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Finance Director's Statement
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9 Operating expenses Total operating expenses at c11.6 million were c0.5 million higher than in 2007 (c11.1 million). Before exceptional items, share option charges, depreciation and amortisation, other operating costs grew to c8.4 million from c7.3 million. Much of this increase was associated with bringing in-house the CRM and customer service functions in the offices of Malta and Israel. d000’s d000’s 2008 2007 Personnel expenses (other than share option charges) 4,817 3,449 Professional fees Fort Knox (384) 692 Professional fees Other 1,486 1,469 Office running 1,755 784 Foreign exchange differences 36 247 Other 674 653 Total 8,384 7,294 Personnel Expenses The Group’s headcount grew from 38 to 70 during the year. The costs, (net of share option charges), rose by 40% from c3,449k to c4,817k as the Group built-up its in-house presence in CRM and customer services in both Israel and Malta. Share option charges fell back from c815k to c557k as some options issued during 2004 reached the end of their charge period under accounting standard IFRS 2 share based payments. Professional fees The Group has geographical presence in seven jurisdictions and licences in three. There are eight separate legal entities in the Group. As a consequence, a substantial amount of expenditure each year is incurred with professional advisors. The Group seeks at all times to get best-value for its shareholders yet at the same time have access to top quality advice. During the year the costs fell overall from c2.2 million to c1.1 million, but the bulk of this reduction was a due to a substantial charge made in 2007 and a subsequent credit in 2008 relating to the Fort Knox claim which has previously been disclosed to shareholders. Foreign Exchange Differences The Group’s principal operating currency is the Euro. Costs are also incurred in Israeli Shekels, US Dollars and British Pounds. Exchange differences are created when net current assets/liabilities in currencies other than the Euro are translated into the Euro. In the aggregate, exchange losses of c36k were incurred in the year (2007: loss of c247k). Exceptional items The Group incurred exceptional costs during the year. c316k was incurred on professional fees arising from the abortive bid approach; c526k was incurred on termination and other costs associated with changing the Board during 2008; c1,075k loaned to the external operator of Winzingo was written off, as in the opinion of the directors, it is not collectable in the short term. Depreciation and Amortisation The depreciation charge increased from c57k to c436k principally as the Group registered, and fitted-out a branch office in Israel. Around 27 staff are employed on a formal payroll in Israel. Amortisation decreased from c2,919k to c280k as the majority of intangible assets subject to amortisation were fully amortised in 2007.