Final Results
February 20 2008 - 7:03AM
UK Regulatory
NEWMARKET INVESTMENTS PLC
PRELIMINARY ANNOUNCEMENT FOR 12 MONTHS TO 31 MARCH 2007
Since January 2006, the Board has remained committed to returning the Company
to a position of prominence in its traditional world of the Turf.
The financial information for the year ended 31 March 2007 indicates continuing
improvement in the operating business of BBA Insurance Services Limited
("BBAIS") delivering an operating loss of �264,000 compared to the 2006 loss of
�576,000.
As was mentioned in the interim report, the Board continues to identify
acquisition opportunities to enhance the existing businesses of the Company.
Acquisitions
Since the year end, the Company has made one acquisition. On 23 May 2007, the
Company announced the acquisition of Equine Risk Management Ltd ("ERM"), a
specialist insurance company focused on show jumpers and eventers, which
compliments the existing BBAIS thoroughbred insurance business. The purchase
price for ERM was �75,000, plus costs. This acquisition is in line with the
Company's 'buy and build' strategy within the horse industry and consolidates
and strengthens the growth in the sector.
In addition to growing BBAIS's traditional services, your Board is also intent
on building on the brand value of the British Bloodstock Agency name. A key
challenge over the past six months and during the next year is to continue to
integrate acquired businesses into one coherent operation and build on existing
brands.
The Company is also pleased to announce that it has conditionally agreed to
acquire the entire share capital of the International Racing Bureau Ltd ("IRB")
for a price of �850,000 to be satisfied by the cash payment of �425,000 and the
issue of 42,500,000 new ordinary shares at a price of 1p each. IRB is a leading
source and provider of global horse racing data and also an adviser to race
courses and meets worldwide for the involvement of foreign race entries. This
acquisition strengthens the Boards resolve of re-establishing the Company as a
recognized participant in the horse racing world.
The Board believes IRB is capable of significant growth which may be achieved
through the development of supplementary revenue, specifically in the areas of
sponsorship and media rights, where IRB is well positioned to capture and grow
its customer base.
Your Board also believes that IRB is well equipped to play a leading role in
the introduction and development of horse racing activities in emerging
markets, particularly in Eastern Europe and the Far East.
Fund raising
The Company has conditionally raised �1,315,000 (before expenses) through Ellis
Stockbrokers Limited, by the placing and open offer of 131,500,000 new ordinary
shares to institutional and other investors in connection with the proposed
placing.
The fundraising constitutes a placing of �851,250 and an open offer to existing
shareholders of �463,750. The open offer has been fully underwritten by Ellis
Stockbroker Limited. The fundraising satisfies the cash element of the IRB
acquisition and allows the Company to continue with its organic growth.
The Placing and Open Offer is conditional, inter alia, upon shareholder
approval at the General Meeting of Shareholders which has been convened for 17 March 2008.
Property Acquisition
The Company has agreed to acquire one occupied commercial property to be
satisfied by the issue of 35,250,000 new ordinary shares at a price of 1p per
share. This asset purchase strengthens the Company's balance sheet position. It
is envisaged that this property will be sold to provide further additional
working capital for the development of the Company. The vendors of this
property will become substantial shareholders in the enlarged group and are
already identifying potential opportunities in the equine industry to further
the growth of the Company. It is your Board's intention to pursue these and
other opportunities as soon as these financing and acquisition proposals have
been approved by shareholders.
The Company has also entered into heads of agreement to acquire the freehold of
another property which is conditional on the approval of the current occupants
of the property pursuant to the Landlord and Tenant Act 1987.
Share Capital Reorganisation
The Company is proposing to subdivide and convert each issued and unissued
ordinary share of 1p into 1 new ordinary share of 0.01p each and 1 new deferred
share of 0.99p each. Each new ordinary share will have the same rights
(including voting and dividend rights and rights on a return of capital) as
each existing ordinary share prior to the share capital reorganisation. The new
deferred shares will have the same rights as the existing deferred shares (save
that on a return of capital the holders of the new deferred shares will be
entitled to receive 0.99p per share). The rights attaching to the new deferred
shares will render them effectively worthless and it is intended that they will
be cancelled and an appropriate reserve created in due course. The share
capital reorganisation will not affect the Company's or the Group's net assets.
Full details of the transactions mentioned above are set out in the circular to
shareholders' that accompanies these accounts.
Board Changes
During the period Piers Pottinger, Shane Moloney and Philip Reid stepped down
from the Board. I would like to express my thanks to them for their contribution to the
Company.
Conclusion
The Company continues to deliver its original strategy of building an equine
group with sustainable revenues and improving returns for shareholders.
We are confident that, by combining an integration plan with an ongoing buy and
build strategy, Newmarket Investments can continue to grow organic sales and
complete new acquisitions.
On behalf of the board I would like to thank the executive team and staff for
their contribution and hard work over the past 12 months which has been greatly appreciated.
John Carrington
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2007
2007 2006
�'000 �'000 �'000 �'000
Turnover
Continuing operations 162 154
Discontinued activities - 536
******* *******
162 700
Cost of sales - (202)
******* *******
Gross profit 162 498
Administrative expenses (426) (1,074)
******* *******
Operating loss
Continuing operations (264) (239)
Discontinued activities - (337)
******* *******
(264) (578)
Non operating exceptional items
(Loss)/profit on disposal (9) 24
of other investments -
continuing operations
Loss on sale of subsidiary - (1,279)
undertaking - discontinued
activities
******* *******
(9) (1,255)
******* *******
Other interest receivable - 23
and similar income
Amounts written off (28) -
investments
Interest payable and (2) (26)
similar charges
******* *******
Loss on ordinary activities (303) (1,834)
before taxation
Tax on loss on ordinary - -
activities
******* *******
Loss for the year (303) (1,834)
******* *******
Loss per share - basic (3.4p) (19.6p)
******* *******
Loss per share - continuing (3.4p) (2.1p)
operations
******* *******
Loss per share - (-p) (17.5p)
discontinued operations
******* *******
There are no recognised gains and losses other than those passing through the
profit and loss account.
CONSOLIDATED BALANCE SHEET
As at 31 March 2007
2007 2006
�'000 �'000 �'000 �'000
Fixed assets
Tangible assets 12 18
Investments 1 39
******* *******
13 57
Current assets
Debtors 232 174
Cash at bank and in hand 74 58
******* *******
306 232
Creditors: amounts falling (595) (262)
due within one year
******* *******
Net current liabilities (289) (30)
******* *******
Total assets less current liabilities (276) 27
******* *******
Capital and reserves
Called up share capital 2,188 2,375
Share premium account 117 117
Capital redemption reserve 579 579
Profit and loss account (3,160) (2,857)
******* *******
Shareholders' funds (276) 27
******* *******
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2006
2006 2005
�'000 �'000 �'000 �'000
Net cash outflow from operating activities (112) (74)
Returns on investments and
servicing of finance
Interest received - 23
Interest paid (2) (26)
******* *******
Net cash (outflow)/inflow for (3) (3)
returns on investments and
servicing of finance
Capital expenditure and financial investment
Payments to acquire tangible assets - (119)
Receipts from sales of tangible - 15
assets
Receipts from sales of investments 1 93
******* *******
Net cash inflow/(outflow) for 1 (11)
capital expenditure
Sale of subsidiary undertakings - (39)
(net of cash acquired)
******* *******
Net cash outflow for acquisitions - (39)
and disposals
******* *******
Net cash outflow before management (113) (127)
of liquid resources and financing
Financing
Other new short term loans 65 -
******* *******
Net cash inflow from financing 65 -
******* *******
Decrease in cash in the year (48) (127)
******* *******
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2007
1 Reconciliation of operating loss to net cash outflow 2007 2006
from operating activities
�'000 �'000
Operating loss (264) (576)
Depreciation of tangible assets 6 168
Loss on sale/fixed assets transferred to stock - 43
Increase in stocks - (35)
(Increase)/decrease in debtors (58) 127
Decrease in creditors within one year 204 199
******* *******
Net cash outflow from operating activities (112) (74)
******* *******
2 Analysis of net (debt)/funds 1 April Cash flow 31 March
2006 2007
�'000 �'000 �'000
Net cash:
Cash at bank and in hand 58 16 74
Bank overdrafts - (64) (64)
******* ******* *******
58 (48) 10
******* ******* *******
Debt:
Debt falling due within one - (65) (65)
year
******* ******* *******
58 (113) (55)
******* ******* *******
3 Reconciliation of net cash flow to movement in net 2007 2006
(debts)/funds
�'000 �'000
Decrease in cash in the year (48) (127)
Cash inflow from financing (65) -
On disposal of subsidiary - 190
******* *******
Movement in net (debt)/funds in the year (113) 63
Opening net funds/(debt) 58 (5)
******* *******
Closing net (debt)/funds (55) 58
******* *******
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. The financial information set out above does not constitute full accounts
within the meaning of Section 240 of the Companies Act 1985 (`the Act'). Full
accounts for the Group for the year, which received an unqualified auditors'
report within the meaning of Section 235 of the Act but modified with regard to
the matter referred to in note 2 below, and which will not contain a statement
under Section 237 (2) or (3) of the Act, will be posted to shareholders as soon
as is practicable.
2. The Directors continually monitor the financial position of the Group, taking
into account the latest cash flow forecasts and the ability of the Group to
generate cash. The Directors have prepared the financial statements on a going
concern basis having had regard to the cash flow projections which include
additional funding in the form of a share issue which is currently being
arranged.
The financial statements do not include any adjustments that would result if
the going concern basis of preparation became no longer appropriate.
3. The directors of the Company do not propose the payment of a dividend.
4. Earnings per ordinary share
The earnings and number of shares used in the calculation of earnings per
ordinary share are set out below:
Earnings per ordinary share
The earnings and number of shares used in the calculation of earnings per
ordinary share are set out below:
2007 2006
Basic:
Loss for the financial year 303,000 1,834,000
Weighted average number of shares 8,750,000 9,352,054
Loss per share 3.4p 19.6p
********** **********
There was no dilutive effect from the share options outstanding during the
year.
Continuing operations
Basic:
Loss for the financial year 303,000 193,000
Weighted average number of shares 8,750,000 9,352,054
Loss per share 3.4p 2.1p
********** **********
Discontinued operations
Basic:
Loss for the financial year - 1,641,000
Weighted average number of shares - 9,352,054
Loss per share -p 17.5p
********** **********
Copies of this announcement and the Annual Report and Accounts are
available from the Company Secretary at 25 Manchester Square, London W1U 3PY
and from Newmarket's website, www.newmarketinvestmentsplc.com
Copies of the Annual Report and Accounts have today been posted to shareholders.
For further information please contact:
Newmarket Investments plc
John Carrington
Chairman
Tel: 020 7486 8985
Nominated Adviser to Newmarket
City Financial Associates Limited
Liam Murray
Tel: 020 7492 4777
END
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