Half-yearly Report
03 Oktober 2011 - 8:00AM
UK Regulatory
TIDMTEX
30 September 2011
TEP Exchange Group PLC
("TEP" or "the Company")
Half-yearly results for the six month period ended 30 June 2011
Chairman's Statement
I am pleased to report the unaudited results of the Company for the six month
period ended 30 June 2011. Total revenue for the period was GBP518,000 (six month
period ended 30 June 2010: GBP15,000), of which licence fee income amounted to GBP
500,000 (six month period ended 30 June 2010: GBPnil). The Company achieved a
profit from operations of GBP370,000, compared to a loss from operations of GBP
79,000 in the same period last year. The profit before and after taxation was GBP
357,000, compared to a loss before and after taxation of GBP92,000 in the first
six months of last year.
Although the commission revenue achieved in the first half of 2011 was ahead of
the revenue in the first half of 2010 the absolute figure was very low and this
was due to the continuation of the lack of demand in the traded endowment
policy market. The Company continues to work closely with market markers in the
hope of increasing demand for policies.
The licence fee income generated in the six month period ended 30 June 2011 was
generated from the licensing of the electronic platform and all technology to
SL Investment Management Limited, ("SL"), a 48.26 per cent shareholder in the
Company. The licensing arrangements with SL were set out in the Company's
announcement of the contract on 12 November 2010. In summary the Company has
licensed its electronic platform and all technology to SL, in consideration for
which TEP will receive a quarterly fee of GBP20,000. In addition, SL has been
granted exclusive rights to develop and modify the electronic platform for a
quarterly fee of GBP230,000 ("the Licence Agreement"). The Licence Agreement is
for a period of 10 years; however, SL has the right to terminate the agreement
on 30 April of each year, subject to certain conditions. As a result of these
arrangements and the expected profitability of them, the directors consider it
appropriate to prepare these interim financial statements on the going concern
basis.
As announced today, subject to the approval of the Company's shareholders, the
Directors have recently agreed with three subscribers (being SL and companies
acting in concert with it) for them to subscribe for new ordinary shares in the
Company at a subscription price of 0.02p per share to generate GBP90,000 (before
expenses) to provide additional working capital for the Company. In addition to
the issue of the new ordinary shares, it is also proposed that each of the
subscribers will be issued with warrants to subscribe (subject to achieving the
conditions attaching to the exercise of the warrants) for further new ordinary
shares in the Company. Further detail on this post balance event is set out in
note 5 of this publication and is also set out in a circular issued to the
Company's shareholders.
Your Directors are not proposing an interim dividend.
George Kynoch
Chairman
30 September 2011
For further information please contact:
TEP Exchange Group plc
David Roxburgh 00 353 87 2431665
Merchant Securities Limited
John East/Simon Clements 020 7628 2200
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 518 15 165
Administrative expenses (148) (94) (222)
Profit / (loss) from operations 370 (79) (57)
Finance costs (13) (13) (29)
Profit / (loss) before income tax 357 (92) (86)
Income tax expense - - -
Profit / (loss) attributable to the 357 (92) (86)
equity holders of the parent and total
comprehensive income for the period
Loss per share
Basic and diluted loss per share (note 0.09p (0.02)p (0.02)p
3)
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2011
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 2010 2,263 3,952 (6,857) (642)
Total comprehensive income - - (92) (92)
for the period
At 30 June 2010 2,263 3,952 (6,949) (734)
Total comprehensive income - - 6 6
for the period
At 31 December 2010 2,263 3,952 (6,943) (728)
Total comprehensive income - - 357 357
for the period
At 30 June 2011 2,263 3,952 (6,586) (371)
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 2011
As at As at As at
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Current assets
Inventories 3 3 3
Trade and other receivables 352 52 323
Cash and cash equivalents 207 5 49
Total current assets 562 60 375
TOTAL ASSETS 562 60 375
LIABILITIES
Current liabilities
Borrowings (379) (454) (534)
Trade and other payables (554) (340) (569)
Total current liabilities (933) (794) (1,103)
Non-current liabilities
Borrowings - - -
Total non-current liabilities - - -
TOTAL LIABILITIES (933) (794) (1,103)
TOTAL NET LIABILITIES (371) (734) (728)
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 (6,586) (6,949) (6,943)
TOTAL EQUITY DEFICIT (371) (734) (728)
Consolidated Statement of Cash Flows
for the six months ended 30 June 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Operating profit / (loss) 357 (92) (87)
Increase in trade and other receivables (29) (29) (300)
(Decrease) / increase in trade and other (15) 33 263
payable
Cash generated / (used) by operating 313 (88) (124)
activities
Cash flows from financing activities
(Decrease) / increase in borrowings (155) 91 171
Net increase /(decrease) in cash and cash 158 3 47
equivalents
Cash and cash equivalents at beginning of 49 2 2
period
Cash and cash equivalents at end of period 207 5 49
Cash and cash equivalents comprise:
Cash available on demand 207 5 49
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 2011 have been prepared in accordance with the recognition
and measurement principles of 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 2011.
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 2010
have been derived from the statutory accounts for 2010. The statutory accounts
have been delivered to the Registrar of Companies. The auditors have reported
on those accounts; their report was unqualified and did not contain statements
under the section 498(2) or 498(3) of the Companies Act 2006.
2. Dividends
No dividend is proposed for the six months ended 30 June 2011.
3. Profit / (loss) per share
The profit / (loss) per share has been calculated by dividing the profit after
taxation for the period of GBP357,000 (six month period ended 30 June 2010: loss
of GBP92,000 and year ended 31 December 2010: loss of GBP86,000) by the weighted
average number of Ordinary Shares of 399,999,999 (six month period ended 30
June 2010: 399,999,999 and year ended 31 December 2010: 399,999,999) in issue
during the period.
The options and warrants in issue at 30 June 2010, 31 December 2010 and 30 June
2011 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 2011 the Group achieved a profit of GBP
357,000 (year ended 31 December 2010 loss of GBP86,000) and at 30 June 2011 had
net liabilities of GBP371,000 (31 December 2010 net liabilities of GBP728,000).
In reaching a decision as to whether the Company remains a going concern, the
directors have given due regards to the following factors:
* During 2010, the Company entered into a 10-year licence agreement with SL
Investment Management Limited ("SL"), which will generate significant
revenue and cash for the Group in 2011. The licence agreement remains in
place until at least 30 April 2012, at which point sufficient revenue and
cash will have been generated to take the Group to a net asset position and
enable the Group to meet its liabilities as they fall due for the
foreseeable future.
* The propose issue of new ordinary shares to generate GBP90,000 for the
benefit of the Company.
* The current financial position of SL.
On the basis of the above, and all other available information, the Directors
consider that the Group will be able to operate within the cash flow forecasts
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.
Notes to the half-yearly results
5. Post-Balance Sheet Event
Subject to the approval of the Company's shareholders the Directors have just
agreed with three subscribers for them to subscribe for new ordinary shares in
the Company at a subscription price of 0.02p per share to generate GBP90,000
(before expenses) for the benefit of the Company. The issue of these ordinary
shares will represent 53 per cent of the thereby enlarged issued ordinary share
capital of the Company.
In addition to the issue of the new ordinary shares, it is also proposed that
each of the subscribers is issued with warrants to subscribe for new ordinary
shares in the Company. The exercise price in relation to each warrant is 0.002p
per new ordinary share, representing a discount of one tenth the subscription
price of 0.02 per the new ordinary shares now being issued by the Company. The
issue of new ordinary shares to the holders of the warrants would generate GBP
90,000 for the benefit of the Company.
The warrants will only be exercisable provided two triggers have occurred,
namely:
* The achievement by the Group of an average annual revenue in excess of GBP
600,000 per annum, over the three financial years ending 31 December 2013,
or earlier if the Group achieves revenue in of at least GBP900,000 in the
financial year ending 31 December 2011 and at least GBP900,000 in the
financial year ending 31 December 2012; and
* The payment of dividends by the Company of at least GBP250,000.
It is currently envisaged that to the extent not exercised, the warrants will
lapse 18 months following the publication of the audited accounts of the
Company for the period to 31 December 2013.
The three subscribers are SL Investment Management Limited (an existing
shareholder in the Company), Close Horizons Limited (an existing shareholder in
the Company) and Preferred Asset Management Limited (which is deemed to be
acting in concert with SL Investment Management and Close Horizons for the
purposes of the Code on Takeovers and Mergers). After the issue of new ordinary
shares in the Company the three subscribers will hold 79.98 per cent. of the
enlarged issued ordinary share capital of the Company. Assuming the warrants
are exercised the three subscribers will hold 96.82 per cent. of the enlarged
issued ordinary share capital of the Company. Further detail on this
transaction is set out in the announcement of the subscription released today
and in the shareholder circular issued to the Company's shareholders.
END
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