TurfTrax Plc (the "Company")
Final Results for the year to 31 March 2008
CHAIRMAN'S STATEMENT
The year ended 31 March 2008 marked the most active period in the Group's
activities since its formation, with the culmination of the development of the
Tracking technology, the development and launch with our technology partner of
an in-running fixed odds betting product powered by our Tracking technology
and, on 30 January 2008, the admission of the company's shares to AIM.
Unhappily, since that time the Group has been unable to secure contracts for
the in-running fixed odds betting product from major bookmakers or an
international sale of a Tracking system.
In particular the failure to secure a contract with a bookmaker has resulted in
the failure to generate revenues sufficient to cover the ongoing costs of
operation which if left unaddressed would have placed a significant and
potentially unsupportable burden on the Group's cash position. To mitigate the
effect of this and to ensure security of short term working capital while a
number of initiatives were explored, the Group sold the business of TurfTrax
Ground Management Systems Limited to its management with effect from 1 July
2008 and placed TurfTrax Racing Data Limited into Administration on 17 July
2008. The attached Financial Statements reflect the write downs and provisions
for impairment arising from those decisions.
Whilst positive discussions have continued with several jurisdictions regarding
the international exploitation of Tracking systems and further inquires have
been received none of these have reached conclusion or are likely to do so in
an acceptable timeline to improve the short to medium term cash position.
During the year to 31 March 2008 the Group focussed on further improvements to
the core Tracking technology and on applications primarily focussed on the
horse race betting market. This was seen, based on extensive contacts with that
industry, to offer the best and quickest means of commercialising the core
technology.
Discussions with UK bookmakers indicated a strong interest in a fixed odds
in-running product to enable bookmakers to offer their customers a new horse
race betting product that would be competitive in the fast growing in-play
sports book market. In conjunction with Finsoft, a leading provider of systems
to the bookmaking industry, we developed such a product, the Pricer, which was
demonstrated in beta form at the Betting Show in October 2007. This
demonstration created strong interest within the betting industry and on this
basis development of a commercial product was commissioned and made available
to potential customers shortly after the end of the financial year.
While the response to the trials was generally positive, the commercial
response was disappointing in that it was either to decline the product in the
short term or to set a timetable for the completion of a contract some time in
the future. Regretfully, your directors concluded that they were unable to
continue to support the Tracking operation, by far the largest cost within the
Group for the length of time considered likely to realise a contract, and
therefore had little alternative but to terminate operations and to place
TurfTrax Racing Data Limited, in which Tracking and Pricer operations were
carried out, into Administration on 17 July 2008.
TurfTrax Ground Management Systems Limited, which provides consultancy
services, experienced a year of two halves, with a strong first half followed
by a shortage of orders in the second half. Overall, while turnover increased
by 14% the results were below management expectation. Subsequent to the year
end, the Group's Board decided that, to raise cash to support the
commercialisation process for the Pricer, assets needed to be realised and the
business was sold to the management for a consideration of approximately �
300,000.
For TurfTrax Course Services, the year under review broadly coincided with a
year long trial of the GoingStick on all UK turf race courses by the Regulatory
Authority, the BHA. The outcome of this trial was ultimately successful and use
of the GoingStick will be required under the Rules of Racing on all UK turf
race courses from 1 January 2009, with an extended trial and induction process
partly funded by the BHA for the period following the end of the financial year
until the 1 January 2009.
This business was operated as a division of TurfTrax Racing Data Limited and,
although itself profitable, was involved in the Administration of TurfTrax
Racing Data Limited in July 2008. Subsequently it has been agreed with the
Administrators to buy back TurfTrax Course Services and it will operate as an
independent business within the Group.
Betting Services also operated as a division of TurfTrax Racing Data Limited
during the year. While it increased both its registered users and subscribers
during the year, it continued to operate at a substantial loss. It too was
involved in the Administration in July 2008 but the underlying business was
bought out from Administration by a third party for a gross consideration of �
15,000 in August 2008.
At the date of this review, efforts continue to create or preserve
opportunities to generate value for shareholders.
The directors anticipate writing to shareholders on further developments in the
near future.
GROUP INCOME STATEMENT for the year ended 31 March 2008
2008 2007
Total Total
�000 �000
Revenue 1,005 1,162
Cost of sales * (2,550) (2,677)
Gross loss (1,545) (1,515)
Distribution costs (112) (156)
Administrative expenses** (3,072) (1,399)
Operating loss (4,729) (3,070)
Finance income 11 1
Finance costs (78) (59)
Loss before income tax (4,796) (3,128)
Income tax expense - 107
Loss for the year (4,796) (3,021)
Loss per share
Basic (�0.11) (�0.47)
* In the current year cost of sales includes a charge of �696,000 in relation
to the impairment of intangible and tangible fixed assets. In the prior year
cost of sales included a one-off charge of �627,000 in relation to the
impairment of capitalised development costs.
** An impairment review of goodwill as at 31 March 2008, following TurfTrax
Racing Data Limited being placed in Administration on 17 July 2008 has meant a
one-off charge of �1,582,000 is included in administrative expenses in the year
(2007: �Nil).
GROUP BALANCE SHEET as at 31 March 2008
2008 2007
�000 �000
Assets
Non-current assets
Property, plant and equipment 81 627
Intangible assets - 1,707
81 2,334
Current assets
Inventories 16 29
Trade and other receivables 281 261
Income tax receivable 1 59
Cash and cash equivalents 771 22
1,069 371
Total assets 1,150 2,705
Capital and reserves attributable to equity holders of
the Company
Share capital 4,429 320
Share premium 1,972 12,349
Share option reserve 133 -
Merger reserve 10,730 -
Accumulated deficit (16,649) (11,853)
Total equity 615 816
Current liabilities
Trade and other payables 535 608
Financial liabilities - 9
Borrowings - 1,272
535 1,889
Total liabilities 535 1,889
Total equity and liabilities 1,150 2,705
GROUP CASH FLOW STATEMENT for the year ended 31 March 2008
2008 2007
�000 �000
Cash flows from operating activities
Cash used in operations (2,141) (1,761)
Interest paid (78) (59)
Income tax received 59 48
Net cash used in operating activities (2,160) (1,772)
Cash flows from investing activities
Purchases of property, plant and equipment (202) (74)
Purchases of intangible assets (214) (6)
Interest received 11 1
Net cash used in investing activities (405) (79)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 4,595 600
Repayments of borrowings (9) (10)
Repayments of capital elements of hire purchase - (13)
contracts
Net cash generated from financing activities 4,586 577
Net increase/(decrease) in cash, cash equivalents and 2,021 (1,274)
bank overdrafts
Cash, cash equivalents and bank overdrafts at (1,250) 24
beginning of the year
Cash, cash equivalents and bank overdrafts at end of 771 (1,250)
the year
1 General information
TurfTrax plc (`the Company') and its subsidiaries (together `the Group')
provide data and services to the racing and betting industries and the media as
well as advisory services to the sports turf industry.
The Company is a public limited company incorporated and domiciled in the UK.
The address of its registered office is Chequers Court, 31 Brown Street,
Salisbury, Wiltshire, SP1 2AS.
The Company's accounts were posted to shareholders on 29 August 2008 and a copy
of the accounts are available from the Company's website www.turftrax.co.uk.
The audit opinion contained within the auditors report stated:-
"Opinion: disclaimer on view given by the financial statements
Because of the possible effect of the limitation in evidence available to us,
we are unable to form an opinion as to whether the financial statements:
* give a true and fair view, in accordance with IFRSs as adopted by the
European Union applied in accordance with the provisions of the Companies
Act 1985, of the state of the group's and parent company's affairs as at 31
March 2008 and of the group's loss for the year then ended; and
* have been properly prepared in accordance with the Companies Act 1985.
In respect solely of the limitation of our work referred to above we have not
obtained all the information and explanations that we considered necessary for
the purpose of our audit.
Notwithstanding our disclaimer on the view given by the financial statements,
in our opinion the information given in the Directors' Report is consistent
with the accounts".
2 Summary of significant accounting policies
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.
Going concern
The Group had net current assets of �534,000 (2007: net current liabilities �
1,518,000). The directors have prepared the consolidated financial statements
on a going concern basis but there is inherent uncertainty of future cash flows
in the Group. The effect and impact of the Group not being a going concern have
not been reflected.
The failure to secure contracts has resulted in the failure to generate
revenues sufficient to cover the ongoing costs of operation which if left
unaddressed would have placed a significant and potentially unsupportable
burden on the Group cash position. To mitigate the effect of this and ensure
the security of short term working capital while a number of initiatives were
explored, the Group sold the business of TurfTrax Ground Management Systems
Limited to its management with effect from 1 July 2008 and placed TurfTrax
Racing Data Limited into Administration on 17 July 2008.
Basis of preparation
Statement of compliance
The consolidated financial statements of TurfTrax plc have been prepared for
the first time in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union, International Financial Reporting
Interpretation Council (IFRIC) interpretations and those parts of the Companies
Act 1985 applicable to companies reporting under IFRS. The disclosures required
by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 34.
Basis of measurement
The consolidated financial statements have been prepared under the historic
cost convention.
Consolidation of subsidiaries
The shareholders of TurfTrax Holdings Limited transferred their shareholdings
to TurfTrax plc on 4 December 2007 as part of a share for share exchange in
consideration for 6 shares in TurfTrax plc for each share held in TurfTrax
Holdings Limited.
The introduction of a new holding company does not result in the addition of
any new business to the Group, and as such it falls outside the scope of IFRS
3. Therefore, it has been accounted for using merger accounting principles. As
a result, although the Group reconstruction did not become effective until 4
December 2007, the consolidated financial statements of TurfTrax plc are
presented as if TurfTrax plc and TurfTrax Holdings Limited had always been part
of the same Group. Accordingly, the financial information for the current
period has been presented, and that for the prior period restated, as if
TurfTrax Holdings Limited had been owned by TurfTrax plc throughout the current
and comparative periods.
The Group accounts consolidate the accounts of TurfTrax plc and all its
subsidiary undertakings drawn up to the 31 March each year.
Subsidiaries are entities that are directly or indirectly controlled by the
Group. Control exists where the Group has the power to govern the financial and
operating policies of the entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that are currently exercisable or
convertible are taken into account.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. The excess of the cost of acquisition over
the fair value of the Group's share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of
the net assets of the subsidiary acquired, the difference is recognised
directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated
but considered an impairment indicator of the asset transferred. On
consolidation accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns which are different from those of segments
operating in other economic environments.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Property, plant and equipment
Fixed assets are stated in the balance sheet at cost or fair value at
acquisition less any subsequent accumulated depreciation and impairment losses.
No capitalised interest is included in the cost of items of property, plant and
equipment.
Depreciation is charged so as to write off the cost or valuation of assets over
their estimated useful lives, using the straight line method on the following
bases:
Plant and machinery 3 to 10 years
Leasehold improvements Over the term of the
lease
The carrying values of property, plant and equipment are reviewed for
impairment in the periods if events or changes in circumstances indicate the
carrying value may not be recoverable.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets of the acquired
subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries
is included in `intangible assets'. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated impairment losses.
Any impairment losses on goodwill are recognised immediately in the income
statement and are not subsequently reversed.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts subject to being tested for impairment
at that date.
(b) Patents and trademarks
Acquired patents and trademarks are shown at historical cost. Patents and
trademarks have a finite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight line method over
the period covered by the legal rights, not exceeding 20 years.
The carrying value of intangible fixed assets is reviewed for impairment at the
end of the first full financial year following their acquisition and in the
period if events or changes in circumstances indicate that carrying value may
not be recoverable.
(c) Research and development expenditure
Expenditure on research activities, undertaken with the prospect of gaining new
scientific or technical knowledge and understanding, is recognised in the
income statement in the year that it is incurred.
Development activities involve a plan or a design for the production of new or
substantially improved products and processes. Development costs are
capitalised providing they meet the following criteria;
a. It is technically feasible that the asset will be completed for use or sale
b. The intention to complete the asset for sale or use exists
c. There is an ability to use or sell the asset
d. The asset will generate probable future economic benefits
e. Adequate technical, financial and other resources to complete the
development are available
f. The expenditure on the asset is separately identifiable and reliably
measured
The expenditure capitalised includes the cost of materials, direct labour and
overhead costs that are directly attributable to preparing the asset for its
intended use. Borrowing costs related to the development of qualifying assets
are recognised in the income statement as incurred. Other development
expenditure is recognised in the income statement as incurred.
Once sales of the products have been achieved such capitalised expenditure will
be amortised over a period in line with the expected future sales of the
product, but not exceeding 5 years.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for
impairment.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first in, first out (FIFO) method. The cost of finished
goods and work in progress comprises design costs, raw materials, direct
labour, other direct costs and related production overheads (based on normal
operating capacity). It excludes borrowing costs. Net realisable value is the
estimated selling price in the ordinary course of business, less applicable
variable selling expenses.
Trade receivables
Trade receivables are recognised initially at fair value less provision for
impairment subsequently measured at amortised cost. A provision for impairment
of trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the original
terms of the receivables.
Cash and cash equivalents
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 or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Trade payables
Trade payables are recognised at fair value, subsequently measured, after
initial recognition, at amortised cost.
Borrowing costs
Borrowing costs are recognised in the income statement in the period in which
they are incurred.
Taxation
The tax expense represents the sum of the tax currently payable and any
deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have
been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in
a business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income tax levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Employee benefits
The Group contributes to the individual employees' personal pension schemes.
These pension schemes are defined contribution schemes and are charged in the
period to which they relate.
Share based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of shares or share options, is recognised as
an employee benefit expense in the income statement.
The cost of share-based arrangements, whereby professional advisors receive
remuneration in the form of shares, share options or share warrants, is
recognised as professional fees in the income statement.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non
market-based vesting conditions) at the date of grant. The assumptions
underlying the number of awards expected to vest are subsequently adjusted for
the effects of non market-based vesting to reflect the conditions prevailing at
the balance sheet date. Fair value is measured by the use of a binomial model.
The expected life used in the model has been adjusted, based on the
management's best estimate, for the effects of the non-transferability,
exercise restrictions and behavioural considerations.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Group's
activities. Revenue is shown net of value added tax, returns, rebates and
discounts.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity
and when specific criteria have been met as described below. The amount of
revenue is not considered to be reliably measurable until all contingencies
relating to the sale have been resolved.
Sales of services
The Group sells goods and services to the racing and betting industry, the
media and the sports turf industry. These services are provided on a time and
material basis or as a fixed price contract usually on an annual basis.
Revenue from time and material contracts is recognised monthly as labour hours
are delivered and direct expenses are incurred.
Revenue from fixed price contracts is recognised in the period the services are
provided using a straight line basis over the term of the contract.
Foreign currency
Transactions in foreign currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date. Exchange
differences are taken to operating profit.
Leases and hire purchase commitments
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all of the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases. Assets held under finance
leases are capitalised in the balance sheet and are depreciated over their
useful lives. The capital elements of future obligation under the leases and
hire purchase contracts are included as financial liabilities in the balance
sheet.
The interest elements of the rental obligations are charged to the income
statement over the periods of the leases and hire purchase contracts and
represent a constant proportion of the balance of capital repayments
outstanding.
Rentals payable under operating leases are charged to the income statement on a
straight-line basis over the lease term.
Financial Instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
rate method. A provision is established when there is objective evidence that
the Group will not be able to collect all amounts due. The amount of any
provision is recognised in the income statement.
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less.
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective interest method.
Financial liabilities and equity instruments issued by the Group are classified
in accordance with the substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct
issue costs.
Interest bearing bank loans, overdrafts and other loans are initially recorded
at fair value, which is ordinarily equal to the proceeds received net of direct
issue costs. Finance costs are accounted for on an accruals basis in the income
statement using the effective interest method.
New standards and interpretations
At 31 March 2008, the International Accounting Standards Board and IFRIC had
issued the following standards and interpretations that are effective for
accounting periods commencing later than 1 April 2007.
International Financial Reporting Standards Effective Date
(periods commencing)
IAS 1 Presentation of Financial Statements
(Capital Disclosures) 1 January 2009
IAS 23 Borrowing Costs 1 January 2009
IFRS 8 Operating Segments 1 January 2009
International Financial Reporting Interpretations
IFRIC 9 Re-assessment of embedded derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 IFRS2 - Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
The Group has not elected to adopt any of these standards and interpretations
early. Upon adoption of the amended IAS1 and IFRS8, the Group will need to make
additional or amended disclosures in its financial statements, but there will
be no impact on reported income or net assets. Apart from this the directors do
not anticipate that the adoption of these standards and interpretations will
have a material impact on the Group's financial statements.
3. Loss per share
Basic earnings/loss per share is calculated by dividing the profit attributable
to equity holders of the Company by the weighted average number of ordinary
shares in issue during the year.
The weighted average number of shares in 2007 has been adjusted for the bonus
issue made on 17 August 2007 to ordinary shareholders at 31 March 2008 and has
then been multiplied by six to reflect that on the 4 December 2007 all the
shareholders of TurfTrax Holdings Limited agreed to exchange all their shares
for shares in TurfTrax plc on the basis of one share in TurfTrax Holdings
Limited for six shares in TurfTrax plc. The completion of this transaction
meant that TurfTrax Holdings Limited became a wholly owned subsidiary of
TurfTrax plc.
2008 2007
�000 �000
Loss attributable to equity holders of the Company (4,796) (3,021)
Weighted average number of ordinary shares in issue 44,290 6,378
(thousands)
Basic loss per share (�0.11) (�0.47)
4. Reconciliation of loss to cash used in operations
2008 2007
�000 �000
Operating loss (4,729) (3,070)
Adjustments for:
- Depreciation 316 348
- Amortisation 33 303
- Loss on disposal of property, plant and equipment 42 1
(see below)
- Impairment of intangible assets 306 627
- Impairment of tangible fixed assets 390 -
- Impairment of goodwill 1,582 -
Changes in working capital
- Inventories 13 (1)
- Trade and other receivables (21) (22)
- Trade and other payables (73) 53
Cash used in operations (2,141) (1,761)
In the cash flow statement, proceeds from sale of property, plant and equipment
comprise:
2008 2007
�000 �000
Net book amount (note 5) 42 1
Loss on disposal of property, plant and equipment (10) (1)
Transfer to inventories (32) -
Proceeds from disposal of property, plant and - -
equipment
5. Annual General Meeting
The board announces that on 29 August 2008 a circular was posted to
shareholders with the accounts convening an AGM of the Company on Friday 26
September 2008 at 10.00 am to be held at the offices of Wilsons, 42-44 Chipper
Lane, Salisbury SP1 1BG.
The purpose of the Meeting is to consider and, if thought fit, pass resolutions
as to the ordinary business of the Company relating to the directors, auditors
and accounts.
Contact:
Adam Mills TurfTrax plc + 44 (0) 1722 434 000
Stephen Goschalk Newland Stockbrokers Ltd + 44 (0) 207 290 2414
Liam Murray Dowgate Capital Adviser + 44 (0) 207 492 4777
Ltd
END
Turftrax (LSE:TTX)
Historical Stock Chart
From May 2024 to Jun 2024
Turftrax (LSE:TTX)
Historical Stock Chart
From Jun 2023 to Jun 2024
