OFEX HOLDINGS PLC
INTERIM STATEMENT FOR THE PERIOD 1 JANUARY 2003 - 30 JUNE 2003
Chairman's Statement
The directors are pleased to present the first interim report of OFEX Holdings
plc ("the Company").
In April 2003, the Company successfully raised over GBP1 million (net of
expenses) and was admitted to AIM. Against a backdrop that included some of
the most challenging economic and political conditions for many years, this was
a creditable achievement.
The Company's wholly-owned subsidiary, OFEX plc, operates the OFEX market in
the United Kingdom and the fund-raising was the culmination of the development
stage of OFEX from its beginnings as a trading facility operated by an SFA
member to a market whose operator is authorised and regulated by the FSA.
Results
The consolidated results for the six months ended 30 June 2003 show a loss for
the period of GBP273,000. Expenditure has been in line with budget.
As stated in the Prospectus issued in connection with the Offer for
Subscription dated 3 April 2003 ("the Prospectus"), it is not the board's
intention to pay any dividends in the short term.
Performance of the OFEX Market
There has been a decline in the number of securities traded on the OFEX market
over the six month period under review. This was predominantly due to the fall
in admissions to OFEX reflecting the continuing economic uncertainty. In times
of more robust economic confidence, there is a regular cycle of companies
coming on to and off the market and your board would expect to see an increase
over time in the number of securities traded. Due to the current uncertainty,
new admissions to OFEX fell from 14 in the first half of 2002 to eight in the
same period this year (-43%). New admissions to AIM, excluding transfers from
the Official List, over the same period fell from 63 to 30 (-52%). (Source:
LSE AIM Statistics).
It is clear that conditions for exchanges and markets have continued to be
demanding, with most European junior markets declining during the period. In
addition, the Neuer Markt and NASDAQ Europe have closed, or announced plans to
close, and Euronext Paris has indicated that the Nouveau Marche and Deuxieme
Marche are now part of the official sector covered by their market place.
The Company continues to seek to increase the awareness of the OFEX market
amongst companies suitable for admission to it - most recently through
attending the Oxford Venturefest, Smarter Business and the Australian
Technology Showcase. Indeed, in the first six months of 2003, OFEX announced a
total of 15 separate initiatives to broaden the reach and support for the OFEX
community. The majority of these initiatives were supported by key industry
third parties, such as Comstock, ADVFN, Updata and WI Link.
Since the end of the period under review, OFEX has announced an expansion of
the scope for eligibility of corporate advisers to the market. This is
intended to allow the many accountants and lawyers who support OFEX, but who
were previously unable to become corporate advisers, to participate.
Second Specialist
In the Prospectus the Company stated that it intended to introduce further
specialists (market makers) onto the OFEX market over time. Your board is
delighted to announce that Teather & Greenwood, an existing corporate advisory
member of OFEX, has very recently applied to become a second specialist
operating on OFEX. The application is currently being processed. In addition,
meetings have already taken place in relation to technical issues and progress
has been made. Further announcements will follow in due course.
European Developments
Since the Company's flotation, both the Council of Ministers and the European
Parliament have passed the Market Abuse and Transparency Obligations
Directives. The European Parliament approved the Listing and Prospectus
Directive on 2 July 2003, after a compromise agreement with the European
Council of Ministers. This event has not substantially changed the view of
your board as to the impact of that Directive, which will require pre-vetting
of a listing standard prospectus for applications for admission to a regulated
market. As OFEX is not a regulated market under the Investment Services
Directive, this and other Directives in the Financial Services Action Plan
("FSAP") do not apply directly to OFEX. Accordingly, the directors believe
that the majority of the future potential compliance costs borne by issuers
arising from the implementation of the FSAP are not expected, generally, to be
incurred by issuers admitted to OFEX.
Although compliance with the proposed EU standards required as a result of the
UK's mandatory adoption of the various EU Directives is not a requirement for
OFEX, OFEX companies are required to meet certain standards when they apply to
become an issuer on OFEX and throughout the period that their securities are
traded on the OFEX market. These standards are set in order that the companies
are transparent in their business activities and comply with OFEX disclosure
requirements that are in place to provide an orderly market in the securities
traded. However, the standards on OFEX are considered to be less onerous on
smaller companies than those obligations imposed by other more senior markets,
and once the FSAP is implemented, the directors believe that companies using
regulated markets will have even more onerous requirements to comply with,
resulting in an increase in the ongoing costs associated with such markets.
OFEX will continue to work to provide a cost-effective market for small and
medium sized enterprises within the UK regulatory structure, whilst operating
outside the scope of the FSAP. Appropriate resources will continue to be
applied to monitor and interact with ongoing EU developments.
The Future
Your board continues to explore several key projects that will enhance the OFEX
model both domestically and internationally and make it "the market of choice"
for small and medium sized enterprises ("SMEs"). The programme of promotional
activities that has been announced on the OFEX website will be maintained, and
the Company continues to pursue cost-effective avenues to increase the profile
and profitability of the OFEX market.
John Jenkins
CHAIRMAN
18 August 2003
OFEX HOLDINGS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2003
Six months
ended 30
June 2003
Unaudited
Notes GBP'000
TURNOVER 555
OPERATING COSTS
Staff costs (410)
Other operating charges (405)
(815)
OPERATING LOSS (260)
Interest receivable and similar income 1
Interest payable (14)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (273)
Taxation on loss on ordinary activities -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (273)
Dividends paid and proposed -
Retained loss for the period (273)
Loss per share - basic and diluted 4 (3.09)p
OFEX HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
30 June 2003
As at
30 June 2003
Unaudited
Notes GBP'000
FIXED ASSETS
Tangible 34
Intangible - Intellectual Property Rights 1 500
Investments 1
535
CURRENT ASSETS
Debtors 170
Prepayments 133
Cash at bank and in hand 363
666
CREDITORS: amounts falling due within one year
Creditors (201)
Deferred income 5 (448)
Amounts due to related party - J P Jenkins Limited 6 (20)
(669)
NET CURRENT LIABILITIES (3)
CREDITORS: amounts falling due after more than one year
Amounts due to related party - J P Jenkins Limited 6 (727)
NET LIABILITIES (195)
Share capital 2 789
Share premium 2 782
Profit and loss account 3 (1,766)
EQUITY SHAREHOLDERS' DEFICIT 3 (195)
OFEX HOLDINGS PLC
BALANCE SHEET
30 June 2003
As at
30 June 2003
Unaudited
Notes GBP'000
FIXED ASSETS
Investments in subsidiaries 500
CURRENT ASSETS
Cash at bank and in hand 293
NET CURRENT ASSETS 293
NET ASSETS 793
Share capital 2 789
Share premium 2 782
Profit and loss account 8 (778)
EQUITY SHAREHOLDERS' FUNDS 793
OFEX HOLDINGS PLC
NOTES TO THE ACCOUNTS
For the six months ended 30 June 2003
1. Basis of preparation
These interim accounts, which are unaudited, have been prepared on the basis of
the accounting policies set out in the 31 December 2002 financial statements of
OFEX plc, and the Prospectus for OFEX Holdings plc dated 3 April 2003. As set
out in that Prospectus, the Company acquired OFEX plc by way of a group
reconstruction, and hence the acquisition has been accounted for using merger
accounting principles. Accordingly, the information presented in the
consolidated profit and loss account reflects the results of the constituent
businesses from the start of the period rather than its date of acquisition.
As a result of the group reconstruction undertaken prior to the flotation of
the Company, the directors have not presented comparative figures for the
interim financial information. These will be included in the annual financial
statements for the year ended 31 December 2003.
The financial information contained in this interim report does not constitute
the group's consolidated statutory accounts within the meaning of section 240
of the Companies Act 1985.
The financial information is prepared in accordance with applicable United
Kingdom law and accounting standards and on the going concern basis. Selected
accounting policies adopted are as follows:
Accounting Convention
The financial information is prepared under the historical cost convention.
Turnover
Turnover represents amounts derived from the provision of services which fall
within the OFEX group's ordinary activities after deduction of value added
tax. The turnover and pre-tax loss are attributable to one activity, the
operation of the OFEX market. This activity is undertaken solely in the UK.
Deferred income arises on renewals of membership and issuer fees for the OFEX
market.
Intangible fixed assets
The right to operate the OFEX market is valued at cost of acquisition less any
provision for impairment.
Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision
for impairment.
Depreciation is provided on cost in equal annual instalments over the estimated
useful lives of the assets. A full year's charge is made in the year of
acquisition. The following rates are used:
Furniture and fittings, office equipment and computer equipment: 33 1/3% per
annum.
Deferred taxation
Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based
on current tax rates and law. Timing differences arise from the inclusion of
items of income and expenditure in taxation computations in periods different
from those in which they are included in financial statements. Deferred tax
assets are recognised to the extent that they are regarded as more likely than
not to be recovered. Deferred tax assets and liabilities are not discounted.
2. Share capital
The Company was formed on 3 December 2002 with an authorised share capital
comprising 100,000 ordinary shares of GBP1 each, with 2 shares issued on
incorporation. At a meeting of the Company on 21 February 2003, the authorised
capital was increased to GBP5,000,000 by the creation of 4,900,000 new ordinary
shares of GBP1 each ranking pari-passu with the existing ordinary shares. Each
new and existing GBP1 ordinary share was then sub-divided into 20 ordinary
shares of 5p each. On the same date, 160 ordinary shares were issued for cash.
On 27 February 2003, 9,999,800 ordinary shares were issued to acquire the OFEX
group, consisting of Kudosoption plc, OFEX plc, OFEXmedia Limited and Newstrack
Limited.
On 29 April 2003, 5,789,844 ordinary shares were allotted pursuant to the Offer
for Subscription, which closed on 25 April 2003. The entire issued share
capital of the Company was admitted to trading on the AIM market of the London
Stock Exchange on 30 April 2003.
3. Movement on shareholders' funds
Share Share Profit and Total
Capital Premium Loss
Account Account
GBP GBP GBP GBP
Merger reserves acquired - - (1,493,122) (1,493,122)
Shares issued
- on incorporation 2 - - 2
- subsequent to incorporation 8 - - 8
- on acquisition of OFEX plc 499,990 - - 499,990
- on flotation 289,492 1,157,969 - 1,447,461
Flotation expenses - (376,498) - (376,498)
Retained loss for the period - - (272,714) (272,714)
789,492 781,471 (1,765,836) (194,873)
4. Loss per ordinary share
Basic loss per share has been calculated by dividing the loss on ordinary
activities after taxation by the weighted number of shares in issue during the
period. Diluted loss per share is basic loss per share adjusted for the effect
of conversion into fully paid shares of the weighted average number of share
options granted during the period. As the group has made a loss during the
period, under FRS14 no dilution effect has been calculated.
Six months
ended 30
June 2003
GBP
Loss on ordinary activities after taxation (272,714)
Number
Weighted average number of shares in issue during the period 8,817,382
Pence
Loss per share - basic and diluted (3.09)
5. Deferred income
OFEX issuers and corporate adviser members pay an annual fee. The fee is
payable in advance. The deferred income provision recognises that the issuers
and members have paid their fees for periods that extend beyond 30 June 2003,
and therefore the income will be accounted for by OFEX in such future
accounting periods.
6. Amounts due to related party - J P Jenkins Limited
As detailed in Part V, Notes 8(e) & (f) on material contracts in the
Prospectus, there is an amount due to a related party - J P Jenkins Limited.
The amount represents the outstanding balance of working capital funding under
the former group structure.
Six months
ended 30
June 2003
GBP
Outstanding as at 1 January 2003 1,679,718
Net advances 65,280
1,744,998
Less:
Assignment of loan due from Enriched Events Limited (299,774)
Deed of partial release (197,997)
Repaid from proceeds of the Offer for Subscription (500,000)
Balance as at 30 June 2003 747,227
Repayments of GBP10,000 per month, plus interest, commence on 1 May 2004.
Interest is payable on the loan at the rate of 6 per cent per annum, payable in
monthly instalments, save that the interest payable for the period to 30 April
2004 is rolled up and capitalised. The loan is convertible into ordinary
shares of the Company at the option of J P Jenkins Limited at 35p per share in
the period May 2004 to December 2005 and 45p in the period January 2006 to
January 2007.
7. Share option plans
As detailed in Part V, Note 7 on Share Option Plans (the "OFEX Plans") in the
Prospectus, the OFEX Plans comprise three plans for the purposes of retaining
and incentivising key members of staff. On 1 April 2003, the Company granted
375,000 options to directors and 680,000 to employees, pursuant to two of the
Plans.
8. The profit and loss account for OFEX Holdings plc
The loss shown of GBP778,000 arises principally as a result of a provision
relating to an amount advanced to OFEX plc. It is not anticipated that this
sum will be repaid in the foreseeable future and accordingly a full provision
has been made in the stand alone accounts of the Company.
INDEPENDENT REVIEW REPORT TO OFEX HOLDINGS PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2003, which comprises the consolidated profit and
loss account, the balance sheets and related notes 1 to 8. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company, in accordance with Bulletin 1999/4
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 interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are also responsible for ensuring that the accounting polices, as documented in
Note 1 to the financial information, and the presentation applied to the
interim figures are consistent with those applied in preparing the Prospectus,
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly, we
do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Deloitte & Touche LLP
Chartered Accountants
London
18 August 2003
A review does not provide assurance on the maintenance and integrity of the
website, including controls to achieve this, and in particular on whether any
changes may have occurred to the financial statements since first published.
These matters are the responsibility of the directors but no controls
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
FOR MORE INFORMATION PLEASE CONTACT
OFEX plc - Jonathan Jenkins - 020 7423 0800 or enquiries@ofex.com
ING Media - Leanne Tritton/Rob Pine - 020 7247 8334
END