9th Jun 2006 07:01
Chariot (UK) PLC09 June 2006 Chariot (UK) plc (the "Company" or "Chariot") Fundraising and Business Update 9 June 2006 Fundraising The Directors of Chariot, the Company behind the new charities lottery, monday,are pleased to announce a conditional fundraising of £2.59 million (afterexpenses) by way of a Placing of 53 million Placing Shares at a price of 5p perPlacing Share. The Directors intend to use the net proceeds of the Placing to: augment theworking capital position of the Company, fund the Company's short-term losses,fund re-organisation costs, and fund additional marketing and IT investment. New business plan Due to disappointing ticket sales following the launch of monday, the Companyconducted a review of the business. As a result of the key findings of thisreview, the Board has decided to implement a revised business plan for theCompany to build on the base established since monday's launch. This revisedbusiness plan focuses on ways of aligning the cost base of the Company with itscurrent sales levels and increasing the Company's revenues. The key elements ofthis revised business plan include: • developing the playmonday.com website to be the principal interface between the Company and the players of the lotteries and so reducing the costs of other customer interfaces (e.g. by telephone); • working more closely with the Charity Partners to achieve a more co-ordinated marketing effort. In addition to the Placing, discussions are taking place between the Charity Partners and the Company with a view to the Charity Partners providing some additional financial support for marketing to the Company during the next 12 months; • further investment in IT infrastructure; • significantly reducing the current cost base of the Company; • making greater use of internet marketing and utilising traditional media marketing more sparingly; • forming partnerships with media owners and using affiliate marketing to minimise costs and maximise income; and • focusing promotions to players and introducing new games. Board changes As part of the Company's restructured business, Craig Freeman, David Gray andTim Holley have agreed to step down from the Board in their respective roles asManaging Director, Administrative Director and Non-Executive Chairman withimmediate effect. Matthew Waterman has taken on the role of Chief OperatingOfficer in addition to that of Finance Director, Philip Evans (presentlyCharities Director) has taken on the additional role of Interim ManagingDirector, Peter Jones (presently Non-Executive Deputy Chairman) has taken on therole of Non-Executive Chairman and John Finan (presently a Non-ExecutiveDirector) has taken on the role of Non-Executive Deputy Chairman. Peter Jones, Chairman of Chariot, commented: "This fundraising provides Chariot with the resources with which to continue todevelop its charity lottery - monday. We are pleased with the levels of supportwe have received for the fundraising from many of our existing shareholders aswell as new investors. The Company's new Board will now focus on building on the considerable interestthat has been shown in the game. With a renewed business model and revisedexpectations management will look to stabilise and build ticket sales over thecoming months and further develop a lottery which benefits both its charitypartners and players." For further information: Peter Otero, Bell Pottinger Corporate & Financial: 020 7861 3232 Nick Naylor, Noble & Company Ltd: 020 7763 2200 Chariot (UK) plc (the "Company" or "Chariot") Fundraising and Business Update 9 June 2006 Introduction Chariot (UK) plc, the company behind the new charities lottery, monday, is todayproviding an update on its progress to date. On 2 June 2006, the Company announced that it was seeking to raise additionalfunds through a proposed placing of new Ordinary Shares at a price likely to be5p per Ordinary Share. The Directors are pleased to announce that thearrangements for the Placing have now been finalised with a placing price of 5pper Ordinary Share and the Company is proceeding with a conditional fundraisingof approximately £2.59 million (after expenses) by way of the Placing, which isbeing carried out by Noble on behalf of the Company. The Placing is conditional, inter alia, upon the passing of certain resolutionsby the Shareholders at the Extraordinary General Meeting. The Notice of EGM,which is to be held at 10 Snow Hill, London EC1A 2AL at 9.00 a.m. on 3 July2006, is set out in a circular to be posted to Shareholders today (the "Circular"). Copies of the Circular will be available from Noble & Company Limited, 120Old Broad Street, London, EC2N 1AR for a period of one month after Admission. The Placing is also conditional, inter alia, on the Company receiving advanceassurance from HM Revenue & Customs that the Placing Shares will rank asqualifying for the purposes of the Enterprise Investment Scheme and VentureCapital Trust legislation and on Admission of the Placing Shares to trading onAIM occurring by 6 July 2006, or such later date as the Company and Noble mayagree. The Company has received irrevocable undertakings from Shareholders who hold atotal of 5,528,244 Ordinary Shares (including 2,060,538 Ordinary Shares held bymembers of the Board) to vote in favour of the Resolutions. These undertakingsare in respect of 5,528,244 Ordinary Shares representing approximately 34.63 percent. of the Existing Ordinary Shares. Terms and expressions used in this announcement are detailed in Appendix 1 . Background on the Company and "monday - the charities lottery" Chariot was launched in October 2005 as a new venture to market and retailweekly society lotteries on behalf of a diverse range of Charity Partners. TheCompany raised a total of £14.0m (before expenses), primarily to fund themarketing and promotion of the launch of Chariot's Lottery and to fund theCompany's working capital requirements and the build of its website. Chariot launched monday, on 20 April 2006 and the first draw took place on 8 May2006. Five draws have been held to date with a total of 1.98 million ticketssold. A total of approximately £615,000 has been raised for those CharityPartners who participated in each of these draws and over 38,000 winners havebeen created. monday's website is www.playmonday.com. Progress to date The net proceeds of £12.8 million raised to date by the Company have been spenton the following: • funding the marketing and promotion of the launch of monday; • investment in the IT infrastructure of the Company; • paying Suzanne Counsell a total of £250,000 for the intellectual property associated with Chariot's lottery concept; and • funding the Company's working capital requirements and ongoing running costs. Unfortunately, ticket sales for the first five draws have fallen significantlyshort of the Board's expectations and, as a result, revenues generated by theCompany since the launch of monday have been significantly less than projected.The Board had anticipated a minimum of 2 million ticket sales per week. mondayhas achieved an average of 396,000 ticket sales over the first five draws. TheDirectors believe there are a number of reasons for the lower than anticipatedticket sales including: • the marketing campaign by the Company to promote monday has not been as effective in delivering ticket sales as anticipated by the Board when it was formulating its business plan; and • late amendments to the monday website adversely impacted the website's functionality, which resulted in a "slowing" of the website and in potential players being unable to log on and register as players in the first draw. The Directors believe that a high level of awareness for monday has been createdwith the public and, on the whole, it has received positive feedback in thepress. The first five draws have generated a total of approximately £615,000 forthose Charity Partners who have participated in these draws and approximately£1.07 million in prize money has been paid out to over 38,000 players. TheCompany currently has over 200,000 registered users and there was, at 6 June2006, approximately £1.235 million deposited in customers' electronic wallets.These funds are held in an account on trust for the benefit of players andcharities and are not at risk in the event that the Company is unable to tradein the future. Independent review of the Company and next steps As a result of the disappointing ticket sales following the launch of monday,the Board has concluded that the income generated cannot sustain the Company'soriginal business plan and it asked Peter Jones and John Finan, bothnon-executive directors of the Company, to conduct a review of this plan andpossible alternatives. As part of this review, two independent experts havereviewed the Company's marketing and IT. The review included a detailed analysisof current levels of ticket sales and IT support, and an analysis of theresources required to stabilise the Company's sales and to provide a platformfor the Company to move forward. As a result of the key findings of the business review, the Board is announcingit has decided to implement a revised business plan for the Company to build onthe base established since monday's launch. This business plan focuses on waysof aligning the cost base of the Company with its current sales levels andincreasing the Company's revenues. The key elements of this revised businessplan include: • developing the playmonday.com website to be the principal interface between the Company and the players of the lotteries and so reducing the costs of other customer interfaces (e.g. by telephone); • working more closely with the Charity Partners to achieve a more co-ordinated marketing effort. In addition to the Placing, discussions are taking place between the Charity Partners and the Company with a view to the Charity Partners providing some additional financial support for marketing to the Company during the next 12 months; • further investment in IT infrastructure; • significantly reducing the current cost base of the Company; • making greater use of internet marketing and utilising traditional media marketing more sparingly; • forming partnerships with media owners and using affiliate marketing to minimise costs and maximise income; and • focusing promotions to players and introducing new games. Critical to this revised business plan is the raising of further permanentcapital for the Company and consequently the Company is seeking to raise £2.59million (after expenses) through the Placing. Board changes As part of the Company's restructured business, Craig Freeman, David Gray andTim Holley have agreed to step down from the Board in their respective roles asManaging Director, Administrative Director and Non-Executive Chairman witheffect from 8 June 2006. Matthew Waterman has taken on the role of ChiefOperating Officer in addition to that of Finance Director, Philip Evans(presently Charities Director) has taken on the additional role of InterimManaging Director, Peter Jones (presently Non-Executive Deputy Chairman) hastaken on the role of Non-Executive Chairman and John Finan (presently aNon-Executive Director) has taken on the role of Non-Executive Deputy Chairman.The Board of the Company now consists of Peter Jones (Non-Executive Chairman),John Finan (Non-Executive Deputy Chairman), Matthew Waterman (Chief OperatingOfficer and Finance Director), Philip Evans (Interim Managing Director andCharities Director) and Suzanne Counsell (Non-Executive Director). It is the Board's intention to appoint a permanent Managing Director in duecourse. Craig Freeman and David Gray entered into compromise agreements with the Companyon 8 June 2006 pursuant to which their employment will terminate conditionalupon Admission. Until that time they will continue to be employed by theCompany on their existing terms. Under these compromise agreements, CraigFreeman and David Gray will be entitled to payments of £132,000 and £41,000respectively. These sums will be reduced by the net salary received by CraigFreeman and David Gray from 1 June 2006 and prior to their respective employmentterminating. Tim Holley will receive no payment in connection with hisresignation. The options over, in aggregate, 1,528,250 Ordinary Shares held byCraig Freeman, David Gray and Tim Holley will lapse, in the case of Tim Holley,upon his resignation, and in the case of Craig Freeman and David Gray, upon thetermination of their employment. Reasons for the Placing and use of proceeds The Directors believe that, given the Company's requirements for additionalfinancing, the Placing is the most appropriate way to raise additional funds forChariot. The Directors consider that the Placing provides greater certainty thanother available means of raising additional funds and minimises transactionalcosts. The Directors are confident that by reducing the Company's existing costbase and developing the level of ticket sales generated to date they can buildChariot into a successful and profitable enterprise. The Company is proposing to raise £2.59 million (after expenses) by the issue ofthe Placing Shares at the Placing Price to institutional and other investors.The Placing Shares will, when issued, represent approximately 74.7 per cent. ofthe Company's enlarged ordinary share capital following the Placing and theNoble Subscription and the Placing Price represents a discount of approximately76.7 per cent. to the closing mid-market price of an Existing Ordinary Share of21.5p on 1 June 2006, the date prior to the announcement which detailed that thePlacing was likely to be carried out at 5p per Ordinary Share. The Placing has been arranged by Noble for which they are entitled to acommission of £100,000 which they will apply in the subscription of 2,000,000Ordinary Shares at the Placing Price immediately upon Admission. Under the Placing, John Finan (Non-Executive Deputy Chairman) and Peter Jones(Non-Executive Chairman) have each conditionally subscribed for 5,000,000Placing Shares at the Placing Price, and Suzanne Counsell (Non-ExecutiveDirector) has conditionally subscribed for 1,000,000 Placing Shares at thePlacing Price. On completion of the Placing, John Finan will hold 5,373,750Ordinary Shares representing 7.6 per cent. of the Company's enlarged ordinaryshare capital following Admission, Peter Jones will hold 5,000,000 OrdinaryShares representing 7.0 per cent. of the Company's enlarged ordinary sharecapital following the Placing and the Noble Subscription and Suzanne Counsellwill hold 2,665,000 Ordinary Shares representing 3.8 per cent. of the Company'senlarged ordinary share capital following the Placing and the NobleSubscription. The Placing is expected to raise approximately £2.59 million (after expenses)for Chariot. The Directors intend to use the net proceeds of the Placing to: • augment the working capital position of the Company; • fund the Company's short-term losses; • fund the re-organisation costs to be incurred by Chariot as a result of implementing the revised business plan; and • fund additional marketing and IT investment. The Directors believe that it is essential that further permanent capital beraised by the Company to enable it to continue to trade. If the Placing does notbecome unconditional the Directors may have no alternative but to seekimmediately the protection of a formal insolvency procedure (such as anadministration or liquidation) under the Insolvency Act 1986. On the basis of the net proceeds from the Placing, assuming an average level ofticket sales (approximately 400,000 per week) and the successful implementationof the Company's revised business plan (including the consequent costreductions), the Directors, having made due and careful enquiry, are of theopinion that, in the absence of unforeseen circumstances, the Company will havesufficient working capital available for its present requirements, that is, forat least 12 months following Admission. Shareholders should note that shouldticket sales fall below the Directors' current expectations and/or the revisedbusiness plan (including the consequent cost reductions) not be implementedsuccessfully within the anticipated time-frame, the Company may not havesufficient working capital for its present requirements, that is, for at least12 months following Admission. In such circumstances, there is no guarantee thatthe Company would be able to raise further finance to support its ongoingworking capital requirements. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that, following the passing of theResolutions at the EGM, dealings in the Placing Shares will commence on oraround 6 July 2006. Related Party Transactions Peter Jones has agreed that he will subscribe for 5,000,000 Placing Shares at anaggregate subscription price of £250,000. Peter Jones is a director and istherefore a related party for the purposes of the AIM Rules. Consequently theJones Placing constitutes a related party transaction for the purposes of theAIM Rules. John Finan has agreed that he will subscribe for 5,000,000 Placing Shares at anaggregate subscription price of £250,000. John Finan is a director and istherefore a related party for the purposes of the AIM Rules. Consequently theFinan Placing constitutes a related party transaction for the purposes of theAIM Rules. Suzanne Counsell has agreed that she will subscribe for 1,000,000 Placing Sharesat an aggregate subscription price of £50,000. Suzanne Counsell is a directorand is therefore a related party for the purposes of the AIM Rules. Consequentlythe Counsell Placing constitutes a related party transaction for the purposes ofthe AIM Rules. The Directors (with the exception of Peter Jones in respect of the JonesPlacing, John Finan in respect of the Finan Placing and Suzanne Counsell inrespect of the Counsell Placing) consider, having consulted with Noble, theterms of the Jones Placing, the Finan Placing and the Counsell Placing to befair and reasonable insofar as the Shareholders are concerned and in the bestinterests of the Company. Extraordinary General Meeting The Placing is conditional, inter alia, on the passing of the Resolutions. Atthe end of the Circular being despatched to Shareholders today is a noticeconvening the EGM of the Company, to be held at 10 Snow Hill, London, EC1A 2ALat 9.00 a.m., on 3 July 2006. Appendix 1- Definitions The following definitions apply throughout this announcement and in theaccompanying form of proxy unless the context requires otherwise: "Admission" the admission of the Placing Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules "AIM" AIM, a market operated by the London Stock Exchange "AIM Rules" the rules for AIM companies and their nominated advisers published by the London Stock Exchange from time to time, in relation to AIM traded securities "Charity Partners" the 70 registered charities who have, as at the date of this document, signed contractually binding agreements with the ELM to participate in monday "Chariot's Lottery" the lotteries run and promoted by the Charity Partners through, inter alia, an internet portal provided by Chariot "Counsell Placing" the subscription by Suzanne Counsell for 1,000,000 Placing Shares "Directors" or "Board" the directors of the Company "EGM" extraordinary general meeting of the Company to be held at 10 Snow Hill, London, EC1A 2AL at 9.00 a.m. on 3 July 2006 (or any adjournment thereof) "Existing Ordinary Shares" the 15,964,250 Ordinary Shares in issue as at the date of this announcement "Finan Placing" the subscription by John Finan for 5,000,000 Placing Shares "Jones Placing" the subscription by Peter Jones for 5,000,000 Placing Shares "London Stock Exchange" London Stock Exchange plc "monday" the registered name for the lottery operated on the Charity Partners' behalf by the ELM "Noble" Noble & Company Limited, the Company's nominated adviser and broker, which is authorised and regulated by the Financial Services Authority and has its registered address at 76 George Street, Edinburgh, EH2 3BU "Noble Subscription" the proposed subscription by Noble for 2,000,000 new Ordinary Shares at the Placing Price "Ordinary Shares" ordinary shares of 1p each in the capital of the Company "Placing Price" 5p per Placing Share "Placing Shares" 53,000,000 new Ordinary Shares to be allotted and issued to certain institutional and other investors (including certain Directors) pursuant to the Placing "Placing" the proposed placing by Noble, on behalf of the Company, of the Placing Shares at the Placing Price details of which are set out in the Circular "Resolutions" the resolutions to be proposed at the EGM "Shareholders" the persons who are registered as holders of Ordinary Shares from time to time This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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