Fund Raising Discussions and Interim Statement
September 29 2004 - 3:32AM
UK Regulatory
OFEX HOLDINGS PLC
FUND RAISING DISCUSSIONS AND INTERIM STATEMENT
1) FUND RAISING DISCUSSIONS
OFEX Holdings plc (the "Company") announces that it is in discussions to raise
additional capital for the Company. The purpose of the fund-raising to provide
working capital now and for the longer term and to finance the Company's
marketing expenditure which it intends to use, inter alia, to develop the
Group's product, increase its presence in the regions outside London and the
South East, to promote its market more widely overseas and to enhance the
branding of the Group's product. As part of the Company's re-branding the
Company is intending to split its market into two tiers, a regular section and
a premier section. The premier section will be designed to showcase certain
companies, which seek to bring themselves to the attention of additional
investors, and companies will be required to meet certain size and liquidity
thresholds. The regular section will cover all existing OFEX companies who do
not join the premier section.
The Directors are seeking to raise sufficient funds to realise the Company's
plans but the outcome of these discussions is uncertain. The Company presently
believes that it has sufficient funds to carry on its activities in the short
term but would require additional funding in order to carry on its business in
its existing state beyond the end of November. The Directors will continue to
monitor the position.
2) INTERIM STATEMENT FOR THE SIX MONTHS FROM 1 JANUARY 2004 TO 30 JUNE 2004
OFEX Holdings plc, whose wholly owned subsidiary, OFEX plc, operates the OFEX
market in the United Kingdom and is authorised and regulated by the FSA,
reports its interim results for the six months ended 30 June 2004.
RESULTS
The consolidated results for the six months ended 30 June 2004 show a loss for
the six months ended 30 June 2004 of GBP533,000 (2003: loss of GBP273,000).
Income at GBP570,000 (2003: GBP555,000) was 41% below budget primarily due to
lower than targeted levels of new admissions. Expenditure at GBP1,103,000
(2003: GBP815,000) was marginally below budget.
No dividend will be paid.
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. Whilst the number of new admissions, at
eight, was the same as for the corresponding period in 2003, and turnover was
marginally up by 3%, both numbers were considerably below the level targeted.
The number of companies leaving the market rose to 24 (2003: 19), with 6
choosing to move to the AIM market (2003: 2).
The level of IPO funds raised remained constant and improved market conditions
for established OFEX companies allowed an increase of second-round funding in
the period under review to a level not surpassed since the comparative period
in 2000.
Since the Company strengthened its business development team in the first
quarter the "pipeline" of potential entrants has increased significantly. In
addition, the move to competing market makers ("CMM"), which went live in July
2004, has already produced a new level of investor confidence, and additional
institutions are now able to consider OFEX securities for investment.
Whilst the impact of CMM on improving access to finance for potential companies
will take time to filter through to the numbers of new applications, its effect
on existing issuers has been immediate, and positive.
Since CMM went live shortly after the end of period under review, trading
levels have significantly improved, with trade numbers 78% higher than in the
equivalent period in 2003. In addition approximately 40% of all securities have
seen a significant reduction in spreads. An initial review of the Normal Market
Sizes quoted by the market indicates that the minimum liquidity threshold of 34
companies increased markedly.
I would like to thank all the teams at OFEX, Winterflood, Hoodless Brennan,
Teather & Greenwood and J P Jenkins for working with such a high degree of
commitment on the project.
THE FUTURE
I informed the board in August of my decision to retire from the Chairmanship
of the Company as soon as a suitable replacement is found. I am proud to have
been Chairman of OFEX from its inception in 1995 through to its recent
evolution with the introduction of competing market makers in July 2004.
I would like to thank the whole OFEX community for their support over the
years, particularly the OFEX staff themselves.
Subject to the outcome of the fundraising discussions referred to in the
accompanying statement, your Board will continue to explore a number of
projects and initiatives to enhance the OFEX model both domestically and
internationally.
John Jenkins
Chairman
29 September 2004
OFEX HOLDINGS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2004
SIX SIX YEAR ENDED
MONTHS MONTHS 31 DECEMBER
ENDED 30 ENDED 30 2003
JUNE 2004 JUNE 2003 AUDITED
NOTES UNAUDITED UNAUDITED GBP'000
GBP'000 GBP'000
TURNOVER 570 555 1,097
OPERATING COSTS
Staff costs (567) (410) (843)
Other operating charges (536) (405) (754)
(1,103) (815) (1,597)
OPERATING LOSS (533) (260) (500)
Interest receivable 8 1 1
Interest payable (8) (14) (36)
LOSS ON ORDINARY ACTIVITIES (533) (273) (535)
RETAINED LOSS FOR THE PERIOD (533) (273) (535)
Loss per share - basic and 5 (2.47)p (3.90)p (3.34)p
diluted
OFEX HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
30 JUNE 2004
AS AT AS AT AS AT
30 JUNE 30 JUNE 31
2004 2003 DECEMBER
NOTES UNAUDITED UNAUDITED 2003
GBP'000 GBP'000 AUDITED
GBP'000
FIXED ASSETS
Intangible - Intellectual Property Rights 500 500 500
Tangible 292 34 78
Investments 1 1 1
793 535 579
CURRENT ASSETS
Debtors 7 207 170 239
Prepayments 121 133 73
Cash at bank and in hand 9 475 363 74
803 666 386
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE
YEAR
Bank Loan 9 (67) - -
Creditors (201) (201) (86)
Amounts due to related party - J P 8 (36) (20) (80)
Jenkins Limited
Deferred income 6 (441) (448) (553)
(745) (669) (719)
NET CURRENT ASSETS / (LIABILITIES) 58 (3) (333)
CREDITORS: AMOUNTS FALLING DUE AFTER MORE
THAN ONE YEAR
Amounts due to related party - J P 8 (138) (727) (703)
Jenkins Limited 9 (133) - -
Bank Loan
(271) (727) (703)
NET ASSETS / (LIABILITIES) 580 (195) (457)
CAPITAL AND RESERVES
Called up share capital 3,4 1,077 789 789
Share premium 3,4 2,064 782 782
Profit and loss account 4 (2,561) (1,766) (2,028)
EQUITY SHAREHOLDERS' FUNDS / (DEFICIT) 4 580 (195) (457)
OFEX HOLDINGS PLC
COMPANY BALANCE SHEET
30 JUNE 2004
AS AT AS AT AS AT
30 JUNE 30 JUNE 31
2004 2003 DECEMBER
NOTES UNAUDITED UNAUDITED 2003
GBP'000 GBP'000 AUDITED
GBP'000
FIXED ASSETS
Investments in subsidiaries 10 2 500 500
CURRENT ASSETS
Amounts owed by group undertakings - due 284 - 1,037
after one year 17 - 4
Debtors and prepayments 284 293 1
Cash at bank and in hand
585 293 1,042
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE (7) - (2)
YEAR
TOTAL ASSETS LESS CURRENT LIABILITIES 580 793 1,540
CAPITAL AND RESERVES
Called up share capital 3,4 1,077 789 789
Share premium 4 2,064 782 782
Reserves (2,561) (778) (31)
EQUITY SHAREHOLDERS' FUNDS 580 793 1,540
OFEX HOLDINGS PLC
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 30 JUNE 2004
1. BASIS OF PREPARATION
These interim accounts, which are unaudited, have been prepared on the basis of
the accounting policies set out in the statutory accounts for the year ended 31
December 2003 of OFEX Holdings plc.
The financial information contained in this interim report does not constitute
the Group's statutory accounts within the meaning of section 240 of the
Companies Act 1985. The comparative information contained in this report for
the period ended 31 December 2003 does not constitute the statutory accounts
for that financial period. Those accounts have been reported on by the
company's auditors, Deloitte & Touche 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.
2. GOING CONCERN
The Company has today issued an announcement that it is seeking to raise
additional capital. These interim accounts have been prepared on a going
concern basis, since the Directors currently believe that the fundraising will
be successful. However, the ultimate outcome of the fundraising discussions is
uncertain. The financial information does not include any adjustments that
would be necessary should this fundraising not prove to be successful.
3. SHARE CAPITAL
On 13 January 2004, 4,000,000 shares were allotted at 25p per share and
GBP610,000 of a loan note held by J P Jenkins Limited was converted at 35p per
share into 1,742,857 ordinary shares.
4. MOVEMENT ON SHAREHOLDERS' FUNDS
SHARE SHARE PROFIT AND TOTAL
CAPITAL PREMIUM LOSS
ACCOUNT ACCOUNT
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2003 790 781 (2,028) (457)
Shares issued in period 287 1,323 - 1,610
Share admission expenses - (40) - (40)
Loss for the period - - (533) (533)
1,077 2,064 (2,561) 580
5. 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 in existence during the period. As the Group has made a loss during
the period, under FRS14 no dilution effect has been calculated.
SIX MONTHS SIX MONTHS YEAR ENDED
ENDED 30 ENDED 30 31 DECEMBER
JUNE 2004 JUNE 2003 2003
GBP'000 GBP'000 GBP'000
Loss on ordinary (533) (273) (535)
activities after taxation
NUMBER NUMBER NUMBER
Weighted average 21,532,701 8,817,382 15,789,844
number of shares
PENCE PENCE PENCE
Loss per share (2.47) (3.09) (3.34)
6. DEFERRED INCOME
OFEX issuers and corporate adviser category 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, and therefore the income will be accounted for by OFEX in a future
accounting period.
7. DEBTORS
The balance at 30 June 2004 includes a rental deposit of GBP35,250 that
was paid 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 of 10 February 2004.
8. AMOUNTS DUE TO RELATED PARTY - J P JENKINS LIMITED
As part of a share placing in January 2004, GBP610,000 of the loan from J P
Jenkins Limited was converted into ordinary shares of the Company at 35p per
share.
SIX SIX YEAR ENDED
MONTHS MONTHS 31
ENDED 30 ENDED 30 DECEMBER
JUNE JUNE 2003
2004 2003 GBP'000
GBP'000 GBP'000
Outstanding as at 1 January 783 1,680 1,680
Net advances - 65 65
Interest accruing 7 - 36
790 1,745 1,745
Less:
Assignment of loan due from Enriched - (300) (300)
Events Ltd
Deed of partial release - (198) (198)
Repaid from proceeds of the Offer for - (500) (500)
Subscription
Conversion to ordinary shares (610) - -
Repayments in period (6) - -
Balance as at period end 174 747 783
Repayments of GBP3,000 per month commenced on 1 May 2004. Interest is accruing
at the rate of 6 per cent per annum on the reducing residual balance.
9. BANK LOAN
A three year loan facility of GBP200,000 was established in April 2004 in
relation to the fit-out costs associated with the Company's move to its current
premises, as a result of the lease on its old premises expiring in May 2004.
The rationale of the loan being to match the useful life of the capitalised
fit-out costs with the related cash-flows, however, significant cash cover was
required to establish the facility, and GBP180,000 of the amount reflected
within the cash balance of GBP475,000 at 30 June 2004 relates to this
arrangement, over which the facility provider has a charge in the event of
default on the loan repayments. The cash cover reduces in profile with the loan
repayments.
10. INVESTMENT IN SUBSIDIARIES
The value of the investment in Kudosoption plc, a dormant subsidiary, has been
written down during the first six months of 2004. The write down amounted to
GBP498,000 and the valuation now stands at a nominal amount of GBP1,000. The
balance of GBP1,000 relates to the investment in OFEX plc.
11. SHARE OPTION SCHEMES
The total number of share options outstanding under the OFEX Plans as at 30
June 2004 was 2,630,473:
------------------------------------------------------------------------------
| Number of Share |Exercise Price|Grant Date|Earliest Exercise |Expiry Date|
| Options | | | Date | |
------------------------------------------------------------------------------
| 945,000 | 25p |01/04/2003| 01/04/2006 |31/03/2013 |
------------------------------------------------------------------------------
| 618,553 | 29.5p |11/03/2004| 11/03/2007 |10/03/2014 |
------------------------------------------------------------------------------
| 1,066,940 | 28.25p |31/03/2004| 31/03/2007 |30/03/2014 |
------------------------------------------------------------------------------
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 2004, which comprises the consolidated profit and
loss account, the balance sheets and related notes 1 to 11. 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
that 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 and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts 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.
FUNDAMENTAL UNCERTAINTY RELATING TO THE CONTINUED USE OF THE GOING CONCERN
BASIS
In arriving at our review conclusion, we have considered the disclosures in
note 2 concerning the continued use of the going concern basis for the
preparation of the financial information. It is not possible for us to
determine adjustments, if any, to the financial statements which would arise
should this basis prove not to be appropriate.
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 2004.
Deloitte & Touche LLP
Chartered Accountants
London
29 September 2004
END
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