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Weather Lottery(The) (BOX)

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Monday 20 June, 2011

Weather Lottery(The)

Trading Statement

RNS Number : 6716I
Weather Lottery PLC (The)
20 June 2011
 



WEATHER LOTTERY PLC

 

('TWL or the 'Company')

 

TRADING UPDATE

20 June 2011

 

The last eighteen months have seen significant changes to the Company with a number of encouraging and some less than helpful developments. The Board would like to take this opportunity to update shareholders on the Company's positioning and current trading and prospects.

FC Betz

Last summer, under the leadership of its then Chief Executive, Keith Milhench, the board announced its intention to expand into the online gaming sector, under the brand name "FC BETZ.com", to complement its well established lottery management business.  From July through to December it entered into long term contracts with a number of football league clubs  to provide a full package of on-line gaming products to the clubs and their supporters.  After an initial build-up through a physical presence in club stadia, it became apparent that FC Betz did not have full access to all the clubs' databases, thus severely restricting the ability of FC Betz to build its database of active members. Club sponsorship costs of approximately £177,000, in addition to operating losses of almost £90,000,  were fully expensed in the first half rather than being capitalised since the current database of over 3,000 active signed up members was not considered likely to grow significantly in the near term. Negotiations are in progress to terminate the relevant contracts which it is anticipated should be completed before the Company's year-end. The Directors believe that these negotiations should result in sponsorship costs in the second half being considerably reduced and possibly eliminated, although this might necessitate the institution of legal proceedings. However, given the competitive on-line betting marketplace, the future of FC Betz subsidiary is not perceived as core to the Group's operations.  No value has been attributed to the current database in the Group balance sheet.

Lottery Division

Following the resignation of the Mr Milhench, the former Chief Executive, in September 2010 the board commenced a review of the core lottery operations. These have been streamlined for increased efficiency and greater security and operating costs have been cut significantly. Contracts with fundraisers have been renegotiated with an amended prize pool structure leading to increased fundraiser and administration payments from the fourth quarter of the current financial year.  As a result, monthly profit contributions from lottery operations which have already improved following reductions to overheads already implemented in H1 are expected to further increase significantly from the fourth quarter.  With this expected increased contribution and its long established brand, the division is considered by the board to be a valuable asset to TWL.

Soccerdome

The board recently announced the acquisition of Soccerdome Limited, ("Soccerdome") the owner and operator of an eight pitch five-a-side facility in Nottingham. Planned improvements to pitch surfaces and provision of roof cover to four of the pitches should increase pitch utilisation and result in an increased contribution to Group profitability. The work, planned to allow at least half the pitches to remain open for use during implementation, will start shortly and is expected to be finished by early autumn.  It is hoped that this will be the first of a number of such five-a-side facilities to be run by Soccerdome. The board is excited by the prospects for development of this subsidiary.

Devil Fish Poker

In December 2010 TWL purchased Devil Fish Poker Limited, the on-line poker and gambling site. This business has shown a largely expected small overall operational loss since acquisition. Recent overall losses in the casino operation due to a number of regular high transaction wagers have now been redressed and the casino business is now making a small net contribution. The on-line poker market remains an area of considerable opportunity. The board is looking at ways to move the business into consistent profitability on the basis of its present operations and will review options available from time to time.

Outlook

The Board believes that the measures underway in relation to the FC Betz subsidiary and the improved performance from the core lottery division and the on-line poker and gambling sites, when taken with the acquisition of Soccerdome (with its cross marketing opportunities to the lottery), provide TWL with a sound basis for a return to profitability. With minimal bank debt, TWL is well positioned to seek further complimentary acquisitions to improve shareholder value.

Admission of New Shares

Further to the announcement of 10 June 2011, an application has been made to admit the 78,000,000 new ordinary 0.1p shares to trading on AIM with effect from 21 June 2011.

 

---ENDS---

 

For further information contact:

 

The Weather Lottery PLC

Ross White

Website www.theweatherlottery.com

 

01777 818036

Religare Capital Markets (Nomad)

020 7444 0800

Nick Harriss/Peter Trevelyan-Clark

 


SVS Securities (Broker)

020 7638 5600

Ian Callaway/Alex Mattey


 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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