Doriemus Regulatory News (DOR)

29 Jun 2005 06:00

To be embargoed until 29th June, 2005 at 7.00am TEP EXCHANGE GROUP PLC ("TEP" or "the Company") Preliminary Results for the year ended 31 December 2004 Chairman's StatementI am pleased to report the results for the year ended 31 December 2004.Turnover for the year totalled ‚£187,028 (2003 - ‚£58,930) resulting in anoperating loss of ‚£496,616 compared to an operating loss of ‚£606,549 in 2003.The loss on ordinary activities before and after taxation was ‚£508,108 comparedto a loss before and after taxation of ‚£601,848 in 2003. As a result of ouroperational management arrangements with Surrenda-link Limited, there was areduction in net debt during the year of ‚£18,090.Whilst trading results continue to be disappointing there was a noticeableincrease in activity in the traded endowment policy (TEP) market in the secondhalf of 2004. The turnover achieved in the second half of 2004 amounted to ‚£112,000 compared to the turnover of ‚£75,000 achieved in the first half of 2004.For the first five months of 2005, the company has seen policy submissions onthe trading platform increase by 30% in volume terms, compared to the sameperiod in 2004. One of the major reasons for the increase in activity in theTEP market has been the demand emerging from Germany for British TEPs and it isexpected that this demand will continue to grow as the current year progresses.In the second half of 2004, a new website, allowing direct interaction with thepublic, was launched successfully and this has increased the supply of policiesfor sale on the trading platform.The agreement on the outsourcing of operational management to Surrenda-linkLimited, which has been operating successfully for the last two years, wasrenegotiated in December 2004 for a further three year period. Under the newarrangement, Surrenda-link Limited receive no fixed fees for the services butinstead all the fees are payable in cash on a turnover related basis. This hasfurther reduced the company's fixed cost structure and will assist instabilising its ongoing cash flow position.Your Board continues to focus their efforts on financial viability and thecreation of shareholder value.Your Board is not proposing a dividend for the year under review.G KynochChairman29 June 2005Unaudited consolidated profit and loss account for the year ended 31 December2004 Note Year ended Year ended 31 December 31 December 2004 2003 Turnover 187,028 58,930 Cost of sales (43,297) (15,614) -------- -------- Gross profit 143,731 43,316 Administrative expenses (906,622) (963,667) Other operating income 266,275 313,802 -------- -------- Operating loss (496,616) (606,549) Interest receivable 253 258 Interest payable (11,745) 4,443 -------- -------- Loss on ordinary activities before taxation (508,108) (601,848) -------- -------- Loss on ordinary activities after taxation (508,108) (601,848) Retained loss brought forward (5,799,010) (5,197,162) ---------- ---------- Retained loss carried forward (6,307,118) (5,799,010) ========== ========== Loss per share Basic and diluted loss per share 3 (0.28)p (0.42)p ========== ==========Unaudited consolidated balance sheet as at 31 December 2004 Note As at As at As at As at 31 31 31 31 December December December December 2004 2004 2003 2003 ‚£ ‚£ ‚£ ‚£ Fixed assets Tangible assets 11,041 21,901 Current assets Stock 2,708 2,591 Debtors 5 128,650 207,667 Cash at bank and in hand 13,427 1,494 -------- -------- 144,785 211,752 Creditors: amounts falling due within one year 6 (879,396) 927,791 -------- -------- Net current liabilities (734,611) (716,039) -------- -------- Net liabilities (723,570) (694,138) ======== ======== Capital and reserves Called up share capital 1,915,647 1,436,971 Share premium account 3,667,901 3,667,901 Profit and loss account (6,307,118) (5,799,010) -------- -------- Shareholders' funds - 7 (723,570) (694,138)equity ======== ========Unaudited consolidated Cash flow statement for the year ended 31 December 2004 Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 2004 2004 2003 2003 ‚£ ‚£ ‚£ ‚£ Net cash outflow from operating Activities (449,094) (428,754) Returns on investments and servicing of finance Interest received 253 258 Interest paid (11,745) 4,443 -------- -------- Net cash (outflow)/inflow from returns on investment and servicing of finance (11,492) 4,701 Capital expenditure and financial investment Proceeds on sale of tangible - 1,482fixed assets Financing Issue of ordinary share 478,676 281,250capital -------- -------- Movement in net debt 18,090 (141,321) ======== ========Notes to the Unaudited Preliminary Results for the year ended 31 December, 20041 Accounting policiesThe financial statements have been prepared under the historical costconvention and are in accordance with applicable United Kingdom accountingstandards. The following principal accounting policies have been appliedconsistently in dealing with items that are considered material to the Group'sfinancial statements.Going concernDuring the year ended 31 December 2004 the Group incurred a loss of ‚£508,108(2003 - ‚£601,848) and at 31 December 2004 had net liabilities of ‚£723,570 (2003- ‚£694,138).The Group relies on support from one of its major shareholders, Surrenda-linkLimited, in order to meet its obligations as they fall due. It also now meetsits day to day working capital requirements through a bank loan , repayable bya one off amount of ‚£95,000 in July 2006 and with the remainder over 44 months,together with a bank overdraft facility of ‚£10,000. The directors anticipateimproved trading results for the forthcoming year and have projected cash flowinformation which show creditors with the exception of Surrenda-link Limitedcan be repaid out of cash flow.Since the year end, the Company has issued to Surrenda-link Limited 32,978,700ordinary shares of 1p each by way of capitalisation of the ‚£329,787 of the yearend creditor.The Directors have received written confirmation from Surrenda-link Limitedthat the repayment of outstanding charges will be deferred until such time asthe Company has sufficient liquid resources after repaying all other creditorsto repay them. This support will be provided for a period of not less than oneyear from the date of the approval of these financial statements.The Directors have also received assurances from Surrenda-link Limited that itwill advance to the Company on a quarterly basis, the lesser of the sum of ‚£20,000 and the specific corporate costs incurred by the Company, as defined inthe Outsourcing Agreement signed in December 2004. The Company will utilise thequarterly advance from Surrenda-link to discharge the specific corporate costs.The Company has undertaken to use its reasonable endeavours to minimisespecific corporate costs.On the basis of the above, and all other available information, the Directorsconsider that the Group will become profitable and continue to operate withinthe facilities currently agreed and those likely to be agreed in the future andtherefore that it is appropriate to prepare the financial statements on thegoing concern basis.Basis of consolidationThe consolidated financial statements incorporate the financial statements ofTEP Exchange Group PLC and all of its subsidiary undertakings made up to 31December 2004. Uniform accounting policies are adopted by all companies in theGroup. The acquisition method of accounting is used to consolidate the resultsof subsidiary undertakings in the Group financial statements.TurnoverTurnover represents commission from arranging the sale and purchase of withprofit endowment policies sales to outside customers less value added tax. Feeand commission income is recognised when due.Research and development costsAll research and development costs are charged to the profit and loss accountin the year in which the expenditure is incurred.DepreciationDepreciation is provided to write off the cost, less estimated residual values,of all fixed assets over their expected useful lives. It is calculated at thefollowing rates:Fixtures, fittings and equipment - 4 yearsComputer equipment - 3 yearsInvestmentsInvestments held as fixed assets are stated at cost less provision forimpairment in value.StocksStocks of endowment policies are valued at the lower of cost and net realisablevalue. Cost is based on the cost of purchase. Net realisable value is based onsurrender value less additional costs to completion and disposal.Operating leasesAnnual rentals are charged to the profit and loss account on a straight linebasis over the term of the lease.Financial instrumentsThe Group does not use derivative financial instruments for trading purposes orto manage risk.Deferred taxDeferred tax is recognised in respect of all timing differences that haveoriginated but not reversed by the balance sheet date except for deferred taxassets which are only recognised to the extent that the Group anticipatesmaking sufficient taxable profits in the future to absorb the reversal of theunderlying timing differences.2 Publication of non-statutory accountsThe financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985.The consolidated balance sheet as at 31 December 2004 and the consolidatedprofit and loss account, consolidated cash flow statement and associated notesfor the year have been extracted from the Group's audited financial statementson which the auditors provided an unqualified report which did not contain astatement under S237(2) or (3) of the Companies Act 1985. Those financialstatements have not yet been delivered to the Registrar of Companies. The 2003accounts have been delivered to the Registrar of Companies and the auditorsreported on them, their report was unqualified and did not contain a statementunder s237(2) or (3) of the Companies Act 1985.Copies of accounts will be sent to shareholders shortly and will also beavailable at the Company's registered office, 1 to 2 Grosvenor Court, ForegateStreet, Chester CH1 1HG.3. Loss per shareThe calculation of the basic loss per share is based on the loss after tax of ‚£508,108 (2003 - ‚£601,848) and on 181,073,202 (2003 - 142,544,945) ordinaryshares, being the weighted average number of ordinary shares in issue. Theoptions in issue at the 31 December 2003 and 31 December 2004 areanti-dilutive.4. DividendsThe Directors are not proposing the payment of a dividend in respect of theyear ended 31 December 200 4.5. Debtors 2004 2003 ‚£ ‚£ Trade debtors 58,150 52,969 Other debtors and prepayments 70,500 154,698 128,650 207,6676. Creditors: amounts falling due within one year 2004 2003 ‚£ ‚£ Bank overdraft 190,173 196,330 Trade creditors 384,859 529,180 Amount due to subsidiary undertaking - - Creditors for taxation and social 18,667 13,922security Other creditors 130,750 45,934 Accruals 154,947 142,425 879,396 927,791At the year end, the bank overdraft facility of ‚£200,000 was secured by a fixedand floating charge over the assets of the Company. In April 2005, the bankoverdraft was converted to a ‚£190,000 term loan , repayable by a one off amountof ‚£95,000 in July 2006 and with the remainder over 44 months, together with abank overdraft facility of ‚£10,000 .Included within the creditors of the Company and the Group at 31 December 2004are amounts totalling ‚£427,680 owing to Surrenda-link Limited of which ‚£329,787has been capitalised through the issue of 32,978,700 ordinary shares of 1peach.Within other creditors is an amount of ‚£85,500 in respect of certain employmentcosts and related social security costs as part of the Group's ongoing costrestructuring programme.7. Reconciliation of movements in shareholders' funds for the year ended 31December 2004 2004 2003 ‚£ ‚£ Loss for the year (508,108) (601,848) New Share capital subscribed and 478,676 281,250issued (29,432) (320,598) Opening shareholders' funds (694,138) (373,540) Closing shareholders' funds (723,570) (694,138) 8. Reconciliation of operating loss to net cash outflow from operatingactivities 2004 2003 ‚£ ‚£ Operating loss (496,616) (606,549) Deprecation 10,860 36,613 (Increase)/decrease in stock (117) 9,949 Decrease/(increase) in debtors 79,017 (43,644) (Decrease)/increase in creditors (42,238) 174,877 Net cash outflow from operating (449,094) (428,754)activities 9. Analysis of net debt At 31 Cash Flow Non- cash At 31 December movement December 2003 ‚£ 2004 ‚£ ‚£ Cash in hand and at bank 1,494 11,933 - 13,427 Overdrafts (196,330) 6,157 - (190,173) (194,836) 18,090 - (176,746)The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985.The consolidated balance sheet as at 31 December 2004 and the consolidatedprofit and loss account, consolidated cash flow statement and associated notesfor the year have been extracted from the Group's audited financial statementson which the auditors provided an unqualified report which did not contain astatement under S237(2) or (3) of the Companies Act 1985. Those financialstatements have not yet been delivered to the Registrar of Companies. The10. Copies of accounts will be sent to shareholders shortly and will also beavailable at the Company's registered office, 1 to 2 Grosvenor Court, ForegateStreet, Chester CH1 1HG.ENDTEP EXCHANGE GROUP PLC