30 Jun 2008 15:41
Preliminary Results
BILLAM PLC: PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
The Board of Billam PLC ("Billam" or "the Company") today announces its preliminary results for the year ended 31 December 2007.
Key Points:
Commenting on the results, Simon Bennett, Chairman of Billam said:
"We continue to review our investment portfolio and will continue to look for opportunities to make realisations as and when we can achieve valuations that meet our expectations. We are cautious about the outlook of DFL's business in the current economic climate and will look to take advantage of attractive opportunities for the longer term."
For further information contact:
Simon Bennett 0207 598 5368
Nish Malde 01923 713600
______________________________________________________________________________
CHAIRMAN'S STATEMENT
______________________________________________________________________________
As shareholders will be aware there has been much talk in the press of the effects on the world economy created by the so called credit crunch. There can be little doubt that we will continue to see the effects of the credit crunch on both the world and the UK economy for sometime to come.
PERFORMANCE DURING THE YEAR
The Board announce that the loss on ordinary activities before taxation has been reduced to £0.8 million (2006: loss £0.9 million) but we are disappointed to note that Billam's net assets have now fallen to £0.7 million (2006: £1.5 million). Of the loss on ordinary activities £0.6 million is due to the further reduction in the value of Billam's investment portfolio, further details of which are set out below. Whilst this is unsatisfactory we do not have any control over the share price performance of our investee companies and shareholders should bear in mind that the performance of smaller company shares in the last 12 months has generally been poor.
The Directors do not intend to recommend the payment of a dividend.
We have four investments in our portfolio, three are listed on the Alternative Investment Market ("AIM") and one, TRI-MEX Group Limited is an unquoted private company. We have also invested in our wholly owned development finance subsidiary, Development Funding Limited ("DFL"). I would like to draw your attention to the achievements of our specific investee companies, as follows:-
AIM LISTED INVESTMENTS
Cybit Holdings plc
Cybit Holdings plc ("Cybit") is one of Europe's leading telematics service providers, that provides organisations with a comprehensive suite of online solutions to improve the management and control of their mobile assets. Cybit operates within three distinct sectors, namely: internet based vehicle telematics solutions; economic exclusion zone management and private mobile radio based asset tracking and precise positioning management.
In its latest interim results, for the 6 months ended 30 September 2007 Cybit announced some good results with turnover up 55 per cent at £9.0 million (2006: turnover £5.8 million), operating profits of £1.23 million (2006: operating profit £0.52 million) and profits before taxation up to £616,000 compared to £19,000 for the comparative period.
In terms of the future growth opportunities the Directors of Cybit consider that whilst the UK, the company's principal place of operations, is an established market, the rates of penetration into the UK commercial vehicle telematics sector are estimated to be no more than 3 per cent. Cybit estimates that they have a 20 per cent market share of those units currently installed and that they are therefore well placed to exploit the opportunities that are available to them.
Since these results were announced in December, 2007 Cybit has announced a number of new business wins, contract renewals and contract extensions with such companies as: the online groceries business of Sainsbury's; Food Partners; SIG plc and May Guerney, the integrated construction and support services company.
EiRx Therapeutics plc
EiRx Therapeutics plc ("EiRx") is a drug discovery company developing targeted therapies for cancer. The company has its own in-house research department and has filed patents on potential new cancer drugs. EiRx is, at this stage of its development, largely pre-revenue and as a consequence EiRx has had a number of issues relating to the sufficiency of working capital during the year.
I am therefore pleased to be able to report that in February 2008 EiRx announced the completion of a funding package which the EiRx directors believe will give them sufficient working capital to fund the company for the next twelve months. The funding package comprised a placing of ordinary shares and a debt for equity swap amounting to £600,000, the issue of £300,000 zero coupon non-redeemable convertible loan stock and an increase in the company's bank facilities secured by a guarantee by one of EiRx's leading shareholders.
EiRx announced its interim results for the 6 months ended 31 December 2007 in March 2008. These results showed a reduced loss on ordinary activities before taxation of £0.515 million (2006: loss £0.892 million) and a big improvement on the loss on ordinary activities before taxation of £3.8 million announced for the year 30 June 2007.
In November, 2007 EiRx announced the filing of two new patent applications, which the Directors of EiRx believe demonstrates the ability of their EnPADTM technology. This technology enables the user to focus the selection of biologically active compounds against a chosen aspect of cell biology. EiRx believe that the EnPADTM technology is central to the future success of the company and is a central feature of the strategic realignment from a research based model to a drug development company. Further, the EiRx directors consider that this technology gives them a significant competitive advantage in the race to develop new cancer medicines.
Physiomics plc
Physiomics plc ("Physiomics") is a computational systems biology services company which applies simulations of cell behaviour to drug development companies aimed at reducing the high attrition rates of clinical trials. The commercial rationale for Physiomics' services is that at present it is estimated that the cost of bringing a new drug to market is $800 million and that 80 to 90 per cent of all clinical drug candidates fail.
In February 2008 Physiomics announced that Billam had increased its investment in the company by the issue of £50,000 7% Loan Notes which are repayable on demand and convertible, at Billam's option into Physiomics ordinary shares.
In March 2008 Physiomics announced its interim results for the 6 months ended 31 December, 2007 which showed a loss before taxation of £204,000 (2006: loss before taxation of £154,000) on revenue of £55,000 (2006: revenue of £48,000). Physiomics reported that they had signed a 3 year Memorandum of Understanding with the Institute of Life Science at Swansea University. This allows Physiomics access to the university's IBM super computer which is dedicated to life sciences and allows computations that would normally take days to be completed in minutes.
In September 2007 Physiomics announced a contract with the US pharmaceutical giant Eli Lilly. The directors of Physiomics believe that this contract is a massive endorsement of their proprietary SystemCell® technology.
Unquoted Investments
TRI-MEX Group Limited
TRI-MEX Group Limited ("TRI-MEX") provides monitoring and protection solutions for the protection of vehicles and goods in transit. The accounts for the year ended 31 March, 2007 showed a loss before taxation of £1.1 million (2006: loss before taxation of £1.24 million) on turnover of £0.606 million (2006: turnover £0.354 million). The Group is now focussed on its "EUROWATCH" system and the group's principal source of revenue was sales of subscriptions from this source.
In Europe 1.5 million automobiles and the cargoes of 200,000 commercial vehicles are stolen each year. TRI-MEX's EUROWATCH technology connects all types of GPS tracking systems through to the police across Europe providing them with real time data on a vehicles location. This has resulted in recovery rates of 100 per cent for vehicles and 90 per cent for stolen freight.
TRI-MEX has contracts with Jaguar, Land Rover and Aston Martin.
DEVELOPMENT FUNDING LIMITED
The direct result of the credit crunch has been to reduce the availability of both debt and equity, of the type offered by our wholly owned development finance subsidiary Development Funding Limited ("DFL"), to the small and medium sized housebuilders. Set against a background of wholesale redundancies and the dramatic slowdown in sales of new homes being announced by the housebuilding industry, which are running at levels approximately 25 per cent lower than the levels seen in 2007, we have adopted a cautious approach to requests for new funding.
The first development that DFL has provided mezzanine finance to is located in Northamptonshire and we have now invested a total of £1.05 million. The development comprises 29 houses and is now substantially complete with regard to construction. I am pleased to report that in spite of the poor conditions in the market as a whole, completions have been recorded on five houses and contracts have been exchanged on a further two.
As previously reported DFL, are sharing the development risk with the developer on this development and despite the slower than anticipated sales we remain confident that we will still achieve a reasonable return on this project. The financing of DFL's investment has been provided by Billam's principal shareholder, Mr Stephen Wicks, who has made loans to the Group, on commercial terms, totalling £1.4 million at 31 December 2007. Mr Wicks has the option to convert part of his loans into ordinary shares in Billam. Whilst we are cautious as to the short term outlook, we expect to make other development financing investments as and when suitable opportunities arise and remain confident of the longer term prospects for DFL.
OVERHEADS
As previously reported we have made further efforts to reduce our cost base. I am therefore pleased to report that total overheads have been reduced to just under £0.36 million for the year (2006: £0.52 million) and we will continue to do all we can to reduce costs during the coming year.
OUTLOOK
We continue to review our remaining investments and keep a dialogue with the investee management teams on a regular basis. We will continue to look for opportunities to make realisations from our investment portfolio, as and when we can achieve valuations that meet our expectations. Whilst we remain cautious about the outlook for our development finance business DFL in the short term, we will look to take advantage of the attractive opportunities that we are currently being shown in the longer term.
Simon Bennett
Chairman
30 June 2008
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
| Note | 2007 | 2006 | |
| £'000 | £'000 | ||
| Continuing operations | |||
| Revenue | 2 | 363 | 438 |
| Cost of sales | (808) | (806) | |
| ------------------------- | ------------------------- | ||
| Gross loss | (445) | (368) | |
| Administrative costs | (361) | (515) | |
| ------------------------- | ------------------------- | ||
| Operating loss | (806) | (883) | |
| Finance costs | (115) | (29) | |
| Finance income | 84 | - | |
| ------------------------- | ------------------------- | ||
| Loss before tax | (837) | (912) | |
| Income tax expense | 3 | - | - |
| ------------------------- | ------------------------- | ||
| Loss for the period | (837) | (912) | |
| ============== | =============== | ||
| Loss per share: | |||
| Basic and diluted loss per share from total and continuing operations | 4 | (7.89)p | (8.67)p |
| ======= | =============== |
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2007 ______________________________________________________________________________
| Note | 2007 | 2006 | ||||||
| £'000 | £'000 | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Financial assets at fair value through profit and loss | 5 | 1,651 | 2,446 | |||||
| ------------------------- | ------------------------- | |||||||
| Current assets | ||||||||
| Loans and receivables | 1,026 | - | ||||||
| Trade and other receivables | 208 | 171 | ||||||
| Cash and cash equivalents | 5 | 1 | ||||||
| ------------------------- | ------------------------- | |||||||
| 1,239 | 172 | |||||||
| ------------------------- | ------------------------- | |||||||
| Total assets | 2,890 | 2,618 | ||||||
| ------------------------- | ------------------------- | |||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 466 | 352 | ||||||
| Short-term borrowings | 1,422 | 353 | ||||||
| ------------------------- | ------------------------- | |||||||
| 1,888 | 705 | |||||||
| ------------------------- | ------------------------- | |||||||
| Non-current liabilities | ||||||||
| Long-term borrowings | 299 | 282 | ||||||
| Other payables | - | 170 | ||||||
| ------------------------- | ------------------------- | |||||||
| 299 | 452 | |||||||
| ------------------------- | ------------------------- | |||||||
| Total liabilities | 2,187 | 1,157 | ||||||
| ------------------------- | ------------------------- | |||||||
| Net assets | 703 | 1,461 | ||||||
| ================ | =============== | |||||||
| EQUITY | ||||||||
| Share capital | 6 | 2,279 | 2,279 | |||||
| Share premium account | 5,423 | 5,423 | ||||||
| Convertible loan | 88 | 18 | ||||||
| Merger reserve | 1,012 | 1,012 | ||||||
| Profit and loss account | (8,099) | (7,271) | ||||||
| ------------------------- | ------------------------- | |||||||
| Total equity | 703 | 1,461 | ||||||
| ================ | =============== | |||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2007 ______________________________________________________________________________
| Share capital | Share premium account | Convertible loan | Merger reserve | Profit and loss | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2006 | 2,250 | 5,409 | - | 1,012 | (6,359) | 2,312 |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------ | ------------------- | |
| Loss for the year | - | - | - | - | (912) | (912) |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
| Total recognised income and expense for the year | - | - | - | - | (912) | (912) |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
| Issue of share capital | 29 | 14 | - | - | - | 43 |
| Issue of convertible loan - equity element | - | - | 18 | - | - | 18 |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
| Balance at 31 December 2006 | 2,279 | 5,423 | 18 | 1,012 | (7,271) | 1,461 |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
|
| ||||||
| Loss for the year | - | - | - | - | (837) | (837) |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
| Total recognised income and expense for the year | - | - | - | - | (837) | (837) |
| ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | |
| Share based compensation | - | - | - | - | 9 | 9 |
| Issue of convertible loan - equity element | - | - | 70 | - | - | 70 |
| ------------------- | ----------------- | ----------------- | ----------------- | ----------------- | ----------------- | |
| Balance at 31 December 2007 | 2,279 | 5,423 | 88 | 1,012 | (8,099) | 703 |
| ============ | =========== | ========== | ========== | ========== | ========== |
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
| 2007 | 2006 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Loss before and after taxation | (837) | (912) | |
| Adjustments for: | |||
| Fair value adjustments | 580 | 588 | |
| Profit on sale of investments | (37) | (134) | |
| Interest expense | 115 | 29 | |
| Increase in trade and other receivables | (920) | - | |
| Decrease in trade payables | (104) | (197) | |
| Interest received | (84) | - | |
| Share option charge | 9 | - | |
| ------------------------- | ------------------------- | ||
| Net cash from operating activities | (1,278) | (626) | |
| ------------------------- | ------------------------- | ||
| Cash flows from investing activities | |||
| Purchase of investments | (13) | (46) | |
| Proceeds from sale of investment | 265 | 352 | |
| ------------------------- | ------------------------- | ||
| Net cash used in investing activities | 252 | 306 | |
| ------------------------- | ------------------------- | ||
| Cash flows from financing activities | |||
| Proceeds from short-term borrowings | 1,134 | 335 | |
| Re-payment of short term borrowings | (82) | (54) | |
| ------------------------- | ------------------------- | ||
| Net cash used in financing activities | 1,052 | 281 | |
| ------------------------- | ------------------------- | ||
| Net increase/(decrease) in cash and cash equivalents | 26 | (39) | |
| Cash and cash equivalents at beginning of period | (30) | 9 | |
| ------------------------- | ------------------------- | ||
| Cash and cash equivalents at end of period | (4) | (30) | |
| ================ | ============== |
NOTES TO THE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2007
______________________________________________________________________________
1. BASIS OF PREPARATION
The consolidated financial statements have been prepared under International Financial Reporting Standards as adopted by the EU (IFRSs). The principal accounting policies are unchanged from those disclosed in the Company's interim financial statements for the six month period ended 30 June 2007.
The information set out in this preliminary announcement, which does not constitute full financial statements within the meaning of s240 of the Companies Act 1985, is extracted from the audited financial statements for the Group for the year ended 31 December 2007 which:
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
______________________________________________________________________________
2. income AND SEGMENTAL ANALYSIS
Billam plc is an investment company and generates income by way of management fees and profits or losses on investments. It also generates rental income from sub letting its leasehold properties. The segmental analysis of operations is as follows:
Segmental analysis by activity
| 2007 | 2006 | ||||
| £'000 | £'000 | ||||
| REVENUE BY SEGMENT | |||||
| Management fees | 18 | 11 | |||
| Rental and other related income | 80 | 75 | |||
| Sale of investments | 265 | 352 | |||
| 363 | 438 | ||||
| SEGMENT RESULT | |||||
| Management fees | 18 | 11 | |||
| Rental and other related income | (40) | (14) | |||
| Losses on investment | (784) | (880) | |||
| Operating loss | (806) | (883) | |||
| Finance costs | (115) | (29) | |||
| Finance income | 84 | - | |||
| Loss before tax | (837) | (912) |
All assets and liabilities, capital additions and depreciation are wholly attributable to investment activities.
The activity of both the investment activities and property rental arose wholly in the United Kingdom.
3. INCOME TAX EXPENSE
There is no tax credit / (charge) for either the current or prior years due to the generation of tax losses.
The Group has unrecognised deferred tax assets of £864,000 (2006: £816,000) as a result of losses carried forward of £3,084,000 (2006: £2,720,000).
4. LOSS PER ORDINARY SHARE
The loss per ordinary share is based on the weighted average number of ordinary shares in issue during the year of 10,603,835 ordinary shares of 20 pence (2006: 10,524,035 ordinary shares of 20 pence) and the following figures:
| 2007 £'000 | 2006 £'000 | ||||||||||
| Loss attributable to equity shareholders | (837) | (912) | |||||||||
| Loss per ordinary shares | (7.89)p | (8.67)p |
Diluted earnings per share is taken as equal to basic earnings per share as the Group has recorded a loss and therefore the effect of including share options is anti-dilutive.
5. INVESTMENTS
| 2007 | 2006 | ||||||||
| £'000 | £'000 | ||||||||
| Investments listed on a recognised investment exchange | 1,025 | 1,087 | |||||||
| Other unlisted investments | 626 | 1,359 | |||||||
| 1,651 | 2,446 | ||||||||
| Listed | Listed overseas | Unlisted investments | Total | |||||||
| £'000 | £'000 | £'000 | £'000 | |||||||
| Cost | ||||||||||
| At 1 January 2006 | 745 | 82 | 5,036 | 5,863 | ||||||
| Additions | - | - | 46 | 46 | ||||||
| Sales | ||||||||||
| - proceeds | (174) | (150) | (28) | (352) | ||||||
| - realised gains/(losses) on sales | 105 | 68 | (39) | 134 | ||||||
| At 31 December 2006 | 676 | - | 5,015 | 5,691 | ||||||
| Unrealised appreciation / (depreciation) | ||||||||||
| At 1 January 2006 | 638 | 140 | (3,435) | (2,657) | ||||||
| (Decrease)/increase in unrealised appreciation/(depreciation) | (227) | (140) | (221) | (588) | ||||||
| At 31 December 2006 | 411 | - | (3,656) | (3,245) | ||||||
| Cost or valuation | ||||||||||
| At 31 December 2006 | 1,087 | - | 1,359 | 2,446 | ||||||
| At 31 December 2005 | 1,383 | 222 | 1,601 | 3,206 | ||||||
5. INVESTMENTS (CONTINUED)
| Listed | Unlisted investments | Total | ||||||
| £'000 | £'000 | £'000 | ||||||
| Cost | ||||||||
| At 1 January 2007 | 676 | 5,015 | 5,691 | |||||
| Additions | 13 | - | 13 | |||||
| Sales | ||||||||
| - proceeds | (115) | (150) | (265) | |||||
| - realised gains/(losses) on sales | - | 37 | 37 | |||||
| At 31 December 2007 | 574 | 4,902 | 5,476 | |||||
| Unrealised appreciation / (depreciation) | ||||||||
| At 1 January 2007 | 411 | (3,656) | (3,245) | |||||
| Increase/(decrease) in unrealised appreciation/(depreciation) | 40 | (620) | (580) | |||||
| At 31 December 2007 | 451 | (4,276) | (3,825) | |||||
| Cost or valuation | ||||||||
| At 31 December 2007 | 1,025 | 626 | 1,651 | |||||
| At 31 December 2006 | 1,087 | 1,359 | 2,446 | |||||
| 2007 | 2006 | ||||||||
| £'000 | £'000 | ||||||||
| Net gains on sales | 37 | 134 | |||||||
| Net decrease in unrealised depreciation | (580) | (588) | |||||||
| Loss on investments | (543) | (454) |
6. SHARE CAPITAL
| 2007 | 2006 | ||||
| £'000 | £'000 | ||||
| Authorised | |||||
| 19,210,250 ordinary shares of 20p each (2006: 19,210,250 ordinary shares of 20p each) | 3,842 | 3,842 | |||
| 157,950,000 deferred shares of 0.1p each | 158 | 158 | |||
| 4,000 | 4,000 | ||||
| Allotted, called up and fully paid | |||||
| 10,603,835 ordinary shares of 20p each (2006: 10,603,835 ordinary shares of 20p each) | 2,121 | 2,121 | |||
| 157,950,000 deferred shares of 0.1p each | 158 | 158 | |||
| 2,279 | 2,279 |
6. SHARE CAPITAL (CONTINUED)
The Group operates an unapproved share option scheme. Awards under each scheme are made periodically to employees
The Group has used the Black-Scholes-Merton formula to calculate the fair value of outstanding options and deferred shares. The assumptions applied to the Black-Scholes-Merton formula for share options issued and the fair value per option are as follows:
| Share options | ||
| Expected life of options based on options exercised to date | 4 years | |
| Volatility of share price | 41% | |
| Dividend yield | 0% | |
| Risk free interest rate | 5.62% | |
| Share price at date of grant | 15p | |
| Exercise price | 20p | |
| Fair value per option | £0.03 |
The charge calculated up to 31 December 2007 is £9,000 (2006: £Nil).
Volatility was assessed over the period since the shares were listed.
A reconciliation of option movements over the year ended 31 December 2007 is shown below:
| Number | Exercise price | |
| Granted in the year | 1,900,000 | 20p |
| Outstanding at 31 December 2007 | 1,900,000 | |
| Exercisable at 31 December 2007 | - | |
at 31 December 2007 outstanding options granted over 20p ordinary shares were as follows:
| Share option scheme | Exercise price | Number | Dates exercisable |
| Company unapproved | 20p | 1,900,000 | 24 March 2010 to 23 March 2017 |
There were no share options in issue in the prior year.
7. TRANSACTIONS WITH RELATED PARTIES
Within creditors is an amount accrued but not yet paid to former director A G P Forrest in relation to remuneration amounting to £118,000 (2006: £377,000). This amount is to be repaid in two half yearly instalments. Included in creditors is also an amount due to Mr N Malde of £50,000 in respect of unpaid remuneration.
During the year, a major shareholder, Mr S D Wicks advanced monies to the Group and the fair value of the outstanding balance at the year end was £1,413,000. Interest accrued during the year at 1% above base rates amounted to £60,000 and this remained outstanding at the year end. Interest of £7,000 relating to previous years also remains outstanding at the year end. The loan was secured by way of a debenture over the Company's assets. Whilst there are no formal terms of repayment, Mr S D Wicks has agreed not to seek repayment for a period of at least 12 months from the date of approval of these accounts unless the Group has funds to do so, albeit he may exercise his option to convert part or all of these loans into shares during that time.
Following the year end Highlands Village Limited, a company in which Mr S D Wicks and Mr N Malde are both directors and shareholders, has advanced £285,000 to the Company on an unsecured basis at 1% above base rates.