RNS Number : 4942E
Baydonhill PLC
29 September 2008
29 September 2008
Baydonhill Plc
("Baydonhill" or the "Company")
Final results for the year ended 31 March 2008
Baydonhill (AIM: BHL), one of the UK's leading foreign exchange specialists, announces its
final results for the year ended 31 March
2008.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
The year under review has been a challenging one for the Company, as the downturn in the
market has had significant impact in the
private client foreign exchange sector as a whole. Baydonhill plc is fortunate to have a large
existing private client base, which has
reduced the impact of the current economic conditions on its Private Client Division.
The Company has made significant progress in developing its corporate business. The online
payment platform was launched later than
anticipated at the end of November 2007. While this delayed the generation of expected revenue
from the Corporate Division, the positive
response from corporate clients has resulted in steady growth within this division since.
Financial Review
The loss for the financial year was £1,470,000, compared to £878,000 in 2007. The
£1,470,000 loss included £1,122,000 of costs incurred
in the development of the Corporate Division's foreign exchange business. The losses reported
for 2008 and 2007 include adjustments required
under FRS 20 (relating to share based payments) amounting to a credit of £82,186 in 2008
(2007: charge £121,537).
Gross turnover for the Company for the year under review was £294 million, an increase
from the previous year's figure of £240 million.Gross profit (representing foreign exchange commissions earned) decreased to £2.1 million
from £2.2 million in the previous year.
Shareholders funds at 31 March 2008 amounted to a deficit of £254,000 compared to a
surplus of £743,000 at 31 March 2007.
Sector Review
The launch of the Corporate Division, which contributed £67 million to gross turnover,
helped to increase the Company's gross turnover
to £294 million (2007: £240 million).
The private client foreign exchange sector has experienced another challenging year,
resulting in the Private Client Division's turnover
dropping from just under £240 million in 2007 to £226 million in 2008. We believe this is a
strong performance in comparison to the decline
which has been widely reported in the financial press.
Whilst recruitment of a new team for the Corporate Division was completed in April 2007,
the implementation of the online payment
platform was not completed until November 2007. This delay negatively impacted the forecasted
revenue from the Corporate Division for the
year. However, since the launch of the platform there has been a positive impact on the
Company's revenue as expected. As a result, revenue
generated by the Corporate Division in the last quarter to March 2008 exceeded that generated
in the previous nine months.
Fundraising
In May 2007, the Ekwienox Group subscribed for £500,000 of ordinary shares and entered
into a convertible loan note providing a further
£476,000 of funding. In addition, certain Directors subscribed for a further £24,000 of
ordinary shares. In August 2007, a further
convertible loan note of £700,000 was provided by the Ekwienox Group, intended to provide
funds for the period through to September 2008.However, due to the downturn experienced by the Private Client Division and the delay in the
launch of the Corporate Division's online
trading platform, a further facility of £500,000 was provided on 30 June 2008 by Wallich &
Matthes BV, a wholly owned subsidiary of Ekwienox
Limited.
People
There have been a number of changes to the Board, as outlined in the Directors' Report.These changes reflect changes to the business
profile and the addition of a corporate offering. Our thanks go to Directors who have left
during the year.
The staff have responded magnificently to the changes that they have encountered
throughout the year and the Board would like to thank
them for their continuing dedication and support.
Outlook
The Directors believe that 2009 will continue to be a challenging year for the Private
Client Division, but expect significant growth
from the Corporate Division. In the first quarter of the fiscal year 2009, revenues increased
by 30% over the same period in 2008 whilst
costs rose by 4%.
The Company has recently invested in the redesign of its website, aimed at improving the
Company's web presence. In addition, further
investment will be made to add additional functionality to the online trading platform, aimed
at attracting a wider spectrum of corporate
clients. The Company also expects to increase head count during the year as a result of the
forecasted increase in business.
The core business in the forthcoming year will continue to be the provision of private
client foreign exchange services, with the
Corporate Division making an increasing contribution. This core business remains a focus for
the Company and the sales and marketing
strategies are being reviewed to reflect this.
Sir Eric Peacock KCMG Wayne Mitchell
Chairman Chief
Executive
FURTHER ENQUIRIES
Baydonhill Plc
Eric Peacock 020 7594 0515
Wayne Mitchell
John East & Partners Limited
Bidhi Bhoma 020 7628 2200
AUDITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008
Note 2008 2007
£ £
Turnover 2(b) 293,792,374 239,767,768
Cost of sales (291,647,277) (237,559,748)
Gross profit 2,145,097 2,208,020
Administrative expenses (3,737,519) (3,269,712)
Operating loss 3 (1,592,422) (1,061,692)
Interest receivable and similar income 177,863 184,541
Interest payable and similar charges (55,624) (1,082)
Loss on ordinary activities before taxation (1,470,183) (878,233)
Taxation 4 - -
Loss for the financial year (1,470,183) (878,233)
Basic earnings per share 5 (6.29p) (6.06p)
Fully diluted earnings per share 5 (6.29p) (6.06p)
AUDITED BALANCE SHEET AS AT 31 MARCH 2008
2008 2007
Note £ £ £
£
FIXED ASSETS
Tangible 6 590,027 343,182
Investments 7 10 10
590,037 343,192
CURRENT ASSETS
Debtors due within one year 19,201,359 9,246,673
Cash at bank and in hand 3,892,481 4,106,425
23,093,840 13,353,098
CREDITORS: amounts falling due 8 (22,801,713) (12,953,709)
within one year
NET CURRENT ASSETS 292,127 399,389
TOTAL ASSETS LESS CURRENT 882,164 742,581
LIABILITIES
CREDITORS: amounts falling due 8 (1,135,732) -
after one year
NET ASSETS (253,568) 742,581
CAPITAL AND RESERVES
Called up share capital 11 243,841 144,987
Share premium account 12 3,005,551 2,600,623
Profit and loss account 12 (3,555,398) (2,003,029)
Shares to be issued 12 52,438 -
EQUITY SHAREHOLDERS' (253,568) 742,581
(DEFICIT)/FUNDS
AUDITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008
2008 2007
£ £
Reconciliation of operating loss to net cash flow
from operating activities
Operating loss (1,592,422) (1,061,692)
Depreciation of tangible fixed assets 93,404 131,648
Increase in debtors (9,954,686) (5,408,283)
Increase in creditors 10,010,174 5,403,513
Share - based (credit) / charge (82,186) 121,537
Net cash outflow from operating activities (1,525,716) (813,277)
CASH FLOW STATEMENT (note14)
Net cash outflow from operating activities (1,525,716) (813,277)
Returns on investments and servicing of finance 122,239 183,459
Taxation - 3,697
Capital expenditure (340,249) (354,942)
Cash outflow before use of liquid resources and (1,743,726) (981,063)
financing
Management of liquid resources - 300,000
Financing - Convertible Loans 1,026,000 -
- Issue of shares 503,782 -
Decrease in cash in the year (213,944) (681,063)
Reconciliation of net cash flow to movement in net
funds (note 15)
Decrease in cash in the period (213,944) (681,063)
Cash inflow from decrease in liquid resources - (300,000)
Convertible loan note (973,562) -
Net funds at 1 April 2007 4,106,425 5,087,488
Net funds at 31 March 2008 2,918,919 4,106,425
NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2008
1. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out above does not constitute the Company's statutory
accounts for the years ended 31 March 2007 and 2008,
but is derived from those accounts. Statutory accounts for 2007 have been delivered to the
Registrar of Companies and those for 2008 will be
delivered following the Company's Annual General Meeting. The Auditors have reported on those
accounts; their reports were unqualified and
did not contain statements under the Companies Act 1985, sections 237(2) or (3).
2. ACCOUNTING POLICIES
(a) Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention and in
accordance with applicable accounting standards.A summary of the more important accounting policies, which have been consistently applied
except where noted, is set out below.
(b) Turnover and revenue recognition
Turnover represents:
1. The gross value of foreign exchange currency transactions undertaken by the
Company's foreign currency
business. Purchases of currency relating to such transactions are treated as cost
of sales. Turnover is recognised
after receiving the client's authorisation. Where the Company enters into contracts
with its clients, it also enters
into matched contracts with its bankers.
2. Commissions earned from arranging property finance. Such revenue is recognised when
the client has entered into
irrevocable arrangements with the loan provider or underwriter.
3. OPERATING LOSS
The operating loss is stated after charging:
2008 2007
£ £
Depreciation of tangible fixed assets 93,404 131,648
Operating lease rentals - land and buildings 142,500 142,500
Exceptional item - development of Corporate Foreign 1,122,000 270,000
Exchange division
4. TAXATION
2008 2007
£ £
a) Analysis for the year
Current tax:
UK corporation tax on loss for the year - -
Adjustment in respect of previous years - -
Total current tax (note 4(b)) - -
Total deferred tax - -
Total tax for the year - -
b) Factors affecting tax for year
Loss on ordinary activities before tax (1,470,183) (878,233)
Expected tax @ 30% (2007 : 30%) (441,055) (263,470)
Expenses not deductible for tax purposes 34,528 28,179
Depreciation in excess of capital allowances (37,514) 40,121
Share-based payments not deductible for tax (24,656) 36,461
Losses arising in the period carried forward 468,697 158,709
Actual tax - -
c) Deferred tax
Potential deferred
Short term timing Accelerated tax not recognised
differences capital
Tax £ Allowances £ Total
Losses £ Recog
£ nised
£
At 1 April 2007 345,025 - 59,291 (404,316) -
For the year 486,546 10,720 (39,600) (457,666) -
At 31 March 2008 831,571 10,720 19,691 (861,982) -
As at 31 March 2008, trading losses of approximately £2,970,000 (2007: £1,404,000) are
available to carry forward against future profits
of the same trade. These tax losses will reduce the corporation tax charge in future years
until they have been utilised. No deferred tax
asset in respect of these losses has been recognised as there is currently uncertainty as to
the precise timing over which the asset will be
recovered.
5. EARNINGS PER SHARE
Both basic earnings per share and diluted earnings per share are based on a loss after tax
of £1,470,183 (2007 : £878,233). The basic
earnings per share has been calculated on a weighted average of 23,354,859 (2007 : 14,498,705)
ordinary shares in issue. Diluted loss and
earnings per share is calculated on the same basis as basic loss and earnings per share
because the effect of the potential ordinary shares
(share options and warrants) reduces the net loss per share and is therefore anti-dilutive.
6. TANGIBLE FIXED ASSETS
On-line Leasehold Office
system improveme equipme Total
nts nt
£ £ £
Cost
At 1 April 2007 244,566 165,358 582,346 992,270
Additions 322,220 - 18,029 340,249
At 31 March 2008 566,786 165,358 600,375 1,332,519
Depreciation
At 1 April 2007 11,528 165,223 472,337 649,088
Charge for period 30,081 104 63,219 93,404
At 31 March 2008 41,609 165,327 535,556 742,492
Net book amount
At 31 March 2008 525,177 31 64,819 590,027
At 31 March 2007 233,038 135 110,009 343,182
7. FIXED ASSET INVESTMENTS
Shares in subsidiary undertakings
2008 2007
£ £
Cost
At 1 April 2007 and 31 March 2008 10 10
The Company holds 100% of the ordinary share capital of Baydonhill International Mortgages
Limited and FLG Insurance Brokers Limited.The net assets and trade of these subsidiaries were transferred to Baydonhill plc on 31 March
2007 and, since that date, the two companies
have remained dormant.
The Company also holds 100% of the ordinary share capital of www.fx4less.com Limited,
Boatfinance4less Limited, Currencies4less Limited
and FLG Corporate Services Limited, all of which are dormant. All subsidiaries are registered
in England and Wales.
The company has taken advantage of section 229(2) of the Companies Act 1985 and not
prepared consolidated accounts incorporating the
above investments as the Directors' consider their inclusion is not material for the purpose
of giving a true and fair view.
8. CREDITORS
2008 2007
£ £
Amounts falling due within one year
Trade creditors 21,947,213 12,163,572
Amounts owed to Group undertakings 588,146 565,795
Other tax and social security 54,151 59,619
Accruals and deferred income 212,203 164,723
22,801,713 12,953,709
Amounts falling due after one year
Convertible Loan Note dated 8 May 2007 476,000 -
Convertible Loan Note dated 23 August 2007 550,000 -
Less: Equity element transferred to reserves (52,438) -
Net debt element 973,562 -
Amounts due to Group undertakings 162,170 -
1,135,732 -
In May 2007 the Company entered into a Convertible Loan with the Ekwienox Group in the sum
of £476,000, and in August 2007 it entered
into a second Convertible Loan with the Ekwienox Group in the sum of £700,000, both at rates
of interest based on LIBOR. At 31 March 2008
the first loan had been fully drawn down and the second to the extent of £550,000.
9. FINANCIAL INSTRUMENTS
Treasury activities take place under procedures and policies monitored by the Board. They
are designed to minimise the financial risks
faced by the Company which primarily arise from interest rate, currency, and liquidity risks
and information is given below. As permitted by
FRS13 Derivatives and other financial instruments, no further details are set out in respect
of short-term debtors and creditors.
Interest rate risks
The Company has financed its operations primarily through both the issue of equity shares
and the provision of convertible loans.Floating rate assets comprise cash at bank and the Company receives interest on cash balances
at rates linked to the Company's banker's base
rate. At the year end, the Company had borrowings as a result of drawdowns from the loan notes
amounting to £1,026,000 at rates of interest
based on LIBOR. At the year end the Company owed ASPone Limited, the sum of £416,557 which
bears interest at rates based on LIBOR. The
Company has no other assets or liabilities that are subject to interest rate fluctuations.
Liquidity risk
The Company's treasury management policies are designed to ensure the continuity of
funding. The Company has surplus cash at the year
end.
Foreign currency risk
The Company does not have any significant foreign currency exposure as all foreign
currency is acquired under matched contracts to
fulfil contracts with clients and therefore no further analysis is required under FRS 13.
10. FORWARD DELIVERY CONTRACTS AND MONIES DUE FROM CLIENTS
At the year end, the amount due from clients in respect of open contracts was £18,975,201
(2007 : £9,030,733).
At the year end, the Company had committed to purchase currency at fixed rates from its
bankers, in respect of clients, amounting to
£18,586,041 (2007 : £9,851,306). The fair value of these forward foreign currency exchange
contracts at the year end amounted to an
additional liability of £41,000 (2007 : £77,000).
11. SHARE CAPITAL
Ordinary shares of 1p each
Authorised Allotted, called up and
fully paid
No. £ No. £
At 31 March 2007 50,000,000 500,000 14,498,705 144,987
Increase approved at AGM 25,000,000 250,000
Issued pursuant to Placing 9,113,042 91,131
Agreement dated 8 May 2007
Issued to directors and staff 772,268 7,723
At 31 March 2008 75,000,000 750,000 24,384,015 243,841
At the end of the year the Company had granted the following warrants in respect of
Ordinary shares:
Number of warrants
granted Exercise price Exercise period
Blue Oar Securities Limited 79,762 23p 4 April 2009
Ekwienox FX Limited 5,552,295 5.75p 31 March 2011
Ekwienox FX Limited 1,780,905 5.75p 31 March 2011
Ekwienox FX Limited 560,000 6.25p 30 April 2010
On 8 May 2007 Ekwienox FX Limited entered into an investment agreement with Baydonhill plc
whereby Ekwienox FX Limited acquired
8,695,652 shares at a price of 5.75p. Additionally, the existing warrants and additional
subscription rights held by Ekwienox FX Limited
were re-priced from 23p per share to 5.75p per share.
On the same date Ekwienox FX Limited entered into a Convertible Loan Agreement with
Baydonhill plc whereby it agreed to extend to
Baydonhill plc a convertible loan of £476,000 bearing interest at the rate of 3.75% above
LIBOR and with conversion rights at a price of
5.75p per share.
In an investment agreement dated 8 May 2007, Wayne Mitchell subscribed for 260,869 shares,
Tim Sullivan 86,956 shares and Ian Collins
69,565 shares, all at a price of 5.75p per share. Additionally, and under the terms of their
Contracts of Employment, Wayne Mitchell was
granted 672,268 shares and another employee 100,000 shares all at par.
On 23 August 2007 Ekwienox FX Limited entered into a Convertible Loan agreement with
Baydonhill plc whereby it agreed to extend to
Baydonhill plc a Convertible Loan of £700,000 bearing interest at the rate of 4.00% above
LIBOR and with conversion rights at a price of
6.00p per share. In addition, the Company granted a warrant to Ekwienox FX Limited to
subscribe for 560,000 Ordinary Shares at a
subscription price of 6.25p exercisable at any time prior to 30 April 2010.
None of the warrants noted above are deemed to have a material equity component.
12. RESERVES
2008
£
Share premium account
At 31 March 2007
2,600,623
Shares issued pursuant to Placing Agreement dated 8 May 2007 at a premium of 4.75p
432,870
Less : costs of placing net of any related tax benefit
(27,942)
At 31 March 2008
3,005,551
2008 2007
£ £
Profit and loss account
At beginning of year
(2,003,029) (1,246,333)
(Loss) for year
(1,470,183) (878,233)
Share-based payments
(82,186) 121,537
At end of year
(3,555,398) (2,003,029)
Shares to be issued
At 31 March 2007
- -
Equity element of convertible loans
52,438 -
At 31 March 2008
52,438 -
The "Shares to be issued" reserve above represents the equity elements of the convertible
loans entered into during the year and is
calculated in accordance with FRS 25.
13. SHAREHOLDERS' FUNDS
2008 2007
£ £
At beginning of year 742,581 1,499,277
(Loss) for the year (1,470,183) (878,233)
New shares issued 531,724 -
Costs incurred in respect of Placing (27,942) -
Share-based payments (82,186) 121,537
Shares to be issued 52,438 -
At end of year (253,568) 742,581
14. GROSS CASH FLOWS
2008 2007
Returns on investments and servicing of finance
Interest received 177,863 184,541
Interest paid (55,624) (1,082)
122,239 183,459
Capital expenditure
Payments to acquire tangible fixed assets (340,249) (354,942)
Financing
Issue of share capital 531,724 -
Expenses paid in connection with share issues (27,942) -
503,782 -
Management of liquid resources
Cash withdrawn from secured deposit - 300,000
15. ANALYSIS OF CHANGES IN NET FUNDS
At 1 April Cash Flows Other non-cash movements At 31 March
2007 2008
£ £ £ £
Cash at bank and in hand 3,656,425 (213,944) - 3,442,481
Liquid resources 450,000 - - 450,000
Debt due after one year - (1,026,000) 52,438 (973,562)
Total 4,106,425 (1,239,944) 52,438 2,918,919
16. TRANSACTIONS WITH RELATED PARTIES
During the year the Company entered into contracts to purchase foreign exchange on an arms
length basis on behalf of the following
related parties. The total value of the transactions during the year were:
Sail Croatia Limited, a company controlled £408,208 (2007 : £33,278)
by Mr A. Hughes
Hidden Croatia Limited, a company controlled £645,535 (2007 : £341,160)
by Mr A. Hughes
Ekwienox Limited, the ultimate parent £2,337,680 (2007 : £1,159,119)
Company
Sarah Collis, a director of the Company £345,686 (2007 : £167,949)
Arthur Hughes, the ultimate controlling £824,168 (2007 : £44,486)
party
Charles McLeod, a director of the Company £583,686 (2007 : £527,852)
Ian Collins, a director of the Company £53,547 (2007 : £ Nil)
(until 11 August 2008)
During the year the Company incurred the
following costs from related parties:
Ekwienox Limited, in respect of £46,000 (2007 : £51,250)
non-executive fees and insurance recharges
Ekwienox FX Limited, fees in connection with £30,000 (2007 : £ Nil)
the 2008 Placing
ASPone Limited, a company controlled by £483,959 (2007 : £267,311)
Ekwienox Limited, in respect of the
development of an online trading system and
associated hosting and consultancy charges
Ekwienox FX Limited, interest payable on £29,363 (2007 : £ Nil)
convertible loan notes
At the end of the year the following amounts
were owed to related parties:
Ekwienox Limited £333,759 (2007 : £369,132)
ASPone Limited £416,557 (2007 : £196,664)
Sail Croatia Limited £ Nil (2007 : £338)
Hidden Croatia Limited £27,883 (2007 : £37,625)
Charles McLeod £62,179 (2007 : £ Nil)
Ekwienox FX Limited £1,026,000 (2007 : £ Nil)
17. COMMITMENTS AND GUARANTEES
The Company has a facility with its bankers for spot and forward foreign exchange trading
up to a maximum contingent risk amount
outstanding (as determined by the bank) of £450,000 (2007 : £450,000). The contingent risk
at the year end amounted to £41,000 (2007 :
£77,000).
The Company had no capital commitments not provided for at the year end (2007 : £166,125
committed to ASPone Limited, a company
controlled by Ekwienox Limited). Subsequent to the year end, the company entered into a
further capital commitment of £200,000 with ASPone
Limited in relation to the final phase of the online trading system.
18. SHARE BASED PAYMENT
At the end of the year the Company had an Enterprise Management Incentive Plan that had
granted options in April 2004 and February 2005
and an Unapproved Share Option Scheme that granted options in July and August 2005.
All options are settled by the issue of shares. The principle terms and conditions of the
options outstanding at the year end are as
follows:
Date of grant Entitled Number of Exercise Vesting period Exercise
employees options price from grant Period
April 2004 Employees and 78,333 60p 3 years April 2007 -
April
certain directors 2014
February 2005 Director 50,000 55p 3 years February 2008 -
February 2015
July 2005 Directors 750,000 28 - 60p 0 - 2 years July 2005 -
July
2017
In addition by virtue of contract of employments entered into in September 2006, the
Company undertook to issue to a director and
another employee 672,268 and 100,000 ordinary shares of 1p each respectively, at par. These
shares were to be issued in four equal
instalments in six monthly intervals over a period of two years. Following the investment
agreement entered into by Ekwienox FX Limited on 8
May 2007, all of the shares due under this agreement were issued in May 2007. The fair value
of these instalments has been valued using the
Black Scholes model using the assumptions shown below. The weighted average fair value of
these equity instalments was 10p.
2008 2007
Weighted Weighted
Number average Number average
of options exercise price of exercise price
options
Outstanding at the beginning
of the year 2,881,833 45p 3,183,833 44p
Forfeited during the year (2,003,500) 49p (302,000) 38p
Outstanding at the year end 878,333 33p 2,881,833 45p
Exercisable at the end of the
year 878,333 33p 2,477,779 47p
The options outstanding at 31 March 2008 had exercise prices ranging from 28p to 60p and
the weighted average remaining contractual life
was 8 years.
The fair value of the options and shares granted have been measured using the Black
Scholes valuation model. In arriving at the fair
value, each option grant has been valued separately, with the exception of certain options
which were issued simultaneously on identical
terms which have been aggregated. Volatility has been estimated by reference to the historical
volatility in the Company's share price over
a period of one year prior to each grant date.
The following table lists the main assumptions used in the models:
Volatility (%) 18.0 - 113.7
Risk-free interest rate (%) 4.22 - 4.86
Expected life of options (years) 10
Expected life of share-based payments (years) 1.25
Weighted average share price - options (price) 40
Weighted average share price - share based payments (pence) 11
Expected dividends None
The credit recognised for share based payments in respect of lapsed options during the
year was £82,186 (2007 : charge £121,537).
19. DIVIDEND
No dividend is proposed for year ended 31 March 2008.
20. COPIES OF THE REPORT & ACCOUNTS
Copies of the Report and Accounts will be posted to shareholders shortly, will be
available from the Company's registered office at 160
Brompton Road, Knightsbridge, London SW3 1HW and are available from the Company's website
www.baydonhill.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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