Half-yearly Report
12 November 2009 - 8:00AM
UK Regulatory
TIDMTEX
12 November 2009
TEP Exchange Group PLC
("TEP" or "the Company")
Half-yearly results for the six month period ended 30 June 2009
Chairman's Statement
I am duly reporting the unaudited results of the Company for the six month
period ended 30 June 2009. Revenue for the period was GBP10,000 (six month period
ended 30 June 2008: GBP279,000), a decrease of 96 per cent. over the
corresponding period last year. The Company incurred an operating loss of GBP
72,000, compared to an operating profit of GBP18,000 in the same period last
year. The loss on ordinary activities before and after taxation was GBP76,000,
compared to a profit before and after taxation of GBP6,000 in the first six
months of last year.
Revenue decreased very significantly in the first half of 2009 compared to the
first half of 2008 due to extremely challenging market conditions in the traded
endowment policy market. The turmoil in financial markets which commenced in
the second half of 2008 resulted in a dramatic drop in demand for traded
endowment policies from market makers to such an extent that from November 2008
there were virtually no deals being completed utilising the Company's
electronic platform.
As set out in the Company's recently published Report and Accounts, the group
relies on support from Surrenda-link Limited (a 48.26 per cent. shareholder in
the Company). The Directors have recently agreed with Surrenda-link Limited
that the payment of non-current outstanding charges in the amount of GBP271,624
will not be paid before 31 December 2010. In addition, the Directors have also
recently agreed with Surrenda-link Limited a working capital facility of up to
GBP150,000 which will not be repaid before 31 December 2010.
The Company's challenge to the VAT assessments, as detailed in note 4 of last
year's Half-yearly Results Statement, has now been withdrawn and the Company
has agreed to repay irrecoverable VAT in the amount of GBP134,960. The Company is
in discussion with HM Revenue & Customs on the time period over which the
irrecoverable VAT will be repaid.
The Directors are of the view that the Company's electronic platform is still a
cost effective method for market makers to source policies, particularly direct
from the public, but the Company is heavily reliant upon the market makers to
stimulate the market again and in the meantime the Directors are endeavouring
to reduce the Company's monthly cash outflow.
The expansion of the Company's electronic platform for its current range of
products primarily into the German market was deferred due to the market
conditions currently prevailing.
Your Directors are not proposing an interim dividend.
George Kynoch
Chairman
11 November 2009
For further information please contact:
TEP Exchange Group plc
David Roxburgh 00 353 1 260 7746
Merchant John East Securities Limited
John East/Simon Clements 020 7628 2200
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2009
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 10 279 439
Administrative expenses (82) (261) (637)
(Loss) / profit from operations (72) 18 (198)
Finance income - 1 2
Finance costs (4) (13) (21)
(Loss) / profit before tax (76) 6 (217)
Tax expense - - -
Total comprehensive income attributable (76) 6 (217)
to equity holders of the Company
(Loss) / earnings per share
Basic and diluted (loss) / earnings per (0.02)p 0.00p (0.05)p
share (note 3)
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2009
Attributable to equity holders of the
Company
Share Share Accumulated Total
Capital Premium Losses Equity
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2009 2,263 3,952 (6,642) (427)
Total comprehensive income - - (76) (76)
for the period
At 30 June 2009 2,263 3,952 (6,718) (503)
Share capital is the amount subscribed for ordinary shares and deferred shares
at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of these shares net of share issue expenses.
Accumulated losses represent cumulative losses of the Company and its
subsidiaries (together the "Group") attributable to equity holders.
Consolidated Statement of Financial Position
as at 30 June 2009
As at As at As at
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Current assets
Inventories 3 3 3
Trade and other receivables 60 121 68
Cash and cash equivalents 4 95 29
Total current assets 67 219 100
TOTAL ASSETS 67 219 100
LIABILITIES
Current liabilities
Short term borrowings - (29) -
Trade and other payables (298) (205) (255)
Total current liabilities (298) (234) (255)
Non-current liabilities
Long term borrowings - - -
Trade payables (272) (188) (272)
Total non-current liabilities (272) (188) (272)
TOTAL LIABILITIES (570) (422) (527)
TOTAL NET LIABILITIES (503) (203) (427)
Equity attributable to equity holders of
the parent
Share capital 2,263 2,263 2,263
Share premium reserve 3,952 3,952 3,952
Accumulated losses (6,718) (6,418) (6,642)
TOTAL EQUITY (503) (203) (427)
Consolidated Cash Flow Statement
for the six months ended 30 June 2009
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
(Loss) / profit before taxation (76) 6 (217)
Finance income - (1) (2)
Finance costs 4 13 21
(Loss) / profit from operations before (72) 18 (198)
changes in working capital
Decrease in trade and other receivables 8 139 191
Increase / (decrease) in trade and other 42 (44) 93
payable
Cash (used in) / generated by operating (22) 113 86
activities
Investing activities
Interest received - 1 2
Financing activities
Repayment of borrowings - (44) (73)
Interest paid (3) (13) (24)
Net cash outflow from financing activities (3) (57) (97)
(Decrease) / increase in cash and cash (25) 57 (9)
equivalent
Cash and cash equivalents at beginning of 29 38 38
period
Cash and cash equivalents at end of period 4 95 29
Cash and cash equivalents comprise:
Cash available on demand 4 95 29
Notes to the half-yearly results
1. Basis of preparation
As permitted IAS 34, `Interim Financial Reporting' has not been applied to
these Half-yearly Results. The financial information of the Group for the six
months ended 30 June 2009 have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively "IFRS") issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union ("adopted IFRS") and
are in accordance with IFRS as issued by the IASB. The condensed interim
financial information has been prepared using the accounting policies which
will be applied in the Group's statutory financial statements for the year
ending 31 December 2009, which results in the adoption of IAS 1 `Presentation
of Financial Statements' and has been applied throughout these interim
financial statements.
The financial information shown in this publication is unaudited and does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The comparative figures for the financial year ended 31 December 2008
have been derived from the statutory accounts for 2008. The statutory accounts
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting. The auditors have reported on those accounts; their report was
unqualified and did not contain statements under the Companies Act 1985,
Section 237 (2) or (3). The auditors' report on the statutory accounts for 2008
referred to a matter concerning the company's ability to continue as a going
concern to which the auditors drew attention by way of emphasis without
qualifying their report. The details concerning this matter are given in note 4
below.
2. Dividends
No dividend is proposed for the six months ended 30 June 2009.
3. (Loss) / earnings per share
The (loss) / earnings per share has been calculated by dividing the loss after
taxation for the period of GBP76,000 (six month period ended 30 June 2008: profit
of GBP6,000 and year ended 31 December 2008: loss of GBP217,000) by the weighted
average number of Ordinary Shares of 399,999,999 (six month period ended 30
June 2008: 399,999,999 and year ended 31 December 2008: 399,999,999) in issue
during the period.
The options and warrants in issue at 30 June 2008, 31 December 2008 and 30 June
2009 are anti-dilutive and have therefore been excluded from the calculation of
diluted earnings per share. However, such options may be dilutive in future
periods.
4. Going Concern
During the six month period ended 30 June 2009 the Group incurred a loss of GBP
76,000 (year ended 31 December 2008 loss of GBP217,000) and at 30 June 2009 had
net liabilities of GBP503,000 (31 December 2008 net liabilities of GBP427,000).
The Group relies on support from Surrenda-link Limited (a 48.26% shareholder in
the Company). The Directors have recently agreed with Surrenda-link Limited
that the payment of non-current outstanding charges in the amount of GBP271,624
will not be paid before 31 December 2010. In addition, the Directors have also
recently agreed with Surrenda-link Limited a working capital facility of up to
GBP150,000 which will not be repaid before 31 December 2010.
On the basis of discussions with Surrenda-link Limited the Directors are
anticipating improved trading results for the period up to 30 September 2010
and have projected cash flow information which show creditors (excluding
amounts owed to Surrenda-link Limited) can be paid out of cash flow. The
projected cash flow information assumes that the total amount due to HM Revenue
& Customs of GBP134,960 can be paid over a period of not less than 12 months from
January 2010, which has not yet been agreed with HM Revenue & Customs.
On the basis of the above, and all other available information, the Directors
consider that the Group will be able to operate within the working capital
facility recently agreed with Surrenda-link Limited and therefore that it is
appropriate to prepare the interim financial statements on the going concern
basis.
These conditions indicate the existence of a material uncertainty which may
cast significant doubt about the Company's ability to continue as a going
concern. The interim financial statements do not include any adjustments that
would result from the going concern basis of preparation being inappropriate.
END
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