Half-yearly report
29 Avril 2008 - 9:00AM
UK Regulatory
The Weather Lottery plc
("The Weather Lottery" or the "Company")
Half-yearly Report for the period ended 31 January 2008
29 April 2008
Chief Executive Statement
The past six months have seen an improvement in cost control of administration
expenses, which is reflected in the financial figures for the six months to 31
January 2008. The second half of the financial year to 31 July 2008 is a pivotal
time in the development of the Weather Lottery.
As announced in January 2008, a nationwide project to establish commissioned
agents throughout the country has been implemented. Twenty new sales agents have
been recruited in the past two months alone. In conjunction with the
commissioned agent network, a national programme of agent and client seminars is
being prepared at present. These seminars, which will start from May 2008, will
be run on a county by county basis will be held twice weekly throughout
2008/2009. I anticipate that both of these projects will develop the growth of
The Weather Lottery.
The purchase of email databases continues to enhance our presence in the field
of Charities, Sports and Education.
Heads of terms have been signed to develop a national lottery for a number of
National Charities under one umbrella group. This sister system of The Weather
Lottery will be developed throughout 2008.
We have been pleased by the number of new client enquiries that we received
during the six month period this remains very healthy. We have taken a number
of steps to strengthen our sales and marketing effort with a view to converting
more enquiries into new clients and lines in the current financial year.
Major steps in employment recruitment and client focus have now been implemented
and it is my belief, based on these new client recruitment projects, that The
Weather Lottery has the foundations and credibility to grow from strength to
strength.
Keith Milhench
Enquiries:
The Weather Lottery plc 0113 2750002
Keith Milhench
www.theweatherlottery.com
SVS Securities plc 020 7638 5600
Peter Manfield
Blomfield Corporate Finance Ltd 020 7512 0191
Nick Harriss
CONDENSED CONSOLIDATED INCOME STATEMENT
Period Period Year ended
ended ended 31 July
31 January 31 January 2007
Notes 2008 2007 (audited)
(unaudited) (unaudited)
�'000 �'000 �'000
Revenue 691 761 1,500
Cost of Sales 432 272 530
________ ________ ________
Gross Profit 259 489 970
Administrative expenses (319) (568) (1,133)
________ ________ ________
Profit from operations (60) (79) (163)
Finance expenses - - -
Finance income 3 - 1
________ ________ ________
(Loss) before taxation (57) (79) (162)
Taxation - - -
________ ________ ________
(Loss) attributable to equity (57) (79) (162)
holders ======== ======== ========
Earnings per share
Basic and fully diluted 2 (0.07)p (0.10)p (0.21)p
======== ======== ========
All results derive from continuing operations.
There are no recognised income or expenses other than the loss for the period.
CONDENSED CONSOLIDATED BALANCE SHEET
Note As at As at As at
31 January 31 January 31 July
2008 2007 2007
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
ASSETS
Non-current assets
Goodwill 158 158 158
Intangible assets 3 33 47 40
________ ________ ________
191 205 198
________ ________ ________
Current assets
Trade and other receivables 29 17 47
Cash and cash equivalents 138 163 121
________ ________ ________
167 180 168
________ ________ ________
Total Assets 358 385 366
======== ======== ========
LIABILITIES
Current liabilities
Trade and other payables 300 265 281
Current tax liabilities 41 38 11
________ ________ ________
341 303 292
________ ________ ________
Total Liabilities 341 303 292
======== ======== ========
Net Assets 17 82 74
======== ======== ========
EQUITY
Capital and reserves
attributable to equity
holders
Called up share capital 4 83 77 83
Share premium account 302 233 302
Retained earnings (368) (228) (311)
________ ________ ________
Total equity 17 82 74
======== ======== ========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
Capital Premiumed Earnings
�'000 �'000 �'000 �'000
Balance at 1 August 2006 73 245 (149) 169
Issue of shares less 4 (12) - (8)
issue costs
Profit for the period - - (79) (79)
________ _______ _______ ________
Balance at 31 January 2007 77 233 (228) 82
Issue of shares less 6 69 - 75
issue costs
Profit for the period - - (83) (83)
________ ________ _______ ________
Balance as 31 July 2007 83 302 (311) 74
Profit for the period - - (57) (57)
________ ________ _______ ________
Balance at 31 January 2008 83 302 (368) 17
======== ======== ======== ========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Period Period Year
ended ended ended
Notes 31 January 31 January 31 July
2008 2007 2007
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
Net cash generated from/(used 5 14 (69) (187)
in) operations _______ ______ ______
Cash flow from investing
activities:
Interest received 3 - 1
_______ ______ ______
Net cash generated from 3 - 1
investing activities
_______ ______ ______
Cash flow from financing
activities:
Net proceeds from issue of - 8 67
shares
_______ ______ ______
Net cash generated from - 8 67
financing activities
Increase/(decrease) in cash and 17 (77) (119)
cash equivalents
Increase/(decrease) in cash and 17 (77) (119)
cash equivalents
Cash and cash equivalents at 121 240 240
beginning of period _______ _______ _______
Cash and cash equivalents at 138 163 121
end of period ======= ======= =======
NOTES TO THE INTERIM FINANCIAL REPORT
1. Accounting policies
Basis of Accounting
The financial statements for the year ending 31 July 2008 will be the first
results to be prepared on the basis of International Accounting Standards,
International Financial Reporting Standards and International Accounting
Standards Board adopted for use in the EU (called "IFRS" in this document).
These interim results for the six months ended 31 January 2008 have been
prepared using the historical cost and fair value conventions on the basis of
the accounting policies set out below, which the Company expects to apply to its
financial statements for the year ending 31 July 2008 which are to be prepared
in accordance with IFRS. Whilst this interim report has been prepared in
accordance with IFRS's, it is not in accordance with IAS 34 and therefore is not
fully compliant with IFRS.
Reconciliations and descriptions of the effect of the transition from UK GAAP to
IFRS on the Plc's equity and its net income are provided in Note 6.
These interim results have been prepared under the historical cost convention.
Areas where other bases are applied are identified in the accounting policies
below.
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Company's statutory financial statements for the year ended 31 July 2007
prepared under UK GAAP, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain a statement under Sections 237 (2) and (3) of the Companies Act 1985.
The results for the six months ended 31 January 2008 were approved by the Board
on 28th April 2008.
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 January and 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.
Business combinations
The purchase method of accounting is used for all acquired businesses as defined
by IFRS3 - 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 acquisition consideration plus directly
attributable costs of acquisition over the net fair values of the identifiable
assets, liabilities and contingent liabilities of the subsidiaries acquired.
Goodwill arising on acquisitions before the date of transition to IFRS is
subject to alternative policies for valuation as described below.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Intangible assets
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.
For intangible assets with finite useful lives, amortisation is calculated so as
to write off the cost of an asset less its estimated residual value over its
economic life as follows:
Software development - 10 years
In addition to amortisation, at each balance sheet date the Group reviews the
carrying amounts of its 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). Recoverable amount is the
higher of fair value less costs to sell and value in use. 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 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
in prior years.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Trade receivables
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.
Trade payables
Trade payables are not interest-bearing and are stated at their nominal value.
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, associate or jointly controlled entity at the date
of acquisition.
Goodwill is 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. Goodwill arising on acquisition before the date
of transition to IFRS has been retained at the previous UK GAAP amounts subject
to being tested for impairment at that date.
On disposal of a subsidiary, associate or jointly controlled entity, the
attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
Revenue recognition
Revenue represents takings received for entry into the prize draws. The revenue
is recognised upon receipt of the money for the period that the draws take
place, net of VAT and other sales-related taxes.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The charge for taxation is based on the taxable profit or loss for the period
and takes into account taxation deferred because of timing differences between
the treatment of certain items for taxation and accounting purposes. Current
tax is provided at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more, or a right to pay less, tax in
the future have occurred at the balance sheet date. Timing differences are
differences between the Group's taxable profits and its results as stated in the
financial information that arises from the inclusion of gains and losses in tax
assessments in periods different from those in which they are recognised in the
financial information.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits from which the
reversal of the underlying timing differences can be deducted.
Deferred tax is measured at the tax rates that are expected to apply in the
periods in which the timing differences are expected to reverse based on tax
rates and laws that have been enacted or substantively enacted at the balance
sheet date. Deferred tax is measured on a non-discounted basis.
2. Earnings per ordinary share
The calculation of basic earnings per share is based on the results and
weighted average number of ordinary shares as follows:
Period Period Year
ended ended ended
31 31 January 31 July
January 2007 2007
2008 (unaudited) (audited)
(unaudited)
�'000 �'000 �'000
(Losses) attributable to equity (57) (79) (162)
======= ======= =======
Weighted average number of
ordinary shares:
Basic and fully diluted 83,304,730 76,412,614 77,254,052
========== ========== ==========
The basic and fully diluted weighted average number of ordinary shares are the
same due to there being no share options in place during the period.
3. Intangible Fixed Assets
Software
Development
�'000
Cost:
As at 1 August 2007 154
Additions -
_______
As at 31 January 2008 154
_______
Depreciation:
As at 1 August 2007 114
Charge for Period 7
_______
As at 31 January 2008 121
_______
Net Book Value:
As at 31 January 2008 33
=======
As at 31 July 2007 40
=======
4. Share capital
As At As At As At
31 31 January 31 July
January 2007 2007
2008
�'000 �'000 �'000
Authorised:
100,000,000ordinary shares of 100 100 100
0.1p each ======== ======== ========
Issued and fully paid:
83,304,730 ordinary shares of
0.1p each
(31 January 2007 77,054,737
ordinary shares) 83 77 83
======== ======== ========
5. Cash used in Operations
As At As At As At
31 31 January 31 July
January 2007 2007
2008
�'000 �'000 �'000
(Loss) from operations (60) (79) (163)
Amortisation of intangible 7 7 14
assets
Decrease/(increase) in debtors 18 (7) (37)
Increase/(decrease) in creditors 49 10 (1)
_______ _______ _______
Cash generated from/(used in) 14 (69) (187)
operations
6. Explanation of Transition to IFRS
The Group has applied IFRS1 "First Time Adoption of International Financial
Reporting Standards" as a starting point for reporting under IFRS. The Group's
date of transition is 1 August 2006 and comparative information has been
restated to reflect the Group's adoption of IFRS except where otherwise required
or IFRS1 requires an entity to comply with each IFRS and IAS effective at the
reporting date for its first financial statements prepared under IFRS. As a
general rule IFRS1 requires such standards to be applied retrospectively.
However, the standard allows several optional exemptions from full retrospective
application.
The Group has elected to take advantage of the following exemption. Business
combinations made prior to 1 August 2006 will not be accounted for under IFRS3
"Business Combinations" and as such the value of goodwill in the balance sheet
at that date will be the same amount under IFRS as that recorded in the UK GAAP
financial statements, subject to the completion of an annual impairment review.
The reconciliations of equity at 1 August 2006 (date of transition to IFRS) and
at 31 July 2007 (date of last UK GAAP financial statements) and the
reconciliation of profit for 2006 and 2007, as required by IFRS1, are set out
below. The reconciliation of equity at 31 January 2008 and the reconciliation
of profit for the six months ended 31 January 2008 are also included below to
enable a comparison of the 2008 published interim figures with those published
in the corresponding period of the previous financial year.
Reconciliation of Profit from UK GAAP to IFRS
6 months 6 months Year ended
ended ended
31 31 January 31 July
January 2007 2007
2008
�'000 �'000 �'000
UK GAAP (loss) for the financial (61) (82) (170)
period
Amortisation of goodwill 4 3 8
_______ ________ _______
(Loss) from continuing (57) (79) (162)
operations - IFRS ======= ======== =======
Reconciliation of Net Assets from UK GAAP to IFRS
31 31 January 31 July
January 2007 2007
2008
�'000 �'000 �'000
Net assets per UK GAAP 5 79 66
Amortisation of goodwill 12 3 8
_______ _______ _______
Net assets - IFRS 17 82 74
======= ======= =======
International Financial Reporting Standards require goodwill to be frozen as at
the date of transition to IFRS, 1 August 2006, and to be subject to review for
impairment rather than regular amortisation. Previously amortised amounts in
the UK GAAP accounts for the period ended 31 January 2007 and the year ended 31
July 2007 of �3,000 and �8,000 respectively have been reversed in the IFRS
income statement. The effect of the transition on the balance sheet is shown
above.
7. Interim Financial Report
The unaudited interim financial report, which is the responsibility of the
directors and was approved by them on 28th April 2008 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
This report is available on The Weather Lottery's website at
www.theweatherlottery.com. Copies are available from the Company at its
registered office: 24 St. Michael's Road, Headingley, Leeds, LS6 3AW for a period
of one month, free of charge.
Independent review report to THE WEATHER LOTTERY PLC
Introduction
We have been engaged by the company to review the condensed consolidated set of financial statements in the half yearly
financial report for the six months ended 31 January 2008 which comprise a condensed consolidated income statement,
condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash
flow statement and associated notes numbered 1 to 7. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial reports in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed consolidated set of financial statements
in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review
of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices
Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK
and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of
financial statements in the half-yearly financial report for the six months ended 31 January 2008 is not prepared, in
all material respects, in accordance with the Accounting Standards Board statement "Half-yearly financial reports".
Rochesters
Chartered Accountants
28 April 2008
No 3 Caroline Court
13 Caroline Street
Birmingham
B3 1TR
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