Last checked at 28 Sep 2009 07:00
Interim results for the six months to 30 June 2009
PLUS Markets Group plc ("PMG" or the "Company") reports its interim results for the six months to 30 June 2009.
Highlights
* PLUS H1 volumes at over 36 billion shares traded, up more than 200% on previous year; * Capital markets offering maintaining momentum in difficult market conditions, with twelve new companies - seven of which are international - admitted to the PLUS market in the first half; * Revenues down slightly to 1.49m (2008 - 1.60m); * Administrative expenses amounted to 7.38 million (2008 - 4.11 million) including 3.15 million in respect of expenditure on legal costs, the setting-up of PLUS-Europe, trading platform development costs and strategic initiatives (2008 - 0.93 million); * Loss before depreciation, amortisation, impairment and interest received of GBP5.85 million (2008 - 2.74 million), after share-based payment credit (2008 - charge); and * The Group has no debt and retained a cash balance of 10.26 million (2008 - GBP19.00 million).
Post balance sheet events:
* PLUS commenced trading in all AIM securities on 21 August 2009; and * Successful investment in the Company by Amara Dhari Investments Limited ("Amara Dhari"), a syndicate of investors from the Middle East, raising 5 million before expenses, to strengthen the balance sheet and further the company's international expansion.
Commenting on the interim results, Chief Executive Officer Simon Brickles said:
"Having commenced trading in AIM securities towards the end of August, PLUS is now able to offer complete UK stock coverage on its trading platform. This includes the whole small and mid-cap market where PLUS has a very strong comparative advantage. Although it is early days, PLUS is pleased with initial volumes especially in non-order book stocks. We intend to build further on this liquidity and attract listings on the basis of our unique market position. This ambition is supported by a strengthened balance sheet and a broader international focus"
For further information, please contact:
Simon Brickles/Nemone Wynn-Evans 020 7553 2000
PLUS Markets Group plc
Nick Westlake (Nominated Advisor) 020 7260 1000
Charles Farquhar (Corporate Broker)
Numis Securities LtdJohn Parry 020 7490 8062Rostron Parry (PR Enquiries)Chairman's statement
The first six months of 2009 has seen the Company make progress in its strategic development, in an environment characterised by difficult market conditions. During the period, the Company succeeded in its ambition to be able to trade AIM securities without regulatory encumbrance, and subsequently secured investment from Amara Dhari in order to pursue its international growth initiatives in the Middle East region.
Financial position
The Company's interim results for the period to 30 June 2009 include costs in respect of recent litigation. Having completed its initial development phase, and secured all its regulatory permissions, the Group has reviewed its cost base carefully and has taken active steps to reduce its underlying operational costs in respect of its existing operations in 2010.
Revenues fell slightly to 1.49m (2008 - 1.60m), primarily due to a drop in capital markets activity in the current economic climate. Administrative expenses amounted to 7.38 million (2008 - 4.11 million). These expenses include 3.15 million in respect of expenditure on legal costs (amounting to 2.5 million), the setting up of PLUS Europe, trading platform development costs and strategic initiatives.
The loss before depreciation, amortisation, impairment and interest received of 5.85 million (2008 - 2.74 million), after the share-based payment credit (2008 - charge). Loss after depreciation, amortisation, impairment and interest was 5.71 million (2008 - 2.41 million). The Group has no debt and retained a cash balance of 10.26 million (2008 - 19.00 million).
However, as stated in the Company's announcement on 4 September 2009, the unanticipated delay in the Company obtaining the right to trade all AIM securities and the cost of the associated litigation required the Group to strengthen its balance sheet and increase its regulatory capital. In order to achieve these objectives, and to diversify its geographical reach to exploit its new position as a fully competitive stock exchange, the Company concluded its agreement with Amara Dhari.
Following the decision to write down the carrying value of the Company's regulatory licences and trading platform development costs to nil at 31 December 2008 the Directors have reviewed the current position and have decided to continue to carry the intangible assets at a nil value. Costs incurred in the further development of the trading platform in the six months to 30 June 2009 amounted to 0.38 million and have been included in administrative expenses.
Continuing progress of existing market offering
Transaction volume growth remains strong as brokers and market makers continue to recognise the benefits of using PLUS' platform. The PLUS market saw strong reported flow in the first half of the year with a total of 5,063,258 bargains representing an increase of 136% against the same period last year. By trade value, PLUS posted almost 30 billion worth, up 77%, while the number of shares traded rose to over 36 billion, up 217% compared with the first half of 2008. Early indications are that AIM trading has already achieved significant market share especially in non-order book stocks.
Among the twelve new companies admitted to the PLUS-quoted market in the period January to June 2009 were seven international issuers, although the period also saw 24 leavers. 2009 has seen a steady level of fundraisings on PLUS, with Worship Street Investments raising 1.3m at admission in June, while 3D Diagnostic Imaging, which joined the market in April, raised more than 2 million at admission. In addition, the market has seen more than 60 secondary market fundraisings.
Over the period the total market capitalisation of PLUS companies rose by 34% to more than 2.5 billion. The largest M&A transaction this year, and the biggest ever on PLUS, was the takeover of Rafco by RAK Real Estate for $927m, making Kuwait-based RAK Real Estate the largest PLUS-quoted company by market cap at over 600m.
While PLUS continues to see success in the UK domestic market, marketing efforts continue internationally, particularly in China, South East Asia and India. The interest in PLUS in these regions is encouraging and promises to provide a good source of new investment opportunities. Around a quarter of the issuers quoted on PLUS are either overseas companies or operate mainly overseas, including some recent joiners with a Middle East and North Africa focus.
Amara Dhari
To enable PLUS to develop in the Middle East and surrounding areas, Amara Dhari, a special purpose vehicle set up by a syndicate of investors from the Middle East to take a strategic stake in PLUS Markets Group plc, has invested 5 million before expenses. This was conditional on shareholder approval and at an Extraordinary General Meeting held on 25 September 2009 all the resolutions put to shareholders were duly passed.
Amara Dhari and its shareholders intend to use their relationships with financial institutions, high net-worth individuals, family and international companies headquartered in the Gulf Co-operative Council ("GCC") to drive companies and products onto PLUS' primary markets and promote dual listings; to introduce GCC financial institutions, banks and other organisations to PLUS and vice versa; and to introduce trading members to promote cross-trading. In addition, Amara Dhari intend to work with PLUS in the creation of a Shariah compliant trading platform or segment and to assist PLUS in establishing a presence in the Middle East.
PLUS Liquidity Scheme
Having now achieved a fully competitive exchange and having completed its stock coverage, the Board of Directors believe that PLUS will be able to exploit its position as a venue for quoting, listing and disseminating information about trading in smaller, newer and/or less liquid companies.
Specifically, having obtained full stock coverage of all UK quoted and listed securities, the Company is pursuing various trading initiatives including the PLUS Liquidity Scheme which incentivises market makers to participate in the success of PLUS by enabling them to share in a proportion of increased data sale revenues. The scheme will calculate by reference to the levels of market maker flow.
Outlook
Achieving the right to trade all AIM securities has been an important milestone in the Company's development, but against a backdrop of difficult market conditions. However, having secured its ability to offer full stock coverage, the Company believes it is well positioned strategically as a fully competitive stock exchange based in London.
Stephen Hazell-SmithChairman25 September 2009
Condensed Consolidated Income Statement
For the six months ended 30 June 2009
Note Six months Six months Year ended 31 ended 30 June ended 30 June December 2008 2009 2008 Audited '000 Unaudited Unaudited '000 '000 Continuing Operations Revenue 1,491 1,600 3,247 Administrative expenses 2 (7,379) (4,111) (10,152) Credit/(charge) in relation to 40 (225) (453)share-based payments Loss before depreciation, (5,848) (2,736) (7,358)amortisation and impairment charge Depreciation and amortisation (26) (269) (299) Impairment of intangible assets - - (3,635) Operating loss (5,874) (3,005) (11,292) Finance income 162 595 1,093 Loss on ordinary activities (5,712) (2,410) (10,199)before taxation Taxation - - - Loss for the period (5,712) (2,410) (10,199)attributable to equity holders of the parent Loss per share Basic (1.81)p (0.77)p (3.24)p Diluted (1.77)p (0.76)p (3.22)p
Condensed Consolidated Balance Sheet
As at 30 June 2009 As at 30 June As at 30 June As at 31 2009 2008 December 2008 Unaudited Unaudited Audited '000 '000 '000 Non-current assets Intangible assets - 3,636 - Property, plant and equipment 35 80 55 Available-for-sale investments - 1 1 35 3,717 56 Current assets Available-for-sale investments 1 - - Trade and other receivables 1,454 1,484 1,610 Cash and cash equivalents 10,256 19,000 14,831 11,711 20,484 16,441 Total assets 11,746 24,201 16,497 Current liabilities Trade and other payables (2,098) (1,342) (2,086) Deferred income (979) (971) (84) (3,077) (2,313) (2,170) Net current assets 8,634 18,171 14,271 Net assets 8,669 21,888 14,327 Equity Share capital 15,828 15,734 15,734 Share premium account 16,616 16,616 16,616 Retained deficit (23,775) (10,462) (18,023) Equity attributable to equity 8,669 21,888 14,327holders of the parent
These financial statements were approved by the Board of Directors and authorised for issue on 25 September 2009.
Signed on behalf of the Board of Directors
Stephen Hazell-SmithChairman
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2009
Six months Six months Year ended 31 ended 30 June ended 30 June December 2008 2009 2008 Audited '000 Unaudited Unaudited '000 '000
Net loss from operating activities (5,874) (3,005) (11,292)
Adjustments for non cash items: Impairment of intangible assets - - 3,635 Amortisation of intangible assets - 239 238 Depreciation of property, plant and 26 30 61equipment Share-based payment (credit)/expense (40) 225 453 Operating cash flows before (5,888) (2,511) (6,905)movements in working capital (Increase)/decrease in trade and 156 (578) (704)other receivables Increase in trade and other payables 907 1,024 880 Net cash used in operating (4,825) (2,065) (6,729)activities Investing activities Interest received 162 595 1,093 Purchase of non current assets (6) (536) (539) Net cash generated by investing 156 59 554activities Financing activities Net proceeds from issue of equity 94 - -shares by exercise of options Net cash generated by financing 94 - -activities Net decrease in cash and cash (4,575) (2,006) (6,175)equivalents Cash and cash equivalents at 14,831 21,006 21,006beginning of period/year
Cash and cash equivalents at end of 10,256 19,000 14,831 period/year
Condensed Consolidated Statement of Changes in Equity
Unaudited for the six months ended 30 June 2008, audited for the year ended 31 December 2008 and unaudited for the six months ended 30 June 2009.
Share Share Retained Total capital premium earnings '000 '000 '000 '000
Attributable to equity holders of 15,734 16,616 (8,277) 24,073 the parent at 1 January 2008
Reversal of share based payment - - 225 225charge Loss for the half year - - (2,410) (2,410)
Attributable to equity holders of 15,734 16,616 (10,462) 21,888 the parent at 30 June 2008
Attributable to equity holders of 15,734 16,616 (8,277) 24,073 the parent at 1 January 2008
Reversal of share based payment - - 453 453charge Loss for the year - - (10,199) (10,199)
Attributable to equity holders of 15,734 16,616 (18,023) 14,327 the parent at 31 December 2008
Attributable to equity holders of 15,734 16,616 (18,023) 14,327 the parent at 1 January 2009
Shares issued - Options exercised 94 - - 94
Reversal of share based payment - - (40) (40)credit Loss for the half year - - (5,712) (5,712)
Attributable to equity holders of 15,828 16,616 (23,775) 8,669 the parent at 30 June 2009
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2009
1. Accounting Policies
General information
PLUS Markets Group plc ("the Company") is a company incorporated in the United Kingdom under the Companies Act 1985. The Company's principal activity is that of a holding company, owning 100% of PLUS Markets plc, which is engaged in the operation of the PLUS market and is authorised and regulated by the Financial Services Authority. These condensed consolidated financial statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the Company and its subsidiaries (together "the Group") operate.
Basis of accounting
The condensed consolidated financial information contained within these financial statements, which are unaudited, has been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS"). This condensed consolidated financial information should be read in conjunction with the statutory accounts for the year ended 31 December 2008 which were prepared in accordance with IFRS as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements with the exception of IAS 1 (revised) "Presentation of Financial Statements" which has been adopted from 1 January 2009. The revision to IAS 1 has not had any impact on the presentation of the consolidated financial information in the interim financial report. While the financial figures included in this half-yearly report have been computed in accordance with IFRS applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34. There is no requirement for AIM companies to prepare their half-yearly reports in accordance with IAS 34.
The financial information contained in this interim report does not constitute the Company's statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative information contained in this report for the year ended 31 December 2008 does not constitute the statutory accounts for that financial period. Those accounts (which were prepared under IFRS) have been reported on by the company's auditors, Deloitte LLP, and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
The condensed consolidated financial statements are prepared under the historical cost convention, with the exception of investments which have been fair valued under IAS 39.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.
Intangible Assets - Internally Generated
An internally generated intangible asset arising from the group's activity to acquire regulatory licences and deploy leading edge trading and surveillance technology is recognised as an intangible asset only if all of the following conditions are met:
* an asset is created that can be identified (licences and technology); * it is probable that the asset created will generate future economic benefits; and * the development cost of the asset can be measured reliably.
Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. In the six months to 30 June 2009 development costs totalling 375k did not fulfil all three of the above criteria. The development costs have therefore been expensed.
Going concern
The Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the period ending 30 June 2009. The Group's financial position has been significantly strengthened by the capital injection by Amara Dhari, as approved by shareholders at the Extraordinary General Meeting on 25 September 2009. This has supplemented the existing financial resources held on a range of short term deposits at four different banks. Consequently, the Directors have formed a judgment at the time of approving these financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
2. Administrative Expenses
Administrative expenses in the six months to 30 June 2009 include 3.15 million in respect of expenditure on legal costs (amounting to 2.5 million), the setting up of PLUS Europe, trading platform development costs and strategic initiatives.
Independent Review Report To PLUS Markets Group Plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow statement, the Condensed Consolidated Statement of Changes in Equity and related notes 1 to 2. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company, in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the Group intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom
25 September 2009
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.
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