Final Results

BOXHILL TECHNOLOGIES PLC

6 January 2015

("Boxhill", the "Group" or the "Company")

Final Results for the year to 31 July 2014 & Notice of AGM

Boxhill Technologies (AIM:BOX) the AIM quoted lottery software and leisure company is pleased to announce its final results for the year ended 31 July 2014.

The Company also gives notice that it will hold its Annual General Meeting ("AGM") at 11:30am on Thursday 29 January 2015 at the offices of Allenby Capital Limited, 3 St Helen's Place, London, EC3A 6AB. Copies of the notice of AGM have been sent to ordinary shareholders of the Company today.

A copy of the Company's Annual Report and Accounts for the year to 31 July 2014 have been posted today on the Company's website in accordance with its articles of association and the AIM Rules.

Financial Highlights

· Revenue £1,410,000 (£2,190,000 including discontinued operations) (£843,000 in 2013)

· Operating Loss before interest £110,000 (£201,000 including discontinued operations) (a loss of £232,000 in 2013)

· Net assets of £492,000 (£283,000 in 2013)

· Loss from ordinary activities £187,000 (a loss of £254,000 in 2013)

Operational Highlights

· Acquired technology business Pay Corporation Limited ("Pay Corp")

· Refocused operations, final winding down of gaming operations.

Post-period Highlights

· Successful pilot and testing of casino based services

· Growth from fourteen payments customers to approaching fifty

· Platform level integration into leading foreign exchange trading platforms

· New look lottery website and improved lottery technology

Commenting on the Final Results, Chairman Lord E T Razzall said:

"Through 2014 we have continued to deliver our long term plan of building out the ecommerce and online transactions business. Boxhill Technologies PLC is continuing on its transitional journey focused on building a stable platform for growth. 

Current contracted business through the payments division continues to grow healthily; with encouraging growth in contracts since July, with Foreign Exchange being a major focus in the short term. Estimated group revenues for the financial year ending July 31 2015 are expected to at least double those of 2014 based on current agreed business."

For further information contact:

Boxhill Technologies PLC 020 7618 9000

Philip Jackson, CEO

Website www.boxhillplc.com

Allenby Capital Limited (Nomad & Broker)

Nick Harriss/Nick Athanas/James Reeve 020 3328 5656

Bishopsgate Communications (Financial PR)

Nick Rome/Sam Allen 020 7562 3350

Chairman's Statement

Financial Summary

In my review of the half-year figures to 31 January 2014 the Company made losses of £128,000. I am pleased to report that the operating loss before discontinued operations and exceptional items for the full year has been held to £110,000 against £105,000 in the year ending 31 July 2013. As we continue to improve the structure and shape of our company there is often an impact of restructuring businesses which gives rise to unavoidable exceptional losses. In this case the resulting exceptional loss on discontinued operations is £496,000, including the write down of tangible and intangible assets. Therefore continuing operations in summary are:

Revenue £1,410,000

Operating loss before interest £110,000

Interest payable £77,000

Loss from ordinary activities £187,000

Revenues from discontinued operations were £780,000 therefore total revenues including discontinued operations grew to £2,190,000 from £1,271,000 and on the same basis losses would have been £201,000. The Board felt that the structural changes were the appropriate way forward to reduce overlap of services, creating a focused payments technology business and removing unnecessary additional administrative costs.

The significant underlying growth in revenue and gross profit figures represent the continuing hard work from all members of staff with the biggest contributor being our payment software business which is our largest division supported by the Lottery business which is improving over time.

Operational Summary

The Board saw further changes during the year - with Kevin Dale leaving in July 2014. The company intends to make further appointments to the Board in due course, with a particular view to adding experienced non-executives.

Prize Provision Services Ltd, which operates The Weather Lottery, has seen significant positive change over the past year with a strengthened team at the helm, new location in Manchester, upgraded website, improved online services and the roll out of a new brand. The Weather Lottery itself has given nearly £5 million in prizes and raised over £5.3 million for good causes, providing valuable income for the hundreds of societies it serves. In this regard we believe the services provided really do make a difference to the societies that employ our services. The team continues to work closely with the Liberal Democrat Party with the development of the Lib Dem Lottery, designed to generate funds at grassroots level for the 393 local seats. We hope to develop this approach with other national organisations that have a significant localised presence. 

The five-a-side business operated by Soccerdome Limited remains closed pending completion of the £25,000,000 leisure development by Nottingham City Council of the site, which is due for completion in June 2015. We are working with Nottingham Council on proposals for the development of the site in conjunction with this broader development of the surrounding Harvey Hadden Sports Complex. We believe that the site would make an attractive investment opportunity for either an existing five-a-side operator or an entrepreneur wishing to enter into the sport and leisure arena involving either a straight sale or joint venture.

The Board has concluded that The Gambling Division lacked the critical mass required to make significant returns and was wound down.

The payments business has continued to add customers and has grown from fourteen or so customers in July to approaching 50 as at 21st December 2014. The diversity of customers is important, too, and our customers operate in gaming, foreign exchange, general e-commerce and online secretarial services. Our goal is to continue to focus on developing relationships with other large scale providers, other payment gateways or service providers and of course selected merchants directly. We expect Casino Cash to make a positive contribution by rolling out to a number of locations in 2015 after a successful pilot at a London Casino.

Outlook

Current contracted business through the payments division continues to grow healthily; with encouraging growth in contracts since July, with Foreign Exchange being a major focus in the short term. Estimated group revenues for the coming financial year are expected to at least double based on current agreed business.

This year has therefore seen continuing changes with the original lottery business now continuing to make improvements on an operational front after a period of decline before the present management were put in place. Winning new, as well as reinvigorating existing, customers continues to be the focus for the lottery team. The continued growth in ecommerce services perhaps best represents the future of the company, with existing and proposed products ranging from internet payment services provision to managing ewallet and physical and virtual prepaid services moving the company into profitability. FY2015 will see a greater focus on costs and in in particularly a reduction in the number of consultants used with an improving balance sheet, new products and services the group is still strongly placed to build upon these foundations and the Board continue to look for new profit sources to give much needed shareholder value, which if achieved as expected will no doubt be the most welcome change we will see in the coming twelve months

Lord E T Razzall

Chairman

2 January 2015

BOXHILL TECHNOLOGIES PLC

CONSOLIDATED INCOME STATEMENT

For the year ended 31 July 2014

All of the loss for the period is attributable to equity holders of the parent company.

The Group has no recognised gains or losses for the year other than the loss for the current year.

The Notes on pages 20 to 47 form part of these financial statements.

BOXHILL TECHNOLOGIES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the year ended 31 July 2014

The financial statements were approved by the Board of Directors and authorised for issue on 2 January 2015. They were signed on its behalf by:

P I Jackson

Director

The Notes on pages 20 to 47 form part of these financial statements.

BOXHILL TECHNOLOGIES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 July 2014

As described in the accounting policies, bank overdrafts and borrowings repayable on demand fluctuate from being positive to overdrawn and are considered an integral part of the Group's cash management for cash flow statement purposes.

There is no material difference between the fair value and the book value of cash and equivalents.

The Notes on pages 20 to 47 form part of these financial statements.

1. General Information

Boxhill Technologies Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 39 St James Street, London, SW1X 1JD. The nature of the Group's operations and its principal activities are described in the Directors' Report.

These Financial Statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the Group operates.

2. Adoption of new and revised International Financial Reporting Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on or after 1 August 2013.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

These Standards and Interpretations are not expected to have any significant impact on the Group's Financial Statements in their periods of initial application.

3. Significant accounting policies

Basis of Accounting

The Financial Statements, upon which this financial information is based, have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS).

The financial information has been prepared on a going concern basis, as at 31 July 2014, in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") as well as all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). The Group has not availed itself of early adoption options in such standards and interpretations.

The Financial Statements, upon which this financial information is based, have been prepared under the historical cost basis except where specifically noted. The principal accounting policies adopted are set out below:

Going concern

The financial statements have been prepared on a going concern basis notwithstanding the loss for the financial year.

The Directors' cashflow forecasts indicate that the Group will be able to operate within its existing bank facilities in the future. As with any business, there are uncertainties in the forecast, but as at the date of approval of these financial statements the Directors are unaware of any indications that would suggest inappropriate assumptions have been made in relation to trading volumes. As a result of these, the Directors are of the opinion that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements. The financial statements do not include any adjustments which would result from this basis of preparation being inappropriate.

Basis of consolidation

The consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 July each year. Control is achieved where the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business Combinations

The purchase method of accounting is used for all acquired businesses as defined by IFRS 3 - Business Combinations.

As a result of the application of the purchase method of accounting, goodwill is initially recognised as an asset being the excess at the date of acquisition of the fair value of the purchase consideration plus directly attributable costs of acquisition over the net fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries acquired. Where fair values are estimated on a provisional basis they are finalised within 12 months of acquisition with consequent changes to the amount of goodwill.

Intangible assets

Identifiable intangible assets acquired as part of a business combination are initially recognised separately from goodwill if the assets fair value can be measured reliably, irrespective of whether the asset had been recognised by the acquirer before the business combination was affected. An intangible asset is considered identifiable only if it is separable or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Intangible assets relate to the development of the lottery and on-line gaming (software and related costs). It is considered that the software has a finite useful life and amortisation has been calculated so as to write off the carrying value of it over its useful economic life of 5 years.

Goodwill

Goodwill arising on consolidation represents the excess cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication of impairment. The amount of the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Negative goodwill arising on consolidation is credited to the income statement where the Directors consider that the fair value of the assets is reliable and do not need adjustment and that the negative goodwill relates to a true bargain purchase.

Revenue recognition

Lottery turnover represents takings received for entry into the lottery prize draws. Revenue is recognised upon receipt of the money for the period that the draw takes place. Football pitch turnover represents cash takings received. Payment processing turnover is recognised when transactions are processed.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profits for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that is no longer probable that sufficient taxable profits will be available to allow all, or part, of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Useful lives are reviewed annually by the Directors.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives using the straight-line method, on the following bases:

Property - 5% per annum

Fixtures, fittings and equipment - 25% per annum

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. Where there is evidence of impairment, fixed assets are written down to their recoverable amount.

Leased assets

Rentals payable under non-onerous operating leases are expensed in the income statement on a straight-line basis over the lease term.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair values less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimate of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's function currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

Share based payments

Other than for business combinations, the only share based payments of the Group are equity settled share options and certain liability settlements. The Group has applied the requirements of IFRS 2 Share-based Payments.

For share options granted an option pricing model is used to estimate the fair value of each option at grant date. That fair value is charged on a straight line basis as an expense in the income statement over the period that the holder becomes unconditionally entitled to the options (vesting period), with a corresponding increase in equity.

For shares issued in settlement of fees and/or liabilities, the Directors estimate the fair value of the shares at issue date and that value is charged on a straight line basis as an expense in the income statement (for fees) or reduction in the balance sheet liability (for liabilities) with a corresponding increase in equity.

Inventories

Inventories are stated at the lower of cost and net recognised value. Cost comprises direct materials using the first in first out (FIFO) basis. Net recognised value represents the estimated selling price less estimated costs of completion, marketing and selling.

Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand and demand deposits and are subject to an insignificant risk of changes in value.

Trade receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit and loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate compound at initial recognition.

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recognised at the amount of proceeds received net of costs directly attributable to the transaction. To the extent that those proceeds exceed the par value of the shares issued they are credited to a share premium account.

Bank borrowings

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade payables

Trade payables are not interest-bearing and are stated at their nominal value.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

4. Critical accounting judgements and key sources of estimation uncertainty

In application of the Group's accounting policies above, the Directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities. These estimates and assumptions are based on historical experience and other factors considered relevant. Actual results may differ from estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period which the estimate is revised if the revision affects only that period or in the period of the revision and future payments if the revision affects both current and future periods.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

Share-based payments

Share-based payments are measured at grant date fair value. For share options granted to employees, in many cases market prices are not available and therefore the fair value of the options granted shall be estimated by applying an option pricing model. Such models need input data such as expected volatility of share price, expected dividends or the risk-free interest rate for the life of the option. The overall objective is to approximate the expectations that would be reflected in a current market price or negotiated exchange price for the option. Such assumptions are subject to judgements and may turn out to be significantly different to expected.

Other Payables and Other Receivables

As at the year end the subsidiary Pay Corporation Limited had a potential VAT liability of £1.2M and an amount owed to the Company, by non related companies, of a similar amount. These amounts are included within "Trade and Other Payables" and "Trade and Other Receivables" respectively. At present there is some uncertainty whether this liability is due in full or in part but there is also some uncertainty as to the extent of collectability of these debts whether in full or in part. Should amounts recoverable amount to less than any liability claims may be made under indemnities within the Sale and Purchase Agreement of Pay Corporation Limited together with other individuals and/or companies.

5. Segment analysis

The primary reporting format is by business segment, based on the different services offered by the operating companies within the Group. The Directors consider that the Group now has three business segments, namely that of lottery administration, IT payment facilities and astro-turf football pitches. The Group operates solely in one geographical area, the United Kingdom.

The Directors consider that the On-line gaming segment and part of the payment processing segment are classed as Discontinued during the period

The analysis of continuing operations per segment for the year ended 31 July 2014 is as follows:

5. Segment analysis (continued)

The following table analyses assets and liabilities not allocated to business segments as at 31

July 2014:

6. Expenses

The following material expenses are included in cost of sales:

6. Expenses (continued)

The following material expenses are included in administrative expenses:

7. Operating (loss)

Operating loss has been stated after charging / (crediting) the following:

As permitted by Section 408 of the Companies Act 2006, the holding company's profit and loss account has not been included in these financial statements. The loss for the period after taxation was £663,000 (2013: loss £1.272.000).

8. Discontinued activities

9. Personnel costs

Included within Directors' emoluments is £24,000 (2013: £20,000) paid to directors via related companies, as detailed in note 29.

10. Finance income and costs

11. Income taxes

12. Earnings per share

The calculation is based on the earnings attributable to ordinary shareholders divided by the weighted average number of Ordinary Shares in issue during the period as follows:

In June 2010 the Company issued 24 million options to subscribe for Ordinary shares of 0.1p each. At the year end 8.1 million options were outstanding. None of these options were exercised in either the prior or the current period, but had they been they would have increased the weighted average number of equity shares to 525,141,746 (2013: 476,194,865) and this amount is used in the calculation of diluted earnings per share.

13. Goodwill

The Group carried out an impairment test of goodwill for the period ended 31 July 2014 as required by IFRS. The Directors consider there to be three cash-generating units, as per note 5. During the period one of the payment processing cash-generating units has been impaired and part of this unit has been discontinued.

Included within goodwill is an amount relating to the subsidiaries Prize Provision Services Limited and Pay Corporation Limited. The carrying amount for goodwill for these respective subsidiaries is £158,000 and £460,000 respectively.

The principal assumptions made (in both 2014 and 2013) in determining the value in use of the cash-generating unit were:

• Basis on which recoverable amount determined - value in use;

• Period covered by management plans used in calculation - 1 year;

• Pre-tax discount rate applied to cashflow projection - 5%;

• Growth rate used to extrapolate cashflows beyond management plan - 3%;

• Difference between above growth rate and long term rate for UK - 0.5%

The calculation of value in use shown above is most sensitive to the assumptions on discount rates and growth rates. The assumptions used are considered to be realistically achievable in light of economic and industry measures and forecasts. The Directors believe that any reasonable possible change in the key assumptions on which the recoverable amount is based would not cause its carrying amount to exceed its recoverable amount.

13. Goodwill (continued)

Whilst there can be no certainty that the forecasts used in the impairment calculation will be achieved, the carrying value of goodwill at 31 July 2014 reflects the Directors best estimate based on their knowledge of the business at 2 January 2015 and reflects all matters of which the Directors are aware as at the date of approval of these financial statements.

14. Other intangible assets

15. Property and office equipment

16. Subsidiaries

Details of the company's subsidiaries at 31 July 2014 are as follows:

17. Inventories

18. Other financial assets

The average credit period taken on all sales is 0 days for the year ended 31 July 2014, 26 days for the year ended 31 July 2013.

The Group has provided fully for all receivables which are not considered recoverable. In determining the recoverability of all receivables, the Group considers any change in the credit quality of the receivable up to the reporting date. As at the year end date there were no receivables past due which were either not provided against nor not covered by set-off arrangements with trade payables.(See note 4 under estimation uncertainty on page 27)

The Directors consider that the carrying amount of the receivables approximates their fair value.

Cash and cash equivalents

Cash and cash equivalents comprises cash held by the Group and short-term bank deposits with an original maturity of 6 months or less. The carrying amount of these assets approximates their fair value.

19. Borrowings

Borrowings at 31 July 2014 include loans of £489,000 (2013: £301,000).

Included within borrowings is a loan of £46,875 which, on 2 September 2014 was converted at 0.1625p per share.

A further loan of approximately £426,000 is included in borrowings, this loan is on flexible terms with no fixed repayment period.

A separate loan amount included of approximately £16,000 is repayable on a fixed monthly repayment basis and due for settlement within 12 months.

20. Derivatives financial instruments and hedge accounting

At 31 July 2014 and 2013 the Group had no derivatives in place for cash flow hedging purposes.

21. Other financial liabilities

Trade and other payables

Accrued liabilities and deferred income represents miscellaneous contractual liabilities that relate to expenses that were incurred, but not paid for at the year-end and income received during the period, for which the Group had not supplied the goods or services at the end of the year.

The Directors consider that the book value of trade payables, accrued liabilities and deferred income approximates to their fair value at the balance sheet date.

The average credit period taken for trade purchases is 91 days (2013: 113 days).

22. Financial instruments: information on financial risks

Financial risks are discussed in the Directors' Report and below.

Capital risk management

The Group manages its capital to ensure that the Group as a whole will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes 24 to 25.

Gearing ratio

As at 31 July 2013 the Group gearing ratio was 15.9%. As at 31 July 2014 the gearing ratio is as follows:

Debt is defined as long and short-term borrowings.

Equity includes all capital and reserves of the Group attributable to equity holders of the parent.

Financial risk management objectives

The main market risks to which the Group is exposed are interest rates. There is also exposure to credit risk and liquidity risk. The Group monitors these risks and will take appropriate action to minimize any exposure.

Credit risk

The Group's exposure to credit risk is minimal due to turnover being in the main recognised upon cash receipt, hence the amount of trade receivables is negligible.

22. Financial instruments: information on financial risks (continued)

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Regulatory compliance risk

Regulatory compliance risk is the risk of material adverse impact resulting from failure to comply with laws, regulations, codes of conduct or standards of good practice governing the sector in which the Group operates. The Group is monitored by the financial director who is responsible for meeting regulatory and compliance obligations.

Interest rate risk

The Group's exposure to interest rate risk mainly concerns financial assets and liabilities, which are subject to floating rates in the Group. At presents the Group's loans are on fixed rate interest rates and hence it is not exposed to risk on these should rates move.

23. Deferred taxation

A deferred tax asset has not been recognised in the years ended 31 July 2014 nor 31 July

2013 in respect of taxable losses carried forward of approximately £700,000 (2013: £1,187,000) as there is insufficient historic evidence that it will be recoverable in full against taxable profits during the next 12 months.

There are not considered to be any material temporary differences associated with investments in subsidiaries for which deferred tax liabilities have not been recognised.

24. Equity share capital

During the year the Company issued 0.1p Ordinary shares as follows:

· 12,068,966 shares issued at 0.145p each to A Flitcroft.

· 120,000,000 shares issued at 0.145 p each to Viltek Limited;

· 125,000,000 shares issued at 0.1625p each to a syndicate of individuals;

· 42,736,607 shares issued at 0.145p each to Lausi Trading Limited

· 6,849,315 shares issued at 0.146p each to Allenby Capital Limited

· 324,895,331 shares issued at 0.13p each for the acquisition of Pay Corporation Limited.

25. Other reserves

26. Share-based payments

Certain Directors and key management were issued with share options on 8 June 2010, exercisable immediately at a price fixed at the date of issue. If the options remain unexercised after a period of seven years from the date of grant the options expire.

Details of options granted to date and still outstanding at the end of the year are as follows:

All of the above options were outstanding at the year end. The options had a weighted average exercise price of 1p and a remaining contractual life of 3.8 years. The Directors consider that the estimated fair values of the options at grant date was £nil due to the prevailing market price being lower than the exercise price. As the fair value is currently considered to be £nil, no amount has been recognised in either the income statement or in equity in respect of these options.

27. Business combinations

Subsidiaries acquired

Consideration transferred

Assets acquired and liabilities recognised at the date of acquisition

28. Goodwill arising on acquisition

Net cash inflow on acquisition

29. Transactions with related parties

The transactions set out below took place between the Group and certain related parties.

Lord E T Razzall

Lord E T Razzall, a director, charged the Group £24,000 (2013: £19,500) in the year, for directorship services provided, via an entity trading as R T Associates. At the year end R T Associates was owed £9,600 (2013: £2,400).

Remuneration of key management personnel

The remuneration of the Directors, who are the key management personnel of the Group, is as referred to above, and on page 8 within the Directors Report and in Note 9.

29. Transactions with related parties (continued)

Issue of Equity

On 11 July 2014 the Company issued the following ordinary 0.1p shares ("Shares") in part settlement of fees due to Company personnel to A Flitcroft, a director of the company 12,068,966 Shares in settlement of £17,500 fees due.

The new shares were issued at 0.145p per share, which was the 5 day average of the closing mid market price to 11 July 2014

As referred to in Note 26, share options were granted in 2010 to Directors and key management, all of which were outstanding at the year end. The following options were held by the Directors and key management at the year end:

A - 1,100,000 at 0.75p, 1,100,000 at 1p and 1,000,000 at 1.25p

B - 1,600,000 at 0.75p, 1,600,000 at 1p and 1,600,000 at 1.25p

All of the options are exercisable by 2 June 2017.

30. Operating lease commitments

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Operating lease payments represent rentals payable by the Group for office premises. Leases are negotiated over the term considered most relevant to the individual subsidiary and rentals are fixed where possible for that term.

31. Controlling Party

No single individual has sole control of the company.

32. Events after the balance sheet date

There are no events to note after the balance sheet date.

33. Going Concern

The Group made a loss for the year of £683,000 (2013: £438,000) and an EBITDA loss of £172,000 (2013: profit of £1,000). The trading loss is a result of a reduction in revenue from the lottery business and overhead costs associated with the holding company and its listing on AIM.

The management are continuing to control costs as well as pursue acquisitions of profitable cash generative companies, which has been seen with the acquisition of Pay Corporation Limited. The group is forecasting turnover growth as a result of the acquisition.

Given these changes made to the Group's ongoing operations, together with the additional capital available from the supporting shareholders, the Directors consider that the Group continues to be a going concern and they forecast that that there is sufficient funding in place to enable the continuance of the Group.