RNS Number:8502T
Business Direct Group Plc
28 March 2007
Wednesday 28 March 2007
BUSINESS DIRECT GROUP PLC - SECOND INTERIM ANNOUNCEMENT
Business Direct (BDG.L), the operator of the ParcelXchange intelligent locker
distribution system, is making this Second Interim Announcement, covering the
unaudited 12 months to 31 December 2006 in comparison with the audited 12 months
to 31 December 2005, in the context of its change of year end to 31 January from
31 December.
In the 12 months under review , Business Direct substantially reduced its
losses, secured the re-financing, made important Board changes, and refined its
strategy.
Key Points - Financial
* Turnover increased by 8.4% to #14.64m.
* The adjusted* LBITDA improved by 47.4% to #1.01m and the operating loss
was 35.3% lower at #1.54m.
* The adjusted* loss before tax improved by 30.2% to #1.69m and the reported
pre-tax loss reduced by 25.5% to #2.22m.
* The balance sheet was considerably strengthened, subsequent to the period
end, by the #2.7m (net) placing in January 2007.
* Adjusted excludes exceptional items and amortisation of intangibles
Key Points - Commercial
* The ParcelXchange Division increased its turnover by 50% to #6.89m, with
ParcelXchange increasing its turnover by 137% to #4.03m. The number of
ParcelXchanges increased to approximately 300 from 280 and the number of
individual lockers exceeds 4,000, with the occupancy rate increasing to 51%
from 39%.
* The Specialist Division turnover reduced by 15% to #7.75m.
* The principal conclusions of the Strategic Review, which were adopted by
the Board in December 2006, were to broaden the ParcelXchange business and
expand the Specialist business.
* Today, two Board appointments have been made: Martin Wright as Finance
Director and Martyn Wilson as Managing Director of the Specialist Division.
Derek O'Neill has resigned as Finance Director and will be leaving the
business on 30 April 2007 to take up a joint MD role in a recruitment
services business. David Whittaker, Operations Director of the Specialist
Division, has also resigned from the Board.
Paul Carvell, Chief Executive, stated "In the announcement of the placing on 14
December 2006, it was stated that the Directors anticipate that the new
investment in ParcelXchange will result in continued losses in the short term.
That remains the case. However, as in December 2006, the Directors remain
optimistic about the prospects of the Group over the medium term."
Enquiries:
Business Direct Group plc 01788-821 200
Paul Carvell (Chief Executive Officer)
Martin Wright (Finance Director)
JM Finn & Co. Ltd. (NOMAD and Broker) 020-7628 9688
Geoff Nash/Sam Smith
Bankside Consultants Limited
Charles Ponsonby 020-7367 8851
CHIEF EXECUTIVE'S STATEMENT
Following the conclusion of the recent #3.0m placing, Business Direct announced
a change of year end to 31 January from 31 December. Accordingly, this Second
Interim Announcement covers the unaudited 12 months to 31 December 2006, in
comparison with the audited 12 months to 31 December 2005. The Preliminary
Announcement, which is scheduled for 23 April 2007, will cover the audited 13
months to 31 January 2007, with the same comparator period.
In the 12 months under review, Business Direct substantially reduced its losses,
secured the refinancing, made important Board changes, and redefined its
strategy.
FINANCIAL REVIEW
Financial Statements
Turnover increased by 8.4% to #14.64m (2005: #13.51m) and gross profit was 33.7%
higher at #5.00m (2005: #3.74m), a gross margin of 34.1% (2005: 27.7%).
The operating loss for the 12 months was 35.3% lower at #1.54m (2005: #2.38m).
After an exceptional charge of #0.42m (2005: #0.46m) in connection with moving
the Teddington finance department to Rugby and reorganising the business to
reflect the needs of its redefined strategy, the loss before interest and tax
totalled #1.96m (2005: #2.83m). With the interest charge increasing to #0.26m
(2005: #0.16m), the loss before tax amounted to #2.22m (2005: #2.98m), a
reduction of 25.5%. The basic loss per share was 6.3p (2005: a restated 9.5p),
down 33.7%.
Adding back the exceptional charge of #0.42m (2005: #0.46m) and goodwill
amortisation of #0.11m (2005: #0.10m), the adjusted loss before tax was #1.69m
(2005: #2.42m), a 30.2% improvement, and the adjusted loss per share was 4.8p
(2005: a restated 7.7p), a 37.7% improvement. The adjusted LBITDA almost halved
to #1.01m (2005: #1.92m).
At the period end, net debt totalled #5.3m (2005: #4.0m) and net liabilities
were #0.6m (2005: net assets of #1.4m). The balance sheet has been considerably
strengthened by the placing in January 2007.
Placing and Financial Restructuring
On 14 December 2006, Business Direct announced that it had conditionally raised
#3.0m, before expenses of #0.3m, through the issue to new and existing investors
of 100,000,000 New Ordinary Shares at 3p per share.
The proceeds of the placing will principally be used to expand the Group's core
offering, the ParcelXchange intelligent outdoor locker distribution system, and
bolster its working capital.
At the same time, Tim Houstoun, a Director, and his wife converted their
combined holding of #945,000 of Preference Shares into 31,500,000 New Ordinary
Shares. Together with the Directors' existing holdings and the subscription for
3,166,167 New Ordinary Shares in aggregate by Directors, this took the
Directors' aggregate shareholding to 35.5%.
To facilitate the placing, each Ordinary Share of 5p was converted into one New
Ordinary Share of 1p and one Deferred Share of 4p. The Deferred Shares have no
value.
On 13 December 2006, the Group agreed a series of amendments to its banking
facilities with Bank of Scotland. As part of the new arrangements, the repayment
date for the term loan of #2.5m was put back by 12 months to 2011 and the
financial covenants were amended to reflect the Group's revised business plan.
BUSINESS REVIEW
Business Direct is a specialist provider of logistics solutions for the field
services engineer market. Since January 2007, it has been organised into two
Divisions, ParcelXchange and Specialist.
ParcelXchange
The ParcelXchange Division comprises ParcelXchange, direct engineer delivery
("In-Boot") and direct vendor trunking/delivery to forward stock locations
("FSLs"), providing logistics solutions for the final mile delivery. It has a
blue-chip client base and partnerships with global supply chain companies, such
as DHL/Exel and TNT. Following a period of consultation with our customers,
where we discussed their future needs, we identified the need for a European
inbound freight solution and a national P.U.D.O network (manned Pick Up Drop Off
points). These additional services will be launched in the spring 2007, enabling
us to offer a total In-Night solution, giving pre 8am delivery of UK and
European freight to the field personnel market.
In the period, the ParcelXchange Division increased its turnover by 50%, to
#6.89m from #4.58m, with ParcelXchange increasing its turnover by 137%, to
#4.03m from #1.70m.
ParcelXchange
Business Direct owns a national network of award-winning ParcelXchanges,
providing a secure deposit and collection environment, using sophisticated
technology with end-to-end track-and trace. The ParcelXchanges are typically
used to service the field engineer market, delivering parts into a secure locker
in a convenient location. Customers can rent ParcelXchange lockers for a
pre-agreed period ("Fixed")or pay as used ("Dynamic"). ParcelXchange represents
the UK's largest network of intelligent drop boxes and the lockers are installed
nationwide, normally at petrol stations and supermarkets, with an average drive
time of just 15 minutes from an engineer's home.
The number of ParcelXchanges increased to approximately 300 from 280 and the
number of individual lockers exceeds 4,000. The occupancy rate increased to 51%
from 39%.
In-Boot Delivery & Direct Vendor Trunking
In-Boot is a service that supplies direct into engineers' vehicles during the
night and collects returned parts, enabling the field engineer to reduce overall
mileage and increase productivity. Direct Vendor Trunking is an exclusively
managed national delivery system which enables dedicated delivery and collection
to major vendors and repair agents on a daily basis.
Overall sales of these services in the period were flat. In the First Interim
Announcement of 28 September 2006, we explained that In-Boot business had been
lost in the first half of the year following substantial price increases. These
losses were halted in the second half and margins improved as a result of the
price increases. The loss of In-Boot business has been offset by increased sales
of Direct Vendor Trunking services.
Specialist
The principal services offered by the Specialist Division are two-man delivery,
same-day urgent delivery, national next-day parcel delivery, technical/swap-out,
and pick & pack warehousing.
In the period, Specialist turnover reduced by 15%, to #7.75m from #9.07m.
Two-Man Delivery
Two-man delivery comprises pre-agreed time-specific delivery of large/high value
equipment, such as computer rack systems, using skilled two man teams and
specialist vehicles.
In the period, additional investment was made in the number of two man teams and
the business saw a 60% growth in revenue. This is expected to continue to be a
growth area in the current year.
Same-day Urgent/Next-day Delivery
Same-day urgent and next-day delivery is a service trading principally in the
northern Home Counties out of Business Direct's Watford depot.
In the period, the performance of the same-day business was disappointing.
Whilst this is a mature market, management believes that good returns are
achievable. Martyn Wilson, who joins the Board today (see below), has
significant experience in this area and will be introducing a revenue growth
programme.
Technical/Swap-out
Technical/swap-out comprises the delivery of substantial volumes of electronic
equipment to businesses, their on-desk set-up and the removal of old product in
accordance with European legislation. The business also carries out line 1/line
2 call out on nationwide maintenance agreements.
The investment in a sales specialist in the summer of 2006 is starting to
produce positive results. This is expected to be a high growth opportunity in
the current year.
Partsbank
Partsbank is the management of outsourced warehousing, comprising pick/pack and
stock management.
In the period, revenue fell in this area, and efforts are underway to replace
with higher margin opportunities such as strategic stock holding for our key
clients, close to our national hub
BOARD
Since the first Interim Announcement, a number of changes have been made to the
Board.
On 8 January 2007, Russell Hodgson replaced me as Chairman, on a non-executive
basis. Russell has spent over 25 years in the parcel industry, holding a number
of senior positions. In February 2007, Wayne Crew stepped down from the Board,
whilst remaining responsible for ParcelXchange sales; additionally, I assumed
direct responsibility for the ParcelXchange Division from Tim Houstoun, who is
now responsible for the newly-launched global licensing business, which aims to
license ParcelXchange in overseas territories.
Four other board changes are announced today. Derek O'Neill will be leaving the
business on 30 April 2007 to take up a joint MD role in a recruitment services
business. Over the next month, Derek will continue to oversee the finance
function in a planned handover with his successor, Martin Wright. Martin has
been working with Business Direct for the last five months and has been
instrumental in the relocation of the finance department from Teddington to
Rugby. Derek will step down from the Board today as Finance Director. The Board
thanks Derek for his valued contribution and wishes him all the best in his new
role. Martin Wright has held senior financial roles in a number of significant
businesses, including Business Post and ICL Fujitsu. The Board is also being
strengthened today with the appointment of Martyn Wilson as Managing Director of
the Specialist Division. Martyn has substantial logistics experience working
with Business Post and TNT. Martyn will replace David Whitaker who resigns from
the Board today. The Board thanks David for all his hardwork and contribution in
developing the Specialist business.
STRATEGIC REVIEW
Following my appointment as Chief Executive, I carried out a detailed review of
the business. The principal conclusions of my review, which were adopted by the
Board in December 2006, were to broaden the ParcelXchange business and expand
the specialist business.
It is proposed to broaden the ParcelXchange business beyond the field engineer
market into larger markets, initially field-based personnel in a range of
businesses, such as pharmaceuticals and cosmetics, as well as certain
engineering/support marketing personnel that Business Direct already serves. In
addition, from mid-2007, it is proposed to roll-out modular ParcelXchanges,
which are more flexible than a standard ParcelXchange, initially replacing those
ParcelXchanges that are close to capacity. By the end of 2010, it is proposed
that Business Direct will have approximately 10,000 ParcelXchange lockers in 500
- 600 locations. In due course, once the ParcelXchange business is cash
generative, ParcelXchanges would be ideally suited to provide the infrastructure
for both a B2C and a mail business, areas in which I have experience of
successful development at Business Post.
It is also proposed to build on the specialist business, in particular in the
areas of two man delivery and technical/swap-out. It is intended to take
advantage of relationships with ParcelXchange and In-Boot customers to offer a
complete service for the computer, engineering and consumer electronic sectors.
Additionally, new services will be added in response to customer demand.
OUTLOOK
In the announcement of the placing on 14 December 2006, it was stated that the
Directors anticipate that the new investment in ParcelXchange will result in
continued losses in the short term. That remains the case. However, as in
December 2006, the Directors remain optimistic about the prospects of the Group
over the medium term.
Paul Carvell
Chief Executive 28 March 2007
GROUP PROFIT AND LOSS ACCOUNT
Unaudited Audited
12 months Year
ended ended
31 December 31 December
2006 2005
Total Total
#000 #000
Turnover 1 14,639 13,511
Cost of sales (9,641) (9,769)
--------------- ---------------
Gross profit 4,998 3,742
Administrative expenses (6,589) (6,240)
Other income 52 117
--------------- ---------------
Operating loss (1,539) (2,381)
--------------- ---------------
Profit on the sale of
investments - 15
Exceptional items (422) (459)
--------------- ---------------
(1,961) (2,825)
Interest receivable 7 17
Interest payable and
similar charges (265) (175)
--------------- ---------------
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (2,219) (2,984)
Taxation - -
--------------- ---------------
LOSS FOR THE
PERIOD (2,219) (2,984)
=============== ===============
LOSS PER SHARE
Basic 2 (6.3)p (9.5)p
Diluted 2 (6.3)p (9.5)p
The operating loss for the year arises from the Group's continuing operations.
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
There were no recognised losses or gains other than the loss for the period/
year.
GROUP BALANCE SHEET
Unaudited Audited
31 31
December December
2006 2005
Notes #000 #000
Fixed Assets
Intangible assets 2,049 2,158
Tangible assets 2,418 2,191
--------------- ---------------
4,467 4,349
--------------- ---------------
Current Assets
Debtors 3,488 2,980
Cash at bank and in hand 138 294
--------------- ---------------
3,626 3,274
Creditors: Amounts falling
due within one year 5,305 2,700
--------------- ---------------
Net current(liabilities)/
assets (1,679) 574
--------------- ---------------
Total assets less current
liabilities 2,788 4,923
Creditors: Amounts falling
due after more than one year 3,239 3,362
--------------- ---------------
(451) 1,561
Provisions for liabilities
and other charges Government
grants 101 116
--------------- ---------------
Net (liabilities)/
assets (552) 1,445
=============== ===============
Capital and reserves
Called up share capital 869 763
Share premium account 5,142 5,025
Profit and loss account (6,563) (4,343)
--------------- ---------------
Shareholders'
(deficit)/funds 3 (552) 1,445
=============== ===============
GROUP STATEMENT OF CASHFLOWS
Unaudited
12 Year
months ended ended
31 December 31 December
2006 2005
Notes #000 #000
Net cash outflow from
operating activities 4 (629) (2,962)
--------------- ---------------
Returns on investments and servicing of finance
Interest received 6 17
Interest paid (265) (176)
--------------- ---------------
(259) (159)
--------------- ---------------
Capital expenditure
Payments to acquire tangible fixed assets (687) (1,268)
Sale of investment - 20
--------------- ---------------
(687) (1,248)
--------------- ---------------
Acquisitions and disposals
Purchase of business - (338)
--------------- ---------------
- (338)
--------------- ---------------
Net cash outflow before the management
of liquid resources and financing (1,575) (4,707)
Financing
Issue of ordinary shares 106 227
Share premium on issue of equity share capital 117 1,003
New long term loans (200) 2,300
Factoring debt/invoice discounting 1,546 401
Payment of contingent consideration (150) (89)
--------------- ---------------
1,419 3,842
--------------- ---------------
--------------- ---------------
Decrease in cash (156) (865)
--------------- ---------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Unaudited
12
months Year
ended ended
31 December 31 December
2006 2005
#000 #000
Decrease in cash in the period (156) (865)
Net cash outflow from debt financing (1,346) (2,612)
Contingent consideration
on acquisition of businesses 150 (358)
--------------- ---------------
Change in net funds (1,352) (3,835)
Net debt at 1 January 2006 (3,956) (121)
--------------- ---------------
Net debt at 31 December 2006 (5,308) (3,956)
=============== ===============
NOTES TO THE SECOND INTERIM FINANCIAL STATEMENTS
1 Turnover
Turnover and loss before taxation were all derived from the Group's principal
activities and arose principally in the United Kingdom.
Unaudited
12 Year
months ended ended
31 December 31 December
2006 2005
#'000 #'000
Turnover
Parcel Xchange Division Parcel Xchange 4,032 1,704
Other 2,856 2,876
--------------- ---------------
6,888 4,580
Specialist Division 7,751 8,931
--------------- ---------------
14,639 13,511
=============== ===============
2 Loss per ordinary share
The loss per ordinary share is based on the losses for the period of #2,219,000
(12 months ended 31 December 2005: #2,984,000) and the weighted average number
of shares in issue during the period of 35,093,075 (12 months ended 31 December
2005: 31,372,653).
The loss for the period and the weighted average number of ordinary shares for
calculating the diluted loss per share for the 12 months ended 31 December 2006
are identical to those used for the basic loss per share. This is because the
outstanding share options and warrants would have the effect of reducing the
loss per ordinary share and would therefore not be dilutive under the terms of
Financial Reporting Standard No 22 (FRS22).
3 Reconciliation of movement in group shareholders' funds
for the period to 31 December 2006
Unaudited
12 months ended
31 December 2006
Equity Shareholders' Funds #000
Loss for the period (2,219)
New equity shares issued 106
Premium on new equity shares issued 117
Net addition to shareholders' funds (1,996)
Opening equity shareholders' funds 1,445
------------
Closing equity shareholders' funds (551)
------------
Non-equity shareholders' funds #000
Opening non-equity shareholders' funds 945
Closing non-equity shareholders' funds 945
------------
Total Shareholders' Funds 394
============
4 Reconciliation of operating loss to net cash flow from operating activities
Unaudited Year
12 months ended ended
31 December 31 December
2006 2005
#000 #000
Operating loss (1,539) (2,381)
Depreciation of tangible fixed assets 458 343
Amortisation of goodwill 113 104
Amortisation of government grants (15) (15)
Increase in debtors (508) (1,414)
Increase in creditors 1,284 860
Costs of fundamental restructuring (422) (459)
--------------- ---------------
Net cash outflow from operating
activities (629) (2,962)
=============== ===============
5 Analysis of net movement in net funds
1 January Cash flow 31 December
2006 2006
#000 #000 #000
Cash at bank and in hand 294 (156) 138
Bank loan (2,300) 200 (2,100)
Factoring debt (544) (1,546) (2,090)
Director's loan (192) - (192)
Contingent consideration (269) 150 (119)
Preference shares (945) - (945)
------------- ----------- -----------
(3,956) (1,352) (5,308)
------------- ----------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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