Half-yearly report
15 Avril 2010 - 5:24PM
UK Regulatory
TIDMTWL
The Weather Lottery plc
("TWL" or the "Company")
Half-Yearly Report for the period ended 31 January 2010
15 April 2010
Chairman's Statement
The Right Honourable Lord E T Razzall CBE
I am pleased to report in this, my first statement since being appointed
Chairman of TWL that notwithstanding the difficult economic conditions in the
present recession the Company has moved back into a small profit in the first
six months of the trading year.
This has been achieved by maintaining the existing levels of operation in the
core lottery management business combined with control of costs. The management
under Mr Keith Milhench, Chief Executive, deserve great credit for this and for
the way in which they have eliminated unnecessary overheads leading to a
material reduction in the cost base of the business.
I was appointed Chairman on 7 January 2010 together with Robert White who joined
as Director on that date. You may be aware that there has been a change in the
shareholder profile with new investors purchasing significant stakes in the
Company at the time of these appointments. Mr Neil McGowan has retired as a
Director and we thank him for his contribution to the Company over the years.
TWL has for over 10 years been registered with The Gambling Commission as an
External Lottery Manager through Mr Keith Milhench. This enables the Company to
provide lottery products to clients such as The National Trust. It is the
Board's intention to expand the lottery management operations by targeting new
clients combining the expertise in the Company and adopting new e-commerce
marketing procedures to enhance the Company's market penetration in the areas
presently covered. In addition your Board believes that the goodwill generated
by the excellent record of TWL as a Gaming Commission license holder encourages
them to develop the business in other areas of gaming whether in the UK or
overseas. Certainly other sectors within the gaming industry have proved
resilient to the effects of the recession. Your Board will through the proper
announcements keep you informed of our progress.
I would like to thank Keith and all the staff who have brought the business back
into profit in these challenging times.
Lord Razzall
Chairman
Chief Executives Statement
This period was a further six months of consolidation for TWL.
Lottery Lines played stayed approximately level. Enquiries are still very
healthy but the translation of these to playing lines has proved elusive.
Financial review
The six months to January 2010 showed a profit of GBP13,000 against a small loss
of GBP26,000 for the equivalent period last year.
Strategy and Outlook
TWL's objective remains to build and expand its paper based and online entry for
Society Lotteries in the fields of Charity, Education and Sport. Whilst
considerable progress has been made in establishing these services much has
still to be done to improve, expand and enhance them.
A new secondary lottery has been launched which gives the Societies a larger
return and it is hoped that this will encourage new Societies to join.
Enquiries are very healthy, and new systems of closing are now in place.
It is intended to enhance shareholder value by continued expansion of business
It is our multi-year experience that clients are maintained and we have placed
systems in order to maintain growth for all clients.
TWL is registered and governed by the Gambling Commission, without which we
could not trade, under the new Gaming Act 2005 and we do not anticipate any
changes to the law which would affect our business.
Keith G Milhench
Chief Executive
Enquiries:
The Weather Lottery PLC 0113 275 0002
Keith Milhench
Website www.theweatherlottery.com
Religare Capital Markets (Nomad) 020 7444 0800
Nick Harriss
SVS Securities 020 7638 5600
Ian Callaway/Alex Mattey
CONDENSED CONSOLIDATED INCOME STATEMENT
Period Period Year ended
ended ended 31 July
31 January 31 January 2009
2010 2009 (audited)
Notes (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Revenue 633 687 1345
Cost of Sales 392 501 362
____________________________________
Gross Profit 241 186 983
Administrative expenses (228) (213) (1032)
____________________________________
Profit from operations 13 (27) (49)
Finance expenses - - -
Finance income - 1 1
____________________________________
Profit before taxation 13 (26) (48)
Taxation - - -
____________________________________
Attributable to equity 13 (26) (48)
holders
====================================
Earnings per share
Basic and fully diluted 1 0.02p (0.03)p (0.06)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
2010 2009 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 5 - 6
Goodwill 2 158 158 158
Intangible assets - 18 -
_____________________________________
163 176 164
_____________________________________
Current assets
Trade and other receivables 20 18 16
Cash and cash equivalents 35 78 58
_____________________________________
55 96 74
_____________________________________
Total Assets 218 272 238
LIABILITIES
Current liabilities
Trade and other payables 184 245 233
Current tax liabilities - - -
____________________________________
184 245 233
____________________________________
Total Liabilities 184 245 233
====================================
Net Assets 34 27 5
====================================
EQUITY
Capital and reserves
attributable to equity
holders
Called up share capital 3 99 83 83
Share premium account 302 302 302
Retained earnings (367) (358) (380)
____________________________________
Total equity 34 27 5
====================================
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
Capital Premium Earnings GBP'000
GBP'000 GBP'000 GBP'000
Balance at 1 August 2008 83 302 (332) 53
(Loss) for the period - - (26) (26)
_________________________________
Balance at 31 January 83 302 (358) 27
2009
Loss for the period - - (22) (22)
_________________________________
Balance at 31 July 2009 83 302 (380) 5
Issue of new shares - 7 16 - - 16
January 2010 _________________________________
Profit for the period - - 13 13
Balance at 31 January 2010 99 302 (367) 34
=================================
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Period Period Year
ended ended ended
Notes 31 31 January 31 July
January 2009 2009
2010 (unaudited) (audited)
(unaudited)
GBP'000 GBP'000 GBP'000
Net cash generated (used 4 (24) (28) (40)
in)/from operations _______________________________
Cash flow from investing
activities:
Interest received less
purchases of equipment 1 1 (7)
_______________________________
Net cash generated from 1 1 (7)
investing activities _______________________________
Cash flow from financing
activities:
Net proceeds from issue of
shares - - -
_______________________________
Net cash generated from - - -
financing activities
_______________________________
(Decrease)/increase in cash and (23) (27) (47)
cash equivalents _______________________________
(Decrease)/increase in cash and (23) (27) (47)
cash equivalents
Cash and cash equivalents at 58 105 105
beginning of period
______________________________
Cash and cash equivalents at 35 78 58
end of period ==============================
NOTES TO THE INTERIM FINANCIAL REPORT
1. Accounting policies
Basis of Accounting
These interim results for the six months ended 31 January 2010 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 2010 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.
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 the Companies Act 2006. The Company's
statutory financial statements for the year ended 31 July 2009 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 the Companies
Act 2006.
The results for the six months ended 31 January 2010 were approved by the Board
on 15th April 2010.
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 2009 2009
2010 (unaudited) (audited)
(unaudited)
GBP'000 GBP'000 GBP'000
Attributable to equity 13 (26) (48)
=====================================
Weighted average number of
ordinary shares:
Basic and fully diluted 85,403,087 83,304,730 83,304,730
=====================================
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. Share capital As At As At As At
31 31 January 31 July
January 2009 2009
2010
GBP'000 GBP'000 GBP'000
Authorised:
100,000,000ordinary shares of 100 100 100
0.1p each ===============================
Issued and fully paid:
99,304,730 ordinary shares of 99 83 83
0.1p each ===============================
4. Cash used in Operations As At As At As At
31 31 January 31 July
January 2009 2009
2010
GBP'000 GBP'000 GBP'000
Profit/(Loss) from operations 13 (27) (40)
Amortisation of intangible 0 7 25
assets
Decrease in debtors (4) 16 18
(Decrease)/increase in creditors (33) (24) (50)
_______________________________
Cash generated (used in)/from (24) (28) (47)
operations ===============================
5. Interim Financial Report
The unaudited interim financial report, which is the responsibility of the
directors and was approved by them on 15 April 2010 does not constitute
statutory accounts within the meaning of the Companies Act 2006.
This report is available on The Weather Lottery's website at
www.theweatherlottery.com. Copies are available from the Company at its
registered office:
Derby House Stud, Retford Road, Mattersey, Doncaster, DN10 5HJ for a period of
one month, free of charge.
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