TEP Exchange Group PLC Half-yearly Report
25 September 2012 - 8:00AM
UK Regulatory
TIDMTEX
25 September 2012
TEP Exchange Group PLC
("TEP" or "the Company")
Half-yearly results for the six month period ended 30 June 2012
Chairman's Statement
I am pleased to report the unaudited results of the Company for the six month
period ended 30 June 2012. Total revenue for the period was GBP521,000 (six month
period ended 30 June 2011: GBP518,000), of which licence fee income amounted to GBP
500,000 (six month period ended 30 June 2011: GBP500,000). The Company achieved a
profit from operations of GBP374,000, compared to a profit from operations of GBP
370,000 in the same period last year. The profit before and after taxation was
GBP377,000, compared to a profit before and after taxation of GBP357,000 in the
first six months of last year.
The licence fee income generated in the six month period ended 30 June 2012 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 had the right to terminate the agreement
on 30 April of each year, subject to certain conditions. On 3 September 2012,
the Company announced that from 1 November 2012 the total quarterly licence
fees payable to TEP will be reduced from GBP250,000 to GBP50,000 and in addition,
SL will now have the right to terminate the Licence Agreement upon giving 30
days' prior written notice to TEP. Having regard to the revised arrangements
under the Licence Agreement the directors consider that it is still appropriate
to prepare these interim financial statements on the going concern basis.
The market demand for traded endowment policies still remains extremely
depressed but the Company continues to work closely with marker makers in
anticipation of increasing demand for policies. The directors are continuing to
maintain strong controls over the Company's cost base and are also exploring
opportunities to generate additional income.
The circular to shareholders dated 20 June 2012 contained details of a
conditional capital reduction by way of cancellation of the Company's deferred
shares and the cancellation of the Company's share premium account in order to
effect dividend payments to shareholders. The Company has now obtained the
approval of its Shareholders and the Courts for the capital reduction. The
Board is currently undertaking the final part of the process to enable the
Company to declare and pay it's first ever dividend. In addition, as announced
on 3 September 2012, the Company has obtained agreement with the warrant
holders that 86% of the existing warrants are to be cancelled and the remaining
14% of the warrants (enabling the warrant holders to increase their overall
shareholding by 8.53% of the enlarged share capital of the Company) can be
exercised for 12 months commencing from 1 October 2012 provided the Company has
declared and paid a dividend of at least GBP250,000 to all shareholders prior to
the exercise of the warrants.
George Kynoch
Chairman
25 September 2012
For further information please contact:
TEP Exchange Group plc
David Roxburgh 00 353 87 2431665
Merchant Securities Limited
Simon Clements/Virginia Bull 020 7628 2200
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2012
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 521 518 1,045
Administrative expenses (147) (148) (357)
Profit from operations 374 370 688
Finance income / (costs) 3 (13) (22)
Profit before income tax 377 357 666
Income tax expense - - -
Profit attributable to the owners of 377 357 666
the parent and total comprehensive
income for the period
Earnings per share
Basic and diluted earnings per share 0.04p 0.09p 0.14p
(note 3)
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2012
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 2011 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)
Total comprehensive income - - 309 309
for the period
Share issue in the period 4 81 85
At 31 December 2011 2,267 4,033 (6,277) 23
Total comprehensive income - - 377 377
for the period
At 30 June 2012 2,267 4,033 (5,900) 400
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 2012
As at As at As at
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Current assets
Inventories 3 3 3
Trade and other receivables 448 352 151
Cash and cash equivalents 398 207 74
Total current assets 849 562 228
TOTAL ASSETS 849 562 228
LIABILITIES
Current liabilities
Borrowings - (379) -
Trade and other payables (449) (554) (205)
Total current liabilities (449) (933) (205)
Non-current liabilities
Borrowings - - -
Total non-current liabilities - - -
TOTAL LIABILITIES (449) (933) (205)
TOTAL NET ASSETS / (LIABILITIES) 400 (371) 23
Equity attributable to equity holders of
the parent
Share capital 2,267 2,263 2,267
Share premium reserve 4,033 3,952 4,033
Accumulated losses (5,900) (6,586) (6,277)
TOTAL EQUITY / (DEFICIT) 400 (371) 23
Consolidated Statement of Cash Flows
for the six months ended 30 June 2012
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Operating profit 377 357 666
(Increase) / decrease in trade and other (297) (29) 173
receivables
Increase / (decrease) in trade and other 244 (15) (365)
payable
Cash generated by operating activities 324 313 474
Cash flows from financing activities
Decrease in borrowings - (155) (534)
Issue of ordinary share capital - - 85
Net increase in cash and cash equivalents 324 158 25
Cash and cash equivalents at beginning of 74 49 49
period
Cash and cash equivalents at end of period 398 207 74
Cash and cash equivalents comprise:
Cash available on demand 398 207 74
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 2012 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 2012.
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 2011
have been derived from the statutory accounts for 2011. 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 2012.
3. Earnings per share
The earnings per share has been calculated by dividing the profit after
taxation for the period of GBP377,000 (six month period ended 30 June 2011:
profit of GBP357,000 and year ended 31 December 2011: profit of GBP666,000) by the
weighted average number of Ordinary Shares of 849,999,999 (six month period
ended 30 June 2011: 399,999,999 and year ended 31 December 2011: 471,506,848)
in issue during the period.
4.Going Concern
During the six month period ended 30 June 2012 the Group achieved a profit of GBP
377,000 (year ended 31 December 2011 profit of GBP666,000) and at 30 June 2012
had net assets of GBP400,000 (31 December 2011 net assets of GBP23,000).
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 is generating 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 interim financial statements on
the going concern basis.
END
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