20th Jun 2012 07:00
20 June 2012 TEP EXCHANGE GROUP PLC ("TEP" or "the Company") Final Results for the year ended 31 December 2011
Chairman's statement
I am duly reporting the results for the Company and subsidiaries (together "the Group") for the year ended 31 December 2011. Revenue for the year totalled £ 1,044,472 (2010: £164,776) resulting in a profit from operations of £687,734 (2010: loss £56,797). The profit before and after taxation was £666,082 compared to the loss before and after taxation of £86,458 in 2010. The basic earnings per share was 0.14 pence (2010: loss 0.02 pence).
Revenue increased significantly in 2011 compared with 2010 due to the receipt of fees from 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 and in consideration will receive a quarterly fee of £20,000 and in addition, SL has been granted exclusive rights to develop and modify the electronic platform for a quarterly fee of £230,000 ("the Licence Agreement"). The Licence Agreement is for a period of ten years; however, SL may terminate the agreement on 30 April of each year. On 2 April 2012 the Company announced that SL had informed the Company that the income generated during the 12 month period ending 30 April 2012 was unlikely to be £250,000 or more and, therefore, it may terminate the Licence Agreement in accordance with its terms. The Company agreed with SL that it would provide a 61 day extension to the termination notice period to allow SL to further assess the benefits of the Licence Agreement. A further announcement by the Company was issued on 31 May 2012 setting out that the agreement can now be terminated on 30 August by SL giving 30 day's prior written notice to the Company.
As a result of these arrangements the directors consider it appropriate to prepare the financial statements on a going concern basis.
The market demand for traded endowment policies still remains extremely depressed but the Company continues to work closely with market makers in anticipation of increasing demand for policies. In the meantime, the Directors are continuing to maintain strong controls over the Company's cost base and are also exploring additional opportunities to generate income
Your Board is not proposing a dividend for the year under review.
G KynochChairman19 June 2012Audited Consolidated Statement of Comprehensive Income for the year ended 31December 2011 2011 2010 £ £ Revenue 1,044,472 164,776 Administrative expenses (356,738) (221,573) Profit / (loss) from operations 687,734 (56,797) Finance income - - Finance costs (21,652) (29,661) Profit / (loss) before income tax 666,082 (86,458) Income tax expense - -
Profit / (loss) attributable to owners of the parent and 666,082 (86,458) total comprehensive income for the year
Earnings / (loss) per share [Note 2] Basic and diluted earnings / (loss) per share 0.14p (0.02)p
Audited Consolidated Statement of Financial Position at 31 December 2011
2011 2010 £ £ Assets Current assets Inventories 3,525 3,403 Trade and other receivables [Note 4] 150,736 323,073 Cash and cash equivalents 73,593 49,043 Total current assets 227,854 375,519 Total assets 227,854 375,519 Liabilities Current liabilities Borrowings - (534,000) Trade and other payables [Note 5] (204,988) (569,965) Total current liabilities (204,988) (1,103,965) Total liabilities (204,988) (1,103,965) Net assets/(liabilities) 22,866 (728,446) Equity attributable to owners of the parent Share capital [Note 6] 2,267,480 2,262,980 Share premium reserve 4,032,678 3,951,948 Accumulated losses (6,277,292) (6,943,374) Total equity 22,866 (728,446)
Audited Consolidated Statement of Cash Flow for the year ended 31 December 2011
2011 2010 £ £ Cash flows from operating activities Operating profit / (loss) 666,082 (86,458) Increase in inventories (122) (118) Decrease/(increase) in trade and other receivables 172,337 (300,323) (Decrease)/increase in trade and other payables (364,977) 262,597 Cash generated in operating activities 473,320 (124,302) Cash flows from financing activities (Decrease)/increase in borrowings (534,000) 171,000 Issue of ordinary share capital 85,230 - Net increase in cash and cash equivalents 24,550 46,698 Cash and cash equivalents at beginning of year 49,043 2,345 Cash and cash equivalents at end of year 73,593 49,043 Cash and cash equivalents comprise: Cash available on demand 73,593 49,043 Audited Consolidated Statement of Changes in Equity for the year ended 31December 2011 Share Share Accumulated capital premium losses Total £ £ £ £ At 1 January 2010 2,262,980 3,951,948 (6,856,916) (641,988) Total comprehensive income for - - (86,458) (86,458)the year At 1 January 2011 2,262,980 3,951,948 (6,943,374) (728,446) Total comprehensive income for - - 666,082 666,082the year Share issue in year 4,500 80,730 - 85,230 At 31 December 2011 2,267,480 4,032,678 (6,277,292) 22,866
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 Group attributable to equity shareholders.
Notes to the Audited Preliminary Results for the year ended 31 December 2011
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 2011 and 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. Auditors have reported on those accounts; their reports were unqualified. Their report for 2010 did not contain a statement under s237(2) or s237(3) of the Companies Act 1985 and their report for 2011 did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.
Going concern
During the year ended 31 December 2011 the Group made a profit of £666,082 (2010: loss £86,458) and at 31 December 2011 had net assets of £22,866 (2010: net liabilities £728,446).
In reaching a decision as to whether the Company is a going concern, the Directors have given due regard to the following factors:
* During 2010, the Group entered into a 10 year licence agreement with SL Investment Management Limited ("SL"), which is generating significant 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 financial statements on the going concern basis.
2 Earnings / (loss) per share
The calculation of the basic and diluted earnings / (loss) per share is based upon:
2011 2010 Basic and diluted earnings / (loss) per share 0.14p (0.02)p(pence) Profit / (loss) attributable to equity £666,082 £(86,458)shareholders Number Number Weighted average number of shares 471,560,848 399,999,999
The options, warrants and deferred shares in issue at the 31 December 2010 and 31 December 2011, 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 2011.
4 Trade and other receivables
2011 2010 £ £ Trade receivables 3,598 295,736 Other receivables 130,719 6,902 Prepayments and accrued income 16,419 20,435 150,736 323,073
5 Trade and other payables: amounts falling due within one year
2011 2010 £ £ Trade payables 120,198 199,980 Other payables 3,500 3,500 Creditors for taxation and social security 53,120 86,035 Accrued liabilities and deferred income 28,170 280,450 204,988 569,9656 Share capital 2011 2010 2011 2010 Number Number £ £ Allotted, called up and fully paid Ordinary Shares 0.001p 849,999,999 399,999,999 8,500 40,000/ 0.01p each Deferred shares of 225,897,991,731 224,543,426 2,258,980 2,222,9800.001p / 0.99p each 2,267,480 2,262,980
Details of the movement in share options in the year:
Enterprise Unapproved Management Share Option Incentive Plan Scheme Number Number Outstanding at the beginning of the year 3,710,697 200,000 Lapsed in year (3,710,697) (200,000) Outstanding at the end of the year - -
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.
During the year the Company undertook a subscription for new ordinary shares and warrants by the Company's largest existing shareholder and certain other connected companies.
On 3 November 2011, each of the issued deferred shares of 0.99p was subdivided into 990 new deferred shares of 0.001p each and each of the existing ordinary shares of 0.01p was sub-divided and re-designated into one new ordinary share of 0.001p and nine new deferred shares.
The main rights and restrictions attaching to the new deferred shares are as follows:
* no voting rights; * no entitlement to attend any general meeting of the Company; and * a right to participate in any return of capital to the extent of £1 in aggregate over the class and a right to participate in any dividend or other distribution to the extent of £1 in aggregate over the class.
The new deferred shares are, for all practical purposes, valueless and it is the Board's intention, at an appropriate time, to have the new deferred shares cancelled.
The subscribers agreed to subscribe for the subscription shares at 0.02p to raise £90,000 to fund current short term working capital requirements. The subscribers also received 10 subscription warrants for each subscription share and these are exercisable at 0.002p per new ordinary share. The warrants may only be exercised if the Company (and its wholly owned subsidiaries) meet certain performance criteria over the three financial years ending 31 December 2013. In any case the Company will have to have declared, made and paid dividends of at least £250,000 to all shareholders before the warrants may be exercised. 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 2011 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 Merchant Securities Limited Simon Clements/Virginia Bull 020 7628 2200
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