19th Oct 2009 07:30
19 October 2009 TEP EXCHANGE GROUP PLC ("TEP" or "the Company") Final Results for the year ended 31 December 2008
Chairman's statement
I am pleased to report the results for the year ended 31 December 2008. Revenue for the year totalled 438,858 (2007 - 606,502) resulting in a loss from operations of 198,310 compared to a profit from operations of 64,369 in 2007. The loss from operations in 2008 includes a charge for irrecoverable VAT in the amount of 134,960 and this represents the agreed settlement of the VAT assessments which were detailed in note 19 of the 2007 report and financial statements.
The loss before and after taxation was 217,606, compared to a profit before and after taxation of 37,535 in 2007. The basic loss per share was 0.05 pence, compared to a basic earning per share in 2007 of 0.01 pence.
Revenue decreased significantly in 2008 compared with 2007 due to the extremely challenging market conditions in the traded endowment policy market. The turmoil in the 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 there were virtually no deals being completed utilising the Company's electronic platform. .
The Directors are of the view that the Company's electronic platform is still a cost effective method for market markers to source policies, particularly direct from the public, but the Company is heavily reliant upon the market markers 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 prevailing
Your Board is not proposing a dividend for the year under review.
G KynochChairman16 October 2009
Audited consolidated income statement for the year ended 31 December 2008
2008 2007 GBP GBP Revenue 438,858 606,502 Administrative expenses (637,168) (542,133) (Loss)/profit from operations (198,310) 64,369 (Loss)/profit from operations Finance income 1,606 7,082 Finance costs (20,902) (33,916) (Loss)/profit before tax (217,606) 37,535 Tax expense - -
(Loss)/profit attributable to equity holders of the (217,606) 37,535 parent
(Loss)/earnings per share [Note 2] Basic and diluted (loss)/earnings per share (0.05)p 0.01p
Audited consolidated balance sheet at 31 December 2008
2008 2007 GBP GBP Assets Non-current assets Property, plant and equipment - - Total non-current assets - - Current assets Inventories 3,165 3,050 Trade and other receivables [Note 4] 67,972 259,444 Cash and cash equivalents 29,048 38,044 Total current assets 100,185 300,538 Total assets 100,185 300,538 Current liabilities Bank overdraft - (70) Bank loan - (53,143) Other borrowings - (20,000) Trade and other payables [Note 5] (255,540) (188,662) Total current liabilities (255,540) (261,875) Liabilities Non-current liabilities Trade payables (271,624) (248,036) Total non-current liabilities (271,624) (248,036) Total liabilities (527,164) (509,911) Net liabilities (426,979) (209,373) Equity attributable to equity holders of the parent Share capital [Note 6] 2,262,980 2,262,980 Share premium reserve 3,951,948 3,951,948 Accumulated losses (6,641,907) (6,424,301) Total equity deficit (426,979) (209,373)
Audited consolidated cash flow statement for the year ended 31 December 2008
2008 2007 GBP GBP Operating activities (Loss)/profit before tax (217,606) 37,535 Finance income (1,606) (7,082) Finance costs 20,902 33,916
(Loss)/profit from operations before changes in working (198,310) 64,369 capital
Increase in inventories (115) (112) Decrease/(increase) in trade and other receivables 191,472 (29,445) Increase/(decrease) in trade and other payables 93,274 (220,617) Cash generated/(used) by operating activities 86,321 (185,805) Investing activities Interest received 1,606 7,082 Financing activities Issue of Ordinary Shares - 350,913 Expenses relating to the issue of deferred shares - (49,320) Repayment of borrowings (73,143) (76,778) Interest paid (23,710) (33,916)
Net cash (outflow)/inflow from financing activities (96,853) 190,889
(Decrease)/increase in cash and cash equivalents (8,926) 12,176 Cash and cash equivalents at beginning of year 37,974 25,798 Cash and cash equivalents at end of year 29,048 37,974 Cash and cash equivalents comprise: Cash available on demand 29,048 38,044 Bank overdraft - (70) Cash and cash equivalents at end of the year 29,048 37,974Audited consolidated statement of changes in equity for the year ended 31December 2008 Share Share Accumulated capital premium losses Total GBP GBP GBP GBP At 1 January 2007 2,245,434 3,667,901 (6,461,836) (548,501) Profit and total recognised - - 37,535 37,535income and expense for the year Issue of share capital 17,546 333,367 - 350,913 Expenses relating to the issue - (49,320) - (49,320)of shares At 1 January 2008 2,262,980 3,951,948 (6,424,301) (209,373) Loss and total recognised - - (217,606) (217,606)income and expense for the year At 31 December 2008 2,262,980 3,951,948 (6,641,907) (426,979)
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.
Retained losses represent cumulative losses of the Group attributable to equity holders. There were no changes in equity in the prior year other than the profit/(loss) for the period.
Notes to the Audited Preliminary Results for the year ended 31 December 2008
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 2008 and 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's Annual General Meeting. Auditors have reported on those accounts; their reports were unqualified and did not contain statements under the Companies Act 1985, sections 237(2) or (3). The auditors' report on the accounts for 31 December 2007 referred to a matter concerning a contingent liability to which the auditors' drew attention by way of emphasis without qualifying their report. The auditors' report on the accounts for 31 December 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 opinion. The details concerning this matter are given below.
Going concern
During the year ended 31 December 2008 the Group incurred a loss of 217,606 (2007 - profit of 37,535) and at 31 December 2008 had net liabilities of 426,979 (2007 - 209,373).
The Group relies on support from Surrenda-link Limited (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 271,624 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 150,000 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 134,960 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 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 financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.
2 (Loss)/earnings per share
The calculation of the basic (loss)/earnings per share is based upon:
2008 2007 Basic (loss)/earnings per share (pence) (0.05)p 0.01p
(Loss)/profit attributable to equity holders GBP(217,606) GBP37,535
Number Number Weighted average number of shares 399,999,999 364,908,684
The options, warrants and deferred shares in issue at the 31 December 2007 and 31 December 2008, 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 2008.
4 Trade and other receivables
2008 2007 GBP GBP Trade receivables 4,817 168,499 Other receivables 43,416 69,812 Prepayments and accrued income 19,739 21,133 67,972 259,444
5 Trade and other payables: amounts falling due within one year
2008 2007 GBP GBP Trade payables 58,414 51,891 Other payables 3,500 4,000 Creditors for taxation and social security 166,134 - Accrued liabilities and deferred income 27,492 132,771 255,540 188,6626 Share capital 2008 2007 2008 2007 Number Number GBP GBP Authorised
Ordinary Shares of 0.01p 1,000,000,000 1,000,000,000 100,000 100,000 each
Deferred shares of 0.99p 400,000,000 400,000,000 3,960,000 3,960,000each 4,060,000 4,060,000 Allotted, called up and fully paid Ordinary Shares 0.01p 399,999,999 399,999,999 40,000 40,000each Deferred shares of 0.99p 224,543,426 224,543,426 2,222,980 2,222,980each 2,262,980 2,262,980 Ordinary Shares Deferred shares Number GBP Number GBP Share capital at 1 399,999,999 40,000 224,543,426 2,222,980January 2008 New share capital issued - - - - Share capital at 399,999,999 40,000 224,543,426 2,222,980 31 December 2008
Details of the two equity settled share option schemes are shown below:
Exercise period Number of Exercise From To shares under price option Enterprise Management Incentive Scheme 1,027,879 3p 16.02.2004 16.02.2011 600,000 8p 06.09.2004 06.09.2011 582,818 10p 16.02.2004 16.02.2011 1,500,000 12p 06.09.2004 06.09.2011 3,710,697 Unapproved Share Option 200,000 8p 24.08.2004 24.08.2011Plan 3,910,697
There were no changes to the number of options in issue in either the current or prior period.
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 1,000,000 for each Ordinary Share held by them and shall have no other right to participate in the assets of the Company.
There were no changes to the number of options in issue in either the current or prior period.
On 14 March 2007, the Company issued warrants to subscribe for up to 35,000,000 Ordinary Shares in cash at 0.2p per share. Each warrant confers on the warrantholder the right to subscribe in cash for Ordinary Shares to be issued to the warrant holder or such person as the warrantholder may direct. The warrants are not intended to be listed or dealt on any recognised investment exchange. Ordinary Shares issued on exercise of warrants will qualify for all dividends and distribution declared, made or paid after their date of issue.
The warrants may only be exercised upon certain performance being met criteria in each of any two consecutive financial years over the five years commencing 1 January 2007 and ending 31 December 2011. No cash was received for the warrants and that no charge to the income statement arises under IFRS 2.
The warrants may be exercised in whole or in part or in parts. The exercise price of the warrants must be paid at the time the rights are exercised.
Any rights not exercised prior to 30 June 2012 will lapse on that date.
7 Copies of the final results for the year ended 31 December 2008 will be sent to shareholders today 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 1 260 7746 Merchant John East Securities Limited John East/Simon Clements 020 7628 2200
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