Half-yearly Report
26 September 2007 - 9:01AM
UK Regulatory
26 September 2007
TEP EXCHANGE GROUP PLC
("TEP" or "the Company")
Interim Results for the six month period ended 30 June 2007
Chairman's Statement
I am pleased to report the unaudited results for the six months ended 30 June
2007. Turnover for the period was �229,000 (2006: �136,000), an increase of 68
per cent. over that for the corresponding period last year. As a result of the
increase in turnover and the continued control of costs, I am pleased to report
that the Company achieved an operating profit of �31,000, compared to an
operating loss of �24,000 in the same period last year. The profit on ordinary
activities before and after taxation was �18,000, compared to a loss after tax
of �41,000 in the first six months of last year.
Since the end of 2005, the Company has reduced its net borrowings from �192,000
to �14,000. The debt reduction of �178,000 has been achieved by a combination
of improved trading performance and from the receipt of the proceeds of the
issue on new Ordinary Shares in March this year.
Trading activity on the Company's platform has increased considerably in
comparison to the same period last year. The volume of Traded Endowment
Policies ("TEPs") offered for sale has risen by 63 per cent.; offers accepted
were up by 117 per cent. and completions have grown by 158 per cent.. The
demand for UK TEPs remains strong, especially in continental Europe, and the
Directors expect it to continue throughout the remainder of 2007.
In order to meet demand for TEPs in Europe, the Company has developed its first
European retail websites, TEP Exchange Deutschland, which will enable the sale
of UK TEPs through a network of German financial advisers. This website is now
fully operational.
As set out in the circular to shareholders dated 16 February 2007, TEP has
received VAT assessments, which are being challenged by the Company. As it is
difficult to predict the outcome of the challenge and the Company has received
advice that it has a strong case, no provision has been made in the balance
sheet contained within these interim results for any irrecoverable VAT in the
event that the challenge is unsuccessful or only partly successful.
Pinvex Limited, a company responsible for developing property related offerings
suitable for IFAs using the exchange platform, is progressing initial
discussions with a number of parties regarding the introduction of various
additional products on TEP's trading platform and it is expected that the first
product will be ready for launch on the exchange in early 2008.
These interim results are the first to be reported in accordance with
International Financial Reporting Standards ("IFRS"). The comparative financial
information for the six months ended 30 June 2006 and the year ended 31
December 2006 has not had been materially impacted by the change in accounting
standards. Accordingly, no note showing the impact of adopting IFRS is required
to be given within the notes to the financial information.
Your Directors are not proposing an interim dividend.
George Kynoch
Chairman
26 September 2007
Consolidated Income Statement
for the six months ended 30 June 2007
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Revenue 229 136 384
Other income - 89 104
Operating expenses (198) (249) (509)
Operating profit/(loss) 31 (24) (21)
Finance income and costs:
Finance income 1 - -
Finance costs (14) (17) (38)
Profit/(loss) before income tax 18 (41) (59)
Income tax expenses - - -
Profit/(loss) attributable to 18 (41) (59)
equity holders of the Company
Earnings/(loss) per share
Basic and diluted earnings per 0.01p (0.02p) (0.03p)
share
Consolidated Balance Sheet
as at 30 June 2007
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
ASSETS
Current assets
Inventories 3 3 3
Trade and other receivables 223 122 230
Cash and cash equivalents 109 6 25
Total current assets 335 131 258
TOTAL ASSETS 335 131 258
LIABILITIES
Non-current liabilities
Long term borrowings (31) (32) (57)
Trade and other payables (213) - (213)
Total non-current liabilities (244) (32) (270)
Current liabilities
Trade and other payables (228) (487) (444)
Short term borrowings (92) (142) (92)
Total current liabilities (320) (629) (536)
TOTAL LIABILITIES (564) (661) (806)
TOTAL ASSETS LESS TOTAL LIABILITIES (229) (530) (548)
EQUITY
Capital and reserves attributable to the
Company's equity holders
Equity share capital 2,263 2,245 2,245
Share premium account 3,951 3,668 3,668
Retained losses (6,443) (6,443) (6,461)
TOTAL EQUITY (229) (530) (548)
Consolidated Statement of Changes in Shareholders' Equity
for the six months ended 30 June 2007
Attributable to equity Share Share Retained Total
holders of the Company
capital premium losses equity
(unaudited) (unaudited) (unaudited) (unaudited)
�'000 �'000 �'000 �'000
At 1 January 2007 2,245 3,668 (6,461) (548)
Profit for the period - - 18 18
Issue of share capital 18 333 - 351
Expenses relating to the - (50) - (50)
issue of shares
At 30 June 2007 2,263 3,951 (6,443) (229)
Consolidated Cash Flow Statement
for the six months ended 30 June 2007
Six months Six months Year
ended ended ended
30 June 30 June 31 December
(unaudited) (unaudited) (unaudited)
2007 2006 2006
�'000 �'000 �'000
Operating activities
Net profit/(loss) from ordinary activities 18 (41) (59)
Finance income (1) - -
Finance costs 14 17 38
Operating profit/(loss) before changes in 1 (24) (21)
working capital
Decrease/(increase) in operating 7 53 (22)
receivables
(Decrease)/increase in operating payables (205) 2 149
Cash (used in) / generated from operations (167) 31 106
Cash flows from financing activities
Proceeds from issue of shares 351 - -
Expenses relating to the issue of shares (51) - -
Interest paid (24) (6) (38)
Interest received 1 - -
Repayment of borrowings (26) (27) (51)
Net cash generated from/(used in) 251 (33) (89)
financing activities
Net increase/(decrease) in cash and cash 84 (2) 17
equivalents
Cash and cash equivalents at beginning of 25 8 8
year
Cash and cash equivalents at the end of 109 6 25
year
Notes to the Interim Results
1. Basis of preparation
With effect from 1 January 2007 it became mandatory for the Group to comply
with International Financial Reporting Standards (IFRS).
The financial results of the Group for the six months ended 30 June 2007 have
been prepared on a basis which is consistent with International Financial
Reporting Standards (IFRS) as adopted by the European Union which the Group
expects to apply in the first annual accounts presented as at 31 December 2007.
The adoption of IFRS has not had a material impact on the results or net assets
for the comparative periods and accordingly these have not been restated.
The financial information shown in this publication is unaudited and does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The comparative figures for the financial year ended 31 December 2006
have been abridged from the Group's statutory accounts for that financial year,
translated from United Kingdom Generally Accepted Accounting Principles (UK
GAAP) to IFRS. The UK GAAP version of those accounts have been reported on by
the Group's auditors and delivered to the Registrar of Companies. The auditors'
report on those UK GAAP accounts was unqualified and did not contain any
statement under section 237(2) or (3) of the Companies Act 1985.
2. Dividends
No dividend is proposed for the six months ended 30 June 2007.
3. Earnings per share
The earnings per share has been calculated by dividing the profit after
taxation for the period of �18,000 (six month period ended 30 June 2006: loss
of �41,000 and year ended 31 December 2006: loss of �59,000) by the weighted
average number of Ordinary Shares of 329,235,746 (six month period ended 30
June 2006: 224,543,426 and year ended 31 December 2006: 224,543,426) in issue
during the period.
The options and warrants in issue at 30 June 2006, 31 December 2006 and 30 June
2007, which are detailed in Note 4 to this publication, are antidilutive and
have therefore been excluded from the calculation of diluted earnings per
share. However, such options may be dilutive in future periods.
4. Share Capital
Authorised
30 30 31 30 30 31
June June December June June December
2006
2007 2006 2006 2007 2006
�'000 �'000 �'000 �'000 �'000 �'000
Ordinary 1,000,000,000 4,000,000 4,000,000 100 4,000 4,000
shares
Deferred 400,000,000 - - 3,960 - -
shares
4,060 4,000 4,000
Allotted, called up and fully paid
30 30 31 30 30 31
June June December June June December
2007 2006 2006 2007 2006 2006
�'000 �'000 �'000 �'000 �'000 �'000
Ordinary 399,999,999 224,543,426 224,543,426 40 2,245 2,245
shares
Deferred 224,543,426 - - 2,223 - -
shares
2,263 2,245 2,245
On 14 March 2007, each of the 224,543,426 issued Ordinary Shares of 1p each in
the Company was subdivided into one ordinary share of 0.01p each and one
deferred share of 0.99p each credited as fully paid.
On 15 March 2007, the Company issued 175,456,573 Ordinary Shares of 0.01p each
at a premium of 0.19p per share.
The main rights and restrictions attaching to the Deferred Shares are as
follows:
* no entitlement to receive dividends or other distributions;
* no entitlement to receive notice of or attend of vote at any general
meeting of the Company;
* on a return of capital on a winding in the holders of Deferred Shares shall
only be entitled to receive the amount paid up on such shares after the
holders of the Ordinary Shares have received the sum of �1,000,000 for each
ordinary share held by them and shall have no other right to participate in
the assets of the Company.
Details of the two equity settled share option schemes are shown below:
Exercise period
Number of Exercise Grant From To
shares under price date
option
Enterprise Management 1,027,879 3p 16.02.01 16.2.04 16.02.11
Incentive Scheme
600,000 8p 06.09.01 06.09.04 06.09.11
582,818 10p 16.02.01 16.02.04 16.02.11
1,500,000 12p 06.09.01 06.09.04 06.09.11
3,710,697
Unapproved Share 200,000 8p 24.08.01 24.08.04 24.08.11
Option Plan
3,910,697
There were no changes to the number of options in issue in either the current
or prior period.
On 14 March 2007, the Company issued warrants to subscribe for up to 35,000,000
Ordinary Shares in cash at 0.2p per share. Each warrant confers on the
warrantholder the right to subscribe in cash for Ordinary Shares to be issued
to the warrantholder or such person as the warrantholder may direct. The
warrants are not intended to be listed or dealt on any recognised investment
exchange. Ordinary Shares issued on exercise of warrants will qualify for all
dividends and distribution declared, made or paid after their date of issue.
The warrants may only be exercised upon certain performance being met criteria
in each of any two consecutive financial years over the five years commencing 1
January 2007 and ending 31 December 2011.
The warrants may be exercised in whole or in part or in parts. The exercise
price of the warrants must be paid at the time the rights are exercised.
Any rights not exercised prior to 30 June 2012 will lapse on that date.
5. Copies of the interim results will be available at the Company's registered
office 12 Grosvenor Court, Foregate Street, Chester CH1 1HG and on the
Company's website www.tepexchange.com
Further Enquiries:
TEP Exchange Group PLC Tel: 01244 615 628
Paul Sands/Kieran O'Gorman
John East & Partners Limited Tel: 020 7628 2200
John East/Simon Clements
END
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