TIDMTEX
20 June 2012
TEP EXCHANGE GROUP PLC
("TEP" or "the Company")
Final Results for the year ended 31 December 2011
Chairman's statement
I am duly reporting the results for the Company and subsidiaries (together "the
Group") for the year ended 31 December 2011. Revenue for the year totalled GBP
1,044,472 (2010: GBP164,776) resulting in a profit from operations of GBP687,734
(2010: loss GBP56,797). The profit before and after taxation was GBP666,082
compared to the loss before and after taxation of GBP86,458 in 2010. The basic
earnings per share was 0.14 pence (2010: loss 0.02 pence).
Revenue increased significantly in 2011 compared with 2010 due to the receipt
of fees from 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 and in consideration
will receive a quarterly fee of GBP20,000 and 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 ten years; however, SL may terminate the agreement on 30 April of
each year. On 2 April 2012 the Company announced that SL had informed the
Company that the income generated during the 12 month period ending 30 April
2012 was unlikely to be GBP250,000 or more and, therefore, it may terminate the
Licence Agreement in accordance with its terms. The Company agreed with SL that
it would provide a 61 day extension to the termination notice period to allow
SL to further assess the benefits of the Licence Agreement. A further
announcement by the Company was issued on 31 May 2012 setting out that the
agreement can now be terminated on 30 August by SL giving 30 day's prior
written notice to the Company.
As a result of these arrangements the directors consider it appropriate to
prepare the financial statements on a going concern basis.
The market demand for traded endowment policies still remains extremely
depressed but the Company continues to work closely with market makers in
anticipation of increasing demand for policies. In the meantime, the Directors
are continuing to maintain strong controls over the Company's cost base and are
also exploring additional opportunities to generate income
Your Board is not proposing a dividend for the year under review.
G Kynoch
Chairman
19 June 2012
Audited Consolidated Statement of Comprehensive Income for the year ended 31
December 2011
2011 2010
GBP GBP
Revenue 1,044,472 164,776
Administrative expenses (356,738) (221,573)
Profit / (loss) from operations 687,734 (56,797)
Finance income - -
Finance costs (21,652) (29,661)
Profit / (loss) before income tax 666,082 (86,458)
Income tax expense - -
Profit / (loss) attributable to owners of the parent and 666,082 (86,458)
total comprehensive income for the year
Earnings / (loss) per share [Note 2]
Basic and diluted earnings / (loss) per share 0.14p (0.02)p
Audited Consolidated Statement of Financial Position at 31 December 2011
2011 2010
GBP GBP
Assets
Current assets
Inventories 3,525 3,403
Trade and other receivables [Note 4] 150,736 323,073
Cash and cash equivalents 73,593 49,043
Total current assets 227,854 375,519
Total assets 227,854 375,519
Liabilities
Current liabilities
Borrowings - (534,000)
Trade and other payables [Note 5] (204,988) (569,965)
Total current liabilities (204,988) (1,103,965)
Total liabilities (204,988) (1,103,965)
Net assets/(liabilities) 22,866 (728,446)
Equity attributable to owners of the parent
Share capital [Note 6] 2,267,480 2,262,980
Share premium reserve 4,032,678 3,951,948
Accumulated losses (6,277,292) (6,943,374)
Total equity 22,866 (728,446)
Audited Consolidated Statement of Cash Flow for the year ended 31 December 2011
2011 2010
GBP GBP
Cash flows from operating activities
Operating profit / (loss) 666,082 (86,458)
Increase in inventories (122) (118)
Decrease/(increase) in trade and other receivables 172,337 (300,323)
(Decrease)/increase in trade and other payables (364,977) 262,597
Cash generated in operating activities 473,320 (124,302)
Cash flows from financing activities
(Decrease)/increase in borrowings (534,000) 171,000
Issue of ordinary share capital 85,230 -
Net increase in cash and cash equivalents 24,550 46,698
Cash and cash equivalents at beginning of year 49,043 2,345
Cash and cash equivalents at end of year 73,593 49,043
Cash and cash equivalents comprise:
Cash available on demand 73,593 49,043
Audited Consolidated Statement of Changes in Equity for the year ended 31
December 2011
Share Share Accumulated
capital premium losses Total
GBP GBP GBP GBP
At 1 January 2010 2,262,980 3,951,948 (6,856,916) (641,988)
Total comprehensive income for - - (86,458) (86,458)
the year
At 1 January 2011 2,262,980 3,951,948 (6,943,374) (728,446)
Total comprehensive income for - - 666,082 666,082
the year
Share issue in year 4,500 80,730 - 85,230
At 31 December 2011 2,267,480 4,032,678 (6,277,292) 22,866
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 Group attributable to
equity shareholders.
Notes to the Audited Preliminary Results for the year ended 31 December 2011
1 Basis of preparation
This announcement of the financial results has been prepared in accordance with
the International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRS) issued by the International
Accounting Standards Board (IASB) as adopted by European Union ("adopted
IFRSs"), and are in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2011 and 2010, but is
derived from those accounts. Statutory accounts for 2010 have been delivered to
the Registrar of Companies and those for 2011 will be delivered following the
Company's Annual General Meeting. Auditors have reported on those accounts;
their reports were unqualified. Their report for 2010 did not contain a
statement under s237(2) or s237(3) of the Companies Act 1985 and their report
for 2011 did not contain a statement under s498(2) or s498(3) of the Companies
Act 2006.
Going concern
During the year ended 31 December 2011 the Group made a profit of GBP666,082
(2010: loss GBP86,458) and at 31 December 2011 had net assets of GBP22,866 (2010:
net liabilities GBP728,446).
In reaching a decision as to whether the Company is a going concern, the
Directors have given due regard to the following factors:
* During 2010, the Group entered into a 10 year licence agreement with SL
Investment Management Limited ("SL"), which is generating significant
revenue and cash for the Group. As a result the Group is now in a net asset
position and the Directors believe that the Group will be able to meet its
liabilities as they fall due for the foreseeable future.
* The current financial position of SL
On the basis of the above, and all other available information, the Directors
consider that it is appropriate to prepare the financial statements on the
going concern basis.
2 Earnings / (loss) per share
The calculation of the basic and diluted earnings / (loss) per share is based
upon:
2011 2010
Basic and diluted earnings / (loss) per share 0.14p (0.02)p
(pence)
Profit / (loss) attributable to equity GBP666,082 GBP(86,458)
shareholders
Number Number
Weighted average number of shares 471,560,848 399,999,999
The options, warrants and deferred shares in issue at the 31 December 2010 and
31 December 2011, which are disclosed in note 6, are antidilutive and have
therefore been excluded from the calculation of diluted earnings per share.
However, such options may be dilutive in future periods.
3 Dividends
The Directors are not proposing the payment of a dividend in respect of the
year ended 31 December 2011.
4 Trade and other receivables
2011 2010
GBP GBP
Trade receivables 3,598 295,736
Other receivables 130,719 6,902
Prepayments and accrued income 16,419 20,435
150,736 323,073
5 Trade and other payables: amounts falling due within one year
2011 2010
GBP GBP
Trade payables 120,198 199,980
Other payables 3,500 3,500
Creditors for taxation and social security 53,120 86,035
Accrued liabilities and deferred income 28,170 280,450
204,988 569,965
6 Share capital
2011 2010 2011 2010
Number Number GBP GBP
Allotted, called up and
fully paid
Ordinary Shares 0.001p 849,999,999 399,999,999 8,500 40,000
/ 0.01p each
Deferred shares of 225,897,991,731 224,543,426 2,258,980 2,222,980
0.001p / 0.99p each
2,267,480 2,262,980
Details of the movement in share options in the year:
Enterprise Unapproved
Management Share Option
Incentive Plan
Scheme Number
Number
Outstanding at the beginning of the year 3,710,697 200,000
Lapsed in year (3,710,697) (200,000)
Outstanding at the end of the year - -
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; and
* 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 GBP1,000,000 for each Ordinary
Share held by them and shall have no other right to participate in the assets
of the Company.
During the year the Company undertook a subscription for new ordinary shares
and warrants by the Company's largest existing shareholder and certain other
connected companies.
On 3 November 2011, each of the issued deferred shares of 0.99p was subdivided
into 990 new deferred shares of 0.001p each and each of the existing ordinary
shares of 0.01p was sub-divided and re-designated into one new ordinary share
of 0.001p and nine new deferred shares.
The main rights and restrictions attaching to the new deferred shares are as
follows:
* no voting rights;
* no entitlement to attend any general meeting of the Company; and
* a right to participate in any return of capital to the extent of GBP1 in
aggregate over the class and a right to participate in any dividend or
other distribution to the extent of GBP1 in aggregate over the class.
The new deferred shares are, for all practical purposes, valueless and it is
the Board's intention, at an appropriate time, to have the new deferred shares
cancelled.
The subscribers agreed to subscribe for the subscription shares at 0.02p to
raise GBP90,000 to fund current short term working capital requirements. The
subscribers also received 10 subscription warrants for each subscription share
and these are exercisable at 0.002p per new ordinary share. The warrants may
only be exercised if the Company (and its wholly owned subsidiaries) meet
certain performance criteria over the three financial years ending 31 December
2013. In any case the Company will have to have declared, made and paid
dividends of at least GBP250,000 to all shareholders before the warrants may be
exercised. The warrants may only be exercised together as a whole and not in
part.
7 Copies of the final results for the year ended 31 December 2011 will be sent
to shareholders shortly and will be available from the Company's office at 12
Grosvenor Court, Foregate Street, Chester CH1 1HG and are available for
download from the Company's website www.tepexchange.com
Further enquiries:
TEP Exchange Group plc
David Roxburgh 00 353 87 2431 665
Merchant Securities Limited
Simon Clements/Virginia Bull 020 7628 2200
END
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