webisholdings plc
webisholdings plc
Webis Holdings plc
Viking House, Nelson Street
Douglas, Isle of Man
IM1 2AH, British Isles
Tel: +44 (0) 1624 698141
Fax: +44 (0) 1624 698134
Email: info@betinternet.com
Website: www.webisholdingsplc.com
Global Online Gaming Group
Annual Report and Accounts for the period ended 29 May 2011
Stock Code: WEB
20797-04 14/09/2011
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20797-04 14/09/2011
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Stock Code: WEB
www.webisholdingsplc.co.uk
Group at a Glance
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Turnover: £71.43m
Share of Group sales
68%
(2010: £79.20m and 69%)
www.betinternet.com
betinternet.com (IOM) Limited and betinternet.com NV
The operator of the betinternet.com sportsbook portal,
which provides opportunities for our customers to wager
on an expanding variety of sporting events, combined with
casinos, slots and fixed-odds games.
Fixed odds sports betting
Comprehensive football offering
UK and Irish horse racing
Improved casinos and games suites
Provider of white label gaming solutions
Turnover: £34.12m
Share of Group sales
32%
(2010: £34.97m and 31%)
www.link2bet.com
European Wagering Services Limited
Provider of pari-mutuel (tote) advanced deposit wagering
(ADW) to a global consumer and business to business client
base, through a variety of distribution channels.
Offers pari-mutuel account wagering on North
American and Australian content currently
Accepts wagers through main site www.link2bet.com,
call centre and batch wagering interfaces
Contracts with over 90 global tracks for international
wagering
Recently acquired WatchandWager.com LLC in the
US, licensed by the North Dakota Racing Commission
Planning US growth strategy through web development,
content acquisition and US marketing plans
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Chairman’s Statement
“EWS will be suitably
positioned to develop
effectively its sales and
marketing strategy and
increase the level of
racing content. In this
respect, the Board’s
business plan for EWS
remains unchanged
going into the new
financial year.”
Introduction
The performance of the Group’s
sportsbook operation, betinternet.com
(IOM) Limited (“betinternet”), improved
during the financial year ended
29 May 2011, although the consolidated
results for the period were affected by a
difficult year for the Group’s pari-mutuel
platform, European Wagering Services
Limited (“EWS”). The Group’s turnover
for the year was £106m (2010: £114m).
The Group recorded an operating loss
of £108,000 (2010: £315,000) and
generated EBITDA of £149,000 (2010:
loss of £37,000).
EWS
In August 2010, EWS acquired a United
States pari-mutuel hub, WatchandWager.
com LLC, licenced with the North Dakota
Racing Commission. In line with EWS’
US expansion strategy, the business
also established a permanent sales and
marketing operation in the San Francisco
Bay area during the year.
EWS encountered difficulties during the
second half of the year in establishing
a long-term payment solution for its
online and telephone operations. This
hindered EWS’ ability to accept and
return customer funds via its link2bet.com
website. Most payment processors and
banks have been cautious with regard
to the provision of services and the few
that have done so have proven to be
inconsistent and expensive.
This issue particularly affected the
betting turnover of our higher margin
‘leisure players’. As a result, whilst
turnover only fell slightly by 3% to £34m
(2010: £35m), gross profit reduced to
£1,179,000 (2010: £1,446,000). EWS’
reported performance was also impacted
by an adverse movement in the US
Dollar during the year and, together with
additional customer payment and receipt
processing costs, the business recorded
an operating loss of £102,000 (2010:
profit of £464,000).
EWS acted quickly to implement
temporary payment solutions for its
clients and a number of these are now
in place. The Board anticipates the
establishment of a permanent more
robust solution in the coming weeks.
betinternet
betinternet’s fixed odds business
continued its positive trading performance
during the first half into the second half
of the year. The ‘In-Play’ product offering
was further enhanced during the year and
this, along with last summer’s World Cup
finals, was key to generating increased
turnover at a much improved margin for
this area of betinternet’s business.
Better bonus control and the improved
fixed-odds margin impacted on
betinternet’s casino and games activities
during the second half. As a result, casino
and games’ annual turnover fell, the
primary reason for betinternet generating
lower turnover of £71.427m (2010:
£79.202m). Despite this decrease, gross
profit increased to £1,861,000 (2010:
£1,171,000) following the improved
performance of the fixed odds business.
The business recorded a pre-tax profit of
£1,000 (2010: loss of £778,000).
To address the lower casino and games
activity, betinternet has refreshed its
casino offering with an improved turnkey
solution from a well established games
provider. During the final quarter of the
financial year, betinternet also launched a
new games suite.
The sportsbook business has shown
sufficient signs of progress for the Board
to continue with its support of betinternet.
In particular, the Board believes that
there are further growth opportunities for
the fixed odds business, especially from
‘In-Play’ betting, where we implemented
additional website enhancements to
improve the user experience prior to
the start of the current European
football season.
Overview of Group Results
Group turnover for the full period to
29 May 2011 was £106m (2010: £114m)
and gross profit increased by 16% to
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“Although conditions
in the market remain
challenging, after a much
improved performance
from betinternet, the
Board believes that
this business has the
opportunity to further
grow its market presence
during the forthcoming
year.”
Stock Code: WEB
www.webisholdingsplc.co.uk
is due to be issued to member tracks
by the end of this year at the latest.
Concurrent with these developments, the
Board also expects to further progress its
web development and marketing plans in
the US over the coming months.
The Board is of the opinion that, once a
robust cost-effective payment processing
solution has been established, EWS
will be suitably positioned to develop
effectively its sales and marketing strategy
and increase the level of racing content.
In this respect, the Board’s business plan
for EWS remains unchanged going into
the new financial year. There are now
also signs that EWS is again beginning
to trade in line with the Board’s previous
expectations.
betinternet has continued to trade in line
with the Board’s expectations through the
first quarter of the new financial year. The
increase in fixed odds turnover achieved
during the latter part of the last financial
year has been sustained into the summer.
betinternet has benefited from the
addition of new content, as it continues to
utilise and integrate third party data feeds
without the need for additional personnel.
The casino and games turnover and
margin has also improved steadily during
the first quarter, with the live dealer casino
product in particular showing strong
revenue over the summer months.
Although conditions in the market remain
challenging, after a much improved
performance from betinternet, the Board
believes that this business has the
opportunity to further grow its market
presence during the forthcoming year.
Denham Eke
Chairman
£3.04m (2010: £2.62m). Gross margin
improved to 2.9% (2010: 2.3%).
The Group recorded a profit before
interest, tax, depreciation and
amortisation of £149,000 (2010: loss
of £37,000) and an operating loss of
£108,000 (2010: £315,000).
Operating expenses increased by 9%
compared with last year to £2,891,000
(2010: £2,655,000), primarily due to
increased operating costs on the EWS
operation as result of the exchange loss,
payment processing costs and costs
of establishing a presence in the United
States. betinternet’s operating costs
reduced during the year.
Funding
In February 2011, the Group’s largest
shareholder, Burnbrae Limited, exercised
an option to convert its loan note of
£300,000 together with interest thereon
into 23,344,977 new ordinary shares of
1 penny each.
In July 2011, in order to comply with
new legislation introduced in the Isle
of Man requiring gaming companies
to hold sufficient funds to cover all
potential customer liabilities, the Group
deposited £1,130,000 in designated
client accounts, funded via a short term
overdraft facility from Burnbrae Limited on
normal commercial terms.
Strategy, current trading and outlook
The Board’s EWS US development
plan commenced with the outsourced
migration of its Hub operations from
the Isle of Man to a contracted service
provider in Maryland, a project which
was completed in June 2011. This move
is likely to result in greater access to
international content for EWS’ player
base at reduced cost. The Board has
also commissioned the Thoroughbred
Racing Protective Bureau (TRPB) in the
US to update its report on EWS, with
particular emphasis on its US operations.
Compliance with the TRPB is now a
requirement of most US thoroughbred
tracks and track groups. This report
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Directors and Advisers
D H N Eke, aged 59
Non-executive Chairman
Denham Eke began his career in
Stockbroking before moving into
Corporate Planning for a major UK
Insurance Broker. He is a director of
many years’ standing of both Public and
Private companies involved in the retail,
manufacturing and financial services
sectors.
Mr Eke was appointed Chairman in
April 2003.
G Knowles, aged 44
Managing Director
Garry Knowles has 22 years’ experience
in the gaming industry having worked for
the William Hill Organisation for 15 years.
Garry later held the position of Director
of Customer Relations for MGM Mirage
Online before joining betinternet as Head
of Trading Operations in November 2003.
Mr Knowles joined the Board in June
2005.
J Mellon, aged 54
Non-executive Director
Jim Mellon is the founding and principal
shareholder and non-executive director
of Regent Pacific Group Limited. In
addition, he is the founding and principal
shareholder and director of Charlemagne
Capital Limited. Earlier in his career
he worked for GT Management in the
United States and in Hong Kong and later
became the co-founder and managing
director of Tyndall Holdings plc. He is
currently a director of Fixed Odds Group
Limited and a variety of other investment
companies.
Mr Mellon joined the Board in July 2004.
D Waddington, aged 40
Finance Director
Damon Waddington FCCA joined the
Group in February 2006 as Financial
Controller. He previously held the position
of Financial Controller within the Fortis
Group. Prior to that Damon worked
for a London-based firm of Chartered
Accountants.
Mr Waddington joined the Board in
September 2006.
E Comins, aged 42
Pari-mutuel Operations Director
Ed Comins has 20 years’ experience
in the betting and gaming industry with
Coral, Ladbroke Casinos, the Tote and
GameAccount. At the Tote he had overall
responsibility for developing Totepool’s
pari-mutuel business as General Manager
of Tote Direct and Development Director
for Totepool. He was Commercial
Director for GameAccount, a provider of
on-line skill games, where he managed
betting partner relationships with key
sportsbooks.
Mr Comins joined the Board in May 2010.
Principal Bankers
AIB Bank (CI) Limited, 10 Finch Road
Douglas, Isle of Man, IM1 2PT
Nominated Adviser and Broker
Evolution Securities, Kings House
1 Kings Street, Leeds, LS1 2HH
Auditors
KPMG Audit LLC
Chartered Accountants
Heritage Court, 41 Athol Street
Douglas, Isle of Man, IM99 1HN
UK Transfer Agent
Capita Registrars
The Registry, 34 Beckenham Road
Beckenham, Kent, BR3 4TU
Directors
D H N Eke, Chairman
G Knowles, Managing Director
J Mellon, Non-executive Director
D Waddington, Finance Director
E Comins, Pari-mutuel Operations
Director
Secretary
D Waddington
Registered Office
Viking House, Nelson Street
Douglas, Isle of Man, IM1 2AH
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Stock Code: WEB
www.webisholdingsplc.co.uk
Directors’ Report
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The directors present their annual report
and the audited financial statements for
the period ended 29 May 2011.
Principal activities
The Group operates as a licensed sports
bookmaker providing a worldwide internet
service. The Group also operates a pari-
mutuel service to individual and business
customers, utilising its totalisator facility in
the Isle of Man.
Business review
The Group operates on a worldwide basis
and provides internet facilities in respect
of a wide variety of sporting events.
A more detailed review of the business,
its results and future developments is
given in the Chairman’s Statement on
page 2.
Proposed dividend
The directors do not propose the
payment of a dividend (2010: Nil).
Directors’ interests
D H N Eke
G Knowles
J Mellon
D Waddington
E Comins
Policy and practice on payment of
creditors
It is the policy of the Group to agree
appropriate terms and conditions for its
transactions with suppliers by means
of standard written terms to individually
negotiated contracts. The Group seeks to
ensure that payments are always made
in accordance with these terms and
conditions.
At the year end there were 21 days
(2010: 20 days) purchases in trade
creditors.
Financial risks
Details relating to financial risk
management are shown in note 22 to the
accounts.
Directors and directors’ interests
The directors who held office during the
period and to date were as follows:
D H N Eke
Chairman
G Knowles
Managing Director
J Mellon
Non-executive
D Waddington
Finance Director
E Comins
Pari-mutuel
Operations Director
The directors retiring by rotation are
Mr D H N Eke and Mr G Knowles who,
being eligible, offer themselves for re-
election.
The directors who held office at the end
of the period had the following interests in
the ordinary shares of the Company and
options to purchase such shares arising
from incentive schemes:
Ordinary Shares
Options
Interest
at end of
period
2011
—
Interest at
start of
period
2010
—
Interest
at end of
period
2011
—
Interest at
start of
period
2010
—
200,000
200,000
14,000,000
14,000,000
131,704,442
108,359,465
—
—
18,290
—
18,290
3,000,000
3,000,000
—
—
—
Mr Mellon’s interests are more fully described in the note on page 6 (Substantial interests).
Further details of the options issued to the executive directors are contained in the Report of the Remuneration Committee on
pages 10 and 11.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Directors’ Report continued
Substantial interests
On 1 August 2011 the following interests in 3% or more of the Company’s ordinary share capital had been reported:
Burnbrae Limited
Hargreaves Lansdown (Nominees) Limited
Rock Holding Limited
Number of
ordinary shares
%
57.22
131,686,442
5.70
4.01
13,119,437
9,228,357
The Board has been informed that Mr J Mellon is a beneficiary of a trust that holds the entire share capital of Burnbrae Limited.
Separately, Mr Mellon is also interested in 18,000 ordinary shares in the Company.
Political and charitable contributions
The Group made no political contributions
nor donations to charities during the year.
Auditor
KPMG Audit LLC, being eligible, have
expressed their willingness to continue in
office in accordance with Section 12(2) of
the Isle of Man Companies Act 1982.
On behalf of the Board
D Waddington
15 September 2011
Annual General Meeting
Shareholders will be asked to approve
at the Annual General Meeting certain
resolutions as special business. Some of
these resolutions have become routine
business at the Annual General Meetings
of most public companies, including your
Company, and relate to the renewal of the
authority for the directors to allot relevant
securities and the renewal of the powers
for the directors to allot equity securities
for cash.
Employees
The Group is committed to a policy of
equal opportunity in matters relating
to employment, training and career
development of employees and is
opposed to any form of less favourable
treatment afforded on the grounds of
disability, sex, race or religion.
The Group recognises the importance of
ensuring employees are kept informed of
the Group’s performance, activities and
future plans.
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Stock Code: WEB
www.webisholdingsplc.co.uk
Corporate Governance
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The Company is committed to high
standards of corporate governance. The
Board is accountable to the Company’s
shareholders for good corporate
governance.
This statement describes how the
principles of corporate governance are
applied to the Company.
1. Directors
The Company is controlled through the
Board of directors which comprises
three executive and two non-executive
directors.
The Board has a formal schedule of
matters reserved for it and meets at
regular times throughout the year. It is
responsible for overall Group strategy,
acquisition and divestment policy,
approval of major capital expenditure
projects and consideration of significant
financing matters. It monitors the
exposure to key business risks including
legislative, jurisdictional and major liability
management issues. The Board approves
the annual budget and the progress
towards achievement of the budget. The
Board also considers employee issues
and key appointments.
The Chairman is mainly responsible
for the conduct of the Board, and he,
together with the Managing Director,
seeks to ensure that all directors receive
sufficient relevant information on financial,
business and corporate issues prior to
meetings.
It also seeks to ensure that all directors
receive appropriate training on
appointment and then subsequently
as appropriate. All directors will submit
themselves for re-election at least once
every three years.
The Managing Director, in conjunction
with his executive colleagues, is
responsible for co-ordinating the
Company’s business and implementing
strategy.
None of the non-executive directors are
deemed to be independent, although
the Board intends to appoint at least one
independent director at an appropriate
time.
Shareholders are encouraged to
contact the Chairman should they
require clarification on any aspect of the
Company’s business.
The Board has established two standing
committees, both of which operate within
defined terms of reference.
The committees established are the
Audit Committee and the Remuneration
Committee. The Board does not consider
it necessary for a company of its size
to establish a standing Nominations
Committee. Instead the Board’s policy in
relation to Board appointments is for the
Chairman to agree selection criteria with
all Board members and use independent
recruitment consultants to initiate the
search for candidates. The final decision
on appointments rests with the full Board.
All directors are able to take independent
professional advice in furtherance of their
duties if necessary.
2. Directors’ Remuneration
The Report of the Remuneration
Committee is set out on pages 10 and 11
of the report and accounts.
3. Relations with Shareholders
The Company encourages two-way
communication with both its institutional
and private investors and attempts to
respond quickly to all queries received
verbally or in writing.
The Board has sought to use the Annual
General Meeting to communicate with
private investors and encourages their
participation.
4. Financial Reporting
The performance and financial position
of the Group are provided in the
Chairman’s Statement on pages 2 and
3 and the Directors’ Report on pages
5 and 6. These enable the Board to
present a balanced and understandable
assessment of the Group’s position and
prospects. The directors’ responsibilities
for the financial statements are described
on page 9.
Internal Control
The Board believes it has controls in
place which have established an ongoing
process for identifying, evaluating and
managing the significant risks faced by the
Group. In this regard, the Board seeks to
work closely with the Group’s auditor.
The Board also acknowledges that it
has overall responsibility for reviewing
the effectiveness of internal control. It
believes that senior management within
the Group’s operating businesses should
also contribute in a substantial way and
this has been built into the process.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Corporate Governance continued
Going Concern
As more fully explained in note 1.1 to
the accounts on page 17, and after
making enquiries, the directors have
formed a judgement, at the time of
approving the financial statements, that
there is a reasonable expectation that
the Group has adequate resources to
continue in operational existence for the
foreseeable future. For this reason, the
directors continue to adopt the going
concern basis in preparing the financial
statements.
Internal Audit
The directors have reviewed the need
for an internal audit function and believe
that the Group is not of sufficient size and
complexity to require such a function.
Cash flow forecasts are regularly
prepared to ensure that the Group
has adequate funds and resources for
the foreseeable future.
Risks are identified and appraised
through the annual process of
preparing these budgets.
Steps have been taken to
embed internal control and risk
management into the operations
of the business and to deal with
areas of improvement which come
to management’s and the Board’s
attention. This process is continuing
to increase risk awareness throughout
the Group.
Audit Committee
The Audit Committee comprises the
non-executive directors and is chaired
by Mr D H N Eke. The committee acts
in an advisory capacity to the Board
and meets not less than twice a year. Its
terms of reference require it to take an
independent view of the appropriateness
of the Group’s accounting controls,
policies and procedures. The committee
also reviews and approves the reports,
appointment and fees of the external
auditor, and meets its external auditor at
least once a year. Additional meetings
may be requested by the auditor.
There are inherent limitations in
any system of internal control and,
accordingly, even the most effective
system can provide only reasonable, and
not absolute, assurance with respect to
the preparation of financial information
and the safeguarding of assets. The
system adopted by the Board manages
rather than eliminates the risk of failure to
achieve business objectives.
In carrying out its review of the
effectiveness of internal control in the
Group the Board takes into consideration
the following key features of the risk
management process and system of
internal control:
Risks are identified which are
relevant to the Group as a whole
and encompass all aspects of risk
including operational, compliance,
financial and strategic.
The Board seeks to identify, monitor
and control the significant risks to
an acceptable level throughout the
Group. In order to do so the Audit
Committee, acting on behalf of the
Board, reviews risk matters at each
meeting of the Audit Committee.
The Group operates a comprehensive
budgeting and financial reporting
system which, as a matter of
routine, compares actual results with
budgets. Management accounts are
prepared for each operating activity
and the Group on a monthly basis.
Material variances from budget are
thoroughly investigated. In addition,
the Group’s profitability forecast is
regularly updated based on actual
performance as the year progresses.
A thorough reforecast exercise is
undertaken following production of
the half-year accounts.
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Stock Code: WEB
www.webisholdingsplc.co.uk
Statement of Directors’ Responsibilities
in Respect of the Directors’ Report and
the Financial Statements
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The directors are responsible for keeping
proper accounting records that disclose
with reasonable accuracy at any time the
financial position of the Parent Company
and to enable them to ensure that its
financial statements comply with the
Companies Acts 1931 to 2004. They
have general responsibility for taking such
steps as are reasonably open to them to
safeguard the assets of the Group and
to prevent and detect fraud and other
irregularities.
The directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation governing the preparation and
dissemination of financial statements may
differ from one jurisdiction to another.
The directors are responsible for
preparing the Directors’ Report and the
financial statements in accordance with
applicable law and regulations.
Company law requires the directors to
prepare Group and Parent Company
financial statements for each financial
year which meet the requirements of
Isle of Man company law. In addition,
the directors have elected to prepare
the Group and Parent Company
financial statements in accordance
with International Financial Reporting
Standards.
The Group and Parent Company financial
statements are required by law to give
a true and fair view of the state of affairs
of the Group and Parent Company and
of the profit or loss of the Group for that
period.
In preparing these financial statements,
the directors are required to:
select suitable accounting policies
and then apply them consistently;
make judgements and estimates that
are reasonable and prudent;
state whether they have been
prepared in accordance with
International Financial Reporting
Standards; and
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Parent Company will
continue in business.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Report of the Remuneration Committee
Introduction
As an Isle of Man company there is no
requirement to produce a Directors’
remuneration report. However, this report
has been prepared to accord as far as
possible with rules and regulations for
UK public companies in relation to the
disclosure of directors’ remuneration.
This report also attempts to meet, as far
as is practicable for a company of Webis
Holdings’ size, the relevant requirements
of the Listing Rules of the UK Financial
Services Authority and describes how
the Board has applied the Principles of
Good Governance relating to directors’
remuneration. As required by the
Regulations, a resolution to approve the
report will be proposed at the Annual
General Meeting of the Company at
which the financial statements will be
approved.
Remuneration Committee
The Company has an established
Remuneration Committee which has a
formal constitution and is composed
of the non-executive directors of the
Company under the Chairmanship of
D H N Eke.
No director plays a part in any discussion
about his own remuneration.
Remuneration Policy
The Remuneration Committee’s policy is
to ensure that the remuneration packages
offered are competitive and designed
to attract, retain and motivate executive
directors of the right calibre.
The major elements of the remuneration
package for the executive directors are:
Basic annual salary and benefits.
Eligibility to participate in an annual
bonus scheme, when such scheme
operates.
Share option incentives.
Contribution to a pension plan.
The Committee seeks to ensure that
bonus and share option incentives have a
strong link with individual performance.
Basic Salary
The level of basic annual salary and
benefits is determined by the Committee,
taking into account the performance
of the individual and information from
independent sources on the rates of
salary for similar jobs in comparable
companies.
Annual Bonus Payments
It is anticipated that an annual bonus
scheme will operate when Group
profitability and cash flow allow.
Bonuses for the executive directors are
calculated with reference to the profit
before tax as disclosed in the audited
accounts of the Group, together with
an assessment by the Committee of the
director’s performance against agreed
personal targets. Bonus payments are
not pensionable. Garry Knowles received
a one-off bonus during the year for his
trading contribution during the football
World Cup period.
Share Options
The Committee believes that share
ownership by executives strengthens the
link between their personal interests and
those of shareholders. The Company
currently operates four share option
schemes, although it is intended that
following the adoption of the 2005 Share
Option Plan, no further options will be
issued under these schemes. Options
are granted to executives periodically
at the discretion of the Remuneration
Committee. The grant of share options
is not subject to fixed performance
criteria. This is deemed to be appropriate
as it allows the Committee to consider
the performance of the Group and the
contribution of the individual executives
and, as with annual bonus payments,
illustrates the relative importance placed
on performance related remuneration.
Pensions
The Group does not intend to contribute
to the personal pension plans of directors
in the forthcoming period.
Service Contracts
During the period under review, the
service contract of Mr G R Knowles
provided for a notice period of six months
by all parties and the service contracts
of Mr D Waddington and Mr E Comins
for a notice period of three months by all
parties.
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Aggregate Directors’ Remuneration
The total amounts for directors’ remuneration were as follows:
Emoluments — salaries, bonus and taxable benefits
— fees
Directors’ Emoluments
Executive
D Waddington
G R Knowles
E Comins
Non-executive
D H N Eke*
J Mellon
Aggregate emoluments
* Paid to Burnbrae Limited.
Basic
salary
£000
100
123
103
—
—
326
Fees
£000
Bonus
payments
£000
Taxable
benefits
£000
—
—
—
24
12
36
—
10
—
—
—
10
—
—
—
—
—
—
2011
£000
336
36
372
2011
Total
£000
100
133
103
24
12
372
2010
£000
210
35
245
2010
Total
£000
93
113
4
23
12
245
Details of the options outstanding at 29 May 2011 are as follows:
Name of
director
G R Knowles
30 May
2010
(Lapsed)/
granted in
period
29 May
2011
Exercise
price
Date
from which
exercisable
Expiry
date
(a) 2005 Share Option Plan
1,500,000
(b) 2005 Share Option Plan
9,000,000
(c) 2005 Share Option Plan
3,500,000
D Waddington
(a) 2005 Share Option Plan
3,000,000
17,000,000
—
—
—
—
—
1,500,000
9,000,000
3,500,000
3,000,000
17,000,000
10.4p
18 March 2008 18 March 2015
5p
30 March 2009 30 March 2016
6.0565p
20 Sept 2009
20 Sept 2016
4.775p
7 Nov 2010
7 Nov 2017
The market price of the shares at 27 May 2011 (the last closing price prior to the period end) was 1.375p. The range during the
period was 2.625p to 1.125p.
Approval
The report was approved by the Board of directors and signed on behalf of the Board.
D H N Eke
Chairman
15 September 2011
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Report of the Independent Auditors, KPMG Audit
LLC, to the members of Webis Holdings plc
Scope of the audit of the financial
statements
An audit involves obtaining evidence
about the amounts and disclosures
in the financial statements sufficient
to give reasonable assurance that the
financial statements are free from material
misstatement, whether caused by fraud
or error. This includes an assessment
of: whether the accounting policies are
appropriate to the Group’s circumstances
and have been consistently applied and
adequately disclosed; the reasonableness
of significant accounting estimates
made by the directors; and the overall
presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
Matters on which we are required to
report by exception
We have nothing to report in respect
of the following matters where the
Companies Acts 1931 to 2004 require us
to report to you if, in our opinion:
proper books of account have not
been kept by the Parent Company
and proper returns adequate for our
audit have not been received from
branches not visited by us; or
the Parent Company’s statement of
financial position and statement of
comprehensive income are not in
agreement with the books of account
and returns; or
certain disclosures of directors’
remuneration specified by law are not
made; or
give a true and fair view of the state
we have not received all the
of the Group’s and Parent Company’s
affairs as at 29 May 2011 and of the
Group’s loss for the year then ended;
have been properly prepared in
accordance with IFRSs; and
have been properly prepared in
accordance with the provisions of
Companies Acts 1931 to 2004.
information and explanations we
require for our audit.
KPMG Audit LLC
Chartered Accountants
Heritage Court, 41 Athol Street
Douglas, Isle of Man, IM99 1HN
15 September 2011
We have audited the financial statements
of Webis Holdings plc for the period
ended 29 May 2011 which comprise
the Group Statement of Comprehensive
Income, the Group and Parent Company
Statements of Financial Position, the
Group Statement of Cash Flows, the
Group and Parent Company Statements
of Changes in Shareholders’ Equity
and the related notes. The financial
reporting framework that has been
applied in their preparation is applicable
law and International Financial Reporting
Standards (IFRSs).
This report is made solely to the
Company’s members, as a body, in
accordance with Section 15 of the
Companies Act 1982. Our audit work
has been undertaken so that we might
state to the Company’s members those
matters we are required to state to them
in an auditor’s report and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than the
Company and the Company’s members,
as a body, for our audit work, for this
report, or for the opinions we have
formed.
Respective responsibilities of
Directors and Auditor
As explained more fully in the Directors’
Responsibilities Statement set out on
page 9, the directors are responsible for
the preparation of financial statements
that give a true and fair view. Our
responsibility is to audit, and express
an opinion on, the financial statements
in accordance with applicable law and
International Standards on Auditing (UK
and Ireland). Those standards require
us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for
Auditors.
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Consolidated Statement of
Comprehensive Income
For the period ended 29 May 2011
Turnover
Cost of sales
Betting duty paid
Gross profit
Administration expenses
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
Share-based payment costs
Total operating loss
Net finance costs
Taxation
Total comprehensive loss for the period attributable to owners
Basic and diluted loss per share (pence)
The notes on pages 17 to 31 form part of these financial statements.
Note
2
2011
£000
2010
£000
105,546
114,167
(102,470)
(111,519)
(36)
3,040
(2,891)
149
(248)
(9)
(108)
(2)
—
(110)
(0.05)
(30)
2,618
(2,655)
(37)
(255)
(23)
(315)
(22)
—
(337)
(0.16)
3
4
5
7
8
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Consolidated Statement of
Financial Position
As at 29 May 2011
Non-current assets
Intangible assets — goodwill
Intangible assets — other
Property and equipment
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Bank overdraft
Trade and other payables
Convertible loan notes
Total current liabilities
Net assets/(liabilities)
Shareholders’ equity
Called up share capital
Share premium account
Share option reserve
Profit and loss account
Total shareholders’ equity
2011
2011
Group
Company
Note
£000
£000
2010
Group
£000
2010
Company
£000
9
10
11
12
14
13
22
15
16
17
111
231
34
—
376
838
1,470
2,308
—
(2,049)
—
(2,049)
635
2,302
10,049
116
—
2
—
705
707
29
8
37
—
(549)
—
(549)
195
2,302
10,049
116
43
311
75
—
429
834
999
1,833
(295)
(1,287)
(300)
(1,882)
380
2,068
9,927
107
—
3
1
705
709
29
260
289
—
(859)
(300)
(1,159)
(161)
2,068
9,927
107
(11,832)
(12,272)
(11,722)
(12,263)
635
195
380
(161)
The financial statements were approved by the Board of directors on 15 September 2011.
D H N Eke
Director
G R Knowles
Director
The notes on pages 17 to 31 form part of these financial statements.
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Consolidated Statement of
Changes in Shareholders’ Equity
For the period ended 29 May 2011
Group
Balance as at 31 May 2009
Total comprehensive loss for the period
Transactions with owners:
Share-based payment expense
Balance as at 30 May 2010
Total comprehensive loss for the period
Transactions with owners:
Arising on shares issued in the year
Share-based payment expense
Balance as at 29 May 2011
Company
Balance as at 31 May 2009
Total comprehensive loss for the period
Transactions with owners:
Share-based payment expense
Balance as at 30 May 2010
Total comprehensive loss for the period
Transactions with owners:
Arising on shares issued in the year
Share-based payment expense
Balance as at 29 May 2011
Called up
Share Share option
Retained shareholders’
Total
share capital
premium
£000
2,068
—
—
2,068
—
234
—
£000
9,927
—
—
9,927
—
122
—
reserve
£000
84
—
23
107
—
—
9
earnings
£000
(11,385)
(337)
—
(11,722)
(110)
—
—
2,302
10,049
116
(11,832)
equity
£000
694
(337)
23
380
(110)
356
9
635
Total
Called up
Share Share option
Retained shareholders’
share capital
premium
£000
2,068
—
—
2,068
—
234
—
£000
9,927
—
—
9,927
—
122
—
reserve
£000
84
—
23
107
—
—
9
earnings
£000
(12,240)
(23)
—
(12,263)
(9)
—
—
2,302
10,049
116
(12,272)
equity
£000
(161)
(23)
23
(161)
(9)
356
9
195
The notes on pages 17 to 31 form part of these financial statements.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Consolidated Statement of Cash Flows
For the period ended 29 May 2011
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Interest received
Purchase of intangible assets
Purchase of property and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Interest paid
Issue of equity shares
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Net cash and cash equivalents at end of period
Cash and cash equivalents comprise
Cash and deposits
Bank overdraft
Cash generated from operations
Loss from operations
Adjusted for:
Depreciation and amortisation
Share-based payment cost
Increase in receivables
Increase/(decrease) in payables
Net cash inflow/(outflow) from operating activities
The notes on pages 17 to 31 form part of these financial statements.
2011
£000
607
—
(183)
(12)
(195)
(2)
356
354
766
704
1,470
1,470
—
1,470
2010
£000
(335)
—
(211)
(25)
(236)
(22)
—
(22)
(593)
1,297
704
999
(295)
704
(108)
(315)
248
9
(4)
462
607
255
23
(121)
(177)
(335)
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Stock Code: WEB
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Notes to the Accounts
For the period ended 29 May 2011
1 Reporting entity
Webis Holdings plc 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 Group’s consolidated financial statements as at and for the period ended
29 May 2011 consolidates 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 International Financial Reporting Standards
(“IFRSs”) and its interpretations adopted by the International Accounting Standards Board (“IASB”).
The Group has continued to apply the accounting policies used in the 30 May 2010 annual report.
New significant standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the period ended 29 May
2011, and have not been applied in preparing these consolidated financial statements:
International Accounting
Standards (IAS/IFRS)
IAS 24
IFRS 3
IFRS 9
IFRS 10
IFRS 11
IFRS 12
IFRS 13
Effective date
(accounting periods
commencing on
or after)
Related party disclosures — Revised definition of related parties (revised 2009)
1 January 2011
Business Combinations
Financial instruments
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
1 July 2010
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
The directors do not expect the adoption of the other standards and interpretations to have a material impact on the Group’s
financial statements in the period of initial application.
(b) Basis of measurement and functional currency
The Group consolidated financial statements are presented in Pounds Sterling, rounded to the nearest thousand. They 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 IFRS 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 believe the models and assumptions used to calculate the fair value of the share-based payments, outlined in note
17, are the most appropriate for the Group.
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements.
(d) Going concern
The directors have prepared projected cash flow information for the next 18 months and are satisfied that the Group has
adequate resources to meets its obligations as they fall due. The directors consider that it is appropriate that these financial
statements are prepared on the going concern basis.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
1 Reporting entity continued
1.2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented unless otherwise stated.
Basis of consolidation
(i) The consolidated financial statements incorporate the results of Webis Holdings plc and its subsidiaries. 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.
(ii) Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements and income and expenses arising from intra-group transactions
are eliminated in preparing the consolidated financial statements.
Foreign currency translation
The Group’s financial statements are presented in Pounds Sterling, which is the Company’s functional and presentational
currency. All subsidiaries of the Group have Pounds Sterling as their functional currency.
Foreign currency transactions are translated into the functional currency using the approximate exchange rate prevailing at the
dates of transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from
the translation at the period end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical costs in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated
at fair value are translated into the functional currency using the exchange rates ruling at the date fair value was determined.
Revenue recognition and turnover
Turnover represents the amounts staked in respect of bets placed by customers on events which occurred during the period.
Cost of sales represents payouts to customers, together with Betting Duty payable and commissions and royalties payable to
agents and suppliers of software. Open betting positions are carried at fair market value.
Segmental reporting
Segmental reporting is based on the business areas in accordance with the Group’s internal reporting structure. Since 1 June
2009 the Group determines and presents segments based on the information that internally is provided to the CEO, the Group’s
chief operating decision maker. Previously operating segments were determined and presented in accordance with IAS 14
Segment reporting.
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 CEO to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete financial information is available.
Financing costs
Interest payable on borrowings is calculated using the effective interest rate method.
Deferred income tax
Deferred taxation is provided in full, using the liability method, on timing differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the
related deferred tax is realised. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
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1 Reporting entity continued
Intangible assets — Goodwill
Goodwill represents the excess of fair value consideration over the fair value of the identifiable assets and liabilities acquired, arising
on the acquisition of subsidiaries. Goodwill is included in non-current assets. Goodwill is reviewed at least annually for impairment
and is carried at costs less accumulated impairment losses. Goodwill arising on acquisitions before the transition date of 29 May
2006 has been retained at the previous UK GAAP value and is no longer amortised but is tested annually for impairment.
Intangible assets — Other
Other intangible assets comprise website design and development costs, software licences and registered trademarks and
are stated at acquisition cost less accumulated amortisation. Carrying amounts are reviewed at each financial position date for
impairment.
Costs that are directly attributable to the development of websites are recognised as intangible assets provided that the intangible
asset will generate probable economic benefits and income streams through external use in line with SIC 32 “Intangible assets-
website costs”. Content development and operating costs are expensed as incurred.
Careful judgement by the directors is applied when deciding whether recognition requirements for development costs have been
met and whether the assets will generate probable future economic benefit. Amortisation is calculated using the straight-line
method, at annual rates estimated to write off the assets over their expected useful lives as follows:
Website design and development
Software licences
Trademarks
33.33%
33.33%
33.33%
Property and equipment
Items of property and equipment 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.
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. Assets are depreciated over their expected useful lives as follows:
Equipment
Fixtures & fittings
33.33%
33.33%
Impairment of assets
Goodwill arising on acquisitions and other assets that have an indefinite useful life and are not subject to amortisation are
reviewed at least annually for impairment.
Other intangible assets, property, plant and equipment are reviewed for impairment whenever there is an indication that the
carrying amount of the asset may not be recoverable. If the recoverable amount of an asset is less than its carrying amount, an
impairment loss is recognised. Recoverable amount is the higher of fair value less costs to sell and value in use.
If at the financial position date there is any indication that an impairment loss is recognised in prior periods for an asset other than
goodwill that no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
1 Reporting entity continued
Share-based payments
For all the employee share options granted after 7 November 2002 and vesting on or after 29 May 2006, an expense is
recognised in the income statement with a corresponding credit to equity. The equity share-based payment is measured at fair
value at the date of the grant. Fair value is determined by reference to option pricing models, principally the Black-Scholes model.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest.
Leasing
Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
Equity
Share capital is determined using the nominal value of shares that have been issued.
The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from the premium paid.
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 retained earnings.
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 Shareholders’ Equity.
Financial instruments
Non-derivative financial instruments include trade and other receivables, cash and cash equivalents, loans and borrowings
and trade and other payables. Ante-post sports bets are recognised when the Company becomes party to the contractual
agreements of the instrument.
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 do not carry any interest and are stated at their nominal amounts as reduced to equal the estimated
present value of their future cash flows.
Cash and cash equivalents
Cash and cash equivalents are defined as cash at 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.
Bank borrowings
Interest bearing bank 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 to the extent they are not settled in the period in
which they arise.
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1 Reporting entity continued
Trade and other payables
Trade and other payables are non-interest bearing and are stated at amortised cost.
Convertible loans
Convertible loan notes are interest bearing and are stated at amortised cost.
The convertible loan note has been classified fully as a liability in the balance sheet, as in the view of the directors it does not meet
the definition under International Reporting Standard 32 for an element to be disclosed under equity.
Equity instruments
Equity instruments issued by the Group are recorded at proceeds received, net of direct costs.
Ante-post sports bets
The Group may have at any point in time an exposure on ante-post sports bets. These bets meet the definition of a financial
liability under International Accounting Standard 32 “Financial Instruments: Disclosure and Presentation”, and therefore are
recorded initially at fair value, and subsequently at amortised cost using the effective interest method.
2 Segmental Analysis
Turnover
Sportsbook
Pari-mutuel
Profit/(loss) before tax
Sportsbook
Pari-mutuel
Group
Net assets
Sportsbook
Pari-mutuel
Group
3 Share-based payment costs
Share options
Asia Pacific
UK & Ireland
Europe
Rest of the World
United States
Caribbean
Australia
2011
£000
57,863
8,692
4,070
802
17,694
13,912
2,513
105,546
1
(102)
(9)
(110)
(756)
1,477
(86)
635
2011
£000
9
9
2010
£000
54,476
13,656
9,738
1,332
18,788
16,177
—
114,167
(778)
464
(23)
(337)
(757)
1,579
(442)
380
2010
£000
23
23
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Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
4 Total operating loss
Group operating loss is stated after charging:
Auditors’ remuneration:
Group — audit
Company — audit
Depreciation of property and equipment
Amortisation of intangible assets
Exchange losses
Operating lease rentals — other than plant and equipment
Directors’ fees
5 Net finance costs
Bank interest receivable
Bank interest payable
Loan interest payable
Net finance costs
6 Staff numbers and cost
Average number of employees (including directors)
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Share-based costs
7 Taxation
2011
£000
73
43
53
195
168
62
36
2011
£000
—
—
(5)
3
(2)
(2)
2011
34
2010
£000
71
42
60
195
59
87
35
2010
£000
—
—
(4)
(18)
(22)
(22)
2010
35
2011
£000
1,059
108
9
1,176
2010
£000
995
97
22
1,114
No provision for tax is required for either the current or previous period, due to the zero per cent corporate tax regime in the
Isle of Man.
Unprovided deferred tax was £Nil (2010: £Nil).
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8 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 period.
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 and convertible debt in the previous period has not been reflected in the
calculation of the diluted loss per share, as the effect would have been anti-dilutive.
Loss for the period
Weighted average number of ordinary shares in issue
Diluted number of ordinary shares
Basic loss per share (pence)
Diluted loss per share (pence)
9
Intangible assets — goodwill
Group
Cost
Balance at 30 May 2010
Additions during the period
Balance at 29 May 2011
Amortisation and Impairment
At 30 May 2010
Amortisation for the period
At 29 May 2011
Net book value
At 29 May 2011
At 30 May 2010
2011
£000
(110)
2010
£000
(337)
No.
No.
212,902,757 206,826,667
230,171,644 226,498,798
(0.16)
(0.16)
(0.05)
(0.05)
Goodwill
£000
43
68
111
—
—
—
111
43
The brought forward goodwill relates to the acquisition of the pari-mutuel business which is both a cash generating unit and a
reportable segment.
The addition during the period relates to goodwill arising on the acquisition on 1 August 2010 of WatchandWager.com LLC, a US
registered entity and licenced for pari-mutuel wagering in North Dakota, calculated as follows:
Net assets acquired
Cost of acquisition
Goodwill arising on acquisition
2011
£000
—
68
68
2010
£000
—
—
—
The recoverable amount of goodwill on both pari-mutuel business units has been determined based on a value in use calculation
using cash flow projections based on financial budgets approved by the Directors.
23
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
10 Intangible assets — other
Cost
Balance at 30 May 2010
Additions during the period
Balance at 29 May 2011
Amortisation and Impairment
At 30 May 2010
Amortisation for the period
At 29 May 2011
Net book value
At 29 May 2011
At 30 May 2010
11 Property and equipment
Group
Cost
At 30 May 2010
Additions
At 29 May 2011
Depreciation
At 30 May 2010
Charge for the period
At 29 May 2011
Net book value
At 29 May 2011
At 30 May 2010
Company
Cost
At 30 May 2010
Additions
At 29 May 2011
Depreciation
At 30 May 2010
Charge for the period
At 29 May 2011
Net book value
At 29 May 2011
At 30 May 2010
24
Software & development
costs
Group
£000
Company
£000
2,517
115
2,632
2,206
195
2,401
231
311
Computer
equipment
£000
Fixtures &
fittings
£000
1,241
12
1,253
1,179
42
1,221
32
62
281
—
281
268
11
279
2
13
Computer
equipment
£000
Fixtures &
fittings
£000
263
—
263
262
1
263
—
1
79
—
79
79
—
79
—
—
33
—
33
30
1
31
2
3
Total
£000
1,522
12
1,534
1,447
53
1,500
34
75
Total
£000
342
—
342
341
1
342
—
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12 Investments
Company
As at 30 May 2010 & 29 May 2011
Details of investments at 29 May 2011 are as follows:
Subsidiaries
European Wagering Services Limited
Country of incorporation
Isle of Man
Technical Facilities & Services Limited
Isle of Man
betinternet.com (IOM) Limited
betinternet UK.com Limited
Isle of Man
England
betinternet.com NV
WatchandWager.com LLC
Netherlands Antilles
United States of America
Activity
Operation of interactive wagering
totaliser hub
Provision of IT & betting systems to
Group companies
Sportsbook trading company
Holder of UK bookmaker’s permit
non-trading
Licence holder for games and casinos
Operation of interactive wagering
totaliser hub
Investment
in subsidiary
companies
£000
705
Holding (%)
100
100
100
100
100
100
On 1 August 2010, the Group acquired 100% of WatchandWager.com LLC, a US registered entity and licenced for pari-mutuel
wagering in North Dakota.
13 Cash and cash equivalents
A security assignment of £10,000 held with AIB Bank (CI) Limited, Isle of Man Branch, in the name of Betinternet (IOM) Limited is
registered with the Isle of Man Companies Registry.
14 Trade and other receivables
Trade receivables
Other receivables and prepayments
Group
Company
2011
£000
626
212
838
2010
£000
720
114
834
2011
£000
—
29
29
2010
£000
—
29
29
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
15 Trade and other payables
Trade payables
Amounts due to Group undertakings
Deferred income
Income tax and national insurance
Accruals and other payables
Group
Company
2011
£000
1,505
—
5
24
515
2,049
2010
£000
1,041
—
17
8
221
1,287
2011
£000
38
59
—
—
452
549
2010
£000
31
677
—
—
151
859
Amounts due to Group undertakings are unsecured, interest free and repayable on demand.
16 Convertible loan note
Convertible loan note
Group and Company
2010
2011
£000
£000
300
—
The Group had issued a £300,000 secured convertible loan note to Burnbrae Limited on 23 February 2007, which was secured
over all the assets and undertakings of the Group and bore interest at LIBOR plus 4%. The loan and accrued interest were
converted into 23,344,977 ordinary shares on 24 February 2011.
17 Share Capital
Authorised
Ordinary shares of 1p each
Allotted, issued and fully paid
At 30 May 2010: ordinary shares of 1p each
Issued during the period
At 29 May 2011: ordinary shares of 1p each
No.
400,000,000
206,826,667
23,344,977
230,171,644
2011
£000
4,000
2,068
234
2,302
2010
£000
4,000
2,068
—
2,068
Options
Movements in share options during the period ended 29 May 2011 were as follows:
At 30 May 2010 — 1p ordinary shares
Options granted
Options lapsed
Options exercised
At 29 May 2011 — 1p ordinary shares
Details of options at 29 May 2011 were as follows:
Price per share
10.4p
5.0p
6.0565p
4.775p
2005 Share Option Plan
2005 Share Option Plan
2005 Share Option Plan
2005 Share Option Plan
No.
17,056,000
—
(56,000)
—
17,000,000
Options granted
1,500,000
9,000,000
3,500,000
3,000,000
17,000,000
Exercisable between
March 2008 and March 2015
March 2009 and March 2016
September 2009 and September 2016
November 2010 and November 2017
In September 2010, options to subscribe for 56,000 Ordinary 1p shares, which were exercisable from September 2003 to
September 2010, and granted under the terms of the 1998 Share Option Plan, lapsed.
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17 Share Capital continued
The fair value of services received in return for share options granted is based on the fair value of share options granted,
measured using the Black–Scholes model with the following inputs:
Share price at date of grant
Option exercise price at date of grant
Expected volatility
Option life
Expected dividends
Risk-free interest rate
varies from
varies from
2005 Share
Option Plan
0.04775p to 0.104p
0.04775p to 0.104p
20%
3.5 years
0%
4.60%
Expected volatility was determined by calculating the historical volatility of the Company’s weighted average share price over the
period. The expected life used has been adjusted based on management’s best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Expense in profit and loss account:
Share options
18 Contingent Liabilities
2011
£000
9
9
2010
£000
23
23
By the nature of the business, a stake can be received from a customer in respect of some event happening in the future, and
hence the level of any actual liability to the Group cannot be assessed until after that event has occurred, although the maximum
potential liability can be determined. As at the financial position date there were £5,080 (2010: £17,424) of such stakes that had
been received where the event to which they related was after the financial position date. Accordingly, such amount has been
reflected as deferred income in the balance sheet (see note 15). The maximum possible liability on deferred bets is £0.03m
(2010: £0.315m).
19 Capital Commitments
As at 29 May 2011, the Group had no capital commitments (2010: £Nil).
20 Operating lease commitments
At 29 May 2011, the Group was committed to making the following payments during the next period in respect of operating
leases:
Leases which expire within one year
Leases which expire between one and two years
Leases which expire between two and five years
20797-04 14/09/2011
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2011
£000
—
—
—
2010
£000
25
—
—
27
Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
21 Related party transactions
Rental and service charges of £53,790 (2010: £86,536) and loan interest of £(2,781) (2010: £18,253) were charged/(credited) by
Burnbrae Limited during the period.
22 Financial risk management
Capital structure
The Group’s capital structure is as follows:
Cash and cash equivalents
Loans and similar income
Net funds
Shareholders’ equity
Capital employed
2011
£000
1,470
—
1,470
(635)
835
2010
£000
704
(300)
404
(380)
24
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, interest rate risks and foreign exchange risks.
Liquidity risks
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 and renegotiated where necessary to meet the Group’s requirements. In order to provide
customers with the reassurance that repayment requests are immediately met, the Group seeks to ensure that its cash balances
plus amounts held by host tracks on behalf of customers exceed the balances due to customers. On this measure there was
a surplus of £680,000 (2010: surplus of £243,000) at the period end. The Directors anticipate that the business will continue to
generate positive cash flow in the forthcoming period to meet any of its obligations to customers.
In the previous period the Group had an overdraft facility, at an interest rate of base plus 1%, of £400,000, which has been
replaced by a short-term loan facility with Burnbrae Limited, at an interest rate of base plus 4%, of £350,000 (2010: £Nil).
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22 Financial risk management continued
The following are the contractual maturities of financial liabilities:
2011
Financial liabilities
Trade creditors
Income tax and national insurance
Other creditors
2010
Financial liabilities
Trade creditors
Income tax and national insurance
Bank overdraft
Other creditors
Convertible loan note
Carrying Contractual
cash flow
amount
£000
£000
(1,509)
1,509
(24)
24
(366)
358
(1,899)
1,891
6 months
or less
£000
(1,509)
(24)
(366)
(1,899)
Carrying Contractual
cash flow
amount
£000
£000
(1,041)
1,041
(8)
8
(295)
295
(82)
82
(318)
300
(1,744)
1,726
6 months
or less
£000
(1,041)
(8)
(295)
(82)
(318)
(1,744)
Up to
1 year
£000
—
—
—
—
Up to
1 year
£000
—
—
—
—
—
—
1–5
years
£000
—
—
—
—
1–5
years
£000
—
—
—
—
—
—
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.
Classes of financial assets — carrying amounts
Cash and cash equivalents
Trade and other receivables
2011
£000
1,470
838
2,308
2010
£000
704
834
1,538
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 trade receivables by business segment:
Pari-mutuel
Sportsbook
2011
£000
626
212
838
2010
£000
750
84
834
Of the above receivables, £588,000 (2010: £720,000) relates to amounts owed from US horse 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. No amounts were considered past due at the year end (2010: £Nil).
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notes to the Accounts continued
For the period ended 29 May 2011
22 Financial risk management continued
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 inter bank rates.
Any movement in interest rates would not be considered to have any significant impact on net assets at the balance sheet date.
Foreign Currency risks
The Group operates internationally and is subject to transactional foreign currency exposures primarily with respect to the Euro,
US Dollar and Singapore Dollar.
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 balance sheet date the Group had the following exposure:
2011
HKD GBP EUR USD SGD NOK DKK AUD CAD CHF CNY
£000
£000
£000
Current assets
—
52
2
Current liabilities
(9)
(7)
(52)
Short-term exposure —
(9)
(5)
£000
20 1,897
(187)
(848)
(167) 1,049
£000
256
(839)
(583)
£000
67
(72)
(5)
£000
4
(8)
(4)
£000
5
(7)
(2)
£000
1
(9)
(8)
£000
3
(3)
—
£000
SEK Total
£000
£000
1 2,308
(8) (2,049)
259
(7)
2010
Current assets
Current liabilities
Short-term exposure
HKD GBP EUR
£000
£000
£000
39 1,622
(42) (2,003)
(381)
USD
£000
39 1,293
(483)
810
(128)
(89)
(3)
SGD NOK
£000
£000
—
146
(7)
(89)
(7)
57
DKK
£000
3
(1)
2
AUD CAD
£000
£000
3
9
(1)
(7)
2
2
CHF CNY
£000
£000
—
1
—
—
—
1
SEK
£000
Total
£000
7 3,162
(6) (2,767)
395
1
The following table illustrates the sensitivity of the net result for the period and equity in regards to the Group’s financial assets
and financial liabilities and the Sterling—US Dollar exchange rate, Sterling—Euro exchange rate and Sterling—Singapore Dollar
exchange rate.
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22 Financial risk management continued
A 5% weakening of Sterling against the following currencies at 29 May 2011 would have increased equity and profit and loss by
the amounts shown below:
2011
Current assets
Current liabilities
Net assets
2010
Current assets
Current liabilities
Net assets
USD
£000
95
(42)
53
USD
£000
65
(24)
41
EUR
£000
1
(9)
(8)
EUR
£000
2
(6)
(4)
SGD
£000
3
(4)
(1)
SGD
£000
7
(4)
3
Total
£000
99
(55)
44
Total
£000
74
(34)
40
A 5% strengthening of Sterling 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.
23 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 57.22%.
24 Post balance sheet event
In July 2011, in order to comply with Isle of Man E-gaming legislation introduced in December 2010, the Group has deposited
funds into designated client bank accounts.
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Webis Holdings plc
Annual Report and Accounts for the period ended 29 May 2011
Notice of Meeting
NOTICE IS HEREBY GIVEN that the
Annual General Meeting of Webis
Holdings plc (“the Company”) will be
held at The Claremont Hotel, 18/19 Loch
Promenade, Douglas, Isle of Man, on
28 October 2011 at 11 am for the
purpose of transacting the following
business:
Ordinary Business
1 To receive and adopt the report of
the directors and the accounts for the
period ended 29 May 2011.
2 To re-elect as a director Mr D H N
Eke who retires by rotation and, being
eligible, offers himself for re-election
in accordance with the Company’s
Articles of Association.
authority shall expire at the conclusion
of the next Annual General Meeting
of the Company after the date of
passing of this Resolution unless
renewed, varied or revoked by the
Company in General Meeting.
As a Special Resolution
6 The directors of the Company be
and they are hereby empowered
pursuant to Article 8 of the Articles
of Association of the Company (the
“Articles”) to allot equity securities (as
defined in Article 7(H) of the Articles)
pursuant to the authority conferred
on the directors to allot relevant
securities by Resolution 5 above as
if Article 7(A) of the Articles did not
apply to such allotment PROVIDED
THAT this power shall be limited to:
3 To re-elect as a director Mr G Knowles
who retires by rotation and, being
eligible, offers himself for re-election
in accordance with the Company’s
Articles of Association.
(i)
4 To reappoint KPMG Audit LLC as
auditor and to authorise the directors
to determine their remuneration.
Special Business
To consider and, if thought fit, to pass the
following resolutions:
As an Ordinary Resolution
5 That the authority granted by
special resolution to the directors
of the Company to allot relevant
securities up to an amount equal to
but not exceeding the authorised
but unissued share capital of the
Company for the time being which
was passed at the Annual General
Meeting of the Company held on
9 December 2002 be renewed
pursuant to the power provided by
Article 6(C) of the Company’s Articles
of Association, that such renewal of
authority be for the exercise of that
power generally and unconditionally
and in all respects in the same terms
as originally granted, and that such
32
the allotment of equity securities
in connection with a rights issue
in favour of ordinary shareholders
where the equity securities are
issued proportionally (or as nearly as
may be) to the respective number
of ordinary shares held by such
shareholders (but subject to such
exclusions or other arrangements as
the directors may deem necessary
or expedient to deal with issues
arising under the laws of any
territory or the requirements of
any regulatory body or any stock
exchange in any territory or the
fixing of exchange rates applicable
to any such equity securities where
such equity securities are to be
issued to shareholders in more than
one territory, or legal or practical
problems in respect of overseas
shareholders, fractional entitlements
or otherwise howsoever);
(ii) the allotment of equity securities
to holders of any options under
any share option scheme of the
Company for the time being in
force, on the exercise by them of
any such options; and
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(iii) the allotment (otherwise than
pursuant to paragraphs (i) or (ii)
above) of equity securities up to
a maximum aggregate nominal
value equal to 50% of the issued
ordinary share capital of the
Company for the time being.
The power hereby conferred shall
expire at the conclusion of the next
Annual General Meeting of the
Company after the date of passing
of this Resolution unless such power
shall be renewed in accordance with
and subject to the provisions of the
said Article 8, save that the Company
may before such expiry make an offer
or agreement which would or might
require equity securities to be allotted
after such expiry and the directors may
allot equity securities pursuant to such
offer or agreement as if the power
conferred hereby had not expired.
As Ordinary Resolutions
7 That in accordance with Article 12 of
the Company’s Articles of Association
and with Section 13 of the
Companies Act 1992 the Company
be generally and unconditionally
authorised to make market purchases
(as defined by Section 13(2) of the
Companies Act 1992) of ordinary
shares of 1 pence each in its capital,
provided that:
(a) the maximum number of
shares that may be acquired is
23,017,000;
(b) the minimum price that may be
paid for the shares is 1 pence;
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Welcome to Webis Holdings plc
Webis Holdings plc has a growing global customer base, placing bets on a wide
variety of sports, through fixed odds and pari-mutuel, as well as wagering in our
casinos and games suites.
Our customers place bets on all the major global sports — football, US sports,
golf, tennis, formula 1, greyhound and horse racing. Our growing range of
wagering opportunities reflects the diversity of sports played around the world.
Our Performance
Our Governance
Our Financials
01 Group at a Glance
04 Directors and Advisers
12 Report of the Independent
02 Chairman’s Statement
05 Directors’ Report
07 Corporate Governance
09 Statement of Directors’
Responsibilities
10 Report of the Remuneration
Committee
Auditors
13 Consolidated Statement of
Comprehensive Income
14 Consolidated Statement of
Financial Position
15 Consolidated Statement of
Changes in Shareholders’
Equity
16 Consolidated Statement of
Cash Flows
17 Notes to the Accounts
32 Notice of Meeting
Stock Code: WEB
www.webisholdingsplc.co.uk
(c) the maximum price that may be
paid is, for a share the Company
contracts to purchase on any
day, a sum equal to 105% of
the average of the upper and
lower quotations on the Daily
Official List of the London Stock
Exchange for the ordinary
shares of the Company on the
five business days immediately
preceding that day; and
(d) the authority conferred by this
resolution shall expire at the
conclusion of the next Annual
General Meeting of the Company
after the date of the passing of
this Resolution unless renewed,
varied or revoked by the
Company in General Meeting,
but not so as to prejudice
the completion of a purchase
contracted before that date.
8 That the Report of the remuneration
committee be received and adopted.
By order of the Board
D Waddington
Secretary
15 September 2011
Registered Office: Viking House
Nelson Street, Douglas
Isle of Man, IM1 2AH
Notes
1. Members are entitled to appoint a
proxy to exercise all or any of their
rights to attend and vote on their
behalf at the meeting. A proxy need
not be a shareholder of the Company.
A shareholder may appoint more than
one proxy in relation to the Annual
General Meeting provided that each
proxy is appointed to exercise the
rights attached to a different share
or shares held by that shareholder.
To appoint more than one proxy you
may photocopy this form. Please
indicate the proxy holder’s name
and the number of shares in relation
to which they are authorised to act
as your proxy (which, in aggregate,
should not exceed the number of
shares held by you). Please also
indicate if the proxy instruction is one
of multiple instructions being given.
All forms must be signed and should
be returned together in the same
envelope.
2. To be valid, the form of proxy and the
power of attorney or other authority
(if any) under which it is signed or
a certified copy of such power or
authority must be lodged at the offices
of the Company’s registrars, Capita
Registrars, PXS, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU by hand,
or sent by post, so as to be received
not less than 48 hours before the time
fixed for the holding of the meeting or
any adjournment thereof (as the case
may be).
3. The completion and return of a form
of proxy will not preclude a member
from attending in person at the
meeting and voting should he wish to
do so.
4. In the case of a corporation, the form
of proxy must be executed under its
common seal or the hand of an officer
or attorney duly authorised.
5. A member may appoint a proxy of
its own choice. If the name of the
member’s choice is not entered in the
space provided on the form of proxy,
the return of the form of proxy duly
signed will authorise the chairman of
the meeting to act as that member’s
proxy.
6. To abstain from voting on a resolution,
select the relevant ‘withheld’ box. A
vote withheld is not a vote in law and
will not be counted in the calculation
of votes for or against the resolution.
If no voting indication is given, your
proxy will vote or abstain from voting
at his or her discretion. Your proxy
will vote (or abstain from voting) as
he or she thinks fit in relation to any
other matter which is put before the
meeting.
7. Pursuant to regulation 22 of the
Uncertificated Securities Regulations
2005, the Company has specified
that only those members entered on
the register of members at 6 pm on
26 October 2011 shall be entitled
to attend and vote at the meeting.
Changes to the register after 6 pm on
26 October 2011 shall be disregarded
in determining the rights of any
person to attend and vote at the
meeting.
8. Where a corporation is to be
represented at the meeting by
a personal representative, such
corporation must deposit a certified
copy of the resolution of its directors
or other governing body authorising
the appointment of the representative
at the Company’s registered office:
Viking House, Nelson Street, Douglas,
Isle of Man, IM1 2AH not later than
48 hours before the time appointed
for the holding of the meeting.
33
20797-04 14/09/2011
Proof 7
20797-04 14/09/2011
Proof 7
webisholdings plc
webisholdings plc
Webis Holdings plc
Viking House, Nelson Street
Douglas, Isle of Man
IM1 2AH, British Isles
Tel: +44 (0) 1624 698141
Fax: +44 (0) 1624 698134
Email: info@betinternet.com
Website: www.webisholdingsplc.com
Global Online Gaming Group
Annual Report and Accounts for the period ended 29 May 2011
Stock Code: WEB
20797-04 14/09/2011
Proof 7
20797-04 14/09/2011
Proof 7