4 Oct 2013 10:30
The Weather Lottery plc
("TWL" or the "Company")
Trading Update, Strategic Review, Disposal of Devil Fish
And Issue of Equity
4 October 2013
The Board of Directors of TWL (the "Board") (AIM:TWL), the AIM quoted lottery, gaming and leisure company is pleased to provide a trading update to shareholders, together with details of the proposed disposal of a subsidiary.
Trading Update
The financial year to 31 July 2013 saw the acquisition of Poseve Limited ("Poseve") during May. All divisions (including the new Gaming & Payments Software division built around Poseve) (collectively all subsidiaries and the Company, the "Group"), with the exception of the On-Line Gambling division (principally consisting of Devil Fish Poker Limited ("Devil Fish")), made a positive contribution before central costs. Overall TWL expects to report results slightly ahead of expectations for the year to 31 July 2013 before a write down in the value of Devil Fish and a loss after said write down.
Since the year end the Gaming & Payments Software division has seen a positive start to the year, boosted by the subsequent acquisition of Sormelle Limited, announced on 13 September 2013. This division is currently generating increasing revenues through the provision of on-line payment systems for Ladbrokes, and other gaming and non-gaming merchants in a number of jurisdictions has seen an encouraging growth in use.
The Lottery division is currently in the process of having a major overhaul of its systems and software, including the launch of a new website (www.theweatherlottery.com) through which players can now play online. The Group expects to initiate a vigorous marketing campaign and invest in new business development staff in order to more than reverse the 10% decline in sales in the year to 31 July 2013.
The Company expects to announce its audited results for the year to 31 July 2013 in mid December.
Strategic Review
The Board has conducted a strategic review of the Group's operations, which concluded that the Lottery and Gaming & Payment Software divisions will be the focus for the Group moving forward.
The Soccerdome Limited ("Soccerdome"), a five-a-side football facility in Nottingham, is currently closed while a broader re-development of the site takes place (see the Company's announcements of 27 June 2012 and 11 January 2013). The Board has concluded that Soccerdome will be held with a view to either an outright sale of the business or finding a suitable joint venture partner for when the site has been redeveloped. A number of options are currently being investigated. Soccerdome made a small profit for the year to 31 July 2013.
The Board has concluded that the On-Line Gambling division does not have sufficient critical mass to provide potential for attractive future returns. Activity in the FC Betz sports betting subsidiary has now ceased following a final wind down during the year to 31 July 2013. Activity levels at Devil Fish also saw further falls, especially during the second half of the year to 31 July 2013. As a result the Board has decided to sell Devil Fish. Devil Fish made a small operating loss for the year to 31 July 2013 on sales of circa £35,000, with net assets of circa £57,000.
Proposed Disposal of Devilfish Poker
The Board has agreed to sell Devil Fish to Jeff Williams, the former managing director of the Group's On-Line Gambling subsidiaries. Mr Williams will pay £1, with Devil Fish also assuming responsibility for items which would otherwise have resulted in a circa £60,000 charge to the Group's Statement of Comprehensive Income during the financial year to 31 July 2013. In addition, Mr Williams will terminate his consultancy agreement (as announced 24 May 2013) with the Group with immediate effect. The disposal will result in a write down of circa £300,000 in the book value of Devil Fish in the year to 31 July 2013, but in combination with the ceasing of Mr Williams' consultancy contract, will produce a positive contribution of circa £100,000 for the current financial year. The transaction is expected to complete next week.
The disposal constitutes a related party transaction under the AIM Rules, as Mr Williams was a director of certain subsidiaries of TWL and a substantial shareholder during the past 12 months. The Board consider, having consulted with Allenby Capital Limited, the Company's nominated adviser, that the terms of the sale of Devil Fish to Mr Williams are fair and reasonable insofar as Shareholders are concerned.
Issue of Equity
The Company announces that it has issued 6,849,315 ordinary 0.1p shares ("Ordinary Shares"), each issued at a value of 0.146p per New Ordinary Share, the average of the 5 day closing mid-market price of the Ordinary Shares for the five business days to 30 September 2013. These are in settlement of certain liabilities of the Company.
An application will be made for admission of the 6,849,315 new Ordinary Shares to trading on AIM with effect from 11 October 2013. Following the admission of the 6,849,315 new Ordinary Shares, the Company will have 1,127,178,043 Ordinary Shares in issue, all with equal voting rights. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company.
Chairman's Comment
Chairman Lord Tim Razzall commented, "We believe the Group has made significant progress since May. The acquisitions of Poseve and Sormelle have created a new exciting division of activity that is already producing a positive contribution, both directly and in terms of reinvigorating our traditional lottery business. The Board believes that both the Lottery and Gaming and Payments Software divisions offer significant growth potential for the future."
For further information contact:
The Weather Lottery PLC begin_of_the_skype_highlighting end_of_the_skype_highlighting 020 7618 9000
Philip Jackson, CEO
Website www.theweatherlotteryplc.com
Allenby Capital Limited (Nomad & Broker) begin_of_the_skype_highlighting
Nick Harriss/Nick Athanas/James Reeve 020 3328 5656end_of_the_skype_highlighting