TIDMB90
RNS Number : 4818S
B90 Holdings PLC
17 March 2021
17 March 2021
B90 Holdings plc
("B90", the "Company" or "Group")
Final Results for the year ended 31 December 2019
B90 Holdings plc (AIM: B90), the online marketing and operating
company for the gaming industry, announces its audited final
results for the year ended 31 December 2019 (the " 2019 Annual
Report").
The 2019 Annual Report has been posted to shareholders and can
be found on the Company ' s website at www.b90holdings.com .
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
B90 Holdings Plc +44 (0)1624 605 764
Paul Duffen, Executive Chairman
Marcel Noordeloos, Chief Financial Officer
Strand Hanson Limited (Nominated Adviser) +44 (0)20 7409 3494
James Harris / Jack Botros / James Dance
Whitman Howard Ltd (Broker)
Nick Lovering / Christopher Furness
IFC Advisory (Financial PR & IR) +44 (0)20 3934 6630
Tim Metcalfe / Graham Herring / Zach Cohen
About B90 Holdings plc
B90 Holdings plc is a group of companies focused on the
operation of its own online Sportsbook and Casino product as well
as marketing activities for other online gaming companies.
Website: www.b90holdings.com
Strategic Report
I hereby present the Annual Report for B90 Holdings plc ("B90"
or the "Company", together with its subsidiaries, the "Group") for
the financial year ended 31 December 2019.
Financial and operational highlights
Revenues from continuing operations: EUR1.1 million (compared to
EUR10.0 million in 2018)(1)
Revenues from discontinued operations: EUR2.9 million (compared
to EUR1.6 million in 2018)(2)
Total Revenues: EUR4.0 million (compared to EUR11.6 million in
2018)
Operating result: EUR4.4 million loss (EUR16.9 million loss in
2018)
Notes:
(1) Revenue derived from the Group's marketing activities in the
sportsbook and casino vertical and from the online operations from
Bet90. In the 2018 figures, revenues from the marketing activities
relating to the online financial trading vertical are included,
activities which were terminated during the 4(th) quarter of 2018
and therefore no revenues have been recorded in 2019.
(2) For both 2018 and 2019, this relates to the revenues derived
from the Group's land-based Bet90 terminal operations, which the
Group ceased on 31 December 2019 .
Operational review
As previously communicated, the Group faced significant
operational challenges during 2018, relating to the collection of
receivables in respect of the Group's online financial trading and
lottery marketing activities. The Group terminated these marketing
activities in November 2018.
During 2019 the Company entered into a heads of terms with
Binbar GmbH to acquire the remaining 49% of Quasar Holdings Ltd
("Quasar") not held by the Company, which was then completed in
January 2020. Quasar wholly owns Bet90 Sports Ltd ("Bet90"), an
online sportsbook and casino gaming company, the main focus of
operations since the restructuring in 2018. During 2019, the Group
owned 51% of the issued share capital of Quasar.
As part of the 49% acquisition in Quasar, the Directors decided
to terminate the loss making land-based operations and focus
completely on the online operations with effect from January 2020.
The results of these land-based operations have been recorded as
discontinued operations in the financial statements. Although these
operations generated reasonable gross revenues, the operating and
franchising costs were high, resulting in a loss in relation to
those activities of EUR0.9 million during the year.
During the year the Company announced a number of
fundraises:
- on 30 January 2019, the Company announced it had completed a
fundraise of GBP500,000 (or EUR555,500) by issuing 3,333,333 new
ordinary shares of 15p each in the capital of the Company
("Ordinary Shares");
- on 1 April 2019, the Company announced that it had entered
into separate loan agreements with three of its Directors, raising
a total of EUR500,000 for working capital. This loan amount was
converted into new Ordinary Shares, as announced on 19 December
2019;
- on 30 May 2019, the Company announced that it had raised
EUR300,000 by issuing 4,000,000 new Ordinary Shares;
- on 16 September 2019, the Company announced that it had raised
EUR300,000 via a convertible loan note ("Convertible Loan Note"),
with a three year term and 10% coupon payable in arrears at the end
of each quarter, with the first instalment due to be paid on 31
December 2019, and convertible at a price of 8p per new Ordinary
Share. The Convertible Loan Note would automatically convert into
new Ordinary Shares if the closing mid-market price of an Ordinary
Share is 15p or more for 25 consecutive business days. On 19
December 2019, the terms of this Convertible Loan Note were amended
to match those of the 19 December 2019 Convertible Loan Note set
out below;
- on 19 December 2019, the Company announced that it had raised
GBP500,000 (or EUR592,000) via a Convertible Loan Note. With a 3
year term and 5% annual coupon (payable in arrears at 30 June and
31 December) and convertible at a price of 5p per new Ordinary
Share. The Convertible Loan note will automatically convert into
new Ordinary Shares if the closing mid-price of an Ordinary Share
is 10p or more for 25 consecutive business days.
Subsequent to year-end, the Company announced further
fundraises:
- on 7 May 2020, that it had raised GBP450,000 (or approximately EUR515,000);
- on 11 September 2020, that it had raised EUR450,000;
- on 8 December 2020, that it had raised EUR700,000; and
- on 16 March 2021, that it had raised EUR1,847,000,
all under the terms of the Convertible Loan Note announced on 19
December 2019 as stated above.
Financial review
Continuing from the restructuring during 2018, 2019 was as a
year of significant challenges for the Group. During 2019, the
Group shifted its focus to the marketing activities in the Casino
and Sportsbook operations. With the acquisition of thr remaining
49% of Bet90, the Group's single-minded focus became the operations
of the Bet90 sportsbook and casino brand.
Due to a significant reduction of marketing spend already during
the second half of 2018, and the complete cessation of operations
in other business verticals in 2019, revenues for the full year
decreased to EUR4.0 million (2018: EUR11.6 million) of which EUR1.1
million relates to the online (i.e. continuing) operations. This
revenue consists of revenue from the Groups' marketing contracts as
well as from its online and land-based sportsbook and casino
operations. Revenues relating to the loss making land-based
sportsbook (i.e. discontinued) operations amounted to EUR2.9
million (2018: 1.6 million); as a result of the completed
acquisition of the remaining 49% in Quasar Holdings Ltd (a company
that wholly owns Bet90 Sports Ltd), the Group ceased these
operations from 1 January 2020.
The net result for the year amounted to a loss of EUR5.2 million
(2018: EUR16.7 million loss). The results for 2018 were
significantly impacted by the impairment of receivables from the
online financial trading and lottery business of, in aggregate,
EUR10.7 million, combined with the impairment of the relating
intangible assets of EUR6.4 million. During 2019, the Group had to
restructure its operations to re-align the organisation to its new
business focus. Furthermore, due to the strategic changes to focus
on the online operations of Bet90, an impairment charge on the
intangible assets relating to Bet90 was recorded (EUR0.8 million vs
nil in 2018). Also, an impairment charge of EUR0.3 million was
recorded relating to the T4U Marketing domain name. Due to limited
cash resources, the Group was unable to further increase the Bet90
market share during 2019.
Cash Flow
The Group used to be active in three major verticals (sportsbook
and casinos, online lotteries and online financial trading) and had
revenues and cost centres in numerous locations in Europe. The
Group experienced operational difficulties in receiving agreed
marketing commissions within the online financial trading and
lottery verticals as previously announced, which ultimately led to
an impairment of these receivables of EUR10.7 million during 2018.
During 2019, there continued to be only limited cash flow from the
Group's operations. As a result the Group underook a number of fund
raises, either through issuance of new Ordinary Shares, as well as
via convertible loans.
Post the period end, the Group raised GBP450,000 (approximately
EUR515,000) through a subscription in a convertible loan with
certain existing shareholders on 7 May 2020, to provide further
working capital to the Group. A further EUR450,000 was raised on 11
September 2020, EUR700,000 was raised on 8 December 2020 and
EUR1,847,000 was raised on 16 March 2021, all under the same
terms.
Board changes
During the year, the Company made one change to its Board and
senior management to reflect the changes in the Group's operations
during the year.
On 30 January 2019, the Company announced the appointment of
Paul Duffen as the new Chairman of the Group, replacing Gilles
Ohana, who stepped down from the Board at the same time. Paul was
subsequently appointed as the Group's Executive Chairman on 7 March
2019.
The Company continues to seek a new CEO and an independent
Non-executive Director in-line with the developments of the Company
and a further announcements will be made as and when
appropriate.
Principal risks and uncertainties
The main operational risk factors are included on page 13 of
this report.
Current trading and outlook
The Group's operations were highly impacted as a result of the
COVID-19 pandemic, especially in the period between mid-March and
mid-June 2020, due to the cancellation of the vast majority of
sporting events in our target markets during that period. With some
leagues restarting in June 2020, the revenue showed signs of
recovery and trading during the second half of 2020 was in line
with management's revised expectations.
Whilst trading during the second half of 2020 has been in line
with the Board's revised expectations, the Group continues to
reduce its operating costs to match the current operations and the
Directors continue to manage the Group's cash resources carefully.
Whilst the Group raised additional funds by way of the issue of
convertible loan notes since the 2019 year-end, amounting in
aggregate to EUR3.5 million (including the funds raised on 16 March
2021), it remains reliant, inter alia, on being able to manage its
cash resources carefully, continuing to manage its creditors and
trading being in-line with management's expectations. Whilst the
EUR1,847,000 raised on 16 March 2021 provides the Group with
additional working capital and strengthens the balance sheet, the
Group continues to remain reliant on being able to manage its
creditors. Furthermore, should trading not be in-line with
mangement's expectations going forward, the Group's ability to meet
its liabilities may be further impacted, in which case the Group
will need to raise additional funding. In such circumstances,
whilst the directors are confident of being able to raise the
necessary funding, there is no certainty that such funding will be
available and/or the terms of such funding.
A significant development as part of today's EUR1,847,000
fundraising, is the participation of Ronny Breivik, who contributed
EUR500,000 via a convertible loan, on the terms described above.
Ronny has an impressive track record operating in the online gaming
sector and will be joining the Group in a senior role to oversee
all operations.
As part of our focus on geographic expansion, the Group is in
advanced discussions with regards to engaging Oddsen.nu, the
leading Norwegian online gaming affiliate, to help us grow our
revenues in that territory. A further announcement will be made
with regard to details of this agreement, once it is finalised.
In addition, with the issue of the Convertible Loan today and
receipt of proceeds thereof, the Group is expected to resume
strategic marketing initiatives and partnerships with existing
partners to drive revenue, including potentially launching new
products and entering into new agreements in its existing
markets.
The Board would like to express our thanks to both existing and
new shareholders, who have supported the Group through challenging
times and we look forward to the continued journey together.
Dividend
The Directors are not proposing a dividend for the year ended 31
December 2019.
Approved by the Board of Directors and signed on behalf of the
Board.
Paul J Duffen
Executive Chairman, B90 Holdings plc
16 March 2021
Directors' Report
The Directors present their report and consolidated financial
statements for the year ended 31 December 2019.
Principal activities and review of the business
B90 Holdings plc is a company focused on generating marketing
leads and entering into marketing contracts for the activities of
its sportsbook partner in sports betting and casinos games as well
as operating its own Bet90 sportsbook and casino games, in which it
initially had a 51% interest. During the fourth quarter of 2018,
the Group ceased its marketing activities relating to lottery and
online financial trading verticals. In December 2019, the Company
entered into a non-binding heads of terms with Binbar GmbH to
acquire the 49% of Quasar Holdings Ltd not already owned by it, a
transaction that completed in January 2020. The Group therefore
currently owns 100% of the Bet90 operations. In conjunction with
the full ownership of the Bet90 Sports Ltd operations, the Company
terminated the loss-making land-based operations from 1 January
2020.
The principal activities from 1 January 2020 are therefore
focused completely on operating the online Sportsbook and casino
operation using the domain Bet90.com. Furthermore, the Group
operates an affiliate platform, currently focusing on the German
speaking territory, using the tippen4you.com domain.
Results and dividends
The Group's results for the year, after taxation, amounted to a
loss of EUR5.2 million (2018: loss of EUR16.7 million). The Group's
2019 results are impacted by the costs of restructuring the
business, which continued into 2020, as well as a partial
impairment of intangible assets relating to T4U Marketing Ltd and
Quasar Holdings Ltd. The Group's 2018 results were highly impacted
by the impairment of receivables and intangible assets relating to
the Group's marketing activities and operations across its then
three verticals. The operating earnings before interest, tax,
depreciation and amortisation ("EBITDA") for the full year 2019
amounted to negative EUR4.2 million (2018: EUR0.5 million
positive).
As a result of the above, the Directors are proposing not to pay
a dividend for the year ended 31 December 2019.
Future developments
Future developments are discussed in the Strategic Report.
Financial Risk Management
The Board is responsible for setting the objectives and
underlying principles of financial risk management for the Group.
The Board establishes the detailed policies such as authority
levels, oversight responsibilities, risk identification and
measurement and exposure limits.
Capital risk management
The Company's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders.
Liquidity risk
Liquidity risk exists where the Group might encounter
difficulties in meeting its financial obligations as they become
due. The Group monitors its liquidity in order to ensure that
sufficient liquid resources are available to allow it to meet its
obligations.
Large wins by customers
Inherent to the business is that there is a risk that a few
players and customers might win significant amounts of money during
the same period thus reducing the earnings of the Group, in
particular in regard to its sportsbook partner which has a higher
concentration of VIP players. In respect of its marketing
activities for its sportsbook partner, negative or highly impacted
net revenues in any period are also carried forward and netted off
against net revenues in future periods on which commission might
otherwise be payable to the Group. Whilst the Group would not have
to cover any gaming or gambling losses in the existing marketing
agreements, the percentage of earnings retained by the Group might
be greatly reduced as a result of this.
Gaming or gambling losses within the Group's own Bet90
operations would though need to be covered by the Group as and when
they occur. Under the regulation of the Malta Gaming Authority, the
Company must at all times have sufficient cash balances available
to cover liabilities to customers. In the case of a large win by a
customer, the Company would need to move funds from its current
account to the accounts that cover the liability to customers,
which would immediately negatively impact the Company's working
capital and its earnings for the period.
Currency risk
The Group is exposed to translation and transaction foreign
exchange risk. As the majority of the Group's transactions are
denominated in Euros, the Directors deem the Group's exposure to
exchange rate fluctuations to be minimal.
Interest rate risk
The Group's exposure to upside interest rate risk is limited.
The loans on the balance sheet have a fixed interest rate. The
Directors do not consider the impact of possible interest rate
changes based on current market conditions to be material to the
net result for the year or the equity position at the year-end for
either the year ended 31 December 2019 or 31 December 2018.
Credit risk
The Group's credit risk is primarily attributable to trade
receivables. Trade receivables consist of:
-- Customers running the land based operations of Bet90, via
Bet90 branded terminals (which has now been terminated); and
-- Payment service providers (PSPs). PSPs are third-party
companies that facilitate deposits and withdrawals of funds to and
from customers' virtual wallets with the Group. These are mainly
intermediaries that transact on behalf of credit card
companies.
The risk is that a customer or a PSP would fail to discharge its
obligation with regard to the balance owed to the Group.
The Group reduces this credit risk by:
-- Monitoring balances with customers on a regular basis;
-- Monitoring balances with PSPs on a regular basis; and
-- Arranging for the shortest possible cash settlement intervals in all cases.
The Group considers that based on the factors above and on past
experience, the customers and PSP receivables used in the current
businesses are of good credit quality and there is a low level of
potential bad debt as at year-end.
An additional credit risk the Group faces relates to customers
in its own operations disputing charges made to their credit cards
("chargebacks") or any other funding method they have used in
respect of the services provided by the Group. Customers may fail
to fulfil their obligation to pay, which will result in funds not
being collected. These chargebacks and uncollected deposits, when
occurring, will be deducted at source by the payment service
providers from any amount due to the Group. The Group monitors the
need for impairment provisions by considering all reasonable and
supportable information, including that which is forward-looking.
For the year ended 31 December 2019, the Group has not made any
provision for this, as any provision would be immaterial.
Regulatory risk
Regulatory, legislative and fiscal regimes for betting and
gaming in key markets can change, sometimes even at short notice.
Such changes could benefit or have an adverse effect on the Group's
operations and additional costs might be incurred in order to
comply with any new laws or regulations in various
jurisdictions.
The Group closely monitors regulatory, legislative and fiscal
developments in key markets allowing the Group to assess, adapt and
takes the necessary action where appropriate. Management takes
external advice, which incorporates risk evaluation of individual
territories. Regulatory updates are provided to the Board when
changes are announced.
Whilst changing regulatory and tax regimes can offer
opportunities to the Group as well as posing risks, a significant
adverse change in jurisdictions in which the Group operates could
have a significant impact on the Groups future profitability and
cash generation.
Going concern
The Group continued to experience significant operational
difficulties during 2019 after its restructuring in respect to
marketing within the online financial trading and lottery
verticals. As a result, the Company has completed a number of fund
raises from investors during 2020 and in 2021.
As a result of the above, the Group achieved a net loss of
EUR5.2 million for the year ended 31 December 2019. Furthermore,
the Group had a negative cash flow from operations of EUR2.1
million for the year ended 31 December 2019 and the Group has
recorded a further loss for the year ending 31 December 2020,
expected to exceed EUR1.75 million.
Whilst trading during the second half of 2020 has been in line
with the Board's revised expectations, the Group continues to
reduce its operating costs to match the current operations and the
Directors continue to manage the Group's cash resources carefully.
Whilst the Group raised additional funds by way of the issue of
convertible loan note since the 2019 year-end, amounting in
aggregate to EUR3.5 million (including the funds raised on 16 March
2021), it remains reliant, inter alia, on being able to manage its
cash resources carefully, continuing to manage its creditors and
trading being in line with management's expectations. Whilst the
funds raised on 16 March 2021 of EUR1,847,000 provide the Group
with additional working capital and further strengthen the balance
sheet, the Group continues to remain reliant on being able to
manage its creditors. Furthermore, should trading not be in line
with mangement's expectations going forward, the Group's ability to
meet its liabilities may be impacted, in which case the Group will
need to raise further funding. In the circumstance that this is
needed and whilst the directors are confident of being able to
raise such funding if required, there is no certainty that such
funding will be available and/or the terms of such funding. These
conditions are necessarily considered to represent a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern.
Whilst acknowledging this material uncertainty, the Directors
remain confident that the recent fundraise will allow the Group to
expand its operations and generate a positive operational cash flow
within a reasonable time or, if needed, be able to raise additional
funding when required, therefore the Directors consider it
appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include the adjustments that
would result if the Group and Company was unable to continue as a
going concern.
Post balance sheet events
On 17 January 2020 the Company announced that it had completed
the acquisition of the 49% of Quasar Holdings Ltd ("Quasar") not
owned by the Company from Binbar GmbH. Quasar wholly owns Bet90
Sports Ltd, the online sportsbook and casino gaming company.
On 3 February 2020, the Company announced that it had changed
the Company's name to B90 Holdings plc. The ticker code on the
London Stock Exchange changed from VLTY to B90 on that day.
In March 2020, The Company ' s business was negatively impacted
by the cancellation of the vast majority of sporting events in its
target markets as a result of the global COVID-19 pandemic (as
declared by the World Health Organisation on 11 March 2020). In
June 2020, some of the main events in the target markets restarted,
however, in the months of March, April and May, the Company faced a
significant reduction in the number of customers placing bets. This
caused a significant reduction in the Group's revenue over that
period and as it is still unsure how the pandemic develops
globally, no certainty can be given about the Company's future
revenues. During the second half of 2020, with the restart of the
main football leagues in June and July, revenues did slowly
recover, with results in line with management's revised
expectations for Q4 of 2020.
On 7 May 2020, the Company announced that it had raised
GBP450,000 (or approximately EUR515,000) pursuant to subscriptions
for Convertible Loan Notes.
On 11 September 2020, the Company announced that it had raised
EUR450,000 (or approximately GBP408,000) pursuant to subscriptions
for Convertible Loan Notes.
On 9 December 2020, the Company announced that it had raised
EUR700,000 (or approximately GBP638,000) pursuant to subscriptions
for Convertible Loan Notes.
On 16 March 2021, the Company announced that it had raised
EUR1,847,000 (or approximately GBP1,585,000) pursuant to
subscriptions for Convertible Loan Notes.
Directors and their interest
The following Directors held share options as at 31 December
2019:
Number of options Exercise Date of grant Vesting
Price (GBP) period
------------------ ------------- ----------------- ----------
Paul Duffen 1,000,000 0.15 14 February 2019 1-4 Years
Marcel Noordeloos 750,000 0.25 30 June 2016 1-4 years
Marcel Noordeloos 550,000 0.15 14 February 2019 1-4 years
Mark Rosman 400,000 0.25 30 June 2016 1-4 years
Mark Rosman 550,000 0.15 14 February 2019 1-4 years
Gilles Ohana 800,000 0.25 22 May 2017 4. Years
Rainer Lauffs 250,000 0.15 14 February 2019 1-4 Years
Directors who served during the year
Appointed Resigned
---------------- ----------------
Gilles Ohana 20 November 30 January 2019
2017
Paul Duffen 30 January 2019 -
Mark Rosman 19 March 2014 -
Marcel Noordeloos 30 June 2016 -
Rainer Lauffs 26 March 2018 -
On 30 January 2019, Paul Duffen was appointed as Chairman,
replacing Gilles Ohana. Paul Duffen was appointed Executive
Chairman on 7 March 2019.
Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to keep reliable
accounting records which allow financial statements to be prepared.
In addition, the Directors have elected to prepare group financial
statements in accordance with International Financial Reporting
Standards as adopted by the European Union and applicable law. The
financial statements are required to give a true and fair view of
the state of affairs of the Group 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 judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and prepare financial statements.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for ensuring that they meet
their responsibilities under the AIM Rules.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
In so far as each of the Directors is aware:
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
Auditors
The auditors of the Group are Nexia Smith & Williamson,
Chartered Accountants. Last year it was proposed that the six-year
term of the current senior statutory auditor be extended for a
final year, due to the significant change in the business and
management of the Group. 2019 will therefore be the final year of
service of the current senior statutory auditor.
This report was authorised for issue by the Board on 16 March
2021.
Paul J Duffen
Executive Chairman, B90 Holdings plc
16 March 2021
Risk factors
The Board evaluates the operational risks facing the Group on an
ongoing basis to monitor for changes in risks and risk impact and
to set guidelines for risk mitigation. The most significant risks
identified by the Board are listed below.
Gambling laws and regulations are constantly evolving and
increasing
The regulatory framework of online gaming is dynamic and
complex. Change in the regulatory regime in a specific jurisdiction
can have a material adverse effect on business volume and financial
performance in that jurisdiction. In addition, a number of
jurisdictions have regulated online gaming, and in several of those
jurisdictions the Group, or its operating partner, either holds a
licence or is planning to obtain one, if the market is considered
commercially viable. However, in some cases, lack of clarity in the
regulations, or conflicting legislative and regulatory
developments, mean that the Group may risk failing to obtain an
appropriate licence, having existing licences adversely affected,
or being subject to other regulatory sanctions, including internet
service providers blocking, blocking options to make deposits,
black-listing the Company and fines.
The Group is managing this risk by consulting with legal
advisers in various jurisdictions where its services are marketed
or which generate, or may generate, significant revenue for the
Group. Furthermore, the Group obtains regular updates regarding
changes in the law that may be applicable to its operations,
working with local counsel to assess the impact of any changes on
its operations. Furthermore, the Group ' s owned operations Bet90,
blocks players from certain " blocked jurisdictions" using multiple
technological methods as appropriate.
Reliance on VIP players
Although the focus of the Company is primarily on the operations
of its own brand Bet90, a large percentage of the commission based
revenue from the Group ' s marketing activities in the sportsbook
and casino vertical is generated by a small group of high net worth
players, described as " VIP Players". These are loyal players that
regularly deposit high amounts on the websites. The Group knows
these players and makes them feel valued. A VIP player (or also a
non-VIP player) can have large winnings, in either the sportsbook
or the casino, in a certain period, which can significantly impact
the revenues on a monthly basis. A loss of any of the VIP Players
could significantly adversely affect the Group ' s business,
financial condition, results or future operations.
In respect of its own sportsbook and casino brand, Bet90, any
large wins by VIP players could potentially lead to recording a
loss in such cases. The Company has Terms & Conditions in place
to limit the daily win of a single player to mitigate such a
risk.
Imposition of additional gaming or other indirect taxes
Revenues earned from customers located in a particular
jurisdiction may give rise to further taxes in that jurisdiction.
If additional taxes are levied, this may have a material adverse
effect on the amount of tax payable by the Group. Further taxes may
include value added tax (VAT) or other indirect taxes. The Company
may be subject to VAT or similar taxes on transactions, which have
previously been treated as exempt.
The Company seeks to include geographical diversity in its
operations. In order to mitigate the risks that arise, the Company
actively identifies, evaluates, manages and monitors its tax risks
and the geographies in which it operates. The Company works with
external local tax advisers to assist them in this process.
COVID-19 Pandemic
In March 2020, the Company ' s business was negatively impacted
by the cancellation of the vast majority of sporting events in its
target markets as a result of the global COVID-19 pandemic. Only in
June 2020, some of the main events in the target markets restarted,
however, in the months of March, April and May, the Company faced a
significant reduction in the number of customers placing bets.
Whereas most sporting events have continued since the summer of
2020, there is no guarantee that a future cancellation of some
sporting events in the Group's key markets will not occur. In that
situation, revenue of the Group may be significantly impacted
without a proportionate reduction (if at all) in costs.
Corporate Governance Report
As an AIM-quoted company, B90 and its subsidiaries (together,
the "Group") are required to apply a recognised corporate
governance code, demonstrating how the Group complies with such
corporate governance code and where it departs from it.
The Board of Directors of the Company ("Directors" or "Board")
have adopted the QCA Corporate Governance Code (the "QCA Code").
The Board recognises the principles of the QCA Code, which focus on
the creation of medium to long-term value for shareholders, without
stifling the entrepreneurial spirit in which small to medium sized
companies, such as B90, have been created.
Application of the QCA Code
In the spirit of the QCA Code it is the Board's job to ensure
that the Group is managed for the long-term benefit of all
shareholders and other stakeholders with effective and efficient
decision-making. Corporate governance is an important part of that
job, reducing risk and adding value to the Group. The Board will
continue to monitor the governance framework of the Group as it
grows.
B90 is an online marketing and operating company that seeks to
grow shareholder value through organic growth and acquisitions.
B90's aim is to build a portfolio of gaming brands through a
combination of strong organic growth as well as strategic
acquisitions that complement the current business.
The Board aims to achieve these objectives through the adoption
of best working practices and by leveraging its industry knowledge
and expertise. We believe that the senior management team as well
as the Board, together with their industry leading partners and
networks, have the necessary capabilities to achieve organic and
external growth in the future, as demonstrated, for example, by the
acquisition in 2017 of the 51% interest in online sportsbook and
casino gaming company, Bet90. The Company acquired the remaining
49% in January 2020 and therefore now owns 100% of the
operations.
In accordance with the AIM Rules, B90 applies (and in some cases
departs from) the QCA Code in the following way:
Principle 1 - Establish a strategy and business model which
promote long-term value for shareholders
B90 is an online marketing and operating company in the gaming
sector that seeks to grow shareholder value through organic growth
and acquisitions, key aspects of which are ensuring customer
satisfaction on both a B2B and B2C basis and strengthening the B90
brand.
Principle 2 - Seek to understand and meet shareholder needs and
expectations.
B90 has engaged in active dialogue with shareholders through
regular communication and the Company's Annual General and
one-on-one discussions. New information is released via the
regulatory news service (RNS) before anywhere else and the website
is update accordingly.
Principle 3 - Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Board recognises the importance of its wider stakeholders -
employees, contractors, suppliers, customers, regulators and
advisors - to its long-term success. The Board has established
expectations that these key resources and relationships are valued
and monitored. In particular, the Company's business model of
outsourcing some its key activities requires reliable dialogue with
contractors to ensure the successful pursuit of its long-term
strategic objectives. Furthermore, the Board intends to actively
seek to engage regularly with its corporate advisers to ensure
proactive communication regarding the Company's activities. In
doing so, the Company is able to take any feedback into account and
adjust its actions accordingly to ensure it stays focused on
long-term performance. The Board recognises that the Company
operates within a competitive and fast changing industry and
strives to remain alert to developments in a wider industry/society
context.
Principle 4 - Embed effective risk management, considering both
opportunities and threats, throughout the organisation
B90 operates within a complex business environment and an
industry that is fundamentally driven by regulatory processes. The
Board has set out its understanding of the principal risks and
uncertainties in its Annual Report and regularly reviews its
strategies for minimising any adverse impact to the Company or its
investors.
The Directors acknowledge their responsibility for the Group's
system of internal control, which is designed to ensure adherence
to the Group's policies whilst safeguarding the assets of the
Group, in addition to ensuring the completeness and accuracy of the
accounting records. Responsibility for implementing a system of
internal financial control is delegated to the CFO.
The essential elements of the Group's internal financial control
procedures involve:
-- Strategic business planning
The Board regularly reviews and discusses the Group's
performance and strategic objectives.
-- Performance review
The Directors monitor the Group's performance through the
preparation and consideration of monthly management accounts and
daily through KPIs and regular reviews of its expenditure and
projections. In addition, detailed financial projections for each
financial year are prepared and are subject to formal and regular
review against actual trading by the Board.
Principle 5 - Maintain the Board as a well-functioning, balanced
team led by the Chairman
The Board comprises four Directors of which three are Executives
and one is a Non-executive, reflecting a blend of different
experience and backgrounds. Considering the 2020 fundraises, in
which the Group's Non-excutive Director Mark Rosman has
participated, the Board considers, at this moment, none of the
Directors to be completely independent as a Director in terms of
the QCA guidelines. Accordingly, the composition of the Board does
currently not satisfy the QCA recommendation that there are at
least two independent Non-executive Directors on the Board.
The Board meets throughout the year and all major decisions are
taken by the Board as a whole. The Group's day-to-day operations
are managed by the Executive Directors. All Directors have access
to the Company information and any Director needing independent
professional advice in the furtherance of his/her duties may obtain
this advice at the expense of the Group.
Although the Board is satisfied that it has a suitable balance
of knowledge of the Group, experience and skills to enable it to
discharge its duties and responsibilities effectively, and that all
Directors have adequate time to fill their roles, the Group intends
to appoint an independent Non-Executive Director in due course and
we will make further announcements as and when appropriate.
The role of the Chairman is to provide leadership of the Board
and ensure its effectiveness on all aspects of its remit to
maintain control of the Group. In addition, the Chairman is
responsible for the implementation and practice of sound corporate
governance.
Our Non-executive director is expected to devote as much time as
is necessary for the proper performance of his duties. Executive
directors are full-time employees or services providers and
expected to devote as much time as is necessary for the proper
performance of their duties.
During 2019 the Board held seven (7) formal meetings either in
person or by call, all of which were attended by all Directors. The
Board also passed ten (10) unanimous written resolutions.
Principle 6 - Ensure that between them the directors have the
necessary up to-date experience, skills and capabilities
The Board considers its current composition to be appropriate
and suitable with the adequate and up-to-date experience, skills
and capabilities to make informed decisions. Each member of the
Board brings a different set of skills, expertise and experience,
making the Board a diverse unit equipped with the necessary set of
skills required to create maximum value for the Company.
The Board is fully committed to ensuring its members have the
right skills. Members of the Board must be re-elected by the
shareholders of the Company if they have not been re-elected at the
previous two annual general meetings in accordance with the
Company's Articles of Association, thereby providing shareholders
the ability to decide on the election of the Company's Board.
The biographical details of the Directors are:
Paul J Duffen , Executive Chairman, aged 62, brings over 35
years in management experience in various industries and being an
entrepreneur. Paul was co-founder and Chief Executive Officer
(until 2006) of Catalyst Media Group plc, which specialised in the
sports, media and entertainment sectors, including motor racing in
the USA and Horse Racing in the UK. He subsequently served as
Executive Chairman of Hull City Football Club, securing their first
promotion to the Premier League in 2008 and Chairman of Newsdesk
Media Ltd, an international publishing Group. He currently serves
as a Director of Greenacre Capital Ltd, a property investment
company and as a non-executive Director of Animus Associates Ltd, a
business intelligence consultancy.
Marcel Noordeloos , Chief Financial Officer, aged 52, was Group
Finance Director at Playlogic International NV between 2006 and
2009 and Chief Financial Officer at Playlogic Entertainment Inc
from March 2009 until December 2010 prior to becoming Chief
Financial Officer at the Company. Marcel has held several
management positions with among others Nike EMEA (2002-2006) and
PwC (1992-2001). Marcel holds an RA Degree (Registered Accountant)
from the University of Amsterdam.
Rainer Lauffs, Chief Operating Officer, aged 48, is a business
graduate from Philipps University of Marburg (Germany) and has been
working in the online gaming world since 2006. Among other
projects, he was significantly involved in building up
PartyGaming's business in German and Dutch territories.
Mark Rosman , Non-Executive Director, aged 53, has over 15 years
of experience advising on private equity investments and managing
private equity portfolios. Mark worked for Galladio Capital
Management B.V. for eleven years and held the role of chief
operating officer from 2006 until his departure in 2010. Since
leaving Galladio, Mark has served as chief executive officer of The
Nestegg B.V., a private equity management and advisory firm that
advises high net worth individuals on the structuring and
management of investments. Mark is a law graduate from VU
University Amsterdam and has an MBA from Rotterdam School of
Management.
The Board also consults with external advisers, such as it
Nominated Adviser and the Company's lawyers, and with executives of
the Company on various matters as deemed necessary and appropriate
by the Board.
Principle 7 - Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
B90's Board is small and extremely focussed on implementing the
Group's strategy. However, given the size and nature of the Group,
the Board does not consider it appropriate to have a formal
performance evaluation procedure in place, as described and
recommended in Principle 7 of the QCA Code. The Board will closely
monitor the situation as it grows.
Principle 8 - Promote a corporate culture that is based on
ethical values and behaviours
We are committed to acting ethically and with integrity. We
expect all employees, officers, directors and other persons
associated with us to conduct their day-to-day business activities
in a fair, honest and ethical manner.
For that purpose, we have adopted a Code of Business Conduct and
Ethics ("Code") which applies to all our workforce personnel.
Pursuant to the Code, employees, directors and other relevant
stakeholders are required to comply with all laws, rules and
regulations applicable to us. These include, without limitation,
laws covering anti-bribery, copyrights, trademarks and trade
secrets, data privacy, insider trading, illegal political
contributions, antitrust prohibitions, rules regarding the offering
or receiving of gratuities, environmental hazards, employment
discrimination or harassment, occupational health and safety, false
or misleading financial information or misuse of corporate assets.
The Code also includes provisions for disclosing, identifying and
resolving conflicts of interest of the employees and Board
members.
The Code includes provisions requiring all employees to report
any known or suspected violation and ensures that all reports of
violations of the Code will be handled sensitively and with
discretion. We also recognise the benefits of a diverse workforce
and are committed to providing a working environment that is free
from discrimination.
We have also adopted a share dealing code, regulating trading
and confidentiality of inside information by persons discharging
managerial responsibility and persons closely associated with them
("PDMRs").
We take all reasonable steps to ensure compliance by PDMRs and
any relevant employees with the terms of the dealing code.
Principle 9 - Maintain governance structures and processes that
are fit for purpose and support good decision-making by the
Board
Corporate Governance Committees
The Board has established two committees, of which the
composition is as follows:
Audit committee
Mark Rosman (Chairman)
Paul J Duffen
Remuneration committee
Mark Rosman (Chairman)
Paul J Duffen
The Audit Committee
The Audit Committee meets twice during the year to review the
published financial information, the effectiveness of external
audit and internal financial controls including the specific
matters set out below.
The terms of reference of the Audit Committee are to assist all
the Directors in discharging their individual and collective legal
responsibilities and during the meetings to ensure that:
-- The Group's financial and accounting systems provide accurate
and up-to-date information on its current financial position,
including all significant issues and going concern;
-- The integrity of the Group's financial statements and any
formal announcements relating to the Group's financial performance
and reviewing significant financial reporting judgments contained
therein are monitored;
-- The Group's published financial statements represent a true
and fair reflection of this position; and taken as a whole are
balanced and understandable, providing the information necessary
for shareholders to assess the Group's performance, business model
and strategy;
-- The external audit is conducted in an independent, objective,
thorough, efficient and effective manner, through discussions with
management and the external auditor; and
-- A recommendation is made to the Board for it to put to
shareholders at a general meeting, in relation to the
reappointment, appointment and removal of the external auditor and
to approve the remuneration and terms of engagement of the external
auditor.
The Audit Committee does not consider there is a need for an
internal audit function given the size and nature of the Group.
Significant issues considered by the Audit Committee during the
year have been the Principal Risks and Uncertainties (which are set
out in the this annual report) and their effect on the financial
statements. The Audit Committee tracked the Principal Risks and
Uncertainties through the year and kept in contact with the Group's
Management, External Service Providers and Advisers and received
regular updates. The Audit Committee is satisfied that there has
been appropriate focus and challenge on the high-risk areas.
Nexia Smith & Williamson, our external auditors, have been
in office since 2013.
The external auditors are invited to attend the Audit Committee
meeting to present their findings and this provides them with a
direct line of communication to the Non-executive Director.
The Remuneration Committee
The terms of reference of the Remuneration Committee are to:
-- recommend to the Board a framework for rewarding senior
management, including Executive Directors, bearing in mind the need
to attract and retain individuals of the highest calibre and with
the appropriate experience to make a significant contribution to
the Group; and
-- ensure that the elements of the remuneration package are
competitive and help in underpinning the performance-driven culture
of the Group.
Principle 10 - Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Board is committed to maintaining good communication with
its shareholders and in promoting effective dialogue regarding the
Group's strategic objectives and performance. Institutional
shareholders and analysts have the opportunity to discuss issues
and provide feedback via meetings with the Company. The Annual
General Meeting and any other General Meetings that are held
throughout the year are for shareholders to attend and question the
Directors on the Company's performance. Regular progress reports
are also made via RNS announcements and the point of contacts are
Paul J. Duffen, Executive Chairman and Marcel Noordeloos, CFO.
Our Audit Committee Report is included on pages 21 to 22 of this
Annual Report. Our Remuneration Committee Report is included on
page 23 of this Annual Report.
Audit Committee Report
General and Composition of the Audit Committee
The Audit Committee is a sub-committee of the Board. The Audit
Committee chairman reports formally to the Board on all matters
within the Committee's duties and responsibilities and on how the
Audit Committee discharges its responsibilities. The Audit
Committee members are Mark Rosman (Chairman) and Paul Duffen.
The Audit Committee consists of two members, Mark Rosman
(Chairman) and Paul Duffen. Mark Rosman is considered to be
independent.
The biographies of the Audit Committee members are on pages
17-18 under principle six, as well as on the Company's website at
www.b90holdings .com/corporate-info .
The Audit Committee meets at twice a year at appropriate times
in the reporting and audit cycle and otherwise as required. The
Audit Committee also meets regularly with the Company's external
auditors.
Purpose and Responsibilities of Audit Committee
The purpose of the Audit Committee is to assist the Board to
carry out the following functions more efficiently and fully:
-- Oversight of the integrity of the Group's formal reports,
statements and announcements relating to the Group's financial
performance; and
-- Reviewing compliance with internal guidelines, policies and
procedures and other prescribed internal standards of
behaviour.
To achieve such purposes, the Audit Committee has been assigned
with the following responsibilities:
-- Reviewing the half-year and full-year financial statements
with management and with the external auditors as necessary prior
to their approval by the Board;
-- Reviewing financial results announcements of the Group and
any other formal announcements relating to the Group's financial
performance and recommending them to the Board for approval;
-- Reviewing recommendations from the CFO and the external
auditors on the key financial and accounting principles to be
adopted by the Group in the preparation of the financial
statements;
-- Reviewing the Group's systems for internal financial control;
-- Considering and making recommendations to the Board, to put
to shareholders for approval at the AGM, the appointment,
re-appointment and removal of the Company's external auditors and
oversee the relationship with the external auditors;
-- Reviewing and approving the external audit plan and regularly monitoring the progress of implementation of the plan;
-- Determining and monitoring the effectiveness and independence of the external auditors.
Main Activities in 2019
On 28 June 2019 the Audit Committee reviewed the financial
statements for FY2018.
On 30 September 2019 the Audit Committee reviewed the financial
results of the Company for H1 2019.
External Auditors
The external auditors of the Company are Nexia Smith &
Williamson ("NS&W"). The appointment of NS&W as auditors by
the Audit Committee was based on their performance during past
years. The Audit Committee review of the external auditors
confirmed the appropriateness of their reappointment and included
assessment of their independence, qualification, expertise and
resources, and effectiveness of their audit process.
Both the Board and the external auditors have safeguards in
place to avoid the possibility that the auditors' objectivity and
independence could be compromised. The services provided by the
external auditors include the Audit-related services. In
recognition of public concern over the effect of consulting
services on auditors' independence, the external auditors are not
invited to general consulting work which can affect their
independence as external auditors.
The total remuneration of the external auditors for 2019 and for
2018 was as listed in the table below:
2019 2018
Auditor's remuneration
Audit services EUR89,000 EUR65,000
Acquisition and assurance - -
services
Taxation compliance - -
The Audit Committee remains mindful of the attitude investors
have to the auditors performing non-audit services. The Committee
has clear policies relating to the auditors undertaking non-audit
work and monitors the appointment of the auditors for any non-audit
work, with a view to ensuring that non-audit work does not
compromise the Company ' s auditors objectiveness and
independence.
The Audit Committee and the auditors found that the external
audit plan for 2019, the audit work of the external auditors for
2019 and the remuneration of the external auditors for 2019 did not
undermine the independence of the external auditors.
Financial Reporting
The Group's trading performance is monitored on an ongoing
basis. An annual budget is prepared, and specific objectives and
targets are set. The budget is reviewed and approved by the Board.
The key trading aspects of the business are monitored daily and
internal management and financial accounts are prepared monthly.
The results are compared to budget and prior year performance.
The Audit Committee has taken and will continue to take further
steps to ensure the Group's control environment is working
effectively and efficiently.
Mark Rosman
Chairman of the Audit Committee
Remuneration Committee Report
General
The Remuneration Committee is responsible for determining and
recommending to the Board the framework for the remuneration of the
Board chairman, executive directors and other designated senior
executives and, within the terms of the agreed framework,
determining the total individual remuneration packages of such
persons including, where appropriate, bonuses, incentive payments
and share options or other share awards.
The Remuneration Committee consists of two members, Mark Rosman
(Chairman) and Paul Duffen. Mark Rosman is considered independent.
The Remuneration Committee meets at least once a year and otherwise
as required.
Key elements in Remuneration
As an AIM-quoted company, the Company is not required to comply
with the remuneration reporting requirements applicable to fully
listed companies in the UK. However, set out below are certain
disclosures relating to directors' remuneration:
-- The remuneration of executive directors and certain other
senior executives is set by comparison to market rates at levels
aimed to attract, retain and motivate the best staff, recognising
that they are key to the ongoing success of the business.
-- The remuneration of non-executive directors is a matter for
the Chairman and the executive directors to determine.
-- No Director is involved in any decision as to his or her own remuneration.
-- The remuneration of senior management includes equity-based
payments (stock options) vested over time to retain their
employment.
Responsibilities of the Remuneration Committee
The responsibilities of the Remuneration Committee include the
below and other responsibilities as set forth in the Charter of the
Committee:
-- Setting the remuneration policy for all executive directors.
Paul Duffen is not involved in setting his own remuneration, this
is determined by Mark Rosman only;
-- Recommending and monitoring the level and structure of
remuneration for senior management personnel;
-- Reviewing the design of all share incentive plans for
approval by the Board and shareholders.
Share option scheme
On 17 May 2016, the Company adopted a "long term incentive
senior management and Directors' stock option plan" ("the Plan").
Options granted under the Plan will entitle the participant to
acquire Ordinary Shares at a price determined in accordance with
the rules of the Plan.
The Directors' interests in the Company's share options for the
year ended 31 December 2019 are shown on page 10.
The Committee remains committed to a fair and responsible
approach to executive pay whilst ensuring it remains in line with
best practice and appropriately incentivises executive directors
over the longer term to deliver the Group's strategy.
Mark Rosman, Chairman of the Remuneration Committee
INDEPENT AUDITOR ' S REPORT TO THE MEMBERS OF B90 Holdings
PLC
Opinion
We have audited the consolidated financial statements of B90
Holdings PLC (the 'Parent Company') and its subsidiaries (the
'Group') for the year ended 31 December 2019 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows, and
the notes to the consolidated financial statements, including a
summary of significant accounting policies. 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.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group ' s
affairs as at 31 December 2019 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor ' s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC
' s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which
indicates that at 31 December 2019 the Group is only able to
continue as a going concern if it receives sufficient positive cash
flows from its existing operations as projected by the Directors.
This is contingent on future marketing activity being successful,
players not having large wins, receivables being collected as they
fall due and the continued support of creditors. If projected
revenues are not achieved in quantum or timing, then the Group will
need to raise equity or debt in order to meet its liabilities as
they fall due.
The Group has made a loss for the year of EUR 5.2m, has net
current liabilities of EUR 3.4m as at 31 December 2019, has cash
outflow of EUR 0.6m in 2019 and is projected to make losses for the
year ended 31 December 2020. The business has raised EUR 1.7m in
convertible loan finance during the year ended 31 December 2020,
and a further EUR 1.8m in convertible loan finance subsequent to
the year ended 31 December 2020 to fund the operations of the
business.
In any event the Directors consider that further funding is
likely to be required for working capital purposes and whilst they
are confident of being able to raise such funding if required,
there is no certainty that such funding will be available and/or
the terms of such funding. If the business continues to make
trading losses, the other intangible assets held by the Group at
EUR 0.25m and the goodwill held at EUR 1.4m may be impaired,
additional liabilities may arise and assets and liabilities
currently classified as non-current may become current.
These conditions represent a material uncertainty that may cast
significant doubt on the Group ' s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
In addition to the matter around going concern described above,
we identified the key audit matters described below as those that
were of most significance in the audit of the financial statements
of the current period. Key audit matters include the most
significant assessed risks of material misstatement, including
those risks that had the greatest effect on our overall audit
strategy, the allocation of resources in the audit and the
direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures
below which were designed to address the matters in the context of
the financial statements as a whole and in forming our opinion
thereon. Consequently, we do not provide a separate opinion on
these individual matters.
How the matter was addressed
Key audit in the audit and key observations
matter Description of risk arising with respect to
that risk
Revenue recognition Revenue is a key performance The Group's revenue recognition
indicator of the Group. policies are stated in note
The Group is reliant 3.
on revenues from its
main business lines We evaluated the design
with the Bet90 sports and implementation of relevant
and casino activity internal controls that the
and T4U. Revenue Group uses to ensure the
expectations completeness, accuracy and
may place pressure timing of revenue recognised.
on the Directors to
distort revenue recognition. In testing revenue recognition
This may result in we have:
overstatement or deferral * Reviewed the Group's material contracts with
of revenues to assist customers.
in meeting current
or future targets
or expectations. * Performed detailed testing on a sample of revenue
transactions, including agreement to third party
reports.
* Where cash has been received it has been agreed to
bank statements and remittance advice.
* agreed the receipt of income in respect of the land
based terminal operations in Bet90, to the set off
agreement with a supplier that recovered income from
these contracts as an offset to their costs that
would otherwise have been payable by the Group.
* Agreed that revenue is being recognised correctly in
line with IFRS 15.
----------------------------- -----------------------------------------------------------------
Carrying As at 31 December We challenged the assumptions
amount and 2019 the Group holds used in the impairment model
impairment other intangible assets for intangible assets, described
of other with a net book value in note 10.
intangible of EUR300k. Of this As part of our procedures
assets balance, EUR225k relates we:
to the brand and domain * considered historical trading performance by
name of Bet90 Sports comparing both revenue and operating profit of the
Limited and EUR25k Group's trading platforms of Bet90 sports and casino
to the domain name activity and T4U with projected revenues and
for T4U Marketing operating profits;
Limited.
The Group has impaired * assessed the appropriateness of the assumptions
EUR1.0m of intangible concerning growth rates and inputs to the discount
assets in the year. rate against latest market expectations;
The Group's assessment
of the carrying amount * considered the Directors' assertions about the
requires significant Group's future utilisation of assets by cash
judgement, in particular generating unit; and
regarding cash flows,
growth rates, discount
rates and sensitivity * considered sensitivity analysis of key variables
assumptions. included within the value in use calculations.
In performing our procedures,
we used our internal valuation
specialists and third party
evidence to assess the appropriateness
of the discount rate applied.
The Directors have impaired
EUR782k in respect of the
domain name for Bet 90 Sports
Limited, and EUR260k of
the brand and domain name
in T4U Marketing Limited.
----------------------------- -----------------------------------------------------------------
Carrying As at 31 December We challenged the assumptions
amount and 2019 the Group holds used in the impairment model
impairment goodwill with a net for goodwill, described
of goodwill book value of EUR1.4m. in note 9.
EUR1.4m of this balance As part of our procedures
relates to the acquisition we:
of Bet90 Sports Limited. * considered historical trading performance of both
revenue and operating profit in respect of the Bet 90
sports and casino activity;
The Group's assessment
of carrying amount
requires significant * assessed the appropriateness of the assumptions
judgement, in particular concerning growth rates and inputs to the discount
regarding cash flows, rate against latest market expectations;
growth rates, discount
rates and sensitivity
assumptions. * considered the Directors' assertions about the
Group's future utilisation of assets by cash
generating unit; and
* considered sensitivity analysis of key variables
included within the value in use calculations.
In performing our procedures,
we used our internal valuation
specialists and third party
evidence to assess the appropriateness
of the discount rate applied.
The Directors have determined
that no impairment on the
goodwill balance for Bet
90 Sports Limited was necessary.
----------------------------- -----------------------------------------------------------------
Materiality
The materiality for the financial statements as a whole was set
at EUR 79,000. This has been determined with reference to the
benchmark of the Group ' s revenue.
An overview of the scope of our audit
Of the Group ' s 14 reporting components, we subjected all
components to specific audit procedures where the extent of our
audit work was based on our assessment of the risk of material
misstatement and of the materiality of the Group.
The components within the scope of our work covered: 100% of the
Group ' s revenue, loss before tax and net assets.
Other information
The other information comprises the information included in the
Annual Report and Accounts, other than the financial statements and
our auditor ' s report thereon. The Directors are responsible for
the other information. Our opinion on the financial statements does
not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the Directors ' responsibilities
statement set out on page 9, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group ' s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor ' s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor ' s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council ' s website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor ' s report.
Use of our report
This report is made solely to the Company ' s members, as a
body, in accordance with our engagement letter dated 19 February
2018. 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.
Nexia Smith & Williamson 25 Moorgate
Statutory Auditor London
Chartered Accountants EC2R 6AY
16 March 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
Notes 2019 2018(1)
EUR EUR
Revenues 4 1,065,612 10,041,732
Salary expense (1,347,425) (1,352,887)
Marketing and selling expense (931,978) (5,381,050)
General administrative expense (1,981,042) (2,613,684)
Bad Debt write-off 12 - (10,712,715)
Depreciation, amortisation and impairment
expense 9,10,11 (1,181,601) (6,887,272)
---------------------------------- --------------
Total administrative expenses (5,442,046) (26,947,608)
---------------------------------- --------------
Operating loss (4,376,434) (16,905,876)
Financial income/(expense) (26,454) 38,851
---------------------------------- --------------
Loss before tax 6 (4,402,888) (16,867,025)
Taxation 7 104,150 555,800
---------------------------------- --------------
Loss for the period from continuing
operations (4,298,738) (16,311,225)
---------------------------------- --------------
Discontinued operations
Loss for the period from discontinued
operations 4 (907,418) (392,077)
---------------------------------- --------------
Loss and total comprehensive loss
for the period (5,206,156) (16,703,302)
---------------------------------- --------------
Attributable to:
Equity holders of the Company (3,799,744) (15,177,112)
Non-controlling interests (1,406,412) (1,526,190)
---------------------------------- --------------
(5,206,156) (16,703,302)
---------------------------------- --------------
Loss per share attributable to equity
holders of the Company
- Basic (in EUR) 8 (0.0472) (0.2029)
- Diluted (in EUR) 8 (0.0472) (0.2029)
Loss per share on continuing operations,
attributable to equity holdings
of the Company
- Basic (in EUR) 8 (0.0414) (0.2002)
- Diluted (in EUR) 8 (0.0414) (0.2002)
Loss per share on discontinued operations,
attributable to equity holdings
of the Company
- Basic (in EUR) 8 (0.0058) (0.0027)
- Diluted (in EUR) 8 (0.0058) (0.0027)
The Notes on pages 33 to 58 form part of these financial
statements
(1) the 2018 Conslidated Statement of Comprehensive Income has
been restated to report the continued and discontinued operations
as per the 2019 statement, which shows the land-based operations of
Bet90 as being discontinued
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
Note 2019 2018
EUR EUR
Non-current assets
Goodwill 9 1,410,931 1,410,931
Other intangible assets 10 251,563 1,431,925
Property, plant and equipment 11 - 1,238
-------------------------------- --------------------------------
Total non-current assets 1,662,494 2,844,094
-------------------------------- --------------------------------
Current assets
Trade and other receivables 12 130,883 854,215
Cash and cash equivalents 13 430,626 1,031,071
-------------------------------- --------------------------------
Total current assets 561,509 1,885,286
-------------------------------- --------------------------------
Total assets 2,224,003 4,729,380
-------------------------------- --------------------------------
Equity and liabilities
Share capital 14 - -
Additional paid-in capital 15 15,162,647 14,344,702
Reverse asset acquisition reserve 16 (6,046,908) (6,046,908)
Equity portion Convertible Bond 19 149,836 -
Retained earnings 17 (8,910,238) (5,262,376)
-------------------------------- --------------------------------
Equity attributable to owners
of the parent 355,337 3,035,418
-------------------------------- --------------------------------
Non-controlling interests (2,817,990) (1,411,578)
-------------------------------- --------------------------------
Total shareholders' equity (2,462,653) 1,623,840
-------------------------------- --------------------------------
Non-current liabilities
Borrowings 19 774,891 27,858
-------------------------------- --------------------------------
Total non-current liabilities 774,891 27,858
-------------------------------- --------------------------------
Current liabilities
Trade and other payables 20 3,887,543 2,980,836
Corporate income tax payable 24,222 96,846
-------------------------------- --------------------------------
Total current liabilities 3,911,765 3,077,682
-------------------------------- --------------------------------
Total equity and liabilities 2,224,003 4,729,380
-------------------------------- --------------------------------
Approved by the board on 16 March 2021 and signed on its behalf
by:
Paul Duffen
Chairman
The Notes on pages 33 to 58 form part of these financial
statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other
reserves
Additional Equity portion -
convertible Reverse
Share paid in Loan asset Retained Non-controlling Total
acquisition
capital capital Note reserve earnings Total interest Equity
EUR EUR EUR EUR EUR EUR EUR EUR
Loss for the
financial
period - - - - (15,177,112) (15,177,112) (1,526,190) (16,703,302)
Dividend paid - - - - (210,914) (210,914) (68,355) (279,269)
Share based
payments - - - - 176,744 176,744 - 176,744
Shares to be
issued - 555,500 - - - 555,500 - 555,500
Issue of
share
capital - 123,969 - - - 123,969 - 123,969
---------- ------------ ------------------------------------- ------------- -------------- -------------- ---------------- --------------
Balance as at
31 December
2018 - 14,344,702 - (6,046,908) (5,262,378) 3,035,416 (1,411,578) 1,623,838
---------- ------------ ------------------------------------- ------------- -------------- -------------- ---------------- --------------
Loss for the
financial
period - - - - (3,799,744) (3,799,744) (1,406,412) (5,206,156)
Convertible
loan note - - 149,836 - - 149,836 - 149,836
Share based
payments - - - - 151,884 151,884 - 151,884
Issue of
share
capital - 817,945 - - - 817,945 - 817,945
---------- ------------ ------------------------------------- ------------- -------------- -------------- ---------------- --------------
Balance as at
31 December
2019 - 15,162,647 149,836 (6,046,908) (8,910,238) 355,337 (2,817,990) (2,462,653)
---------- ------------ ------------------------------------- ------------- -------------- -------------- ---------------- --------------
The Notes on pages pages 33 to 58 form part of these financial
statements
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2019 2018
EUR EUR
Cash flows from operating activities
Operating loss (5,283,852) (17,297,953)
Adjustments for:
Share based payments 151,884 176,744
Depreciation 1,238 1,292
Amortisation of intangibles 137,697 403,222
Impairment of intangibles 1,042,665 6,482,752
Bad debt impairment - 10,737,715
------------------------------------ ----------------------------------
Cash flow from operations before
working capital changes (3,950,368) 503,772
Decrease/(increase) in trade and
other receivables 723,329 (1,058,697)
Increase in trade and other payables 935,022 533,580
------------------------------------ ----------------------------------
Cash flow from operations (2,292,017) (21,345)
Tax paid - (86,823)
------------------------------------ ----------------------------------
Cash flow from operating activities (2,292,017) (108,168)
------------------------------------ ----------------------------------
Cash flow from investing activities
Interest received/(paid) - 38,851
------------------------------------ ----------------------------------
Net cash inflow from investing
activities - 38,851
------------------------------------ ----------------------------------
Cash flow from financing activities
Proceeds of issue of new shares 300,000 679,469
Dividends paid - (279,273)
Receipts from loans 1,391,572 -
------------------------------------ ----------------------------------
Net cash inflow from financing
activities 1,691,572 400,196
------------------------------------ ----------------------------------
Net (decrease)/increase in cash
and cash equivalents (600,445) 330,879
Cash and cash equivalents at start
of period 1,031,071 700,192
------------------------------------ ----------------------------------
Cash and cash equivalents at end
of period 430,626 1,031,071
------------------------------------ ----------------------------------
The Notes on pages 33 to 58 form part of these financial
statements
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
Note 1: General Information
Company descriptions and activities
B90 Holdings plc (the "Company") and its subsidiaries (together
the " Group ") was founded in 2012 in the Isle of Man (Company
number 9029V). In July 2013, the Company listed on the AIM market
of the London Stock Exchange and completed a reverse merger in June
2016.
The Company was named Veltyco Group plc until a name change to
B90 Holdings plc was executed on 3 February 2020.
The Group is focused on the operation of its own online
Sportsbook and Casino product (Bet90 Sports Ltd) as well as
marketing activities for other online gaming companies.
Accounting policies
The principal accounting policies as adopted by the Group in the
preparation of its consolidated financial statements for the year
ended 31 December 2019 are set out below. The accounting policies
have been consistently applied, unless otherwise stated.
Basis of preparation
The Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and issued by the
International Accounting Standards Board ("IASB"). These accounting
policies comply with each IFRS that is mandatory for accounting
periods ending on or after 1 January 2019. The Consolidated
Financial Statements have been prepared under the historical cost
convention and on a going concern basis.
Basis of consolidation
The Consolidated Financial Statements incorporate the results of
B90 Holdings plc (the "Company") and entities controlled by the
Company (its subsidiaries) (collectively the "Group"). Control is
achieved where the Company has the power to govern the financial
and operating policies of an entity.
The results of subsidiaries disposed of are included in the
consolidated statement of comprehensive income to the effective
date of loss of control and those acquired from the date on which
control is transferred to the Group.
Going concern
The Group continued to experience significant operational
difficulties during 2019 after its restructuring in respect to
marketing within the online financial trading and lottery
verticals. As a result, the Company has completed a number of fund
raises from investors during 2020 and in 2021.
As a result of the above, the Group achieved a net loss of
EUR5.2 million for the year ended 31 December 2019. Furthermore,
the Group had a negative cash flow from operations of EUR2.1
million for the year ended 31 December 2019 and the Group has
recorded a further loss for the year ending 31 December 2020,
expected to exceed EUR1.75 million.
Whilst trading during the second half of 2020 has been in line
with the Board's revised expectations, the Group continues to
reduce its operating costs to match the current operations and the
Directors continue to manage the Group's cash resources carefully.
Whilst the Group raised additional funds by way of the issue of
convertible loan note since the 2019 year-end, amounting in
aggregate to EUR3.5 million (including the funds raised on 16 March
2021), it remains reliant, inter alia, on being able to manage its
cash resources carefully, continuing to manage its creditors and
trading being in line with management's expectations. Whilst the
funds raised on 16 March 2021 of EUR1,847,000 provide the Group
with additional working capital and further strengthen the balance
sheet, the Group continues to remain reliant on being able to
manage its creditors. Furthermore, should trading not be in line
with mangement's expectations going forward, the Group's ability to
meet its liabilities may be impacted, in which case the Group will
need to raise further funding. In the circumstance that this is
needed and whilst the directors are confident of being able to
raise such funding if required, there is no certainty that such
funding will be available and/or the terms of such funding. These
conditions are necessarily considered to represent a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern.
Whilst acknowledging this material uncertainty, the Directors
remain confident that the recent fundraise will allow the Group to
expand its operations and generate a positive operational cash flow
within a reasonable time or, if needed, be able to raise additional
funding when required, therefore the Directors consider it
appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include the adjustments that
would result if the Group and Company was unable to continue as a
going concern.
Note 2: Critical accounting policies, estimates and
judgements
The preparation of the Consolidated Financial Statements
requires the Directors to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
Areas of estimation
Impairment of Goodwill and other intangible fixed assets
Determining whether goodwill and other intangible fixed assets
with a definite or indefinite useful life are impaired requires an
estimation of the value-in-use of the cash-generating units. The
value-in-use calculation requires the entity to estimate the future
cash flows expected to arise from the cash-generating unit and
select a suitable discount rate in order to calculate present value
together with an assessment as to whether future cash flows are
subject to any degree of uncertainty. The work to assess the
existence of impairment indicators and, where applicable, to
evaluate the impairment of goodwill and intangible assets was
conducted internally by the Directors. Further details are provided
in Notes 9 and 10 of this report. However, there is a risk of a
further impairment next year. There is a risk that there are
insufficient future cash flows to support the value in use of these
assets.
Share-Based Payments
Certain employees (including Directors and senior Executives) of
the Company receive remuneration in the form of share-based payment
transactions.
The fair value is determined using the Black-Scholes valuation
model. The Directors believe this is appropriate considering the
effects of the vesting conditions, expected exercise period and the
dividend policy of the Company.
Due to limited trading history, the expected volatility has been
based on the 5-year historical volatility of a mix of share prices
from other companies in the same industry, as well as the overall
market volatility.
Convertible Bond Note
In September and December 2019 respectively, the Company issued
a EUR300,000 and a GBP500,000 (EUR591,200 at year-end) secured
convertible bonds of 5%. Interest is paid twice a year or accrued
at the request of the lender. The bonds are repayable three years
from their issue date, they can be converted at any time into
shares at a price of 5p per New Ordinary Share ("Conversion Price")
at request of the holder. An automatic conversion is triggered when
the Company's shares are trading above 10p for 25 consecutive
dealing days.
Under IAS 32, the convertible bonds are accounted for as a
compound financial instrument. For the calculation of the fair
value, the Company has reviewed the market interest rates for a
comparable unsecured loan, with a 3 year term. The market interest
rate used in the calculations is 12%.
New Standards, interpretations and amendments adopted by the
Group
The following interpretation and amendments to International
Financial Reporting Standards, issued by the IASB and adopted by
the EU, were effective from 1 January 2019 and have been adopted by
the Group during the year with no significant impact on the parent
company or on the consolidated results or financial position:
-- Amendments to IAS28 - Long-term Interests in Associates and Joint Ventures
-- Annual Improvements to IFRS Standards 2015-2017 Cycle
-- IFRIC Interpretation 23 - Uncertainty over Income Tax Treatments
-- Amendments to IAS19: Plan Amendment, Curtailment or Settlement
-- Amendments to IFRS 9: Prepayment Features with Negative Compensation
Changes in accounting policies
Initial adoption of new financial reporting and accounting
standards and amendments to existing financial reporting and
accounting standards:
Initial adoption of IFRS 16: "Leases"
IFRS 16 Leases - IFRS 16 was issued in January 2016 and it
replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement
contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27
Evaluating the Substance of Transactions Involving the Legal Form
of a Lease. IFRS 16 Leases requires lessees to recognise
right-of-use assets and lease liabilities for most leases. A
contract is (or contains) a lease if it conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration.
Right-of-use assets are initially measured at cost and
depreciated by the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The cost of
right-of-use assets comprises of initial measurement of the lease
liability, any lease payments made before or at the commencement
date and initial direct costs. The lease liability is initially
measured at the present value of the lease payments that are not
paid at the commencement date and subsequently measured at
amortised cost with the interest expense recognised within finance
income (expense) in the consolidated statement of income.
The Group only has one short term lease agreement in place, for
which the costs are expensed in the year in which the rent
arises.
In accordance with the transition provisions in IFRS 16, the
Group is entitled to choose to apply the modified retrospective
approach. Under this approach, a lessee does not restate
comparative information and recognise the cumulative effect of
initially applying IFRS 16 as an adjustment to the opening balance
of retained earnings at the date of initial application. The
Company nor its subsidiaries do not have any lease commitments that
exceed 12 months after the year-end and therefore there is no
impact on the 2019 figures.
New standards that have not been adopted by the Group as they
were not effective for the year:
The following relevant interpretations and amendments to
existing standards issued by the IASB, have not been adopted by the
Group as they were either not effective for the year or not yet
endorsed for use in the EU. The Group is currently assessing the
impact of these interpretations and amendments will have on the
presentation of, and recognition in, parent company or consolidated
results or financial position in future periods:
-- Amendments to References to the Conceptual Framework in IFRS
Standards, Effective date 1 January 2020
-- Amendments to IAS 1 and IAS 8: Definition of Material, Effective date 1 January 2020
The Directors do not expect the adoption of these standards and
interpretations to have a material impact on the consolidated or
company financial statements in the period of initial
application.
Note 3: Significant accounting policies
The principal accounting policies applied in the preparation of
these Consolidated Financial Statements are set out below. The
policies have been consistently applied to all years presented,
unless otherwise stated.
Revenue
Revenue from contracts with customers is recognised when the
control over the services is transferred to the customer. The
transaction price is the amount of the consideration that is
expected to be received based on the contract terms.
In determining the amount of revenue from contracts with
customers, the Group evaluates whether it is a principal or an
agent in the arrangement. The Group is principal when the Group
controls the promised services before transferring them to the
customer. In these circumstances, the Group recognises revenue for
the gross amount of the consideration. When the Group is an agent,
it recognises revenue for the net amount of the consideration,
after deducting the amount due to the principal.
Marketing commission revenue
Revenue from marketing contracts with customers is recognised
when the reports are received from the customers on which the
Company is basing the amounts to be invoiced. The transaction price
is the commission amount of the consideration that is expected to
be received based on the contract terms. The performance obligation
of a revenue contract is satisfied at the point a player's losses
are incurred. Operators typically pay a month in arrears. This
gives rise to contract assets on a short term basis.
Sportsbook and casino revenue
Revenue is recognised provided that it is probable that economic
benefits will flow to the Group and the revenue can be reliably
measured. Revenue is recognised in the accounting periods in which
the transactions occurred and after adding the fees and charges
applied to customer accounts, and is measured at the fair value of
the consideration received or receivable.
Revenue consists of income from activities and income generated
on customer deposit and withdrawals and account fees.
Revenue from these activities comprises:
Sportsbook
Sport online gaming revenue comprises bets placed less pay-outs
to customers, adjusted for the fair value of open betting
positions, adjusted for the fair value of certain promotional
bonuses granted to customers.
Landbased revenue comprises of the bets placed less pay-outs to
customers. Commissions paid to the shop owners are recorded as cost
of sale.
Casino
Casino and Bingo online gaming revenue is represented by the
difference between the amounts of bets placed by customers less
amounts won, adjusted for the fair value of certain promotional
bonuses granted to customers.
Administrative expenses
Administrative expenses consist primarily of staff costs
(including contractors), corporate professional expenses, and
depreciation and amortisation. All expenses are recognised on an
accruals' basis.
Foreign currencies
Transactions in foreign currency are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the statement of financial
position date. Any gains or losses arising on translation are taken
to the profit and loss.
Retirement benefit costs and pensions
The Group does not operate any defined benefit pension schemes
for employees or Directors. The Group has no payment obligations
relating to retirement and pension plans.
Taxation
Current tax
Current tax for each taxable entity in the Group is based on the
local taxable income at the local statutory tax rate enacted or
substantively enacted at the statement of financial position date
and includes adjustments to tax payable or recoverable in respect
of previous periods.
Deferred tax
Deferred taxation is calculated using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Consolidated
Financial Statements. However, if the deferred tax arises from the
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, it is not
accounted for. Deferred tax is determined using tax rates and laws
that have been enacted (or substantively enacted) by the date of
the statement of financial position and are expected to apply when
the related deferred tax asset is realised or the deferred tax
liability is settled.
Deferred tax liabilities are provided in full.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the profit and loss, except where
they relate to items that are charged or credited directly to
equity in which case the related deferred tax is also charged or
credited directly to equity.
Intangible fixed assets
Acquired intangible assets
Intangible assets acquired separately consist of domain names
and customer lists and are capitalised at cost. Those acquired as
part of a business combination are recognised separately from
goodwill if the fair value can be measured reliably. These
intangible assets are amortised over the useful life of the assets,
which for domain names is ten years. The useful life of customer
lists is 1 to 8 years.
The cost of intangible assets acquired in a business combination
is the fair value at acquisition date. The valuation methodology
used for each type of identifiable asset category is detailed
below:
Asset category Valuation methodology
---------------------- ----------------------
Customer relationship Excess earnings
Domain names Relief from royalty
Licenses Cost approach
Goodwill
Goodwill represents the excess of the fair value of the
consideration in a business combination over the Group's interest
in the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Consideration comprises the fair
value of any assets transferred, liabilities assumed and equity
instruments issued.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the profit and loss
and not subsequently reversed. Where the fair values of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the profit and loss on the acquisition. Changes in the fair
value of the contingent consideration are charged or credited to
the profit and loss. In addition, the direct costs of acquisition
are charged immediately to the profit and loss.
Non-controlling interests
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the
non-controlling shareholder's share of changes in equity since the
date of the combination except where any non-controlling interests
have been acquired by the Group. At this point any share of gains
or losses are transferred to the Group's retained earnings. Total
comprehensive income is attributed to non-controlling interests
even if this results in the non-controlling interests having a
deficit balance.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually and where
applicable an impairment loss is recognised immediately in the
profit and loss. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount
(being the higher of value in use and fair value less costs to
sell), the asset is written down accordingly through the profit and
loss.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
asset's cash generating unit (i.e. the smallest group of assets to
which the asset belongs for which there are separately identifiable
and largely independent cash inflows).
Investments
The Group reports its investments in entities at fair value with
movements in fair value being taken directly to equity. The fair
value of investments in unquoted equity securities cannot be
reliably measured and they are therefore held at cost.
Equity
Equity comprises the following:
-- "Share capital" represents amounts subscribed for shares at nominal value.
-- "Additional paid in capital" represents amounts subscribed
for share capital in excess of nominal value.
-- The "Reverse asset acquisition reserve" represents the
difference in carrying value between the Additional paid in capital
of Veltyco Group plc (currently named B90 Holdings plc) and the
Share capital of Sheltyco on the acquisition date (June 2016).
-- "Retained earnings" represents the accumulated profits and
losses attributable to equity shareholders.
Financial instruments
Trade and other receivables
Trade receivables are held in order to collect the contractual
cash flows and are initially measured at the transaction price as
defined in IFRS 15, as the contracts of the Group do not contain
significant financing components. Impairment losses are recognised
based on lifetime expected credit losses in profit or loss.
Other receivables are held in order to collect the contractual
cash flows and accordingly are measured at initial recognition at
fair value, which ordinarily equates to cost and are subsequently
measured at cost less impairment due to their short term nature. A
provision for impairment is established based on 12-month expected
credit losses unless there has been a significant increase in
credit risk when lifetime expected credit losses are recognised.
The amount of any provision is recognised in profit or loss.
Cash and cash equivalents, and finance income
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts.
Finance income is recognised on bank balances as and when it is
receivable.
Trade payables
Trade payables, including customer balances, are recognised
initially at fair value and subsequently measured at amortised cost
using the effective interest method.
Financial liabilities
Financial liabilities are classified as financial liabilities
measured at amortised cost. The Group determines the classification
of its financial liabilities at initial recognition. The
measurement of financial liabilities is initially recognised at
fair value and subsequently measured at amortised cost using the
effective interest method. Amortised cost is calculated by taking
into account any issue costs and any discount or premium on
settlement. Gains and losses arising on the repurchase, settlement
or cancellation of liabilities are recognised respectively in
interest and other revenues and finance costs.
Borrowings and finance costs
Borrowings are initially recognised at fair value net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
profit and loss over the period of the borrowings using the
effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the date
of the Statement of Financial Position.
Convertible Bond Note
The proceeds received on issue of the Group's convertible bond
note are allocated into their liability and equity components. The
amount initially attributed to the debt component equals the
discounted cash flows using a market rate of interest that would be
payable on a similar debt instrument that does not include an
option to convert. Subsequently, the debt component is accounted
for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the bond. The balance of
the proceeds is allocated to the equity conversion option and is
recognised in the 'Convertible debt option reserve' within
shareholders' equity, net of income tax effects. Issue costs
incurred are allocated between liability and equity in proportion
to the value of each component.
Note 4: Segment reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker to
allocate resources to the segments and to assess their performance.
In accordance with IFRS 8, the chief operating decision maker has
been identified as the Board. The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board considers that the business comprises a single
activity, being the marketing and promotion of gaming websites,
lottery and online financial trading. Therefore, the Group is
organised into one operating segment and there is one primary
reporting segment. The segment information is the same as that set
out in the Consolidated Statements of Comprehensive Income,
Consolidated Statements of Financial Position, Consolidated
Statements of Changes in Equity and Consolidated Statements of Cash
Flows.
Revenue originates from:
2019 2018
EUR EUR
British Virgin Islands 195,790 3,661,574
Malta 869,822 6,380,158
---------- -----------
Total 1,065,612 10,041,732
---------- -----------
The Board evaluates the operations based on the revenues metric.
Revenues consist of invoiced commissions for the marketing and
player acquisition services provided as well as revenues generated
from own operations. B90 operates an integrated business model and,
therefore, does not allocate operating expenses, assets and
liabilities to any of the originating countries.
As presented in the 2018 accounts, the Group has terminated the
marketing agreements relating to the online financial trading and
lottery verticals. During 2019 the Group operated both an online as
well as offline sportsbook and casino. At the completion of the 49%
acquisition of Quasar Holdings Ltd in January 2020, the Group also
terminated operations of the (loss making) offline sportsbook
operations.
The land-based operations of the Group were discontinued with
effect from 31 December 2019. The results of these discontinued
operations were as follows:
2019 2018
EUR EUR
Revenue 2,896,012 1,592,441
Net operation costs (3,803,430) (1,984,518)
------------ ------------
Loss from operations (907,418) (392,077)
------------ ------------
The results of the discontinued operations of the Group for the
year ended 31 December 2018 have been represented, as required by
IFRS5, so that the disclosure relates to all operations that have
been discontinued by 31 December 2019 for all periods
presented.
During the year the discontinued operations contributed
EUR907,418 negative (2018:EUR392,077 negative) to the Group's net
operating cash flows. No contributions to the Group's investing and
financing activities for both 2018 and 2019.
Note 5: Key management remuneration
Key management remuneration for each period was as follows:
Share Total Total
Cash based based Remuneration Remuneration
salary payments 2019 2018
EUR EUR EUR EUR
Gilles Ohana (Resigned 30
January 2019) 92,650 56,935 149,585 182,151
Paul Duffen 130,000 4,182 134,182 -
Marcel Noordeloos 144,000 5,563 149,563 164,594
Mark Rosman 50,400 4,040 54,440 148,021
Rainer Lauffs (Appointed
26 March 2018) 156,000 4,309 160,309 162,585
----------- ----------- -------------- --------------
Total 573,050 75,029 648,079 657,351
----------- ----------- -------------- --------------
Note 6: Profit for the year
Profit before taxation is stated after charging/(crediting):
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Depreciation of property, plant
and equipment 1,238 1,292
Amortisation of intangibles 137,698 403,222
Impairment of intangibles 1,042,665 6,482,758
Impairment of receivables - 10,712,715
Operating lease expenses - 56,760
Short term lease expense 3,734 -
Share based payment charge 151,884 176,744
Foreign exchange (gains) 2,698 (11,113)
Note 7: Taxation
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Loss before tax (4,402,888) (17,259,102)
------------- -------------
Profit before tax multiplied by the
standard rate of corporation tax in
Isle of Man of 0% - -
Adjustments to tax charge in respect
of previous periods (104,150) (608,733)
Effect of different tax rates in other
countries - 52,933
Tax credit (104,150) (555,800)
------------- -------------
Note 8: Earnings per share (basic and diluted)
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Earnings
Earnings for the purposes of basic and
diluted earnings per share, being net
profit after tax attributable to equity
shareholders
* Continuing operations (3,336,960) (14,977,153)
* Discontinued operations (462,783) (199,959)
* Continuing and discontinued operations (3,799,744) (15,177,112)
------------- -------------
Number of shares
Weighted average number of ordinary
shares for the purposes of:
Basic earnings per share 80,528,381 74,819,180
Diluted earnings per share 80,528,381 74,819,180
------------- -------------
Basic loss per share (in EUR) (0.0472) (0.2029)
Diluted loss per share (in EUR) (0.0472) (0.2029)
Loss per share from continuing operations
Basic loss per share (in EUR) (0.0414) (0.2002)
Diluted loss per share (in EUR) (0.0414) (0.2002)
Loss per share from discontinued operations
Basic loss per share (in EUR)
Diluted loss per share (in EUR) (0.0058) (0.0027)
(0.0058) (0.0027)
------------- -------------
The Group has granted share options in respect of equity shares
to be issued, the details of which are disclosed in Note 18. Share
options and warrants outstanding are anti dilutive due to the
losses incurred in each period.
Note 9: Goodwill
Goodwill
EUR
Cost
At 1 January 2018 1,743,485
Additions -
Disposals -
Impairments (332,554)
----------
At 31 December 2018 1,410,931
----------
Additions -
Impairments -
----------
At 31 December 2019 1,410,931
----------
Net Book Value
At 1 January 2018 -
----------
At 31 December 2018 1,410,931
----------
At 31 December 2019 1,410,931
----------
Goodwill
Goodwill arose following the acquisition of 51% in T4U Marketing
Ltd and 51% in Quasar Holdings Ltd in 2017.
Key assumptions and inputs used
Cash flow projections have been prepared for a five-year period,
following which a long-term growth rate has been assumed.
Underlying growth rates have been applied to revenue and are based
on past experience, including the results in 2017 and 2018. Key
assumptions in preparing these cash flow projections include
moderate growth in revenue, a stable level of costs per customer
acquisition and the expectation that the Group will continue to
operate in the countries currently being covered.
The Directors have performed an impairment review at the end of
the year. This is done based on the discounted cash flow
methodology, using the 2017, 2018 and 2019 results as the basis for
the review, for which a weighted average cost of capital ("WACC")
rate was used of 26% and no growth rate for the T4U Marketing Ltd
acquisition.
For the acquisition of Quasar Holdings Ltd (including Bet90
Sports ltd) the same WACC of 26% was used and a 2% long term growth
rate after 5 years was used.
The impairment review resulted in an impairment to goodwill of
EUR332,554 for the year 2018 on the goodwill paid following the
acquisition of T4U Marketing Ltd. No impairment is needed for the
year 2019.
In assessing for impairment, the recoverable amount has been
based on value in use.
Note 10: Other intangible assets
Customer Brand and Other Total
database domain
names
EUR EUR EUR EUR
Cost
At 1 January 2018 61,742 4,570,103 105,000 4,736,845
Additions (1) 4,000,000 - - 4,000,000
Disposals - - - -
------------ ------------ --------- ------------
At 31 December 2018 4,061,742 4,570,103 105,000 8,736,845
Disposals (4,000,000) - - (4,000,000)
------------ ------------ --------- ------------
At 31 December 2019 61,742 4,570,103 105,000 4,736,845
------------ ------------ --------- ------------
Amortisation
At 1 January 2018 (34,852) (686,334) (30,312) (751,498)
Charge for the period (7,717) (360,505) (35,000) (403,222)
Impairment (4,000,000) (2,150,201) - (6,150,201)
------------ ------------ --------- ------------
At 31 December 2018 (4,042,569) (3,197,039) (65,312) (7,304,920)
Charge for the period (19,173) (86,024) (32,500) (137,697)
Impairment - (1,042,665) - (1,042,665)
Disposals 4,000,000 - - 4,000,000
------------ ------------ --------- ------------
At 31 December 2019 (61,742) (4,325,728) (97,812) (4,485,282)
------------ ------------ --------- ------------
Net Book Value
At 1 January 2018 26,890 3,883,769 74,688 3,985,347
------------ ------------ --------- ------------
At 31 December 2018 19,173 1,373,064 39,688 1,431,925
------------ ------------ --------- ------------
At 31 December 2019 - 244,375 7,188 251,563
------------ ------------ --------- ------------
During 2018, the domain names relating to the online financial
trading vertical have been impaired. The book value of these
domains amounted to EUR2,143,218. Furthermore, a EUR6,983
impairment charge for the Tippen4you.com domain was recorded. The
remaining book value of the brand and domain names relate to the
acquisition of Quasar Holdings Ltd and T4U Marketing ltd in
2017.
In May 2018, the Company completed the acquisition of 100% in
Marsovia Holding Ltd for a consideration of EUR4.0 million. During
2018, the Company has impaired the value of the database held by
Marsovia, resulting in a remaining book value of nil. For the
year-end 2019, considering the change of focus to being a
Sportsbook operator, the database was considered unusable for the
future operations. The database contained data from financial
trading operations and considering current operations and GDPR
rules it will be unusable for the current sportsbook operations and
was therefore destroyed.
The Directors have performed an impairment review at the end of
the year. This is done based on the "relief from royalty"
methodology, using the previous years results as the basis for the
review, for which a weighted average cost of capital ("WACC") rate
was used of 26% and no a growth rate of 2%. A royalty rate of 2.5%
was used for the impairment review of Quasar Holdings ltd and a
12.5% royalty rate for T4U marketing ltd.
The impairment review resulted in an impairment to brand and
domainnames of EUR259,864 for the year 2019 for T4U Marketing Ltd.
For the year 2019, an impairment of EUR782,801 was recorded for the
domainname Bet90.com, resulting in a total impairment charge for
the year 2019 of EUR1,042,665.
Note 11: Property, plant & equipment
Furniture
& equipment Computers Total
EUR EUR EUR
Cost
At 1 January 2018 4,500 1,005 5,505
Additions - - -
Disposals - - -
------------- ------------ --------
At 31 December 2018 4,500 1,005 5,505
Additions - - -
Disposals - - -
------------- ------------ --------
At 31 December 2019 4,500 1,005 5,505
------------- ------------ --------
Depreciation
At 1 January 2018 (2,137) (838) (2,975)
Charge for the period (1,125) (167) (1,292)
Disposals - - -
------------- ------------ --------
At 31 December 2018 (3,262) (1,005) (4,267)
Charge for the period (1,238) - (1,238)
Disposals - - -
------------- ------------ --------
At 31 December 2019 (4,500) (1,005) (5,505)
------------- ------------ --------
Net Book Value
At 1 January 2018 2,363 167 2,530
------------- ------------ --------
At 31 December 2018 1,238 - 1,238
------------- ------------ --------
At 31 December 2019 - - -
------------- ------------ --------
Note 12: Trade and other receivables
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Trade receivables - 132,544
VAT receivables 59,333 117,163
Other receivables and prepayments 71,550 350,700
Accrued income - 253,808
------------- -------------
Total 130,883 854,215
------------- -------------
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets on hand at the reporting date. The
Group has policies in place to ensure that provision of services is
made to customers with an appropriate credit history and monitors
on a continuous basis the ageing profile of its receivables.
Trade and other receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of
its customer base, including the default risk of the industry and
country in which customers operate. Due to the nature of the
Group's operations the Group only has a few customers.
Impairment
A provision for impairment of trade receivables is established
using an expected loss model. Expected loss is calculated from a
provision matrix based on the expected lifetime default rates and
estimates of loss on default. During the year ended 31 December
2018, the Company recorded an impairment charge for potential
recoverability problems on the receivables, amounting to
EUR10,712,715. No impairment charge was recorded during the year
ended 31 December 2019.
As at 31 December 2018 and 2019, the ageing of trade and other
receivables that were not impaired are as follows:
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Not due - 58,270
Past due 1-30 days - 41,167
Past due 31-120 days - 24,117
Past due more than 120 days - 8,990
--------------- -------------
Total - 132,544
--------------- -------------
Management believes that the unimpaired amounts that are past
due are collectible in full.
Note 13: Cash and cash equivalents
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Cash held in current accounts 384,346 1,031,071
Restricted cash 46,280 -
------------- -------------
Total 430,626 1,031,071
------------- -------------
The restricted cash related to a regulatory amount to cover
liabilities to players at year-end.
Note 14: Share capital
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Allotted, called up and fully paid
90,889,492 (2018: 74,956,159) - -
------------- -------------
Ordinary shares
Par value of the shares nil nil
------------- -------------
During the year a total of 15,933,333 new Ordinary Shares have
been issued on subscription and conversion of debt.
On 30 January 2019, the Company issued 3,333,333 new Ordinary
Shares pursuant to a subscription agreement for GBP500,000 (or
approximately EUR590,000). Also, on the same date the Company
issued 200,000 new Ordinary Shares in lieu of certain fees payable.
The amount was already received in December 2018 and was recorded
under Shares to be issued as at 31 December 2018.
On 30 May 2019, the Company issued 4,000,000 new Ordinary Shares
pursuant to a subscription agreement for EUR300,000 (or
approximately GBP264,000).
On 19 December 2019, the Company issued 8,400,000 new Ordinary
Shares for converting a loan with a principle amount of EUR500,000
(or approximately GBP425,000) plus EUR17,945 of accrued
interest.
Note 15: Additional paid in capital
Additional paid in capital represents amounts subscribed for
share capital in excess of nominal value. Details of additions are
described in Note 14 above.
Note 16: Reverse asset acquisition reserve
The reverse acquisition completed on 30 June 2016 has been
accounted for as a share-based payment transaction which should be
accounted for in accordance with IFRS 2. On the basis of the
guidance in paragraph 13A of IFRS 2, the difference in the fair
value of the consideration shares and the fair value of the
identifiable net assets should be considered to be payment for the
services to transition to a public company.
Note 17: Retained earnings
Retained earnings represents the cumulative net gains and losses
recognised in the consolidated statement of comprehensive income
and other transactions with equity holders.
Note 18: Share based payments
Equity-settled share option scheme
On 17 May 2016, the Company adopted a "long term incentive
senior management and Directors' stock option plan" ("the Plan").
Options granted under the Plan will entitle the participant to
acquire Ordinary Shares at a price determined in accordance with
the rules of the Plan.
As at 31 December 2019, the following options have been granted
under the Plan.
A total of 4,150,000 share options have a grant date of 30 June
2016, with an exercise price of GBP0.25 for all of the options.
These options expire on its 5(th) anniversary on 30 June 2021.
Further to this, 800,000 options have a grant date of 22 May 2017,
with an exercise price of GBP0.25 for all of the options. These
800,000 options expire on its 5(th) anniversary on 22 May 2022.
These options vest over 4 equal yearly instalments starting 1 year
after grant date provided that the participant remains a Director
or employee of the Company during this period.
At the same date, on 14 February 2019, the Board granted
2,420,000 share options to Directors and key employees with an
exercise price of GBP0.15 for all of the options. These options
expire on its 5(th) anniversary on 14 February 2024. All options
vest over 4 equal yearly instalments starting 1 year after the
grant date provided that the participant remains a Director or
employee of the company during this period
During 2017, a total of 262,500 of these options were exercised,
all with an exercise price of GBP0.25 per share, for which the
Company issued new Ordinary Shares. Furthermore, during 2018, a
total of 437,500 options have been exercised, all with an exercise
price of GBP0.25 per share, for which the Company issued new
Ordinary Shares. Also, during those years a total of 1,025,000
options were cancelled due to employees or directors leaving the
Company.
As a result of the above the total of 5,645,000 options are
outstanding at 31 December 2019.
Warrants
On 30 June 2016, the Company issued new Ordinary Shares in
relation to funds raised and loans converted as part of the reverse
merger and re-admission of the Group. As part of this fundraise and
conversion, the Company issued 1 warrant for every 5 new Ordinary
Share allotted pursuant to the conversion and subscription
agreements, exercisable at GBP0.31 per warrant at any time during
the period from the date of issue until the 5(th) anniversary of
issue.
As a result of this a total of 758,221 warrants were issued on
30 June 2016. On 2 September 2016, the Company issued a further
175,798 warrants at the same conditions as part of completion of
the subscription agreements in relation to the reverse merger.
Furthermore, on 30 June 2016, 500,000 existing warrants were
converted into 20,000 warrants as part of the 25 to 1 consolidation
of shares. These warrants have an exercise price of GBP0.75. These
warrants had an end-date of until 17 February 2019, were not
exercised and have therefore lapsed.
On 4 October 2017, the Company issued 109,846 warrants to Strand
Hanson Limited, on their appointment of being Nominated Adviser for
the Company on 4 October 2017. These warrants have an exercise
price of GBP0.895 per warrant and can be exercised during the
period from the date of issue until the 5(th) anniversary. During
the year, the Company agreed to reprice these options to an
exercise price of GBP0.15 per warrant. The other conditions have
not changed.
During 2017, a total of 733,521 warrants with an exercise price
of GBP0.31 per share were exercised, for which the Company issued
new Ordinary Shares.
No warrants have been exercised during 2018 and 2019.
As a result of the above a total of 310,344 warrants are
outstanding at 31 December 2019.
Details of the share options and warrants outstanding during the
period are as follows:
Weighted average
Number of share exercise price
options and warrants(1) (GBP)
Outstanding as at 1 January
2017 5,344,019 0.262
Exercisable as at 1 January
2017 954,019 0.319
------------------------- -----------------
Forfeited during 2017 (690,000) 0.424
Options granted on 22 May 2017 800,000 0.250
Options granted on 5 July 2017 1,200,000 0.650
Warrants granted on 5 October
2017 109,846 0.895
Warrants exercised on 21 July
2017 (733,521) 0.310
Options exercised on 18 September
2017 (262,500) 0.250
------------------------- -----------------
Outstanding as at 31 December
2017 5,767,844 0.314
Exercisable as at 31 December
2017 957,999 0.264
Options exercised on 16 February
2018 (250,000) 0.250
Options exercised on 19 July
2018 (187,500) 0.250
------------------------- -----------------
Outstanding as at 31 December
2018 5,330,344 0.335
Exercisable as at 31 December
2018 1,850,000 0.326
Options granted on 14 February
2019 2,420,000 0.150
Cancelled on 14 February 2019 (900,000) 0.650
Forfeited during 2019 (875,000) 0.250
Warrants lapsed on 17 February
2019 (20,000) 0.750
------------------------- -----------------
Outstanding as at 31 December
2019 5,955,344 0.210
Exercisable as at 31 December
2019 2,585,344 0.250
(1) The warrants, options and prices in this table have been
adjusted to reflect the 25:1 consolidation of shares as executed on
30 June 2016.
The options outstanding as at 31 December 2019 had a weighted
average remaining contractual life of 2.1 years. The value of the
options has been derived by using a Black Scholes pricing model for
the options granted on 22 May 2017 and granted on 14 February 2019.
The inputs into the pricing models were as follows:
Options granted Options granted Warrants
on on granted on
22 May 2017 5 July 2017 14 February
2019
Share price at grant GBP0.52 GBP0.62 GBP0.0725
date
Exercise price GBP0.25 GBP0.65 GBP0.15
Volatility 34.3% 34.3% 34.3%
Expected life 5 years 5 years 5 years
Risk free rate 2.51% 2.51% 1.4%
Expected dividend yield 0% 0% 0%
As the Company has only been trading since 30 June 2016, the
expected volatility for all options was determined by taking the
average the Company's share price and the historical volatility of
a peer group over a 5-year period.
The total value of the options granted on 30 June 2016 is
EUR173,129. Of this amount, EUR16,315 has been charged in the
financial statements for the year ended 31 December 2019 (2018:
EUR32,923). The remaining balance of EUR5,085 will be charged in
the financial statements of the years ending 31 December 2020 and
2021.
The total value of the options granted on 22 May 2017 is
EUR287,272. Of this amount, EUR56,935 has been charged in the
financial statements for the year ended 31 December 2019 (2018:
EUR70,492). The remaining balance of EUR114,834 will be charged in
the financial statements of the years ending 31 December 2020, 2021
and 2022.
The total value of the options granted on 5 July 2017 is
EUR276,712. These options were cancelled per 14 February 2019. The
unamortised balance amounting to EUR68,806 has been charged to the
income statements for the year ended 31 December 2019.
The total value of the options granted on 14 February 2019 is
EUR22,250. Of this amount, EUR9,828 has been charged in the
financial statements for the year ended 31 December 2019 (2018:
nil). The remaining balance of EUR12,422 will be charged in the
financial statements of the years ending 31 December 2020, 2021,
2022 and 2023.
Note 19: Borrowings
31 December 31 December
2019 2018
EUR EUR
Convertible loan(1) 746,661 -
Loan from a shareholder 28,230 27,858
------------ ------------
774,891 27,858
------------ ------------
(1) The Convertible Loan has a 3 year term, bears a 5% coupon,
which is payable in arrears at 30 June and 31 December (with the
first payment due on 30 June 2020). The Loan can be converted by
the note holder at any time and will automatically convert into new
Ordinary Shares when the share price exceeds 10p for 25 consecutive
days. The Convertible Loan is unsecured and will be repaid in full
on its third year anniversary if not converted by this date.
In September and December 2019, the Company issued a EUR300,000
and a GBP500,000 (EUR591,200 at year-end) secured convertible bonds
of 5%. Interest is paid twice a year or accrued at the request of
the lender. The bonds are repayable three years from their issue
date, they can be converted at any time into shares at a price of
5p per New Ordinary Share ("Conversion Price") at request of the
holder. An automatic conversion is triggered when the Company's
shares are trading above 10p for 25 consecutive dealing days.
Under IAS 32, the convertible bonds are accounted for as a
compound financial instrument. The value of the liability component
and the equity conversion component were determined at the date the
instrument was issued. The fair value of the liability component,
included in non-current borrowings, was calculated using a market
interest rate for an equivalent instrument without conversion
option with the balance recorded as shares to be issued.
The value of the liability is held on the balance sheet at
amortised cost. This value will increase to its principal value of
EUR891,200 over the life of the instrument, with interest costs
being taken to the Income Statement on an monthly basis.
The loan from a shareholder is a long-term loan provided by a
previous majority shareholder in the Company, Lensing Management
Services Ltd ("Lensing"), a related party at that time, indirectly
owned and controlled by one of the Company's shareholders,
amounting to EUR28,230 (2018: EUR27,858). This loan bears interest
at 3% per annum and remains outstanding.
Note 20: Trade and other payables
31 December 31 December
2019 2018
EUR EUR
Trade payables 1,649,049 1,626,884
Accrued expenses 553,406 107,077
Liabilities to customers 191,729 201,709
Other creditors 1,493,359 1,045,166
------------ ------------
3,887,543 2,980,836
------------ ------------
Note 21: Capital commitments
At 31 December 2019 and 31 December 2018 there were no capital
commitments.
Note 22: Contingent liabilities
There were no contingent liabilities at 31 December 2019 or 31
December 2018.
Note 23: Financial instruments - Fair Value and Risk
Management
The Group is exposed through its operations to risks that arise
from use of its financial instruments. The Board approves specific
policies and procedures in order to mitigate these risks.
The main financial instruments used by the Group, on which
financial risk arises, are as follows:
-- Cash and cash equivalents;
-- Trade and other receivables;
-- Trade and other payables; and
-- Customer deposits in case of the Bet90 operations.
Detailed analysis of these financial instruments is as
follows:
2019 2018
Financial assets EUR EUR
Trade and other receivables (Note
12) 130,883 854,215
Cash and cash equivalents (Note
13) 430,626 1,031,071
-------- ----------
Total 561,509 1,885,286
-------- ----------
In accordance with IFRS 9, all financial assets are held at
amortised cost.
2019 2018
Financial liabilities EUR EUR
Trade and other payables(1) (Note
20) 3,334,137 2,873,760
Accrued liabilities 553,406 107,077
Borrowings (Note 19) 774,891 27,858
---------- ----------
Total 4,662,434 3,008,695
---------- ----------
(1) Excludes taxes payable.
In accordance with IFRS 9, all financial liabilities are held at
amortised cost.
Capital
The capital employed by the Group is composed of equity
attributable to shareholders. The primary objective of the Group is
maximising shareholders' value, which, from the capital
perspective, is achieved by maintaining the capital structure most
suited to the Group's size, strategy, and underlying business risk.
There are no demands or restrictions on the Group's capital.
The main financial risk areas are as follows:
Credit risk
Trade receivables
The Group's credit risk is primarily attributable to trade
receivables, most of which are due from the Group's partners for
which it operates the marketing activities and player acquisitions.
These are third party companies that operate the websites. As the
Group operates a limited number of brands the trade receivables are
with a limited number of partners.
The risk is that a partner would fail to discharge its
obligation with regard to the balance owed to the Group. The Group
reduces this credit risk by monitoring the activity for these
operations and arranging for the shortest possible cash settlement
intervals. As the Group has ongoing relationships with its
partners, the Directors have visibility on the activity in its
partners' operations.
The Group considers that based on the factors above, recent
developments with respect to these partners, to provide for the
collectability risk. Due to this, the Company has recorded a charge
of EUR10,712,715 in the 2018 accounts. No charge was recorded in
the 2019 accounts.
For the Group's own operations in Bet90, an additional credit
risk relates to customers disputing charges made to their credit
cards ("chargebacks") or any other funding method they have used in
respect of the services provided by the Group. Customers may fail
to fulfil their obligation to pay, which will result in funds not
being collected. These chargebacks and uncollected deposits, when
occurring, will be deducted at source by the payment service
providers from any amount due to the Group. The risk for the year
2019 has been assessed by the Board to being immaterial.
Trade receivables are considered in default and subject to
additional credit control procedures when they are more than 60
days past due in line with industry practice. Trade receivables are
only written off when there is no reasonable expectation of
recovery due to insolvency of the debtor.
12 month and lifetime expected credit losses are estimated based
on historical loss rates for the relevant country, adjusted where
evidence is available that different rates are likely to apply in
the future. This is based on changes to the expected insolvency
rates in the relevant countries.
Financial assets which are past due but not impaired
2019
Up to
Up to 12
3 months months Over 1
Not yet over over year over
due due due due Total
EUR EUR EUR EUR EUR
Trade receivables - - - - -
Accrued income - - - - -
Other receivables 60,287 - - 70,597 130,883
-------- ---------- -------- --------------- ----------
Total 60,287 - - 70,597 130,883
-------- ---------- -------- --------------- ----------
The amount over 1 year overdue relate to funds held by SATA bank
in Malta. SATA bank has lost its banking licenses and are currently
under investigation with the European Central Bank ("ECB"). Funds
have been secured by the ECB and will be release in due course,
although timing is still unsure.
2018
Up to
Up to 12
3 months months Over 1
Not yet over over year over
due due due due Total
EUR EUR EUR EUR EUR
Trade receivables 68,597 41,167 22,780 - 132,544
Accrued income 253,808 - - - 253,808
Other receivables 267,863 - 200,000 - 467,863
--------- ---------- -------- --------------- ----------
Total 590,268 41,167 222,780 - 854,215
--------- ---------- -------- --------------- ----------
For further information, refer to the going concern disclosure
in Note 1.
Liquidity risk
Liquidity risk exists where the Group might encounter
difficulties in meeting its financial obligations as they become
due. The Group monitors its liquidity in order to ensure that
sufficient liquid resources are available to allow it to meet its
obligations.
The following table details the contractual maturity analysis of
the Group's financial liabilities:
2019
Between
3
months
In 3 and 1 More than
On demand months year 1 year Total
EUR EUR EUR EUR EUR
Trade and other
payables (1) 3,334,137 - - - 3,334,137
Accrued liabilities - 553,406 - - 553,406
Borrowings - - - 774,891 774,891
----------- --------- -------- -------------- -----------
Total 3,334,137 553,406 - 774,891 4,662,434
----------- --------- -------- -------------- -----------
(1) Excludes taxes payable.
2018
Between
3
months
In 3 and 1 More than
On demand months year 1 year Total
EUR EUR EUR EUR EUR
Trade and other
payables (1) 2,873,760 - - - 2,873,760
Accrued liabilities 107,077 - - - 107,077
Borrowings - - - 27,858 27,858
----------- -------- -------- -------------- -----------
Total 2,980,837 - - 27,858 3,008,695
----------- -------- -------- -------------- -----------
(1) Excludes taxes payable.
Note 24: List of subsidiaries
The Company held the issued shares of the following subsidiary
undertakings as at 31 December 2019:
Proportion
of ownership
and voting
Name of subsidiary Place of Incorporation power Ownership
----------------------- ----------------------- -------------- ----------------------------------
B90 Ventures Ltd Isle of Man 100% Direct
B90 Services BV The Netherlands 100% Direct
Sheltyco Enterprises British Virgin 100% Direct
Group Ltd Islands
Sheltyco Enterprises Cyprus 100% Indirect, through Sheltyco
Ltd Enterprises Group Ltd
Sheltyco Enterprises Cyprus 100% Indirect, through Sheltyco
Marketing Ltd Enterprises Group Ltd
Silkline Marketing Ltd Cyprus 100% Indirect, through Sheltyco
Enterprises Group Ltd
Tunegames Marketing Cyprus 100% Indirect, through Sheltyco
Ltd Enterprises Group Ltd
Tunegames Holding Ltd Cyprus 100% Indirect, through Sheltyco
Enterprises Group Ltd
T4U Marketing Ltd Cyprus 51% Indirect, through Sheltyco
Enterprises Group Ltd
Marsovia Holding ltd Cyprus 100% Indirect, through Sheltyco
Enterprises Group Ltd
Quasar Holdings Ltd Malta 51% Indirect, through B90 Ventures
Ltd
Bet90 Sports Ltd Malta 51% Indirect, through Quasar Holdings
Ltd
Velty Bulgaria Ltd Bulgaria 100% Indirect, through B90 Ventures
Ltd
Veltyco Licensing Ltd Malta 100% Indirect, through B90 Ventures
Ltd
Note 25: Reconciliation of debt
The Group had the following movement in the borrowings:
At 1 January Cash Interest Converted Other At 31
2019 Charged to equity settlements December
2019
EUR EUR EUR EUR EUR
Borrowings 27,858 891,572 10,612 (149,836) (5,315) 774,891
Loans from
directors - 500,000 17,945 (517,945) - -
------------- ---------- --------- ----------- ------------- ----------
27,858 1,391,572 28,557 (667,781) (5,315) 774,891
------------- ---------- --------- ----------- ------------- ----------
At 1 January Cash Other settlements At 31 December
2018 2018
EUR EUR EUR
Borrowings 1,355,223 - (1,327,365) 27,858
------------- ----- --------------------------- ---------------
1,355,223 - (1,327,365) 27,858
------------- ----- --------------------------- ---------------
Note 26: Related party transactions
Remuneration of Directors and key employees
Remuneration of Directors and key employees is disclosed in Note
5.
Loan from Directors
On 1 April 2019, the Company entered into separate loan
agreements with three of its Directors (Mark Rosman, Paul Duffen
and Marcel Noordeloos), raising a total of EUR500,000. This loan
amount, including accrued interest of EUR17,945, was converted into
8,400,000 New Ordinary Shares on 19 December 2019.
Other related party transactions
The Group has recorded expenses totalling EURnil (2018:
EUR152,039) to Softlot Software Services Ltd ("Softlot"), a company
previously controlled by one of the Company's shareholders. Softlot
provided B2B services for lottery operations and following the
cessation of marketing activities in this vertical, Softlot is
currently providing no services to the Group and as 31 December
2019, no amounts were outstanding to be paid to Softlot (2018:
nil).
Furthermore, the Group has a loan payable to a Company's
shareholder, Lensing, a company indirectly owned and controlled by
one of the Company's shareholders, amounting to EUR28,230 (2018:
EUR27,858). This loan bears an interest of 3% per annum.
Included within other creditors, the Group has accrued for
unpaid salaries with its Directors, amounting to EUR61,500 at 31
December 2019 (2018: nil receivable from Directors).
Payables to related parties
The Group had the following amounts payable to related
parties:
Year ended Year ended
31 December 31 December
2019 2018
EUR EUR
Unpaid salaries and fees to Directors 61,500 -
Loan from Lensing (Note 19) 28,230 27,858
------------- -------------
Total 89,730 27,858
------------- -------------
Intra group transactions
Transactions between Group companies have not been disclosed as
these have all been eliminated in the preparation of the
Consolidated Financial Statements.
Note 27: Ultimate controlling party
As at 31 December 2019 the Directors do not believe there to be
any single controlling party.
Note 28: Post balance sheet events
On 17 January 2020 the Company announced that it had completed
the acquisition of the 49% of Quasar Holdings Ltd ("Quasar") not
owned by the Company from Binbar GmbH. Quasar wholly owns Bet90
Sports Ltd, the online sportsbook and casino gaming company.
On 3 February 2020, the Company announced that it had changed
the Company's name to B90 Holdings plc. The ticker code on the
London Stock Exchange changed from VLTY to B90 on that day.
In March 2020, The Company ' s business was negatively impacted
by the cancellation of the vast majority of sporting events in its
target markets as a result of the global COVID-19 pandemic. In June
2020, some of the main events in the target markets restarted,
however, in the months of March, April and May, the Company faced a
significant reduction in the number of customers placing bets. This
has led to a significant reduction in the Group's revenue over that
period and as it is still unsure how the pandemic develops
globally, no certainty can be given about the Company's future
revenues. The Company's shares were suspended from trading on AIM
on 17 March 2020.
On 7 May 2020, the Company announced that it had raised
GBP450,000 (or approximately EUR515,000) pursuant to subscriptions
for Convertible Loan Notes.
On 11 September 2020, the Company announced that it had raised
EUR450,000 (or approximately GBP408,000) pursuant to subscriptions
for Convertible Loan Notes.
On 9 December 2020, the Company announced that it had raised
EUR700,000 (or approximately GBP638,000) pursuant to subscriptions
for Convertible Loan Notes.
On 16 March 2021, the Company announced that it had raised
EUR1,847,000 (or approximately GBP1,585,000) pursuant to
subscriptions for Convertible Loan Notes
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR KQLFFFXLXBBL
(END) Dow Jones Newswires
March 17, 2021 03:00 ET (07:00 GMT)
Veltyco (LSE:VLTY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Veltyco (LSE:VLTY)
Historical Stock Chart
From Jul 2023 to Jul 2024
