TIDMTWL
RNS Number : 3183V
Weather Lottery PLC (The)
11 January 2013
11 January 2013
THE WEATHER LOTTERY PLC
("TWL" or the "'Company")
Final Results for the year to 31 July 2012
The Weather Lottery PLC, the AIM quoted lottery operator, is
pleased to announce its final results for the year to 31 July
2012.
Summary of Final Results
-- Turnover down 15% to GBP1,142k (GBP1,343k) following
elimination of certain loss making gambling activities.
-- Loss for the year reduced to GBP291k (loss GBP789k).
-- Lottery business made a profit of GBP238k and has good prospects for the future.
-- Gambling activities substantially restructured.
-- Improved business and financial performance in the second half of the year.
-- New arrangement with Nottingham City Council for the
Soccerdome site should provide a more attractive future for this
business.
The Company's annual report and accounts has been issued to
shareholders by way of posting on the Company's website
(www.theweatherlotteryplc.com) in accordance with the Company's
article of association. The Company will hold its annual general
meeting on 31 January 2013 at Econnective Conference Room, Global
Business Centres, 9 Holles Street, London W1G 0BD at 9.30am.
For further information contact
The Weather Lottery PLC
John Botros (Company Secretary) 07714 209 346
Allenby Capital (Nominated adviser)
Nick Harriss 0203 328 5658
SVS Securities (Broker)
Ian Callaway 0207 638 5600
THE WEATHER LOTTERY PLC
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
REGISTERED NUMBER: 04458947 (England and Wales)
THE WEATHER LOTTERY PLC
COMPANY INFORMATION
DIRECTORS Lord E T Razzall
A J A Flitcroft
SECRETARY J M Botros
COMPANY NUMBER 04458947
REGISTERED OFFICE The Old Rectory
Main Road
Ombersley
Droitwich
Worcestershire
WR9 0EW
NOMINATED ADVISERS AND Allenby Capital Limited
BROKERS Claridge House
32 Davies Street
Mayfair London
W1K 4ND
AUDITORS Hart Shaw LLP
Europa Link
Sheffield Business Park
Sheffield
S9 1XU
SOLICITORS Harrison Clark
5 Deansway
Worcester
WR1 2JG
REGISTRARS SLC Registrars Limited
42-46 High Street
Esher
Surrey
KT10 9QY
PRINCIPAL BANKERS Lloyds TSB Bank plc
134 High Street
Stourbridge
West Midlands
DY8 1DS
BROKERS SVS Securities plc
21 Wilson Street
London
EC2M 2SN
THE WEATHER LOTTERY PLC
CONTENTS
Page
FINANCIAL STATEMENTS
Chairman's Statement 3
Directors' Report 5
Independent Auditor's Report 13
Consolidated Income Statement 15
Consolidated Statement of Financial Position 16
Consolidated Statement of Changes in Equity 17
Consolidated Cash Flow Statement 18
Notes to the Consolidated Financial Statements 19
Parent Company Balance Sheet 42
Notes to the Parent Company Balance Sheet 43
THE WEATHER LOTTERY PLC
CHAIRMAN'S STATEMENT
For the year ended 31 July 2012
Operating and Financial Review
In my review of the half-year figures to 31 January 2012 the
company made losses of GBP201,000 (EBITDA GBP170,000). Whilst these
were a considerable improvement on the previous very difficult year
I pointed out that they included a number of legacy problems from
the past and I hoped the second half would show much improvement. I
am pleased to report that the losses in the second half have been
cut to GBP90,000 (EBITDA GBP44,000) against GBP468,000 (EBITDA
GBP460,000) for the same period last year.
These improved figures represent the hard work done in settling
losses from the gambling sector and the final conclusion of the
very difficult problems caused by the well documented activities of
the former Managing Director leading to his conviction at the end
of October 2011.
During the current year R White resigned from the Board in May
2012. The company will be making a further appointment to the Board
in due course. Jeff Williams has taken over the position of
Executive Director of the subsidiary companies and also become the
Annex A manager of the lottery operations responsible for licence
holder Prize Provision Services Limited (PPSL) to the Gambling
Commission. In June following these changes by arrangement the
Gambling Commission carried out an inspection of the operations of
the Lottery. It was clear that the historic systems did not comply
with the requirements of the Gambling Act 2006 or the Commission
code of practice and a full review was undertaken. Following these
findings the company will take legal advice on whether any claims
exist in respect of the activities of the former management.
PPSL immediately engaged lottery expert G Caswell on the
recommendation of the Lottery Council. He has worked with the
employees for the last six months to ensure that the systems comply
in all respects with the law and the code of practice. I am pleased
to say that as a result of this hard work the Gambling Commission
have confirmed they are satisfied that the lottery now complies in
most respects going forward. In addition, in the areas which still
need to be improved, arrangements have been made to bring these up
to standard within a reasonable agreed time frame. I can safely say
that as a result of this investigation and the work done under the
supervision of the Consultant the lottery is now operating to a
greater standard of compliance than ever before. The lottery is
profitable and is well placed for expansion following this
review.
In my last statement I advised that the acquisition of the
Soccerdome Five-a-Side centre in Nottingham had not performed as
well as hoped for two reasons. Firstly the court surfaces were in
worse condition than represented by the vendor which may give rise
to a claim for damages. Secondly the uncertainty about a possible
major leisure development meant a refurbishment would have to be
delayed. I am pleased to say that Nottingham City Council have
decided to proceed with a major leisure development at the site
involving expenditure of up to GBP13million pounds with the
possibility of additional sports grants.
Soccerdome Limited has closed the facility by mutual agreement
with the Council on satisfactory financial terms and expects the
value of its leasehold interest to be greatly enhanced by the
development. Moreover on re-opening in 2015 it expects, with the
greatly increased footfall, the profitability of the business will
considerably increase. Soccerdome has become a much more valuable
business occupying a much more valuable site as a result of these
developments.
The Gambling Division which was responsible for significant
losses has now been re-organised to largely eliminate any losses
going forward. FC Betz limited has made very small profits from a
much reduced level of trading activity. Devilfish has also been
placed with a new service provider on improved operating terms.
This year has seen the completion of the cleaning up process
caused by historic problems in the management of the Lottery
division and the loss making activities in the gambling
subsidiaries. Those are now in the past. The Lottery is better
placed than ever going forward and the developments at the
Soccerdome Ltd site are exciting. The Weather Lottery plc has no
bank debt itself with only a minimal bank loan in Soccerdome Ltd
which was in existence at the time of acquisition and which is the
liability, of and being repaid, by the vendor. It is not therefore
a finance cost of the group. The TWL group is strongly placed in
this regard and the Board continues to look for new profit sources
to give shareholder value which in the past years have regrettably
not been generated.
Lord E T Razzall
Chairman
THE WEATHER LOTTERY PLC
DIRECTORS' REPORT
For the year ended 31 July 2012
The Directors present their Report and the annual Financial
Statements for the year ended 31 July 2012.
Principal activities
The principal activity of the Company is that of a holding
company.
The principal activity of the Group in the period was that of
lottery administrators, online gaming and marketing activities. The
Group also earns commission via search engine provision and
operation of floodlit football astro-turf pitches.
Business review and future developments
The Weather Lottery plc's ("The Weather Lottery") principal
activity is that of lottery administrators, online gaming, IT
search engines and the provision of football pitches. A review of
these activities, future developments and principal risks is
provided in the Chairman's Statement and the Principal risks and
uncertainties section.
Financial key performance indicators ("KPI's")
The key performance indicators reviewed by the Group Board are
as follows:
-- Turnover
-- Operating profit
-- Profit before taxation
-- Rolling cash flow forecasts
These indicators are reviewed by the Group Board at least once a
month. Explanations are sought and given for any material variances
and the management are required to provide plans to recover any
performance failures as they occur during the year.
Principal risks and uncertainties facing the Group
Management and employees
The nature of the Group and its business model creates reliance
upon retaining and incentivising its senior management and certain
key employees, whose expertise will be important to the fortunes of
the Group going forward. The Directors have endeavoured to ensure
that the principal members of its management team are suitably
incentivised, but the retention of such staff cannot be
guaranteed.
The Group may need to recruit additional senior management and
other staff in order to further develop its business. There can be
no guarantee that such individuals will be recruited in the Group's
preferred timetable or at the cost levels anticipated by the Group.
Competition for staff is strong and therefore the Group may find it
difficult to retain key management and staff. The loss of key
personnel and the inability to recruit further key personnel could
have a material adverse effect on the future of the Group through
the impairment of the day-to-day running of the businesses and the
inability to maintain existing client relationships.
Exposure of the Group to UK economic conditions
Demand for the Group's services may be significantly affected by
the general level of economic activity and economic conditions in
the regions and sectors in which the Group operates. Therefore, a
continuation of the economic downturn, especially in regions or
sectors where the Group's operations are focused, could have a
material adverse effect on the Group's business and financial
results.
Competition
The Group is engaged in business activities where there a number
of competitors. Many of these competitors are larger than the
relevant businesses carried on by the Group and have access to
greater funds than the Company, which will potentially enable them
to gain market share at the expense of the Group.
Acquisitions
The Directors cannot discount circumstances where an acquisition
would support the Company's business strategy. However, there is no
guarantee that the Company will successfully be able to identify,
attract and complete suitable acquisitions or that the acquired
business will perform in line with expectations.
Funding and working capital
The Group has given the usual undertakings, covenants and
security for its funding facility.
Maintaining a sufficient level of working capital is essential
to enable the Group to meet its foreseeable obligations and achieve
its strategy. Failure to manage working capital could impact upon
the ability of the Group to grow.
Management of growth
The ability of the Group to implement its strategy in an
expanding market requires effective planning and management control
systems. The Directors anticipate that further expansion will be
required to respond to market opportunities and the potential
growth in its client base. The Group's growth plans may place a
significant strain on its management, operational, financial and
personnel resources. The Group's future growth and prospects will,
therefore, depend on its ability to manage the growth and to
continue to expand and improve operational, financial and
management information and quality control systems on a timely
basis, whilst at the same time maintaining effective cost controls.
Any failure to expand and improve operational, financial and
management information and quality control systems in line with the
Group's growth could have a material adverse effect on its
business, financial condition and results of operations.
Market developments
Any failure to expand the Group's service offering in response
to customer demand and/or industry developments may have an adverse
effect on the Group's financial performance and prospects.
Reliance on Partners
Much of the Group's business is dependent on partners
(charities, clubs, etc). Changes in key relationships within those
partners, change of strategic direction by partner organisations,
changes in the viability of partner-owned technology, economic and
other business circumstances could all have an adverse effect on
the financial performance of the Group.
Legal and regulatory matters
The Group is subject to a considerable degree of regulation and
legislation. Changes in or extensions of laws and regulations
affecting the industry in which the Group operates (or those in
which its customers operate) and the rules of industry
organisations could restrict or complicate the Group's business
activities, with the potential to increase compliance / legal costs
significantly.
As required by section 656 of the Companies Act 2006, the
Directors are required to point out that the net assets of the
Company are less than 50% of the aggregate of share capital and the
share premium account. The Board will discuss at the AGM the ways
that it seeks to rectify this position in the near future.
Financial risk management
The Group's financial risk management policies are disclosed in
the accounting policies and note 21 within the financial
statements.
Dividends
The Directors do not recommend a dividend for the year (2011:
GBPnil).
Directors
The following Directors held office during the financial year
ended 31 July 2012:
Lord E T Razzall
A J A Flitcroft Appointed 7 November 2011
R R White Resigned 21 May 2012
A Moore Resigned 1 August 2011
Directors' interests in shares and warrants
The Directors who held office at 31 July 2012 had the following
interests in the shares of the Company, including family
interests:
Ordinary shares of 0.1p each
At 31 July 2011
(or date of
At 31 July 2012 appointment, if later)
Lord E T Razzall 20,000,000 8,000,000
R R White (resigned 21 May 2012) - 3,333,334
A Moore (resigned 1 August 2011) - 8,000,000
The following share options have been issued to the Directors of
the Company, none were exercised in the year to 31 July 2012 and
all were still held at the year end:
Number Exercise price Exercise period
Lord E T Razzall 3,200,000 0.75p-1.25p 8 June 2010 - 2 June
2017
Further details of these options are given in notes 25 and 28 to
the Financial Statements.
Directors' remuneration
In accordance with AIM Rule 19, the remuneration of the
Directors, who served during the year is detailed below:
Salary, fees Bonus Pension Total
& Benefits in contributions
Kind
GBP '000 GBP '000 GBP '000 GBP '000
Lord E T Razzall 15 - - 15
R R White 31 - - 31
(resigned 21 May 2012)
A J A Flitcroft 23 - - 23
(appointed 7 November 2011)
Substantial shareholdings
The Company has been notified of the following substantial
holdings of ordinary 0.1p shares as at 6 November 2012
Percentage No. of
Holding shares
HALB Nominees Ltd* 11.98% 52,905,392
SVS (Nominees) Ltd*** 7.23% 31,946,416
Petwood Hotel Ltd 6.79% 30,000,000
J M Botros Esq 6.03% 26,626,588
Pershing Nominees Ltd** 4.98% 21,975,279
C Crawford**** 3.96% 17,466,666
TD Direct Investing Nominees Ltd 3.56% 15,720,004
Barclayshare Nominees Ltd 3.32% 14,674,686
* - held on behalf of J and M Williams.
In addition J S Williams Esq holds 12,000,000 shares (2.72%)
personally.
** - includes 12,800,279 shares (2.43%) held on behalf of J
Botros Esq, 8,000,000 shares (1.81%) held on behalf of Lord E T
Razzall.
In addition Lord E T Razzall holds 12,000,000 shares (2.72%)
personally.
*** - includes 13,333,333 shares (3.02%)held on behalf of MCI
Services Ltd.
**** - C Crawford Esq also holds 6,320,000 shares (1.43%) held
in the name of Davycrest Nominees.
No other person has notified an interest in the ordinary shares
of the Company as required to be disclosed to the Company.
Capital Structure
Details of the issued share capital are shown in note 23. There
are no special restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restriction on
the transfer of securities or on voting rights. No one has any
special rights of control over the Company's share capital and all
issued shares are fully paid.
Under its Articles of Association, the company has authority to
issue the amount of shares shown in note 23.
Donations
Charitable and political donations made by the Group during the
year amounted to GBPnil (2011: GBPnil).
Creditor payment policy and practice
It is the Group's policy to establish terms of payments with
suppliers when agreeing each transaction or series of transactions,
to ensure that suppliers are aware of these terms of payment and to
abide by them. At 31 July 2012, the Group had an average of 95 days
(2011: 99 days) of purchases outstanding in trade creditors.
Post balance sheet events
The Group has carried a restructuring of the subsidiary
companies. In addition Soccerdome Limited and Nottingham City
Council agreed on mutually beneficial terms that it will close the
football courts until redevelopment of the site has been completed.
Soccerdome Limited will receive financial compensation together
with valuable improvements to the terms of the Lease in
consideration of closing the site for redevelopment.
Going concern
UK Company Law requires Directors to consider whether it is
appropriate to prepare the financial statements on the basis that
the Company and the Group are going concerns. Throughout the
financial statements there are various disclosures relating to
Group funding and operational risks. The Directors' report
summarises the key themes.
The Group does have some exposure to current economic conditions
which have the potential to impact annual revenues. To date the
economic downturn has marginally reduced Group revenue on its
principal lottery operations in the period. The Directors are
confident that the Group has sufficient resources and support to
ensure that the profit and cash generation derived from future
trading are sufficient to meet the Group's future requirements. As
a result of these reviews, the Directors are of the opinion that
the Group has adequate resources to continue in operation for the
foreseeable future. For this reason, they consider it appropriate
to adopt the going concern basis in preparing the financial
statements.
Environment policies
The Group is always seeking ways to improve its consumption of
resources and ways to protect the environment.
Employee policies
The Group places considerable value on the involvement of the
employees and keeps them informed on matters affecting them as
employees and on relevant matters affecting the performance of the
Group.
The Group's employment policies include a commitment to equal
opportunities regardless of sex, age, race, sexual orientation or
ethnic origin.
The Group's policy is to give full and fair consideration to
applications for employment made by disabled persons, bearing in
mind the respective aptitudes of the applicants concerned. In the
event of staff becoming disabled every effort would be made to
ensure their continued employment within the Group and to provide
specialised training where appropriate.
Information to shareholders
The Group has its own website (www.theweatherlotteryplc.com) for
the purposes of improving information flow to shareholders as well
as potential investors.
Corporate governance
The Group intends to continue with measures previously put in
place to ensure that it complies with the Corporate Governance Code
in so far as is practicable and appropriate for a public company of
its size and nature.
The Group has put into place an Audit Committee and a
Remuneration Committee under the control of A J A Flitcroft,
Finance Director. It has primary responsibility for monitoring the
quality of internal control and ensuring the financial performance
of the Group is properly measured and reported on and for reviewing
reports from the Group's auditors relating to its accounting and
internal controls. In all cases due regard is given to the
interests of the shareholders. It also determines the terms and
conditions of service of the executive Directors, including their
remuneration and grant of options.
The Directors intend to comply with Rule 21 of the AIM Rules for
Companies relating to Directors' dealings as applicable to AIM
companies and will also take all reasonable steps to ensure
compliance by the Group's applicable employees. In line with the
AIM rules for Companies, the Group has adopted an AIM rules
compliance policy setting out the procedures to be followed in
order that the Company will fully comply with the AIM Rules for
Companies.
Relations with shareholders
The Chairman is the Group's principal spokesperson with
investors, fund managers, the press and other interested parties.
At the Annual General Meeting, private investors are given the
opportunity to question the Board.
Internal control
The Board acknowledges its responsibility for establishing and
monitoring the Group's systems of internal control. Although no
system of internal control can provide absolute assurance against
material misstatement or loss, the Group's systems are designed to
provide the Directors with reasonable assurance that problems are
identified on a timely basis and so can be dealt with
appropriately.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements in accordance
with applicable law and regulations. Company law requires the
Directors to prepare Group and Parent Company financial statements
for each financial year. As required by the AIM Rules of the London
Stock Exchange the Directors are required to prepare the Group
Financial Statements in accordance with IFRS's as adopted by the EU
and applicable laws and have elected to prepare the Parent Company
Financial Statements in accordance with UK Accounting Standards and
applicable law (UK Generally Accepted Accounting Practice).
The Group Financial Statements are required by law and IFRS's as
adopted by the EU to present fairly the financial position and the
performance of the Group; the Companies Act 2006 provides in
relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and
fair view are references to their achieving a fair
presentation.
The Parent Company financial statements are required by law to
give a true and fair view of the state of affairs of the Parent
Company. In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and estimates that are reasonable and
prudent;
- for the Group financial statements, state whether they have
been prepared in accordance with IFRS's as adopted by the EU;
- for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
- prepare the financial statements on a going concern basis,
unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
The Directors are responsible for keeping proper accounting
records, for safeguarding the assets of the Group and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring
that the Directors Report and other information contained in the
annual report is prepared in accordance with company law in the
United Kingdom.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included in the
Company's website. Legislation in the UK governing the preparation
and dissemination of the financial statements may differ from
legislation in other jurisdictions.
Disclosure of information to auditors
The Directors who held office at the date of approval of this
Directors' Report each confirm the following:
-- so far as they are aware, there is no relevant audit
information of which the Group's auditors are unaware, and
-- they have taken all the steps that they ought to have taken
as Director in order to make themselves aware of any relevant audit
information and to establish that the Group's auditors are aware of
that information.
A J A Flitcroft
Director
Date: 10 January 2013
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
THE WEATHER LOTTERY PLC
For the year ended 31 July 2012
We have audited the financial statements of The Weather Lottery
plc for the year ended 31 July 2012 which comprise the Consolidated
Income Statement, the Consolidated Statement of Financial Position
and Parent Company Balance Sheet, the Consolidated Statement of
Changes in Equity, the Consolidated Cash Flow Statement and the
related notes. The financial reporting framework that has been
applied in the preparation of the consolidated financial statements
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the Company's members, as a body,
in accordance with Sections 495 to 497A of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an Auditors' report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Group and the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities
Statement (set out on page 11), the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's (APB's) Ethical Standard for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the group's and the parent company's circumstances
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial
statements. In addition we read all the financial and non-financial
information in the Chairman's Statement and Directors' Report to
identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion:
- the financial statements give a true and fair view of the
state of the group's and parent company's affairs as at 31 July
2012 and of the group's loss for the year then ended;
- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
- the parent company financial statements have been properly
prepared in accordance with
United Kingdom Generally Accepted Accounting Practice;
- the parent company financial statements have been prepared in
accordance with the requirements of the Companies Act 2006; and, as
regards the group financial statements, Article 4 of the IAS
Regulation.
Separate opinion in relation to IFRS's as issued by the IASB
As explained in note 2 to the group financial statements, the
group in addition to complying with its legal obligation to apply
IFRS's as adopted by the European Union, has also applied IFRS's as
issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRS's
as issued by the IASB.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Director's Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements. Our
responsibilities do not extend to any other information.
Emphasis of matter
In forming our opinion on the financial statements we have
considered the adequacy of the disclosures made in note 32 of the
financial statements concerning Going Concern. In view of the
significance of this uncertainty we consider that it should be
drawn to your attention but our opinion is not qualified in this
respect.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept by the group
and parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
- the parent company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosure of directors' remuneration specified by law
are not made; or
- we have not received all the information and explanations we
require for our audit.
Paul Dawson (Senior Statutory Auditor)
for and on behalf of Hart Shaw LLP
Chartered Accountants and Business Advisers
Europa Link
Sheffield Business Park
Sheffield
South Yorkshire
S9 1XU
Date: 10 January 2013
THE WEATHER LOTTERY PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31 July 2012
Note 2012 2011
GBP'000 GBP'000
Continuing operations
Revenue 1,142 1,343
Cost of sales (723) (573)
----------------- -------------
Gross profit 419 770
Administrative
expenses 6 (705) (1,545)
Finance income 9 - -
Finance costs 9 (5) (14)
----------------- -------------
Loss before taxation (291) (789)
Income tax expense 10 - -
----------------- -------------
Loss from continuing
operations (291) (789)
================= =============
PROFIT/(LOSS)
PER SHARE
Basic profit/(loss)
per ordinary share 11 (0.07)p (0.30)p
================= =============
Diluted profit/(loss)
per ordinary share 11 (0.06)p (0.27)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.
THE WEATHER LOTTERY PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 July 2012
Note 2012 2011
GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and
equipment 14 476 503
Goodwill 12 467 467
Other intangible assets 13 44 73
----------------------- -------------------------
Total non current assets 987 1,043
----------------------- -------------------------
Current assets
Inventories 16 2 2
Trade and other receivables 17 101 209
Cash and cash equivalents 17 18 74
----------------------- -------------------------
Total current assets 121 285
----------------------- -------------------------
Total assets 1,108 1,328
----------------------- -------------------------
Current liabilities
Trade and other payables 20 805 874
Bank and other borrowings 18 37 38
Current tax payable - -
----------------------- -------------------------
Total current liabilities 842 912
Non-current liabilities
Trade and other payables 20 40 -
Bank and other borrowings 18 - 49
Deferred tax provision 22 - -
----------------------- -------------------------
Total non-current liabilities 40 49
----------------------- -------------------------
Total liabilities 882 961
----------------------- -------------------------
Net assets 226 367
======================= =========================
EQUITY
Share capital 23 442 380
Share premium account 24 1,321 1,233
Retained earnings 24 (1,537) (1,246)
----------------------- -------------------------
Equity attributable
to equity holders of
the parent 226 367
======================= =========================
The financial statements were approved by the Board of Directors
and authorised for issue on 10 January 2013. They were signed on
its behalf by:
A J A Flitcroft
Director
THE WEATHER LOTTERY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2012
Called up Share premium Retained
share capital account Earnings Total Equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance 31 July
2010 186 476 (457) 205
(Loss) for the
year - - (789) (789)
Shares issued
in year less
costs 194 757 - 951
--------------- -------------- ----------- -----------------
Balance 31 July
2011 380 1,233 (1,246) 367
Shares issued
in year less
costs 62 88 - 150
(Loss) for the
year - - (291) (291)
--------------- -------------- ----------- -----------------
Balance 31 July
2012 442 1,321 (1,537) 226
--------------- -------------- ----------- -----------------
THE WEATHER LOTTERY PLC
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 July 2012
Year ended Year ended 31
31 July 2012 July
GBP'000 2011
GBP'000
Note
Net cash from operating activities 26 (135) (121)
Interest and financing costs (5) (14)
-------------- --------------
Net cash (outflow) from operating
activities (140) (135)
-------------- --------------
Cashflow from investing activities
Acquisition of subsidiary undertakings - (18)
Purchases of intangible assets (11) (63)
Purchases of property, plant and
equipment (5) (4)
-------------- --------------
Net cash (outflow) from investing
activities (16) (85)
-------------- --------------
Financing
Net proceeds from issue of shares 150 236
Proceeds of new bank and other
loans - 18
Repayment of bank and other loans (50) (8)
-------------- --------------
Net cash from financing activities 100 246
-------------- --------------
Net (decrease) / increase in cash
and cash equivalents (56) 26
Cash and cash equivalents at 1
August 2011 74 48
-------------- --------------
Cash and cash equivalents at 31
July 2012 18 74
============== ==============
Comprising of:
Cash and cash equivalents per
the balance sheet 18 74
Less:
Bank overdraft - -
-------------- --------------
Cash and cash equivalents for
cash flow statement purposes 27 18 74
============== ==============
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.
THE WEATHER LOTTERY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2012
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 The Old Rectory, Main Road, Ombersley, Droitwich, WR9
0EW. 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 2011.
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 19 - Employee Benefits
IAS 27 - Consolidated and separate financial statements
(revised)
IAS 28 - Investments in associates and joint ventures
(revised)
Amendments to IAS 32 - Offsetting Financial Assets and Financial
Liabilities
Amendments to IFRS7 - Disclosures - Offsetting Financial Assets
and Financial Liabilities
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
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 2012, 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
GBP291,000.
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 intangible 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 recognised
value. Cost comprises direct materials using the first in first out
(FIFO) basis. Net recognised 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. 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 2012 is as follows:
Lottery On-line IT Facilities Football Unallocated Group total
Gaming Pitches
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 975 140 12 15 - 1,142
--------- --------- -------------- --------- ------------ ------------
Amortisation - 22 - - - 22
Depreciation 4 1 - 24 3 32
Impairment - 18 - - - 18
Operating
profit/(loss) 240 (203) 7 (50) (280) (286)
Finance
costs (2) - - (1) (2) (5)
--------- --------- -------------- --------- ------------ ------------
Profit/(loss)
before tax 238 (203) 7 (51) (282) (291)
Tax charge - - - - - -
--------- --------- -------------- --------- ------------ ------------
Profit/(loss)
for the
year 238 (203) 7 (51) (282) (291)
========= ========= ============== ========= ============ ============
Balance
sheet
Total assets 179 318 57 490 64 1,108
========= ========= ============== ========= ============ ============
Non current
asset additions 6 7 - - 3 16
========= ========= ============== ========= ============ ============
Total liabilities 376 70 31 33 372 882
========= ========= ============== ========= ============ ============
5. Segment analysis (continued)
The following table analyses assets and liabilities not
allocated to business segments as at 31
July 2012:
GBP'000
Assets
Intangible fixed assets 18
Tangible fixed assets 1
Other receivables 35
Cash and cash equivalents 10
--------
64
--------
Liabilities
Trade and other payables 348
Borrowings 24
--------
372
--------
6. Expenses
The following material expenses are included in cost of
sales:
2012 2011
GBP'000 GBP'000
--------- ---------
Revenue Share 91 256
Processing and Transaction Fees 32 103
Fees to Clients 389 352
Prizes Payable 111 365
Player Rake Back 28 74
The following material expenses are included in administrative
expenses:
2012 2011
GBP'000 GBP'000
--------- ---------
Consultancy fees 190 174
Office rent and rates 37 37
Hotel and travel 25 23
Professional fees 80 51
Bank charges 34 14
7. Operating (loss)
Operating loss has been stated after charging/(crediting) the
following:
2012 2011
GBP'000 GBP'000
Negative goodwill recognised
in period - (123)
Impairment of goodwill in period - 110
Amortisation of intangible fixed
assets 40 20
Depreciation of tangible fixed
assets 32 7
Operating lease charges 37 37
Auditors' remuneration - audit
services to the parent company 1 1
Auditors' remuneration - audit
services to the Group 10 15
========= =========
Auditors' remuneration - taxation
services 2 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 GBP193,000 (2011 GBP313,000).
8. Personnel costs
2012 2011
The average monthly number of employees No. No.
(including executive and non executive
Directors) was 7 8
========== ==========
The split of employees by function
within the Group is as follows: No. No.
Administration and Sales 3 4
Management 4 4
---------- ----------
Total 7 8
========== ==========
2012 2011
Their aggregate remuneration comprised GBP'000 GBP'000
Wages and salaries 80 115
Social security costs 9 11
Sums paid to third parties for services 46 77
---------- ----------
135 203
---------- ----------
8. Personnel costs (continued)
Directors' emoluments GBP'000 GBP'000
Emoluments 23 10
Sums paid to third parties for director
services 46 77
69 87
========== ==========
Number of Directors accruing benefits No. No.
under money purchase schemes - -
========== ==========
Aggregate emoluments of highest
paid Director 31 50
========== ==========
Included within Directors' emoluments is GBP64,000 (2011
GBP77,000) paid to directors via related companies, as detailed in
note 28. All of the Directors' emoluments relate to short-term
employee benefits
9. Finance income and costs
2012 2011
GBP'000 GBP'000
Finance income - -
========= =========
Finance charges 5 14
========= =========
10. Income taxes
2012 2011
GBP'000 GBP'000
Current:
Current tax for the year - -
--------- ---------
Total current tax charge - -
Deferred tax credit (note 22) - -
--------- ---------
Total income taxes - -
========= =========
10. Income taxes (continued)
Tax rate reconciliation
2012 2011
GBP'000 GBP'000
Profit/(Loss) for the year (291) (789)
========= =========
Corporation tax charge thereon at
20% (2011: 21%) (58) (166)
Adjusted for the effects of:
Disallowed net expenses/(income)
for tax purposes (25) (1)
Depreciation in excess of capital 13 -
allowances
Taxable losses and excess charges
carried forward 70 167
--------- ---------
Income tax expense for the year - -
========= =========
11. 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:
2012 2011
Numerator: earnings attributable
to equity (GBP'000) (291) (789)
Denominator: weighted average
number of equity shares (No.) 404,312,311 266,479,621
============== ===========================
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 428,312,311 (2011 290,479,621) and this amount is
used in the calculation of diluted earnings per share.
12. Goodwill
GBP'000
At 31 July 2011 467
Additions -
Impairment -
--------
At 31 July 2012 467
========
12. Goodwill (continued)
The Group carried out an impairment test of goodwill for the
period ended 31 July 2012 as required by IFRS. The Directors
consider there to be four cash-generating units, as per note 5. No
impairments were recognised in respect of these cash-generating
units.
The principal assumptions made (in both 2012 and 2011) 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 2012 reflects the Directors best estimate based
on their knowledge of the business at 31 December 2012 and reflects
all matters of which the Directors are aware as at the date of
approval of these financial statements.
13. Other intangible assets
Website and software design
and development
2012 2011
GBP'000 GBP'000
Cost
At 1 August 2011 247 172
Additions 11 75
-------------- --------------
At 31 July 2012 258 247
============== ==============
Amortisation
At 1 August 2011 174 154
Charge for the year 22 20
Impairment 18 -
============== ==============
At 31 July 2012 214 174
============== ==============
Net Book Value
At 31 July 2012 44 73
============== ==============
14. Property and office equipment
Land and buildings Office equipment Total
2012
GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 August 503 11 514
Additions - 5 5
------------------- ----------------- ---------------
At 31 July 503 16 519
------------------- ----------------- ===============
Depreciation
At 1 August 4 7 11
Charge for the
year 24 8 32
------------------- ----------------- ---------------
At 31 July 28 15 43
------------------- ----------------- ===============
Net Book Value
At 31 July 2012 475 1 476
At 31 July 2011 499 4 503
------------------- ----------------- ===============
15. Subsidiaries
Details of the company's subsidiaries at 31 July 2012 are as
follows:
Place of Proportion
incorporation of ownership
(or registration) interest
Name of Subsidiary Company number and operation & voting Holding Principal activity
power held
Prize Provision England and Ordinary
Services 03152966 Wales 100% shares Lottery provider
Prize Logistics England and Ordinary Dormant company
Limited 06221487 Wales 100% shares (see note 31)
England and Ordinary Online gaming
FC Betz Limited 07304154 Wales 100% shares 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
Soccerdome England and Ordinary Operates floodlit
Limited 02948017 Wales 100% shares pitches
16. Inventories
2012 2011
GBP'000 GBP'000
Finished goods 2 2
================== ===================
17. Other financial assets
Trade and other receivables
2012 2011
GBP'000 GBP'000
Unpaid share capital - -
Trade receivables 2 47
Other receivables 44 146
Prepayments and accrued
income 55 16
----------------------- --------
101 209
======================= ========
The average credit period taken on all sales is 1 day for the
year ended 31 July 2012, (2011: 13 days).
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
2012 2011
GBP'000 GBP'000
Cash and cash equivalents 18 74
======== ========
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.
18. Borrowings
Borrowings at 31 July 2012 include bank loans of GBP14,000
(2011: 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.
None of the borrowings are due for settlement after 12 months
but within 5 years, with GBP37,000 being due for settlement within
12 months.
19. Derivatives financial instruments and hedge accounting
At 31 July 2012 and 2011 the Group had no derivatives in place
for cash flow hedging purposes.
20. Other financial liabilities
Trade and other payables
2012 2011
GBP'000 GBP'000
Trade payables 395 635
Other payables 349 203
Accrued liabilities and deferred
income 101 36
-------- --------
845 874
======== ========
Other payables comprise:
GBP'000 GBP'000
Social security and other taxes 29 36
Other 320 167
-------- --------
349 203
======== ========
Presented as:
* Current 805 874
======== ========
40 -
* Non Current
======== ========
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 95 days
(2011: 99 days).
21. 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 18, cash and
cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings
as disclosed in notes 23 to 24.
Gearing ratio
As at 31 July 2011 the Group gearing ratio was 3.5%. As at 31
July 2012 the gearing ratio is as follows:
GBP'000
Debt (37)
Cash and cash equivalents 18
--------
Net Debt (19)
--------
Equity 226
--------
Net debt to equity ratio 8.4%
========
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.
21. Financial instruments: information on financial risks
(continued)
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.
22. Deferred taxation
A deferred tax asset has not been recognised in the years ended
31 July 2012 nor 31 July 2011 in respect of taxable losses carried
forward of approximately GBP1,166,000 (2011: GBP880,000) 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.
23. Equity share capital
2012 2011
GBP'000 GBP'000
Allotted, called up and fully paid
441,627,159 (2011: 380,404,738) Ordinary
Shares of 0.1p each 442 380
======== ========
During the year the Company issued 0.1p Ordinary shares as
follows:
-- 17,466,666 shares issued at 0.462p each on 29 September 2011 to C Crawford;
-- 311,311 shares issued at 0.462p each on 29 September 2011 to J Botros;
-- 4,444,444 shares issued at 0.462p each on 5 January 2012 to J Botros;
-- 39,000,000 shares issued at a 0.1p each to Botros, Williams,
Razzall and Moore to pay outstanding creditors.
24. Other reserves
Share premium Profit and
loss
account
GBP'000 GBP'000
At 1 August 2011 1,233 (1,246)
Shares issued less 88 -
costs
Result for the period - (291)
-------------- -----------
At 31 July 2012 1,321 (1,537)
============== ===========
25. 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 2012 Exercise price Exercise period
Grant
No.
GBP'000
8 June 2010 to 2 June
8 June 2010 5,900,000 0.75p 2017
8 June 2010 to 2 June
8 June 2010 5,900,000 1.00p 2017
8 June 2010 to 2 June
8 June 2010 5,800,000 1.25p 2017
All of the above options were outstanding at the year end. The
options had a weighted average exercise price of 1.000p and a
remaining contractual life of 4.8 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 23, during the year shares were issued to
third parties as settlement for certain liabilities to the value of
GBP39,000.
26. Cash used in operations
2012 2011
GBP'000 GBP'000
Results from operating activities (291) (775)
Finance costs 5 7
Depreciation of tangible assets 32
Amortisation and impairment of
goodwill and intangible assets 40 130
Negative goodwill - (123)
Share based payments - -
Increase in stock - -
Decrease in receivables 108 120
Decrease in payables (29) 520
-------- --------
Net cash from operations (135) (121)
======== ========
27. Analysis of net debt
2012 2011
GBP'000 GBP'000
Cash and cash equivalent per balance
sheet 18 74
Bank overdraft - -
-------- --------
Cash and cash equivalent per cash
flow statement 18 74
Bank loan due within one year (37) (87)
Bank loan over one year - -
-------- --------
Net debt (19) (13)
======== ========
28. 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 former director, charged the Group GBP31,000 (2011:
GBP30,000) in the year, for directorship services provided, via
Freedom Telemarketing Ltd, of which GBPnil (2011: GBPnil) was
outstanding at the year end.
A Moore
A Moore, a former director, was also a Designated Member of
Central Corporate Finance LLP in the year. There was no charge to
the Group (2011 GBP12,000) via this partnership for directorship
services in the year, although GBP10,000 (2011: GBP10,000) was
still outstanding at the year end.
Lord E T Razzall
Lord E T Razzall, a director, charged the Group GBP13,750 (2011:
GBP15,000) in the year, for directorship services provided, via an
entity trading as R T Associates. At the year end R T Associates
was owed GBP1,600 (2011: GBP2,850).
28. Transactions with related parties (continued)
J M Botros
J M Botros, the Company Secretary, charged the Group GBP80,000
(2011: GBP52,852) in the year, for Company Secretarial and legal
services provided. At the year end there was GBP35,000 outstanding
(2011: GBP25,810).
J S Williams
J S Williams, the general manager, charged the Group GBP51,250
(2011: GBPnil) in the year for his services provided, via FCBid
Limited, of which GBP13,023 (2011: GBPnil) was outstanding at the
year end. A charge to the Group of GBP29,160 (2011: GBPnil) for his
services was also made, via DFP consultancy, of which GBP29,160
(2011: GBPnil) was outstanding at the year end.
Issue of Equity
On 18 June 2012 the Company issued the following ordinary 0.1p
shares ("Shares") in part settlement of fees due to Company
personnel.
-- The Right Honourable Lord E T Razzall CBE, Non-Executive
Chairman, 12,000,000 Shares in settlement of GBP12,000 fees
due.
-- J M Botros, Company Secretary and Legal Adviser, 12,000,000
Shares in settlement of GBP12,000 fees due.
-- J S Williams, General Manager, 12,000,000 Shares in settlement of GBP12,000 fees due.
-- A Moore, Consultant on gambling matters, 3,000,000 Shares in
settlement of GBP3,000 fees due
The new shares were issued at 0.1p per share, a 25% premium to
the closing mid-market price of the Shares on 15 June 2012.
As referred to in Note 25, 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
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 8.
29. 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:
2012 2011
GBP'000 GBP'000
Land and buildings:
Within one year - 16
In the second to fifth years 16 -
inclusive
After five years - -
Other: - -
Within one year - -
In the second to fifth years - -
inclusive
-------- --------
After five years 16 16
======== ========
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.
30. Controlling Party
No single individual has sole control of the company.
31. Events after the balance sheet date
Prize Provision Services limited
Following a review by The Gambling Commission of the Company's
lottery operations Prize Provision Services Limited became the sole
trading entity of the lottery. Prize Provision Services Limited is
a wholly owned subsidiary of The Weather Lottery plc and is
licensed by the Gambling Commission as an External Lottery Manager.
As part of this overall restructuring Click Now Limited ceased to
have any role in the administration of the lottery, and Prize
Logistics Limited, a company which had been dormant since the end
of 2011, was placed in liquidation. The liquidation is not yet
completed but is expected to be finished early in the new year.
Soccerdome limited
As stated in previous announcements the site of the Soccerdome
five-a-side facility has been under consideration for a major
leisure development by Nottingham Council. On 27 June 2012 The
Weather Lottery plc through its wholly owned subsidiary Soccerdome
Limited advised that Nottingham City Council had confirmed its
intention to redevelop the Harvey Hadden Leisure Centre involving
an investment of over GBP13m on new state-of-the art sports
facilities. Soccerdome Limited, holds a lease until 2031 over a
central part of the site under which it operates a five-a-side
facility with eight courts.
31. Events after the balance sheet date (continued)
On 19(th) December 2012 following protracted negotiations
Soccerdome Limited and Nottingham City Council agreed on mutually
beneficial terms that it will close the football courts until
redevelopment of the site has been completed. Soccerdome Limited
will receive financial compensation together with valuable
improvements to the terms of the Lease in consideration of closing
the site for redevelopment. As part of its commitment Soccerdome
Limited intends to refurbish the five-a-side facility. The
Directors of both TWL and Soccerdome Limited believe that the
proposed development is very exciting and will substantially
increase both the business of Soccerdome and the value of its
asset. A final decision on the future of Soccerdome within the
group has not yet been taken but the development has increased both
the options and value of what the directors believe will be a very
attractive business opportunity.
32. Going Concern
The Group made a loss for the year of GBP291,000 (2011:
GBP789,000) and an EBITDA loss of GBP231,000 (2011: GBP761,000) as
a result of trading losses in its online gaming operations and
legal fees and associated costs in respect of expense
irregularities submitted by an ex-Director.
However in the second six months of the year trading losses were
reduced significantly as the Group continued to implement a cost
cutting program and further streamline its operations. During the
second half of the year the loss before tax was GBP90,000 (2011:
GBP468,000) and an EBITDA loss of GBP44,000 (2011: GBP460,000).
In addition management has undertaken changes to its online
gaming facilities in order to restrict future losses and together
with the recent temporary closure of its 5-a-side facility has
further reduced outgoings. The lottery division continues to be a
profitable part of the Group contributing to head office costs.
Given these changes made to the Group's ongoing operations,
together with the additional capital available from our supporting
shareholders, 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.
THE WEATHER LOTTERY PLC
PARENT COMPANY BALANCE SHEET
For the year ended 31 July 2012
Note 2012 2011
GBP'000 GBP'000
Fixed assets
Intangible fixed assets III 18 18
Property, Plant and Equipment III 2 2
Investments III 675 675
-------- ---------
695 695
Current assets
Debtors IV 882 717
Cash at bank and in hand 10 61
-------- ---------
892 778
Creditors: Amounts falling due
within one year V (869) (720)
-------- ---------
Net current assets 23 58
-------- ---------
Total assets less current liabilities 718 753
Creditors: Amounts falling due
over one year V (40) (32)
-------- ---------
Net assets 678 721
======== =========
Capital and Reserves
Share capital VI 442 380
Share premium VI 1,321 1,233
Profit and loss account VII (1,085) (892)
-------- ---------
Equity shareholders' funds 678 721
======== =========
The Financial Statements were approved by the Board of Directors
and authorised for issue on 10 January 2013. They were signed on
its behalf by:
A J A Flitcroft
Director
THE WEATHER LOTTERY PLC
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
For the year ended 31 July 2012
I. Accounting Policies
There are no material differences between the accounting
policies of the Group except as detailed below:
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
The separate Financial Statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate Financial Statements have been prepared in accordance
with United Kingdom accounting standards.
The Company's financial risk management policies are disclosed
in the consolidated financial statements.
II. Operating profit
The auditors' remuneration for audit and other services is
disclosed in note 7 of the consolidated financial statements.
In the current year the company had no employees other than the
Directors, who are all remunerated by the company.
III. Fixed Assets
The company's intangible assets consist of research and
development costs of GBP18,000 (2011: GBP18,000) as detailed in
note 13 of the consolidated financial statements. There was no
amortisation in the period due to the amount being considered
immaterial.
The company's tangible fixed assets consist of office equipment
with a net book value of GBP2,000 when rounded to GBP'000s.
The company's investments consist of investments in subsidiaries
of GBP675,000 (2011:
GBP675,000).
Details of the Company's subsidiaries at 31 July 2012 can be
found in Note 15 of the attached consolidated Financial
Statements.
III. Fixed Assets (continued)
Cost and net book value of Shares in subsidiary 2012 2011
undertakings
GBP'000 GBP'000
Cost as at 1 August 2011 675 14
Additions - 771
Impairment - (110)
---------------- ------------
Net Book Value at 31 July 2012 675 675
================ ============
IV. Debtors
2012 2011
GBP'000 GBP'000
Unpaid share capital -
Amounts due from subsidiary undertakings 844 542
Other debtors 18 164
Prepayments and accrued income 20 11
----------------- --------
882 717
================= ========
V. Creditors
2012 2011
GBP'000 GBP'000
Amounts falling due within one year
Amounts due to subsidiary undertakings 536 172
Bank and other borrowings 24 19
Trade creditors 233 358
Other creditors 17 141
Accruals and deferred income 59 30
-------------- --------------------
869 720
============== ====================
Amounts falling due over one year
Trade creditors 40 -
Bank and other borrowings - 32
-------------- --------------------
40 32
============== ====================
VI. Share capital and share premium account
The movements on share capital and share premium are disclosed
in notes 23 and 24 to the consolidated financial statements.
VII. Profit and loss reserves
2012 2011
GBP'000 GBP'000
Balance at 1 August 2011 (892) (579)
(Loss) for the year (193) (313)
------------------ ----------------
Balance at 31 July 2012 (1,085) (892)
================== ================
VIII. Controlling party
No single individual has sole control of the company.
IX. Related parties
The transactions set out below took place between the parent
company and its subsidiaries.
2012 2011
GBP,000 GBP,000
Management charge to:
Click Now Limited 138 25
Management charges from:
Prize Logistics Limited 25 -
Prize Provision Services
Limited 28 -
Balances included in debtors:
Devilfish Poker Limited 224 97
FCBetz Limited 550 443
Click Now Limited 65 2
Soccerdome Limited 4 -
Balance included creditors:
Prize Provision Services
Limited 536 172
Bad debts written off:
Prize Logistics Limited 49 -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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