Trading Statement (6716I)
20 Juin 2011 - 8:00AM
UK Regulatory
TIDMTWL
RNS Number : 6716I
Weather Lottery PLC (The)
20 June 2011
WEATHER LOTTERY PLC
('TWL or the 'Company')
TRADING UPDATE
20 June 2011
The last eighteen months have seen significant changes to the
Company with a number of encouraging and some less than helpful
developments. The Board would like to take this opportunity to
update shareholders on the Company's positioning and current
trading and prospects.
FC Betz
Last summer, under the leadership of its then Chief Executive,
Keith Milhench, the board announced its intention to expand into
the online gaming sector, under the brand name "FC BETZ.com", to
complement its well established lottery management business. From
July through to December it entered into long term contracts with a
number of football league clubs to provide a full package of
on-line gaming products to the clubs and their supporters. After an
initial build-up through a physical presence in club stadia, it
became apparent that FC Betz did not have full access to all the
clubs' databases, thus severely restricting the ability of FC Betz
to build its database of active members. Club sponsorship costs of
approximately GBP177,000, in addition to operating losses of almost
GBP90,000, were fully expensed in the first half rather than being
capitalised since the current database of over 3,000 active signed
up members was not considered likely to grow significantly in the
near term. Negotiations are in progress to terminate the relevant
contracts which it is anticipated should be completed before the
Company's year-end. The Directors believe that these negotiations
should result in sponsorship costs in the second half being
considerably reduced and possibly eliminated, although this might
necessitate the institution of legal proceedings. However, given
the competitive on-line betting marketplace, the future of FC Betz
subsidiary is not perceived as core to the Group's operations. No
value has been attributed to the current database in the Group
balance sheet.
Lottery Division
Following the resignation of the Mr Milhench, the former Chief
Executive, in September 2010 the board commenced a review of the
core lottery operations. These have been streamlined for increased
efficiency and greater security and operating costs have been cut
significantly. Contracts with fundraisers have been renegotiated
with an amended prize pool structure leading to increased
fundraiser and administration payments from the fourth quarter of
the current financial year. As a result, monthly profit
contributions from lottery operations which have already improved
following reductions to overheads already implemented in H1 are
expected to further increase significantly from the fourth quarter.
With this expected increased contribution and its long established
brand, the division is considered by the board to be a valuable
asset to TWL.
Soccerdome
The board recently announced the acquisition of Soccerdome
Limited, ("Soccerdome") the owner and operator of an eight pitch
five-a-side facility in Nottingham. Planned improvements to pitch
surfaces and provision of roof cover to four of the pitches should
increase pitch utilisation and result in an increased contribution
to Group profitability. The work, planned to allow at least half
the pitches to remain open for use during implementation, will
start shortly and is expected to be finished by early autumn. It is
hoped that this will be the first of a number of such five-a-side
facilities to be run by Soccerdome. The board is excited by the
prospects for development of this subsidiary.
Devil Fish Poker
In December 2010 TWL purchased Devil Fish Poker Limited, the
on-line poker and gambling site. This business has shown a largely
expected small overall operational loss since acquisition. Recent
overall losses in the casino operation due to a number of regular
high transaction wagers have now been redressed and the casino
business is now making a small net contribution. The on-line poker
market remains an area of considerable opportunity. The board is
looking at ways to move the business into consistent profitability
on the basis of its present operations and will review options
available from time to time.
Outlook
The Board believes that the measures underway in relation to the
FC Betz subsidiary and the improved performance from the core
lottery division and the on-line poker and gambling sites, when
taken with the acquisition of Soccerdome (with its cross marketing
opportunities to the lottery), provide TWL with a sound basis for a
return to profitability. With minimal bank debt, TWL is well
positioned to seek further complimentary acquisitions to improve
shareholder value.
Admission of New Shares
Further to the announcement of 10 June 2011, an application has
been made to admit the 78,000,000 new ordinary 0.1p shares to
trading on AIM with effect from 21 June 2011.
---ENDS---
For further information contact:
The Weather Lottery PLC
Ross White
Website www.theweatherlottery.com 01777 818036
Religare Capital Markets (Nomad) 020 7444
0800
Nick Harriss/Peter Trevelyan-Clark
SVS Securities (Broker) 020 7638
5600
Ian Callaway/Alex Mattey
This information is provided by RNS
The company news service from the London Stock Exchange
END
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