Final Results

Billam PLC 14 February 2005 BILLAM PLC (AIM) FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 The Board of Billam Plc ('Billam' or 'the Company'), the investment company specialising in technology for the future, is pleased to announce its Final Results for the year to 31 December 2004. Achievements * Four flotations of investee companies during the year * At year end majority of portfolio held in quoted shares * Further commercial progress by investee companies * New investee companies have performed well Commenting on the results Billam's Chairman, Victor Beamish, said: 'Billam made significant progress throughout the year; with the flotation of four of its investee companies, the Company has achieved its stated objective of holding a greater proportion of its investments in quoted companies. Your Board anticipates that further progress will be made in 2005.' The above summary should be read in conjunction with the full text of the following announcement --ENDS-- Enquiries Billam Plc 020 7336 1300 Angus Forrest Bishopsgate Communications 020 7430 1600 Maxine Barnes / Dominic Barretto BILLAM PLC CHAIRMAN'S STATEMENT For the year ended 31 December 2004 Chairman's statement 2004 has seen significant change in your Company's asset base. The business model, which was formulated in 2000 and backed by many of the current shareholders, is completing its objective of turning its unquoted investments into quoted ones. More than 50% of the portfolio (measured both by number and value including those quoted investments held by Eirx Pharma Limited) was quoted by the year end (2003: 25% and 33% respectively). Further, many of the companies have advanced the commercial development of their businesses, particularly through new contracts with major customers. Many of the investments are exploiting world-leading technologies and, in some cases, are market leaders. However, the market value of two of the quoted investments has fallen in the year and this has had an immediate impact on Billam's net asset value. We believe that as these companies evolve further, there will be an upward re-rating of their valuations. Billam's philosophy has been to identify and back, with both funding and management support, companies seeking to exploit rapidly growing markets. Your Company's portfolio has proved to be resilient despite the difficulties caused by economic and stock market conditions from 2001 through 2003. Company During 2004, the objectives I identified in my report last year have to a great extent been achieved: Following the consolidation, the bid/offer spread has reduced from approximately 100% to 25%. However, this still remains larger than is desirable. The Company is taking steps to achieve further reductions through a combination of increased and improved communications with shareholders, market professionals and commentators. Administrative costs have been reduced from £871,000 to £622,000. I would like to thank all the staff including my fellow directors for their hard work during the year. Shareholders We welcome the support of all existing shareholders and new investors who became shareholders during the year. Your Board is continuing its efforts to create awareness of Billam's achievements. We have entered a period of change when the valuation of the Company's existing portfolio is becoming increasingly transparent, through market prices. Whilst this makes our portfolio vulnerable to stock market fluctuation over the short term we believe that over the longer term it will lead to capital growth. The free share-dealing scheme for small shareholders was well received in 2004. A similar scheme will be offered in March 2005. This year eligible shareholders - those with holdings of 500 or less Ordinary 10 pence shares - will receive a personal letter and details of the scheme allowing them to sell or buy shares. As I explained in my 2004 interim statement, it is the intention of the Board to have a further consolidation in 2005. Details will be circulated with the Report and Accounts and notice of the AGM. Outlook Billam made progress during 2004 - your Company's investments are developing well and further progress is anticipated in 2005. This will be achieved by commercial development within investee companies, and through more companies being floated. Many good investment proposals are being received by the Company and it is the Board's intention to take advantage of selected investment opportunities. Victor Beamish Chairman BILLAM PLC CHIEF EXECUTIVE'S REPORT For the year ended 31 December 2004 Executive Report I am pleased to report that the portfolio companies have developed well in 2004 and many have been transformed commercially by winning new and valuable contracts with blue chip customers. This has increased the credibility of their technologies and value of product offerings, which further bolsters their capital value and makes flotation (or sale) a viable expectation. As Victor Beamish, our Chairman, has already identified there has been a transformation of the portfolio from unquoted to quoted over the past year. Investment Policy The investee companies are no longer reliant on Billam Plc as their sole or major source of finance. This development has been assisted by the flotation of three existing portfolio companies in 2004, and one new investee company in which Billam invested at flotation. Investment Activity We continued to support two investee companies prior to flotation: EiRx Therapeutics plc and Physiomics plc, both of which floated in 2004; and we have made three new investments: Sareum plc, TMO Biotec Ltd and Intellego Holdings plc. Two of these had Initial Public Offerings (IPOs) on AIM in 2004. Valuations The increasing proportion of the portfolio which is held in quoted shares makes the valuation of your Company's assets more transparent as these are valued at market value at the year end. Two of Billam's quoted investments, Physiomics and EiRx Therapeutics are held via an unquoted holding company, Eirx Pharma Limited, EiRx Pharma's directors intend to distribute the quoted shares to the shareholders at which time Billam's investment portfolio will be adjusted. The impact of this will be to increase the value of the quoted portfolio by £4,389,000 and decrease the value of the unquoted by a corresponding amount. Value of Investments The number and maturity of the quoted investments can lead to volatility in values, which are measured at a particular moment. It is anticipated that as the business develops, and the number of quoted investments increases, so the portfolio volatility should reduce. Our target is for Net Asset Value per share to outperform the benchmark indices shown below over the longer term: Net assets per share have fallen by 47% in the year. FTSE Techmark All Share Index 9.7 % FTSE All Share Index 9.2 % FTSE AIM 20.4 % However, over the four year period from 1 June 2000 they have grown 74%, which compares favourably with the FTSE All Shares Index : -20% and FTSE AIM Index : -39%. Outlook for the Portfolio In 2004, more investee businesses began to demonstrate their potential. Whilst this has facilitated four flotations in 2004, so far it has not been fully recognised by the Stock Market in terms of increased values. Rises in the values of the investments in the quoted portfolio and further transfers of investments from unquoted to quoted share portfolio should occur in 2005 subject to Stock Market conditions not deteriorating significantly. The greater value and number of the quoted investments should allow Billam's management increased flexibility in the future, by giving more options for asset reallocation, broader security for any borrowings and less reliance on any one shareholding. The flexibility should continue to develop as more investments become quoted. Communications Billam continues to develop the information and data provided to its shareholders and others, and to offer regular updates using the London Stock Exchange RNS service, the Company's website: www.billamplc.co.uk, emails to individuals who register on the website and through brokers' notes and press releases. Angus Forrest Chief Executive PORTFOLIO REVIEW For the year ended 31 December 2004 QUOTED PORTFOLIO Cybit Holdings plc (AIM) Telematic Service Provider Equity Ownership 11.3% Cybit is one of the UK's leading telematics Valuation (£'000) 1,644 service providers. In 2004 Cybit announced Cost (£'000) 415 significant developments of its business Valuation based on market value with the introduction of new services Cost - Original cost net of realisations including the industry's first fully modular internet based telematics solution and the acquisition of Mapamobile mobile location service. New business wins include Sainsbury Home Delivery, Alfred McAlpine and Marshalls Plc, appointment of new resellers and a partnership with Norwich Union Insurance EiRx Therapeutics plc (AIM) Pre-Clinical Therapeutics Equity Ownership <1% EiRx Therapeutics discovers and validates Valuation (£'000) 3 genes involved in apoptosis (a regulated Cost (£'000) 2 series of events that occur in human cells Valuation based on market value for shares and results in their death) which is a held direct and excluding major factor in the control of many held via EiRx Pharma Ltd illnesses including cancers and Cost - Original cost net of realisations inflammatory diseases. In doing so, EiRx Therapeutics creates intellectual property that it out-licenses or otherwise exploits. In the year EiRx Therapeutics announced the first success milestone in its contract with OSI Pharmaceuticals Inc, also an agreement with Biofocus Plc, a world leader in collaborative drug discovery to help accelerate the discovery of anti-cancer drugs by EiRx Therapeutics. In January 2004 EiRx Therapeutics floated on AIM Intellego Holdings plc (AIM) e-Learning Solutions Provider Equity Ownership 4% Intellego is a workforce training and support Valuation (£'000) 67 services business and retailer of e-learning Cost (£'000) 60 computer software. It provides solutions to Valuation based on market value facilitate in-house clearing on IT related Cost - Original cost projects, as well as non-IT such as regulation, compliance, product information and demonstration. The target market is large commercial and governmental organisations. In its first year of operation Intellego secured business from 48 different organisations spread across a wide range of markets IVU Traffic Technologies AG Telematic Software Developer (Frankfurt Stock Exchange) Equity Ownership <1% IVU is a leading, Berlin based, developer of Valuation (£'000) 25 software for telematic solutions and logistics. Cost (£'000) 407 2004 has seen continued consolidation and Valuation based on market value concentration on financial performance of the Cost - Original cost business. In the year new versions of existing products were introduced and IVU increased its share in its market. Its directors anticipate the return to profitable trading in 2005 Physiomics plc (AIM) Computer Simulation of Cells - Systems Biology Equity Ownership 1.7% Physiomics has developed computer Valuation (£'000) 184 software that allows it to supply Cost (£'000) 159 simulations customised to proprietary Valuation based on market value for pharmaceutical development projects. shares held direct and excluding This should lead to improved shares held via EiRx Pharma Ltdd productivity and substantially reduced Cost - Original cost costs of drug development and faster time to market. Ultimately, the use of systems biology and simulations could enable truly personalised medicine. In July 2004 Physiomics entered into a technology and technology alliance with Bayer Technology Services Gmbh, which has developed a highly sophisticated Physiology-based Pharmaceutical modelling system. On 20 December 2004 Physiomics shares were floated on AIM. Sareum plc (AIM) Drug Discovery Service Equity Ownership 1.9% Sareum has developed a fast-track pre-clinical drug Valuation (£'000) 154 discovery process using a combination of skills in Cost (£'000) 55 biology, combination of chemistry and high-throughput Valuation based on market value chemical synthesis. Also by using its expertise in the Cost - Original cost structure-based drug discovery to develop high-value clinical candidates for partnering with pharmaceutical companies. Sareum announced five collaboration agreements in November and December. Sareum's shares were admitted to AIM in October 2004. UNQUOTED PORTFOLIO Arakis Limited Developer of Performance Enhanced Medicine Equity Ownership <1% In March Arakis acquired Sirus Valuation (£'000) 164 Pharmaceuticals Ltd in a share for Cost (£'000) 480 share exchange. Arakis is an emerging Valuation based on merger March 2004 speciality pharmaceutical company, with a commercial focus in inflammatory diseases and oncology adjunctive therapy. It possesses a unique research capability specialising in cytokine and receptor mediated mechanisms of disease. Arakis identifies, develops and commercialises product opportunities based upon new clinical uses for known drugs, or known drug templates, termed Performance Enhanced Medicines (PEMs). It has three drugs in Phase II trials. In September 2004 Arakis announced it had raised £29 million from a syndicate of existing and new investors. Autonomics Limited Financial Modelling and Database Management Equity Ownership 10% Autonomics was formed in 2000 to Valuation (£'000) 50 develop and commercialise financial Cost (£'000) 506 software products for multinational Valuation based on directors' valuation companies and investment banks. EiRx Pharma Limited Holding Company Equity Ownership 39% EiRx Pharma owned 100% of EiRx Therapeutics Valuation (£'000) 4,389 Limited and Physiomics Limited prior to those Cost (£'000) 2,700 companies shares being admitted to trading on Valuation based on value of underlying AIM. It is EiRx Pharma's intention to distribute investments its shareholding to its own shareholders, (including Billam Plc). A description of each investee is shown in the quoted portfolio section. Inaplex Limited Database and Integration Tools Equity Ownership 6% Inaplex signed its first contract with a leading CRM Valuation (£'000) 67 software vendor to bundle Inaplex software with a market Cost (£'000) 67 leading product. This should lead to further Valuation based on cost opportunities for bundling Inaplex software. The royalties from the first contract should provide finance for the next stage of Inaplex's development. TMO Biotec Limited Bio-ethanol and Bio-diesel Production Technology Equity Ownership 2% TMO Biotec plans to prove its world leading Valuation (£'000) 114 technology in a commercial pilot plant by Cost (£'000) 114 the end of March 2005. The technology using Valuation based on cost thermophiles is predicted to be up to 50% more efficient than current technologies at producing bio-ethanol and bio-diesel. It can be retrofitted to existing plants to provide an instant turnkey solution offering major gains in efficiency for current operators in these fast expanding markets. Trimex Group Limited Telematics - Security Equity Ownership 2% Trimex signed its first deal with a car maker, Mercedes Benz. Valuation (£'000) 1,001 Mercedes are rolling out the services throughout Europe starting Cost (£'000) 1,001 in Poland. The commercial vehicle service has entered its second Valuation based on cost year and is achieving renewal rates of 80% whilst also winning new customers. Trimex top-end product EFS was discontinued in July because the newer lower cost services had effectively made this premium service redundant. Development on the new part load-monitoring product continues with leading industrial partners. BILLAM PLC CONSOLIDATED STATEMENT OF TOTAL RETURN For the year ended 31 December 2004 2004 2004 2004 2003 2003 2003 Note £'000 £'000 £'000 £'000 £'000 £'000 Capital Revenue Total Capital Revenue Total (Losses)/gains on investments (4,071) - (4,071) 2,193 - 2,193 Income - 60 60 - 239 239 Gross revenue and capital (deficit)/return 60 239 2,432 (4,071) (4,011) 2,193 Administrative expenses - (622) (622) - (871) (871) Net (deficit)/return before exceptional items, (562) (4,633) (632) 1,561 finance costs and taxation (4,071) 2,193 Loss on sale of subsidiary - - - (116) - (116) Interest payable and similar charges (3) (3) (6) (6) - - (Deficit)/return on ordinary activities before (565) (4,636) (638) 1,439 taxation (4,071) 2,077 Tax on ordinary activities 2 764 (428) 336 (339) 121 (218) (Deficit)/return attributable to equity (993) (4,300) (517) 1,221 shareholders (3,307) 1,738 (Deficit)/return per ordinary share Basic and fully diluted 3 (18.4p) (5.6p) (24.0p) 12.7p (3.8p) 8.9p The return per ordinary share is based on the weighted average number of ordinary shares in issue during the year of 17,945,924 ordinary shares of 10 pence (2003: 13,624,235 ordinary shares of 10 pence). All of the above results arise from continuing activities. There are no recognised gains and losses for the year other than those reflected in the above Statement of Total Return. BILLAM PLC CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004 Group 2004 2003 £'000 £'000 Fixed assets Investments 7,864 11,798 Current assets Debtors 201 137 Cash at bank and in hand 47 158 248 295 Creditors: amounts falling due within one year (57) (143) Net current assets 191 152 Total assets less current liabilities 8,055 11,950 Creditors: amounts falling due after more than one year (912) (899) Provision for liabilities and charges - (336) 7,143 10,715 Capital and reserves Called up share capital 2,170 1,775 Share premium account 5,389 5,056 Other reserves Capital reserve realised (957) (886) Capital reserve unrealised 1,614 4,850 Merger reserve 1,736 1,736 Revenue account (2,809) (1,816) Shareholders' funds 7,143 10,715 Total shareholders' funds are attributable to: Equity shareholders 6,985 10,557 Non-equity shareholders 158 158 7,143 10,715 Net asset value per share Ordinary shares 34.7p 65.3p Deferred shares 0.1p 0.1p The net asset value per ordinary share is based on net assets at the year end and on 20,119,680 ordinary shares of 10 pence (2003: 16,172,312 ordinary shares of 10 pence) being the number of ordinary shares in issue at the year end. BILLAM PLC CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2004 2004 2004 2003 2003 Note £'000 £'000 £'000 £'000 Net cash outflow from operating activities 4 (699) (817) Returns on investment and servicing of finance Interest paid (3) (6) Net cash outflow from returns on investment and servicing of finance (3) (6) Capital expenditure and financial investment Purchase of investment in subsidiary - (17) Purchase of investments (929) (1,027) Sale of investments 792 776 Net cash outflow from capital expenditure and financial investment (137) (268) Net cash outflow before financing (839) (1,091) Financing Issue of share capital 728 846 Receipt of borrowings - 397 Net cash inflow from financing 728 1,243 (Decrease)/increase in cash in the year 5 (111) 152 BILLAM PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2004 1. BASIS OF PREPARATION The preliminary announcement has been prepared under the historical cost convention, as modified by the revaluation of investment assets. The Group's accounts have been prepared in accordance with the Statement of Recommended Practice for investment trusts. The significant accounting policy of the Group is as follows; INVESTMENTS Quoted investments are valued at mid market prices. Unquoted investments are valued at cost or with reference to available information including market prices of similar companies, latest dealings, accounting information and professional advice as appropriate in accordance with the guidelines issued by the British Venture Capital Association. Realised surpluses or deficits on the disposal of investments and permanent impairments in the value of investments are taken to capital reserve - realised, and unrealised surpluses and deficits on the revaluation of investments are taken to capital reserve - unrealised, as explained in the capital reserve policy below. 2. TAX ON ORDINARY ACTIVITIES The tax credit / (charge) for the year is made up as follows: 2004 Capital 2004 Revenue 2004 2003 2003 2003 £'000 £'000 Total Capital Revenue Total £'000 £'000 £'000 £'000 Deferred tax 764 (428) 336 (339) 121 (218) 3. (DEFICIT) / RETURN PER ORDINARY SHARE The (deficit) / return per ordinary share is based on the weighted average number of ordinary shares in issue during the year of 17,945,924 ordinary shares of 10 pence (2003 13,624,235 ordinary shares of 10 pence) and the following figures: 2004 Capital 2004 Revenue 2004 2003 2003 2003 £'000 £'000 Total Capital Revenue Total £'000 £'000 £'000 £'000 (Deficit) / return attributable to equity shareholders (3,307) (993) (4,300) 1,738 (517) (1,221) (Deficit) / return per ordinary share (18.4p) (5.6p) (24.0p) 12.7p (3.8p) 8.9p All options outstanding during the year and at the year end were anti-dilutive. 4. RECONCILIATION OF OPERATING (DEFICIT)/ RETURN TO NET CASH FLOW FROM OPERATING ACTIVITIES 2004 2003 £'000 £'000 Operating (deficit)/return (4,633) 1,561 Depreciation - 24 Release of negative goodwill - (94) Loss on sale of subsidiary - (116) Loss/(gain) on sale of investments 192 (132) Unrealised decrease/(increase) in investment appreciation 3,879 (2,061) (Increase)/decrease in debtors (64) 69 Decrease in creditors (73) (68) Net cash outflow from operating activities (699) (817) 5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2004 2003 £'000 £'000 (Decrease)/increase in cash in the year (111) 152 Loan note issued in the year - (397) Change in net funds resulting from cash flows (111) (245) Net (debt)/funds at 1 January 2004 (239) 6 Net debt at 31 December 2004 (350) (239) 6. PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The summarised balance sheet at 31 December 2004 and the summarised profit and loss account, summarised cash flow statement and associated notes for the year then ended have been extracted from the Group's 2004 statutory financial statements upon which the auditors' opinion is unqualified. Those financial statements have not yet been delivered to the Registrar. 7. ANNUAL GENERAL MEETING The Company's Annual General Meeting will be held at 11.00 am on 23 March 2005 at the offices of KBC Peel Hunt, 111 Old Broad Street, London, EC2N 1PH. This information is provided by RNS The company news service from the London Stock Exchange

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