures and will
continue to do so. The Board conducts regular risk assessments on a micro and
macro level.
Licenses
During the period reported, all of our licenses are active both in the Isle of
Man and the USA. Particularly in the USA, we fully expect all our renewals to
be approved before the end of 2024, going into 2025 and beyond.
Content
As mentioned, WatchandWager continues to offer the widest range of global
content to its customers of any licensed advance deposit wagering globally.
All our content agreements, both domestic USA and international, are up to
date through 2024, and we fully expect that to be extended into 2025 and
beyond.
Compliance
There were no compliance issues across the entire operation during the period
reported.
Health & Safety
There were no Health and Safety issues across the entire operation during the
period reported.
Outlook
This has been reported upon in the circular regarding the delisting of Webis.
Further updates will be supplied to shareholders when we have more details.
Board Appointments
We were pleased to appoint our principal shareholder, Jim Mellon, to the Board
in July 2024. Alongside other Board members, he will provide excellent insight
into the strategy of the business.
Other Business Developments
USA Expanded Gaming
Whilst we were disappointed by the last failure to legalise sports betting in
California, primarily created by the Native American Tribal Casino groups
stalling the process, we are aware that there are now significant discussions
about a more open bill to be put through the Capitol no later than 2026. Of
course, with our positioning as a licensed operator and racetrack in
Sacramento, we will be pushing for the new legislation as hard as possible.
Historical horseracing machines
Related to the above, we are very encouraged by the potential for historical
horse racing machines to be licensed in California in the near future. The
machines are pari-mutuel in nature and therefore would fall within the remit
of our wagering licenses in the State. We are fully involved in lobbying to
make this project a reality, and we will update shareholders as soon as we
know more details. Looking at the results of these terminals in other states,
particularly in Kentucky, if we were licensed to operate them this would be a
significant game changer for the Company.
Acquisitions and Mergers
We consider the decision to delist the Company from AIM will make the Company
more attractive for potential partnerships, mergers, and acquisitions, most
likely within the USA. We will keep shareholders fully informed of any
developments in this area.
Summary
Finally, I would like to thank all our shareholders and customers for their
continued loyalty to the Company. In addition, I would like to thank all our
staff and team for their work and commitment to the business over the year.
Denham Eke
Non-executive Chair
29 November 2024
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2024
Note
2024 2023
US$000 US$000
Amounts wagered 110,459 113,371
Revenue 1.2 50,031 50,020
Cost of sales 1.2 (45,531) (45,303)
Betting duty paid (88) (100)
Gross profit 4,412 4,617
Operating costs (5,445) (5,488)
Other (losses) / gains (12) 32
Other income 175 247
Operating loss 3 (870) (592)
Finance costs 4 (193) (153)
Loss before income tax (1,063) (745)
Income tax expense 6 - -
Loss for the year (1,063) (745)
Total comprehensive loss for the year (1,063) (745)
Basic earnings per share for loss attributable to the equity holders of the 7 (0.27) (0.19)
Company during the year (cents)
Diluted earnings per share for loss attributable to the equity holders of the 7 (0.27) (0.19)
Company during the year (cents)
Statements of Financial Position
As at 31 May 2024
Note 31.05.24 31.05.24 31.05.23
Group Company 31.05.23 Company
US$000 US$000 Group US$000
US$000
Non-current assets
Intangible assets 8 57 - 19 -
Property, equipment, and motor vehicles 9 525 - 661 1
Investments 10 - 3 - 3
Bonds and deposits 11 100 - 100 -
Total non-current assets 682 3 780 4
Current assets
Bonds and deposits 11 883 - 883 -
Cash, cash equivalents and restricted cash 12 3,421 1,203 3,285 1,227
Trade and other receivables 13 1,228 1,564 1,378 745
Total current assets 5,532 2,767 5,546 1,972
Total assets 6,214 2,770 6,326 1,976
Equity
Called up share capital 16 6,334 6,334 6,334 6,334
Share option reserve 16 42 42 42 42
Retained losses (6,866) (5,973) (5,803) (5,828)
Total equity (490) 403 573 548
Current liabilities
Trade and other payables 14 3,848 84 3,712 78
Loans, borrowings, and lease liabilities 15 970 850 462 350
Total current liabilities 4,818 934 4,174 428
Non-current liabilities
Loans, borrowings, and lease liabilities 15 1,886 1,433 1,579 1,000
Total non-current liabilities 1,886 1,433 1,579 1,000
Total liabilities 6,704 2,367 5,753 1,428
Total equity and liabilities 6,214 2,770 6,326 1,976
Statements of Changes in Equity
For the year ended 31 May 2024
Group Called up Share option reserve Retained earnings Total
share capital US$000 US$000 equity
US$000 US$000
Balance as at 31 May 2022 6,334 42 (5,058) 1,318
Total comprehensive loss for the year:
Loss for the year - - (745) (745)
Balance as at 31 May 2023 6,334 42 (5,803) 573
Total comprehensive profit for the year:
Loss for the year - - (1,063) (1,063)
Balance as at 31 May 2024 6,334 42 (6,866) (490)
Called up Share option reserve Retained earnings Total
share capital US$000 US$000 equity
US$000 US$000
Company
Balance as at 31 May 2022 6,334 42 (5,711) 665
Total comprehensive loss for the year:
Loss for the year - - (117) (117)
Balance as at 31 May 2023 6,334 42 (5,828) 548
Total comprehensive profit for the year:
Loss for the year - - (145) (145)
Balance as at 31 May 2024 6,334 42 (5,973) 403
Consolidated Statement of Cash Flows
For the year ended 31 May 2024
Note 2024 2023
US$000 US$000
Cash flows from operating activities
Loss before income tax (1,063) (745)
Adjustments for:
- Depreciation of property, equipment, and motor vehicles 9 139 137
- Amortisation of intangible assets 8 12 5
- Rent concessions received 18 - (18)
- Finance costs / (income) - (net) 136 94
- Decrease / (increase) in movement of restricted cash 126 (60)
- Increase in lease liabilities 57 59
- Other foreign exchange movements 7 (47)
Changes in working capital:
- Decrease / (increase) in receivables 150 (188)
- Increase in payables 136 72
Cash flows from operations (300) (691)
Finance income 11 7
Net cash used in operating activities (289) (684)
Cash flows from investing activities
Purchase of intangible assets 8 (50) (13)
Purchase of property, equipment, and motor vehicles 9 (3) (13)
Net cash used in investing activities (53) (26)
Cash flows from financing activities
Loan interest paid (147) (101)
Payment of lease liabilities - principal 18 (91) (89)
Payment of lease liabilities - interest 18 (57) (59)
Rent concessions received 18 - 18
Repayment of loans and borrowings (527) (20)
Proceeds from loans and borrowings 1,433 -
Net cash generated from / (used in) financing activities 15 611 (251)
Net increase / (decrease) in cash and cash equivalents 269 (961)
Cash and cash equivalents at beginning of year 2,148 3,062
Exchange (losses) / gains on cash and cash equivalents (7) 47
Cash and cash equivalents at end of year 12 2,410 2,148
Notes to the Financial Statements
For the year ended 31 May 2024
1 Reporting entity
Webis Holdings plc (the "Company") is a company domiciled in the Isle of Man.
The address of the Company's registered office is Viking House, Nelson Street,
Douglas, Isle of Man, IM1 2AH. The Webis Holdings plc consolidated financial
statements as at and for the year ended 31 May 2024 consolidate those of the
Company and its subsidiaries (together referred to as the "Group"). The
Group's primary activities are the provision of pari-mutuel wagering services,
through its Isle of Man and USA based subsidiaries and the hosting of harness
racing, through its USA based subsidiary.
1.1 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with UK
Adopted - International Accounting Standards. They were authorised for issue
by the Board on 28 November 2024.
The Group has consistently applied the accounting policies as set out in note
1.2 to all periods presented in these financial statements.
Functional and presentational currency
These financial statements are presented in US Dollars which is the Company's
functional and presentational currency. Financial information presented in US
Dollars has been rounded to the nearest thousand, unless otherwise indicated.
All continued operations of the Group have US Dollars as their functional
currency.
Other information presented
In line with the Isle of Man Companies Acts 1931-2004, the Company also
presents Parent Company Statements of Financial Position, the Parent Company
Statement of Changes in Equity and related disclosures. The Company applies
the requirements of UK Adopted International Accounting Standards, as
indicated in the relevant accounting policies below, when preparing the
Company statement of financial position and related notes.
(b) Basis of measurement
The Group consolidated financial statements are prepared under the historical
cost convention except where assets and liabilities are required to be stated
at their fair value.
(c) Use of estimates and judgement
The preparation of the Group financial statements in conformity with UK
Adopted - International Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income, and expenses. Although
these estimates are based on management's best knowledge and experience of
current events and expected economic conditions, actual results may differ
from these estimates.
The Directors consider the only critical estimate area to be as follows:
· Note 20 - the measurement of Expected Credit Loss ("ECL")
allowance for trade and other receivables and assessment of specific
impairment allowances where receivables are past due.
Going concern
The Group and Parent Company financial statements have been prepared on a
going concern basis, notwithstanding material uncertainties related to events
and conditions discussed below, that may cast significant doubt on the going
concern assumption.
As indicated in the statement of comprehensive income, the Group has incurred
a net loss in the current year of US$ 1,063,000 (2023: loss of US$ 745,000),
with net operating cash outflows in the current year of US$ 300,000 (2023:
outflows of US$ 691,000), and due to that, net assets reduced from US$ 573,000
to a net liability of US$ (490,000). WatchandWager.com Ltd generated a profit
of US$ 124,000, while WatchandWager.com LLC incurred a loss of US$ 1,042,000.
The company incurred a loss for the year of US$ 145,000 (2023: loss of US$
117,000), reducing company net assets to US$ 403,000 (2023: US$ 548,000).
Based on forecasts prepared by the Directors, the Group and the Company may
continue to sustain losses if it continues in its current structure and
operations. These circumstances have necessitated the implementation of a
strategic review of the Group's activities by the Directors.
As part of the implementation of this strategic review the Directors have
announced that the Company will seek a cancellation of the admission of the
Company's shares to trading on AIM in order to realise significant cost
savings incurred as a result of the legal and regulatory burden of operating
as a listed business being disproportionate to the company's size and
operations. As announced on 22 November 2024, the cancellation of the
Company's shares is subject to a shareholder vote which is currently scheduled
to take place on 18 December 2024. The directors consider that the
cancellation of the listing is a critical step in the strategic review of the
business and in realising necessary cost savings and improved financial
performance that will increase the future prospects of the Group, as well as
improving the flexibility and attractiveness of the business to future
investment.
The Directors consider that the continued development of gaming regulation in
the USA may provide opportunities for the Group to grow in future, combined
with the delisting making the business more attractive for potential
partnerships, mergers, and acquisitions, most likely within the USA. Whilst
the Directors continue to assess all strategic options in relation to the
Group's business, the Directors recognise that the ultimate success of
strategies adopted is difficult to predict as they may require additional
liquidity to pursue the required investment.
After the year end, in November 2024, Galloway Limited (related entity) has
agreed a new loan of US$ 550,000 repayable in 5 years (as well as rolling up
the loan that matured during the current year), which will assist in providing
the Group with liquidity to support its continued operations whilst a
strategic review is completed which includes reducing the expense base of the
Group.
The Group and the Company have, in previous years, received financial support
from Galloway Limited, and Galloway Limited has expressed its willingness to
continue to make these funds available and has undertaken not to recall these
existing facilities (including the amount extended in November 2024 and the
loan due to mature in March 2025) within the forecast period.
The Directors have prepared cash flow forecasts for a period of 12 months from
the date of approval of these financial statements which indicate that, should
the cancellation of shares from AIM occur in December 2024 (subject to
shareholder vote) and taking account of reasonably possible downsides, the
Group and the Company are projected to have sufficient funds for at least 12
months from the date of signing the current year financial statements as a
result of the additional financial support of US$ 550,000 received from
Galloway Limited in November 2024. The Directors consider that this provides a
reasonable time period for the shareholder vote to occur, and should the
cancellation of shares be approved, allows time for such cost saving
initiatives to be implemented as well as the strategic review of the Group's
activities to be completed.
The outcome of these circumstances represents a material uncertainty that may
cast significant doubt upon the Company's ability to continue as a going
concern and, therefore, to continue realising its assets and discharging its
liabilities in the normal course of business. The financial statements do not
include any adjustments that would result from the basis of preparation being
inappropriate.
Based on these indications and factors, the Directors believe that it remains
appropriate to prepare the financial statements on a going concern basis.
1.2 Summary of significant accounting policies
During the current year, the Group adopted all the new and revised IFRSs that
are relevant to its operation and are effective for accounting periods
beginning on 1 June 2023. No adoptions had a material effect on the accounting
policies of the Group.
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporate the results of the Group.
Subsidiaries are consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue until the date that such control
ceases. Control exists when the Group has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances, and unrealised gains on transactions
between the Group companies are eliminated. Unrealised losses are also
eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform with the Group's accounting policies.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). As the primary activities of the
Group and the primary transactional currency of the Group's customers are
carried out in US Dollars, the consolidated financial statements have been
presented in US Dollars, which is the Company's presentational and functional
currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are remeasured. Foreign exchange gains and losses
resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the
income statement, except when deferred in other comprehensive income as
qualifying cash flow hedges and qualifying net investment hedges. Foreign
exchange gains and losses that relate to borrowings are presented in the
income statement within 'Finance income' or 'Finance costs'. All other foreign
exchange gains and losses are presented in the income statement within 'Other
(losses)/gains'.
Revenue from contracts with customers
The Group generates revenue primarily from the provision of wagering services
and the hosting of races on which guests are entitled to participate in the
related wagering services. Revenue is measured at fair value based on the
consideration specified in a contract with a customer. The Group recognises
revenue when it discharges services to a customer. Revenue has been
disaggregated by geographical locations which are consistent with the
operating segments (note 2).
Hosting fees (Racetrack operations) are recognised when the customers
participate in the Group's pari-mutuel pools and the race audio visual signals
are transmitted. Hosting fees are recorded on a gross receipts basis.
Wagering revenue from the Group's activities as the race host is recognised
when a race on which wagers are placed is completed. The wagering commission
from the Group's commingling of its wagering pools with a host's pool is
recognised when the race on which those wagers are placed is completed. The
Group acts as a principal when it allows customers to place wagers in the
races it hosts and as an agent when it allows customers to place wagers in
other entities' races. Where the Group acts as a principal, the entire wager
is recognised as revenue and where it is an agent the wagering commission the
Group retains is recognised as revenue.
Settlement terms for revenue where the Group acts as a host is usually 7 days
for on and off-track wagering and 30 days from month end for ADW wagering.
Where the Group acts as an agent, settlement terms are typically 30 days from
month end.
Transactions fees (ADW operations) are recognised when the Group facilitates
customers' deposit transactions into their betting accounts. The Group
recognises revenue for transaction services net of related winnings.
Cost of sales
The Group recognises cost of sales related to the Racetrack operations in
which it is the race host. The cost of sales includes direct costs such as
purses, hub fees, import fees, pay-outs, and other statutory distributions.
Segmental reporting
Segmental reporting is based on the business areas in accordance with the
Group's internal reporting structure, which allows the individual operating
segments to be identified by the disparate nature of the principal activity
they undertake. The Group determines and presents segments based on the
information that internally is provided to the Board and Managing Director,
the Group's chief operating decision maker.
An operating segment is a component of the Group and engages in business
activities from which it may earn revenues and incur expenses. The Board and
Managing Director regularly review an operating segment's results to make
decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available.
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
Current tax comprises the expected tax payable or receivable on the taxable
income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or
received that reflects uncertainty related to income taxes, if any. It is
measured using tax rates enacted or substantively enacted at the reporting
date. Current tax also includes any tax arising from dividends. Current tax
assets and liabilities are offset only if certain criteria are met.
Deferred income tax is recognised on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax liabilities are not
recognised if they arise from
the initial recognition of goodwill; deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by
the reporting date and are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries except for deferred income tax
liability, where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will
not reverse in the foreseeable future. Only where there is an agreement in
place that gives the Group the ability to control the reversal of the
temporary difference is the liability not recognised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is
probable the temporary difference will reverse in the future and there is
sufficient taxable profit available against which the temporary difference can
be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes, assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities where there is an intention to settle the
balances on a net basis.
Intangible assets - other
(a) Trademarks and licences
Separately acquired trademarks and licences are shown at historical cost.
Trademarks and licences acquired in a business combination are recognised at
fair value at the acquisition date. Trademarks and licences have a finite
useful life and are carried at cost less accumulated amortisation and any
accumulated impairment. Amortisation is calculated using the straight-line
method to allocate the cost of trademarks and licences over their estimated
useful lives of three years. Renewal costs are expensed in the year they
relate to.
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software. These costs are
amortised over their estimated useful lives of three years.
(b) Website design and development costs
Costs associated with maintaining websites are recognised as an expense as
incurred. Development costs that are directly attributable to the design and
testing of identifiable and unique websites controlled by the Group are
recognised as intangible assets when the following criteria are met:
· it is technically feasible to complete the website so
that it will be available for use;
· management intends to complete the website and use it;
· there is an ability to use the website;
· it can be demonstrated how the website will generate
probable future economic benefits;
· adequate technical, financial, and other resources to
complete the development and to use the website are available; and
· the expenditure attributable to the website during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the website
include the website employee costs and an appropriate portion of relevant
overheads.
Other development expenditures that do not meet these criteria are recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
Website development costs recognised as assets are amortised over their
estimated useful lives, which do not exceed three years.
Property, equipment, and motor vehicles
Items of property, equipment and motor vehicles are stated at historical cost
less accumulated depreciation (see below) and impairment losses. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the
Company and the cost of the item can be measured reliably. The carrying amount
of the replaced part is derecognised. All other repairs and maintenance are
charged to the income statement during the financial period in which they are
incurred.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the financial position date. An asset's carrying amount is
written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. Depreciation is
calculated using the straight-line method to allocate the cost of property,
equipment, and motor vehicles over their estimated useful lives.
The estimated useful lives of property, equipment and motor vehicles for
current and comparative periods are as follows:
Motor
vehicles
5 years Fixtures and
fittings
3 years
Plant and
equipment
3-5 years
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within 'Other gains/(losses) - net' in
the income statement.
Investment in subsidiary
A subsidiary is an entity controlled by the entity. The Company controls an
investee when the Company is exposed or has rights to variable returns from
its involvement with the investee and can affect the return through its power
over the investee. Control exists when the Company has the power to govern the
financial and operating policies of an entity to obtain benefits from its
activities. In assessing control, potential voting rights that are currently
exercisable are considered.
Investment in subsidiaries are initially recognised at cost. At subsequent
reporting dates, the recoverable amounts are estimated to determine the extent
of impairment losses, if any, and carrying amounts of investments are adjusted
accordingly. Impairment losses are recognised as an expense. Where impairment
losses subsequently reverse, the carrying amounts of the investments are
increased to the revised recoverable amounts but limited to the extent of
initial cost of investments. A reversal of impairment loss is recognised in
the profit or loss.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
Equity settled share-based employee remuneration is credited to the share
option reserve until related stock options are exercised. On exercise or
lapse, amounts recognised in the share option reserve are taken to share
capital. When the options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium.
Retained earnings include all current and prior period results as determined
in the income statement and any other gains or losses recognised in the
Statement of Changes in Equity.
Financial instruments
Recognition and measurement
Non-derivative financial instruments include trade and other receivables, cash
and cash equivalents, bonds and deposits, borrowings and trade and other
payables.
Financial assets and financial liabilities are recognised on the Group and the
Company's balance sheet when the Group and/or the Company become party to the
contractual terms of the instrument. Transaction costs are included in the
initial measurement of financial instruments, except financial instruments
classified as at fair value through profit or loss. The subsequent measurement
of financial instruments is dealt with below.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in bank and in hand as well as
bank deposits, money held for processors and cash balances held on trust for
the customers entitled to them. Cash equivalents are held for the purpose of
meeting short-term cash commitments rather than for investment or other
purposes. These are subsequently measured at amortized cost.
Bonds and deposits
Bonds and deposits are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment.
Borrowings
Interest-bearing borrowings and overdrafts are recorded at the proceeds
received net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs are charged on an
accrual basis using the effective interest method and are added to the
carrying amount of the instrument.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
Impairment of financial assets
The Group and the Company use an impairment model that applies to financial
assets measured at amortised cost and contract assets and is detailed below.
Financial assets at amortised cost include trade receivables, cash and cash
equivalents, bonds and deposits.
Performing financial assets
Stage 1 (0-30 Days)
From initial recognition of a financial asset to the date on which an asset
has experienced a significant increase in credit risk relative to its initial
recognition, a stage 1 loss allowance is recognised equal to the credit losses
expected to result from its default occurring over the next 12 months
('12-month ECL').
Stage 2 (31-90 Days)
Following a significant increase in credit risk relative to the initial
recognition of the financial asset, a stage 2 loss allowance is recognised
equal to the credit losses expected from all possible default events over the
remaining lifetime of the asset ('Lifetime ECL'). The assessment of whether
there has been a significant increase in credit risk requires considerable
judgment, based on the lifetime probability of default ('PD'). Any financial
asset that had been outstanding for greater than 30 days would be assessed on
an individual basis to determine if it qualified as a significant increase in
credit risk. Stage 1 and 2 allowances are held against performing loans; the
main difference between stage 1 and stage 2 allowances is the time horizon.
Stage 1 allowances are estimated using the PD with a maximum period of 12
months, while stage 2 allowances are estimated using the PD over the remaining
lifetime of the asset.
Impaired financial assets
Stage 3 (After 90 Days)
When a financial asset is considered to be credit-impaired, the allowance for
credit losses ('ACL') continues to represent lifetime expected credit losses,
however, interest income is calculated based on the amortised cost of the
asset, net of the loss allowance, rather than its gross carrying amount.
The Group applies the ECL model to two main types of financial assets that are
measured at amortised cost:
Trade receivables, to which the simplified approach (provision matrix)
prescribed by IFRS 9 is applied. This approach requires the recognition of a
Lifetime ECL allowance on day one. In the normal course of operations, trade
receivables could be considered to be in default after 90 days.
Other financial assets at amortised cost, to which the general three stage
model (described above) is applied, whereby a 12-month ECL is recognised
initially and the balance is monitored for significant increases in credit
risk which triggers the recognition of a Lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. ECLs for financial
assets that are not credit-impaired at the reporting date are measured as the
present value of all cash shortfalls (i.e. the difference between the cash
flows due in accordance with the contract and the cash flows that the Company
expects to receive). ECLs for financial assets that are credit-impaired at the
reporting date are measured as the difference between the gross carrying
amount and the present value of estimated future cash flows. The maximum
period considered when estimating ECLs is the maximum contractual period over
which the Group is exposed to credit risk. The measurement of ECLs considers
information about past events and current conditions, as well as supportable
information about future events and economic conditions. The Group reviews its
impairment methodology for estimating the ECLs, taking into account
forward-looking information in determining the appropriate level of allowance.
In addition, it identifies indicators and set up procedures for monitoring for
significant increases in credit risk.
Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
i. As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease
commencement/modification date. The right-of-use asset is initially measured
at cost, and subsequently at cost less accumulated depreciation and impairment
loss and adjusted for certain remeasurements of the lease liability.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted at the Group's
applicable incremental borrowing rate (if the rate implicit in the lease
cannot be determined). The Group has measured the incremental borrowing as
equal to external borrowing rates. The lease liability is subsequently
increased by the interest cost of the lease liability and decreased by the
lease payment made. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, a change in the estimate
of the amount expected to be payable under a residual value guarantee, or as
appropriate, changes in the assessment of whether a purchase or extension
option is reasonably certain to be exercised, or a termination option is
reasonably certain not to be exercised.
The Group has applied judgment to determine the lease term for some lease
contracts in which it is a lessee that include renewal options. The assessment
of whether the Group is reasonably certain to exercise such options impacts
the lease term, which affects the amount of lease liabilities and right of use
assets recognised.
The Group receives rent concessions on its racetrack lease when, due to
external factors, the number of days raced in a season is lower than the
actual number of days scheduled to be raced.
The Group determines its incremental borrowing rate by obtaining interest
rates from various external financing sources and makes certain adjustments to
reflect the terms of the lease and the type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the
following:
- Fixed payments, including in-substance fixed payments;
- Variable lease payments that depend on an index or a rate, initially
measured using the index or rate as at the commencement date;
- Amounts expected to be payable under a residual value guarantee; and
- The exercise price under a purchase option that the Group is reasonably
certain to exercise, lease payments in an optional renewal period if the Group
is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate
early.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a
purchase, extension, or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset or is recorded in
profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets that do not meet the definition of
investment property in 'property, equipment, and motor vehicles' and lease
liabilities in 'loans, borrowings and lease liabilities' in the statement of
financial position.
The Group has elected not to recognise right-of-use assets and lease
liabilities for leases of low-value items and short-term leases. The Group
recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
Employee benefits
(a) Pension obligations
The Group and the Company do not operate any post-employment schemes,
including both defined benefit and defined contribution pension plans.
(b) Short-term employee benefits
Short-term employee benefits, such as salaries, paid absences, and other
benefits, are accounted for on an accrual's basis over the period in which
employees have provided services in the year. All expenses related to employee
benefits are recognised in the Statement of Comprehensive Income in operating
costs.
(c) Profit sharing and bonus plans
The Group and the Company recognises a liability and an expense for bonuses
and profit sharing, based on a formula that takes into consideration the
profit attributable to the Company's shareholders after certain adjustments.
The Group and the Company recognises a provision where contractually obliged
or where there is a past practice that has created a constructive obligation.
Any recognised liability would be settled within 12 months of the year end.
Standards and interpretations in issue not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the year and have not been applied in preparing these
consolidated financial statements. The Directors do not expect the adoption of
the standards and interpretations to have a material impact on the Group's
financial statements in the period of initial application.
Standards Effective date
(accounting periods
commencing on or after)
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) 1 January 2024
Classification of liabilities as Current or Non-Current and Non-current
Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial
Statements)
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
Lack of Exchangeability (Amendments to IAS 21) 1 January 2025
Sale or Contribution of Assets between an Investor and its Associate or Joint
Ventures (Amendments to FRS 10 and IAS 28)*
*The effective date of these amendments was deferred indefinitely. Early
adoption continues to be permitted.
2 Operating Segments
A. Basis for segmentation
The Group has two operating segments, which are its reportable
segments. The segments offer different services in relation to various forms
of pari-mutuel racing, which are managed separately due to the nature of their
activities.
Reportable segments and operations provided
Racetrack operations - hosting of races through the management and operation
of a racetrack facility, enabling patrons to attend and wager on horse racing,
as well as utilise simulcast facilities.
ADW operations - provision of online ADW services to enable customers to wager
into global racetrack betting pools.
The Group's Board of Directors review the internal management
reports of the operating segment on a monthly basis.
B. Information about reportable segments
Information relating to the reportable segments is set out below. Segment
revenue along with segment profit / (loss) before tax are used to measure
performance as management considers this information to be a relevant
indicator for evaluating the performance of the segments.
Reportable segments
Racetrack ADW Corporate operating costs Total
2024 2024 2024 2024
US$000 US$000 US$000 US$000
External revenues 48,017 2,014 - 50,031
Segment revenue 48,017 2,014 - 50,031
Segment loss before tax (101) (817) (145) (1,063)
Interest expense (53) (5) (146) (204)
Depreciation and amortisation (100) (50) (1) (151)
Other material non-cash items:
- Impairment movement on trade receivables - 3 - 3
Segment assets 2,213 2,728 1,273 6,214
Segment liabilities 1,886 2,451 2,367 6,704
Reportable segments
Racetrack ADW Corporate operating Total
2023 2023 costs 2023
US$000 US$000 2023 US$000
US$000
External revenues 47,865 2,155 - 50,020
Segment revenue 47,865 2,155 - 50,020
Segment profit / (loss) before tax 46 (674) (117) (745)
Interest expense (58) (3) (99) (160)
Depreciation and amortisation (98) (42) (2) (142)
Other material non-cash items:
- Impairment movement on trade receivables - (2) - (2)
Segment assets 2,187 2,846 1,293 6,326
Segment liabilities 1,523 2,802 1,428 5,753
C. Reconciliations of information on reportable segments to the amounts
reported in the financial statements
2024 2023
US$000 US$000
i. Revenues
Total revenue for reportable segments 50,031 50,020
Consolidated revenue 50,031 50,020
ii. Loss before tax
Total loss before tax for reportable segments (918) (628)
Loss before tax for other segments (145) (117)
Consolidated loss before tax (1,063) (745)
iii. Assets
Total assets for reportable segments 4,941 5,033
Assets for other segments 1,273 1,293
Consolidated total assets 6,214 6,326
iv. Liabilities
Total liabilities for reportable segments 4,337 4,325
Liabilities for other segments 2,367 1,428
Consolidated total liabilities 6,704 5,753
v. Other material items
Interest expense (204) (160)
Depreciation and amortisation (151) (142)
Impairment movement on trade receivables 3 (2)
There were no reconciling items noted between Segment information
and the Financial Statements.
D. Geographic information
i. Revenues
The below table analyses the geographic location of the customer base of the
operating segments.
2024 2023
US$000 US$000
Revenue
Racetrack operations North America 48,017 47,865
ADW operations North America 1,479 1,701
ADW operations British Isles 459 428
ADW operations Caribbean 76 26
50,031 50,020
ii. Non-current assets
The geographical information below analyses the Group's non-current assets by
the Company's Country of Domicile (Isle of Man) and the United States of
America. Information is based on geographical location of the Group's assets.
2024 2023
US$000 US$000
United States of America 583 679
Isle of Man - 2
583 681
Non-current assets exclude financial instruments. During the year,
additions to non-current assets for the reportable segments were Racetrack US$
Nil (2023: US$ 13,000) and ADW US$ 53,000 (2023: US$ 74,000).
E. Major customers
The Group does not earn revenue of 10% or more from any external customer.
3 Operating loss
Operating loss is stated after charging: 2024 2023
US$000 US$000
Auditors' remuneration - audit 156 146
Depreciation of property, equipment, and motor vehicles 139 137
Amortisation of intangible assets 12 5
Exchange losses / (gains) 4 (9)
Directors' fees 94 105
4 Finance costs
2024 2023
US$000 US$000
Bank interest receivable 11 7
Loan and lease interest payable (204) (160)
Net finance costs (193) (153)
5 Staff numbers and cost
2024
2023
Average number of employees - Pari-mutuel and Racetrack Operations 55 50
The aggregate payroll costs of these persons were as follows: 2024
US$000 2023
Pari-mutuel and Racetrack Operations US$000
Wages and salaries 1,678 1,694
Social security costs 122 121
1,800 1,815
6 Income tax expense
(a) Current and Deferred Tax Expenses
The current and deferred tax expenses for the year were US$ Nil (2023: US$
Nil). Despite having made losses, no deferred tax was recognised as there is
no reasonable expectation that the Group will recover the resultant deferred
tax assets.
(b) Tax Rate Reconciliation
2024 2023
US$000 US$000
Loss before tax (1,063) (745)
Tax charge at IOM standard rate (0%) - -
Adjusted for:
Tax credit for US tax losses (at 21%) (219) (153)
Add back tax losses not recognised 219 153
Tax charge for the year - -
The maximum deferred tax asset that could be recognised at year end is
approximately US$ 1,380,000 (2023: US$ 1,161,000). The Group has not
recognised any asset as it might not be recoverable within the allowed period.
The tax losses for tax years beginning in January 2018 are currently permitted
to be carried forward indefinitely. Tax losses incurred prior to that period
expire after 20 years.
7 Earnings per ordinary share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares, on the assumed
conversion of all dilutive share options.
An adjustment for the dilutive effect of share options in the current period
has not been reflected in the calculation of the diluted loss per share, as
the effect would have been anti-dilutive.
2024 2023
US$000 US$000
Loss for the year (1,063) (745)
No. No.
Weighted average number of ordinary shares in issue 393,338,310 393,338,310
Dilutive element of share options if exercised (note 16) 14,000,000 14,000,000
Diluted number of ordinary shares 407,338,310 407,338,310
Basic earnings per share (cents) (0.27) (0.19)
Diluted earnings per share (cents) (0.27) (0.19)
The earnings applied are the same for both basic and diluted earnings
calculations per share as there are no dilutive effects to be applied.
8 Intangible assets
Software & development costs Total
Group Company Group Company
US$000 US$000 US$000 US$000
Cost
Balance at 1 June 2022 612 15 612 15
Additions during the year 13 - 13 -
Disposals/decommissioned assets (8) (1) (8) (1)
Balance at 31 May 2023 617 14 617 14
Balance at 1 June 2023 617 14 617 14
Additions during the year 50 - 50 -
Balance at 31 May 2024 667 14 667 14
Amortisation and Impairment
Balance at 1 June 2022 601 15 601 15
Amortisation for the year 5 - 5 -
Disposals/decommissioned assets (8) (1) (8) (1)
Balance at 31 May 2023 598 14 598 14
Balance at 1 June 2023 598 14 598 14
Amortisation for the year 12 - 12 -
Balance at 31 May 2024 610 14 610 14
Carrying amounts
At 1 June 2022 11 - 11 -
At 31 May 2023 19 - 19 -
At 31 May 2024 57 - 57 -
The Group reviews intangible assets annually for impairment or more frequently
if there are indications that the intangible assets may be impaired (see note
1). The carrying amount of US$ 57,000 of software and development costs
relates primarily to development and integration costs of the US based
wagering website. These assets will be fully amortised within the next 3
years.
9 Property, equipment, and motor vehicles
Group Computer Fixtures, Motor Vehicles Right-of- Total
Equipment Fittings & Track Equipment US$000 use Assets US$000
US$000 US$000 US$000
Cost
Balance at 1 June 2022 166 321 50 945 1,482
Additions during the year - 13 - 61 74
Disposals/decommissioned assets (49) - - (118) (167)
Balance at 31 May 2023 117 334 50 888 1,389
Balance at 1 June 2023 117 334 50 888 1,389
Additions during the year 3 - - - 3
Balance at 31 May 2024 120 334 50 888 1,392
Depreciation
Balance at 1 June 2022 163 268 31 296 758
Charge for the year 2 20 7 108 137
Disposals/decommissioned assets (49) - - (118) (167)
Balance at 31 May 2023 116 288 38 286 728
Balance at 1 June 2023 116 288 38 286 728
Charge for the year 1 23 7 108 139
Balance at 31 May 2024 117 311 45 394 867
Carrying amounts
At 1 June 2022 3 53 19 649 724
At 31 May 2023 1 46 12 602 661
At 31 May 2024 3 23 5 494 525
Company Computer Equipment US$000 Fixtures & Total
Fittings US$000
US$000
Cost
Balance at 1 June 2022 37 80 117
Additions during the year - - -
Balance at 31 May 2023 37 80 117
Balance at 1 June 2023 37 80 117
Additions during the year - - -
Balance at 31 May 2024 37 80 117
Company Computer Equipment US$000 Fixtures & Total
Fittings US$000
US$000
Depreciation
Balance at 1 June 2022 34 80 114
Charge for the year 2 - 2
Balance at 31 May 2023 36 80 116
Balance at 1 June 2023 36 80 116
Charge for the year 1 - 1
Balance at 31 May 2024 37 80 117
Carrying amounts
At 1 June 2022 3 - 3
At 31 May 2023 1 - 1
At 31 May 2024 - - -
10 Investments in Subsidiaries
Investments in subsidiaries are held at cost less impairment. Details of
investments are as follows:
Subsidiaries Country of incorporation Activity
2024 2023
Holding (%) Holding (%)
WatchandWager.com Limited Isle of Man Operation of interactive wagering 100 100
totaliser hub
WatchandWager.com LLC United States of America Operation of interactive wagering 100 100
totaliser hub and harness racetrack
betinternet.com (IOM) Limited Isle of Man Dormant 100 100
A wholly owned subsidiary, Technical Facilities & Services Limited, was
dissolved during the 31 May 2023 financial year. Impairment assessment is
performed annually, and this involves assessment of the net asset value and
profitability of the subsidiaries.
11 Bonds and deposits
2024 2023
US$000 US$000
Bonds and deposits - expire within one year 883 883
Bonds and deposits - expire within one to two years - -
Bonds and deposits - expire within two to five years - -
Bonds and deposits - expire more than five years 100 100
983 983
Cash bonds of US$ 875,000 have been paid as security deposits in relation to
various US State ADW licences (2023: US$ 875,000). These cash bonds are held
in trust accounts used exclusively for cash collateral, with financial
institutions which have been screened for their financial strength and
capitalization ratio. The financial institutions have a credit rating of A-
Excellent from AM Best credit rating agency. Therefore, these bonds are
considered to be fully recoverable. A rent deposit of US$ 100,000 is held by
California Exposition & State Fair and is for a term ending in 2030 (2023:
US$ 100,000). This is held by an entity of the Californian state government
and is therefore considered fully recoverable. Rent and other security
deposits total US$ 8,168 (2023: US$ 8,167). These deposits are repayable upon
completion of the relevant lease term, under the terms of legally binding
agreements. The fair value of the bonds and deposits approximates to the
carrying value.
12 Cash, cash equivalents and restricted cash
Group Company
2024 2023 2024 2023
US$000 US$000 US$000 US$000
Cash and cash equivalents - Company and other funds 2,410 2,148 218 116
Restricted cash - protected player funds 1,011 1,137 985 1,111
Total cash, cash equivalents and restricted cash 3,421 3,285 1,203 1,227
The Group holds funds for operational requirements and for its non-Isle of Man
customers, shown as 'Company and other funds' and on behalf of its Isle of Man
regulated customers and certain USA state customers, shown as 'protected
player funds'.
Protected player funds are held in fully protected client accounts within an
Isle of Man regulated bank and in segregated accounts within a USA regulated
bank. These funds are segregated from operational funds of the Company and are
held on trust for the customers entitled to them.
13 Trade and other receivables
Group Company
2024 2023 2024 2023
US$000 US$000 US$000 US$000
Trade receivables 325 612 - -
Amounts due from Group undertakings - - 1,494 680
Other receivables and prepayments 903 766 70 65
1,228 1,378 1,564 745
Included within trade receivables are impairment provisions of US$ 65,566 (see
note 20), (2023: US$ 68,837). Other receivables include accrued and other
income due to the Group, along with sundry other debtors. Amounts due from
Group undertakings are unsecured, interest free and repayable on demand.
14 Trade and other payables
Group Company
2024 2023 2024 2023
US$000 US$000 US$000 US$000
Trade payables 597 436 9 8
Amounts due to customers 1,945 2,089 - -
Taxes and national insurance 22 18 2 2
Accruals and other payables 1,284 1,169 73 68
3,848 3,712 84 78
Other payables include distributions and purses payable for the racetrack
operations, along with sundry other payables.
15 Loans, borrowings, and lease liabilities
Current liabilities
Group Company
2024 2023 2024 2023
US$000 US$000 US$000 US$000
Unsecured loans (current portion) 20 21 - -
Lease liabilities (current portion) 100 91 - -
Secured loans - Galloway Limited 850 350 850 350
970 462 850 350
Non-current liabilities
Group Company
2024 2023 2024 2023
US$000 US$000 US$000 US$000
Unsecured loans (non-current portion) - 26 - -
Lease liabilities (non-current portion) 453 553 - -
Secured loans - Galloway Limited 1,433 1,000 1,433 1,000
1,886 1,579 1,433 1,000
Terms and repayment schedule
Nominal 2024 2023
interest rate Year of maturity Total Total
US$000 US$000
Unsecured loans 1.00-8.90% 2025 20 47
Lease liabilities 6.00-9.50% 2023-30 553 644
Secured loan 2017 - Galloway Limited* 7.75% 2027 - 500
Secured loan 2019 - Galloway Limited* 7.00% 2024 350 350
Secured loan 2020 - Galloway Limited* 7.00% 2025 500 500
Secured loan 2023 - Galloway Limited* 11.00% 2028 1,433 -
Total loans and borrowings 2,856 2,041
During 2022, the Group received an unsecured Paycheck Protection Program
("PPP") loan for US$ 48,427, which matures on 7 May 2025 and attracts interest
at 1% per annum.
The secured loans from Galloway Limited are secured over the unencumbered
assets of the Group, which includes the Cash and cash equivalents - Company
and other funds of US$ 2,410,000 (2023: US$ 2,148,000) and Cash bonds of US$
875,000 (2023: US$ 875,000). In September 2023, the Group obtained additional
financing from Galloway Limited, which included the Secured loan 2017 of US$
500,000, being rolled into this financing.
In November 2024, the Group has agreed additional funding from Galloway
Limited of US$ 920,000, with the Secured loan 2019 of US$ 350,000, being
rolled into the new financing (see note 22).
*The fair value of the Galloway Limited loans approximates to the carrying
value.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Other loans and borrowings Lease liabilities Total
US$000 US$000 US$000
Balance at 1 June 2022 1,417 672 2,089
Changes from financing cash flows
Proceeds from loans, borrowings, and lease liabilities - 59 59
Repayment of borrowings (20) - (20)
Payment of lease liabilities - (148) (148)
Rent concession received - 18 18
Interest paid (101) (59) (160)
Total changes from financing cash flows (121) (130) (251)
Other changes
Liability-related
New leases - 61 61
Rent concession received - (18) (18)
Interest expense 101 59 160
Total liability-related other changes 101 102 203
Balance at 31 May 2023 1,397 644 2,041
Balance at 1 June 2023 1,397 644 2,041
Changes from financing cash flows
Proceeds from loans, borrowings, and lease liabilities 1,433 57 1,490
Repayment of borrowings (527) - (527)
Payment of lease liabilities - (148) (148)
Interest paid (147) (57) (204)
Total changes from financing cash flows 759 (148) 611
Other changes
Liability-related
Interest expense 147 57 204
Total liability-related other changes 147 57 204
Balance at 31 May 2024 2,303 553 2,856
16 Share capital
No. 2024 2023
US$000 US$000
Allotted, issued, and fully paid
At beginning and close of year: ordinary shares of 1p each 393,338,310 6,334 6,334
At 31 May: ordinary shares of 1p each 393,338,310 6,334 6,334
The authorised share capital of the Company is US$ 9,619,000 divided into
600,000,000 ordinary shares of £0.01 each (2023: US$ 9,619,000 divided into
600,000,000 ordinary shares of £0.01 each). This is the sole class of shares
authorised and issued by the Company and these shares convey the right for
shareholders to vote at general meetings, to receive dividends and to receive
surplus assets on the liquidation of the Company. There are no preferences or
restrictions attached to these shares. Neither the Company, nor its
subsidiaries, hold any shares in the Company. Share options are shown
below.
Options
Movements in share options during the year were as follows:
2024 2023
At start of year - number of 1p ordinary shares 14,000,000 14,000,000
Options granted - -
Options lapsed - -
Options exercised - -
At end of year - number of 1p ordinary shares 14,000,000 14,000,000
The options were issued on 3 March 2016 to Ed Comins, Managing Director of the
Group and vested on 3 March 2019. The options expire on 2 March 2026. The
weighted average exercise price of all options is £0.01.
17 Capital commitments
As at 31 May 2024, the Group had no capital commitments (2023: US$ Nil).
18 Leases
A. Leases as lessee
The Group leases office and racetrack facilities. The office facility is
leased until May 2025, with an average length of renewal of between two to
three years. The racetrack facility is leased until May 2030, with extensions
or renewals typically ranging between three to five years. Extension/renewal
is only available to lessor on terms and conditions to be agreed between both
parties. All currently available options to extend have been exercised.
The Group also leases additional office facilities with contract terms of no
more than one year. These leases are short-term, and the Group has elected not
to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties that do not meet the
definition of investment property are presented within property, equipment,
and motor vehicles.
Group Property Total
US$000 US$000
Cost
Balance at 1 June 2022 945 945
Additions during the year 61 61
Disposals during the year (118) (118)
Balance at 31 May 2023 888 888
Balance at 1 June 2023 888 888
Additions during the year - -
Balance at 31 May 2024 888 888
Depreciation
Balance at 1 June 2022 296 296
Charge for the year 108 108
Disposals during the year (118) (118)
Balance at 31 May 2023 286 286
Balance at 1 June 2023 286 286
Charge for the year 108 108
Balance at 31 May 2024 394 394
Carrying amounts
At 1 June 2022 649 649
At 31 May 2023 602 602
At 31 May 2024 494 494
ii. Amounts recognised in profit or loss
2024 2023
US$000 US$000
Interest on lease liabilities 57 59
Depreciation expense 108 108
Rent concessions received - (18)
Expenses relating to short-term leases 68 59
iii. Amounts recognised in statement of cash flows
2024 2023
US$000 US$000
Payment of lease liabilities - principal (91) (89)
Payment of lease liabilities - interest (57) (59)
Rent concessions received - 18
19 Related party transactions
Identity of related parties
The Parent Company has a related party relationship with its subsidiaries (see
note 10), and with its Directors and executive officers and with Burnbrae Ltd
(significant shareholder).
Transactions and balances with and between subsidiaries
Transactions with and between the subsidiaries in the Group, which have been
eliminated on consolidation, are considered to be related party transactions.
During the year, Webis Holdings plc recharged head office costs to
WatchandWager.com Ltd of US$ 259,962 (2023: US$ 238,104) and to
WatchandWager.com LLC of US$ 389,944 (2023: US$ 357,156). WatchandWager.com
LLC recharged support costs of US$ 7,831 (2023: US$ 8,120) to
WatchandWager.com Ltd. At the year end, Webis Holdings plc had receivable
balances with WatchandWager.com Ltd of US$ 971,639 (2023: US$ 168,575) and
with WatchandWager.com LLC of US$ 522,178 (2023: US$ 511,166).
WatchandWager.com Ltd had a receivable balance of US$ 8,485,256 (2023: US$
7,656,283) with WatchandWager.com LLC. There were no impairments on these
balances.
Transactions and balances with entities with significant influence over the
Group
Rental and service charges of US$ 43,365 (2023: US$ 41,617) and Directors'
fees of US$ 43,987 (2023: US$ 38,681) were charged in the year by Burnbrae
Limited, of which Denham Eke is a common Director and Katie Errock an
employee. Trade payables at the year-end of US$ 3,582 (2023: US$ 3,580)
related to rental and service charges. The Group also had loans of US$
2,282,555 (2023: US$ 1,350,000) from Galloway Limited, a company related to
Burnbrae Limited by common ownership and Directors (note 15). Interest expense
of US$ 146,268 (2023: US$ 99,498) was paid on these loans.
Transactions with key management personnel
The total amounts for Directors' remuneration during the year were as follows:
2024 2023
US$000 US$000
Emoluments - salaries, bonuses, and taxable benefits 373 368
- fees 94 105
467 473
Directors' Emoluments
Basic Bonus Termination 2024 2023
salary Fees US$000 payments Benefits Total Total
US$000 US$000 US$000 US$000 US$000 US$000
Executive
Ed Comins 341 - - - 32 373 368
Non-executive
Denham Eke* - 25 - - - 25 24
Sir James Mellon - 2 - - - 2 18
Richard Roberts - 48 - - - 48 48
Katie Errock* - 19 - - - 19 15
Aggregate emoluments 341 94 - - 32 467 473
* Paid to Burnbrae Limited.
14,000,000 share options were issued to Ed Comins (see note 16) during 2016.
20 Financial risk management
Capital structure
The Group's capital structure is as follows:
2024 2023
US$000 US$000
Cash and cash equivalents 2,410 2,148
Loans and similar liabilities (2,303) (1,397)
Net funds 107 751
Shareholders' equity 490 (573)
Capital employed 597 178
The Group's policy is to maintain as strong a capital base as possible,
insofar as can be sustained due to the fluctuations in the net results of the
Group and the inherent effect this has on the capital structure. The Group
monitors costs on an ongoing basis and undertakes actions to grow revenue,
with the aim of improving the Group's capital base. The Group does not have
any external capital requirements imposed upon it.
The Group's principal financial instruments comprise cash and cash
equivalents, trade receivables and payables that arise directly from its
operations.
The main purpose of these financial instruments is to finance the Group's
operations. The existence of the financial instruments exposes the Group to a
number of financial risks, which are described in more detail below.
The principal risks which the Group is exposed to relate to liquidity risks,
credit risks and foreign exchange risks.
Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its financial
obligations as they fall due.
The Group's objective is to maintain continuity of funding through trading and
share issues but to also retain flexibility through the use of short-term
loans if required.
Management controls and monitors the Group's cash flow on a regular basis,
including forecasting future cash flow. Banking facilities are kept under
review to ensure they meet the Group's requirements. Funds equivalent to
customer balances are held in designated bank accounts where applicable to
ensure that Isle of Man Gambling Supervision Commission player protection
principles are met. Other customer balances are covered by cash funds held
within the Group and by receivables due from ADW racetrack settlement
partners. The Directors anticipate that the business will maintain sufficient
cash flow in the forthcoming period, to meet its immediate financial
obligations.
The following are the contractual maturities of financial assets and financial
liabilities:
2024
Financial assets
Carrying amount Contractual cash flow 6 months Up to 1-5 5+
US$000 US$000 or less 1 year years years
US$000 US$000 US$000 US$000
Cash, cash equivalents and restricted cash 3,421 3,421 3,421 - - -
Trade receivables 325 325 325 - - -
Other receivables 773 773 773 - - -
Bonds and deposits 983 983 680 203 - 100
5,502 5,502 5,199 203 - 100
2023
Financial assets
Carrying amount Contractual cash flow 6 months Up to 1-5 5+
US$000 US$000 or less 1 year years years
US$000 US$000 US$000 US$000
Cash, cash equivalents and restricted cash 3,285 3,285 3,285 - - -
Trade receivables 612 612 612 - - -
Other receivables 645 645 645 - - -
Bonds and deposits 983 983 683 200 - 100
5,525 5,525 5,225 200 - 100
2024
Financial liabilities
Carrying amount Contractual cash flow 6 months Up to 1-5 5+
US$000 US$000 or less 1 year years years
US$000 US$000 US$000 US$000
Trade payables (597) (597) (597) - - -
Amounts due to customers (1,945) (1,945) (1,945) - - -
Other payables and loans (3,111) (3,873) (1,281) (623) (1,969) -
Lease liabilities (553) (724) (27) (123) (460) (114)
(6,206) (7,139) (3,850) (746) (2,429) (114)
2023
Financial liabilities
Carrying amount Contractual cash flow 6 months Up to 1-5 5+
US$000 US$000 or less 1 year years years
US$000 US$000 US$000 US$000
Trade payables (436) (436) (436) - - -
Amounts due to customers (2,089) (2,089) (2,089) - - -
Other payables and loans (2,153) (2,372) (815) (406) (1,151) -
Lease liabilities (644) (872) (27) (122) (493) (230)
(5,322) (5,769) (3,367) (528) (1,644) (230)
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation.
Impairment losses on financial assets recognised in profit or loss were as
follows:
2024 2023
US$000 US$000
Non-credit impaired trade receivables 4 7
Credit impaired trade receivables 62 62
Total impairment losses 66 69
The Group's exposure to credit risk is influenced by the characteristics of
the individual racetracks and the settling agents operating on behalf of these
tracks. The racetracks themselves are influenced by many factors, including
the product they offer, supporting sources of revenue they might generate,
such as offering simulcast, slots or sports wagering facilities, current
economic conditions, ownership structure, state laws and so on, all of which
may affect their liquidity and ability to operate.
The Group limits its exposure to credit risk by regular settling and
verification of balances due to and from settling agents, with standard terms
of one month. While there is on occasion debt that is slower to be settled,
historical settlements for at least the last six years show that of the
current trade receivable balance, greater than 99% would be expected to be
received.
In addition, the majority of the current Group customers have transacted with
the Group for five years or more and none of these customers balances have
been specifically impaired in that period.
The Group has continued to take a conservative approach to the assessment of
the Weighted Average Loss Rate and maintained rates that are considered to
reflect the risk that exists under current market conditions.
The following table provides information about exposure to credit risk and
expected credit losses for trade receivables as at 31 May 2024:
2024 Weighted Average Loss Rate (%) Gross Carrying Amount US$000 Net Carrying Amount US$000 Credit Impaired
Loss Allowance US$000
Current (not past due) 0.50% 245 (1) 244 No
1-30 days past due 1.00% 57 (1) 56 No
31-60 days past due 3.00% 10 - 10 No
61-90 days past due 5.00% 7 (1) 6 No
More than 90 days past due 7.00% 10 (1) 9 No
More than 90 days past due 100.00% 62 (62) - Yes
391 (66) 325
2023 Weighted Average Loss Rate (%) Gross Carrying Amount US$000 Net Carrying Amount US$000 Credit Impaired
Loss Allowance US$000
Current (not past due) 0.50% 421 (2) 419 No
1-30 days past due 1.00% 110 (1) 109 No
31-60 days past due 3.00% 70 (2) 68 No
61-90 days past due 5.00% 6 (1) 5 No
More than 90 days past due 7.00% 12 (1) 11 No
More than 90 days past due 100.00% 62 (62) - Yes
681 (69) 612
The Group uses an allowance matrix to measure the ECLs of trade receivables
from racetracks and their settling agents, which comprise a moderate number of
balances, ranging from small to large. The Group has reviewed its historical
losses over the past four years as well as considering current economic
conditions in estimating the loss rates and calculating the corresponding loss
allowance.
Classes of financial assets - carrying amounts
2024 2023
US$000 US$000
Cash and cash equivalents 2,410 2,148
Bonds and deposits 983 983
Trade and other receivables 1,101 1,258
4,494 4,389
Generally, the maximum credit risk exposure of financial assets is the
carrying amount of the financial assets as shown on the face of the Statements
of Financial Position (or in the notes to the financial statements). Credit
risk, therefore, is only disclosed in circumstances where the maximum
potential loss differs significantly from the financial asset's carrying
amount.
The maximum exposure to credit risks for receivables in any business segment:
2024 2023
US$000 US$000
Pari-mutuel 1,101 1,258
Of the above receivables, US$ 325,000 (2023: US$ 612,000) relates to amounts
owed from racing tracks. These receivables are actively monitored to avoid
significant concentration of credit risk, and the Directors consider there to
be no significant concentration of credit risk.
The Directors consider that all the above financial assets that are not
impaired for each of the reporting dates under review are of good credit
quality. The banks have external credit ratings of at least Baa3 from Moody's.
The credit risk for liquid funds and other short-term financial assets is
considered negligible since the counterparties are reputable banks with
high-quality external credit ratings.
Interest rate risk
The Group finances its operations mainly through capital with limited levels
of borrowings. Cash at bank and in hand earns negligible interest at floating
rates, based principally on short-term interbank rates.
Any movement in interest rates would not be considered to have any significant
impact on net assets at the balance sheet date as the Group and Parent Company
do not have floating rate loans payable.
Foreign currency risks
The Group operates internationally and is subject to transactional foreign
currency exposures, primarily with respect to Pounds Sterling, Hong Kong
Dollars, and Euros.
The Group does not actively manage the exposures but regularly monitors the
Group's currency position and exchange rate movements and makes decisions as
appropriate.
At the reporting date the Group had the following exposure:
2024 USD GBP EUR HKD Total
US$000 US$000 US$000 US$000 US$000
Current assets 4,200 550 97 557 5,404
Current liabilities (3,847) (269) (41) (639) (4,796)
Short-term exposure 353 281 56 (82) 608
2023 USD GBP EUR HKD Total
US$000 US$000 US$000 US$000 US$000
Current assets 4,703 114 86 523 5,426
Current liabilities (3,146) (334) (43) (633) (4,156)
Short-term exposure 1,557 (220) 43 (110) 1,270
The following table illustrates the sensitivity of the net result for the year
and equity with regards to the Group's financial assets and financial
liabilities and the US Dollar-Sterling exchange rate, US Dollar-Euro exchange
rate and US Dollar-Hong Kong Dollar exchange rate.
A 5% weakening of the US Dollar against the following currencies at 31 May
2024 would have increased / (decreased) equity and profit and loss by the
amounts shown below:
2024 GBP EUR HKD Total
US$000 US$000 US$000 US$000
Current assets 28 5 28 61
Current liabilities (14) (2) (32) (48)
Net assets 14 3 (4) (13)
2023 GBP EUR HKD Total
US$000 US$000 US$000 US$000
Current assets 6 4 26 36
Current liabilities (17) (2) (32) (51)
Net assets (11) 2 (6) (15)
A 5% strengthening of the US Dollar against the above currencies would have
had the equal but opposite effect on the above currencies to the amounts shown
above on the basis that all other variables remain constant.
21 Controlling party and ultimate controlling party
The Directors consider the ultimate controlling party to be Burnbrae Limited
and its beneficial owner Jim Mellon by virtue of their combined shareholding
of 63.10%.
22 Subsequent events
In November 2024, the Group has agreed funding of US$ 920,000 from Galloway
Limited (related entity), in the form of a 5 year term loan, which will
support the Group's working capital requirements. The loan will accrue
interest at the rate of 13% per annum and is secured against the unencumbered
assets of the Group. The loan comprises US$ 550,000 in respect of new funding
and an existing debt of US$ 350,000 (plus US$ 20,000 of accrued interest), due
and outstanding by the Group to Galloway Limited (see note 15).
In addition, in November 2024, the Company announced that it intends to seek
shareholder approval for the cancellation of the admission of its Ordinary
Shares to trading on AIM, which if approved by shareholders, would be
effective in January 2025.
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