SJH.L Regulatory News (SJH)

The Weather Lottery plc

("TWL" or the "Company")

Half-Yearly Report for the period ended 31 January 2013

30 April 2013

Chairman's Statement

The half year figures to 31 January 2013 show that each of the three trading subsidiaries have made a small profit. However after taking account of the costs associated with the listing on AIM and the additional costs associated with the Gambling Commission investigation culminating in the decision of the Review Panel on 10 January 2013, to which I referred to in my last statement, TWL has made a loss for the period of £88,000 (£41,000 EBITDA).

Prize Provision Services Limited, the holder of the Gambling Commission licence and operator of the core Weather Lottery business, made a net contribution before overheads of £138,000. The new conditions applied to the licence by the decision of the Gambling Commission Panel have been complied with so far. The final conditions will be fulfilled by early June within the time limits specified when the Lottery should be fully compliant under the Law and the Commission's Code of Practice. We are indebted to J Williams, J Botros and consultant G Caswell who have managed the installation of new procedures over the past months. The Company reserves its position with regard to the possible claims against former Directors in respect of the historic breaches of both law and the code of practice which the Gambling Commission Panel found to have occurred in the past, and letters before action have been sent to the previous directors. The insurance company providing directors and officers cover have been notified of this potential substantial claim . The theft and misuse of funds (as originally announced on 14 January 2011), and amounting to around £200,000 in total over a five year period, have caused working capital levels within the group to be very constrained, and that situation continues despite the efforts and financial commitments of the management. The Board believes that the Lottery operation can now be expanded with the confidence that it is to be fully compliant.

Soccerdome Limited the five-a-side operator made a small profit of £19,000 which takes account of the compensation package agreed with the Nottingham City Council. This package includes provision for an extended lease on the re-opening of the facility as part of the new £20million development by the City Council in early 2015. On re-opening with the long lease the Board believes the site will represent a substantially enhanced capital asset with equally significant earning potential.

Devilfish Poker Limited has made a profit of £14,000. Costs are now under control although as I stated before it does not form part of the future strategy of the business.

The Board of TWL have been actively evaluating and progressing a number of potential transactions since the end of the period covered by these accounts. The Board has concluded that the current activities of the Company are insufficiently large to take full advantage of the Company's AIM quotation. One of these negotiations has now reached an advanced stage and we would hope to announce something shortly.

The Right Honourable Lord E T Razzall CBE

Chairman

For further information contact:

The Weather Lottery PLC 01905 621123  

Website www.theweatherlotteryplc.com

Allenby Capital Limited (Nomad)

Nick Harriss/Nick Athanas/James Reeve 020 3328 5658

SVS Securities (Broker)

Alex Brearley 020 7638 5600  

CONDENSED CONSOLIDATED INCOME STATEMENT

All results derive from continuing operations.

There are no recognised income or expenses other than the loss for the period.

CONDENSED CONSOLIDATED BALANCE SHEET

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE INTERIM FINANCIAL REPORT

1. Accounting policies

Basis of Accounting and Preparation

These interim results for the six months ended 31 January 2013 have been prepared using the historical cost and fair value conventions on the basis of the accounting policies set out below. This interim report has been prepared in accordance with IFRS's, it is not in accordance with IAS 34 and therefore is not fully compliant with IFRS.

These interim results have been prepared under the historical cost convention. Areas where other bases are applied are identified in the accounting policies below.

The financial information set out in this interim report does not constitute statutory accounts as defined in the Companies Act 2006. The Company's statutory financial statements for the year ended 31 July 2012 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified, although it did include a reference to disclosures concerning Going Concern which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

This announcement contains certain forward-looking statements with respect to the operations, performance and financial position of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of the preparation of this announcement and the Company undertakes no obligation to update these forward-looking statements. Nothing in this Interim Financial Report should be construed as a profit forecast.

The results for the six months ended 31 January 2013 were approved by the Board on 29 April 2013.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 January and 31 July each year. Control is achieved where the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities.

Business combinations

The purchase method of accounting is used for all acquired businesses as defined by IFRS3 - Business Combinations.

As a result of the application of the purchase method of accounting, goodwill is initially recognised as an asset being the excess at the date of acquisition of the fair value of the purchase acquisition consideration plus directly attributable costs of acquisition over the net fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries acquired.

Goodwill arising on acquisitions before the date of transition to IFRS is subject to alternative policies for valuation as described below.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Intangible assets

An intangible asset is considered identifiable only if it is separable or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

For intangible assets with finite useful lives, amortisation is calculated so as to write off the cost of an asset less its estimated residual value over its economic life as follows:

Software development - 10 years

Website development costs - 3 years

In addition to amortisation, at each balance sheet date the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recognised at the amount of proceeds received net of costs directly attributable to the transaction. To the extent that those proceeds exceed the par value of the shares issued they are credited to a share premium account.

Trade payables

Trade payables are not interest-bearing and are stated at their nominal value.

Goodwill

Goodwill arising on consolidation represents the excess cost of acquisition over the group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Goodwill arising on acquisition before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Revenue recognition

Revenue represents takings received for entry into the prize draws. The revenue is recognised upon receipt of the money for the period that the draws take place, net of VAT and other sales-related taxes.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The charge for taxation is based on the taxable profit or loss for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group's taxable profits and its results as stated in the financial information that arises from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial information.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the reversal of the underlying timing differences can be deducted.

Deferred tax is measured at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis.

2. Earnings per ordinary share

The calculation of basic earnings per share is based on the results and weighted average number of ordinary shares as follows:

The fully diluted number of ordinary shares includes 17.6 million options, to subscribe for Ordinary shares of 0.1p each, which were issued in June 2010. None of these options have been exercised in the period.

3. Share capital

4. Cash used in Operations

5. Interim Financial Report

The unaudited interim financial report, which is the responsibility of the directors and was approved by them on 29 April 2013 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.

This report is available on The Weather Lottery's website at www.theweatherlotteryplc.com. Copies are available from the Company at its registered office:

The Old Rectory, Main Road, Ombersley, Droitwich, WR9 0EW