TIDMTEX
10 June 2013
TEP EXCHANGE GROUP PLC
("TEP" or "the Company")
Final Results for the year ended 31 December 2012
Chairman's statement
I am duly reporting the results for the Company and subsidiaries (together "the
Group") for the year ended 31 December 2012. Revenue for the year totalled GBP
915,886 (2011: GBP1,044,472) resulting in a profit from operations of GBP581,751
(2011: profit GBP687,734). The profit before and after taxation was GBP590,759
compared to the profit before and after taxation of GBP666,082 in 2011. The basic
earnings per share was 0.07 pence (2011: earnings 0.14 pence).
Total revenue decreased by 12 per cent. primarily as a result of the reduced
licence fees receivable under the revised arrangement with SL Investment
Management Limited ("SL"), who currently have a 23.92 per cent. shareholding in
the Company. On 3 September 2012, the Company announced that from 1 November
2012 the total quarterly licence fees payable to the Company would be reduced
from GBP250,000 to GBP50,000 and in addition, SL now has the right to terminate the
licence agreement upon giving 30 days' prior written notice to the Company.
Accordingly, the business of TEP, although generating revenues is dependent on
the maintenance of the licence agreement which can be terminated at short
notice.
Even though the licence fee revenue is now substantially reduced, during the
life of the licence agreement so far the Company has been able to eliminate the
deficit on the Company's balance sheet, effect a capital reduction to create
distributable reserves and has paid a first dividend to all shareholders. In
addition, a second dividend was announced on 21 February 2013 and was paid on
12 April 2013. The Directors consider that these arrangements have been
fundamentally important to the Company and its shareholders; however, the
uncertainty surrounding the on-going licence agreement has meant that the Board
has been forced to consider the strategic future of the Company.
The Company received an approach from Hamish Harris and me regarding a
potential transaction for the recapitalisation of the Company and simultaneous
adoption of the new investing policy by the Company. The new investing policy
was set out in detail in the circular issued by the Company on 21 February 2013
whereby the Company would be able to maintain its interest in the TEP business
but also seek to maximise shareholder value by drawing on the experience and
expertise of the three new Directors in identifying accretive opportunities.
On 9 November 2012 the Company announced that an interim dividend for the 2012
accounting period of 0.03p per share would be paid to shareholders on 20
December 2012 and the dividend was duly paid.
The Board would like to express its gratitude to Moses Kraus and Ami Weitz, who
have recently left the Board, for their excellent contribution to the
development of the Company.
D Stang
Chairman
7 June 2013
Audited Consolidated Statement of Comprehensive Income for the year ended 31
December 2012
2012 2011
GBP GBP
Revenue 915,886 1,044,472
Administrative expenses (334,135) (356,738)
Profit from operations 581,751 687,734
Finance income 9,008 -
Finance expense - (21,652)
Profit before income tax 590,759 666,082
Income tax expense - -
Profit attributable to owners of the parent and total 590,759 666,082
comprehensive income for the year
Earnings per share [Note 2]
Basic earnings per share 0.07p 0.14.p
Diluted earnings per share 0.05p 0.14p
Audited Consolidated Statement of Financial Position at 31 December 2012
2012 2011
GBP GBP
Assets
Current assets
Inventories - 3,525
Trade and other receivables [Note 4] 426,794 150,736
Cash and cash equivalents 80,951 73,593
Total current assets 507,745 227,854
Total assets 507,745 227,854
Liabilities
Current liabilities
Trade and other payables [Note 5] (149,120) (204,988)
Total current liabilities (149,120) (204,988)
Total liabilities (149,120) (204,988)
Net assets 358,625 22,866
Equity attributable to owners of the parent
Share capital [Note 6] 8,500 2,267,480
Share premium reserve - 4,032,678
Profit and loss account 350,125 (6,277,292)
Total equity 358,625 22,866
Audited Consolidated Statement of Cash Flow for the year ended 31 December 2012
2012 2011
GBP GBP
Cash flows from operating activities
Operating profit 590,759 666,082
Decrease/(increase) in inventories 3,525 (122)
(Increase)/decrease in trade and other receivables (276,058) 172,337
Decrease in trade and other payables (55,868) (364,977)
Net cash inflow from operating activities 262,358 473,320
Returns of investment and servicing of finance
Decrease in borrowings - (534,000)
Issue of ordinary share capital - 85,230
Equity dividends paid (255,000) -
Net increase in cash and cash equivalents 7,358 24,550
Cash and cash equivalents at beginning of year 73,593 49,043
Cash and cash equivalents at end of year 80,951 73,593
Cash and cash equivalents comprise:
Cash available on demand 80,951 73,593
Audited Consolidated Statement of Changes in Equity for the year ended 31
December 2012
Share Share Accumulated
capital premium profits Total
GBP GBP GBP GBP
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
Shares issued in year 4,500 80,730 - 85,230
At 1 January 2012 2,267,480 4,032,678 (6,277,292) 22,866
Total comprehensive income for - - 590,759 590,759
the year
Capital reduction and (2,258,980) (4,032,678) 6,291,658 -
cancellation of share premium
Equity dividends - - (255,000) (255,000)
At 31 December 2012 8,500 - 350,125 358,625
Share capital is the amount subscribed for ordinary shares at nominal value.
Accumulated profits represent cumulative profits of the Group attributable to
equity shareholders.
Notes to the Audited Preliminary Results for the year ended 31 December 2012
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 2012 and 2011, but is
derived from those accounts. Statutory accounts for 2011 have been delivered to
the Registrar of Companies and those for 2012 will be delivered following the
Company's Annual General Meeting. Auditors have reported on those accounts;
their reports were unqualified. Their report for 2011 did not contain a
statement under s237(2) or s237(3) of the Companies Act 1985 and their report
for 2012 did not contain a statement under s498(2) or s498(3) of the Companies
Act 2006.
2 Earnings per share
The calculation of the basic and diluted earnings per share is based upon:
2012 2011
Basic earnings per share (pence) 0.07p 0.14p
Diluted earnings per share (pence) 0.05p 0.14p
Profit attributable to equity shareholders GBP590,759 GBP666,082
Number Number
Weighted average number of shares - basic 849,999,999 471,506,848
Weighted average number of shares - diluted 1,100,273,972 471,506,848
The diluted number of shares includes 630,000,000 warrants as described in Note
6.
3 Dividends
2012 2011
GBP GBP
Interim dividend 255,000 -
4 Trade and other receivables
2012 2011
GBP GBP
Trade receivables 2,720 3,598
Other receivables 376,000 130,719
Prepayments and accrued income 48,074 16,419
426,794 150,736
5 Trade and other payables: amounts falling due within one year
2012 2011
GBP GBP
Trade payables 44,018 120,198
Other payables 3,500 3,500
Creditors for taxation and social security 25,772 53,120
Accrued liabilities and deferred income 75,830 28,170
149,120 204,988
6 Share capital
2012 2011 2012 2011
Number Number GBP GBP
Allotted, called up
and fully paid
Ordinary Shares 0.001p 849,999,999 849,999,999 8,500 8,500
each
Deferred shares of - 225,897,991,731 - 2,258,980
0.001p
each
8,500 2,267,480
During the year, the Company effected a court approved capital reduction by way
of the cancellation of its deferred shares (225,897,991,731 deferred shares of
0.001p each amounting to GBP2,258,980) and the cancellation of its share premium
account (GBP4,032,678).
Three of the Company's shareholders have received warrants which entitle these
shareholders, subject to the achievement of certain performance criteria, to
acquire 630,000,000 ordinary shares in the Company at an exercise price of
0.002p each. The warrants can be exercised during the 12 months ending 30
September 2013 provided the Company have declared, made and paid a dividend of
at least GBP250,000 to all shareholders prior to the exercise of the warrants.
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 2012 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
Sanlam Securities Limited
Simon Clements/Virginia Bull 020 7628 2200
END
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