6 September 2010
TEP EXCHANGE GROUP PLC
("TEP" or "the Company")
Final Results for the year ended 31 December 2009
Chairman's statement
I am duly reporting the results for the year ended 31 December 2009. Revenue
for the year totalled £10,334 (2008: £438,858) resulting in a loss from
operations of £205,840 (2008: £198,310). The loss before and after taxation was
£215,009 compared to the loss before and after taxation of £217,606 in 2008.
The basic loss per share was 0.05 pence which was the same basic loss per share
as incurred in 2008.
Revenue decreased significantly in 2009 compared with 2008 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 during 2009. Since the end of 2009 there has been a modest increase in
demand for traded endowment policies from market makers.
The Directors are of the view that the Company's electronic platform is still a
cost effective method for market makers to source policies, particularly direct
from the public and in addition, the technology can be utilised for trading in
other assets particularly within the financial services sector. With this in
mind the Directors are currently in the final stages of negotiations for the
Company to receive quarterly fees from licensing the electronic platform and
all the technology to SL Investment Management Limited (a 48.26 per cent.
shareholder in the Company). It is intended that TEP Exchange Limited will
continue to be able to utilise the electronic platform in order that market
makers can continue to source traded endowment policies.
Your Board is not proposing a dividend for the year under review.
On behalf of the Board I want to express my sincere appreciation to Paul Sands
for his professionalism, guidance and work ethic over the past 9 years as a
director of the Company. Paul has decided to retire from the Board and not to
offer himself for re-election at the forthcoming Annual General Meeting of the
Company. I am happy to report the Board is intending for David Roxburgh to
assume the position of Managing Director of the Company on the retirement of
Paul.
G Kynoch
Chairman
6 September 2010
Audited consolidated statement of comprehensive income for the year ended 31
December 2009
2009 2008
£ £
Revenue 10,334 438,858
Administrative expenses (216,174) (637,168)
Loss from operations (205,840) (198,310)
Finance income - 1,606
Finance costs (9,169) (20,902)
Loss before tax (215,009) (217,606)
Tax expense - -
Loss attributable to equity holders of the parent and (215,009) (217,606)
total comprehensive income for the year
Loss per share [Note 2]
Basic and diluted loss per share (0.05)p (0.05)p
Audited consolidated statement of financial position at 31 December 2009
2009 2008
£ £
Current assets
Inventories 3,285 3,165
Trade and other receivables [Note 4] 22,750 67,972
Cash and cash equivalents 2,345 29,048
Total current assets 28,380 100,185
Total assets 28,380 100,185
Liabilities
Current liabilities
Other borrowings (363,000) -
Trade and other payables [Note 5] (307,368) (255,540)
Total current liabilities (670,368) (255,540)
Non-current liabilities
Trade payables - (271,624)
Total non-current liabilities - (271,624)
Total liabilities (670,368) (527,164)
Net liabilities (641,988) (426,979)
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 (6,856,916) (6,641,907)
Total equity deficit (641,988) (426,979)
Audited consolidated statement of cash flow for the year ended 31 December 2009
2009 2008
£ £
Operating activities
Loss before tax (215,009) (217,606)
Finance income - (1,606)
Finance costs 9,169 20,902
Loss from operations before changes in working capital (205,840) (198,310)
Increase in inventories (120) (115)
Decrease in trade and other receivables 45,222 191,472
(Decrease)/increase in trade and other payables (219,796) 93,274
Cash (used)/generated by operating activities (380,534) 86,321
Investing activities
Interest received - 1,606
Financing activities
Increase in borrowings 363,000 -
Repayment of borrowings - (73,143)
Interest paid (9,169) (23,710)
Net cash inflow/(outflow) from financing activities 353,831 (96,853)
Decrease in cash and cash equivalents (26,703) (8,926)
Cash and cash equivalents at beginning of year 29,048 37,974
Cash and cash equivalents at end of year 2,345 29,048
Cash and cash equivalents comprise:
Cash available on demand 2,345 29,048
Audited consolidated statement of changes in equity for the year ended 31
December 2009
Share Share Accumulated
capital premium losses Total
£ £ £ £
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 1 January 2009 2,262,980 3,951,948 (6,641,907) (426,979)
Loss and total recognised - - (215,009) (215,009)
income
and expense for the year
At 31 December 2009 2,262,980 3,951,948 (6,856,916) (641,988)
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 2009
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 2009 and 2008, but is
derived from those accounts. Statutory accounts for 2008 have been delivered to
the Registrar of Companies and those for 2009 will be delivered following the
Company's Annual General Meeting. Auditors have reported on those accounts;
their reports were unqualified. Their report for 2008 did not contain a
statement under s237(2) or s237(3) of the Companies Act 1985 and their report
for 2009 did not contain a statement under s498(2) or s498(3) of the Companies
Act 2006. The auditors' report on the accounts for 31 December 2009 and 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 2009 the Group incurred a loss of £215,009
(2008 -£217,606) and at 31 December 2009 had net liabilities of £641,988 (2008
- £426,979).
The Group relies on support from SL Investment Management Limited (48.26 per
cent. shareholder in the Company). The Directors have recently agreed with SL
Investment Management Limited that the repayment of the loan in the amount of £
363,000 will not be repaid before 31 March 2011 unless otherwise agreed by both
parties.
In 2010 the Directors are anticipating increased demand for traded endowment
policies from market makers particularly from SL Investment Management Limited.
In addition, the Directors are currently in the final stages of negotiations
for the Company to receive quarterly fees from licensing the electronic
platform and all the technology to SL Investment Management Limited.
Accordingly, the Directors are anticipating improved trading results for the
period up to 30 June 2011 and have projected cash flow information which show
creditors can be paid out of cash flow. The projected cash flow information
assumes that the total amount due at 31 December 2009 to HM Revenue & Customs
of £165,026 will be paid over a period of nine months from February 2010 in
accordance with the written agreement with HM Revenue & Customs. Should the new
licensing fee agreement not be completed as anticipated, the Company will need
to raise funds from other sources.
On the basis of the above, and all other available information, the Directors
consider that the Group will be able to operate within the cash flow forecasts
and therefore 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 per share
The calculation of the basic loss per share is based upon:
2009 2008
Basic loss per share (pence) (0.05)p (0.05)p
Loss attributable to equity holders £(215,009) £(217,606)
Number Number
Weighted average number of shares 399,999,999 399,999,999
The options, warrants and deferred shares in issue at the 31 December 2008 and
31 December 2009, 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 2009.
4 Trade and other receivables
2009 2008
£ £
Trade receivables 523 4,817
Other receivables - 43,416
Prepayments and accrued income 22,227 19,739
22,750 67,972
5 Trade and other payables: amounts falling due within one year
2009 2008
£ £
Trade payables 58,616 58,414
Other payables 3,500 3,500
Creditors for taxation and social security 160,063 166,134
Accrued liabilities and deferred income 85,189 27,492
307,368 255,540
6 Share capital
2009 2008 2009 2008
Number Number £ £
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 3,960,000
each
4,060,000 4,060,000
Allotted, called up and
fully paid
Ordinary Shares 0.01p 399,999,999 399,999,999 40,000 40,000
each
Deferred shares of 0.99p 224,543,426 224,543,426 2,222,980 2,222,980
each
2,262,980 2,262,980
Ordinary Shares Deferred shares
Number £ Number £
Share capital at 1 399,999,999 40,000 224,543,426 2,222,980
January 2009
New share capital issued - - - -
Share capital at 399,999,999 40,000 224,543,426 2,222,980
31 December 2009
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 24.08.2011
Plan
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 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 2009 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 1 260 7746
Merchant Securities Limited
John East/Simon Clements 020 7628 2200
END
TEP EXCHANGE GROUP PLC
