TIDMWEB
RNS Number : 8419H
Webis Holdings PLC
29 November 2022
For immediate release 29 November 2022
Webis Holdings plc
("Webis" or "the Group")
Annual Report and Financial Statements for the year ended 31 May
2022
Notice of Annual General Meeting
Webis Holdings plc, the global gaming group, today announces its
audited results and the publication of its 2022 Report and Accounts
("Accounts") for the year ended 31 May 2022, extracts from which
are set out below.
The Accounts are being posted to shareholders today together
with the Notice of Annual General Meeting, and will be available on
the Group's website www.webisholdingsplc.com and at the Group's
Registered Office: Viking House, Nelson Street, Douglas, Isle of
Man IM1 2AH.
The AGM will be held at The Claremont Hotel, 18/19 Loch
Promenade, Douglas, Isle of Man, at 10.00 a.m. on 30 January
2023.
Chairman's Statement
Introduction
The Board is satisfied with the progress of the business over
the year reported. It has been difficult to make comparisons with
prior years with the impact of Covid-19 lock downs impacting
business in various ways for at least the last two years. The
positive factors have been our continued growth in our B2C sector
and our continued good performance at our racetrack, Cal Expo in
Sacramento. Against that we have seen a decline in our B2B
business, which we see as a mature business model.
On a macro level, we are pleased with a continued licensed
presence across the USA and, of course, our existing business in
California. Shareholders will have noted the "no" votes on sports
betting in California. The bills were badly constructed on many
levels, and as a result now leave us even better positioned in the
State. Sports wagering will happen in California - the State
finance deficit dictates so - and with our long-term lease at Cal
Expo, we are very much part of the process.
I am also pleased to report that the Board has agreed a clear
business strategy for a minimum of the next two years. This is
largely based upon generating significant growth for our B2C
sector, which we consider an asset, in conjunction with our
increasing licensed presence within the USA. We consider that
focusing on these two areas of growth will maximise value for
shareholders.
In summary, we know that we need to improve our day-to-day
performance (as commented on below) and are confident that we can
achieve that. Finally, I can report we continue to have the full
support of our principal shareholder to drive the growth strategy
forwards in the USA.
Year End Results Review
The Group amounts wagered for the year ended 31 May 2022 were
US$ 120.1 million (2021: US$ 132.1 million). Gross Profit reported
was US $ 5.1 million (2021: US$ 5.8 million).
Operating costs were up on last year at US$ 5.6 million (2021
US$ 5.3 million), primarily from increased race days at the Cal
Expo racetrack, whilst we also managed the business effectively
during the Covid-19 pandemic.
This resulted in a loss on the year of US$ 0.374 million, a
downturn on the 2021 profit of US$ 0.824 million, albeit last year
was an exceptional year.
Shareholder equity stands at US$ 1.3 million (2021: US$ 1.7
million). Total cash stands at US$ 4.1 million (2021: US$ 5.1
million), which includes ring-fenced funds held as protection
against our player liability as required under USA and Isle of Man
gambling legislation.
Approach to Risk and Corporate Governance
As part of the adoption of the Quoted Companies Alliance
Corporate Governance code in 2018, the Board completed an
assessment of the risks inherent in the business and defined and
adopted a statement of risk appetite, being the amount and type of
risk, it is prepared to seek, accept or tolerate in pursuit of
value. This being: -
"The Group's general risk appetite is a moderate, balanced one
that allows it to maintain appropriate growth, profitability and
scalability, whilst ensuring full regulatory compliance."
The Group's primary risk drivers include: -
Strategic
Reputational
Credit
Operational
Market
Liquidity, Capital and Funding
Regulatory and Compliance
Conduct
Our risk appetite is classified under an "impact" matrix defined
as Zero, Low, Medium and High. Appropriate steps are implemented to
ensure the prudential control monitoring of risks to the Group and
the Audit, Risk and Compliance Committee oversees this essential
requirement. Further details of the Corporate Governance Statement
will be found on pages 10 to 13 of this report and should be read
in conjunction with my report.
The Board refined the Group's business plan which incorporates
the risk and compliance framework.
Performance by Sector
WatchandWager
Business-to-Consumer
www.watchandwager.com /mobile
We have been encouraged by the performance of the B2C business
over the period reported. This continues the positive momentum that
we enjoyed in the previous financial year. Comparisons are very
difficult to make against prior years due to the impact of the
COVID-19 pandemic. As previously reported, this sector performed
well last year during a scenario where live racing continued across
the world but, in many circumstances, customers were not permitted
to visit the tracks. This year, thankfully, saw a gradual
relaxation of the policies around the pandemic, which was most
welcome for the industry as a whole, but also made trading more
competitive.
Given these points, we have analysed our key metrics versus
pre-pandemic levels, and we have shown significant growth on the
website/mobile. Most importantly, overall handle (amounts wagered)
in the period reported from players on our interactive platforms
has increased by 40% versus the FY ending in May 2019, and 66%
versus the FY ending in May 2018. FY 2020/21 was to an extent a
freak year, for the reasons above, and we saw a small drop off in
handle against last year. This is not wholly surprising looking at
the market overall, but it is vital we keep this positive momentum
going.
We consider our growing B2C business as one of our principal
assets of the company. To that end, our executive team is currently
conducting a detailed strategic review of this sector, with a view
to further invest in software development, marketing and related
resource to grow this area even faster. This is commented upon
further in Subsequent Events.
Business-to-Business
This sector covers the provision of pari-mutuel (pool) wagering
to high-roller clients, many of whom specialise in algorithmic, or
computer assisted trading, on a wide range of global
racetracks.
Conversely, we consider this model to be a mature business,
albeit one that is still important to the overall Group. Over the
period reported, we saw a decline in handle and in addition some
issues with our key customers' ability to return a positive
investment on their wagers. This is, of course, fundamental to the
pari-mutuel business model of churn that we operate. There is no
easy solution to this issue. The fact is that the sector is overly
competitive with our main host global racetracks continuing to
request a greater margin from this type of betting. At the same
time, the key high roller clients are also requesting preferential
rates based upon their volumes. Obviously, this squeezes an
operator such as ourselves.
Cal Expo
We raced between October 2021 and May 2022 during the period
with 45 nights of live racing. Overall, we were pleased with our
performance and this sector continues to show a consistent level of
profitability. The reason for this is we have achieved unique
positioning on the West Coast with our product. We had good horse
level numbers throughout the season, competitive betting action and
good levels of exposure from the TV channels. This is a recipe for
strong levels of handle throughout the season. In addition, we
continue to benefit from the "dark monies", namely revenues accrued
whilst we were not racing. As a reminder to shareholders, we have
secured the lease at the property until 2030. We still consider Cal
Expo to be a key asset as we grow our presence in California.
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.
Licences, Regulatory and Compliance
I am pleased to report that during the period we renewed all our
key licences, and in addition we fully expect all our licenses
subsequent to the period to be approved before the calendar year
end 2022.
In addition, I can report that the Group did not have any
regulatory breaches or complaints from our regulators and our
content providers during the period, and indeed to date. There were
also no AML issues reported to the regulatory authorities during
the period. There were also no Health and Safety issues over the
period. We consider compliance and social responsibility to be
important to the brand and company.
Subsequent Events (post period reported)
Trading
I am pleased to report that we had a good first quarter of the
new financial year, June-August was overall strong, where we
continued to show good levels of growth in our B2C sector and also
in revenues from Cal Expo. Against that, B2B business continued to
be stagnant.
It should be noted, however, that as anticipated we saw a
slowing in business through September and October, mainly due to
reduced quality of USA content. This is normal seasonality, however
there is no doubt that USA and global economic factors are becoming
a threat to the business and industry generally.
License Renewals
As reported, we have renewed or are in the process of renewing
all our key licenses in both the Isle of Man and the USA.
Significantly, we extended our Webis license with the Isle of Man
Gambling Supervision Commission in August of this year. Whilst of
course the US is the key generator of business, we do consider our
continued presence in the Isle of Man as strategically
important.
In the USA, as well as our Cal Expo license, and as previously
reported, we renewed our online license with the California
Horseracing Board on 22 November. This is a vitally important
license for reasons given below.
Arizona Downs
Shareholders should be updated on this project. We have signed a
lease agreement with the landlord at the venue in Prescott Valley,
AZ. However, at time of writing we still have not had our license
hearing with the State regulators. This has been frustrating, but
we fully expect to be licensed by the end of this year, or at worst
early in 2023. Based upon that, we would immediately commence
operations as a licensee, and plan to commence actual live racing
in September and October 2023. We still believe that this project
will be profitable and will assist our other live operations at Cal
Expo. We will keep shareholders fully informed of progress on this
matter.
USA/CA regulated sports betting
As shareholders are aware, on Tuesday 8 November the two
Californian Sports Betting Propositions failed to receive the
number of votes required for them to go into law. Contrary to some
opinions, this was actually a very positive development for our
Californian business. The comments for both propositions were seen
to be ill thought-out, highly protective, and in the case of 27,
potentially misleading. Initial indications since the elections
show that this subject is far from dead in California. Simply put,
the market for Californian sports betting is too big for it not to
happen.
We much prefer working closely with the State legislature in
Sacramento to devise a State-driven Bill that is fair and equitable
for all interested parties and, most importantly, the Californian
customer. We believe that this can happen in 2023 with a view for
live operations in 2024 and will work to ensure that our assets in
California will be included in such a Bill.
Strategic Outlook
We have now completed a comprehensive strategic review of our
operations and goals for the business through the next two years,
all linked to achieving profitability. We have identified growing
the B2C sector as our principal aim with a view to at least
doubling player numbers within the next two years. We have
developed a detailed software and marketing plan to that end which
has been approved by the Board with detailed budgets until the end
of 2024 which project this sector and indeed the whole operation to
be profitable.
In conjunction with that, we have several aims to improve our
licensed position in the USA, especially in CA and AZ. We believe
that it is vitally important for growth that we continue to ensure
the highest levels of regulatory compliance as a company in the
USA.
A combination of growth in our core business as detailed above
plus our unique presence in key States will greatly enhance the
valuation of the business. Related to that, we continue to assess
more strategic developments and have not ruled out alliances,
mergers or acquisitions to fast-track our growth. We will keep
shareholders fully up to date on developments in this area.
Summary
Finally, I would like to thank all our shareholders and
customers for their continued loyalty. In addition, I would like to
thank all our staff and team for their work and commitment over the
year.
Denham Eke
Non-executive Chairman
28 November 2022
For further information:
Webis Holdings plc Tel: 01624 639396
Denham Eke
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish/James Biddle
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2022
2022 2021
Note US$000 US$000
------------------------------------------------------------ ----- --------- -----------
Amounts wagered 120,140 132,149
------------------------------------------------------------ ----- --------- ---------
Revenue 1.2 53,612 55,668
Cost of sales 1.2 (48,462) (49,757)
Betting duty paid (101) (114)
------------------------------------------------------------ ----- --------- -----------
Gross profit 5,049 5,797
------------------------------------------------------------ ----- --------- -----------
Operating costs (5,604) (5,314)
Loss allowance on trade receivables 21 11 7
Other gains 20 2
Government grant 15 (48) 272
Other income 324 185
Operating (loss) / profit 3 (248) 949
------------------------------------------------------------ ----- --------- -----------
Finance costs 4 (126) (125)
------------------------------------------------------------ ----- --------- -----------
(Loss) / profit before income tax (374) 824
------------------------------------------------------------ ----- --------- ---------
Income tax expense 6 - -
------------------------------------------------------------ ----- --------- -----------
(Loss) / profit for the year (374) 824
------------------------------------------------------------ ----- --------- ---------
Total comprehensive (loss) / profit for the year (374) 824
------------------------------------------------------------ ----- --------- ---------
Basic earnings per share for (loss) / profit attributable
to the equity holders of the Company during the
year (cents) 7 (0.10) 0.21
------------------------------------------------------------ ----- --------- -----------
Diluted earnings per share for (loss) / profit attributable
to the equity holders of the Company during the
year (cents) 7 (0.09) 0.20
------------------------------------------------------------ ----- --------- -----------
Statements of Financial Position
As at 31 May 2022
31.05.22 31.05.22 31.05.21 31.05.21
Group Company Group Company
Note US$000 US$000 US$000 US$000
------------------------------ ----- --------- --------- ----------- ---------
Non-current assets
Intangible assets 8 11 - 12 -
Property, equipment and motor
vehicles 9 724 3 380 6
Investments 10 - 3 - 3
Bonds and deposits 11 100 - 101 -
------------------------------ ----- --------- --------- ----------- ---------
Total non-current assets 835 6 493 9
------------------------------ ----- --------- --------- ----------- ---------
Current assets
Bonds and deposits 11 883 - 882 -
Cash, cash equivalents and
restricted cash 12 4,139 1,266 5,083 2,142
Trade and other receivables 13 1,190 821 1,896 150
Total current assets 6,212 2,087 7,861 2,292
------------------------------ ----- --------- --------- ----------- ---------
Total assets 7,047 2,093 8,354 2,301
------------------------------ ----- --------- --------- ----------- ---------
Equity
Called up share capital 17 6,334 6,334 6,334 6,334
Share option reserve 17 42 42 42 42
Retained losses (5,058) (5,711) (4,684) (5,516)
------------------------------ ----- --------- --------- ----------- ---------
Total equity 1,318 665 1,692 860
------------------------------ ----- --------- --------- ----------- ---------
Current liabilities
Trade and other payables 14 3,640 78 4,995 91
Loans, borrowings and lease
liabilities 16 109 - 572 500
------------------------------ ----- --------- --------- ----------- ---------
Total current liabilities 3,749 78 5,567 591
------------------------------ ----- --------- --------- ----------- ---------
Non-current liabilities
Loans, borrowings and lease
liabilities 16 1,980 1,350 1,095 850
------------------------------ ----- --------- --------- ----------- ---------
Total non-current liabilities 1,980 1,350 1,095 850
------------------------------ ----- --------- --------- ----------- ---------
Total liabilities 5,729 1,428 6,662 1,441
------------------------------ ----- --------- --------- ----------- ---------
Total equity and liabilities 7,047 2,093 8,354 2,301
------------------------------ ----- --------- --------- ----------- ---------
Statements of Changes in Equity
For the year ended 31 May 2022
Called up Share option Retained Total
share capital reserve earnings equity
Group US$000 US$000 US$000 US$000
--------------------------- --------------- ------------- ---------- --------
Balance as at 31 May 2020 6,334 42 (5,508) 868
Total comprehensive loss
for the year:
Profit for the year - - 824 824
Balance as at 31 May 2021 6,334 42 (4,684) 1,692
Total comprehensive profit
for the year:
Loss for the year - - (374) (374)
Balance as at 31 May 2022 6,334 42 (5,058) 1,318
--------------------------- --------------- ------------- ---------- --------
Called up Share option Retained Total
share capital reserve earnings equity
Company US$000 US$000 US$000 US$000
--------------------------- --------------- ------------- ---------- --------
Balance as at 31 May 2020 6,334 42 (5,526) 850
Total comprehensive loss
for the year:
Profit for the year - - 10 10
Balance as at 31 May 2021 6,334 42 (5,516) 860
Total comprehensive profit
for the year:
Loss for the year - - (195) (195)
Balance as at 31 May 2022 6,334 42 (5,711) 665
--------------------------- --------------- ------------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 May 2022
Note 202 2 2021
US$000 US$000
---------------------------------------------------------- ------- -------- ----------
Cash flows from operating activities
( Loss) / p rofit before income tax (374 ) 824
Adjustments for:
* Depreciation of property, equipment and motor
vehicles 9 128 119
* Amortisation of intangible assets 8 7 26
* R ent concessions received 19 (2) (5)
* Lo an interest paid 101 101
* R e-recognition of PPP loan 15 48 -
* Government grant utilised - (272)
* D ecrease / (increase) in movement of restricted
cash* 768 (375)
* Increase in lease liabilities 2 5 2 4
* Other foreign exchange movements (66) 222
Changes in working capital:
* Decrease / (i ncrease) in receivables 706 (640)
* (Decrease) / increase i n payables (1,355) 1,246
---------------------------------------------------------- ------- -------- --------
Net cash ( used in) / generated from operating activities (14) 1,2 70
---------------------------------------------------------- ------- -------- --------
Cash flows from investing activities
Purchase of intangible assets 8 (6) (8)
Purchase of property, equipment and motor vehicles 9 - ( 84)
Net cash used in investing activities (6) (9 2 )
---------------------------------------------------------- ------- -------- ----------
Cash flows from financing activities
L oan i nterest paid (101) (101)
Payment of lease liabilities - principal 19 ( 92) ( 92)
Payment of lease liabilities - interest 19 ( 25) ( 24)
R ent concessions received 19 2 5
Repayment of loans and borrowings ( 6) ( 5)
Net cash used in financing activities 16 (222) (217)
---------------------------------------------------------- ------- -------- --------
Net ( decrease) / i ncrease in cash and cash equivalents (242) 961
Cash and cash equivalents at beginning of year 3,2 38 2,4 99
Exchange g ains / ( losses) on cash and cash equivalents 66 ( 222)
Cash and cash equivalents at end of year 12 3,062 3,238
---------------------------------------------------------- ------- -------- --------
*Decrease / (increase) in movement of restricted cash, has been
reclassified to Operating activities from Cash and cash
equivalents. The reclassification has been made to achieve better
presentation, as the restricted cash relates to player liabilities,
which is part of the operating activity of the Group. The impact of
this reclassification on net cash (used in) / generated from
operating activities is a decrease of USD 375k on the total as
previously reported of USD 1,645k.
Notes to the Financial Statements
For the year ended 31 May 2022
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 2022 consolidate those of the Company and its
subsidiaries (together referred to as the "Group").
1.1 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with UK Adopted - International Accounting Standards
post Brexit.
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 Group's 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
(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 post Brexit
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. Although these
estimates are based on management's best knowledge and experience
of current events and expected economic conditions, actual results
may differ from these estimates.
The Directors consider the only critical estimate area to be as
follows:
-- Note 21 - the measurement of Expected Credit Loss ("ECL")
allowance for trade and other receivables and assessment of
specific impairment allowances where receivables are past due.
Going concern
The Group and Parent Company financial statements have been
prepared on a going concern basis.
As indicated in the statement of comprehensive income, the Group
has incurred a net loss in the current year of US $374,000 (2021:
profit of US $824,000) and due to that, net assets reduced from US
$1,692,000 to US$1,318,000.
2020/21 results benefitted from the horseracing industry
continuing to operate during the lockdown period of the Covid
pandemic in 2020, which allowed the industry to attract higher
player numbers and wagering volumes, which resulted in improved
performance and increased Group profitability during that financial
year. While there has been an expected reduction in retail customer
numbers as other sports and wagering opportunities opened again,
overall, there has still been an improvement in net results when
compared to years prior to 2020/21. Extensive efforts have been
made to promote the content and markets the Group provides to a
wider customer base with an increased focus on player retention.
Whilst there can be no certainty as to the level and duration of
higher volumes and improved trading results, significant attention
is being applied to sustain these trading patterns through
attracting and retaining new players.
The Group has maintained sufficient operational cash to allow it
to continue to meet its liabilities for the foreseeable future.
In order to help achieve and maintain its goal of profitability
and maintaining adequate liquidity in order to continue its
operations the Directors are continuing to pursue strategies that
include:
-- broadening the Group's client base and the continued
expansion of its business to customer base;
-- continuing to renew and acquire further US state regulated
gaming licenses and continuing to develop and expand the Cal Expo
racetrack operation; and
-- taking advantage of the anticipated regulatory change in the
State of California's adoption of sports betting legislation which
will further open up opportunities for the Group.
Whilst the Directors continue to assess all strategic options in
relation to the strategies noted in the previous paragraph, the
Directors recognize that the ultimate success of strategies adopted
is difficult to predict as they require additional liquidity to
pursue the required investment, including bonds to be placed with
the relevant authorities to allow for betting on those tracks and
excess cost to be paid to service providers to add more servers to
allow for increased number of users. The Directors have prepared
cash flow forecasts for a period of 12 months from the date of
approval of these financial statements which indicate that, taking
account of reasonably possible downsides, the Group is projected to
have sufficient funds. Projections are inherently uncertain (also
considering the history of losses) and, in that regard, the related
entity has committed to extend funding in case the Group faces any
difficulty to meet its liabilities as they fall due for that
period.
The Company and the Group have, in previous years, received
financial support from Galloway Limited ( r elated entity) a nd
Galloway Limited has expressed its willingness to continue to make
funds available as and when needed by the G roup and Company . The
loan s from Galloway Limited stand at US $1,350,000 as at 31 May
2022.
As with any company placing reliance on other parties for
financial support, the Directors acknowledge that there can be no
certainty that this support will continue, although, at the date of
approval of these financial statements, they have no reason to
believe that it will not do so.
Based on these indications, (namely cashflow projections and
commitment of support from the related entity), along with the
current cash position, 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 2021. No adoptions had a
material effect on the accounting policies of the Group.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented
unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporate the results of
the Group. Subsidiaries are consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue until the date that such control ceases. Control exists
when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition-related costs are expensed as
incurred.
Inter-company transactions, balances and unrealised gains on
transactions between the Group companies are eliminated. Unrealised
losses are also eliminated. When necessary amounts reported by
subsidiaries have been adjusted to conform with the G roup's
accounting policies.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). As the primary activities of the Group and the primary
transactional currency of the Group's customers are carried out in
US Dollars, the consolidated financial statements have been
presented in US Dollars. The determination of the presentation
currency does not involve significant judgement as the primary
activities of the Group are in US Dollars.
(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'.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
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 based on the consideration specified in a contract with
a customer. The Group recognises revenue when it discharges
services to a customer. Revenue has been disaggregated by
geographical locations which are consistent with the operating
segments (note 2).
Hosting fees (Racetrack operations) are recognised when the
customers participate in the Group's pari-mutuel pools and the race
audio visual signals are transmitted. Hosting fees are recorded on
a gross receipts basis.
Wagering revenue from the Group's activities as the race host is
recognised when a race on which wagers are placed is completed. The
wagering commission from the Group's commingling of its wagering
pools with a host's pool is recognised when the race on which those
wagers are placed is completed. The Group acts as a principal when
it allows customers to place wagers in the races it hosts and as an
agent when it allows customers to place wagers in other entities'
races. Where the Group acts as a principal, the entire wager is
recognised as revenue and where it is an agent the wagering
commission the Group retains is recognised as revenue.
Settlement terms for revenue where the Group acts as a host is
usually 7 days for on and off-track wagering and 30 days from month
end for ADW wagering. Where the Group acts as an agent, settlement
terms are typically 30 days from month end.
Transactions fees (ADW operations) are recognised when the Group
facilitates customers' deposit transactions into their betting
accounts. The Group recognises revenue for transaction services net
of related winnings.
Cost of sales
The Group recognises cost of sales related to the Racetrack
operations in which it is the race host. The cost of sales includes
direct costs such as purses, hub fees, import fees, pay-outs, and
other statutory distributions.
Government grants
The Group initially recognises government grants, that
compensate for expenses incurred, as deferred income at fair value
if there is a reasonable assurance that they will be received. They
are then recognised in profit or loss on a systematic basis in the
periods in which the expenses are recognised.
Segmental reporting
Segmental reporting is based on the business areas in accordance
with the Group's internal reporting structure, which allows the
individual operating segments to be identified by the disparate
nature of the principal activity they undertake. The Group
determines and presents segments based on the information that
internally is provided to the Board and Managing Director, the
Group's chief operating decision maker.
An operating segment is a component of the Group and engages in
business activities from which it may earn revenues and incur
expenses. An operating segment's operating results are reviewed
regularly by the Board and Managing Director to make decisions
about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is
available.
Current and deferred income tax
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends. Current
tax assets and liabilities are offset only if certain criteria are
met.
Deferred income tax is recognised on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill; deferred tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the
reporting date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries
except for deferred income tax liability, where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future. Only where there is an agreement in place
that gives the Group the ability to control the reversal of the
temporary difference is the liability not recognised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit
available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes, assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Intangible assets - goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units ("CGUs"), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within
the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the operating segment
level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
Intangible assets - other
(a) Trademarks and licences
Separately acquired trademarks and licences are shown at
historical cost. Trademarks and licences acquired in a business
combination are recognised at fair value at the acquisition date.
Trademarks and licences have a finite useful life and are carried
at cost less accumulated amortisation. 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 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:
Plant and equipment 3 years Fixtures and fittings 3 years
Motor vehicles 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.
Share-based payment expense
The Group operates an equity-settled, share-based compensation
plan, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of the employee services received in exchange for the
grant of the options is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an
entity's share price); and
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time-period).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
Equity
Share capital is determined using the nominal value of shares
that have been issued.
Equity settled share-based employee remuneration is credited to
the share option reserve until related stock options are exercised.
On exercise or lapse, amounts recognised in the share option
reserve are taken to share capital.
Retained earnings include all current and prior period results
as determined in the income statement and any other gains or losses
recognised in the Statement of Changes in Equity.
Financial instruments
Recognition and measurement
Non-derivative financial instruments include trade and other
receivables, cash and cash equivalents, bonds and deposits,
borrowings and trade and other payables.
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes 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
and 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 behalf of players. Cash equivalents are held for
the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
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 uses 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
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 earlier of the next 12 months or its
maturity date ('12-month ECL').
Stage 2
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 90 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
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.
Other financial assets at amortised cost, to which the general
three stage model (described above) is applied, whereby a 12-month
ECL is recognised initially and the balance is monitored for
significant increases in credit risk which triggers the recognition
of a Lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. ECLs
for financial assets that are not credit-impaired at the reporting
date are measured as the present value of all cash shortfalls (i.e.
the difference between the cash flows due in accordance with the
contract and the cash flows that the company expects to receive).
ECLs for financial assets that are credit-impaired at the reporting
date are measured as the difference between the gross carrying
amount and the present value of estimated future cash flows. ECLs
are discounted at the effective interest rate of the financial
asset which is 0% for all financial assets at amortised cost. The
maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit risk.
The measurement of ECLs considers information about past events and
current conditions, as well as supportable information about future
events and economic conditions. The Group reviews its impairment
methodology for estimating the ECLs, taking into account
forward-looking information in determining the appropriate level of
allowance. In addition, it identifies indicators and set up
procedures for monitoring for significant increases in credit
risk.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
i. As a lessee
The Group recognises a right-of-use asset and a lease liability
at the lease commencement/modification date. The right-of-use
asset is initially measured at cost, and subsequently at cost
less accumulated depreciation and impairment loss and adjusted for
certain remeasurements of the lease liability.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted at the Group's applicable incremental borrowing rate
(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.
Extension/renewal is only available to lessor on terms and
conditions to be agreed between both parties.
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.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for property rental costs that do not meet the
definition of leases under IFRS 16. The Group recognises these
costs as an expense on a straight-line basis.
Employee benefits
(a) Pension obligations
The Group does 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 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 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)
Onerous Contracts - Cost of Fulfilling a Contract (Amendments 1 January 2022
to IAS 37)
2022 Annual Improvements to IFRS Standards 2018 - 2020
Property, Plant and Equipment: Proceeds before Intended
Use (Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to
IFRS 3)
IFRS 17 Insurance Contracts 1 January 2023
Classification of liabilities as current or non-current
(Amendments to IAS 1)
Amendments to IFRS 17
Disclosure of Accounting Policies (Amendments to IAS1
and IFRS Practice Statement 2)
Definition of Accounting Estimate (Amendments to IFRS
8)
Deferred Tax related Asset and Liabilities Arising from
a Single Transaction - Amendments to IAS 12 Income Taxes
Sale or Contribution of Assets between an Investor and
its Associate or Joint Ventures (Amendments to FRS 10
and IAS 28)
2 Operating Segments
A. Basis for segmentation
The Group has the below two operating segments, which are its
reportable segments. The segments offer different services in
relation to various forms of pari-mutuel racing, which are managed
separately due to the nature of their activities.
Reportable segments and operations provided
Racetrack operations - hosting of races through the management
and operation of a racetrack facility, enabling patrons to attend
and wager on horse racing, as well as utilise simulcast
facilities.
ADW operations - provision of online ADW services to enable
customers to wager into global racetrack betting pools.
The Group's Board of Directors review the internal management
reports of the operating segment on a monthly basis.
B. Information about reportable segments
Information relating to the reportable segments is set out
below. Segment revenue along with segment profit / (loss) before
tax are used to measure performance as management considers this
information to be a relevant indicator for evaluating the
performance of the segments.
Reportable segments
Corporate
operating
Racetrack ADW costs Total
2022 2022 2022 2022
US$000 US$000 US$000 US$000
------------------------------------------------ ----------- --------- ---------- --------
External revenues 51,225 2,387 - 53,612
Segment revenue 51,225 2,387 - 53,612
------------------------------------------------ ----------- --------- ---------- --------
Segment profit / (loss) before
tax 259 (438) (195) (374)
Interest expense (22) (6) (98) (126)
Depreciation and amortisation (88) (44) (3) (135)
Other material non-cash items:
* Impairment movement on trade receivables - 11 - 11
------------------------------------------------ ----------- --------- ---------- --------
Segment assets 2,324 3,387 1,336 7,047
------------------------------------------------ ----------- --------- ---------- --------
Segment liabilities 1,522 2,779 1,428 5,729
------------------------------------------------ ----------- --------- ---------- --------
Reportable segments
Corporate
operating
Racetrack ADW costs Total
2021 2021 2021 2021
US$000 US$000 US$000 US$000
------------------------------------------------- ---------- --------- ---------- --------
External revenues 52,640 3,028 - 55,668
Segment revenue 52,640 3,028 - 55,668
------------------------------------------------- ---------- --------- ---------- --------
Segment profit before tax 390 424 10 824
Interest expense (23) (4) (98) (125)
Depreciation and amortisation (79) (66) - (145)
Other material non-cash items:
* Impairment movement on trade receivables - 7 - 7
------------------------------------------------- ---------- --------- ---------- --------
Segment assets 2,138 3,915 2,301 8,354
------------------------------------------------- ---------- --------- ---------- --------
Segment liabilities 1,409 3,812 1,441 6,662
------------------------------------------------- ---------- --------- ---------- --------
C. Reconciliations of information on reportable segments to the
amounts reported in the financial statements
2022 2021
US$000 US$000
--------------------------------------------------------- ------- -------
i. Revenues
Total revenue for reportable segments 53,612 55,668
--------------------------------------------------------- ------- -------
Consolidated revenue 53,612 55,668
--------------------------------------------------------- ------- -------
ii. (Loss) / profit before tax
Total (loss) / profit before tax for reportable segments (179) 814
(Loss) / profit before tax for other segments (195) 10
--------------------------------------------------------- ------- -------
Consolidated (loss) / profit before tax (374) 824
--------------------------------------------------------- ------- -------
iii. Assets
Total assets for reportable segments 5,711 6,053
Assets for other segments 1,336 2,301
--------------------------------------------------------- ------- -------
Consolidated total assets 7,047 8,354
--------------------------------------------------------- ------- -------
iv. Liabilities
Total liabilities for reportable segments 4,301 5,221
Liabilities for other segments 1,428 1,441
--------------------------------------------------------- ------- -------
Consolidated total liabilities 5,729 6,662
--------------------------------------------------------- ------- -------
v. Other material items
Interest expense (126) (125)
Depreciation and amortisation (135) (145)
Impairment movement on trade receivables 11 7
--------------------------------------------------------- ------- -------
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.
2022 2021
US$000 US$000
--------------------- -------------- ------- -------
Revenue
Racetrack operations North America 51,225 52,640
ADW operations North America 1,833 2,294
British
ADW operations Isles 527 734
ADW operations Caribbean 27 -
53,612 55,668
------------------------------------ ------- -------
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.
2022 2021
US$000 US$000
------------------------- ------- -------
United States of America 731 386
Isle of Man 4 6
735 392
------------------------- ------- -------
Non-current assets exclude financial instruments.
3 Operating (loss) / profit
2022 2021
Operating (loss) / profit is stated after charging: US$000 US$000
------------------------------------------------------- ------- -------
Auditors' remuneration - audit 153 136
Depreciation of property, equipment and motor vehicles 128 119
Amortisation of intangible assets 7 26
Exchange losses / (gains) 7 (2)
Directors' fees 96 73
------------------------------------------------------- ------- -------
4 Finance costs
2022 2021
US$000 US$000
---------------------- ------- -------
Loan interest payable (126) (125)
---------------------- ------- -------
Finance costs (126) (125)
---------------------- ------- -------
5 Staff numbers and cost
2022 2021
-------------------------------------------------------- ---- ------
Average number of employees - Pari-mutuel and Racetrack
Operations 52 52
-------------------------------------------------------- ---- ------
The aggregate payroll costs of these persons were as
follows:
2022 2021
Pari-mutuel and Racetrack Operations US$000 US$000
----------------------------------------------------- ------- --------
Wages and salaries 1,707 1,676
Social security costs 127 116
1,834 1,792
----------------------------------------------------- ------- --------
6 Income tax expense
(a) Current and Deferred Tax Expenses
The current and deferred tax expenses for the year were US$Nil
(2021: 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
2022 2021
US$000 US$000
------------------------------------------------------ ------- -------
(Loss) / profit before tax (374) 824
Tax charge at IOM standard rate (0%) - -
Adjusted for:
Tax credit for US tax (losses) gains (at 21%) (91) 118
Add back deferred tax losses / (gains) not recognised 91 (118)
------------------------------------------------------ ------- -------
Tax charge for the year - -
------------------------------------------------------ ------- -------
The maximum deferred tax asset that could be recognised at year
end is approximately US$985,000 (2021: US$894,000). The Group has
not recognised any asset as it might not be recoverable within the
allowed period.
7 Earnings per ordinary share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares, on the assumed conversion of all dilutive share
options.
An adjustment for the dilutive effect of share options in the
current period has not been reflected in the calculation of the
diluted profit per share, as the effect would have been
anti-dilutive.
2022 2021
US$000 US$000
----------------------------------------------------- ----------- -------------
(Loss) / profit for the year (374) 824
----------------------------------------------------- ----------- -----------
No. No.
----------------------------------------------------- ----------- -------------
Weighted average number of ordinary shares in issue 393,338,310 393,338,310
Dilutive element of share options if exercised (note
17) 14,000,000 14,000,000
----------------------------------------------------- ----------- -------------
Diluted number of ordinary shares 407,338,310 407,338,310
----------------------------------------------------- ----------- -------------
Basic earnings per share (cents) (0.10) 0.21
----------------------------------------------------- ----------- -----------
Diluted earnings per share (cents) (0.09) 0.20
----------------------------------------------------- ----------- -----------
The earnings applied are the same for both basic and diluted
earnings calculations per share as there are no dilutive effects to
be applied.
8 Intangible assets
Software & development Total
Goodwill costs
---------------------------- --------------- ------------------------- ----------------------------
Group Group Company Group Company
US$000 US$000 US$000 US$000 US$000
---------------------------- --------------- ------------ ----------- -------- ----------------
Cost
Balance at 1 June 2020 177 598 15 775 15
Additions during the year - 8 - 8 -
Balance at 31 May 2021 177 606 15 783 15
---------------------------- --------------- ------------ ----------- -------- ----------------
Balance at 1 June 2021 177 606 15 783 15
Additions during the year - 6 - 6 -
Balance at 31 May 2022 177 612 15 789 15
---------------------------- --------------- ------------ ----------- -------- ----------------
Amortisation and Impairment
Balance at 1 June 2020 177 568 15 745 15
Amortisation for the year - 26 - 26 -
Balance at 31 May 2021 177 594 15 771 15
---------------------------- --------------- ------------ ----------- -------- ----------------
Balance at 1 June 2021 177 594 15 771 15
Amortisation for the year - 7 - 7 -
Balance at 31 May 2022 177 601 15 778 15
---------------------------- --------------- ------------ ----------- -------- ----------------
Carrying amounts
At 1 June 2020 - 30 - 30 -
---------------------------- --------------- ------------ ----------- -------- ----------------
At 31 May 2021 - 12 - 12 -
---------------------------- --------------- ------------ ----------- -------- ----------------
At 31 May 2022 - 11 - 11 -
---------------------------- --------------- ------------ ----------- -------- ----------------
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).
9 Property, equipment and motor vehicles
Fixtures,
Fittings
Computer & Track Motor Right-of-
Equipment Equipment Vehicles use Assets Total
Group US$000 US$000 US$000 US$000 US$000
-------------------------- ---------- ---------- --------- ----------- -------
Cost
Balance at 1 June 2020 162 241 50 473 926
Additions during the year 4 80 - - 84
Balance at 31 May 2021 166 321 50 473 1,010
-------------------------- ---------- ---------- --------- ----------- -------
Balance at 1 June 2021 166 321 50 473 1,010
Additions during the year - - - 472 472
Balance at 31 May 2022 166 321 50 945 1,482
-------------------------- ---------- ---------- --------- ----------- -------
Depreciation
Balance at 1 June 2020 155 241 17 98 511
Charge for the year 5 9 7 98 119
Balance at 31 May 2021 160 250 24 196 630
-------------------------- ---------- ---------- --------- ----------- -------
Balance at 1 June 2021 160 250 24 196 630
Charge for the year 3 18 7 100 128
Balance at 31 May 2022 163 268 31 296 758
-------------------------- ---------- ---------- --------- ----------- -------
Carrying amounts
At 1 June 2020 7 - 33 375 415
-------------------------- ---------- ---------- --------- ----------- -------
At 31 May 2021 6 71 26 277 380
-------------------------- ---------- ---------- --------- ----------- -------
At 31 May 2022 3 53 19 649 724
-------------------------- ---------- ---------- --------- ----------- -------
Fixtures
Computer &
Equipment Fittings Total
Company US$000 US$000 US$000
-------------------------- ---------- --------- -------
Cost
Balance at 1 June 2020 33 80 113
Additions during the year 4 - 4
Balance at 31 May 2021 37 80 117
-------------------------- ---------- --------- -------
Balance at 1 June 2021 37 80 117
Additions during the year - - -
Balance at 31 May 2022 37 80 117
-------------------------- ---------- --------- -------
Fixtures
Computer &
Equipment Fittings Total
Company US$000 US$000 US$000
----------------------- ---------- --------- -------
Depreciation
Balance at 1 June 2020 26 80 106
Charge for the year 5 - 5
Balance at 31 May 2021 31 80 111
----------------------- ---------- --------- -------
Balance at 1 June 2021 31 80 111
Charge for the year 3 - 3
Balance at 31 May 2022 34 80 114
----------------------- ---------- --------- -------
Carrying amounts
At 1 June 2020 7 - 7
----------------------- ---------- --------- -------
At 31 May 2021 6 - 6
----------------------- ---------- --------- -------
At 31 May 2022 3 - 3
----------------------- ---------- --------- -------
10 Investments
Investments in subsidiaries are held at cost. Details of
investments at 31 May 2022 are as follows:
Holding
Subsidiaries Country of incorporation Activity (%)
-------------------------- ------------------------- --------------------------- -------
Operation of interactive
wagering
WatchandWager.com Limited Isle of Man totaliser hub 100
Operation of interactive
wagering
United States totaliser hub and harness
WatchandWager.com LLC of America racetrack 100
Technical Facilities &
Services Limited Isle of Man Dormant 100
betinternet.com (IOM)
Limited Isle of Man Dormant 100
Technical Facilities & Services Limited was dissolved after
the year end. A wholly owned subsidiary, B. E. Global Services Ltd
was dissolved in May 2022.
11 Bonds and deposits
Group Company
2022 2021 2022 2021
US$000 US$000 US$000 US$000
-------------------------------- ---------- ----------- --------- ----------
Bonds and deposits which expire
within one year 883 882 - -
Bonds and deposits which expire
within one to two years - - - -
Bonds and deposits which expire
within two to five years 100 101 - -
-------------------------------- ---------- ----------- --------- ----------
983 983 - -
-------------------------------- ---------- ----------- --------- ----------
Cash bonds of US$875,000 have been paid as security deposits in
relation to various US State ADW licences (2021: 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 of 8 years
(2021: 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$8,227 (2021: US$8,315).
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
2022 2021 2022 2021
US$000 US$000 US$000 US$000
----------------------------- -------- ------------- ------------- ------------
Cash and cash equivalents -
company and other funds 3,062 3,238 189 312
Restricted cash - protected
player funds 1,077 1,845 1,077 1,830
----------------------------- -------- ------------- ------------- ------------
Total cash, cash equivalents
and restricted cash 4,139 5,083 1,266 2,142
----------------------------- -------- ------------- ------------- ------------
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.
13 Trade and other receivables
Group Company
2022 2021 2022 2021
US$000 US$000 US$000 US$000
------------------------------------ --------- ------------ ----------- -------------
Trade receivables 395 907 - -
Amounts due from Group undertakings - - 757 98
Other receivables and prepayments 795 989 64 52
------------------------------------- --------- ------------ ----------- -------------
1,190 1,896 821 150
------------------------------------ --------- ------------ ----------- -------------
Included within trade receivables are impairment provisions of
US$67,293 (see note 21), (2021: US$78,002).
Amounts due from Group undertakings are unsecured, interest free
and repayable on demand.
14 Trade and other payables
Group Company
2022 2021 2022 2021
US$000 US$000 US$000 US$000
----------------------------- --------- ------------ ----------- ------------
Trade payables 659 686 7 33
Amounts due to customers 2,037 2,968 - -
Taxes and national insurance 16 15 2 2
Accruals and other payables 928 1,326 69 56
------------------------------ --------- ------------ ----------- ------------
3,640 4,995 78 91
----------------------------- --------- ------------ ----------- ------------
15 Deferred income (Government Grant)
The Group received a Paycheck Protection Program ("PPP") loan
for US$319,994, under the provisions of the US CARES Act in May
2020 to support certain incurred expenses. The provisions of the
loan allowed for an application for loan forgiveness, directly
relating to expenditure incurred in the 24-week period from the
date of the loan advance, of which at least 60% must be on payroll
related expenditure. The Group had ascertained reasonable assurance
that the loan should be forgiven in its entirety and the
application for forgiveness was submitted in June 2021, with the
application agreed by the lending bank. The grant was recognised in
profit or loss in the periods that the relevant expenses were
recognised. After final review by the Small Business
Administration, it was determined that the lending bank had
calculated and advanced a loan amount greater than it should have.
The resultant difference of US$48,427 is a recognised as a loan
(financial liability) at year end (see note 16).
16 Loans, borrowings and lease liabilities
Current liabilities
Group Company
2022 2021 2022 2021
US$000 US$000 US$000 US$000
------------------------------------ -------- --------- --------- --------
Unsecured loans (current portion) 20 6 - -
Lease liabilities (current portion) 89 66 - -
Secured loans - Galloway Limited - 500 - 500
109 572 - 500
------------------------------------ -------- --------- --------- ----------
Non-current liabilities
Group Company
2022 2021 2022 2021
US$000 US$000 US$000 US$000
--------------------------------- ---------------- ------------- -------- -----------
Unsecured loans (non-current
portion) 47 19 - -
Lease liabilities (non-current
portion) 583 226 - -
Secured loans - Galloway Limited 1,350 850 1,350 850
1,980 1,095 1,350 850
--------------------------------- ---------------- ------------- -------- -----------
Terms and repayment schedule
Nominal 2022 2021
interest Year of Total Total
rate maturity US$000 US$000
--------------------------- ---------- ----------- -------- --------
Unsecured loans 1.00-8.90% 2025 67 25
Lease liabilities 6.00-9.50% 2023-30 672 292
Secured loan - Galloway
Limited* 7.75% 2027 500 500
Secured loan - Galloway
Limited* 7.00% 2024 350 350
Secured loan - Galloway
Limited* 7.00% 2025 500 500
------------------------------ ---------- ----------- -------- --------
Total loans and borrowings 2,089 1,667
------------------------------ ---------- ----------- -------- --------
The Group received an unsecured Paycheck Protection Program
("PPP") loan for US$48,427, which matures on 7 May 2025 and
attracts interest at 1% per annum (see note 15).
The secured loans from Galloway Limited are secured over the
unencumbered assets of the Group.
*Based on current interest rates, the estimated fair value of
the Galloway Limited loans is US$1.315m.
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 2020 1,380 384 1,764
-------------------------------- --------------- ----------------- -------
Changes from financing cash
flows
Proceeds from loans, borrowings
and lease liabilities - 24 24
Repayment of borrowings (5) - (5)
Payment of lease liabilities - (111) (111)
Interest paid (101) (24) (125)
-------------------------------- --------------- ----------------- -------
Total changes from financing
cash flows (106) (111) (217)
Other changes
Liability-related
Rent concession received - (5) (5)
Interest expense 101 24 125
Total liability-related other
changes 101 19 120
-------------------------------- --------------- ----------------- -------
Balance at 31 May 2021 1,375 292 1,667
-------------------------------- --------------- ----------------- -------
Balance at 1 June 2021 1,375 292 1,667
-------------------------------- --------------- ----------------- -------
Changes from financing cash
flows
Proceeds from loans, borrowings
and lease liabilities 48 25 73
Repayment of borrowings (6) - (6)
Payment of lease liabilities - (115) (115)
Interest paid (101) (25) (126)
-------------------------------- --------------- ----------------- -------
Total changes from financing
cash flows (59) (115) (174)
-------------------------------- --------------- ----------------- -------
Other changes
Liability-related
New leases - 472 472
Rent concession received - (2) (2)
Interest expense 101 25 126
Total liability-related other
changes 101 495 596
-------------------------------- --------------- ----------------- -------
Balance at 31 May 2022 1,417 672 2,089
-------------------------------- --------------- ----------------- -------
17 Share capital
2022 2021
No. US$000 US$000
------------------------------------------------ ----------- -------- --------
Allotted, issued and fully paid
At beginning and close of year: ordinary shares
of 1p each 393,338,310 6,334 6,334
At 31 May: ordinary shares of 1p each 393,338,310 6,334 6,334
------------------------------------------------ ----------- -------- --------
The authorised share capital of the Company is US$9,619,000
divided into 600,000,000 ordinary shares of GBP0.01 each (2021:
US$9,619,000 divided into 600,000,000 ordinary shares of GBP0.01
each).
Options
Movements in share options during the year ended 31 May 2022
were as follows:
No.
------------------------------------ ----------
At 31 May 2021 - 1p ordinary shares 14,000,000
------------------------------------ ----------
Options granted -
------------------------------------ ----------
Options lapsed -
------------------------------------ ----------
Options exercised -
------------------------------------ ----------
At 31 May 2022 - 1p ordinary shares 14,000,000
------------------------------------ ----------
During 2016 the Group established an equity-settled share-based
option program. The fair value of options granted is recognised as
an expense, with a corresponding increase in equity. The fair value
is measured at grant date using a Black-Scholes model and is spread
over the vesting period. The amount recognised in equity is
adjusted to reflect the actual number of share options which are
expected to vest. By taking into consideration the volatility of
the shares over the 3 years prior to granting, the volatility of
the options is calculated at 75%, with a risk-free interest rate of
0.86%.
The options were issued on 3 March 2016 to Ed Comins, Managing
Director of the Group. The fair value of each option on the grant
date was estimated as being GBP0.0022. The share options vested on
3 March 2019 after Ed Comins had remained in the employment of the
Group for 3 years from when the options were granted. The options
are able to be exercised from 3 March 2019 and expire on 2 March
2026. The weighted average exercise price of all options is
GBP0.01.
The charge for share options recorded in profit and loss for the
year was US$Nil (2021: US$Nil). Since the grant date, the total
charge in relation to the share options was US$42,126.
18 Capital commitments
As at 31 May 2022, the Group had no capital commitments (2021:
US$Nil).
19 Leases
A. Leases as lessee
The Group leases office and racetrack facilities. The office
facility is leased until May 2023, with an average length of
renewal of between two to three years. The racetrack facility is
leased until May 2030, with extensions or renewals typically
ranging between three to five years.
The Group also leases additional office facilities with contract
terms of no more than one year. These leases are short-term and the
Group has elected not to recognise right-of-use assets and lease
liabilities for these leases.
Information about leases for which the Group is a lessee is
presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties that do not
meet the definition of investment property are presented within
property, equipment and motor vehicles.
Property Total
Group US$000 US$000
-------------------------- -------- -------
Cost
Balance at 1 June 2020 473 473
Additions during the year - -
Balance at 31 May 2021 473 473
--------------------------- -------- -------
Balance at 1 June 2021 473 473
Additions during the year 472 472
Balance at 31 May 2022 945 945
--------------------------- -------- -------
Depreciation
Balance at 1 June 2020 98 98
Charge for the year 98 98
Balance at 31 May 2021 196 196
------------------------ --- ---
Balance at 1 June 2021 196 196
Charge for the year 100 100
Balance at 31 May 2022 296 296
------------------------ --- ---
Carrying amounts
At 1 June 2020 375 375
------------------------ --- ---
At 31 May 2021 277 277
------------------------ --- ---
At 31 May 2022 649 649
------------------------ --- ---
ii. Amounts recognised in profit or loss
2022 2021
US$000 US$000
--------------------------------------- ------- -------
Interest on lease liabilities 25 24
Depreciation expense 100 98
Rent concessions received (2) (5)
Expenses relating to short-term leases 71 69
--------------------------------------- ------- -------
iii. Amounts recognised in statement of cash flows
2022 2021
US$000 US$000
----------------------------------------- ------- -------
Payment of lease liabilities - principal (92) (92)
Payment of lease liabilities - interest (25) (24)
Rent concessions received 2 5
----------------------------------------- ------- -------
20 Related party transactions
Identity of related parties
The Parent Company has a related party relationship with its
subsidiaries (see note 10), and with its Directors and executive
officers and with Burnbrae Ltd (significant shareholder).
Transactions 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.
Transactions with entities with significant influence over the
Group
Rental and service charges of US$46,914 (2021: US$45,652) and
Directors' fees of US$27,193 (2021: US$26,461) were charged in the
year by Burnbrae Limited, of which Denham Eke is a common Director.
The Group also had loans of US$1,350,000 (2021: US$1,350,000) from
Galloway Limited, a company related to Burnbrae Limited by common
ownership and Directors (note 16).
Transactions with key management personnel
The total amounts for Directors' remuneration were as
follows:
2022 2021
US$000 US$000
----------- ----------------------------------------- ------- -------
Emoluments - salaries, bonuses and taxable benefits 345 366
- fees 96 73
----------------------------------------------------- ------- -------
441 439
----------------------------------------------------- ------- -------
Directors' Emoluments
Basic Termination 2022 2021
salary Fees Bonus payments Benefits Total Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Executive
Ed Comins 320 - - - 25 345 366
Non-executive
Denham Eke* - 27 - - - 27 26
Nigel Caine - - - - - - 20
Sir James Mellon - 21 - - - 21 20
Richard Roberts - 48 - - - 48 7
--------------------- -------- --------- -------- ------------ ----------- -------- --------
Aggregate emoluments 320 96 - - 25 441 439
--------------------- -------- --------- -------- ------------ ----------- -------- --------
* Paid to Burnbrae Limited.
14,000,000 share options were issued to Ed Comins (see note 17)
during 2016.
21 Financial risk management
Capital structure
The Group's capital structure is as follows:
2022 2021
US$000 US$000
---------------------------------------------------- -------- --------
Cash and cash equivalents 3,062 3,238
Loans and similar liabilities (1,417) (1,375)
---------------------------------------------------- -------- ----------
Net funds 1,645 1,863
Shareholders' equity (1,318) (1,692)
---------------------------------------------------- -------- ----------
Capital employed 327 171
---------------------------------------------------- -------- ----------
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'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
liabilities:
2022
Financial liabilities
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
------------------------- -------- ----------- -------- ------- ------- -------
Trade payables (659) (659) (659) - - -
Amounts due to customers (2,037) (2,037) (2,037) - - -
Other payables and loans (1,899) (2,214) (541) (58) (1,615) -
Lease liabilities (673) (952) (26) (121) (460) (345)
------------------------- -------- ----------- -------- ------- ------- -------
(5,268) (5,862) (3,263) (179) (2,075) (345)
------------------------- -------- ----------- -------- ------- ------- -------
2021
Financial liabilities
Carrying Contractual 6 months Up to 1-5 5+
amount cash flow or less 1 year years years
US$000 US$000 US$000 US$000 US$000 US$000
------------------------- -------- ----------- -------- ------- ------- -------
Trade payables (686) (686) (686) - - -
Amounts due to customers (2,968) (2,968) (2,968) - - -
Other payables and loans (2,269) (2,507) (947) (893) (667) -
Lease liabilities (292) (338) (13) (72) (253) -
------------------------- -------- ----------- -------- ------- ------- -------
(6,215) (6,499) (4,614) (965) (920) -
------------------------- -------- ----------- -------- ------- ------- -------
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:
2022 2021
US$000 US$000
-------------------------------------- ------- -------
Non-credit impaired trade receivables 5 16
Credit impaired trade receivables 62 62
Total impairment losses 67 78
-------------------------------------- ------- -------
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 2022:
2022 Weighted Gross Carrying N et Carrying Credit
Average Amount US$000 Loss Allowance Amount Impaired
Loss Rate US$000 US$000
(%)
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
Current (not past due) 1.00% 3 74 (4) 370 No
1-30 days past due 2.00% 9 (0) 9 No
31-60 days past due 5.00% 1 6 (1) 15 No
61-90 days past due 7.00% ( 1) (0) (1) No
More than 90 days past
due 10.00% 2 (0) 2 No
More than 90 days past
due 100.00% 62 (62) - Yes
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
4 62 (67) 395
-------------------------- -------------- ------------------ -------------------- ----------------- -------------
2021 Weighted Gross Carrying N et Carrying Credit Impaired
Average Amount US$000 Loss Allowance Amount
Loss Rate US$000 US$000
(%)
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
Current (not
past due) 1.00% 479 (5) 474 No
1-30 days past
due 2.00% 406 (8) 398 No
31-60 days past
due 5.00% 10 (1) 9 No
61-90 days past
due 7.00% 20 (1) 19 No
More than 90
days past
due 10.00% 8 (1) 7 No
More than 90
days past
due 100.00% 62 (62) - Yes
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
985 (78) 907
-------------------- -------------- ------------------ -------------------- ----------------- -------------------
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
2022 2021
US$000 US$000
---------------------------- ------- -------
Cash and cash equivalents 3,062 3,238
Bonds and deposits 983 983
Trade and other receivables 1,063 1,766
---------------------------- ------- -------
5,108 5,987
---------------------------- ------- -------
Generally, the maximum credit risk exposure of financial assets
is the carrying amount of the financial assets as shown on the face
of the balance sheet (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:
2022 2021
US$000 US$000
------------ ------- -------
Pari-mutuel 1,063 1,766
------------ ------- -------
Of the above receivables, US$395,000 (2021: US$907,000) relates
to amounts owed from racing tracks. These receivables are actively
monitored to avoid significant concentration of credit risk and the
Directors consider there to be no significant concentration of
credit risk.
The Directors consider that all the above financial assets that
are not impaired for each of the reporting dates under review are
of good credit quality. The banks have external credit ratings of
at least Baa3 from Moody's.
The credit risk for liquid funds and other short-term financial
assets is considered negligible, since the counterparties are
reputable banks with high-quality external credit ratings.
Interest rate risk
The Group finances its operations mainly through capital with
limited levels of borrowings. Cash at bank and in hand earns
negligible interest at floating rates, based principally on
short-term interbank rates.
Any movement in interest rates would not be considered to have
any significant impact on net assets at the balance sheet date as
the Group and Parent Company do not have floating rate loans
payable.
Foreign currency risks
The Group operates internationally and is subject to
transactional foreign currency exposures, primarily with respect to
Pounds Sterling, Hong Kong Dollars and Euros.
The Group does not actively manage the exposures but regularly
monitors the Group's currency position and exchange rate movements
and makes decisions as appropriate.
At the reporting date the Group had the following exposure:
USD GBP EUR HKD Total
2022 US$000 US$000 US$000 US$000 US$000
----------------------- ----------- -------- -------- -------- ---------
Current assets 5,197 236 85 568 6,086
Current liabilities (2,705) (317) (69) (642) (3,733)
----------------------- ----------- -------- -------- -------- ---------
Short-term exposure 2,492 (81) 16 (74) 2,353
----------------------- ----------- -------- -------- -------- -------
USD GBP EUR HKD Total
2021 US$000 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- ------- -------
Current assets 6,710 283 78 659 7,730
Current liabilities (4,778) (339) (85) (700) (5,902)
-------------------- ------- ------- ------- ------- -------
Short-term exposure 1,932 (56) (7) (41) 1,828
-------------------- ------- ------- ------- ------- -------
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 2022 would have increased / (decreased) equity and profit
and loss by the amounts shown below:
GBP EUR HKD Total
2022 US$000 US$000 US$000 US$000
----------------------------------- -------- -------- -------- ----------
Current assets 12 4 28 44
Current liabilities (16) (3) (32) (51)
----------------------------------- -------- -------- -------- ----------
Net assets (4) 1 (4) (7)
----------------------------------- -------- -------- -------- --------
GBP EUR HKD Total
2021 US$000 US$000 US$000 US$000
-------------------- ------- ------- ------- -------
Current assets 14 4 33 51
Current liabilities (17) (4) (35) (56)
-------------------- ------- ------- ------- -------
Net assets (3) - (2) (5)
-------------------- ------- ------- ------- -------
A 5% strengthening of the US Dollar against the above currencies
would have had the equal but opposite effect on the above
currencies to the amounts shown above on the basis that all other
variables remain constant.
22 Controlling party and ultimate controlling party
The Directors consider the ultimate controlling party to be
Burnbrae Limited and its beneficial owner Jim Mellon by virtue of
their combined shareholding of 63.10%.
23 Subsequent events
To the knowledge of the Directors, there have been no other
material events since the end of the reporting period that require
disclosure in the accounts.
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