TIDMTWL
RNS Number : 9984U
Weather Lottery PLC (The)
04 January 2012
THE WEATHER LOTTERY PLC
("TWL" or the "Company")
Final Results for the year to 31 July 2011, Change of Advisers
and Change of Registered Office
4 January 2012
Summary of Final Results
-- Turnover up 9.1% to GBP1,343k (GBP1,231k).
-- Loss for the year of GBP789k (loss GBP77k).
-- FC Betz business to be exited following losses for the year of approximately GBP400k.
-- Lottery business made a small profit despite costs related to
the fraud committed by two former employees, both of whom were
subsequently convicted.
-- Devilfish online gaming business made a loss of approximately GBP149k for the year.
Change of Adviser
The Company is pleased to announce the appointment of Allenby
Capital Limited as nominated adviser and joint broker with
immediate effect. SVS Securities plc will remain as the Company's
joint broker.
Change of Registered Office
The Company has today changed its registered office to:
Units 25-27
Hagley Mews
Hall Drive
Hagley DY9 9LQ
This office is also the Company's head office address.
For further information please contact:
The Weather Lottery plc
John Botros (Company Secretary) 07714 209 346
Andrew Flitcroft (Finance Director) 07769 591 096
Allenby Capital Limited (Nomad and
Broker)
Nick Harriss/James Reeve/Nick Athanas 020 3328 5656
SVS Securities plc (Broker)
Ian Callaway 020 7638 5600
Greycoat Communications (PR)
Andrew Marshall 07785 297 111
Chairman's Statement
As the results show this has been a difficult year for TWL, not
all of which can be attributed to the hard economic climate in the
leisure sector. The Audited results for the period are materially
in line with the trading statement made on 5 December 2011, with
pre-tax losses of GBP789k, compared to losses in the first half of
GBP321k and for the full year 2009/10 of GBP77k. The increase in
reported loss of GBP49k when compared to the loss of GBP740k
previously announced in the company's trading statement issued on 5
December 2011 is the result of additional asset write downs and
provisions which came to rise during the audit and are considered
prudent to include in the year as advised by the Company's
auditors.
During the year TWL has made three acquisitions. In June 2011 it
acquired a five-a-side centre in Nottingham. It is expected that in
the coming year this will prove a sound investment providing a
solid asset from which to generate profit. However as announced on
25 November 2011, the upgrade in this facility at the Harvey Hadden
Sports Complex has been delayed and during the period from
acquisition to 31July 2011 traded at approximately breakeven. When
purchased the vendors gave certain warranties relating to the cost
of and their contribution to this upgrade process. On legal advice
the Board consider those warranties have not been met and the
vendors have been notified that the Company will take legal action
to enforce the warranties made by the vendors as to the actual
condition of the centre and the provision of funds by the vendors
towards the cost of the upgrade.
Losses at FC Betz amounting to GBP267k in the first half year
including expensed sponsorship costs of GBP177k and operating
losses of GBP90k, were considerably reduced in the second half and
now amount to approximately GBP400k for the full year, with club
sponsorship expenses now eliminated and consultancy costs
significantly reduced. As can be seen from the year end figures the
steps taken by the Board to staunch the losses in this subsidiary
are proving effective. The Board do not consider FC Betz to be part
of the future of the business and are seeking ways to dispose of it
and its assets and database as soon as possible.
The core lottery business has reported a small profit for the
year, despite expenses relating to the previously reported fraud
committed by two former employees causing costs exceeding GBP100k
for the year. Thankfully this matter is now fully concluded and we
believe is fully provided for in the accounts. This is a
commendable performance in very difficult circumstances and shows
the resilience of the lottery business which has been operating for
over 15 years. As announced on 20 June 2011, contract
renegotiations have improved the security and profitability during
the last quarter of the company's financial year although it will
take time for these to be fully realised. TWL also acquired
Clicknow, the intermediate search facility available as an
additional source of fund raising to charities and other
organizations. This will be developed in the coming year. TWL
believes Clicknow increases the product range it can offer to fund
raisers and increases its profile in this marketplace.
The second acquisition during the year was the Devilfish on-line
poker and gaming business. At this subsidiary, losses for the
period from acquisition in December 2010 to 31 July 2011 amount to
GBP149k. These include exceptional losses within the casino
operation mentioned in the Company's June trading update. A
renegotiation of supplier contracts with effect from 1 September
2011 should significantly improve the results of the operation from
that time.
Head office costs for the year amounted to approximately
GBP230k.
Your Board has on the advice of the auditors made full and
prudent provision in these accounts for the losses. It acknowledges
and announces the impairment to asset value. However it considers
that the steps it has taken in these accounts will assist in
improved trading for the company which it hopes will be reflected
in the half year figures to 31 January 2012. These half-year
figures are expected to show much reduced losses. They nevertheless
include the costs associated with the restructuring of the FC Betz
business detailed above and the delays in the refurbishment of the
five-a-side facility previously announced, together with the
central overhead and advisory fees required by and consistent with
the status of TWL as a quoted public company.
Lord E T Razzall CBE
Chairman
CONSOLIDATED INCOME STATEMENT
For the year ended 31 July 2011
2011 2010
Note GBP'000 GBP'000
Continuing operations
Revenue 1,343 1,231
Cost of sales (573) (317)
-------- -----------------
Gross profit 770 914
Administrative expenses 6 (1,545) (983)
Finance income 8 - -
Finance costs 8 (14) (8)
Loss before taxation (789) (77)
Income tax expense 9 - -
Loss from continuing operations (789) (77)
======== =================
PROFIT/(LOSS) PER SHARE
Basic profit/(loss) per ordinary share 10 (0.30)p (0.08)p
Diluted profit/(loss) per ordinary
share 10 (0.27)p (0.07)p
======== =================
All of the (loss) for the period is attributable to equity
holders of the parent company. The Group has no recognised gains or
losses for the year other than the loss for the current year.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 July 2011
Note 2011 2010
GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and equipment 13 503 4
Goodwill 11 467 158
Other intangible assets 12 73 18
Total non current assets 1,043 180
------- -------
Current assets
Inventories 15 2 2
Trade and other receivables 16 209 329
Cash and cash equivalents 16 74 48
------- -------
Total current assets 285 379
------- -------
Total assets 1,328 559
------- -------
Current liabilities
Trade and other payables 19 874 354
Bank and other borrowings 17 38 -
Current tax payable - -
------- -------
Total current liabilities 912 354
Non-current liabilities
Bank and other borrowings 17 49 -
Deferred tax provision 21 - -
------- -------
Total non-current liabilities 49 -
------- -------
-
------- -------
Total liabilities 961 354
------- -------
Net assets 367 205
======= =======
EQUITY
Share capital 22 380 186
Share premium account 23 1,233 476
Retained earnings 23 (1,246) (457)
------- -------
Equity attributable to equity holders of the parent 367 205
======= =======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2011
Called Share
up premium Retained Total
share account Earnings Equity
capital
GBP'000 GBP'000 GBP'000 GBP'000
Balance 31 July 2009 186 302 (380) 108
(Loss) for the year - - (77) (77)
Shares issued in year less
costs - 174 - 174
-------- -------- --------- -------
Balance 31 July 2010 186 476 (457) 205
Shares issued in year less
costs 194 757 - 951
(Loss) for the year - - (789) (789)
Balance 31 July 2011 380 1,233 (1,246) 367
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 July 2011
Year ended Year ended
31 July 31 July
Note 2011 2010
GBP'000
Net cash from operating activities 25 (121) (69)
Interest and financing costs (14) (8)
Net cash (outflow) from operating activities (135) (77)
---------- ----------
Cashflow from investing activities
Acquisition of subsidiary undertakings (18) -
Purchases of intangible assets (63) (18)
Purchases of property,plant and equipment (4) -
Net cash (outflow) from investing activities (85) (18)
---------- ----------
Financing
Net proceeds from issue of shares 236 85
Proceeds of new bank and other loans 18 -
Repayment of bank and other loans (8) -
Net cash from financing activities 246 85
---------- ----------
Net increase/(decrease) in cash and cash
equivalents 26 (10)
Cash and cash equivalents at 1 August 48 58
---------- ----------
Cash and cash equivalents at 31 July 74 48
========== ==========
Comprising of:
Cash and cash equivalents per the balance
sheet 74 48
Less:
Bank overdraft - -
---------- ----------
Cash and cash equivalents for cash flow
statement purposes 26 74 48
========== ==========
As described in the accounting policies, bank overdrafts and
borrowings repayable on demand fluctuate from being positive to
overdrawn and are considered an integral part of the Group's cash
management for cash flow statement purposes.
There is no material difference between the fair value and the
book value of cash and equivalents.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2011
1. General Information
The Weather Lottery plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address of the registered
office is Units 25-27 Hagley Mews, Hall Drive, Hagley, West
Midlands, DY9 9LQ. The nature of the Group's operations and its
principal activities are described in the Directors' Report.
These Financial Statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Group operates.
2. Adoption of new and revised International Financial Reporting Standards
In the current year, the Group has adopted all of the new and
revised Standards and Interpretations issued by the International
Accounting Standards Board (the IASB) and the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB
that are relevant to its operations and effective for accounting
periods beginning on or after 1 August 2010.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
IAS 1 - Presentation of financial statements (revised)
IAS 12 - Deferred tax - recovery of underlying assets (revised)
IAS 27 - Consolidated and separate financial statements (revised)
IAS 28 - Investments in associates and joint ventures (revised)
IFRS 3 - Business combinations (revised)
IFRS 7 - Financial instruments Disclosures (revised)
IFRS 9 - Financial instruments (revised 2010)
IFRS 10 - Consolidated financial statements
IFRS 11 - Joint arrangements
IFRS 12 - Disclosure of Interests in Other Entities
IFRS 13 - Fair Value Measurement
IFRIC 10 - Interim Financial Reporting and Impairment
IFRIC 11 - Group and Treasury Share Transactions
IFRIC 19 - Extinguishing financial liabilities with equity instruments
These Standards and Interpretations are not expected to have any
significant impact on the Group's Financial Statements in their
periods of initial application.
3. Significant accounting policies
Basis of Accounting
The Financial Statements, upon which this financial information
is based, have been prepared using accounting policies consistent
with International Financial Reporting Standards (IFRS).
The financial information has been prepared on a going concern
basis, as at 31 July 2011, in accordance with International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") as well as all
interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC"). The Group has not availed
itself of early adoption options in such standards and
interpretations.
The Financial Statements, upon which this financial information
is based, have been prepared under the historical cost basis except
where specifically noted. The principal accounting policies adopted
are set out below:
Going concern
The financial statements have been prepared on a going concern
basis notwithstanding a loss for the financial year of
GBP789,000.
The Directors' cashflow forecasts indicate that the Group will
be able to operate within its existing bank facilities in the
future. As with any business, there are uncertainties in the
forecast, but as at the date of approval of these financial
statements the Directors are unaware of any indications that would
suggest inappropriate assumptions have been made in relation to
trading volumes. As a result of these, the Directors are of the
opinion that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future and
have continued to adopt the going concern basis in preparing the
financial statements. The financial statements do not include any
adjustments which would result from this basis of preparation being
inappropriate.
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 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.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the Financial
Statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business Combinations
The purchase method of accounting is used for all acquired
businesses as defined by IFRS 3 - 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
consideration plus directly attributable costs of acquisition over
the net fair values of the identifiable assets, liabilities and
contingent liabilities of the subsidiaries acquired. Where fair
values are estimated on a provisional basis they are finalised
within 12 months of acquisition with consequent changes to the
amount of goodwill.
Intangible assets
Identifiable intangibles assets acquired as part of a business
combination are initially recognised separately from goodwill if
the assets fair value can be measured reliably, irrespective of
whether the asset had been recognised by the acquire before the
business combination was affected. 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.
Intangible assets relate to the development of the lottery and
on-line gaming (software and related costs). It is considered that
the software has a finite useful life and amortisation has been
calculated so as to write off the carrying value of it over its
useful economic life of 5 years.
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 at the date of
acquisition. Goodwill is initially 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.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit from
the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication of impairment. The
amount of the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
On disposal of a subsidiary the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Negative goodwill arising on consolidation is credited to the
income statement where the Directors consider that the fair value
of the assets is reliable and do not need adjustment and that the
negative goodwill relates to a true bargain purchase.
Revenue recognition
Lottery turnover represents takings received for entry into the
lottery prize draws. Revenue is recognised upon receipt of the
money for the period that the draw takes place. Online gaming
turnover represents commission earned on game plays. Football pitch
turnover represents cash takings received.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profits for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and corresponding tax bases used in the
computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that is no longer
probable that sufficient taxable profits will be available to allow
all, or part, of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss. Useful
lives are reviewed annually by the Directors.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives using the straight-line
method, on the following bases:
Property - 5% per annum
Fixtures, fittings and equipment - 25% per annum
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in income.
Where there is evidence of impairment, fixed assets are written
down to their recoverable amount.
Leased assets
Rentals payable under non-onerous operating leases are expensed
in the income statement on a straight-line basis over the lease
term.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and 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). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair values less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimate of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. 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 (cash-generating unit) 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 (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Group, and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
function currency (foreign currencies) are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical costs in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
Share based payments
Other than for business combinations, the only share based
payments of the Group are equity settled share options and certain
liability settlements. The Group has applied the requirements of
IFRS 2 Share-based Payments.
For share options granted an option pricing model is used to
estimate the fair value of each option at grant date. That fair
value is charged on a straight line basis as an expense in the
income statement over the period that the holder becomes
unconditionally entitled to the options (vesting period), with a
corresponding increase in equity.
For shares issued in settlement of fees and/or liabilities, the
Directors estimate the fair value of the shares at issue date and
that value is charged on a straight line basis as an expense in the
income statement (for fees) or reduction in the balance sheet
liability (for liabilities) with a corresponding increase in
equity.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials using the first in first out
(FIFO) basis. Net realisable value represents the estimated selling
price less estimated costs of completion, marketing and
selling.
Cash and cash equivalents
Cash and cash equivalents comprise of cash on hand and demand
deposits and are subject to an insignificant risk of changes in
value.
Trade receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit and loss
when there is objective evidence that the asset is impaired. The
allowance recognised is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows discounted at the effective interest rate compound at
initial recognition.
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.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs, are accounted for on an accrual basis in profit or
loss using effective interest rate method and are added to the
carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Trade payables
Trade payables are not interest-bearing and are stated at their
nominal value.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
4. Critical accounting judgements and key sources of estimation uncertainty
In application of the Group's accounting policies above, the
Directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities.
These estimates and assumptions are based on historical experience
and other factors considered relevant. Actual results may differ
from estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period which the estimate is revised if the revision affects
only that period or in the period of the revision and future
payments if the revision affects both current and future
periods.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation
of the value in use of cash-generating units to which goodwill has
been allocated. The value in use calculation requires the entity to
estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value.
Share-based payments
Share-based payments are measured at grant date fair value. For
share options granted to employees, in many cases market prices are
not available and therefore the fair value of the options granted
shall be estimated by applying an option pricing model. Such models
need input data such as expected volatility of share price,
expected dividends or the risk-free interest rate for the life of
the option. The overall objective is to approximate the
expectations that would be reflected in a current market price or
negotiated exchange price for the option. Such assumptions are
subject to judgements and may turn out to be significantly
different to expected.
5. Segment analysis
The primary reporting format is by business segment, based on
the different services offered by the operating companies within
the Group. The Directors consider that the Group now has four
business segments, namely that of lottery administration, on-line
gaming, IT facilities and astro-turf football pitches. There was
only one business segment - lottery administration - during the
year ended 31 July 2010 and hence no segmental analysis is provided
for the comparative period. The Group operates solely in one
geographical area, the United Kingdom.
The Directors consider that none of the operations are classed
as Discontinued and hence all operations are considered to be
Continuing throughout the period.
The analysis of operations per segment for the year ended 31
July 2011 is as follows:
Lottery On-line IT facilities Football Un-allocated Group
gaming pitches total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,104 223 7 9 - 1,343
-------- -------- -------------- --------- ------------- --------
Operating
profit/(loss) 6 (549) (3) - (229) (775)
Finance
costs (12) - - - (2) (14)
Profit/(loss)
before tax (6) (549) (3) - (231) (789)
Tax charge - - - - - -
Profit/(loss)
for the
year (6) (549) (3) - (231) (789)
======== ======== ============== ========= ============= ========
Balance
sheet
Total assets 186 304 63 544 231 1,328
======== ======== ============== ========= ============= ========
Total liabilities 268 60 12 41 580 961
======== ======== ============== ========= ============= ========
The following table analyses assets and liabilities not
allocated to business segments as at 31 July 2011:
GBP'000
Assets
Intangible fixed assets 18
Tangible fixed assets 2
Other receivables 150
Cash and cash equivalents 61
--------
231
--------
Liabilities
Trade and other payables 529
Borrowings 51
--------
580
--------
6. Operating (loss)
Operating loss has been stated after charging/(crediting)
the following:
2011 2010
GBP'000 GBP'000
Negative goodwill recognised in period (123) -
Impairment of goodwill in period 110 -
Amortisation of intangible fixed assets 20 -
Depreciation of tangible fixed assets 7 2
Operating lease charges 37 52
Auditors' remuneration - Audit services
to the parent company 1 1
Auditors' remuneration - Audit services
to the Group 15 6
Auditors' remuneration - Taxation services 1 1
======== ========
As permitted by Section 408 of the Companies Act 2006, the
holding company's profit and loss account has not been included in
these financial statements. The loss for the period after taxation
was GBP313,000 (2010 GBP141,000).
7. Personnel costs
2011 2010
The average monthly number of employees No. No.
(including executive and non executive Directors)
was 8 9
======== ========
The split of employees by function within
the Group is as follows:
No. No.
Administration and Sales 4 5
Management 4 4
Total 8 9
======== ========
2011 2010
Their aggregate remuneration comprised GBP'000 GBP'000
Wages and salaries 115 150
Social security costs 11 22
Sums paid to third parties for services 77 57
-------- --------
203 229
======== ========
7. Personnel costs (continued)
2011 2010
Directors' emoluments GBP'000 GBP'000
Emoluments 10 73
Sums paid to third parties for director
services 77 45
87 118
======== ========
Number of Directors accruing benefits No. No.
under money purchase schemes - -
======== ========
Aggregate emoluments of highest
paid Director 50 73
======== ========
Included within Directors' emoluments is GBP77,000 (2010
GBP45,300) paid to directors via related companies, as detailed in
note 27. All of the Directors' emoluments relate to short-term
employee benefits
8. Finance income and costs
2011 2010
GBP'000 GBP'000
Finance income - -
========
Finance charges 14 8
======== ========
9. Income taxes
2011 2010
GBP'000 GBP'000
Current:
Current tax for the year - -
Total current tax charge - -
Deferred tax credit (note 22) - -
Total income taxes - -
Tax rate reconciliation
2011 2010
GBP000 GBP000
Profit/(Loss) for the year (789) (77)
======= =======
Corporation tax charge thereon at 21%
(2010: 21%) (166) (16)
Adjusted for the effects of:
Disallowed net expenses/(income) for
tax purposes (1) 2
Depreciation in excess of capital allowances - -
Taxable losses and excess charges carried
forward 167 14
Income tax expense for the year - -
======= =======
10. Earnings per share
The calculation is based on the earnings attributable to
ordinary shareholders divided by the weighted average number of
Ordinary Shares in issue during the period as follows:
2011 2010
Numerator: earnings attributable to equity
(GBP'000) (789) (77)
Denominator: weighted average number of
equity shares (No.) 266,479,621 101,942,173
=========== ===========
In June 2010 the Company issued 24 million options to subscribe
for Ordinary shares of 0.1p each. None of these options were
exercised in either the prior or the current period, but had they
been they would have increased the weighted average number of
equity shares to 290,479,621 (2010 105,942,173) and this amount is
used in the calculation of diluted earnings per share.
11. Goodwill
GBP'000
At 31 July 2010 158
Additions 419
Impairment (110)
At 31 July 2011 467
The Group carried out an impairment test of goodwill for the
period ended 31 July 2011 as required by IFRS. The Directors
consider there to be four cash-generating units, as per note 5. The
impairment tests resulted in the recognition of a loss of
GBP110,000 with regards to the on-line gaming unit where the
carrying amount of the cash-generating unit was considered higher
than its recoverable amount, and hence provision was made in the
period for this. No other impairments were recognised in respect of
the other cash-generating units.
The principal assumptions made (in both 2011 and 2010) in
determining the value in use of the cash-generating unit were:
-- Basis on which recoverable amount determined - value in use;
-- Period covered by management plans used in calculation - 1 year;
-- Pre-tax discount rate applied to cashflow projection - 5%;
-- Growth rate used to extrapolate cashflows beyond management plan - 3%;
-- Difference between above growth rate and long term rate for UK - 0.5%
The calculation of value in use shown above is most sensitive to
the assumptions on discount rates and growth rates. The assumptions
used are considered to be realistically achievable in light of
economic and industry measures and forecasts. The Directors believe
that any reasonable possible change in the key assumptions on which
the recoverable amount is based would not cause its carrying amount
to exceed its recoverable amount.
Whilst there can be no certainty that the forecasts used in the
impairment calculation will be achieved, the carrying value of
goodwill at 31 July 2011 reflects the Directors best estimate based
on their knowledge of the business at 31 December 2011 and reflects
all matters of which the Directors are aware as at the date of
approval of these financial statements.
Acquisitions
During the year the Group completed its purchase of the entire
share capital of the following three companies:
-- Devil Fish Poker Ltd - an on-line gaming company acquired via
a share issue as identified in note 22 to the financial
statements;
-- Click Now Ltd - a company providing search engine facilities
acquired via a share issue as identified in note 22 to the
financial statements;
-- Soccerdome Ltd - a company with floodlit astro-turf football
pitches in Nottingham, acquired via a share issued as identified in
note 22 to the financial statements.
The performance of these companies is detailed in the Segmental
Reporting information in Note 5. The results of Devil Fish Poker
Ltd are combined with another subsidiary, FC Betz Ltd, in the
On-line gaming operation - on its own Devil Fish Poker Ltd
contributed revenue of GBP170,000 post acquisition and trading
losses of GBP150,000. It is not practicable to identify the impact
on the Group's results if all three companies had been acquired on
1 August 2010, as this information is not readily available.
The confidence in the markets in which the companies operate and
the identified synergies that the Group is expected to obtain
contributed to the amounts paid for goodwill for each acquisition.
Those assets do not meet the recognition criteria prescribed by
IFRS 3 - Business Combinations - and therefore have not been
recognised as separate intangible assets, but assumed in
goodwill.
The fair value of assets and liabilities acquired on each
acquisition, and resultant goodwill, are shown below:
Devil Fish Soccer Dome Click Now
Poker
GBP'000 GBP'000 GBP'000
Assets
Intangible assets 11 - -
Property and equipment 1 503 -
Receivables 6 40 -
Cash and cash equivalents 5 1 -
----------- ------------ ----------
23 544 -
----------- ------------ ----------
Liabilities
Bank and other borrowings - 40 -
Trade payables 34 - -
Other payables 17 - -
----------- ------------ ----------
51 40 -
----------- ------------ ----------
Net assets acquired (28) 504 -
=========== ============ ==========
Consideration paid:
Shares 330 375 49
Cash expenses 7 6 5
----------- ------------ ----------
337 381 54
=========== ============ ==========
Goodwill recognised 365 (123) 54
=========== ============ ==========
The negative goodwill in respect of Soccerdome Limited was taken
direct to the income statement in the period.
12. Other intangible assets
Website and software design
and development
2011 2010
GBP'000 GBP'000
Cost
At 1 August 172 154
Additions 75 18
At 31 July 247 172
============= ============
Amortisation
At 1 August 154 154
Charge for the year 20 -
At 31 July 174 154
============= ============
Net Book Value
At 31 July 73 18
============= ============
No amortisation was recognised in the year to 31 July
2010 as the additions related to development costs in
respect of operations which commenced after the year end.
13. Property and office equipment
Land and Office equipment Total
buildings
2011
GBP'000 GBP'000 GBP'000
Cost
At 1 August - 8 8
Additions 503 3 506
At 31 July 503 11 514
------------------- ===========
Depreciation
At 1 August - 4 4
Charge for the year 4 3 7
At 31 July 4 7 11
-------------- ------------------- ===========
Net Book Value
At 31 July 2011 499 4 503
At 31 July 2010 - 4 4
14. Subsidiaries
Details of the company's subsidiaries at 31 July 2011 are as
follows:
Proportion
Place of of ownership
incorporation interest
Company (or registration) & of voting
Name of subsidiary number and operation power held Holding Principal activity
Prize Provision England and Ordinary
Services Limited 03152966 Wales 100% shares Lottery provider
Prize Logistics England and Ordinary
Limited 06221487 Wales 100% shares Lottery administrator
England and Ordinary
FC Betz Limited 07304154 Wales 100% shares Online gaming activities
England and Ordinary
Clicknow Limited 05391900 Wales 100% shares Online marketing
Devil Fish Poker England and Ordinary Commission earned
Limited 05529624 Wales 100% shares via website
England and Ordinary Operates floodlit
Soccerdome Limited 02948017 Wales 100% shares pitches
15. Inventories
2011 2010
GBP'000 GBP'000
Finished goods 2 2
67
======= =======
16. Other financial assets
Trade and other receivables
2011 2010
GBP'000 GBP'000
Unpaid share capital - 160
Trade receivables 47 -
Other receivables 146 65
Prepayments and accrued income 16 104
209 329
67
======= =======
The average credit period taken on all sales is 13 days for the
year ended 31 July 2011. In the year ended 31 July 2010 the Group's
turnover solely consisted of transactions recognised upon cash
receipt and hence there were no trade receivables and no credit
period given.
The Group has provided fully for all receivables which are not
considered recoverable. In determining the recoverability of all
receivables, the Group considers any change in the credit quality
of the receivable up to the reporting date. As at the year end date
there were no receivables past due which were either not provided
against nor not covered by set-off arrangements with trade
payables.
The Directors consider that the carrying amount of the
receivables approximates their fair value.
Cash and cash equivalents
2011 2010
GBP'000 GBP'000
Cash and cash equivalents 74 48
Cash and cash equivalents comprises cash held by the Group and
short-term bank deposits with an original maturity of 6 months or
less. The carrying amount of these assets approximates their fair
value.
17. Borrowings
Borrowings at 31 July 2011 (none at 31 July 2010) include bank
loans of GBP36,000 which are secured on the land and buildings of
Soccerdome Limited and personal guarantees. All of the loans are
repayable on a fixed monthly repayment basis.
GBP49,000 of the borrowings are due for settlement after 12
months but within 5 years, with GBP38,000 being due for settlement
within 12 months.
18. Derivatives financial instruments and hedge accounting
At 31 July 2011 and 2010 the Group had no derivatives in place
for cash flow hedging purposes.
19. Other financial liabilities
Trade and other payables
2011 2010
GBP'000 GBP'000
Trade payables 635 288
Other payables 203 61
Accrued liabilities and deferred
income 36 5
874 354
Other payables comprise:
GBP'000 GBP 000
Social security and other
taxes 36 22
Other 167 39
203 61
Presented as:
- Current 874 354
Accrued liabilities and deferred income represents miscellaneous
contractual liabilities that relate to expenses that were incurred,
but not paid for at the year-end and income received during the
period, for which the Group had not supplied the goods or services
at the end of the year.
The Directors consider that the book value of trade payables,
accrued liabilities and deferred income approximates to their fair
value at the balance sheet date.
The average credit period taken for trade purchases is 99 days
(2010 56 days).
20. Financial instruments: information on financial risks
Financial risks are discussed in the Directors' Report and
below.
Capital risk management
The Group manages its capital to ensure that the Group as a
whole will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes the borrowings disclosed in note 17, cash and
cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings
as disclosed in notes 22 to 23.
Gearing ratio
As at 31 July 2010 the Group had no debt and hence no gearing
ratio is provided. As at 31 July 2011 the gearing ratio is as
follows:
GBP'000
Debt (87)
Cash and cash equivalents 74
-------
Net Debt (13)
-------
Equity 367
-------
Net debt to equity ratio 3.5%
=======
Debt is defined as long and short-term borrowings.
Equity includes all capital and reserves of the Group
attributable to equity holders of the parent.
Financial risk management objectives
The main market risks to which the Group is exposed are interest
rates. There is also exposure to credit risk and liquidity risk.
The Group monitors these risks and will take appropriate action to
minimize any exposure.
Credit risk
The Group's exposure to credit risk is minimal due to turnover
being in the main recognised upon cash receipt, hence the amount of
trade receivables is negligible.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group's short,
medium and long-term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
Regulatory compliance risk
Regulatory compliance risk is the risk of material adverse
impact resulting from failure to comply with laws, regulations,
codes of conduct or standards of good practice governing the sector
in which the Group operates. The Group is monitored by the
financial director who is responsible for meeting regulatory and
compliance obligations.
Interest rate risk
The Group's exposure to interest rate risk mainly concerns
financial assets and liabilities, which are subject to floating
rates in the Group. At presents the Group's loans are on fixed-rate
interest rates and hence it is not exposed to risk on these should
rates move.
21. Deferred taxation
A deferred tax asset has not been recognised in the years ended
31 July 2011 nor 31 July 2010 in respect of taxable losses carried
forward of approximately GBP880,000 (2010 GBP115,000) as there is
insufficient historic evidence that it will be recoverable in full
against taxable profits during the next 12 months.
There are not considered to be any material temporary
differences associated with investments in subsidiaries for which
deferred tax liabilities have not been recognised.
22. Equity share capital
2011 2010
GBP'000 GBP'000
Allotted, called up and fully paid
380,404,738 (2010: 185,971,398) Ordinary Shares
of 0.1p each 380 186
In accordance with Section 9 of the Companies Act 2006, during
the year the Company passed a special resolution to revoke the
concept of authorised share capital and amended its Articles of
Association accordingly.
During the year the Company issued 0.1p Ordinary shares as
follows:
-- 5,000,000 shares issued at 0.975p each on 1 October 2010 for
the acquisition of Clicknow Limited;
-- 46,666,670 shares issued on 11 October 2010 at 0.23p each for
the raising of working capital;
-- 30,000,000 shares issued at 0.966p each on 21 December 2010
for the acquisition of Devil Fish Poker Limited;
-- 3,000,000 shares issued on 21 April 2011 at 0.5p per share as
settlement of certain liabilities;
-- 34,766,670 shares issued on17 May 2011 at 0.49p per share as a placing;
-- 75,000,000 shares issued at 0.5p each on 1 June 2011 for the
acquisition of Soccerdome Limited;
23. Other reserves
Share premium Profit and
loss account
GBP'000 GBP'000
At 1 August 2010 476 (457)
Shares issued less costs 757 -
Result for the period - (789)
At 31 July 2011 1,233 (1,246)
24. Share-based payments
Certain Directors and key management were issued with share
options on 8 June 2010, exercisable immediately at a price fixed at
the date of issue. If the options remain unexercised after a period
of seven years from the date of grant the options expire.
Details of options granted to date and still outstanding at the
end of the year are as follows:
Date of Grant 2011 Exercise Exercise period
No. price
GBP'000
8 June 2010 to 2 June
8 June 2010 8,100,000 0.75p 2017
8 June 2010 to 2 June
8 June 2010 8,100,000 1.0p 2017
8 June 2010 to 2 June
8 June 2010 7,800,000 1.25p 2017
All of the above options were outstanding at the year end. The
options had a weighted average exercise price of 0.997p and a
remaining contractual life of 5.8 years. The Directors consider
that the estimated fair values of the options at grant date was
GBPnil due to the prevailing market price being lower than the
exercise price. As the fair value is currently considered to be
GBPnil, no amount has been recognised in either the income
statement or in equity in respect of these options.
As detailed in note 22, during the year shares were issued to
third parties as settlement for certain liabilities to the value of
GBP15,000.
25. Cash used in operations
2011 2010
GBP'000 GBP'000
Results from operating activities (775) (69)
Depreciation of tangible assets 7 2
Amortisation and impairment of goodwill
and intangible assets 130 -
Negative goodwill (123) -
Share based payments - 32
Increase in stock - -
Decrease/(increase) in receivables 120 (155)
Increase in payables 520 121
------- -------
Net cash from operations (121) (69)
======= =======
26. Analysis of net debt
2011 2010
GBP'000 GBP'000
Cash and cash equivalent per balance
sheet 74 48
Bank overdraft - -
-------- --------
Cash and cash equivalent per cash flow
statement 74 48
Bank loan due within one year (87) -
Bank loan over one year - -
-------- --------
Net debt (13) 48
======== ========
27. Transactions with related parties
The transactions set out below took place between the Group and
certain related parties.
R R White
R R White, a director, charged the Group GBP30,000 (2010 GBPnil)
in the year, for directorship services provided, via Freedom
Telemarketing Ltd and GBP20,000 (2010 GBPnil) via Telecom
Maintenance Solutions Ltd, companies of which he is also a
director.
K G Milhench
K G Milhench, a director for part of the year, was also a
director of CBI Holdings Limited. CBI Holdings Limited is the
parent company of Cantbuyit Limited. During the year The Weather
Lottery plc made payments of GBP 500 (2010 GBP5,950) on behalf of
Cantbuyit Limited and at the year end was owed GBP9,950 (2010
GBP9,450) from this company. This whole amount has been provided
for as irrecoverable as at 31 July 2011, although the Company will
pursue repayment.
A Moore
A Moore, a director, was also a Designated Member of Central
Corporate Finance LLP in the year. He charged the Group GBP12,000
(2010 GBP36,750) via this partnership for directorship services in
the period, of which GBP12,000 was outstanding at the year end.
Lord E T Razzall
Lord E T Razzall, a director, charged the Group GBP15,000 (2010
GBP3,750) in the year, for directorship services provided, via an
entity trading as R T Associates. At the year R T Associates was
owed GBP2,850 (2010 GBPnil).
J M Botros
J M Botros, the Company Secretary, charged the Group GBP1,000
(2010 GBPnil) in the year, for Company Secretarial services
provided, and GBP52,852 for legal services provided and expenses.
At the year he was owed GBP25,810 (2010 GBPnil).
As referred to in Note 24, share options were granted in 2010 to
Directors and key management, all of which were outstanding at the
year end. The following options were held by the Directors and key
management at the year end:
Options No. Option details
Lord E T Razzall 3,200,000 See A below
A Moore 3,200,000 See A below
R R White 3,200,000 See A below
J Botros 4,800,000 See B below
J Williams 4,800,000 See B below
A - 1,100,000 at 0.75p, 1,100,000 at 1p and 1,000,000 at
1.25p
B - 1,600,000 at 0.75p, 1,600,000 at 1p and 1,600,000 at
1.25p
All of the options are exercisable by 2 June 2017.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is as referred to above, on page 8 within
the Directors Report and in Note 7.
28. Operating lease commitments
At the balance sheet date, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2011 2010
GBP'000 GBP'000
Land and buildings:
Within one year 16 -
In the second to fifth years inclusive - -
After five years - -
Other:
Within one year - 5
In the second to fifth years inclusive - -
After five years
-------- --------
16 5
======== ========
Operating lease payments represent rentals payable by the Group
for office premises. Leases are negotiated over the term considered
most relevant to the individual subsidiary and rentals are fixed
where possible for that term.
29. Controlling Party
No single individual has sole control of the company.
30. Events after the balance sheet date
The company issued share capital to the value of GBP125,000 on
20 September 2011 and appointed A J A Flitcroft as Finance Director
on 7 November 2011.
31. Going Concern
The Group made a loss for the year of GBP789,000 as a result of
trading difficulties with its on-line gaming operations and legal
fees in respect of a fraud perpetrated by an ex-Director. The Group
has undertaken changes to its on-line gaming facilities in order to
restrict future losses. It has also amended its lottery operations
by reducing the number of draws but at a higher entry price - this
should result in maintained turnover but lower prize payment costs,
thereby leading to increased profits in this area. .
During the year the Group has raised approximately GBP950,000 of
funds through share issues and, as per note 30, a further
GBP125,000 post year end. These additional funds have supported the
Group's net asset position and enabled the Group to manage through
the losses in the period.
Given these changes made to the Group's ongoing operations,
together with the additional capital in place, the Directors
consider that the Group continues to be a going concern and they
forecast that that there is sufficient funding in place to enable
the continuance of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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