Preliminary Results Year Ended 31 March 2012

RNS Number : 5992L

Baydonhill PLC

06 September 2012

 



6 September 2012

BAYDONHILL PLC

("Baydonhill" or "the Company")

Preliminary Results for the year ended 31 March 2012

Highlights

·       Turnover (value of foreign exchange transactions) £1,079 million (2011: £1,465 million)

·       Gross profit (foreign exchange commission earned) £5.0 million (2011: £6.7 million)

·       Underlying operating profit (operating profit before exceptional costs) at £530,000 up from £447,000 the previous year

·       Loss before tax of £316,000 (2011: profit £467,000)

·       Loss after tax of £499,000 after exceptional deferred tax charge (2011: profit £397,000)

·       Robust performance in tough economic conditions

·       Sales force expanded in the first quarter of the current year in line with strategy

Sir Eric Peacock, Chairman of Baydonhill, commented:

"In a year following a significant business restructuring and one of very challenging economic conditions, the group has performed creditably.  We are expanding those parts of the business where we see growth potential and we are encouraged by the progress we are making".

Enquiries:

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

Executive Chairman & Chief Executive Officer's Statement

In the year under review the Company increased its reported underlying operating profit (profit before exceptional items) to £530,000 compared to the underlying operating profit for the previous year of £447,000. As indicated in last year's statement, the Company made some strategic changes which impacted on the profitability during the current year.

Revenues from the Corporate Division fell by 28 per cent. as a result of exiting the Money Service Business sector.  The underlying business continued to grow.  The Retail Division had a difficult year and continues to be impacted by the difficult economic climate.

The Company has continued to develop its payment platform and has focused on the integration of systems between departments and banking partners.

Financial Review

The loss before tax for the financial year was £316,473, compared to a profit of £467,201 in 2011, after expensing exceptional costs of £707,696 (2011: income £158,795).  The exceptional costs related primarily to the implementation costs for strategic changes for exiting certain categories of the business.  The effect of the reduction in future corporation tax rates has been to reduce the deferred tax asset with a resultant tax charge of £182,479 in the year under review, despite the reported loss before tax of £316,473.  The Company therefore reported a loss after tax for the financial year of £498,952 (2011: profit £396,962).  The Directors remain 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 revised five year profit forecast with underlying assumptions, where relevant, in line with those experienced in the year ended 31 March 2012.  The forecast indicated that the losses would be utilised within five years.

Gross turnover, (representing the gross value of foreign exchange currency transactions undertaken) for the Company for the year under review was £1,079 million, a decrease of 26 per cent from the previous year's figure of £1,465 million.  Gross profit (representing foreign exchange commissions earned net of payments to affiliates and bank charges) decreased by 23 per cent to £5 million from £6.7 million in the previous year before adjusting forward contracts at the year end to fair value, as required by International Reporting Standards (IAS 39).

Total equity at 31 March 2012 amounted to £865,000 compared to £1.4 million at 31 March 2011. This decrease is due to the loss incurred in the year under review.

People

There has been no change to the composition of the Board in the year under review.  Sir Eric Peacock assumed an Executive Chairman role with effect from 1 January 2012.  Sarah Collis resigned from her position as Director of the Company on 5 September 2012.  The Board thanks her for her significant contribution to the Company over the past six years.

The Company is grateful for the ongoing support of the employees and the Board would like to thank them for their continuing dedication and efforts during this difficult year.

Outlook

The Company has expanded its sales force in the first quarter of the current year and expects to see a return from this during the second half of the year.  The number of trading customers continues to grow in line with expectations.

The Company has also utilised resources to develop products related to specific sectors.  The results are encouraging and we expect a good return later in the year.

In the current economic environment a number of high profile companies have decided to exit the Alternative Investment Market ("AIM").  The Company has decided to put a special resolution to shareholders recommending that it delists from the AIM market, for consideration immediately following the Company's Annual General Meeting.  The principal reasons for this are associated with the costs of maintaining a listing and lack of liquidity in the Company's shares. A further detailed announcement regarding the delisting proposal will be made following these results.

Sir Eric Peacock KCMG Chairman 5 September 2012

Wayne Mitchell Chief Executive Officer 5 September 2012

INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2012

	Notes	2012	2011
		£	£
Continuing Activities
Turnover		1,079,048,798	1,465,444,124
Cost of sales		(1,074,016,068)	(1,458,896,795)
Cost of sales - Exceptional items	2	(11,272)	158,795
Total cost of sales		(1,074,027,340)	(1,458,738,000)
Gross profit		5,021,458	6,706,124
Administrative expenses		(4,502,784)	(6,100,471)
Administrative expenses - Exceptional items	2	(696,424)	-
Total administrative expenses		(5,199,208)	(6,100,471)
Operating (loss) / profit		(177,750)	605,653
Finance costs		(160,600)	(167,453)
Finance income		21,877	29,001
(Loss) / profit before taxation		(316,473)	467,201
Taxation	4	(182,479)	(70,239)
(Loss) / profit for the financial year		(498,952)	396,962
(Loss) / earnings per share
Basic	5	(0.86) pence	0.80 pence
Diluted	5	(0.86) pence	0.72 pence

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2012

	2012	2011
	£	£
(Loss) / profit for the financial year	(498,952)	396,962
Other comprehensive income for the year, net of tax	-	-
Total comprehensive (loss) / income for the year	(498,952)	396,962

STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2012

	Notes	2012 £	2011 £
Non-current assets
Plant and equipment		30,410	41,145
Intangible assets		458,206	573,990
Investments in subsidiaries		10	10
Deferred tax	9	1,167,482	1,349,961
Total non-current assets		1,656,108	1,965,106
Current assets
Trade and other receivables	6	73,358,457	106,984,758
Derivative financial assets - forward contracts		405,533	1,031,212
Cash and cash equivalents		7,688,551	15,386,282
Total current assets		81,452,541	123,402,252
Current liabilities
Trade and other payables	7	(80,868,633)	(123,139,993)
Derivative financial liabilities - forward contracts		(621,472)	(369,945)
Total current liabilities		(81,490,105)	(123,509,938)
Net current liabilities		(37,564)	(107,686)
Total assets less current liabilities		1,618,544	1,857,420
Non-current liabilities	8	(753,632)	(493,556)
Net assets		864,912	1,363,864
Equity
Share capital		578,338	578,338
Share premium		4,672,645	4,672,645
Retained earnings		(4,386,071)	(3,887,119)
		864,912	1,363,864

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2012

	Share Capital	Share Premium	Equity component of convertible loan notes	Retained Earnings	Total Equity
	£	£	£	£	£
Balance at 1 April 2011	578,338	4,672,645	-	(3,887,119)	1,363,864
Total comprehensive income for the year	-	-	-	(498,952)	(498,952)
Balance at 31 March 2012	578,338	4,672,645	-	(4,386,071)	864,912

	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 year	-	-	-	396,962	396,962
Share based payments	-	-	-	16,342	16,342
Conversion of loan note	82,783	393,218	(26,101)	-	449,900
Exercise of warrants	3,000	33,000	-	-	36,000
Balance at 31 March 2011	578,338	4,672,645	-	(3,887,119)	1,363,864

STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 MARCH 2012

	Notes	2012	2011
		£	£
Net cash (used in) / generated from operating activities	10	(7,820,126)	10,124,419
Investing activities
Interest received		21,877	29,001
Purchases of intangible assets		(91,314)	(137,975)
Purchases of plant and equipment		(11,334)	(32,204)
Net cash used in investing activities		(80,771)	(141,178)
Financing activities
(Decrease) in borrowings		-	(177,638)
Increase in borrowings		260,076	-
Issue of shares		-	36,000
Interest paid		(56,910)	-
Net cash generated from / (used in) financing activities		203,166	(141,638)
Net (decrease) / increase in cash and cash equivalents		(7,697,731)	9,841,603
Cash and cash equivalents at beginning of year		15,386,282	5,544,679
Cash and cash equivalents at end of year		7,688,551	15,386,282

NOTES TO THE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2012

1.         BASIS OF PREPARATION

This announcement has been prepared in accordance with the Company's accounting policies, which in turn are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") applied in accordance with the provisions of the Companies Act 2006. IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The accounting policies comply with each IFRS that is mandatory for accounting periods ended 31 March 2012.

2.         COST OF SALES - EXCEPTIONAL

	2012	2011
	£	£
Cost of Sales
Unrealised fair value adjustment on forward contracts	(11,272)	158,795
Administrative expenses
Restructuring costs associated with exiting certain categories of business	(696,424)	-
	(707,696)	158,795

3.         BUSINESS AND GEOGRAPHICAL SEGMENTS

Management has determined the operating segments by considering the business from both a geographic and product perspective. For management purposes, the Company is currently organised into two operating divisions: Corporate and Retail. These divisions are the business segments for which the Company reports its segment information internally to the Board of Directors. The Company's operations are predominately in the one geographical segment, the United Kingdom. The results of each segment have been prepared using accounting policies consistent with those of the Company as a whole.

	Corporate Division	Retail Division	Unallocated	Total
Year ended 31 March 2012	£	£	£	£
Turnover	932,463,423	146,585,375	-	1,079,048,798
Cost of Sales	(928,637,925)	(145,340,583)	(48,832)	(1,074,027,340)
Gross profit	3,825,498	1,244,792	(48,832)	5,021,458
Operating profit / (loss)	536,399	(52,594)	(661,555)	(177,750)
Finance costs	-	-	(160,600)	(160,600)
Finance income	-	-	21,877	21,877
Profit / (loss) before taxation	536,399	(52,594)	(800,278)	(316,473)
Taxation	-	-	(182,479)	(182,479)
Profit / (loss) for the year from continuing operations	536,399	(52,594)	(982,757)	(498,952)
Capital expenditure	76,764	67,050	11,334	155,148
Depreciation & amortisation	259,597	-	21,809	281,406

	Corporate Division	Retail Division	Unallocated	Total
Year ended 31 March 2011	£	£	£	£
Turnover	1,302,024,168	163,419,956	-	1,465,444,124
Cost of Sales	(1,297,216,303)	(161,680,492)	158,795	(1,458,738,000)
Gross profit	4,807,865	1,739,464	158,795	6,706,124
Operating profit / (loss)	729,528	572,399	(696,274)	605,653
Finance costs	-	-	(167,453)	(167,453)
Finance income	-	-	29,001	29,001
Profit / (loss) before taxation	729,528	572,399	(834,726)	467,201
Taxation	-	-	(70,239)	(70,239)
Profit / (loss) for the year from continuing operations	729,528	572,399	(904,965)	396,962
Capital expenditure	137,975	-	32,204	170,179
Depreciation & amortisation	222,070	-	15,779	237,849
Share-based payment costs	5,546	1,947	8,849	16,342

Included in revenues arising from the sale of foreign currency exchange is one customer (2011: two) within the Corporate Division, with total revenues of approximately £280 million (2011: £400 million) which contributed more than 10 per cent of the Company's revenues.

4.         TAXATION

	Note	2012	2011
		£	£
Current tax		-	-
Deferred tax	9	(182,479)	(70,239)
		(182,479)	(70,239)

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

	2012	2011
	£	£
(Loss) / profit before taxation	(316,473)	467,201
Tax on loss on ordinary activities at standard United Kingdom corporation tax rate of 26 per cent (2010: 28 per cent)	(82,283)	130,816
Effects of:
Expenses not deductible for tax purposes	6,307	11,858
Reduction of tax rates on the deferred tax asset	185,191	(72,435)
Reversal of previously recognised losses in respect of the deferred tax asset	73,264	-
Total tax charge for the year	182,479	70,239

5.         EARNINGS PER SHARE

Basic loss per share and diluted loss per share are based on a loss after tax of £498,952 (2011: profit after tax £396,962.  The basic loss per share has been calculated on a weighted average of 57,833,750 (2011: 49,915,356) Ordinary Shares in issue.  Diluted loss per share is calculated on a weighted average of 58,058,750 Ordinary Shares (2011: 57,950,934).  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.  In 2012 the diluted loss and diluted loss per share are calculated on the same basis as basic loss and loss per share because the effect of the potential Ordinary Shares (share options) reduces the net loss per share and is therefore anti-dilutive.

	2012	2011
Basic weighted average number of shares	57,833,750	57,558,751
Potential dilutive effect of share options schemes	225,000	392,183
Dilutive weighted average number of shares	58,058,750	57,950,934

6.         TRADE AND OTHER RECEIVABLES

	2012	2011
	£	£
Trade receivables	73,310,434	107,095,179
Less: provision for impairment	(418,063)	(410,274)
Trade receivables - net	72,892,371	106,684,905
Prepayments and accrued income	466,086	299,853
	73,358,457	106,984,758

Trade receivables and forward contracts constitute the only financial assets within the category "Loans and Receivables" as defined by IAS 39.

Trade receivables and forward contracts are non-interest bearing and are generally not yet due or less than 30 days past due. 

Of the trade receivables and forward contracts balance at the end of the year, £ Nil (2011: £17m) is due from the Company's largest counterparty.  There are four (2011: one) counterparties where the balance of trade receivables represents more than 5 per cent. of the total balance of trade receivables.

A provision for impairment of trade receivables is established when there is no objective evidence that the Company will be able to collect all amounts due according to the original terms.  The Company considers factors such as default or delinquency in payment, significant financial difficulties of the debtor and the probability that the debtor will enter bankruptcy in deciding whether the trade receivable is impaired.

As at 31 March 2012 trade receivables of £73,310,434 (2011: £107,095,179) were not yet due or past due, prior to any provision for impairment.  The ageing analysis of these trade receivables is as follows:

	2012	2011
	£	£
Not yet due	69,586,603	101,473,102
Up to 3 months past due	3,723,831	5,622,077
	73,310,434	107,095,179

The movement in the bad debt provision can be analysed as follows:

	2012	2011
	£	£
Opening position	410,274	277,090
Amount charged to the Income Statement	80,095	192,807
Amount written off as uncollectible	(72,306)	(59,623)
	418,063	410,274

There are no impaired trade receivables not yet due.  Trade receivables up to three months past due includes £418,063 (2011: £410,274) of impaired trade receivables.

7.         TRADE AND OTHER PAYABLES

	2012	2011
	£	£
Amounts owed to Group undertakings	965,333	805,411
Loans from Group companies	280,000	540,000
Trade payables	77,886,816	119,764,002
Trade payables in respect of expenses	347,397	123,145
Other tax and social security	317,565	345,198
Accruals and deferred income	652,674	1,356,959
Other creditors	418,848	205,278
	80,868,633	123,139,993

Trade payables in respect of expenses comprise amounts outstanding for administrative and other ongoing costs.  The average credit period taken for trade purchases is 37 days (2011: 30).  No interest is charged on the outstanding balance.

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

8.         NON CURRENT LIABILITIES

	2012	2011
	£	£
Other creditors	225,000	-
Loans from group companies	528,632	493,566
	753,632	493,556

All the loans from Group undertakings are stated at amortised cost using the effective interest method.

The amount due to ASPone Limited on deferred terms of £118,632 (2011: £243,556) attracts interest at 10 per cent. per annum and is repayable as to £20,000 (2011: £20,000) a month.  There is no material difference between amortised cost and their fair value.

The amount due to Wallich & Matthes Holding BV of £410,000 (2010: £550,000) attracts interest at a rate of 12 per cent.  There is no material difference between the amortised costs and their value

9.         DEFERRED TAX

	2012	2011
	£	£
At 1 April	1,349,961	1,420,200
(Charged) to the Income Statement	(182,479)	(70,239)
At 31 March	1,167,482	1,349,961

	Tax losses	Short term timing differences	Accelerated capital allowances	Total recognised
	£	£	£	£
At 1 April 2011	996,233	110,670	243,058	1,349,961
For the year	(37,011)	(1,908)	(143,560)	(182,479)
At 31 March 2012	959,222	108,762	99,498	1,167,482

Recognition of deferred tax

In order to recognise the deferred tax asset arising from prior period trading losses, the Directors must be 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 consistent with those experienced in the year ended 31 March 2012, where appropriate, or updated to reflect changes in the assumptions since 31 March 2012.  The forecast indicated that the losses would be utilised in full within five years, and the Directors therefore decided it would be appropriate to continue to recognise the deferred tax asset in full. 

Other factors affecting future tax

As at 31 March 2012, trading losses of approximately £4.0 million (2011: £4.2 million) 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.  On 21 March 2012 the government announced its intention to reduce the rate of corporation tax to 23% from 1 April 2013 however, this was not substantively enacted until July 2012. Had this been substantively enacted at 31 March 2012, the deferred tax expense for the year ending 31 March 2012 would have increased by approximately £44,000 and the deferred tax asset decreased by the same amount.

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

	2012	2011
	£	£
Operating (loss) / profit	(177,750)	605,653
Depreciation charge	21,809	15,779
Amortisation charge	259,597	222,070
Decrease / (increase) in receivables	34,251,981	(22,801,470)
(Decrease) / increase in payables	(42,175,763)	32,082,387
Cash generated from operations	(7,820,126)	10,124,419
Tax paid	-	-
	(7,820,126)	10,124,419

11.        DIVIDENDS

The directors have not recommended the payment of a dividend.

12.        STATUS OF FINANCIAL INFORMATION

The financial information set out above does not comprise the Company's statutory accounts for the periods ended 31 March 2012 or 31 March 2011. The financial information has been extracted from the statutory accounts of the company for the year ended 31 March 2011. The auditors reported on these accounts; their report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis. The statutory accounts for the year ended 31 March 2011 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 March 2012 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

13.        PUBLICATION OF ANNOUNCEMENT AND REPORT AND ACCOUNTS

A copy of this announcement will be available at the Company's registered office (160 Brompton Road, Knightsbridge, London, SW3 1HW) 14 days from the date of this announcement and on its website, www.baydonhillfx.com.

This announcement is not being sent to shareholders. The Annual Report has been posted to shareholders  and will be made available on the website.

 

END

 

 

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