Last checked at 16 Sep 2010 07:00
Interim results for the six months to 30 June 2010
PLUS Markets Group plc ("PMG" or the "Group") reports its interim results for the six months to 30 June 2010.
Financial highlights
* Revenues at £1.53 million (2009 - £1.49 million) on administrative expenses of £4.03 million (2009 - £7.38 million). * Loss before depreciation, amortisation, impairment and interest received of £2.54 million (2009 - £5.85 million). Loss after depreciation, amortisation, impairment and interest of £2.48 million (2009 - £5.71 million). * The Group has no debt and retained a cash balance of £9.73 million (2009 - £10.26 million) as at the balance sheet date.
Commenting on the interim results, Chief Executive Officer Cyril Th©ret said:
"PLUS Markets has embarked on a radical and aggressive strategy to transform itself. We have made some clear decisions about the future direction of the Company. We now seek to broaden our services and products to both the small and mid-cap sector and a wider group of users in order to generate revenues and greater future value."
For further information, please contact:
Cyril Th©ret / 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
This is the first set of results under the new management team which took office in February 2010. The new team embarked on a radical and aggressive strategy to turn PLUS Markets Group plc from a reporting venue into a fully-fledged competitive stock exchange for London, providing listing and execution services in cash equities and derivatives.
During the period, the management team have been extremely busy establishing a clear direction for the exchange based on customer requirements. The outcome of this work, if successfully implemented, will transform the position of the PLUS stock exchange.
Key highlights of this work included:
* reducing the cost base by 40% to annual level of below £5 million from 2011; * + headcount reduction from 52 to 28 generating savings of over £1m on an annualised basis; + notice given on the existing Facilities Management Agreement, reducing technology infrastructure costs from over £2 million p/a to under £0.5 million p/a projected for 2011 for the in-house built quote and trade reporting facility. * completion of strategic review on 25 August 2010; * new technology offering providing market making, bilateral and multilateral electronic execution services; and * proposed launch of new products: corporate bond product for small and mid cap, retail execution services, and PLUS Derivatives Exchange.
The Board now have a clear focus on driving the Group to profitability within two years.
Financial performance
The first half of 2010 saw continuing difficult market conditions, particularly in respect of low Initial Public Offering ("IPO") activity on the PLUS-quoted market. The market held steady with twelve new companies admitted during the period (2009 - 12) while 17 left (2009 - 24), resulting in 174 companies on the market at the period end.
Sales in real-time products and other services remained unchanged in a muted environment. In March, PLUS launched a fixed income trade reporting service, increasing the variety of products for retail investors on the exchange.
Revenues in the first six months increased slightly to £1.53 million (2009 - £ 1.49 million), on administrative expenses of £4.03 million (2009 - £7.38 million).
Trading activity
Retail trading activity reported on PLUS remained healthy, with a 44% increase in value traded as against the same period last year (2010 - £43.1 billion; 2009 - £29.9 billion), although the number of bargains declined (2010 - 3.6 million; 2009 - 5.1 billion), in line with declining volumes across the sector. This is an activity from which the exchange intends to generate revenues in the future.
Market conditions
The cash equity markets remain uncertain with a general lack of IPOs and falling equity volumes, leading to consolidation of the sector, including Multilateral Trading Facilities ("MTFs"). The exchange's marketplace continues to evolve rapidly post-MIFID, while investment firms face new challenges and seek to reduce operational and systemic risks.
The change of UK government in May resulted in HM Treasury launching new consultations that are directly relevant to PLUS, relating to the City regulatory framework and the important role of the private sector in economic recovery. The PLUS stock exchange welcomes focus on the importance of funding Small and Medium sized Enterprises ("SMEs") in a credit-constrained environment, as outlined in the Green Paper "Financing a Private Sector Recovery".
Future plans
Against this backdrop, as recently announced, the Group is broadening its offering to our customers, while seeking to build a sustainable revenue base.
* SME offering - PLUS continues to increase the profile of its issuers through the commissioning of equity research from Edison Research and holding regional roadshows across the UK. Sales initiatives across the Far East and Middle East regions are ongoing, as they offer better IPO prospects. Our current offering will also be enhanced by a new corporate bond product; * Retail execution services -,PLUS plans to improve its offering through an RSP hub based on a Request For Quote ("RFQ") model providing best execution, single fill and price improvement opportunities to retail investors. * PLUS Derivatives Exchange ("PDX") - PLUS intends to launch a new range of interest rate swap products, providing efficient access to full fixed-for-floating rate interest exposure through the FTSE MTIRS (Medium Term Interest Rate Swap) Index Series. This will initially be through an over-the-counter ("OTC") cleared service, developing subsequently, subject to market demand, into a new exchange-traded product known as an Exchange-Traded Index ("ETI"), listed and traded on PLUS. * Proposed new trading platform - PLUS intends to launch a new lit book (order book) in 2011, subject to funding of up to £10 million from potential users, using next generation platform technology provided by Algo Technologies Ltd.
Board changes
As PLUS Markets rolls out its new developments and new initiatives, it will continue to review the shape and composition of its Board to meet new challenges and opportunities. Stephen Allcock, Non-Executive Director, stepped down from the Board on 14 September 2010, following over four years' service to the Company, and we are grateful for his valuable contribution. We are seeking to replace him as soon as possible. Also, Simon Brickles has decided to relinquish the post of Vice Chairman and left the Board on 14 September 2010; therefore this role will no longer exist. The Board recognises the work he has undertaken over many years in helping formulate and promote London's equity markets in support of smaller companies and wishes him well for the future.
Outlook
The result of all the above activity is to give a clear understanding to both our customers and shareholders as to the company's direction, in what is widely acknowledged to be a difficult environment. We do not underestimate the challenges that we face but the speed of change in the company already indicates we are prepared to fulfil the role of a truly competitive stock exchange.
Giles VardeyChairman15 September 2010
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2010
Note Six months Six months Year ended 31 ended 30 June ended 30 June December 2009 2010 2009 Audited £'000 Unaudited £ Unaudited £ '000 '000 Continuing Operations Revenue 1,528 1,491 3,038 Administrative expenses 2 (4,031) (7,379) (11,563) (Charge)/credit in relation to (32) 40 91share-based payments Loss before depreciation, (2,535) (5,848) (8,434)amortisation and impairment charge Depreciation and amortisation (12) (26) (40) Operating loss (2,547) (5,874) (8,474) Finance income 65 162 218 Loss on ordinary activities (2,482) (5,712) (8,256)before taxation Taxation - - - Loss for the period (2,482) (5,712) (8,256)attributable to equity holders of the parent Loss per share Basic (0.64)p (1.81)p (2.37)p Diluted (0.63)p (1.77)p (2.33)p
There were no other items of comprehensive income in the period or comparative period.
Condensed Consolidated Statement of Financial Position
As at 30 June 2010 Note As at 30 As at 30 As at 31 June 2010 June 2009 December Unaudited £ Unaudited £ 2009 Audited '000 '000 £'000 Non-current assets Property, plant and equipment 11 35 21 11 35 21 Current assets Available-for-sale investments - 1 - Trade and other receivables 1,122 1,454 1,027 Cash and cash equivalents 9,728 10,256 10,744 10,850 11,711 11,771 Total assets 10,861 11,746 11,792 Current liabilities Trade and other payables (1,243) (2,098) (566) Provisions 3 (177) - (177) Deferred income (898) (979) (56) (2,318) (3,077) (799) Net current assets 8,532 8,634 10,972 Net assets 8,543 8,669 10,993 Equity Share capital 19,345 15,828 19,345 Share premium account 18,021 16,616 18,021 Retained deficit (28,823) (23,775) (26,373) Equity attributable to equity 8,543 8,669 10,993holders of the parent
These financial statements were approved by the Board of Directors and authorised for issue on 15 September 2010.
Signed on behalf of the Board of Directors
Giles Vardey
Chairman
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2010
Six months Six months Year ended 31 ended 30 June ended 30 June December 2009 2010 2009 Audited £'000 Unaudited £ Unaudited £ '000 '000
Net loss from operating activities (2,547) (5,874) (8,474)
Adjustments for non cash items: Depreciation of property, plant and 12 26 40equipment Profit on disposal of - - (2)available-for-sale investment Share-based payment expense/(credit) 32 (40) (91) Operating cash flows before (2,503) (5,888) (8,527)movements in working capital (Increase)/decrease in trade and (95) 156 583other receivables Increase/(decrease) in trade and 1,519 907 (1,371)other payables Net cash used in operating (1,079) (4,825) (9,315)activities Investing activities Interest received 65 162 218 Purchase of non current assets (2) (6) (6) Net cash generated by investing 63 156 212activities Financing activities Net proceeds from issue of equity - 94 5,016shares Net cash generated by financing - 94 5,016activities Net decrease in cash and cash (1,016) (4,575) (4,087)equivalents Cash and cash equivalents at 10,744 14,831 14,831beginning of period/year
Cash and cash equivalents at end of 9,728 10,256 10,744 period/year
Condensed Consolidated Statement of Changes in Equity
Unaudited for the six months ended 30 June 2009, audited for the year ended 31 December 2009 and unaudited for the six months ended 30 June 2010.
Share Share Retained Total £ capital £ premium £ earnings £ '000 '000 '000 '000
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
Attributable to equity holders of 15,734 16,616 (18,023) 14,327 the parent at 1 January 2009
Retained earnings of dormant - - (3) (3)subsidiary disposed of in the year
Shares issued - Options exercised 94 - - 94
Shares issued - Placing 1 October 3,517 1,405 - 4,922 2009
Reversal of share based payment - - (91) (91)credit Loss for the year - - (8,256) (8,256)
Attributable to equity holders of 19,345 18,021 (26,373) 10,993 the parent at 31 December 2009
Attributable to equity holders of 19,345 18,021 (26,373) 10,993 the parent at 1 January 2010
Reversal of share based payment - - 32 32charge Loss for the half year - - (2,482) (2,482)
Attributable to equity holders of 19,345 18,021 (28,823) 8,543 the parent at 30 June 2010
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2010
1. Accounting Policies
General information
PLUS Markets Group plc ("the Company") is a company incorporated in the United Kingdom under the Companies Act 2006. 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") as adopted by the European Union. This condensed consolidated financial information should be read in conjunction with the statutory accounts for the year ended 31 December 2009 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. In the current financial year the Group has not adopted any new IFRSs. 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 information for the year ended 31 December 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006. 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 2010 development costs totalling £70k did not fulfil all three of the above criteria. The development costs have therefore been expensed.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Going concern
The Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the period ending 30 June 2010. At the balance sheet date the Group held £9.7 million cash on a range of short term deposits at three different banks. In the light of the Group's reduced operating cost base the Directors have formed a judgement 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. The Group is required to maintain a level of regulatory capital as a Recognised Investment Exchange, which it continues to meet, and the Directors will continue to monitor the adequacy of the regulatory capital headroom.
2. Administrative Expenses
Administrative expenses in the six months to 30 June 2010 include £0.07 million in respect of expenditure on development of the new trading platform.
3. Provisions
The provision for non-reclaimable VAT represents VAT claimed on developments to the trading platform to enable it to accommodate electronic matching of trades, which is an exempt supply for VAT purposes. The amount provided represents 100% of the VAT claimed and is subject to agreement by HMRC, which agreement has been sought.
Independent Review Report to PLUS Markets Group Plc
We have been engaged by the company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the income statement, the balance sheet, the cash flow statement, the statement of changes in equity and related notes 1 to 3. 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 (UK and Ireland) 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 consolidated 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 (UK and Ireland) 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 inquiries, 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 consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 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
15 September 2010
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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