5th May 2006 07:00
TEP EXCHANGE GROUP PLC ("TEP" or "the Company") Unaudited Preliminary Results for the year ended 31 December 2005 Chairman's statementI am pleased to report the results for the year ended 31 December 2005.Turnover for the year totalled ‚£404,118 (2004 - ‚£187,028) resulting in anoperating loss of ‚£69,032 compared to an operating loss of ‚£496,616 in 2004.The loss on ordinary activities before and after taxation was ‚£96,077, comparedto a loss before and after taxation of ‚£508,108 in 2004. The loss per share was0.04 pence, compared to a loss per share last year of 0.28 pence.The greatly improved trading results in 2005 were due to a combination of: * The increase in activity in the traded endowment policy (TEP) market as demonstrated by the substantial increase in turnover in 2005 compared to 2004; * The beneficial cost effect of the renegotiated Agreement for the outsourcing of operational management to Surrenda-link Limited; * The continued focus on reducing costs. The increase of activity in the TEP market due largely to demand emerging fromGermany for British TEPs continued in 2005 and has continued in 2006.During 2005, opportunities to add non U.K. based TEP trading activity andadditional non-TEP related products have been identified and are expected to berealised in the coming year.The renegotiated Agreement on the outsourcing of operational management toSurrenda-link Limited, which runs for three years from December 2004, hasreduced the company's fixed cost structure and has assisted in stabilising thecompany's ongoing cash flow position.Your Board continues to focus its efforts on financial viability and thecreation of shareholder value.Your Board is not proposing a dividend for the year under review.G KynochChairman5 May 2006Unaudited consolidated profit and loss account for the year ended 31 December 2005 Note 2005 2004 ‚£ ‚£ Turnover 404,118 187,028 Cost of sales (120,834) (43,297) Gross profit 283,284 143,731 Administrative expenses (525,363) (906,622) Other operating income 173,047 266,275 Operating loss (69,032) (496,616) Interest recieveable 1,352 253 Interest payable (28,397) (11,745) Loss on ordinary activities before (96,077) (508,108)taxation Tax on loss on ordinary activities - - Loss on ordinary activities after (96,077) (508,108)taxation Retained loss brought forward (6,307,118) (5,799,010) Retained loss carried forward (6,403,195) (6,307,118) Loss per share Basic and diluted loss per share (0.04)p (0.28)pUnaudited consolidated balance sheet at 31 December 2005 Note 2005 2005 2004 2004 ‚£ ‚£ ‚£ ‚£ Fixed assets Tangible assets 175 11,041 Current assets Stock 2,825 2,708 Debtors 208,224 128,650 Cash at bank and in 13,446 13,427 hand 224,495 144,785 Creditors: amounts (680,991) (879,396) falling due within one year Net current liabilties (456,496) (734,611) Total assets less (456,321) (723,570)current liabilities Creditors: amounts (33,545) -falling due after more than one year Net liabilities (489,866) (723,570) Capital and reserves Called up share capital 2,245,428 1,915,647 Share premium account 3,667,901 3,667,901 Profit and loss account (6,403,195) (6,307,118) Shareholders' funds - (489,866) (723,570)equity TEP Exchange Group PLCUnaudited consolidated cash flow statement for the year ended 31 December 2005 Note 2005 2005 2004 2004 ‚£ ‚£ ‚£ ‚£ Net cash outflow from 9 (278,364) (449,094)operating activities Returns on investments and servicing of finance Interest received 1,352 253 Interest paid (28,397) (11,745) Net cash outflow from (27,045) (11,492)returns on investment and servicing of finance Capital expenditure and financial investment Proceeds on sale of - -tangible fixed assets Financing New bank loan 190,000 - Bank loan repaid (29,375) - Issue of ordinary share 329,787 478,676 capital 490,412 478,676 Movement in net cash 10 185,003 18,090TEP Exchange Group PLCNotes to the Unaudited Preliminary Results for the year ended 31 December 20051 Accounting policiesThe financial statements have been prepared under the historical costconvention and are in accordance with applicable United Kingdom accountingstandards. The following principal accounting policies have been appliedconsistently in dealing with items that are considered material to the Group'sfinancial statements.Going concernDuring the year ended 31 December 2005 the Group incurred a loss of ‚£96,077(2004 - ‚£508,108) and at 31 December 2005 had net liabilities of ‚£489,866 (2004- ‚£723,570).The Group relies on support from one of its major shareholders, Surrenda-linkLimited, in order to meet its obligations as they fall due. It is also financedthrough a bank loan, repayable by a one off amount of ‚£95,000 in July 2006 andwith the remainder over 36 months, together with a bank overdraft facility of ‚£10,000. In addition, in 2005 the directors restructured the trading operationin particular with Surrenda-link Limited, who now charge for their services ona commission rather than a fixed fee basis. As a result of this and improvedperformance since the year end, the directors anticipate improved tradingresults for the forthcoming year and have projected cash flow information whichshows creditors with the exception of Surrenda-link Limited can be repaid outof cash flow.The Directors have received written confirmation from Surrenda-link Limitedthat the repayment of outstanding charges will be deferred for not less thanone year from the date of the approval of these financial statements until suchtime as the Company has sufficient liquid resources after repaying all othercreditors to repay them.The Directors have also received assurances from Surrenda-link Limited that itwill advance to the Company on a quarterly basis, the lesser of the sum of ‚£20,000 and the specific corporate costs incurred by the Company, as defined inthe Outsourcing Agreement signed in December 2004. The Company will utilise thequarterly advance from Surrenda-link to discharge the specific corporate costs.The Company has undertaken to use its reasonable endeavours to minimisespecific corporate costs.On the basis of the above, and all other available information, the Directorsconsider that the Group will become profitable and continue to operate withinthe facilities currently agreed and those likely to be agreed in the futurewith Surrenda-link Limited and its bankers and therefore that it is appropriateto prepare the financial statements on the going concern basis.Basis of consolidationThe consolidated financial statements incorporate the financial statements ofTEP Exchange Group PLC and all of its subsidiary undertakings made up to 31December 2005. Uniform accounting policies are adopted by all companies in theGroup. The acquisition method of accounting is used to consolidate the resultsof subsidiary undertakings in the Group financial statements.TurnoverTurnover represents fees and commission from arranging the sale and purchase ofwith profit endowment policies sales to outside customers less value added tax.Fee and commission income is recognised when contractually due.DepreciationDepreciation is provided to write off the cost, less estimated residual values,of all fixed assets over their expected useful lives. It is calculated at thefollowing rates:Fixtures, fittings and equipment - 4 yearsComputer equipment - 3 yearsInvestmentsInvestments held as fixed assets are stated at cost less provision forimpairment in value.StocksStocks of endowment policies are valued at the lower of cost and net realisablevalue. Cost is based on the cost of purchase. Net realisable value is based onsurrender value less additional costs to completion and disposal.Operating leasesAnnual rentals are charged to the profit and loss account on a straight linebasis over the term of the lease.Financial instrumentsThe Group does not use derivative financial instruments for trading purposes orto manage risk.Deferred taxDeferred tax is recognised in respect of all timing differences that haveoriginated but not reversed by the balance sheet date except for deferred taxassets which are only recognised to the extent that the Company anticipatesmaking sufficient taxable profits in the future to absorb the reversal of theunderlying timing differences.2 Publication of non-statutory accountsThese preliminary results for the year ended 31 December 2005, which areunaudited, are prepared on the basis of the accounting policies set out in thefinancial statements for the year ended 31 December 2004.The financial information for the year ended 31 December 2004 is extracted fromthe Group's financial statements to that date which received an unqualifiedauditors' report. The full accounts for the year ended 31 December 2004 havebeen delivered to the Registrar of Companies.Full accounts for the year ended 31 December 2005 will be delivered to theRegistrar of Companies and shareholders in due course. The consolidatedfinancial statements within this preliminary announcement do not constitutestatutory accounts as defined under Section 240 of the Companies Act 1985 (asamended).3 Loss per shareThe calculation of the basic loss per share is based on the loss after tax of ‚£96,077 (2004 - ‚£508,108) and on 211,678,109 (2004 - 181,073,202) ordinaryshares, being the weighted average number of ordinary shares in issue. Theoptions in issue at the 31 December 2004 and 31 December 2005 are antidilutive.4 DividendsThe Directors are not proposing the payment of a dividend in respect of theyear ended 31 December 2005.5 Debtors 2005 2004 ‚£ ‚£ Trade debtors 21,732 58,150 Other debtors and prepayments 186,492 70,500 208,224 128,6506 Creditors: amounts falling due within one year 2005 2004 ‚£ ‚£ Bank overdraft 5,189 190,173 Bank loan 129,080 - Trade creditors 307,779 384,859 Creditors for taxation and social security 19,187 18,667 Other creditors 48,155 130,750 Accruals 171,601 154,947 680,991 879,396Of the Company's bank term loan of ‚£160,625, ‚£129,080 is repayable during 2006,and ‚£31,545 over a further 2 years to December 2008. The company also has abank overdraft facility of ‚£10,000.7 Creditors: amounts falling due after more than one year 2005 2004 ‚£ ‚£ Bank loan 31,545 - Other creditors 2,000 - 33,545 -8 Reconciliation of movements in shareholders' funds 2005 2004 ‚£ ‚£ Loss for the year (96,077) (508,108) New share capital subscribed and issued 329,781 478,676 233,704 (29,432) Opening shareholders' funds (723,570) (694,138) Closing shareholders' funds (489,866) (723,570)9 Reconciliation of operating loss to net cash outflow from operatingactivities 2005 2004 ‚£ ‚£ Operating loss (69,029) (496,616) Depreciation 10,860 10,860 Increase in stock (117) (117) (Increase)/decrease in debtors (79,574) 79,017 Decrease in creditors (140,504) (42,238) (278,364) (449,094)10 Analysis of net debt At 31 Cash Flow Non-cash At 31 December movement December 2004 ‚£ 2005 ‚£ ‚£ ‚£ Cash in hand and at bank 13,427 19 - 13,446 Overdrafts (190,173) 184,984 - (5,189) Cash equivalents (176,746) 185,003 - 8,257 Bank loan - (160,625) - (160,625) Net debt (176,746) 24,378 - (152,368) ENDTEP EXCHANGE GROUP PLCRelated Shares:
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