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Webis Holdings plc
Annual Report and Financial Statements for the year ended 31 May 2014
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Contents
Our Performance
02 Group at a Glance
03 Operating Highlights
04 Chairman’s Statement
Our Governance
06 The Board of Directors
07 Directors’ Report
09 Corporate Governance
11 Statement of Directors’ Responsibilities
12 Report of the Remuneration Committee
Our Financials
14 Report of the Independent Auditors
15 Consolidated Statement of Comprehensive Income
16 Consolidated Statement of Financial Position
17 Consolidated Statement of Changes in Equity
18 Consolidated Statement of Cash Flows
19 Notes to the Financial Statements
38 Notice of Meeting
www.webisholdingsplc.com
Stock Code: WEB
01
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Group at a Glance
Webis Holdings plc operates two businesses within its Group structure:
Sportsbook
betinternet.com
m.betinternet.com (mobile)
betinternet.com (IOM) Limited
betinternet.com NV
The betinternet.com sportsbook offers betting opportunities on sports, casinos, poker and games to a growing global customer
base through both its website and mobile platforms. The sports betting coverage continues to grow particularly within In Play, where
customers place bets on sports events in real time, and this area now accounts for a substantial part of betinternet’s turnover and
margin. Also on offer are a ‘Live Dealer’ and traditional casino product with table games and slots as well as an increasing suite
of fixed-odds games and poker. The company operates under licences issued by the gaming regulatory bodies in the Isle of Man,
United Kingdom and Curacao.
Pari-Mutuel and Racetrack Operations
watchandwager.com
Cal Expo Harness Racetrack
WatchandWager.com Limited
WatchandWager.com LLC
WatchandWager.com Ltd has its operational base in San Francisco, California and provides pari-mutuel, or pool-betting, wagering
services through a number of distribution channels to a global client base. The company holds United States pari-mutuel licences
for Advanced Deposit Wagering (ADW), issued by North Dakota and California. The business provides wagering opportunities
predominantly on horse and greyhound racing and has contracted with a significant number of prestigious racetrack partners within
the United States, Hong Kong, Canada, United Kingdom, Ireland, Australia and Sweden amongst others. It provides wagering
facilities to customers through its website, watchandwager.com, as well as offering a business-to-business wagering product and a
telephone call centre.
WatchandWager.com LLC operates Cal Expo Harness Racetrack in Sacramento, California, under a licence issued by the California
Horse Racing Board. This ‘bricks and mortar’ presence in the largest state economy in the US continues to provide leverage for our
related global pari-mutuel operations.
As part of the requirements for Webis Holdings plc’s Isle of Man licence, client funds for all Isle of Man licensed Group companies
are held in fully protected client accounts within an Isle of Man regulated bank.
02
Webis Holdings plc
Annual Report and Financial Statements for the year ended 31 May 2014
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Operating Highlights
} Turnover has increased by 4.2% to US$275.85 million (2013: US$264.68 million)
} Gross profit has increased by 2.1% to US$8.71 million (2013: US$8.53 million)
} Total comprehensive income has increased to US$0.46 million (2013: profit of
US$0.28 million)
} Basic earnings per share have increased to 0.13 cents (2013: 0.07 cents)
} Total assets have increased by 27.4% to US$13.40 million (2013: US$10.52 million)
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www.webisholdingsplc.com
Stock Code: WEB
03
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Chairman’s Statement
Shareholders should note that the Board
has elected to change the Company’s
reporting currency from Sterling to US
Dollars so as to more accurately reflect
the overall performance of the Group,
which has the majority of its assets
held, and transactions conducted, in
US Dollars.
Pool-wagering turnover increased to
$67.59 million (2013: $52.89 million),
with a loss before tax of $0.17 million
(2013: profit of $0.02 million). Racetrack
Operations achieved a turnover of
$51.45 million (2013: $59.52 million) with
a profit before tax of $0.13 million (2013:
loss of $0.002m).
Introduction
I am pleased to report that Webis
Holdings plc (“Webis” or “the Group”)
has achieved a Total Comprehensive
Profit for the full financial year ended
31 May 2014.
WatchandWager.com
(“WatchandWager”), the Group’s pool-
wagering and racetrack operation, has
made some excellent strategic progress,
particularly with increasing the availability
of premium global wagering content for
our customers.
The Group’s Sportsbook operation,
betinternet.com (IOM) Limited
(“betinternet” or “Sportsbook”), has
remained resilient against some strong
regulatory headwinds that are impacting
the online gambling industry as a whole.
Year End Results Review
Group turnover for the year ended
31 May 2014 was $275.85 million
(2013: $264.68 million). Gross Profit
increased by 2% to $8.71 million (2013:
$8.53 million). Overall gross margin was
3.2% (2013: 3.2%).
Operating expenses increased by 9%
over the previous year to $8.55 million
(2013: $7.83 million). The majority of the
increase in expenses was attributable
to the implementation of our growth
strategy for WatchandWager in the US.
Shareholder equity has increased to
$5.17 million (2013: $4.75 million) with
total cash at $8.40 million (2013: $7.79
million), which includes a ring-fenced
amount of $4.74 million (2013: $4.02
million) held as protection against our
player liability as required under Isle of
Man gambling legislation.
Our Sportsbook turnover increased to
$156.81 million (2013: $152.18 million)
achieving a profit before tax of $0.27
million (2013: profit of $0.38 million).
WatchandWager
WatchandWager experienced a 24%
growth in turnover for the full year,
boosted by new player activity into the
Hong Kong Jockey Club and Swedish
ATG racetrack pools. Both of these
outlets provide us with a competitive
advantage over other international
operators and are part of our growth
strategy to secure further global
licences and agreements. We have now
established a highly competitive level of
global racing content that we are able
to offer to our customers through our
multiple wagering channels.
Following these successes, the Board
has agreed to further investment in our
pool-wagering division, concentrating on
recruiting additional resource to manage
the growing scope of our US-based
operations. This activity will be focused
to specifically make further improvements
to the entire watchandwager.com
wagering platform. The Board believes
that this additional investment expense
will translate into enhanced turnover and
margin derived from the operation in the
near term.
We experienced some delays in the
full roll-out of our primary website
watchandwager.com and mobile
application, in an effort to ensure it
adequately caters for the needs of
our US customer base. As a result
performance was below expectations
in this sector over the full year. In
addition, redirecting the majority of our
transactions through our US licences
04
Webis Holdings plc
Annual Report and Financial Statements for the year ended 31 May 2014
has also impacted our cost base with
increased levels of duty, licensing and
compliance costs incurred in the US. The
Board views this increased expenditure
as part of the cost of operating
legitimately in the US market and
anticipates that as our turnover grows,
we will see the percentage of these costs
level off against revenue.
Cal Expo, our Sacramento-based
harness racetrack operation, adjusted
its meeting schedules to achieve the
best return for all stakeholders and,
by keeping a very close control of the
costs, helped to bring profitability to this
part of the Group, despite a reduction
in turnover for the full racing season.
The racetrack remains a key part of
our strategy and has continued to offer
meaningful leverage in developing the
pool-wagering and wider business, with
WatchandWager and partner racetrack
groups continuing to be actively involved
in discussions on legislative change
within online gaming in California. The
number of parties who have conflicting
interests in the opening up of the gaming
market in this state may mean, however,
that any legislative changes are likely to
take some time to materialise.
betinternet
betinternet saw overall turnover continue
at a similar level to the previous year.
Fixed Odds turnover achieved good
growth due to the popularity of In Play,
whereas Casino and Games activity
reduced as the changing government
perceptions towards online gaming
in Singapore, one of our main Asian
markets, meant we were obliged to
curtail some of our casino and gaming
activity in February. This was one of the
external challenges in the second half
which resulted in a lower overall full-year
margin than had been anticipated.
Also, a reduction in card authorisations
from Singapore and some unfavourable
football results in the latter part of the
European football season also had
an impact on the overall gross margin
achieved for the full year, which ended
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Results during the football World Cup
tournament in June and July in Brazil
were generally favourable for betinternet
which achieved an encouraging margin.
Overall results during the early part of the
year have also been favourable. In Play
Tennis has continued to be our biggest
growth area, with significant increases in
activity, particularly during the Wimbledon
and US Open championships.
The regulatory environment in which
our Sportsbook operates continues
to change around us, with many
governments taking the opportunity
to review their existing gambling
legislation, particularly as it relates to
online activities. In many cases, the
primary reason for the introduction
of new laws is to offer protection for
customers, but invariably this legislation
increases contribution levels through
additional licence fees and increased
duty payments. In many cases this
has the unintended effect of restricting
legal competition. As there is little
global standardisation of legislation, the
overall cost of entering newly regulated
markets can be high, making the
business case difficult to justify in many
jurisdictions, with these costs likely to
impact the smaller, niche operators
disproportionately.
As an example, the Singapore Remote
Gambling Bill 2014 was passed by the
Singapore Parliament on
7 October 2014. This Bill imposes severe
restrictions on the companies that are
able to legally provide online gambling
services within this jurisdiction. We
expect the effects of this Bill to impact
during the first half of 2015. Therefore,
in compliance with Group policy, we will
withdraw betinternet from any activity in
the Singapore market. This withdrawal
will have a material impact on the
profitability of this part of our business,
despite concerted efforts to reduce our
reliance on this region.
at $4.25 million, although this remained
ahead of the previous year (2013:
$4.01 million).
For the full year, the Sportsbook fixed-
odds margin showed a good level of
consistency, remaining similar to that
achieved last year at 3.74% (2013:
3.75%). In Play betting accounted for
73% (2013: 57%) of all fixed odds
turnover on single bets, highlighting the
shifting preference of our customers
towards our engaging live betting
product.
As we grew more comfortable with our
price modelling and technologies for In
Play Tennis, we increased our exposure
to client activity on this product during
the second half, which resulted in an
uplift in the overall levels of turnover and
margin. We further increased our In Play
offering to include Baseball, Rugby and
Volleyball and focused the majority of
our internal development work on this
growing area.
Post Year, Strategy and Regulatory
Developments
WatchandWager has now established full
access to all of the major US racetrack
pools, following our agreement with
the New York Racing Association in
June. This contract signing was the
trigger for a further increase in a variety
of targeted marketing activity for the
watchandwager.com website.
WatchandWager has renewed its
California Horse Racing Board racing
licence for Cal Expo and our third season
of racing restarted in early October.
Following consultation with US media
groups, Cal Expo has switched from a
Friday and Saturday schedule to race
on Saturday and Sunday evenings.
WatchandWager is also increasing the
prize money incentive scheme for this
season. These initiatives are designed
to promote strong horse numbers
throughout the season and encourage
greater exposure of our races on
television.
www.webisholdingsplc.com
Stock Code: WEB
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The Board is currently undertaking
a comprehensive review of the
opportunities available to the Sportsbook
and its continued viability. In the interim,
the Board has agreed that betinternet
will focus only on regulated gaming
markets, including customer activity from
UK residents. In this connection, Webis
made an application for a UK gambling
licence, specifically for sportsbook
activities, under the transitional
arrangements for those operators
holding an existing Isle of Man Gambling
licence. I am pleased to report that
Webis has been granted a ‘continuation’
licence by the UK Gambling Commission
which took effect from the start of the
new legislation on 1 November 2014.
This will allow us the opportunity to be
granted a full UK licence in due course.
Pending the outcome of the internal
review, the Board considers that the
Group’s current activities are correctly
aligned to ensure the best prospects for
future growth.
I would like to thank all of our staff, our
customers and our shareholders for their
continued support throughout the year.
Denham Eke
Non-executive Chairman
19 November 2014
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The Board of Directors
D H N Eke, aged 63
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 Non-executive
Chairman in April 2003.
E Comins, aged 44
Pari-mutuel Operations Director
Ed Comins has 22 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 online skill games, where
he managed betting partner relationships
with key sportsbooks.
Mr Comins joined the Board in
May 2010.
G Knowles, aged 47
Managing Director
Garry Knowles has 25 years’ experience
in the gaming industry having worked for
the William Hill Organisation for 15 years.
He 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.
Sir James Mellon, aged 85
Non-executive Director
Sir James Mellon is a former diplomat
who began his career with the
Department of Agriculture for Scotland
before moving onto several varied
roles including Head of Trade Relations
and Export Dept (TRED), FCO, UK
Ambassador to Denmark and Director-
General for Trade and Investment,
United States and Consul-General, New
York. He has many years of corporate
experience having been a director of
both public and private companies.
Sir James Mellon joined the Board in
January 2012.
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Webis Holdings plc
Annual Report and Financial Statements for the year ended 31 May 2014
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Directors’ Report
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The directors present their annual report
and the audited financial statements for
the year ended 31 May 2014.
Proposed dividend
The directors do not propose the
payment of a dividend (2013: $Nil).
Directors and directors’ interests
The directors who held office during the
year and to date were as follows:
Principal activities
The Group operates:
} a licensed sports bookmaker
providing a worldwide Internet
service;
} a pari-mutuel service to individual
and business customers;
} a racetrack under a licence issued in
California, USA.
Business review
The Group operates on a worldwide
basis and provides online and offline
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 4.
Directors’ interests
D H N Eke
G Knowles
E Comins
Sir James Mellon
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 22 days
(2013: 22 days) purchases in trade
creditors.
Financial risks
Details relating to financial risk
management are shown in note 21 to the
financial statements.
D H N Eke
G Knowles
E Comins
Sir James Mellon
Non-executive
Chairman
Managing Director
Pari-mutuel
Operations Director
Non-executive
Director
The director retiring by rotation is Mr
Garry Knowles who, being eligible, offers
himself for re-election.
The directors who held office at the end
of the year 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
year
2014
–
200,000
–
–
Interest at
start of
year
2013
–
200,000
–
–
Interest
at end of
year
2014
–
14,000,000
–
–
Interest at
start of
year
2013
–
14,000,000
–
–
D H N Eke is Managing Director of Burnbrae Limited which holds 268,204,442 ordinary shares representing 68.19% of the issued
capital of the Company.
Further details of the options issued to the executive directors are contained in the Report of the Remuneration Committee on
pages 12 and 13.
www.webisholdingsplc.com
Stock Code: WEB
07
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Directors’ Report continued
Substantial interests
On 6 October 2014 the following interests in 3% or more of the Company’s ordinary share capital had been reported:
%
68.19
7.54
Number of
ordinary shares
268,204,442
29,651,666
Burnbrae Limited
BBHISL Nominees Ltd
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.
Political and charitable contributions
The Group made no political
contributions during the year.
As part of the obligations of the pari-
mutuel business in the United States, the
Group made charitable contributions of
$29,522 during the year (2013: $19,964).
Auditors
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
Garry Knowles
Managing Director
19 November 2014
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Corporate Governance
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
two executive and two non-executive
directors.
The Non-executive 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.
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 Non-executive Chairman should they
require clarification on any aspect of the
Company’s business.
All directors are able to take independent
professional advice in furtherance of their
duties if necessary.
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.
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 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 Non-executive
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.
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2. Directors’ Remuneration
The Report of the Remuneration
Committee is set out on pages 12 and
13 of the report and financial statements.
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 4 and
5 and the Directors’ Report on pages
7 and 8. 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 11.
www.webisholdingsplc.com
Stock Code: WEB
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Corporate Governance continued
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
auditors.
} 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 financial statements.
} 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.
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.
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
specifically focuses on any risk to
the Group from regulatory changes
within the jurisdictions from which it
currently accepts customers.
Audit Committee
The Audit Committee comprises the
non-executive directors and is chaired
by Sir James Mellon. 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
auditors, and meets its external auditors
at least once a year. Additional meetings
may be requested by the auditors.
Going Concern
As more fully explained in note 1.1 to
the financial statements on page 21,
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.
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Statement of Directors’ Responsibilities
in Respect of the Directors’ Report and
the Financial Statements
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 as adopted by the European
Union.
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
year.
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.
www.webisholdingsplc.com
Stock Code: WEB
11
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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
Conduct 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
Sir James Mellon.
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.
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 one share option
scheme, being the 2005 Share Option
Plan. 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 year.
Service Contracts
During the year under review, the service
contracts of Mr G R Knowles and Mr E
Comins provided for a notice period of
six months.
12
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Annual Report and Financial Statements for the year ended 31 May 2014
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Aggregate Directors’ Remuneration
The total amounts for directors’ remuneration were as follows:
Emoluments — salaries, bonuses and taxable benefits
— fees
Directors’ Emoluments
e
c
n
a
n
r
e
v
o
G
r
u
O
2014
US$000
552
56
608
2013
US$000
392
58
450
Basic
salary
US$000
Fees
US$000
Bonus
US$000
Termination
payments
US$000
Benefits
US$000
2014
Total
US$000
2013
Total
US$000
Executive
G Knowles
E Comins
Non-executive
D H N Eke*
Sir James Mellon
Aggregate emoluments
* Paid to Burnbrae Limited.
260
277
–
–
537
–
–
32
24
56
–
–
–
–
–
–
–
–
–
–
2
13
–
–
15
262
290
32
24
608
192
200
35
23
450
Details of the options outstanding at 31 May 2014 are as follows:
Name of
director
G Knowles
(a) 2005 Share Option Plan
(b) 2005 Share Option Plan
(c) 2005 Share Option Plan
31 May
2013
(Lapsed)/
granted in
year
31 May
2014
Exercise
price
Date
from which
exercisable
Expiry
date
1,500,000
9,000,000
3,500,000
14,000,000
–
–
–
–
1,500,000
9,000,000
3,500,000
14,000,000
10.4p 18 March 2008 18 March 2015
5p 30 March 2009 30 March 2016
20 Sept 2016
20 Sept 2009
6.0565p
The market price of the shares at 31 May 2014 was 3.250p. The range during the year was 6.000p to 3.125p.
Approval
The report was approved by the Board of directors and signed on behalf of the Board.
Denham Eke
Non-executive Chairman
19 November 2014
www.webisholdingsplc.com
Stock Code: WEB
13
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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:
} give a true and fair view of the
state of the Group’s and Parent
Company’s affairs as at 31 May 2014
and of the Group’s profit for the year
then ended;
} have been properly prepared in
accordance with IFRSs as adopted
by the European Union; and
} have been properly prepared in
accordance with the provisions of
Companies Acts 1931 to 2004.
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
} we have not received all the
information and explanations we
require for our audit.
KPMG Audit LLC
Chartered Accountants
Heritage Court, 41 Athol Street
Douglas, Isle of Man, IM99 1HN
19 November 2014
We have audited the financial
statements of Webis Holdings plc for
the year ended 31 May 2014 which
comprise the Consolidated Statement
of Comprehensive Income, the
Consolidated and Parent Company
Statements of Financial Position, the
Consolidated Statement of Cash Flows,
the Consolidated and Parent Company
Statements of Changes in 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) as adopted by the
European Union.
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 Auditors
As explained more fully in the Directors’
Responsibilities Statement set out on
page 11, 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.
14
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Consolidated Statement of Comprehensive Income
For the year ended 31 May 2014
Turnover
Cost of sales
Betting duty paid
Gross profit
Operating costs
Other gains/(losses) — net
Operating profit
Finance income
Finance costs
Finance income/(costs) — net
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Currency translation differences on translation of foreign subsidiaries
Other comprehensive income for the year
Total comprehensive income for the year
Note
2
3
4
4
6
Restated
(see Note 1.1)
2013
US$000
264,678
(255,963)
(181)
8,534
(7,832)
(462)
240
18
(32)
(14)
226
–
226
2014
US$000
275,847
(266,962)
(178)
8,707
(8,554)
351
504
12
(3)
9
513
–
513
(58)
(58)
455
54
54
280
Basic and diluted earnings per share for profit attributable to the equity holders
of the Company during the year (cents)
7
0.13
0.07
The notes on pages 19 to 37 form part of these financial statements.
The directors believe that all results derive from continuous operations.
www.webisholdingsplc.com
Stock Code: WEB
15
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Consolidated Statement of Financial Position
As at 31 May 2014
31 May
2014
Group
US$000
31 May
2014
Company
US$000
Note
Restated
(see Note 1.1)
31 May
2013
Group
US$000
Restated
(see Note 1.1)
31 May
2013
Company
US$000
Restated
(see Note 1.1)
28 May
2012
Group
US$000
Restated
(see Note 1.1)
28 May
2012
Company
US$000
Non-current assets
Intangible assets
Property, equipment and
motor vehicles
Investments
Bonds and deposits
Total non-current assets
Current assets
Bonds and deposits
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Called up share capital
Share premium account
Share option reserve
Foreign currency translation
reserve
Retained losses
Total equity
Non-current liabilities
Bank loans
Total non-current
liabilities
Current liabilities
Trade and other payables
Bank loans
Total current liabilities
Total liabilities
Total equity and liabilities
8
9
10
11
11
13
12
16
15
14
15
489
183
–
704
1,376
1,298
2,325
8,402
12,025
13,401
6,334
16,978
156
(4)
(18,295)
5,169
–
–
8,215
17
8,232
8,232
13,401
–
17
1,187
–
1,204
–
97
5,655
5,752
6,956
6,334
16,978
156
–
(19,508)
3,960
–
–
2,996
–
2,996
2,996
6,956
463
146
–
206
815
–
1,915
7,790
9,705
10,520
6,334
16,978
187
54
(18,808)
4,745
15
15
5,737
23
5,760
5,775
10,520
–
–
1,078
–
1,078
–
65
5,412
5,477
6,555
6,334
16,978
187
–
(19,903)
3,596
–
–
2,959
–
2,959
2,959
6,555
489
50
–
–
539
–
997
4,301
5,298
5,837
3,690
16,110
187
–
(19,034)
953
–
–
4,884
–
4,884
4,884
5,837
–
–
1,130
–
1,130
–
48
2,717
2,765
3,895
3,690
16,110
187
–
(19,674)
313
–
–
3,582
–
3,582
3,582
3,895
The financial statements were approved by the Board of directors on 19 November 2014
Denham Eke
Director
Garry Knowles
Director
The notes on pages 19 to 37 form part of these financial statements.
16
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Consolidated Statement of Changes in Equity
For the year ended 31 May 2014
Group
Called
up share
capital
US$000
Share
premium
US$000
Share
option
reserve
US$000
Foreign
currency
translation
reserve
US$000
Balance as at 27 May 2012 (Restated - see
Note 1.1)
Total comprehensive income for the period:
Profit for the period
Other comprehensive income
Transactions with owners:
Arising on shares issued in the period
Balance as at 31 May 2013 (Restated - see
Note 1.1)
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Transactions with owners:
Share-based payment credit
Balance as at 31 May 2014
3,690
16,110
187
–
–
–
–
2,644
868
–
–
–
6,334
16,978
187
–
–
–
–
–
6,334
–
16,978
–
–
(31)
156
–
–
54
–
54
–
(58)
–
(4)
Company
Called
up share
capital
US$000
Share
premium
US$000
Share
option
reserve
US$000
Foreign
currency
translation
reserve
US$000
Balance as at 27 May 2012 (Restated - see
Note 1.1)
Total comprehensive income for the period:
Loss for the period
Other comprehensive income
Transactions with owners:
Arising on shares issued in the year
Balance as at 31 May 2013 (Restated - see
Note 1.1)
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Transactions with owners:
Share-based payment credit
Balance as at 31 May 2014
3,690
16,110
187
–
–
–
–
2,644
868
–
–
–
6,334
16,978
187
–
–
–
–
–
6,334
–
16,978
–
–
(31)
156
The notes on pages 19 to 37 form part of these financial statements.
–
–
–
–
–
–
–
–
–
Retained
earnings
US$000
Total
equity
US$000
(19,034)
226
–
953
226
54
–
3,512
(18,808)
4,745
513
–
–
(18,295)
513
(58)
(31)
5,169
Retained
earnings
US$000
Total
equity
US$000
(19,674)
313
(229)
–
(229)
–
–
3,512
(19,903)
3,596
395
–
–
(19,508)
395
–
(31)
3,960
www.webisholdingsplc.com
Stock Code: WEB
17
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Consolidated Statement of Cash Flows
For the year ended 31 May 2014
Cash flows from operating activities
Profit before income tax
Adjustments for:
— Depreciation of property, equipment and motor vehicles
— Amortisation of intangible assets
— Finance (income)/costs — net
— Foreign exchange (gains)/losses on revaluation
— Share-based payment credit
Changes in working capital:
— Increase in receivables
— Increase in payables
Cash flows from operations
Finance income
Bonds and deposits placed in the course of operations
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, equipment and motor vehicles
Disposal of property, equipment and motor vehicles
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Loans (repaid)/received
Loans received from related party
Issue of equity shares
Net cash (used in)/generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of year
The notes on pages 19 to 37 form part of these financial statements.
Restated
(see Note 1.1)
2013
US$000
2014
US$000
513
71
135
(9)
(478)
(31)
(410)
2,478
2,269
12
(1,796)
485
(120)
(99)
3
(216)
(3)
(21)
–
–
(24)
245
7,790
367
8,402
226
42
163
14
333
–
(918)
2,667
2,527
18
(206)
2,339
(155)
(140)
–
(295)
(32)
38
267
1,302
1,575
3,619
4,301
(130)
7,790
18
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Notes to the Financial Statements
For the year ended 31 May 2014
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 year ended 31
May 2014 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 International Financial Reporting Standards
(“IFRSs”) and its interpretations as adopted by the European Union.
Standards and interpretations not yet effective
A number of new standards, amendments to standards and interpretation are not yet effective for year ended 31 May 2014, and
have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the
measurement of the amounts recognised in the Group’s financial statements; however, IFRS 9, Financial Instruments (“IFRS 9”)
may change the classification of financial assets. IFRS 9 is first effective for accounting periods beginning on or after 1 January
2018.
There are no other standards, interpretations or amendments to existing standards that are not yet effective that would be
expected to have a significant impact on the Group.
The Group has continued to apply the accounting policies, presentation and methods of computation used in the 31 May
2013 annual report except that the financial statements are now presented in US Dollars and as described below for fair value
measurement.
Changes in accounting policies
The Group has adopted the following new standards and amendments to standards, including any consequential amendments
to other standards, with a date of initial application of 1 June 2013:
} IFRS 10 Consolidated Financial Statements (2011) (“IFRS 10 (2011)”) along with the consolidation suite of standards,
namely: IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (revised) and IAS 28 (revised).
The amendments to IFRS 10 require investment entities to state controlled portfolio entities at fair value under IAS 39 instead
of consolidating such subsidiaries (see (a))
} IFRS 13 Fair Value Measurement (“IFRS 13”) (see (b))
The nature and the effect of the significant changes are further explained below.
(a) Subsidiaries
As a result of IFRS 10 (2011), the Company has changed its accounting policy for determining whether it has control over
and consequently whether it consolidates its subsidiary companies. IFRS 10 (2011) introduces a new control model that is
applicable to all investee companies, by focusing on whether the Company has power over an investee company, exposure or
rights to variable returns from its involvement with the investee company and ability to use its power to affect those returns. In
particular, IFRS 10 (2011) requires that the Company consolidate investee companies that it controls on the basis of de facto
circumstances.
In accordance with the transitional provisions of IFRS 10 (2011), the Company reassessed the control conclusion for its
subsidiary companies at 1 June 2013. No changes resulted from this reassessment. The directors consider that the adoption of
IFRS 11 and IFRS 12 will not have any impact on the presentation in the financial statements.
www.webisholdingsplc.com
Stock Code: WEB
19
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Notes to the Financial Statements continued
For the year ended 31 May 2014
1 Reporting entity continued
(b) Fair value measurement
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when
such measurements are required or permitted by other IFRS’s. In particular, it unifies the definition of fair value as the price
at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the
measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRS’s,
including IFRS 7 Financial Instruments: Disclosures.
In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance
prospectively. Notwithstanding the above, the change had no significant impact on the measurements of the Group’s assets and
liabilities.
Change in functional currency
IAS 21 The Effects of Changes in Foreign Exchange Rates describes functional currency as “the currency of the primary
economic environment in which an entity operates”. A change in functional currency reflects the accumulation over time of those
factors which are the main determinants of functional currency. Having considered the aggregate effect of all relevant factors,
the directors concluded that the functional currency of Webis Holdings plc had changed from Sterling to US Dollars in the first
quarter of this financial year. Accordingly, the change in functional currency of Webis Holdings plc is effective from 1 June 2013.
In accordance with IAS 21 this change has been accounted for prospectively from this date.
Change in presentational currency
Following the development of the US-based pari-mutuel and racetrack operations, the Group’s US operations have expanded
and become more significant to the results of the Group. The dominant functional currency of the operating subsidiaries is the
US Dollar. This is not only driven by US domiciled businesses but also by businesses outside the US, which have a US Dollar
functional currency. The Group’s revenues, cash flows and economic returns are now principally denominated in US Dollars.
Webis Holdings plc has changed the currency in which it presents its consolidated and Parent Company Financial Statements
from Sterling to US Dollars, as this will give a more meaningful view of the Group’s and Company’s financial performance and
position.
A change in presentational currency is a change in accounting policy which is accounted for retrospectively. Financial information
reported in Sterling in the Group’s 2013 Annual Report has been restated into US Dollars using the procedures outlined below:
(a) assets and liabilities denominated in non-US Dollar currencies were translated into US Dollars at closing rates of exchange.
Non-US Dollar trading results were translated into US Dollars at average monthly rates of exchange. Differences resulting
from the retranslation of the opening net assets and the results for the year of non-US trading subsidiaries have been taken
to the foreign currency translation reserve; and
(b) share capital, share premium and capital redemption reserves were translated at the historic rates prevailing at the dates of
transactions.
The closing rates for each reporting period included in this report are as follows:
Exchange rates
US$/£ — year/period end
2014
1.6778
2013
1.5235
2012
1.6031
20
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(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 IFRS as adopted by the EU 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 16, 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.
Going concern
The directors have prepared projected cash flow information for the next 12 months and are satisfied that the Group has
adequate resources to meet its obligations as they fall due. The directors consider that it is appropriate that these financial
statements are prepared on the going concern basis as the Group is generating positive cash flows, has a positive cash balance
and minimal debt.
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
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.
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 Group companies are eliminated.
Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with
the Group’s accounting policies.
www.webisholdingsplc.com
Stock Code: WEB
21
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Notes to the Financial Statements continued
For the year ended 31 May 2014
1 Reporting entity continued
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’). The consolidated financial statements are
presented in US Dollars, which is also the Group’s functional currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash
flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and
cash equivalents are presented in the income statement within ‘finance income or costs’. All other foreign exchange gains and
losses are presented in the income statement within ‘Other gains/(losses) – net’.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions); and
(iii) all resulting exchange differences are recognised in other comprehensive income.
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 recognition and turnover
Turnover represents the amounts staked in respect of bets placed by customers on events which occurred during the year. 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. The Group
determines and presents segments based on the information that internally is provided to the 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 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.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
22
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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.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
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 income 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 income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet 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.
www.webisholdingsplc.com
Stock Code: WEB
23
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Notes to the Financial Statements continued
For the year ended 31 May 2014
1 Reporting entity continued
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.
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 of three 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.
24
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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.
Share-based payments
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.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease.
The Group is not party to any leases that are classified as finance leases.
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 Equity.
www.webisholdingsplc.com
Stock Code: WEB
25
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Notes to the Financial Statements continued
For the year ended 31 May 2014
1 Reporting entity continued
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 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.
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.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
Open sports bets
The Group may have at any point in time, an exposure on open 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 at
fair value.
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 accruals 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.
26
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Asia Pacific
Europe
UK & Ireland
Rest of the World
United States
Asia Pacific
Caribbean
UK & Ireland
Europe
2 Segmental Analysis
Turnover
Sportsbook
Pari-mutuel and Racetrack Operations
Total comprehensive income
Sportsbook
Pari-mutuel and Racetrack Operations
Group
Net assets
Sportsbook
Pari-mutuel and Racetrack Operations
Group
3 Operating profit
Operating profit is stated after charging:
Auditors’ remuneration — audit
Depreciation of property, equipment and motor vehicles
Amortisation of intangible assets
Exchange (gains)/losses
Operating lease rentals — other than plant, equipment and Harness Racetrack
Operating lease rentals — Harness Racetrack
Directors’ fees
4 Finance income/(costs) — net
Bank interest receivable
Finance income
Bank interest payable
Loan interest payable
Finance costs
Finance income/(costs) — net
www.webisholdingsplc.com
Stock Code: WEB
2014
US$000
2013
US$000
112,045
23,379
15,874
5,507
88,852
17,010
10,330
2,386
464
275,847
209
(39)
285
455
(578)
2,980
2,767
5,169
120,937
11,372
17,002
2,870
86,038
10,074
15,539
626
220
264,678
437
15
(172)
280
(787)
3,019
2,513
4,745
2014
US$000
2013
US$000
150
71
135
(351)
84
148
56
165
42
163
462
67
163
60
2014
US$000
2013
US$000
12
12
(3)
–
(3)
9
18
18
(2)
(30)
(32)
(14)
27
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Notes to the Financial Statements continued
For the year ended 31 May 2014
5 Staff numbers and cost
Average number of employees (including directors) – Sportsbook
Average number of employees – Pari-mutuel and Racetrack Operations
The aggregate payroll costs of these persons were as follows:
Sportsbook
Wages and salaries
Social security costs
Pari-mutuel and Racetrack Operations
Wages and salaries
Social security costs
6
Income tax expense
Profits before tax
Tax charge at IOM standard rate (0%)
Adjusted for:
Tax credit for US tax losses (at 15%)
Add back deferred tax losses not recognised
Tax charge for the year
7 Earnings per ordinary share
2014
20
65
2014
US$000
1,016
107
1,123
2014
US$000
1,872
153
2,025
2013
19
64
2013
US$000
931
93
1,024
2013
US$000
1,491
121
1,612
2014
US$000
2013
US$000
513
–
(95)
95
–
226
–
(30)
30
–
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 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.
Profit for the year
Weighted average number of ordinary shares in issue
Diluted number of ordinary shares
Basic and diluted earnings per share (cents)
2014
US$000
2013
US$000
513
No.
226
No.
393,338,310
407,338,310
0.13
330,148,762
344,148,762
0.07
28
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Intangible assets
Cost
Balance at 31 May 2013
Additions during the year
Currency translation differences
Balance at 31 May 2014
Amortisation and Impairment
At 31 May 2013
Amortisation for the year
At 31 May 2014
Net book value
At 31 May 2014
At 31 May 2013
Goodwill
Group
US$000
Software & development costs
Company
US$000
Group
US$000
Total
Group
US$000
Company
US$000
169
–
17
186
–
–
–
186
169
4,357
120
24
4,501
4,063
135
4,198
303
294
50
–
–
50
50
–
50
–
–
4,526
120
41
4,687
4,063
135
4,198
489
463
50
–
–
50
50
–
50
–
–
The goodwill relates to the acquisition of the pari-mutuel business which is both a cash generating unit and a reportable
segment, including goodwill arising on the acquisition in 2010 of WatchandWager.com LLC, a US registered entity licensed for
pari-mutuel wagering in North Dakota.
The Group tests intangible assets annually for impairment, or more frequently if there are indications that the intangible assets
may be impaired. 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.
The key assumptions on which the directors have based their three year discounted cash flow analysis are a pre-tax discount
rate of 15% and growth rate in pari-mutuel business of 2%. The assumption of growth rate in pari-mutuel business has been
based on the historic performance of the business as well as forecast performance based on the Board’s plan to invest further in
this business. In respect of the value in use calculations, cash flows have been considered for both the conservative and the full
forecast potential of future cash flows with no impact to the valuation of goodwill.
9 Property, equipment and motor vehicles
Group
Cost
At 31 May 2013
Additions
Disposals
Currency translation differences
At 31 May 2014
Depreciation
At 31 May 2013
Charge for the year
Disposals
At 31 May 2014
Net book value
At 31 May 2014
At 31 May 2013
www.webisholdingsplc.com
Stock Code: WEB
Fixtures,
Fittings
& Track
Equipment
US$000
Computer
Equipment
US$000
Motor
Vehicles
US$000
Total
US$000
2,022
70
–
8
2,100
1,920
48
–
1,968
132
102
458
25
(3)
2
482
437
12
(1)
448
34
21
34
4
–
2
40
11
12
–
23
17
23
2,514
99
(3)
12
2,622
2,368
72
(1)
2,439
183
146
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Notes to the Financial Statements continued
For the year ended 31 May 2014
9 Property, equipment and motor vehicles continued
Company
Cost
At 31 May 2013
Additions
Disposals
At 31 May 2014
Depreciation
At 31 May 2013
Charge for the year
At 31 May 2014
Net book value
At 31 May 2014
At 31 May 2013
10 Investments
Computer
Equipment
US$000
Fixtures &
Fittings
US$000
Total
US$000
401
–
–
401
401
–
401
–
–
120
21
–
141
120
4
124
17
–
521
21
–
542
521
4
525
17
–
Investments in subsidiaries are held at cost. Details of investments at 31 May 2014 are as follows:
Subsidiaries
Country of incorporation
Activity
Holding (%)
WatchandWager.com Limited
Isle of Man
Operation of interactive wagering
totaliser hub
Dormant
Sportsbook trading company
Licence holder for games and casinos
Technical Facilities & Services Limited Isle of Man
Isle of Man
betinternet.com (IOM) Limited
Netherlands Antilles
betinternet.com NV
United States of America Operation of interactive wagering
WatchandWager.com LLC
totaliser hub and harness racetrack
Provision of IT & marketing services
to the Sportsbook trading company
Non-trading
B.E. Global Services Limited
Webis Ireland Limited
Isle of Man
Ireland
100
100
100
100
100
100
100
11 Bonds and deposits
Bonds and deposits which expire within one year
Bonds and deposits which expire within one to two years
Bonds and deposits which expire within two to five years
Group
Company
2014
US$000
2013
US$000
2014
US$000
2013
US$000
1,298
–
704
2,002
–
–
206
206
–
–
–
–
–
–
–
–
A rent deposit of $200,000 was paid to California Exposition & State Fair and is for a term of 5 years (2013: $200,000).
$500,000 has been paid as a bond in relation to WatchandWager’s Californian ADW licence (2013: $Nil). Rent and security
deposits of $3,678 have been paid in relation to office deposits and security and are expected to be in place for at least a
minimum of two years (2013: $Nil). A retainer account of $1,289,792 is held with the Hong Kong Jockey Club. A sales tax
deposit of $5,850 was paid to the State Board of Equalization and was refunded in June 2014 (2013: $5,850). An annually
renewable insurance bond of $2,000 is also in place.
30
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Cash and cash equivalents – company funds
Cash and cash equivalents – protected player funds
Total cash and cash equivalents
Group
Company
2014
US$000
3,657
4,745
8,402
2013
US$000
3,770
4,020
7,790
2014
US$000
910
4,745
5,655
2013
US$000
1,392
4,020
5,412
The Group holds funds for operational requirements, shown as “company funds” and on behalf of its Isle of Man regulated
customers, shown as “protected player funds”.
Protected player funds are held in fully protected client accounts within an Isle of Man regulated bank.
13 Trade and other receivables
Trade receivables
Other receivables and prepayments
14 Trade and other payables
Trade payables
Amounts due to Group undertakings
Open sports bets
Taxes and national insurance
Accruals and other payables
Group
Company
2014
US$000
590
1,735
2,325
2013
US$000
554
1,361
1,915
2014
US$000
2013
US$000
–
97
97
–
65
65
Group
Company
2014
US$000
2013
US$000
2014
US$000
2013
US$000
7,591
–
9
42
573
8,215
4,059
–
9
52
1,617
5,737
43
2,857
–
–
96
2,996
69
2,835
–
–
55
2,959
Amounts due to Group undertakings are unsecured, interest free and repayable on demand. Included within trade payables are
amounts due to customers of $7,323,692.
15 Bank loans
Due within one year
Due within one to two years
Due within two to five years
Group
Company
2014
US$000
2013
US$000
2014
US$000
2013
US$000
17
–
–
17
23
15
–
38
–
–
–
–
–
–
–
–
The bank loan is provided by Conister Bank Limited (note 20), carries an interest rate of 6.5% per annum on the original principal
amount and is fully repayable by 14 January 2015.
www.webisholdingsplc.com
Stock Code: WEB
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Notes to the Financial Statements continued
For the year ended 31 May 2014
16 Share Capital
Allotted, issued and fully paid
At beginning of year/period: ordinary shares of 1p each
Issued during the year
At 31 May: ordinary shares of 1p each
No.
2014
US$000
2013
US$000
393,338,310
–
393,338,310
6,334
–
6,334
3,690
2,644
6,334
The authorised share capital of the Company is US$9,619,000 divided into 600,000,000 ordinary shares of £0.01 each.
Options
Open share options during the year ended 31 May 2014 were as follows:
At 31 May 2014 and 31 May 2013 — 1p ordinary shares
Details of options at 31 May 2014 were as follows:
No.
14,000,000
2005 Share Option Plan
2005 Share Option Plan
2005 Share Option Plan
Price per share
Options granted
Exercisable between
10.4p
5.0p
6.0565p
1,500,000
9,000,000
3,500,000
14,000,000
March 2008 and March 2015
March 2009 and March 2016
September 2009 and September 2016
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
5.0p to 10.4p
5.0p to 10.4p
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 year. The expected life used has been adjusted based on management’s best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Credit in profit and loss account:
Share options
2014
US$000
31
31
2013
US$000
–
–
32
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17 Open sports bets liabilities
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 $8,714 (2013: $8,449) 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 open sports bets in the balance sheet (see note 14).
The maximum possible liability on open sports bets is $3.992m (2013: $0.049m).
18 Capital commitments
As at 31 May 2014, the Group had no capital commitments (2013: $Nil).
19 Operating lease commitments
At 31 May 2014, the Group was committed to future minimum lease payments of:
Payments due within one year
Payments due between two to five years
Payments due beyond five years
2014
US$000
2013
US$000
226
357
–
226
582
–
20 Related party transactions
Identity of related parties
The Group has a related party relationship with its subsidiaries (see note 10), and with its directors and executive officers and
with Burnbrae Ltd (significant shareholder) and with Conister Bank Ltd (common director and 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 $58,861 (2013: $44,777), loan interest of $Nil (2013: $31,633) and directors’ fees of $32,192
(2013: $36,759) were charged in the year by Burnbrae Limited of which Denham Eke is a common director. Burnbrae Limited
had also provided an unsecured loan which was converted into share capital in the previous year of $1,980,550. A loan of
$16,952 was owed to Conister Bank Ltd (note 15) at the year end (2013: $38,484).
Transactions with other related parties
Cash deposits totalling $5,697,311 (2013: $5,564,460) were held with Conister Bank Ltd at the year end.
Transactions with key management personnel
See page 13 for disclosure of Directors’ Emoluments.
www.webisholdingsplc.com
Stock Code: WEB
33
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Notes to the Financial Statements continued
For the year ended 31 May 2014
21 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
2014
US$000
8,402
(17)
8,385
(5,169)
3,216
2013
US$000
7,790
(38)
7,752
(4,745)
3,007
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 to ensure they meet the Group’s requirements. Funds equivalent to customer balances are held
in designated bank accounts to ensure that Isle of Man Gambling Supervision Commission player protection principles are met.
The directors anticipate that the business will continue to generate sufficient cash flow in the forthcoming period to meet its
financial obligations.
The Group had an unsecured loan facility with Burnbrae Limited, with an interest rate of base plus 4%, which had not been
utilised during the year. During the year ended 31 May 2013 the total loan balance of $1,980,550 was converted into share
capital.
The following are the contractual maturities of financial liabilities:
2014
Financial liabilities
Trade creditors
Income tax and national insurance
Other creditors
Carrying
amount
US$000
Contractual
cash flow
US$000
6 months
or less
US$000
Up to
1 year
US$000
1–5
years
US$000
7,591
42
153
7,786
(7,591)
(42)
(153)
(7,786)
(7,591)
(42)
(153)
(7,786)
–
–
–
–
–
–
–
–
34
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21 Financial risk management continued
2013
Financial liabilities
Trade creditors
Income tax and national insurance
Other creditors
Carrying
amount
US$000
Contractual
cash flow
US$000
4,059
52
1,157
5,268
(4,059)
(52)
(1,157)
(5,268)
6 months
or less
US$000
(4,059)
(52)
(1,157)
(5,268)
Up to
1 year
US$000
1–5
years
US$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
2014
US$000
8,402
2,021
10,423
2013
US$000
7,790
1,713
9,503
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 any business segment:
Pari-mutuel
Sportsbook
2014
US$000
1,841
180
2,021
2013
US$000
1,498
215
1,713
Of the above receivables, $589,000 (2013: $542,000) relates to amounts owed from US 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 (2013: $Nil).
The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
www.webisholdingsplc.com
Stock Code: WEB
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Notes to the Financial Statements continued
For the year ended 31 May 2014
21 Financial risk management continued
Interest rate risk
The Group finances its operations mainly through capital with limited levels of borrowings. Cash at bank and in hand earns
negligible interest at floating rates, based principally on short-term interbank rates.
Any movement in interest rates would not be considered to have any significant impact on net assets at the balance sheet date.
Foreign currency risks
The Group operates internationally and is subject to transactional foreign currency exposures primarily with respect to Pound
Sterling, Swedish Krona and Singapore Dollar.
The Group does not actively manage the exposures but regularly monitors the Group’s currency position and exchange rate
movements and makes decisions as appropriate.
At the balance sheet date the Group had the following exposure:
2014
Current assets
Current liabilities
Short-term exposure
2013
Current assets
Current liabilities
Short-term exposure
HKD
US$
000
GBP
US$
000
EUR
US$
000
USD
US$
000
SGD
US$
000
NOK
US$
000
DKK
US$
000
AUD
US$
000
CAD
US$
000
CHF
US$
000
CNY
US$
000
SEK
US$
000
Total
US$
000
49 3,244
(24)
(748)
25 2,496
195 6,168
(298) (5,188)
980
(103)
167
(90)
77
4
(3)
1
7
(1)
6
4
(4)
–
5
–
5
2
–
2
– 2,180 12,025
(8,232)
– (1,876)
3,793
304
–
HKD
US$
000
GBP
US$
000
110 3,614
(41)
(628)
69 2,986
EUR
US$
000
USD
US$
000
73 5,355
(265) (4,660)
695
(192)
SGD
US$
000
190
(85)
105
NOK
US$
000
DKK
US$
000
AUD
US$
000
CAD
US$
000
CHF
US$
000
CNY
US$
000
2
(3)
(1)
8
(3)
5
5
(5)
–
6
(2)
4
5
(2)
3
–
–
–
SEK
US$
000
337
(66)
271
Total
US$
000
9,705
(5,760)
3,945
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21 Financial risk management continued
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s financial assets and
financial liabilities and the US Dollar–Sterling exchange rate, US Dollar–Swedish Krona exchange rate and US Dollar–Singapore
Dollar exchange rate.
A 5% weakening of the US Dollar against the following currencies at 31 May 2014 would have increased equity and profit and
loss by the amounts shown below:
2014
Current assets
Current liabilities
Net assets
2013
Current assets
Current liabilities
Net assets
GBP
US$000
SEK
US$000
SGD
US$000
Total
US$000
162
(37)
125
109
(94)
15
8
(5)
3
279
(136)
143
GBP
US$000
SEK
US$000
SGD
US$000
Total
US$000
181
(31)
150
17
(3)
14
10
(4)
6
208
(38)
170
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 68.19%.
23 Post balance sheet events
There have been no material events since the end of the reporting period that require disclosure in the accounts.
www.webisholdingsplc.com
Stock Code: WEB
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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 19 December 2014 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 year ended 19 May 2014.
As a Special Resolution
5 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 4 above as
if Article 7(A) of the Articles did not
apply to such allotment PROVIDED
THAT this power shall be limited to:
2 To re-elect as a director Mr Garry
Knowles who retires by rotation
and, being eligible, offers himself for
re-election in accordance with the
Company’s Articles of Association.
(i)
(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.
6 That, subject to the confirmation of
the High Court of Justice of the Isle
of Man pursuant to Section 57 of
the Companies Act 1931, the share
premium account of the Company
be cancelled and reduced to nil and
that all sums standing to the credit of
the share premium account as at the
date of this resolution be transferred
to distributable reserves.
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:
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
3 To reappoint KPMG Audit LLC as
auditors 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
4 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
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.
38
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(a) the maximum number of
shares that may be acquired is
39,333,831;
(b) the minimum price that may be
paid for the shares is 1 pence;
(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
Chris Allen
Secretary
19 November 2014
Registered Office: Viking House
Nelson Street, Douglas
Isle of Man, IM1 2AH
www.webisholdingsplc.com
Stock Code: WEB
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Notice of Meeting continued
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
17 December 2014 shall be entitled
to attend and vote at the meeting.
Changes to the register after 6 pm
on 17 December 2014 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.
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 his
or her 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.
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 the proxy form
accompanying this notice. 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 notarially certified or office copy
of such power or authority must
be lodged at the offices of the
Company’s registrars, Capita Asset
Services, 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).
40
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Company Information
Directors
Denham Eke
Non-executive Chairman
Garry Knowles
Managing Director
Ed Comins
Pari-mutuel Operations Director
Sir James Mellon
Non-executive Director
Secretary
Chris Allen
Registered Office
Viking House
Nelson Street
Douglas, Isle of Man
IM1 2AH
Bankers
Conister Bank Limited
Clarendon House
Victoria Street
Douglas, Isle of Man
IM1 2LN
Auditors
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas, Isle of Man
IM99 1HN
Nominated Adviser and Broker
Beaumont Cornish Limited
2nd Floor, Bowman House
29 Wilson Street
London
EC2M 2SJ
Legal Advisers
Appleby (Isle of Man) LLC
33–37 Athol Street
Douglas, Isle of Man
IM1 1LB
Mishcon de Reya
Summit House
12 Red Lion Square
London
WC1R 4QD
UK Registrar
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Corporate Website
www.webisholdingsplc.com
Twitter
@WebisHoldings
Webis Holdings plc
Viking House
Nelson Street
Douglas, Isle of Man
IM1 2AH, British Isles
Tel: +44 (0) 1624 652590
Email: ir@webisholdingsplc.com
Website: www.webisholdingsplc.com
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Webis Holdings plc
Viking House, Nelson Street
Douglas, Isle of Man, IM1 2AH
Tel: +44 (0) 1624 652590
Email: ir@webisholdingsplc.com
Website: www.webisholdingsplc.com
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