26th Jul 2006 07:01
Chariot (UK) PLC26 July 2006 Chariot (UK) plc26 July 2006 Chariot (UK) plcUnaudited Preliminary Results for the year ended 30 April 2006 Chariot (UK) plc ("Chariot" or "the Company") announces its preliminary resultsfor the year ended 30 April 2006. Highlights: • Pre IPO funding round completed in October 2005, raising £4.4 million (before expenses) at 100p per share (as adjusted for the bonus issue in November 2005) • Placing and admission to AIM on 6 February 2006, raising £9.6 million (before flotation expenses of £936,000) at 115p per share • On-line lottery "monday - the Charities Lottery" launched on 21 April 2006, with the first draw completed on 8 May 2006 • Reorganisation and cost reduction exercise initiated in June 2006 following disappointing initial sales • Secondary placing on 6 July 2006 raising £2.6 million (before expenses) at 5p per share • First £1 million of funds raised for Chariot's charity partners completed on 17 July 2006 • Over 200,000 active registered customers as at 24 July 2006 Peter Jones, non-executive chairman, commented: "The Company worked hardthrough the year under review, in line with its original business plan, toposition the Company for the launch of its alternative charity lottery. However,disappointing ticket sales in the first few months of operation following theyear end have necessitated a radical overhaul of the business plan, theCompany's operations and cost base. "The leaner business that has emerged from the review is aiming to be a virtualon-line operator of charity lotteries and other games. The Company is makingfurther investment in IT and marketing, in order to consolidate its currentmarket, generate new customers and increase sales with the aim of taking theCompany into profitability in the near term. Although the Company faces anumber of significant challenges in executing this revised business plan, webelieve that the concept of an alternative lottery which is more charityfriendly is still a compelling proposition for both charities and the lotteryplaying public." ENQUIRIES Chariot (UK) plc Noble & Company Limited Bell PottingerTel: 0870 380 2121 Tel: 0207 763 2200 Tel: 020 7861 3864 Stuart Handley, Communications Director John Llewellyn - Lloyd Peter Otero Chariot (UK) plc Chairman's statement I am pleased to present to you to Chariot (UK) plc's results for the financialyear end 30 April 2006 and the first since our admission to AIM in February2006. Our primary objective this financial year was to create and then launch analternative national lottery designed to deliver a vital new source ofunrestricted funding to the charity sector. The legislation permitting 'society lotteries' has been in place for many years.In general, charities have been unable to take full advantage of thisopportunity because the investment in marketing and infrastructure needed to runa lottery profitably has made it simply too risky to consider. We wanted tocreate a game that would change that. Our first game monday - the Charities Lottery, was launched to widespread mediasupport on 21 April 2006 with sales for our first draw on 8 May starting on 24April. Chariot markets and retails the monday lottery on behalf of 70 charity partnerswho represent a wide range of causes. The charities are a carefully consideredmix of large national or international as well as smaller organisations. For the charities, we have made it possible for them to benefit from lotterieswithout significant risk or investment. For players, monday gives them muchbetter chances of winning and the ability to choose which charity receives theirmoney. Our AIM admission in February provided us with the all important investment tofund the ongoing operation of the business, the development of the game and itswebsite www.playmonday.com, as well as the marketing programme for its launch. With net assets of £5.4 million as at 30 April 2006, the Company had at thatpoint, in line with its business plan, already expended a significant amount ofthe net funds raised in the year on IT infrastructure, running costs and mostsignificantly, marketing and advertising. Furthermore, the Company wascommitted to continuing its high profile advertising campaign, which ran fromlate April until 30 May, and which would consume substantially all of theCompany's remaining working capital during May. The Company's strategy was predicated on the need to generate a high level ofawareness of the new lottery proposition. This was expected to drive largenumbers of ticket sales and in turn generate attractive jackpot prizes. However, all did not go to plan and the Company has faced significant challengessince the year end. In particular ticket sales for our first draw on 8 May 2006and subsequent draws have been very disappointing. Ticket sales have totalled£3,441,000 over the first 12 draws to 24 July 2006, averaging £286,750 per draw. We believe this was caused by: a misdirected marketing campaign which did notclarify our proposition to potential players; too heavy a reliance on high costoffline rather than affiliate or online marketing; and, an inappropriate focuson a traditional retail lottery model for the launch with its high upfrontcosts. This situation was then compounded by short-term technical problems onour first draw date that limited the number of customers able to play. Nevertheless, in a relatively short period of time, the Company has built abusiness; formed critical partnerships with charities and technical providers;designed and launched a new national online game and established a consumerbrand. We believe we have achieved a great deal in relatively short order. Chariot (UK) plc Chairman's statement (continued) Since launch we have secured over 200,000 registered players who, as at 24 July2006, had contributed over £1 million to our charity partners. In purely onlineterms, Chariot has a current user base that is substantial when compared withother gaming sites. The Board has taken prompt action to address the challenges facing the business.It has secured additional funding; cut costs and staffing; restructured thebusiness and focused activities predominantly online. In addition, we areexploring new sales channels for the game through potential affiliate or partnermarketing both on and offline. For now we are completely focused on making a success of monday. While we haveraised funds to support the Company's restructuring and marketing plan andthereby secured our short term future, we must see significant and sustainedincreases in our ticket sales for the Company to generate operating profits. This is an exciting time for lotteries, gaming and the internet and Chariotintends to play its part in capitalising on this and leading innovation in theinterest of raising funds for charity and returns for our shareholders. Peter JonesChairman26 July 2006 Chariot (UK) plc Profit and loss account for the year ended 30 April 2006 Note 2006 2005 Unaudited £'000 £'000 Administrative expenses (7,983) (357) Operating loss (7,983) (357) Interest receivable and similar income 126 -Interest payable and similar charges (1) - Loss on ordinary activities before taxation (7,858) (357) Taxation on loss on ordinary activities 5 - - Loss on ordinary activities after taxation (7,858) (357) Loss per share- Basic and diluted (pence) 3 (103.9)p (12.0)p All results are derived from continuing operations. There are no recognised gains and losses other than those shown in the profitand loss account above. Chariot (UK) plc Balance sheet at 30 April 2006 2006 2006 2005 2005 Unaudited Unaudited £'000 £'000 £'000 £'000 Fixed assets Intangible assets 223 -Tangible assets 901 2 1,124 2 Current assetsDebtors 3,402 10Cash in bank and investments 2,788 3 6,190 13Creditors: amounts fallingdue within one yearCreditors 1,860 624 Net current assets/ (liabilities) 4,330 (611) 5,454 (609) Capital and reservesShare capital 160 -Share premium reserve 8,583 85Special reserve 2,186 -Profit and loss reserve (5,475) (694) Shareholders' Funds/(Deficit) 5,454 (609) Chariot (UK) plc Cash flow statement for the year ended 30 April 2006 Note 2006 2005 Unaudited £'000 £'000 Net cash outflow from operating activities 6 (9,144) (118) Returns on investment and servicing of finance 7 125 -Capital expenditure and financial investment 7 (1,178) (1) Cash outflow before use of liquid resources and financing (10,197) (119) Management of liquid resources 7 (1,788) - Financing 7 12,982 126 Increase in cash 997 7 Chariot (UK) plc Notes forming part of the preliminary announcement for the year ended 30 April2006 1 Accounting policies The financial information set out in this preliminary announcement has beenprepared under the historical cost convention and in accordance with applicableaccounting standards. The following principal accounting policies have beenapplied: Depreciation Depreciation is provided to write off the cost, less estimated residual values,of all tangible fixed assets evenly over their expected useful lives. It iscalculated at the following rates: Leasehold buildings - 2% per annum straight line or evenly over the length of the lease, whichever is the greaterPlant and machinery - 20% per annum straight lineComputer equipment - 20% per annum straight line Leased assets All leases are treated as operating leases. Their annual rentals are charged tothe profit and loss account on a straight-line basis over the terms of thelease. Externally acquired intangible assets Externally acquired intangible assets are initially recognised at cost andsubsequently amortised on a straight-line basis over their useful economiclives. The amortisation expense is included within the administrative expensesline in the profit and loss account. The significant intangibles recognised by the company, their useful economiclives and the methods used to determine the cost are as follows: Intangible asset Useful economic life Valuation method Intellectual property rights 3 years Cost Financial instruments Financial instruments comprise cash and short-term deposits and are measuredinitially and subsequently at cost. Liquid resources For the purpose of the cash flow statement, liquid resources are defined as cashon short-term deposits. Pension costs Contributions to defined contribution pension schemes are charged to the profitand loss account in the year to which they relate. Chariot (UK) plc Notes forming part of the preliminary announcement for the year ended 30 April2006 (continued) Deferred taxation Deferred taxation is provided in full in respect of taxation deferred by timingdifferences between the treatment of certain items for taxation and accountingpurposes. The recognition of deferred tax assets is limited to the extent that the companyanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are not discounted. Share-based payments In preparing the preliminary announcement, the directors have chosen to earlyadopt FRS20 Share-based payment. This has had no impact on the balance sheet orresults for the previous financial period as all share options were granted inthe year ended 30 April 2006. Where share options are awarded to employees and officers of the company, thefair value of the options at the date of grant is charged to the profit and lossaccount over the vesting period. Non-market vesting conditions are taken intoaccount by adjusting the number of equity instruments expected to vest at eachbalance sheet date so that, ultimately, the cumulative amount recognised overthe vesting period is based on the number of options that eventually vest.Market vesting conditions are factored into the fair value of the optionsgranted. As long as all other vesting conditions are satisfied, a charge ismade irrespective of whether the market vesting conditions are satisfied. Thecumulative expense is not adjusted for failure to achieve a market vestingcondition. The credit entry for the charge is taken to the profit and lossreserve and reported in the reconciliation of movements in shareholders' funds. Where the terms and conditions of options are modified before they vest, theincrease in the fair value of the options, measured immediately before and afterthe modification, is also charged to the profit and loss account over theremaining vesting period. Where equity instruments are granted to persons other than employees, wheredeterminable, the profit and loss account is charged with the fair value ofgoods and services received. 2 Going concern The preliminary announcement has been prepared on the going concern basis as, inthe opinion of the directors, at the time of release, there is a reasonableexpectation that the Company will continue in operational existence for theforeseeable future. In forming this opinion, the directors have taken accountof the following facts and uncertainties: • The level of ticket sales for the first draw on 8 May 2006 and subsequent draws have been very disappointing, falling substantially short of the board's expectations and the level required in order to sustain the business. • Sales levels have declined week on week since the first draw and the directors expect sales to continue to decline until the website re-launch and commencement of the on-line marketing programme planned from September onwards. Chariot (UK) plc Notes forming part of the preliminary announcement for the year ended 30 April2006 (continued) 2 Going concern (continued) • Urgent action has been taken since the year end to review the Company's business model, operations, costs and financing. • The principal risk in the revised business plan is that sufficient incremental revenues cannot be generated in the time afforded by the Company's working capital resources. • In July 2006, the Company raised additional equity funds of £2,650,000 before costs. These funds have been raised to support the Company's short term future. • The Company currently has available no committed undrawn borrowing facilities; In view of the actions they have taken since the year end, the directors believethat it remains appropriate to prepare the preliminary announcement on a goingconcern basis. However, there can be no certainty that the revised businessplan initiated by the directors since the year end will be successful insecuring, in the time afforded by the Company's working capital resources, thelevel of incremental sales revenue necessary to enable the Company to continueas a going concern. The preliminary announcement does not include anyadjustments that would result from the going concern basis of preparation beinginappropriate. 3 Loss per share 2006 2005 Unaudited £'000 £'000Numerator Loss used for calculation of basic and diluted lossper share (7,858) (357) Denominator Weighted average number of shares used in basicand diluted loss per share calculation 7,561,473 11,942Adjustment for bonus issue on 17 November 2005 - 2,973,572 Adjusted weighted average number of shares used in basicand diluted loss per share calculation 7,561,473 2,985,514 None of the potential ordinary shares are considered to be dilutive. 4 Dividends The Company is not presently in a position to pay a dividend. In the Company'sAIM admission document the Company stated that as Chariot was in the earlystages of its growth and business the Directors considered it inappropriate atthat stage to pay a dividend. They further stated that they would review thisposition if the Company became profitable and distributable reserves becameavailable. As part of the ongoing restructuring the Company has reviewed itsagreements with the charity partners and has agreed, in return for the charitypartners paying a larger initial commission, not to pay a dividend until theCompany has rebated this additional commission back to the charity partners.This is a technical change to the dividend policy but the Directors believe thisis not a material change as in reality no distributable reserves will beavailable until the charity partners have been rebated in full. Chariot (UK) plc Notes forming part of the preliminary announcement for the year ended 30 April2006 (continued) 5 Taxation on loss on ordinary activities 2006 2005 Unaudited £'000 £'000 Current tax expense - - Factors affecting tax charge for the year Loss on ordinary activities before taxation (7,858) (357)Expected tax charge based on the standard rate ofcorporation tax in the UK of 30% (2005 - 30%) (2,357) (107)Effects of:Expenses not deductible for tax purposes 1 -Amortisation not deductible for tax purposes 8 -Share based payment expense 250 -Capital allowances in excess of depreciation (59) -Losses carried forward 2,157 107 Current tax charge - - The Company has estimated losses of £7,648,000 (2005: £458,000) available forcarry forward against future trading profits. No deferred tax asset has been recognised in respect of the losses as the timingof future profits is uncertain. 6 Reconciliation of operating loss to net cash outflow in the cash flowstatement 2006 2005 Unaudited £'000 £'000 Operating loss (7,983) (357)Adjustments for:Depreciation 29 1Amortisation 27 -Share based payment expense 833 -Increase in debtors (3,392) -Increase in creditors 1,342 238 Net cash outflow from operating activities (9,144) (118) Chariot (UK) plc Notes forming part of the preliminary announcement for the year ended 30 April2006 (continued) 7 Analysis of cash flows for headings netted in the cash flow statement 2006 2005 Unaudited £'000 £'000Returns on investment and servicing of financeInterest received 126 -Interest paid (1) - 125 - Capital expenditurePayments to acquire intangible fixed assets (250) (1)Payments to acquire tangible fixed assets (928) - (1,178) (1) Management of liquid resourcesCash placed on short-term deposit (1,788) - FinancingIssue of ordinary shares 13,088 85Proceeds from short-term loans - 126Repayment of short-term loans (106) (85) 12,982 126 8 Post balance sheet events On 3 July 2006 the Company raised additional shareholders' equity of 53 millionshares at 5p by means of a share placing. Funds of £2,650,000 before costs werereceived. In addition, there was a further subscription for 2 million shares inconsideration for advice received from the Company's nominated adviser inconnection with the share placement. 9 Status of financial information The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 30 April 2006 and 30 April2005. The financial information for the year ended 30 April 2005 is derived fromthe statutory accounts for that year which have been delivered to the Registrarof Companies. The audit report on those accounts was unqualified and did notcontain a statement under s237 (2) or (3) Companies Act 1985. The statutoryaccounts for the year ended 30 April 2006 will be finalised on the basis of thefinancial information presented by the directors in this preliminaryannouncement and will be delivered to the Registrar of Companies following theCompany's annual general meeting. 10 Annual Report and Accounts Copies of the Company's Annual Report and Accounts are expected to be sent toshareholders on or around 29 July 2006 with further copies available from theCompany's registered office, Hythe House,200 Shepherd's Bush Road, London, W67NL. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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