Directors' Report

The Directors submit their Annual Report and audited financial statements of the Group for the year ended 31 July 2008.

Principal Activities

The principal activities of the Group are the operation of interactive licensed betting and gaming operations over the internet. In Australia only, interactive betting is conducted over the internet and telephone.

Results and Dividends

The results of the Group for the year are set out on page 44 and show a loss after taxation for the year of £4.3m (2007: £315.1m). The Directors do not recommend payment of a final dividend.

Review of the Business and Future Developments

future developments is given in the Group Chief Executive Statement on pages 12 to 14 and the extended Business Review on pages 16 to 21.

Directors

The following Directors have held office during the year and subsequently:

P Dicks Chairman and Non-Executive
A McIver Executive
D Hobday Executive
J Wilkinson Executive
N Payne Non-Executive
S O'Connor Senior Independant Non-Executive
B Harris Non-Executive

Peter Dicks was appointed as Chairman and Non-Executive Director of the Company on 1 February 2008, at which point Sean O’Connor resumed his role as the Company’s Senior Independent Non-Executive Director. Jim Wilkinson was appointed as Group Finance Director on 1 February 2008. Following the Group’s restructuring, the Company announced that on 8 May 2008 the role of Chief Operating Officer was no longer required. As a result, Dave Hobday formally resigned as a Director of the Company on 8 May 2008.

Both Peter Dicks and Jim Wilkinson will seek re-appointment, and Andrew McIver will retire by rotation and seek re-election, all of whom being eligible, at this year’s Annual General Meeting.

The interests of the Directors in the shares of the Company and options for such shares were as shown on pages 34 to 39 both reflecting the year end figures and any subsequent changes. No Director has any interest in any other Group company. Details of the Directors’ remuneration and service contracts appears on pages 34 to 39.

Auditor

The auditor, Grant Thornton UK LLP, is willing to continue in office and a resolution to re-appoint Grant Thornton UK LLP will be proposed at the forthcoming Annual General Meeting.

Related Party Transactions

Details of transactions with related parties undertaken by the Group during the year are disclosed in note 25 to the Financial Statements.

Corporate Governance

The Board’s statement on Corporate Governance appears on pages 28 to 31 and policies in relation to Employees appear on page 27.

Charitable Donations

During the year, the Group donated £136,440 to a number of charities. This figure includes donations to the Responsibility in Gambling Trust, Cancer Research UK and the Bishop Simeon Trust. Included in this total was a donation of £10,000 to the Friends of Israel Sport Centre for the Disabled, of which Brian Harris is the founder.

Directors Indemnity

Details of the Directors’ indemnity insurance can be found in the remuneration report.

Purchase of own Shares

The Company did not purchase any of its own shares during the financial period.

Policy and Practice of Payement of suppliers

In respect of the Group’s next financial year, it is the policy of the Group that each company within the Group should agree appropriate terms and conditions for its transactions with suppliers by means ranging from standard written terms to individually negotiated contracts.Payments are to be made in accordance with these terms and conditions. At 31 July 2008 the Company had a trade creditor balance of £nil (2007: £nil). Group trade payables presented 15 days of purchases (2007: 15 days).

Substantial Shareholdings

As at 15 October 2008 the following Shareholders hold, or control, interests in 3% or more of the Company’s voting rights:

Shareholder
Number of
Ordinary shares
of 0.1p each
%
Voting
rights
Fidelity
Investments
70,860,914
14.92
DBS Advisors
Limited
60,893,903
12.82
Bonaire Investment
Holdings Limited
44,487,096
9.36
BNP Paibas
Abitage
23,176,305
4.88
Apollo Nominees
Limited
19,571,740
4.12

Treasury Management

The Board has laid out its policy on treasury management in the Financial Review on page 24 and in note 25.

Going Concern

The Directors have considered the implications of the potential impact of regulatory uncertainties discussed in note 26. The Directors have reviewed the cash flow projections for the Group in light of these uncertainties and have considered the financial resources available to the Group. Accordingly, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue operations for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Annual General Meeting

The Annual General Meeting will be held on 12 December 2008. The Notice of the Meeting is set out on pages 88 and 93. The Notice contains special business, including the renewal of authority to the Board to allot shares and the dis-application of statutory pre-emption rights on equity issues for cash – both in accordance with ABI and NAPF Guidelines. Shareholders should complete the Proxy form accompanying this Report in accordance with the Notes contained in the Notice of Annual General Meeting.

Directors' Responsibility in Relations to the Accounts

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 prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRSs”). The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

  • select suitable accounting policies and then apply them consistently
  • make judgements and estimates that are reasonable and prudent
  • state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the Financial Statements
  • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that theGroup will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that the Financial Statements comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may differ from legislation in other jurisdictions.

Disclosure of Informationo to the Auditor

So far as each of the Directors is aware, there is no relevant audit information of which the Company’s auditor is unaware. Each of the Directors has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

On behalf of the Board
A McIver
Director
15 October 2008