SJH.L Regulatory News (SJH)

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

St James House plc

Final Results and Audited Annual Report and Accounts for the Year to 31 January 2019

& Trading Update

("SJH" the "Group" or the "Company")

9 July 2019

Final Results

The Board of Directors of SJH is pleased to announce the publication of the audited annual report and accounts for the year to 31 January 2019 (the "Annual Report").

The Annual Report will be published on the Company's website in compliance with its articles of association and the electronic communications provisions of the Companies Act 2006. A copy of the Annual Report can also be accessed through the link below.

Annual Report 

http://www.rns-pdf.londonstockexchange.com/rns/9748E_1-2019-7-9.pdf

Key extracts from the Annual Report can also be viewed below.

Graeme Paton, the Group CEO commented, "The period covered by these accounts was a difficult and challenging one for all of us working in the Group, as well as for our shareholders. Since the new year, we believe we have made solid progress, and approach the second half of the year with optimism and confidence."

Trading Update

The Board is delighted to announce that Market Access Ltd, through its "Another" B2C brand, has signed a contract to deliver a pre-paid card programme with an innovative technology partner based in the UK.

The card programme is for an initial 100,000 prepaid cards, with 5,000 cards due immediately. It is expected that 25,000 cards will be activated within two months of launch and 100,000 within the first nine months. Each card is expected to produce revenues to the Group of between £3 and £5 per month.

Since the last trading update announced on 29 May 2019, the Group has continued to make solid progress in its primary business areas.

Within the Payment division, the two key areas of focus have been the integration of Another (please refer to the announcement of 5 July 2019 for further details) and the roll-out of the much-improved payment card processing service to our clients, including over a dozen new clients expected to be actively transacting business by the end of July through the integration of the "Another-Pay" gateway . This is now generating material levels of card processing commissions for the Group after a trial and integration period with several key clients.

The Lottery division has seen continued progress with the Unite2Win lottery on behalf of the Unite the Union Benevolent Fund, resulting in total lines played increasing by approximately one-third during the last year. These increased levels of growth, if maintained, will see the Lottery division making a positive contribution to the Group during the second half of the year.

Lord Razzall, Chairman, commented, "Our new client is an exciting and novel business with strong ecological values and a sound offer, for whom prepaid cards are expected to play a significant role in their success. Our recent acquisition of "Another", combined with the existing Market Access infrastructure, has meant we are able to immediately service their requirements. The increase in payment card processing business, both from existing Market Access efforts and through the acquisition of Another are encouraging for the second half of the year."

For further information, contact:

Strategic report

Operating and Financial Review for the year ending 31 January 2019

The principal activities of St James House plc (formerly Boxhill Technologies plc) are that of lottery administrators and the provision of payment processing products and services.

Prize Provision Services Limited ('PPSL') is licensed by the UK Gambling Commission as an External Lottery Manager ('ELM') to provide administration services to societies. It administers all aspects such as lottery draws, prizes, player accounts, financial and data administration required by law to run a lottery.

During the year to 31 January 2019, a number of organisational and structural changes were made to the business in order to deliver future revenue growth:

Launch of Market Access

During 2018, St James House PLC established Market Access Limited ('Market Access') as a wholly owned subsidiary to operate a foreign exchange ("FX") and treasury services business and provide payment processing to low risk clients, with the intention of generating a more stable growth pattern than had been seen with Emex's traditional customer base (referred to as Non-Conforming Customers). Additionally, the management is based in London and benefits from the additional direct support the Board and the team based there can offer.

Sale of Emex

On 30 July 2018, the Group separated the provision of payment services to Non-Conforming Customers from the rest of the Group through the sale of Emex (UK) Group Limited, Emexconsult Limited and Emex Technologies Limited (collectively "Emex") to MDC Nominees Limited. This included the disposal of all assets and liabilities that formed part of the Payment Processing operating segment as at and for the year ended 31 January 2018 (the "Transaction"). The consideration for Emex was £2,000,000, satisfied through the issue by MDC Nominees Limited of a Loan Note, which has the following key terms:

· Amount - £2,000,000

· Term - 10 years

· Interest rate - 0 per cent

· Security - A debenture over the issued share capital of Emex Technologies Limited, Emexconsult Ltd, Net World Limited and Emex (UK) Group Limited

· Repayment - by way of the establishment of a sinking fund into which the net revenues of Emex resulting from the customers left in place at the time of the transaction or any new Non-Conforming Customers referred by Market Access shall be transferred on a monthly basis and used for general working capital purposes and any balance outstanding at the end of 10 years, after the above sinking fund has been extinguished, by MDC Nominees Limited.

As part of the Transaction, whilst Non-Conforming Customers of Emex remained with the Emex Group, Conforming customers were given the opportunity from October 2018 to engage with Market Access Limited as part of the transaction, clear of any liabilities. In consideration of this arrangement for the Conforming Customers, St James House plc agreed to issue 100,000,000 Shares (pre-consolidation) to MDC Nominees Limited.

Under the terms of the Transaction, Market Access continues to have an ongoing commercial relationship with MDC Nominees Limited, with Market Access referring any new Non-Conforming Customers to MDC Nominees Limited and Market Access providing certain ongoing support services. Once the Loan Note is fully repaid, Market Access will receive a commission of 50 per cent of the net revenues resulting from the Non-Conforming Customers both in place at the time of the Transaction and those subsequently referred to MDC Nominees Ltd by Market Access.

These businesses were in a significant net liabilities position which had arisen from the working capital shortfall between cash balances and client fund liabilities in EmexGo. Therefore, their disposal helps to establish a better balance sheet position for the continuing Group. Subsequent to the disposal, Emex Technologies Limited has entered into Administration. The Directors, having taken external legal advice, are satisfied that the Group has no further obligations or liabilities related to this matter.

MDC Nominees Limited is owned by John Botros, a director of certain Group subsidiaries and a substantial shareholder (as defined by the AIM Rules) of St James House plc. The Transaction therefore constituted a related party transaction under the AIM Rules.

Whilst, the loan note of £2,000,000 was issued with 0% interest, the value of the investment is reflected in the Balance sheet as at 31 January 2019 at a value of £1,722,000 (2018: £nil), reflecting a 2.5% discount rate over the expected repayment period. Interest income relating to the investment of £22,000 was included in the loss before tax for the year ending 31 January 2019 (2018: £nil)

Issue of Equity

On 23 April 2018 (admitted to trade on AIM with effect from 30 April 2018), new shares totalling 410,000,000 Ordinary Shares (pre-consolidation) of 0.1 pence each ('Ordinary Shares') were issued in settlement of amounts invoiced:

1. 140,000,000 Ordinary Shares for consultancy fees totalling £140,000 from Moorhen Limited, a company controlled by Phil Jackson, in relation to his contracted ongoing role within the payment services division of the Group.

2. 10,000,000 Ordinary Shares for consultancy fees totalling £10,000 from FS Business Limited, a company controlled by Andrew Flitcroft, in relation to his contracted services as Finance Director and company secretary of the Group.

3. The Board agreed contractual terms with John Botros trading as St. James Street Chambers in relation to the legal work involved in the integration of Timegrand Limited with the newly established Market Access in February 2018 and post-acquisition dealings with the Gambling Commission for a total consideration of £100,000.

4. The Board agreed contractual terms with Bluedale Corporate Limited ('Bluedale') in relation to the corporate finance work involved in the establishment of Market Access Limited (announced on 28 March 2018) and post-establishment activities for a total consideration of £160,000. Bluedale is a company controlled by John Botros.

Also, on 23 April 2018, 20,000,000 share options were granted to each of Clive Hyman, Arno Rudolf and Cath McCormick at an exercise price of 0.1 pence per share and a life of 5 years.

In addition, on 9 May 2018 (admitted to trade on AIM with effect from 14 May 2018), new shares totalling 50,000,000 Ordinary Shares of 0.1 pence each were issued in settlement of invoices for consultancy fees totalling £50,000 from Nineteen Twelve Management Limited, a company controlled by James Rose.

Suspension of Shares

On 1 August 2018 trading in the Company's Ordinary Shares were suspended on AIM. This was as a result of the Company being unable to finalise the annual report and consolidated accounts for the year to 31 January 2018. As stated in the announcement to the market on 1 August 2018, certain outstanding information from one of the Company's banks remained outstanding along with the final risk review relating to the high value transfer service ("HVTS") announced on 28 July 2017. Whilst the final risk review for the HVTS was resolved in early September 2018 (and announced to the Market on 17 September 2018), the obtaining of the necessary information related to a bank account in the name of Networld Ltd proved much harder than originally expected. Following the dismissal of a former subsidiary director (the "FSD"), a change to the bank account mandate for this bank account (where the FSD was the sole authorised signatory) was not possible.

These issues also delayed the introduction of payment processing services by Market Access and the receipt of amounts from MDC Nominees Limited.

Following the publication of the accounts for the year ended 31 January 2018, along with those for the six months to 31 July 2018, the suspension of share trading was lifted and trading in the Company's Ordinary Shares resumed on AIM on 30 January 2019.

Change in Head Office

In order to deliver improved centralised and fewer regional controls the company opened operational offices in London and senior staff based in UK now have direct operational and financial responsibility for overseas operations, ensuring changes in focus are reflected quickly and directly in our domestic and overseas activities and continue to support our clients as changes in regulations and technology mean that we must remain agile and open to change as the market develops in a post Brexit world.

Change in Senior Management/Board

With effect from 30 January 2019, Graeme Paton and Cath McCormick were appointment to the Board of St James House PLC as Chief Executive Officer and Finance Director respectively.

Lottery Product Offerings

In April 2018, Prize Provision Services Ltd (PPSL) entered into an agreement with Unite, one of the UK's largest membership organisations. The size of the deal generates an opportunity to significantly increase the size of the lottery business on its own. PPSL provides lottery administration, marketing and promotional services along with a standalone website operated under a bespoke brand. The minimum viable product launched on December 1st, 2018 and the first players entered into draws in January 2019.

In addition, a scratch-card product has recently been launched which will be available to all lottery clients. The product offers further choice and flexibility to all clients to be able to produce a product which both immediately appeals to their supporters while giving a good profit margin.

Expected to retail at £1 with a £1,000 top prize, the scratch-cards are expected to best benefit those societies who regularly meet face to face with supporters in any environment and offer an impulse purchase which a subscription lottery does not.

In addition, there is a strong pipeline of new Weather Lottery and Sports Club Lottery charities and societies.

Financial key performance indicators ("KPI's")

KPIs provide an illustration of management's ability to successfully deliver against the Group's strategic objectives. The Board periodically reviews the KPIs of the Group taking into account the strategic objectives and the challenges facing implementation of such. The measures reflect the Group's development focused strategy, the importance of a positive cash position and our underlying commitment to ensuring safe operations. These KPI's can be categorised into operational and financial. These include, but are not limited to:

• Revenue

• Gross profit

• EBITDA

• Profit before taxation

The Group Board review these indicators at least once a month. Explanations are sought and given for any material variances and the management are required to provide plans to resolve any performance failures as they occur during the year.

As the business grows and increases its expenditure on internally generated and externally purchased tangible and intangible assets, resulting in increased depreciation and amortisation, the business has moved to measuring performance using EBITDA as it provides a better measurement of underlying operational performance.

EBITDA is defined as profit before tax, net finance costs, depreciation and amortisation.

Financial Summary

For the full year to 31 January 2019 the Group recorded total comprehensive income of £398,000 compared to a loss of £1,809,000 for the ended 31 January 2018 and an EBITDA loss of £2,176,000 compared to an EBITDA loss of £1,628,000 for the year ended 31 January 2018.

In summary, for the year to 31 January 2019 the Group performance was as follows: 

Revenue : £938,000 (2018: £458,000)

Gross Profit : £686,000 (2018: £215,000)

EBITDA : Loss of £2,285,000 (2018 : Loss of £604,808)

Depreciation & Amortisation : £498,000 (2018 : £116,000)

(Loss)/profit before tax : Loss of £2,755,000 (2018: Loss of £721,000)

The above figures exclude the gain on the sale of the Emex group of companies of £3,505,000, as detailed in note 8.

Including both activity from discontinued operations and the profit on sale of the Emex group, results in a total comprehensive income of £398,000 (2018: loss of £1,809,000).

As can be seen in note 2, the overall loss after tax comprised a loss of £56,000 (2018: Loss of £16,000) in the Lottery business and a loss of £979,000 (2018: Loss of £1,147,000) in the Payment processing businesses, further reduced by unallocated central costs of £1,622,000 (2018: £588,000).

Depreciation and Amortisation in the year to 31 January 2019 was £498,000 (2018: £122,000), with the increase compared to the previous year relating to an amortisation catch-up resulting from a change in the useful life of the Timegrand software from 10 to 5 years.

Performance in the payments processing business in the year to 31 January 2019 was impacted by the corporate changes undertaken by the Group as it realigned itself and began to build a presence in a more competitive market.

Payments processing income during the year to 31 January 2019 was £575,000 (2018: £909,000), with the reduction resulting from the time taken to develop the products, services and infrastructure required to deliver a full suite of financial products through Market Access Limited. In addition, the Board, upon a review of the underlying performance of Emex, found that prior to its sale, the team in Malta had failed to deliver either the growth in revenues or the cost savings required to ensure that the Company operated at an acceptably profitable level. The anticipated returns on investments in people, travel and expenses were not delivered.

Following the previous year's consolidatory work, PPSL implemented its growth strategy for the business. In addition to the continued development of client services, 2018 saw the launch of the Sports Club Lottery, designed to support sporting societies raise money through their own lottery.

As a result, the trend of reducing revenue experienced in the Lottery segment for several years was halted in Autumn 2017, and through the year to 31 January 2019 small month-on-month revenue growth was experienced, with that trend continuing through the first quarter of 2019.

Lottery administration expenses in the year to 31 January 2019 were £38,000 higher compared to the prior year as a result of increased marketing and staff costs associated with the set up and launch of the SCL.

Unallocated central costs, largely borne by the parent company, were £1,034,000 higher in the year to 31 January 2019 compared to the year to 31 January 2018, largely as a result of legal fees associated with the changes in corporate structure, which were settled in shares and the costs associated with the process undertaken by the business in order to return to the AIM market following its suspension on 1 August 2018.

During the year to 31 January 2018 trade and other receivables reduced by £1,776,000, largely driven by the sale of the Emex businesses to MDC Nominees Limited on 30 July 2018, in particular, the high value transaction service with Phillite D UK Limited as announced to the market in November 2017 was included as part of the sale.

In addition, the client balances within other payables (as can be seen in note 20) decreased by £5,477,000 reflecting the liabilities sold to MDC Nominees Limited of the Emex companies.

Together these were the major drivers of the decrease in bank and cash balances as at 31 January 2019 to £371,000 (2018: £2,151,000), offset by cash absorbed in the operating activities.

Post Balance Sheet events

Change in Senior Management/Board

With effect from 1 February 2019, Andrew Flitcroft stepped down from the Board of St James House plc, but continues in the role of Company Secretary for the Group.

In addition, having overseen the reorganisation of the business, including the sale of Emex to MDC Nominees Ltd, Clive Hyman (Non-Executive Director) and Tim Razzall (Executive Chairman) will not be seeking re-election at the Annual General Meeting for the year to 31 January 2019, which is to be held on 31 July 2019. Lord Razzall became chairman of the Company in 2010. In accordance with corporate governance best practice, he is standing down from the board after nine years in the chair. The Company is in the final stages of recruiting a Non-Executive Chairman and a Senior Independent Non-Executive Director with the successful candidates announced once the recruitment process is complete.

Issuing of shares

On 21 February 2019, new shares totalling 200,000,230 Ordinary Shares of 0.1 pence each ("Ordinary Shares") were issued in settlement of amounts owed:

1. 30,000,000 Ordinary Shares at a price of 0.1 pence per share in settlement of invoices for director and consultancy fees totalling £30,000 from RT Associates, a partnership controlled by Lord Tim Razzall, a director of the Company, in relation to his contracted services as Executive Chairman of the Company.

2. 20,000,000 Ordinary Shares at a price of 0.1 pence per share in settlement of invoices for consultancy fees totalling £20,000 from FS Business Limited, a company controlled by Andrew Flitcroft, the company secretary and a former director of the Company, in relation to his contracted services as Finance Director and company secretary of the Company.

3. 50,000,000 Ordinary Shares at a price of 0.1 pence per share in settlement of salaried amounts outstanding totalling £50,000 for Cath McCormick, a director of the Company, in relation to her contracted employment with the Company.

4. The Board agreed contractual terms with John Botros t/a St. James Street Chambers in relation to the legal work involved in the issues surrounding Net World Ltd and its impact on the delayed audit of the Company (as announced on 30 January 2019) for a total consideration of £100,000.23 (the "Legal Services"). The Board and Mr Botros agreed to the issue of 100,000,230 Ordinary Shares at a price of 0.1 pence per share in settlement of the invoice for the Legal Services. John Botros is a director of a Group company.

At a general meeting held on 30 July 2018, Shareholders approved the sale of Emex. As part of the terms of the Disposal, shares were to be issued to MDC, but due to the suspension, these were not issued at the time of the Disposal. The Board approved the issue and allotment of the shares to MDC (as published 30 January 2019) and an application was made to admit those shares to trading on AIM with effect from 21 February 2019.

Purchase of Shares by PDMR

Since 1 February 2019, a number of shares have been purchased by Persons Discharging Managerial Responsibility ("PDMR") under the Market Abuse Regulations:

1. On 4 February 2019, Phil Jackson purchased 29,577,728 Ordinary Shares at a price of 0.0623p and a further 2,739,726 at a price of 0.0732p

2. On 19 March 2019 (and after the Share Consolidation discussed below), James Rose purchased 12,265 Ordinary Shares at a price of £0.40

Share Consolidation

The Board considered that having nearly three billion shares issued created a negative perception of the Company and also exposes Shareholders to undue volatility. Following discussion with the Company's financial adviser, the Board proposed a share restructuring, which was approved by the Board on 4 March 2019.

The share capital restructuring consisted of a sub-division of each Ordinary Share followed by a consolidation at a ratio of 1:1,000.

Each Ordinary Share of the Company was sub-divided into one new ordinary share of 0.001 pence each ("Interim Ordinary Shares") and one deferred share of 0.099 pence each ("Deferred Shares"), followed by a consolidation of every 1,000 Interim Ordinary Shares into one consolidated new ordinary share of 1 pence each ("New Ordinary Shares"). Therefore, the existing 3,115,830,000 Ordinary Shares became 3,115,830 New Ordinary Shares and 3,115,830,000 Deferred Shares (the "Restructuring"). Fractional entitlements arising from the Restructuring were aggregated and sold in the market for the benefit of the Company. Following the Restructuring, there were 3,115,830 New Ordinary Shares in issue, each with one voting right per share.

The Deferred Shares have no right to vote, attend or speak at general meetings of the Company and have no right to receive any dividend or other distribution and have only limited rights to participate in any return of capital on a winding-up or liquidation of the Company. No application will be made to the London Stock Exchange for admission of the Deferred Shares to trading on AIM. There will be 3,115,830,000 immediately following the Restructuring.

The outstanding options over 60,000,000 Ordinary Shares exercisable at 0.1 pence per Ordinary Share (as announced 24 April 2018), all held by Board members, will be adjusted for the Restructuring to become options over 60,000 New Ordinary Shares, exercisable at 100 pence per share. The life of the options remains unchanged at 5 years from 23 April 2018.

Change of Company Name

To reflect the change in ongoing strategy of the Group and the significant changes that have occurred during the last year, the Board believed that a change of the Company's name was appropriate. Following GM approval, Boxhill Technologies plc changed its name to St James House plc on 4 March 2019.

Acquisition of Another Ops Ltd

On 23 May 2019, St James House plc completed the acquisition of Another Ops Limited, trading as "another", whose website is https://an-other.co.uk/ ("Another"). Another Ops Limited offer prepaid payment card and merchant solutions which provide a complementary product to the merchant, international payment and foreign exchange services provided by the Company's Market Access division.

The acquisition was for 100 percent of the issued share capital of Another, consisting of 350,000 ordinary shares of £1.00 each, of which an aggregate amount of £210,000 is currently unpaid, for a consideration of £5.00. Another has an existing trading relationship with the Group and had net liabilities to the Group of around £140,000 as at the date of the acquisition.

Another has principally been engaged in product and service development since incorporation in 2017, so is an early stage business. Another is yet to publish final accounts for the period from incorporation (13 July 2017) to 31 July 2018. with management accounts showing a loss for the period of £258,615 on sales of £108,497 and net assets of £91,385 (including £210,000 of unpaid share capital, as outlined above); for the six-months to 31/1/19, management accounts show further losses of £155,519 on sales of £126,784. The Board is confident that the technology developed by Another, once integrated into the existing SJH infrastructure will result in this becoming an exciting additional business line for the Group. Another will form part of the Group's payments division and it is the intention to utilise the "another" brand for the Group's retail payments offering, while the Group's existing Market Access business is focussed on the business and institutional markets.

New Lottery Joint Venture

On 8 March 2019, the Board of Directors of St James House PLC announced it had agreed terms, subject to contract, to establish a new lottery joint venture in Malta. The Company's partner in this joint venture is ZeU Crypto Networks Limited ("ZeU"), a wholly owned subsidiary of St-Georges Eco-Mining Corp. of Montreal, Canada ("SGEM"), whose shares are quoted on the Canadian Securities Exchange (The "Lottery JV").

The Lottery JV will be established as a new company in Malta and will combine the Company's expertise in regulated lottery management and administration with ZeU's innovative blockchain-based technology. The Group will hold a 45 per cent equity interest in the Lottery JV and the other shareholders will be Zeu with 19.9 per cent, SGEM with 19.9 per cent and the balance with outside shareholders. All costs of the Lottery JV will be met by ZeU and in return, ZeU will charge a service fee that will not exceed 90% of the revenues from the Lottery JV. The remaining 10 per cent of the revenues of the Lottery JV will be distributed as a dividend to the shareholders, i.e. the Group will receive 4.5 per cent of the revenues of the Lottery JV by way of a dividend. St James House PLC will appoint three directors to the Lottery JV and ZeU will appoint one director. The Lottery JV will apply to the Maltese authorities for the appropriate licence to operate a lottery.

The Group's interest in the Lottery JV will be held by PPS Blockchain Limited, a wholly owned subsidiary of SJH ("PPSB"). PPSB will issue 100,000 non-voting, zero-coupon redeemable preference shares of 2 pence each to ZeU (the "Preference Shares"). The Preference Shares will be redeemable in 21 years, the redemption price of the Preference Shares to be fixed within 3 months after the issue of the audited accounts of the Lottery JV for the second year of trading and will be based on an independent valuation report of the value of the Group's equity interest. At the discretion of ZeU, the Preference Shares may be exchanged on the basis of one Preference Share for two ordinary shares of 1 pence each in SJH ("Ordinary Shares"), with notice to be given one day before the preference shares are due to be redeemed in 21 years, i.e. a maximum of 200,000 Ordinary Shares may be issued.

Lord Razzall, the Non-Executive Chairman of SJH is a director of ZeU and holds no common shares in ZeU, he owns less than 1 per cent of the common shares of SGEM and is not a director of SGEM.

Change of Auditor

The Board has appointed MHA MacIntyre Hudson as auditors to the Group in replacement of KPMG LLP. The Board believes MHA MacIntyre Hudson to be more suited to the Group's size and business activities.

Operational Summary

The Payments Division continues to make progress after the difficulties of 2018. Market Access is now actively adding new clients to its payment card processing service. To enhance its competitiveness in this sector, it has added further acquiring institutions to its payment gateway. The acquisition of Another Ops Limited ("Another"), as announced on 23 May 2019, will add to the Group's offering within the payment card space, through the addition of prepaid cards, mobile payments, point of sale terminals and pay by link services, as well as bringing additional acquiring relationships. 

Market Access' foreign exchange and international payments service is gaining increasing traction, with the number of transactions in May expected to be around three times those undertaken in April, based on the number completed to date. Market Access has been granted a BIC (business identifier code) by SWIFT (The Society for Worldwide Interbank Financial Telecommunication), the global payment network for financial institutions, which will considerably enhance the Group's ability to make international payments. Market Access has also signed agreements to provide Union Pay, AliPay and WePay, (the major Chinese domestic payment systems) services internationally, as well as commencing several further international banking relationships.

Outlook

Payment Services

The combination of services offered by Market Access with the addition of Another means that the Company now has a full range of card and payment services designed to meet the needs of individuals and businesses. Prepaid card programmes are being rolled out on behalf of Bandania Bank and 4New Limited with a target of more than 100,000 active cardholders in 2019. Each activated card is expected to generate revenue between £3 and £5 per month. Merchants Services has seen an increase in number of clients and transactions handled and is set for significant growth throughout 2019, both Prepaid and Merchant services generate Foreign Exchange business further supporting the Company's strategy moving forward.

Lottery

PPSL has completed roll out of a number of technology improvements and rolled out the Sports Club Lottery, focused on raising funds for sports clubs including over 100 league and non-league football clubs, alongside the Weather Lottery which supports hundreds of local and national health and education programmes.

In November 2018 PPSL announced that it is to operate the lottery for Unite, one of the UK's largest membership organisation. Already players are being recruited following the soft launch in December 2018, followed by the full launch in late H1 2019. The remainder of 2019 will see a number of player recruitment activities in order to raise funds for the organisation's benevolent fund. This includes dedicated online and offline marketing activity and inclusion of lottery information with recruitment and membership initiatives.

Principal risks and uncertainties facing the Group

There are a number of potential risks and uncertainties that could have a material impact on the Group's long-term performance, and the Group takes a positive approach to risk management.

Management and employees

The nature of the Group and its business model creates reliance upon retaining and incentivising its senior management and certain key employees, whose expertise will be important to the fortunes of the Group going forward. The Directors have endeavoured to ensure that the principal members of its management team are suitably incentivised, but the retention of such staff cannot be guaranteed.

The Group may need to recruit additional senior management and other staff in order to further develop its business. There can be no guarantee that such individuals will be recruited in the Group's preferred timetable or at the cost levels anticipated by the Group. Competition for staff is strong and therefore the Group may find it difficult to retain key management and staff. The loss of key personnel and the inability to recruit further key personnel could have a material adverse effect on the future of the Group through the impairment of the day-to-day running of the businesses and the inability to maintain existing client relationships.

Economic risk

Demand for the Group's services may be significantly affected by the general level of economic activity and economic conditions in the regions and sectors in which the Group operates. Therefore, a continuation of the challenging economic environment, especially in regions or sectors where the Group's operations are focused, could have a material adverse effect on the Group's business and financial results.

Financial Risk

The Group's financial risk management strategy is based on sound economic objectives and corporate practices. The main financial risks concern the availability of funds to meet obligations as they arise (liquidity risk) and fluctuations in exchange rates (exchange rate risk).

Competition

The Group is engaged in business activities where there are a number of competitors. Many of these competitors are larger than the relevant businesses carried on by the Group and have access to greater funds than the Group, which will potentially enable them to gain market share at the expense of the Group.

Acquisitions

The Directors cannot discount circumstances where an acquisition would support the Group's business strategy. However, there is no guarantee that the Group will successfully be able to identify, attract and complete suitable acquisitions or that the acquired business will perform in line with expectations.

Funding and working capital

Maintaining a sufficient level of working capital is essential to enable the Group to meet its foreseeable obligations and achieve its strategy. Failure to manage working capital or to collect receivables such as amounts due from Phillite D UK Limited of £1,241,000 in a timely manner could impact upon the ability of the Group to grow.

Management of growth

The ability of the Group to implement its strategy in an expanding market requires effective planning and management control systems. The Group's growth plans may place a significant strain on its management, operational, financial and personnel resources. The Group's future growth and prospects will, therefore, depend on its ability to manage the growth and to continue to expand and improve operational, financial and management information and quality control systems on a timely basis, whilst at the same time maintaining effective cost controls. Any failure to expand and improve operational, financial and management information and quality control systems in line with the Group's growth could have a material adverse effect on its business, financial condition and results of operations.

Market developments

Any failure to expand the Group's service offering in response to customer demand and/or industry developments may have an adverse effect on the Group's financial performance and prospects.

Reliance on Partners

Much of the Group's business is dependent on partners (acquiring banks, charities, clubs, etc.). Changes in key relationships with those partners, change of strategic direction by partner organisations, changes in the viability of partner-owned technology, economic and other business circumstances could all have an adverse effect on the financial performance of the Group.

Legal and regulatory matters

The Group is subject to a considerable degree of regulation and legislation. Changes in or extensions of laws and regulations affecting the industry in which the Group operates (or those in which its customers operate) and the rules of industry organisations could restrict or complicate the Group's business activities, with the potential to increase compliance/legal costs significantly.

As announced on 31 October 2017, the historic legal matters surrounding the Company's relationship with its former regulated payment processor, EUPay Group Limited ("EUPay") has been settled. Phillite D UK Limited has independently of the Company taken responsibility for the amounts owed by EUPay to the Group. As a result of the settlement, Phillite D UK Limited is now in a position to pursue the collection of these amounts without any hindrance from litigation. This will facilitate the repayment of the amounts outstanding to the Group.

Going concern

As a result of the challenges faced by the business in recent periods, and as a result of the restructuring undertaken in the last year, the Group is in the relatively early phases of its longer-term strategy and, excluding the exceptional gain on the disposal of Emex, has generated operating losses in the year ended 31 January 2019 and subsequently. As a result, there is a risk that it is not able to achieve the forecast growth in revenue, profits and cash flows and as a result it may not be able to continue as a going concern without raising additional capital. Further details are provided in the Directors' Report and in Note 1 to the financial statements.

Independent auditor's report to the members of St James House plc (formerly Boxhill Technologies plc)

1. Our opinion is unmodified

We have audited the financial statements of St James House plc (formerly Boxhill Technologies plc) ("the Company") for the year ended 31 January 2019 which comprise the Consolidated Statement of Profit and Loss and Other Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement, Company Balance Sheet, Company Statement of Changes in Equity, and the related notes, including the accounting policies in note 1.

In our opinion:

· the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 January 2019 and of the Group's profit for the year then ended;

· the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;

· the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2. Material uncertainty related to going concern

We draw attention to note 1 to the financial statements which indicates that the Group's and the parent Company's ability to continue as a going concern is dependent upon the substantial achievement of forecast cash flows. These events and conditions represent a material uncertainty that may cast significant doubt on the Group's and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

The risk - Disclosure quality

Following a significant restructuring of the Group's Payment Processing business, the Group is in the relatively early phases of its longer-term strategy and has generated losses in the year ended 31 January 2019 and subsequently. Projections for the period to 31 October 2020 have been prepared, indicating that the Group has taken action to address current cash flow shortfalls, and that the Payment Processing business will generate profit and cash inflows within a short period of time, which will enable the Group and the Company to meet its liabilities as they fall due for the foreseeable future. The financial statements explain how the Directors have formed a judgement that it is appropriate to prepare the accounts of the Group and Parent Company on a going concern basis. However, the Directors have concluded that the factors discussed in note 1 represent a material uncertainty that may cast significant doubt regarding the Group's and parent Company's ability to continue as a going concern.

As this assessment involves a consideration of future events there is a risk that the judgement is inappropriate. Furthermore, clear and full disclosure of the facts and the directors' rationale for the use of the going concern basis of preparation, including that there is a related material uncertainty, is a key financial statement disclosure. Auditing standards require such matters to be reported as a key audit matter.

Our response

Our procedures included:

- Personnel interviews: inquiring of senior management and challenging the assumptions used in the Directors' forecast models, in particular those relating to forecast revenue, and corroborating these against available evidence by inspecting agreements signed with new and existing customers;

- Sensitivity analysis: we assessed reasonably possible downside scenarios that would result in the cash flow falling below operating expense requirements and considered whether they could be considered to be reasonably possible; and

- Assessing transparency: Assessing the going concern disclosure for clarity, including that there is disclosure of a material uncertainty.

3. Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:

4. Our application of materiality and an overview of the scope of our audit

Materiality for the Group financial statements as a whole was set at £42,001, determined with reference to a benchmark of group profit (of which it represents 10%). We consider profit to be the most appropriate measure of group.

Materiality for the parent company financial statements as a whole was set at £42,000, determined with reference to a benchmark of company net assets, of which it represents 2%.

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £2,100, in addition to other identified misstatements that warranted reporting on qualitative grounds.

Of the Group's eight (2018: 9) reporting components, we subjected 5 (2018: 5) to full scope audits for Group purposes. For the residual 3 components, we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of material misstatement within these.

The components within the scope of our work accounted for 100% (2018: 100%) of total group revenue, 100% (2018: 100%) of group loss before tax and 100% (2018: 97%) of total group assets.

All component audits, including the audit of the parent company, were performed by the Group team using component materialities, which ranged from £3,000to £,42,000, having regard to the mix of size and risk profile of the Group across the components.

5. We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Strategic report and directors' report

Based solely on our work on the other information:

· we have not identified material misstatements in the strategic report and the directors' report;

· in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

· in our opinion those reports have been prepared in accordance with the Companies Act 2006.

6. We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent Company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

7. Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out on page 24 the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company'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 they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

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 our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at: www.frc.org.uk/auditorsresponsibilities.

8. The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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.

Jason Mitchell (Senior Statutory Auditor)

MHA MacIntyre Hudson

Chartered Accountants

Statutory Auditor

Pennant House

1-2 Napier Court

Reading

RG1 8BW

8 July 2019Consolidated Statement of Profit and Loss and Other Comprehensive Income

for year ended 31 January 2019

All of the profit/(loss) for the period is attributable to equity holders of the Parent Company.

The notes on pages 34 to 66 of the Annual Report form part of these financial statements.

Consolidated Balance Sheet

At 31 January 2019

The notes on pages 34 to 66 of the Annual Report form part of these financial statements.

Consolidated Cash Flow Statement

for year ended 31 January 2019

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

The notes on pages 34 to 66 of the Annual Report form part of these financial statements.

Notes to editors:

St. James House PLC (AIM: SJH) is an AIM quoted financial technology and lottery company.

SJH has a range of ecommerce products that suit all merchants' and customers' needs enabling secure payments. The Company works within both regulated frameworks and in regions where traditional partners struggle to offer safe, secure services.

In addition, SJH operates the Weather Lottery, which has been in operation since 2002 and the Group holds one of the limited number of UK external lottery manager's licences. Over £5.4 million has been raised to date for good causes and the lottery has paid over £4.9 million in prizes to winners.

SJH also has a joint venture agreement via Soccerdome Ltd operating a five a side football complex in Nottingham.

The Annual Report is available on the Group's website at https://sjhplc.com/. Copies are available from the Company at its registered office:

30-35 Pall Mall, London SW1Y 5LP, United Kingdom