Final Results

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 "theGroup") for the year ended 31 December 2012. Revenue for the year totalled £915,886 (2011: £1,044,472) resulting in a profit from operations of £581,751(2011: profit £687,734). The profit before and after taxation was £590,759compared to the profit before and after taxation of £666,082 in 2011. The basicearnings per share was 0.07 pence (2011: earnings 0.14 pence). Total revenue decreased by 12 per cent. primarily as a result of the reducedlicence fees receivable under the revised arrangement with SL InvestmentManagement Limited ("SL"), who currently have a 23.92 per cent. shareholding inthe Company. On 3 September 2012, the Company announced that from 1 November2012 the total quarterly licence fees payable to the Company would be reducedfrom £250,000 to £50,000 and in addition, SL now has the right to terminate thelicence agreement upon giving 30 days' prior written notice to the Company.Accordingly, the business of TEP, although generating revenues is dependent onthe maintenance of the licence agreement which can be terminated at shortnotice. Even though the licence fee revenue is now substantially reduced, during thelife of the licence agreement so far the Company has been able to eliminate thedeficit on the Company's balance sheet, effect a capital reduction to createdistributable reserves and has paid a first dividend to all shareholders. Inaddition, a second dividend was announced on 21 February 2013 and was paid on12 April 2013. The Directors consider that these arrangements have beenfundamentally important to the Company and its shareholders; however, theuncertainty surrounding the on-going licence agreement has meant that the Boardhas been forced to consider the strategic future of the Company. The Company received an approach from Hamish Harris and me regarding apotential transaction for the recapitalisation of the Company and simultaneousadoption of the new investing policy by the Company. The new investing policywas set out in detail in the circular issued by the Company on 21 February 2013whereby the Company would be able to maintain its interest in the TEP businessbut also seek to maximise shareholder value by drawing on the experience andexpertise of the three new Directors in identifying accretive opportunities. On 9 November 2012 the Company announced that an interim dividend for the 2012accounting period of 0.03p per share would be paid to shareholders on 20December 2012 and the dividend was duly paid. The Board would like to express its gratitude to Moses Kraus and Ami Weitz, whohave recently left the Board, for their excellent contribution to thedevelopment of the Company. D Stang Chairman 7 June 2013 Audited Consolidated Statement of Comprehensive Income for the year ended 31December 2012 2012 2011 £ £ 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 590,759 666,082comprehensive 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 £ £ 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 £ £ 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 31December 2012 Share Share Accumulated capital premium profits Total £ £ £ £ At 1 January 2011 2,262,980 3,951,948 (6,943,374) (728,446) Total comprehensive income for - - 666,082 666,082the 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 - - 590,759 590,759the 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 toequity 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 withthe International Financial Reporting Standards, International AccountingStandards and Interpretations (collectively IFRS) issued by the InternationalAccounting Standards Board (IASB) as adopted by European Union ("adoptedIFRSs"), and are in accordance with IFRS as issued by the IASB. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2012 and 2011, but isderived from those accounts. Statutory accounts for 2011 have been delivered tothe Registrar of Companies and those for 2012 will be delivered following theCompany's Annual General Meeting. Auditors have reported on those accounts;their reports were unqualified. Their report for 2011 did not contain astatement under s237(2) or s237(3) of the Companies Act 1985 and their reportfor 2012 did not contain a statement under s498(2) or s498(3) of the CompaniesAct 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 £590,759 £666,082 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 Note6. 3 Dividends 2012 2011 £ £ Interim dividend 255,000 - 4 Trade and other receivables 2012 2011 £ £ 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 £ £ 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 £ £ Allotted, called upand fully paid Ordinary Shares 0.001p 849,999,999 849,999,999 8,500 8,500each Deferred shares of - 225,897,991,731 - 2,258,9800.001peach 8,500 2,267,480 During the year, the Company effected a court approved capital reduction by wayof the cancellation of its deferred shares (225,897,991,731 deferred shares of0.001p each amounting to £2,258,980) and the cancellation of its share premiumaccount (£4,032,678). Three of the Company's shareholders have received warrants which entitle theseshareholders, subject to the achievement of certain performance criteria, toacquire 630,000,000 ordinary shares in the Company at an exercise price of0.002p each. The warrants can be exercised during the 12 months ending 30September 2013 provided the Company have declared, made and paid a dividend ofat least £250,000 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 sentto shareholders shortly and will be available from the Company's office at 12Grosvenor Court, Foregate Street, Chester CH1 1HG and are available fordownload from the Company's website www.tepexchange.com Further enquiries: TEP Exchange Group plcDavid Roxburgh 00 353 87 2431 665 Sanlam Securities LimitedSimon Clements/Virginia Bull 020 7628 2200