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Finance Director's Statement
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10 Financial income and expense The Group’s average cash balance over 2008 was c17.3 million (2007: c12.6 million). Interest rates have of course been falling throughout 2008. The Group earned c551k (2007: c459k) during 2008, an average rate of 3.2% (2007: 3.6%). Corporate Taxation The Group’s tax charge was derived primarily from its operations in Malta, a company which started trading in August 2007 and became profitable in 2008. The Group tax charges include: • Malta a rate of 35% on taxable profits which can be reduced to an effective rate of 4.17% through a tax claim made by Gaming VC Holdings S.A. (Luxembourg). • Netherland Antilles a rate of 2% of its trading profits. This has been sheltered, through the writedown of intangible assets in prior years. Further profits arising in the Netherlands Antilles up to c20 million should be sheltered from tax in future years. The Group is exposed potentially to additional tax charges as profits are passed up the Group, by dividends, depending on the composition of the underlying profits. Based on maintaining an annual Group dividend of c0.40 per share the Group could incur c1.2 million of non-reclaimable withholding tax. The Group is currently investigating ways to mitigate this risk. Property, plant and equipment c1.5 million of Property, plant and equipment was acquired in the year, principally through the establishment of a legal branch in Israel and further fitting-out for our offices in Malta and Rome. These assets are being depreciated over three years. Intangible assets Additional licences costing c435k were acquired in the year. These are being amortised over between three and five years. Net current assets, cash and treasury matters The Group had c19,180k of net current assets at 31 December 2008 (2007: c15,706k), an increase of 22%. The Group had c18,834k (2007: c15,859k) of cash and cash equivalents at the balance sheet date, an increase of 18.8% on 2007. Customer account balances and the related cash and cash equivalent balances, associated with our Betaland and Betpro sites are shown on the balance sheet within both Payables and Cash and Cash Equivalents. Own funds, (excluding balances held to cover customer account balances and similar), were c17.5 million (2007: c15.2 million). This equates to c0.562 (2007: c0.489) per share.