Digitalbox Regulatory News (DBOX)

6 Sep 2006 07:00

PLUS MARKETS GROUP PLC ("THE COMPANY") INTERIM STATEMENT INTERIM STATEMENT FOR THE SIX MONTHS FROM 1 JANUARY TO 30 JUNE 2006PLUS Markets Group plc reports its interim results for the six months ended 30June 2006.HIGHLIGHTS* Full implementation of extended trading platform offering;* Successful penetration into new market segments;* Significant increase in membership of PLUS;* Foundations laid for future revenue growth; and* Application to become a Recognised Investment Exchange.Commenting on the results, Simon Brickles, Chief Executive Officer of theCompany said:The successful implementation of our extended trading platform offering, underthe new name of "PLUS", has been well received by leading UK equity marketparticipants. Membership expanded significantly during the period and familiarity with theconcept of choice in this marketplace continues to rise, which will sustainfurther continued growth in UK equity trading volume on our platform. Even inthese early days, the first six months of 2006 showed solid growth in ourmarket share - a clear endorsement of our quote-driven model, which offersliquidity and lower costs. We are also very pleased by the encouragement wehave received from The City in offering a competitive primary market, whosesecurities are also traded on our PLUS platform.Given our progress to date, we confirm that it is our intention to apply to theFinancial Services Authority to seek Recognised Investment Exchange ("RIE")status, as part of our continuing commitment to substantial long-term growth.CHAIRMAN'S STATEMENTThe extension of our range of services has enabled us to widen the Company'soffering and gives rise to two new revenue streams in the form of TradingServices and Market Data Services. Consequently, the Company is operating afundamentally different business model from the one deployed previously, inwhich revenue came almost entirely from the primary market for its CompanyServices (in other words, issuing companies and corporate advisers). Theextended trading platform offering was launched just before Christmas 2005, soeffectively this is the first period in which the new business model has beenoperational.Following the successful launch of the PLUS service, we have embarked on aprocess of bringing together our primary and secondary market offerings into asingle market, known simply as "PLUS". The decision has been taken to phase outthe name Ofex and this process will be completed in the coming weeks as finalchanges to the relevant regulatory and legislative framework are effected.During the first half of the year there were 22 admissions to our primarymarket (2005: 13) and since the end of the reporting period, we have admitted afurther 11 companies and have received 10 applications.At the commencement of the period, we had 17 broker members of PLUS, as TradingServices customers. I am pleased to report that at the date of this statement,46 brokers have applied and been granted membership. Over half of theseapplications were received after the reporting period ended and consequently,the principal benefits to the Company will come through in the second half ofthe year. Of the brokers who have applied to date, around 18 are still makingtechnical changes to their systems or undertaking conformance testing. Inaddition, more brokers and market makers have indicated their intention toapply to become members before the end of this financial year.The success of our second new revenue stream, Market Data Services, isprimarily a function of the number of members and our consequent market shareof UK equity trading. As these expand, so too will our revenues from ourinformation, primarily in the form of market data terminal sales. Already, ourmarket share is making solid progress and is heralding further increase as moreof our membership applicants are processed and become able to trade through us.Indeed, we believe that brokers who are not members of PLUS already risktrading at a disadvantage. This was established by independent research carriedout by Cass Business School during the period that demonstrated empiricallythat the best prices are often available on PLUS, at cheaper dealing costs. I foreshadowed in my last statement accompanying the Company's 2005 annualreport: "Expenditure on PLUS necessarily precedes revenues and that this willbe most noticeable in the first half of the current year." This has proved tobe the case with first half losses widening to GBP802,000 (2005 restated:GBP244,000). These amounts also reflect the impact of the obligatory adoptionof FRS 20 'Share-based Payment'. Turnover in the period was GBP929,000 (2005:GBP774,000) which, excluding one off revenue last year of GBP160,000,represents growth of 51% on the prior year. Operating costs were GBP1,798,000(2005 restated: GBP1,065,000). Excluding one off costs of approximatelyGBP238,000 (2005: GBP55,000) this is 54% up on the previous year. This increaseis entirely in line with the Company's budgets and expectations and resultsfrom increased regulatory and IT headcount and trading service costs pertainingto the extension of our business model. In summary, we are encouraged with our progress to date; we now have in excessof 800 stocks quoted on our platform and are ahead on the number of TradingService customers that we had expected at this stage. Additionally, followingthe completion of our rebranding process, the Company is reviewing its pricingstructure during Q3 to ensure that its range of services is appropriatelypriced in 2007. We believe that we have laid sound foundations for futuregrowth.In short the Company is delivering on its business model in accordance with itsplans and the next logical stage in our development, given the growth in thenature and extent of our operations, is to become a Recognised InvestmentExchange ("RIE"). We confirm that we will make a formal application to theFinancial Services Authority to secure this status which, if granted, willenable us to continue substantial long-term growth plans and to compete furtheracross a wider range of equity market services.Stephen Hazell-SmithChairman5 September 2006PLUS MARKETS GROUP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE SIX MONTHS ENDED 30 JUNE 2006 SIX MONTHS SIX MONTHS YEAR ENDED ENDED ENDED 30 JUNE 30 JUNE 31 DECEMBER 2006 2005 2005 UNAUDITED UNAUDITED AUDITED NOTES (RESTATED) (RESTATED) GBP'000 GBP'000 GBP'000 TURNOVER 2 929 774 1,446 OPERATING COSTS Staff costs (736) (461) (958) Share-based payments 3 (96) (91) (210) Other operating charges 4 (966) (513) (1,739) 2 (1,798) (1,065) (2,907) OPERATING LOSS (869) (291) (1,461) Interest receivable 67 47 98 LOSS ON ORDINARY ACTIVITIES (802) (244) (1,363) RETAINED LOSS FOR THE PERIOD (802) (244) (1,363) Loss per share - basic and 6 (0.60)p (0.29)p (1.40)p dilutedPLUS MARKETS GROUP PLCCONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2006 AS AT AS AT AS AT 30 JUNE 30 JUNE 31 DECEMBER 2006 2005 2005 NOTES UNAUDITED UNAUDITED AUDITED GBP'000 GBP'000 GBP'000 FIXED ASSETS Intangible - Intellectual Property 500 500 500 Rights Tangible 393 198 442 Investments 1 1 1 894 699 943 CURRENT ASSETS Debtors and prepayments 9 519 368 602 Cash at bank and in hand 2,705 1,918 3,449 3,224 2,286 4,051 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Creditors and accruals (328) (345) (400) Deferred income 7 (752) (446) (861) (1,080) (791) (1,261) NET CURRENT ASSETS 2,144 1,495 2,790 TOTAL ASSETS 3,038 2,194 3,733 CAPITAL AND RESERVES Called up share capital 5 6,729 4,227 6,727 Share premium 5 1,517 1,469 1,508 Profit and loss account 5 (5,208) (3,502) (4,502) EQUITY SHAREHOLDERS' FUNDS 5 3,038 2,194 3,733PLUS MARKETS GROUP PLCCOMPANY BALANCE SHEETAS AT 30 JUNE 2006 AS AT AS AT AS AT 30 JUNE 30 JUNE 31 DECEMBER 2006 2005 2005 NOTES UNAUDITED UNAUDITED AUDITED GBP'000 GBP'000 GBP'000 FIXED ASSETS Investments in subsidiaries 10 2 2 2 CURRENT ASSETS Amounts owed by group undertakings - due after one year 1,112 509 362 Debtors and prepayments 20 19 20 Cash at bank and in hand 2,651 1,838 3,356 3,783 2,366 3,738 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (4) (2) (5) NET ASSETS 3,779 2,366 3,733 CAPITAL AND RESERVES Called up share capital 5 6,729 4,227 6,727 Share premium 5 1,517 1,469 1,508 Reserves (4,467) (3,330) (4,502) EQUITY SHAREHOLDERS' FUNDS 3,779 2,366 3,733PLUS MARKETS GROUP PLCCONSOLIDATED CASHFLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 SIX MONTHS SIX MONTHS YEAR ENDED ENDED ENDED 30 JUNE 30 JUNE 31 DECEMBER 2006 2005 2005 UNAUDITED UNAUDITED AUDITED NOTES GBP'000 GBP'000 GBP'000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 8 (732) (470) (1,176) CASH FLOWS FROM INVESTING ACTIVITES Interest received 67 47 98 CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (90) (11) (366) Cash cover relating to loan financing - 169 169 (90) 158 (197) CASH FLOWS FROM FINANCING ACTIVITIES Net issue of ordinary share capital 11 - 2,470 VAT rebate on share admission - - 69 expenses Net loan financing - (167) (167) 11 (167) 2,372 (DECREASE) / INCREASE IN CASH (744) (432) 1,097PLUS MARKETS GROUP PLCNOTES TO THE ACCOUNTSFOR THE SIX MONTHS ENDED 30 JUNE 20061. BASIS OF PREPARATIONThese interim statements, which are unaudited, have been prepared on the basisof the accounting policies set out in the most recent audited statutoryaccounts, with the exception of FRS 20 'Share-based Payment', which was adoptedfrom 1 January 2006, with re-statement of the prior periods (see Note 3).The financial information contained in this interim report does not constitutethe Company's statutory accounts within the meaning of section 240 of theCompanies Act 1985. The comparative information contained in this report forthe period ended 31 December 2005 does not constitute the statutory accountsfor that financial period. Those accounts have been reported on by thecompany's auditors, Deloitte & Touche LLP, and delivered to the Registrar ofCompanies. The report of the auditors was unqualified and did not contain astatement under section 237 (2) or (3) of the Companies Act 1985.2. TURNOVERPrior year turnover, for both the first half and full year 2005, included oneoff income of GBP160,000 in respect of the development of the Company's tradingservices.3. SHARE BASED PAYMENTSThe Company has adopted FRS 20 'Share-based Payment,' application of which isobligatory for periods commencing on or after 1 January 2006. FRS 20 requiresthe recognition of share-based payments to employees at fair value at the dateof grant. Prior to the adoption of FRS 20, the group recognised the financialeffect of the share based payment in accordance with UITF Abstract 17 (revised2003) 'Employee Share Schemes.' In accordance with transitional provisions ofFRS 20, the standard was applied retrospectively to all options granted after 7November 2002 that were not yet vested as of 1 January 2006. For the six months ended 30 June 2005 and the year ended 31 December 2005, thechange in accounting policy has resulted in an increase in loss for therespective periods of GBP91,407 and GBP209,858. For the six months ended 30June 2006, the impact of share-based payments is a charge of GBP96,215. Netassets do not change. 4. OTHER OPERATING CHARGESOther operating charges for the first half of 2006 included one off costs ofapproximately GBP238,000. This comprised GBP41,000 of rebranding costs year todate, GBP96,000 of legal costs, GBP101,000 of contract staff and other staffcosts (2005: GBP55,000).5. MOVEMENT ON SHAREHOLDERS' FUNDS SHARE PROFIT AND SHARE PREMIUM LOSS CAPITAL ACCOUNT ACCOUNT TOTAL GBP'000 GBP'000 GBP'000 GBP'000 As at 31 December 2005 6,727 1,508 (4,502) 3,733 Exercise of share options 2 9 - 11 Loss for the period - - (802) (802) Cost of share-based payments - - 96 96 6,729 1,517 (5,208) 3,0386. LOSS PER ORDINARY SHAREBasic loss per share has been calculated by dividing the loss on ordinaryactivities after taxation by the weighted number of shares in issue during theperiod. Diluted loss per share is basic loss per share adjusted for the effectof conversion into fully paid shares of the weighted average number of shareoptions in existence during the period. As the Company has made a loss duringthe period, under FRS22 no dilution effect has been calculated. SIX MONTHS SIX MONTHS YEAR ENDED ENDED 30 ENDED 30 31 DECEMBER JUNE JUNE 2005 2006 2005 GBP'000 GBP'000 GBP'000 Loss on (802) (244) (1,363) ordinary activities after taxation NUMBER NUMBER NUMBER Weighted 134,532,701 84,532,701 97,272,427 average number of shares PENCE PENCE PENCE Loss per (0.60) (0.29) (1.40) share7. DEFERRED INCOMEIssuers, data vendors and members pay an annual fee, which is payable inadvance. The deferred income provision recognises that these members have paidfees for periods that extend beyond 30 June 2006 and therefore the income willbe accounted for in a future accounting period.8. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES SIX MONTHS SIX MONTHS YEAR ENDED ENDED ENDED 30 JUNE 30 JUNE 31 DECEMBER 2006 2005 2005 GBP'000 GBP'000 GBP'000 Operating loss (869) (291) (1,461) Share-based payments 96 91 210 Depreciation 139 59 170 (Increase)/decrease in debtors 83 153 (249) Increase/(decrease) in creditors (181) (482) 154 Net cash outflow from operating (732) (470) (1,176) activities9. DEBTORS The balance at 30 June 2006 includes a rental deposit of GBP35,250 that waspaid to the landlord of the premises that the Company moved into in April 2004.The deposit becomes repayable five years after the lease commencement date of10 February 2004.10. INVESTMENT IN SUBSIDIARIESThe amount comprises the investment of GBP1,000 in Ofex plc and GBP1,000 inKudosoption plc, a dormant subsidiary.11. SHARE OPTION SCHEMESThe total number of share options outstanding under the OFEX Plans as at 30June 2006 was 9,431,833:------------------------------------------------------------------------------|Number of Share |Exercise Price|Grant Date|Earliest Exercise |Expiry Date||Options | | |Date | |------------------------------------------------------------------------------|245,000 |25p |01/04/2003|01/04/2006 |31/03/2013 |------------------------------------------------------------------------------|541,833 |29.5p |11/03/2004|11/03/2007 |10/03/2014 |------------------------------------------------------------------------------|290,909 |6.875p |11/03/2005|11/03/2008 |10/03/2015 |------------------------------------------------------------------------------|3,409,091 |7.25p |17/03/2005|17/03/2008 |16/03/2015 |------------------------------------------------------------------------------|3,950,000 |24.125p |16/12/2005|16/12/2008 |15/12/2015 |------------------------------------------------------------------------------|995,000 |32.75p |18/05/2006|18/05/2009 |17/05/2016 |------------------------------------------------------------------------------INDEPENDENT REVIEW REPORT TO PLUS MARKETS GROUP PLCINTRODUCTIONWe have been instructed by the Company to review the financial information forthe six months ended 30 June 2006, which comprises the consolidated profit andloss account, the balance sheets, the consolidated cash flow statement andrelated notes 1 to 11. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information.This report is made solely to the Company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone otherthan the Company for our review work, for this report, or for the conclusionsthat we have formed.DIRECTORS' RESPONSIBILITIESThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting polices and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed.REVIEW WORK PERFORMEDWe conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management andapplying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the accounting policiesand presentation have been consistently applied unless otherwise disclosed. Areview excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope thanan audit performed in accordance with International Standards on Auditing (UKand Ireland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information.REVIEW CONCLUSIONOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006.Deloitte & Touche LLPChartered Accountants London5 September 2006ENDAll press enquiries to: John Parry, Rostron Parry, 020 7490 8062ENDPLUS Markets Group plc