Final Results

Baydonhill PLC 28 September 2007 For release on 28 September 2007 Baydonhill plc ('Baydonhill' or 'the Company') Preliminary Results for the year ended 31 March 2007 Chairman and Chief Executive's Statement Introduction The year under review has been an exciting period for the Group, with the launch of the new corporate section of the business. The market remains challenging across all sectors, particularly Private Client where the low barriers to entry have resulted in the number of competitors continuing to pose a challenge. There is reason to believe that the situation may improve from Baydonhill's perspective in the future in that increased regulation in the sector, particularly the possibility of compulsory registration with the FSA in 2009, some of the newer entrants may find it difficult to comply with new requirements. In this financial year the Group has continued the development of the Private Client Foreign Exchange and International Mortgage business and launched a new corporate foreign exchange offering. On 2 January 2007 the Company outsourced the insurance portion of the business. Financial Review The Consolidated Loss for the financial year was £878,000 compared to £686,000 in 2006. The £878,000 loss included £270,000 incurred in the development of the Corporate Foreign Exchange business. There was no corresponding charge in the previous year. The losses quoted for the years 2007 and 2006 include charges under FRS 20 amounting to £121,537 in 2007 (2006: £93,489). The practice of netting trade debtors and creditors in the Balance Sheet has been discontinued. Gross turnover for the Group for the year under review was £240 million, a decrease from the previous year's figure of £279 million. Gross profit decreased to £2.2 million from £2.3 million in the previous year. Shareholders funds at March 2007 amounted to £743,000 compared to £1,499,000 in 2006. Sector Review The Private Client foreign exchange sector has experienced a challenging year, resulting in the turnover dropping from just under £279 million to £240 million. Costs rose slightly in total, due almost entirely to an increase in marketing activity. We believe that uncertainty over interest rates and house prices in the UK, which have a fundamental impact on client decision surrounding equity release and the purchase of property abroad, the cornerstone of the private client business, have negatively influenced our results. The Corporate foreign exchange sector started in August 2006 with the employment of Wayne Mitchell, previously the General Manager of Ruesch International. The rest of the year was spent in the development of a state-of-the-art online trading system and the recruitment of both internal and external sales teams. With regard to the latter we are extremely fortunate to have secured the services of a highly experienced external sales team. This recruitment happened in February and March and the benefits in terms of revenue will not be felt until the years 2007 / 2008 and more significantly, 2008 / 2009. Segregated Accounts As of 1 April 2007 the Company introduced segregated accounts to hold Client Monies. This provides extra security for clients and distinguishes the Company from many of its competitors. Fundraising In March 2006 the Ekwienox group became the majority shareholder following an investment of £1,500,000 for the purpose of developing the Corporate foreign exchange sector. Further funding was required, and in May 2007 the Ekwienox group subscribed for a further £500,000 of shares and entered into a Convertible loan note providing a further £476,000, if required and certain Directors subscribed for a further £24,000 of shares. Since then, in August 2007, a further Convertible Loan Note of £700,000 has been provided by the Ekwienox group in order to provide funds and significant headroom for the period through to September 2008, by which time the Group expects to be cash positive. At the time of writing this report, no draw-downs have been made under either of the Convertible Loan Notes. Nominated Advisors We are pleased to report that John East & Partners have agreed to act for the Company as Nominated Advisor and Broker with effect from 24 August 2007. 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. In part, continued challenges and disappointing performance has made change inevitable. Our thanks go to the Directors who have left during the year. The staff have responded magnificently to the changes that they have encountered during the year and the Board would like to thank them for their continuing dedication and support. Outlook The Group has invested heavily in the development of the Corporate division. This included both the recruitment of key personnel and the development of an IT platform. The IT platform includes an online payment offering encompassing an internal trading platform and back office management system, due to be launched in the third quarter of 2007. The Group has also upgraded its telecommunications and CRM capabilities. The Group believes that the recurring nature of the revenue from Corporate clients will improve the quality of the earnings of the Group. However, it is anticipated that the success of the Corporate Foreign Exchange Division will not be fully felt until 2008 / 2009. The core business in the forthcoming year will continue to be the provision of Private Client Foreign Exchange with the Corporate division making an increasing contribution. This core business remains a key focus for the Group and the sales and marketing strategies are being reviewed to reflect this. Eric Peacock KCMG DL Chairman Wayne Mitchell Chief Executive 27 September 2007 Consolidated Profit and Loss Account For the year ended 31 March 2007 Note Year ended Year ended 31 March 31 March 2007 2006 £ £ (As restated) Turnover 239,767,768 278,822,687 Cost of sales (237,559,748) (276,513,820) ---------- ---------- Gross profit 2,208,020 2,308,867 Administrative expenses (3,269,712) (3,174,216) ---------- ---------- Operating loss (1,061,692) (865,349) Interest receivable and similar income 184,541 183,872 Interest payable and similar charges (1,082) (4,834) ---------- ---------- Loss on ordinary activities before taxation (878,233) (686,311) Taxation - - ---------- ---------- Loss for the financial year (878,233) (686,311) ---------- ---------- Basic earnings per share 3 (6.06p) (8.59p) Fully diluted earnings per share 3 (6.06p) (8.59p) ---------- ---------- There were no other recognised gains and losses in the year other than those included above. All amounts relate to continuing operations. The restatement was necessary due to the implementation of FRS 20 relating to share based payment, as explained in accounting policy note 1. Consolidated Balance Sheet As at 31 March 2007 As at 31 March 2007 As at 31 March 2006 £ £ £ £ (As restated) Fixed Assets Tangible 343,182 119,888 --------- -------- -------- --------- 343,182 119,888 Current Assets Debtors 9,246,673 3,842,087 Cash at bank and in 4,106,425 5,087,488 hand --------- -------- -------- --------- 13,353,098 8,929,575 --------- -------- -------- --------- CREDITORS: amounts (12,953,699) (7,550,186) falling due within one year --------- -------- -------- --------- Net Current Assets 399,399 1,379,389 --------- -------- -------- --------- Total Assets Less Current 742,581 1,499,277 Liabilities --------- -------- -------- --------- Net Assets 742,581 1,499,277 --------- -------- -------- --------- Capital and Reserves Called up share capital 144,987 144,987 Share premium account 2,600,623 2,600,623 Profit and loss account (2,003,029) (1,246,333) --------- -------- -------- --------- Equity Shareholders' 742,581 1,499,277 Funds --------- -------- -------- --------- The restatement was necessary due to the change of accounting policy, whereby debtors and creditors are now shown gross and not netted-off as in previous years. Consolidated Cash Flow Statement For the year ended 31 March 2007 Year ended Year ended 31 March 31 March 2007 2006 £ £ (As restated) Reconciliation of operating loss to net cash flow from operating activities Operating loss (1,061,692) (865,349) Depreciation of tangible fixed assets 131,648 147,891 (Increase) / decrease in debtors (5,408,283) 4,710,004 Increase / (decrease) in creditors 5,403,513 (6,067,590) Share-based payment expense 121,537 93,489 -------- ---------- Net cash outflow from operating activities (813,277) (1,981,555) ======== ========== Cash Flow Statement Net cash outflow from operating activities (813,277) (1,981,555) Returns on investments and servicing of finance 183,459 179,038 Taxation 3,697 64,950 Capital expenditure (354,942) (20,695) -------- ---------- Cash outflow before use of liquid resources and financing (981,063) (1,758,262) Management of liquid resources 300,000 - Financing - 1,251,661 -------- ---------- Decrease in cash in the year (681,063) (506,601) ======== ========== Reconciliation of net cash flow to movement in net funds Decrease in cash in the period (681,063) (506,601) Cash inflow from decrease in liquid resources (300,000) - -------- ---------- Change in net funds resulting from cash flows (981,063) (506,601) Net funds at 1 April 2006 5,087,488 5,594,089 -------- ---------- Net funds at 31 March 2007 4,106,425 5,087,488 -------- ---------- The restatement was necessary due to the implementation of FRS 20 relating to share based payment, as explained in accounting policy note 1. 1. Accounting Policies Basis of preparation The results for the year ended 31 March 2007 and the balance sheet at that date have been extracted from the statutory accounts of the Company for that year, upon which the Company's auditors, PKF (UK) LLP, have confirmed they have issued an unqualified audit report under Section 235 of the Companies Act 1985. The accounts for the year ended 31 March 2007 will be filed with the Registrar of Companies following the Annual General Meeting. The financial information for the year ended 31 March 2007 has been prepared on the basis of the accounting policies set out in the accounts for the year ended 31 March 2007. Share based payments The Group has adopted Financial Reporting Standard 20 'Share-based Payment' for the first time this year. In accordance with FRS 20, the fair value of share based payments are recognised as an expense in the profit and loss account with a corresponding increase in equity. The fair value is measured at the date of grant, using the Black Scholes option pricing model taking into account the terms upon which the options were granted and spread over the period during which the employees become unconditionally entitled to the options. The charge made in respect of the share based payments is matched by an equal adjustment to the profit and loss reserve, thereby having no impact on the Group's closing reserves or shareholders funds. As a result of the adoption of FRS 20 this year, comparative figures in the profit and loss account have been restated to increase the reported loss by £93,489. In the current period the charge for the share based payments has increased the reported loss by £121,537. 2. Taxation Tax charge for the year Because of the loss in the current and previous year, there is no charge to corporation tax or deferred tax. 3. Earning per Share Both basic earnings per share and diluted earnings per share are based on a loss after tax of £878,233 (2006: £686,311 as restated). The basic earnings per share has been calculated on a weighted average of 14,498,705 (2006: 7,994,053) 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. Since the year end the Company has issued shares, warrants and convertible loan notes and re-priced certain existing warrants and subscription rights. These changes would amend the number of ordinary shares and potential ordinary shares outstanding at the end of the end of the year if the transactions had occurred before 31 March 2007. 4. Debtors 2007 2006 £ £ (As restated) Due within one year Trade debtors 9,060,216 3,569,830 Corporation tax recoverable - 3,697 Pre-payments and accrued income 186,457 268,560 ---------- --------- 9,246,673 3,842,087 Due within more than one year Amounts due from group undertakings - - ========== ========= 5. Creditors 2007 2006 £ £ (As restated) Amounts falling due within one year Trade creditors 12,163,572 7,314,948 Amounts owed to Group undertakings 565,795 - Other tax and social security 59,619 38,649 Accruals and deferred income 164,713 196,589 ---------- --------- 12,953,699 7,550,186 ========== ========= 6. Reserves £ Share premium account At 31 March 2006 and 31 March 2007 2,600,623 ======== Profit and loss account 2007 2006 £ £ (As restated) At beginning of year (1,246,333) (653,511) Loss for year (878,233) (686,311) Share-based payments 121,537 93,489 ---------- --------- At end of year (2,003,029) (1,246,333) ========== ========= 7. Shareholders' funds 2007 2006 £ £ (As restated) At beginning of year 1,499,277 840,438 Loss for the year (878,233) (686,311) New shares issued - 1,500,180 Costs incurred in respect of Placing - (248,519) Share-based payments 121,537 93,489 ---------- --------- At end of year 742,581 1,499,277 ========== ========= 8. Dividend No dividends have been declared for the year ended 31 March 2007. 9. Copies of the Report and accounts Copies of the Report and Accounts will be sent to shareholders shortly and will be available to members of the public from the Company's registered office, 160 Brompton Road, Knightsbridge, London SW3 1HW and on the Company's website www.baydonhill.com. This information is provided by RNS The company news service from the London Stock Exchange

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