RNS Number:9775U
TEP Exchange Group PLC
24 April 2002
24th April, 2002
TEP EXCHANGE GROUP PLC
("TEP" or "the Company")
Preliminary Results for the year ended 31 December 2001
Chairman's Statement
I am pleased to be able to report your Company's results for the year ended 31
December 2001. This is the first set of results since the Company was admitted
to AIM in September 2001. It is also the first set of trading results since the
on-line electronic trading platform became operational.
Trading in the year produced a turnover of £209,859 (2000-nil) and a loss before
tax of £1,494,008 compared to a loss of £3,186,733 in 2000. Loss per share was
1.83p (2000-11.51p).
Clearly the tragic events of September 11 have had a significant effect on world
markets since that date, and your Company has not been immune from this. The
uncertainty surrounding Life Office bonus rates and surrender values has added
to this difficulty. However your Company has made an encouraging start to
trading in spite of these difficulties.
The Company has continued with its strategy of promoting its electronic trading
platform for traded with profits endowment polices. Independent financial
advisers ("IFAs") have submitted policies with a value of more than £200 million
to the TEP Exchange since the Company commenced trading.
Currently, six principal panel Market Makers are purchasing with profits
endowment policies on the TEP Exchange. Additionally, a number of independent
corporate TEP buyers have established their own buying criteria and are now
purchasing policies through panel Market Makers.
The TEP Exchange has proved to be extremely popular with the independent
financial adviser community and, to date, approximately 7,500 IFAs have
registered directly with the TEP Exchange. Strategic alliances or agreements
have been established with the UK's main IFA Internet portals controlled by
Exchange FS Limited (a Marlborough Stirling company) and, more recently, Misys
IFA Desktop Solutions Limited and Assuresoft Limited (both subsidiaries of Misys
plc) and Bankhall IFAengine Limited which increases access to the TEP Exchange
significantly.
Members of the public are now able to obtain a valuation of their with profits
endowment policies prior to dealing through their IFA, by accessing a 'public
policy submit' service which the Company has established on many leading
financial consumer web sites such as 'ftyourmoney.com'.
The Financial Services Authority has recently given guidance to the Life Offices
that they must make policyholders aware that there is an alternative to policy
surrender and that this has to include trading on the secondary market. Your
Directors believe that TEP Exchange will benefit from the increased number of
polices that should be submitted to the market from this source. Life Offices
wishing to identify trading possibilities on-line for their policyholders
immediately, can now do this through the TEP Exchange.
The Company continues to explore other revenue generating opportunities from the
TEP market. In order to meet the increased interest for TEPs as a relatively
secure investment product it has developed an on-line database and personal
investment buying facility, selling Market Maker polices directly to IFAs. This
service has been income generating from January of this year.
Board Changes
On 19 December 2001, Moses Kraus, one of the founders and principal shareholders
of the Company, stood down as an executive director but remains on the Board as
a non-executive director and deputy chairman.
The Board would like to thank Michael Abrahams, who retires from the position of
finance director in May, and wishes him well in the future. Mike joined TEP in
its infancy and has helped the Company through its initial stages and flotation.
The financial function will be covered, in the interim period until a new
finance director is appointed, by Stephen Kay, your Company's Chief Executive,
who is a chartered accountant.
Current Trading
Difficult trading conditions continued into January of this year. However,
subsequently there has been a considerable hardening in demand for with profits
endowment policies as an investment and, therefore for the TEP Exchange. The
Company is now operating at significantly increased levels of activity and deal
completion and its trading income for the first three months of the year has
exceeded the total trading income of the previous year.
With much of the technology completed and the Exchange operating to plan, a
number of cost saving initiatives have been successfully implemented and your
Directors are encouraged by progress to date.
Dividend
Your Board is not proposing a dividend for the year under review.
I would like to take this opportunity to thank all my co-directors, staff and
our advisers for their unstinting support during these difficult formative
months. Without their enthusiastic support and commitment the progress achieved
would not have been possible.
George Kynoch
Chairman
24 April 2002
Consolidated profit and loss account for the year ended 31 December 2001
Year ended Period ended
31 December 31 December
2001 2000
£ £
Turnover 209,859 -
Cost of sales (171,504) -
-------- --------
Gross profit 38,355 -
Administrative expenses (1,646,136) (3,151,242)
Other operating income 87,302 -
-------- --------
Operating loss (1,520,479) (3,151,242)
Interest receivable 26,502 25,111
Interest payable (31) (60,602)
-------- --------
Loss on ordinary activities before taxation
and retained for the year (1,494,008) (3,186,733)
Retained loss brought forward (3,186,733) -
-------- --------
Retained loss carried forward (4,680,741) (3,186,733)
======== ========
Loss per share
Basic and diluted loss per share (1.83)p (11.51)p
-------- --------
All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and loss account.
Consolidated balance sheet as at 31 December 2001
As at As at As at As at
31 December 31 December 31 December 31 December
Note 2001 2001 2000 2000
£ £ £ £
Fixed assets
Tangible assets 2 133,897 186,529
Current assets
Stock 3 245,544 -
Debtors 4 209,347 212,962
Cash at bank and in hand 476,344 1,275,948
-------- --------
931,235 1,488,910
Creditors: amounts falling due
within one year 5 922,251 1,275,172
-------- --------
Net current assets 8,984 213,738
-------- --------
Total assets less current liabilities 142,881 400,267
Creditors: amounts falling due
after more than one year
Convertible loan notes - 1,905,000
-------- --------
142,881 (1,504,733)
======== ========
Capital and reserves
Called up share capital 1,156,250 720,000
Share premium account 3,667,372 962,000
Profit and loss account (4,680,741) (3,186,733)
-------- --------
Shareholders' funds - equity 142,881 (1,504,733)
======== ========
Cash flow statement for the year ended 31 December 2001
Year ended Year ended Period ended Period ended
31 December 31 December 31 December 31 December
2001 2001 2000 2000
£ £ £ £
Net cash outflow from operating
activities (2,052,763) (2,043,455)
Returns on investments and servicing
of finance
Interest received 26,502 25,111
Interest paid (31) (60,602)
-------- --------
New cash inflow/(outflow) from
returns on investment and
servicing of finance 26,471 (35,491)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (21,883) (232,106)
-------- --------
Net cash outflow from capital expenditure
and financial investment (21,883) (232,106)
Financing
Issue of loan stock and debentures 80,000 1,905,000
Issue of ordinary share capital
(net of issue costs) 1,156,622 1,682,000
-------- --------
Cash inflow from financing 1,236,622 3,587,000
-------- --------
(Decrease)/increase in cash in the year (811,553) 1,275,948
======== ========
1 Accounting policies
The financial statements have been prepared under the historical cost convention
and are in accordance with applicable accounting standards. There has been no
change in the accounting policies during the current year and they are
consistent with those set out in the financial statements for the year ended
31st December, 2000. The following principal accounting policies have been
applied:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
TEP Exchange Group PLC and all of its subsidiary undertakings made up to 31
December 2001. Uniform accounting policies are adopted by all companies in the
group. The acquisition method of accounting is used to consolidate the results
of subsidiary undertakings in the group financial statements.
2 Tangible assets
Fixtures, Total
Computer fittings and
equipment equipment
£ £ £
Cost
At 31 December 2000 172,094 60,012 232,106
Additions 12,991 8,892 21,883
-------- -------- --------
At 31 December 2001 185,085 68,904 253,989
-------- -------- --------
Depreciation
At 31 December 2000 37,570 8,007 45,577
Provided for in the year 61,096 13,419 74,515
-------- -------- --------
At 31 December 2001 98,666 21,426 120,092
-------- -------- --------
Net book value
At 31 December 2001 86,419 47,478 133,897
======== ======== ========
At 31 December 2000 134,524 52,005 186,529
======== ======== ========
3 Stocks
2001 2000
£ £
Stocks of endowment policies held for resale 245,544 -
======== ========
There is no material difference between the replacement cost of stocks and the
amounts stated above.
4 Debtors
2001 2000
£ £
Amount due from subsidiary undertaking - -
Trade debtors 34,029 -
Prepayments 35,534 47,031
Other debtors 139,784 165,931
-------- --------
209,347 212,962
======== ========
5 Creditors: amounts falling due within one year
2001 2000
£ £
Bank overdraft 11,949 -
Trade creditors 285,979 643,970
Other creditors 11,120 65,139
Creditors for taxation and social security 375,505 120,872
Accruals 237,698 445,191
-------- -------
922,251 1,275,172
======== ========
6. Loss per share
The calculation of the basic loss per share is based on the loss after tax
of £1,494,008 (2000 - loss after tax of £3,186,733) and on 81,681,164
(2000 - 27,682,301) ordinary shares, being the weighted average number of
ordinary shares in issue. There are no dilutive potential ordinary shares
in issue.
7. Dividends
The Directors are not proposing the payment of a dividend in respect of the
year ended 31 December 2001.
8. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies
Act 1985.
The consolidated balance sheet as at 31 December 2001 and the consolidated
profit and loss account, consolidated cash flow statement and associated
notes for the year have been extracted from the Group's financial
statements. Those financial statements have not yet been delivered to the
Registrar of Companies, nor have the auditors reported on them. The 2000
accounts have been delivered to the Registrar of Companies and the auditors
reported on them, their report was unqualified and did not contain a
statement under s237(2) or (3) of the Companies Act 1985.
9. Copies of accounts will be sent to shareholders shortly and will also be
available at the Company's registered office.
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