Interim Results

RNS Number : 0560Y

Baydonhill PLC

16 December 2010

 



AIM:  BHL                                                                                                                                

16 December 2010

Baydonhill plc

("Baydonhill" or "the Company")

Interim results for the six month period ended 30 September 2010

Baydonhill breaks into profit after strong sales growth

Baydonhill, the corporate and retail foreign exchange provider, announces its interim results for the six month period ended 30 September 2010.

HIGHLIGHTS

·      Maiden half yearly profit since listing on AIM, with profit before taxation for the period of £91,244 (2009: loss £690,030)

·      Strong growth, with turnover (total value of foreign exchange transactions) for the period up 132 per cent. to £697.3 million (2009: £300.6 million)

·      Gross profit (foreign exchange commission) up 97 per cent. to £3.04 million while administrative expenses rose 35 per cent. to £2.86 million

·      Turnover and gross profit in the six months almost equal the level achieved for the whole of the previous financial year

·      Continued investment in specialist staff and customer service to support growth plans

Eric Peacock, Chairman of Baydonhill, commented:

"The strategy developed and implemented by the new management team over the last three years is now beginning to generate positive returns and this underpins our view that we have built a robust business with a sustainable growth story for the longer term.

"Business volumes have remained encouraging in the first two months of the second half of the financial year and the Company is confident of further good progress for the year as a whole."

 

Contacts:

Baydonhill plc
Eric Peacock, Chairman Wayne Mitchell, Chief Executive	[phone]
Merchant Securities Limited
Bidhi Bhoma / Simon Clements	[phone]
Square1 Consulting
David Bick / Mark Longson	[phone]

 

Chairman's Statement

Performance

I am delighted to report that the Company has continued to grow strongly and has achieved a profit before taxation in each month for the 6 months ended 30 September 2010. During the period under review, the Company made a profit before taxation of £91,244 (2009: loss £690,030) on gross turnover of £697,333,532 (2009: £300,645,456).

The Company has continued to focus on the development of the Corporate Division, which continues to be the fastest growing area of the business. In February 2010, the sales team was expanded and this has contributed to the strong growth in turnover during the period under review.

The Retail Division has also grown significantly compared to the same period last year. The Company has taken a cautious approach to increasing marketing activity as signs of improved economic activity within this segment have become apparent. 

Review

The Corporate Division continues to show strong growth with turnover (representing the value of foreign exchange transactions executed by the Company) increasing to £617 million during the period under review (2009: £255 million); an increase of 142 per cent. Gross profit (representing foreign exchange commission earned net of bank charges and affiliate payments) increased by 176 per cent. to £2,714,000. (2009: £983,000).

The Retail Division has seen improving market conditions, with turnover up 77 per cent. and gross profit up 71 per cent. compared with the same period last year.

Outlook

The Company expects to continue to show revenue growth and build profit levels. Investment in IT infrastructure and talented staff has continued during this fiscal year. This includes expanding the sales activity for both the Corporate and Retail Divisions.

The Company expects that the strongest growth will continue to come from the Corporate Division. The Company has achieved a high retention level in its Corporate client base and expects administrative costs to continue to fall as a percentage of net revenue. The Retail sector has been impacted by the current economic environment, but is showing positive signs of recovery with increasing revenues. We anticipate modest growth from this division and will continue to adopt a cautious approach to investment in expansion.

Business volumes have remained encouraging in the first two months of the second half year and the Company is confident of further good progress for the year as a whole.

Eric Peacock

Chairman

16 December 2010

INCOME STATEMENT

	Notes	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year ended 31 March 2010 (audited) £
Continuing activities
Turnover		697,333,532	300,645,456	709,023,274
Cost of sales		(694,288,983)	(299,102,692)	(705,407,937)
Gross profit		3,044,549	1,542,764	3,615,337
Administrative expenses		(2,863,890)	(2,120,286)	(4,206,883)
Operating profit / (loss)		180,659	(577,522)	(591,546)
Finance costs		(92,080)	(120,508)	(213,204)
Finance income		2,665	8,000	65,435
Profit / (loss) before taxation		91,244	(690,030)	(739,315)
Taxation	4	(28,360)	-	1,420,200
Profit / (loss) for the period		62,884	(690,030)	680,885
Earnings per share
Basic	6	0.13p	(2.35p)	1.95p
Diluted	6	0.13p	(2.35p)	1.28p

STATEMENT OF COMPREHENSIVE INCOME

	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year ended 31 March 2010 (audited) £
Profit / (loss) for the period	62,884	(690,030)	680,885
Other comprehensive income for the year, net of tax	-	-	-
Total comprehensive income / (loss) for the year	62,884	(690,030)	680,885

STATEMENT OF FINANCIAL POSITION

	Notes	At 30 September 2010 (unaudited) £	At 30 September 2009 (unaudited) £	At 31 March 2010 (audited) £
Non-current assets
Plant and equipment		46,421	15,500	24,720
Intangible assets		589,906	721,930	658,085
Investments in subsidiaries		10	10	10
Deferred tax	7	1,391,840	-	1,420,200
Total non-current assets		2,028,177	737,440	2,103,015
Current assets
Trade and other receivables		127,158,015	63,395,914	83,823,792
Derivative financial assets - forward contracts		1,818,136	1,330,736	1,390,708
Cash and cash equivalents		6,690,747	2,454,658	5,544,679
Total current assets		135,666,898	67,181,308	90,759,179
Current liabilities
Trade and other payables		(134,485,651)	(66,659,471)	(90,695,587)
Derivative financial liabilities - forward contracts		(1,471,551)	(999,363)	(330,853)
Total current liabilities		(135,957,202)	(67,658,834)	(91,026,440)
Net current liabilities		(290,304)	(477,526)	(267,261)
Total assets less current liabilities		1,737,873	256,914	1,835,754
Non-current liabilities
Borrowings		(1,210,329)	(2,188,198)	(1,371,094)
Net assets / (liabilities)		527,544	(1,928,284)	464,660
Equity
Share capital		492,555	318,723	492,555
Share premium		4,246,427	3,367,491	4,246,427
Retained earnings		(4,237,539)	(5,672,386)	(4,300,423)
Equity component of convertible loans		26,101	57,888	26,101
Equity shareholders funds		527,544	(1,928,284)	464,660

STATEMENT OF CHANGES IN EQUITY

	Share Capital	Share Premium	Equity component of convertible loan notes	Retained Earnings	Total Equity
	£	£	£	£	£
Balance at 1 April 2009	243,841	3,005,551	57,888	(4,982,356)	(1,675,076)
Total comprehensive income for the period	-	-	-	(690,030)	(690,030)
Issue of equity share capital	74,882	361,940	-	-	436,822
Balance at 30 September 2009	318,723	3,367,491	57,888	(5,672,386)	(1,928,284)

	Share Capital	Share Premium	Equity component of convertible loan notes	Retained Earnings	Total Equity
	£	£	£	£	£
Balance at 1 October 2009	318,723	3,367,491	57,888	(5,672,386)	(1,928,284)
Total comprehensive income for the period	-	-	-	1,370,915	1,370,915
Movement in share based payments	-	-	-	1,048	1,048
Conversion of loan note	5,298	26,489	(31,787)	-	-
Issue of equity share capital	168,534	852,447	-	-	1,020,981
Balance at 31 March 2010	492,555	4,246,427	26,101	(4,300,423)	464,660

	Share Capital	Share Premium	Equity component of convertible loan notes	Retained Earnings	Total Equity
	£	£	£	£	£
Balance at 1 April 2010	492,555	4,246,427	26,101	(4,300,423)	464,660
Total comprehensive income for the period	-	-	-	62,884	62,884
Balance at 30 September 2010	492,555	4,246,427	26,101	(4,237,539)	527,544

STATEMENT OF CASH FLOW

	Notes	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year  ended 31 March 2010 (audited) £
Net cash generated from / (used in) operating activities	8	1,265,341	(551,754)	2,325,316
Investing activities
Interest received		2,665	8,000	13,966
Purchase of intangible assets		(35,500)	(102,767)	(148,893)
Purchase of plant and equipment		(27,194)	(10,287)	(27,197)
Net cash used in investing activities		(60,029)	(105,054)	(162,124)
Financing activities
Decrease in borrowings		(59,098)	-	(180,767)
Increase in borrowings		-	-	139,425
Issue of shares		-	436,821	789,591
Interest paid		(146)	(35,905)	(77,312)
Net cash generated from financing activities		59,244	400,916	670,937
Net increase / (decrease) in cash and cash equivalents		1,146,068	(255,892)	2,834,129
Cash and cash equivalents at beginning of period		5,544,679	2,710,550	2,710,550
Cash and cash equivalents at end of period		6,690,747	2,454,658	5,544,679

1.         General Information

The financial information set out in these interim results does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Company's financial statements for the year ended 31 March 2010 which were prepared under International Financial Reporting Standards ("IFRS"), as adopted for use in the European Union, were filed with the Registrar of Companies.  The auditors reported on these financial statements, their report was unqualified and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and, did not contain any statements under Section 498 (2) or Section 498 (3) of the Companies Act 2006.

The interim results are prepared on the basis of the accounting policies which will be applied in the accounts of the Company for the year ending 31 March 2011.

The figures for the period ended 30 September 2009 reflected within these accounts differ from those quoted last year as the current figures are calculated under IFRS whereas last year, the Company's interim results were prepared under UK GAAP.

2.         Basis of Preparation

            These interim financial statements are for the six month period ended 30 September 2010.  They have been prepared in accordance with IFRS as adopted for use in the European Union with the exception of IAS 34: Interim Financial Reporting.  IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the Financial Reporting Interpretations Committee ("IFRC") and there is an ongoing process of review and endorsement by the European Commission.  The financial information has been prepared on the basis of IFRS that the Board of Directors expect to be applicable as at 31 March 2011.

These financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.

3.         Principal Activities

The principal activities of the Company continue to be the provision of foreign currency exchange and related financial products and the arrangement of overseas mortgages.

4.         Taxation

	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year  ended 31 March 2010 (audited) £
Current tax	-	-	-
Deferred tax	(28,360)	-	1,420,200
	(28,360)	-	1,420,200

Tax has been calculated using an estimated annual effective tax rate of 28 per cent.

(31 March 2010: 28 per cent.) on profit / (loss) before tax.

Taxation (Contd.)

The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the loss before tax is as follows:

	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year  ended 31 March 2010 (audited) £
Profit / (Loss) before taxation	91,244	(690,030)	(739,315)
Tax on loss on ordinary activities at standard UK corporation tax rate of 28 per cent. (2009: 28 per cent.)	25,548	(193,208)	(207,008)
Effects of:
Expenses not deductible for tax purposes	2,812	2,798	5,596
Fair value adjustment on derivative financial instruments	-	-	(19,242)
Losses arising in the year not recognised for deferred tax	-	190,410	-
Prior year trading losses / short term timing differences	-	-	(1,199,546)
Total tax expense / (credit) for the period	28,360	-	(1,420,200)

5.         Dividends

            The Directors do not recommend the payment of an interim dividend.

6.         Earnings per Share

Basic profit per share and diluted profit per share are based on a profit after tax of £62,884 and £72,483 respectively (31 March 2010: profit £680,885 and £690,000 respectively).  The basic profit per share has been calculated on a weighted average of 49,255,490 (31 March 2010: 34,863,807) Ordinary Shares in issue.  Diluted profit per share is calculated on a weighted average of 57,925,934 Ordinary Shares (31 March 2010: 54,012,448).  The convertible debt is assumed to have been converted into Ordinary Shares, and the net profit is adjusted to eliminate the interest expense less the tax effect.  For the share options and warrants, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's share) based on the monetary value of the subscription rights attached to outstanding share options.  The number of shares calculated is compared with the number of shares that would have been issued assuming the exercise of the share options. 

The loss per share for the period ended 30 September 2009 is calculated on the loss for the period of £690,030 based on the weighted average number of shares in issue at 30 September 2009 of 29,364,299. Diluted loss and loss per share is calculated on the same basis as basic loss and loss per share because the effect of the potential ordinary shares reduces the net loss per share and is therefore anti-dilutive.

7.         Deferred Tax

	Six months ended 30 September 2010 (unaudited) £	Six months ended 30 September 2009 (unaudited) £	Year  ended 31 March 2010 (audited) £
Opening balance	1,420,200	-	-
(Charge) / credit to the Income Statement in the period	(28,360)	-	1,420,200
Closing balance	1,391,840	-	1,420,200

Recognition of deferred tax

As at 31 March 2010 the Directors recognised a deferred tax asset arising principally from trading losses incurred in previous years.  In order to recognise the deferred tax asset arising from prior period trading losses, the Directors were satisfied that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.  The Company prepared a five year profit forecast with underlying assumptions in line with those experienced in the year ended 31 March 2010.  The forecast indicated that the losses would be utilised in full by March 2013, and the Directors therefore decided it would be appropriate to recognise the deferred tax asset in full.  This resulted in a tax credit of £1.4 million in the year ended 31 March 2010.  During the period to 30 September 2010, £28,360 of the deferred tax asset has been utilised.

8.         NET CASH GENERATED FROM / (USED IN) OPERATING ACTIVITIES

	Six months ended 30 September 2010 (unaudited)	Six months ended 30 September 2009 (unaudited)	Year  ended 31 March 2010 (audited)
Operating profit / (loss)	180,659	(577,522)	(591,546)
Depreciation charge	5,493	2,737	30,851
Amortisation charge	103,679	101,459	191,006
Increase in receivables	(42,636,967)	(23,438,479)	(43,553,681)
Increase in payables	43,612,477	23,451,365	46,248,686
Cash generated from / (used in) operations	1,265,341	(551,754)	2,325,316
Tax paid	-	-	-
	1,265,341	(551,754)	2,325,316

9.         Copies of the Interim Results

Copies of this interim announcement will be available to download from the Company's website at www.baydonhillfx.com and at the Company's registered office, 160 Brompton Road, London, SW3 1HW.

 

END

 

 

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