4th May 2005 07:01
Blueheath Holdings PLC04 May 2005 Immediate Release 4 May 2005 Blueheath Holdings plc ("Blueheath" or the "Company") Preliminary Results "Delivering sustainable growth" Blueheath is a national delivered wholesaler using sophisticated, proprietarytechnology to offer a substantial cost advantage over established players in the£16.4bn grocery wholesale sector. The Company today announces preliminaryresults for the year ended 26th February 2005. The Company completed a successful flotation on AIM in July 2004. At the issueprice of 121 pence per share, the Company raised £18.5 million (before expenses)through an institutional placing. Final Results - Key Points • Turnover increased 12% to £70.2m (2004 - £62.7m) • Operating loss before exceptionals reduced by 27% to £4.86m (2004 - £6.65m). Operating loss after exceptionals(1) reduced by 20% to £5.34m (2004 - £6.65m) • Cash deposits and facilities at year end of £15.1m with all substantial debt repaid • Met or exceeded all operational targets on order fulfilment, on-time delivery and stock holding • Strong pipeline of new business since year end taking annualised run rate to over £100m: - Confirmation of four wins previously announced in March, including Park Garages - Blueheath today announces two further account wins, Highway Stops and Gala Casinos - Strong pipeline of accounts at trial and tender stage • £4.9m acquisition of CTM Wholesale in April 2005, adding up to £40m of turnover to the enlarged business - initial integration progressing well. • Higher quality multiple accounts now amounting to over 50% of turnover (2003: 35%) • Gross margins improved to 5.9% (2003: 5.0%) reflecting greater buying volumes (1) Exceptional items of £0.48m (2004 - nil) comprising expenses associated withflotation and financial restructuring Commenting on the results and prospects, Douglas Gurr, Chief Executive, said: "The Group has made good progress in growing the business over the past year.With continued success in securing important new contracts and the successfulconclusion of our first acquisition, we expect to see strong growth in the yearahead as we progress towards breakeven." For further details: Blueheath Holdings plcDouglas Gurr, Chief Executive Tel: 020 7689 2455Simon Mindham, Finance Director Tel: 020 7689 2464 Buchanan Communications Tel: 020 7466 5000Mark Edwards / Nicola Cronk / Tom Carroll Notes to editors: Blueheath is a wholesaler of groceries to convenience stores in the £16.4billion UK grocery wholesale sector. The Group sells and arranges thedistribution of approximately 3,100, primarily ambient, product lines to over1,600 independent and multiple retail and leisure outlets within the UK.Blueheath's innovative technology-driven business model is founded on the basicprinciples of stripping out unnecessary supply chain costs and overheads andpassing on financial and operational benefits to customers. This enablesBlueheath to offer customers a wholesale delivery service of groceries at closeto Cash & Carry prices. Blueheath achieves cost savings in three ways: 1. Operating on low stock levels through the use of sophisticated, proprietary stock prediction technology. 2. Using spare distribution capacity through its partnership with British Bakeries Ltd and other operators. 3. The extensive use of process automation to minimise administration costs. CHAIRMAN'S STATEMENT Final Results Blueheath is pleased to announce its maiden final results for the year ended26th February 2005 following its flotation on AIM on 20 July 2004. Turnover for the 12 months ending 26th February 2005 increased by 12% to £70.2m(2004 - £62.7m). Operating losses before exceptionals reduced by 27% to £4.86m (2004 - £6.65m).Gross margins improved to 5.9% (2004 - 5.0%) and total overhead costs beforeexceptional costs as a percentage of sales reduced from 15.7% to 12.8%.Exceptional costs in the year were £0.48m (2004 - £nil) and the operating losswas £5.34m (2004 - £6.65m). As of 26th February the company had repaid all substantial debt and held a totalof £15.1m in cash deposits and facilities, comprising £11.1m of cash and cashheld as current asset investments, and £4.0m of un-drawn invoice discountingfacilities. Operational Performance Operationally the company has performed well over the period, continuing to meetor exceed its key targets. Order fulfilment improved to 97.4% for the year (2004 - 96.9%), a particularlypleasing result as it covered an extensive period over Summer 2004 when supplierinbound performance fell well below 90%. On-time delivery improved to 98.7% forthe year (2004 - 97.8%) reflecting a number of process changes to improve theinformation flow and a good performance by our delivery partners. Total averagestock days - a key measure of the effectiveness of the Blueheath operating model- increased slightly to 5.8 for the year (2004 - 4.8) reflecting periods ofhigher buffering to manage the roll out of significant new customer accounts. Atthe same time, variable distribution cost per case - the key business costmeasure - reduced by 13.4% through the implementation of a series of processimprovements and through the effect of greater volumes leading improvedutilisation rates. Buying margins improved to 5.9% (2004 - 5.0%) reflecting theeffect of greater buying volumes. Business growth is the key factor in driving operational leverage throughimproved buying terms, further improvements in the efficiency of picking anddelivery operations, and in contributing to fixed warehouse and central overheadcosts. The business continues to have ample capacity for further expansion. New Account Wins The business took a strategic decision some two years ago to expand our offerfrom our core customer base of individual independent retailers to multipleaccount chains. This strategy has paid excellent dividends with multipleaccounts now amounting to over 50% of the Blueheath business (2004 - 35%). In early March, the company announced four new account wins which we are todaypleased to confirm as Park Garages (a Grocer Top 50 leading independentretailer), leisure operator PGL, Intervend - the company's first food serviceoperator, and a substantial second forecourt operator. These wins were offset byone loss, in January 2005, of forecourt operator Snax 24. The Company is today delighted to announce two further account wins: leadingforecourt retailer Highway Stops, and leisure operator Gala Casinos. These sixaccounts are being progressively rolled out and, when fully operational, willtake the run rate of the core business to over £100m. There is in addition a strong forward pipeline of new business with some 8accounts currently at trial or tender stage with a combined value ofapproximately £90m. Historically, the Company has managed to convert 30- 40% ofsuch prospects. Acquisition of CTM Wholesale Given the importance of overall business growth, the Company took theopportunity to supplement its organic growth through the acquisition in April2005 of CTM Wholesale Limited ("CTM"). CTM is a traditional delivered wholesalebusiness to the grocery wholesale market and also has a small cash and carryoperation. It operates from a single warehouse depot located in Wrexham, Walesand is expected to report turnover of £45.0 million for the year ending 2ndApril 2005, giving a proforma 2004-05 turnover for the Enlarged Group of some£115m. CTM represents an opportunity to supplement the organic growth of the Companythrough the acquisition of a traditional regional delivered wholesalers. TheDirectors anticipate the Enlarged Group will be able to achieve improvedoperating margins through combining buying volumes, the application ofBlueheath's technology and business processes to the CTM operation, and theintegration of central overheads. Whilst it is still very early days, the reaction from both staff and customershas been extremely positive, and the early work on integration is progressingwell. Channel Management A further good example of the use of Blueheath's technology is the "ChannelManagement" initiative, launched with nine leading suppliers in Summer 2004. Theinitiative, which includes activities to drive sales of new products, executionof retail promotions and sharing of supplier and retailer best practice, isdelivering impressive results. Recent retailer promotions achieved salesuplifts of between 245% and 770% during promotion and on average 66% postpromotion. A new product launch achieved just short of 70% retailer distributionin the first 2 weeks. The concept is about using the power of information to manage the product supplyto the convenience retail sector with the same precision as the multiples. Allsuppliers have access to a real-time online system so they can track their salesand target product to specific stores at specific times. Channel Management brings the supplier and retailer closer together to thebenefit of all parties. Response from both store owners and suppliers such asNestle Rowntree, Masterfoods and United Biscuits has been excellent, reinforcingBlueheath's reputation for innovation in the industry. Company Background In four years since commencing its national rollout, Blueheath has created aunique national distribution network offering a next-day delivery service on afull range of goods to the UK's independent and multiple convenience market.Blueheath's operations were founded on the simple principle of stripping-outunnecessary supply chain costs in order to offer a full delivery service atclose to cash & carry prices. The Company has invested heavily in building the technology and infrastructurenecessary to support this unique national distribution network and is pursuing astrategy of business growth through the addition of new customer accounts tobuild the scale necessary to cover the fixed distribution and administrativeexpenses. A major event in the history of the Company was its successful completion of astock market listing on 20th July 2004 on the AIM market of the London StockExchange raising £18.5m before costs of £1.5m. The primary purpose of thelisting was to repay £1.8m of short-term debt and provide working capital tofund the further expansion of the business. Outlook Looking forward, the Company is well placed to grow both organically through newaccount wins and potentially through further tactical acquisitions oftraditional wholesalers which can be converted to the Blueheath model ofoperation. The Company has been successful in securing a number of new multipleaccounts since the end of the financial year and continues to pursue a healthypipeline of new business although the precise timing of new account wins isalways hard to predict and these accounts take some time to become fullyoperational. Whilst still at an early stage, the integration of CTM Wholesale isprogressing well, although it will take some time to realise the full benefitsfrom conversion to the Blueheath operating model. The Company is thereforeexpecting a year of strong growth combined with steady integration work as thebusiness progresses towards breakeven. Colin Smith Chairman 4 May 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT 52 weeks ended 26 February 2005 52 weeks ended 28 52 weeks ended 26 February 2005 February Before Operating 2004 operating exceptional Total Total exceptional items items Note £'000 £'000 £'000 £'000 TURNOVER 70,151 - 70,151 62,676 Cost of sales (66,017) - (66,017) (59,507) Gross profit 4,134 - 4,134 3,169 Distribution costs (5,027) - (5,027) (5,325)Administrative expenses (3,967) (478) (4,445) (4,494) OPERATING LOSS (4,860) (478) (5,338) (6,650) Interest receivable and similar income 253 - 253 -Interest payable and similar charges (1,142) - (1,142) (826) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (5,749) (478) (6,227) (7,476) Tax on loss on ordinary activities - - - - RETAINED LOSS FOR THE FINANCIAL PERIOD (5,749) (478) (6,227) (7,476) LOSS PER ORDINARY SHARE 1Basic and diluted (pence) (19.3) (41.0) CONSOLIDATED BALANCE SHEET 26 February 2005 Note 26 February 28 February 2005 2004 £'000 £'000 FIXED ASSETSTangible assets 229 220 CURRENT ASSETSStocks 1,125 788Debtors 5,968 3,971Current asset investments 5,100 -Cash at bank and in hand 6,027 - 18,220 4,759 CREDITORS: amounts falling due within one year (6,869) (5,232) NET CURRENT ASSETS (LIABILITIES) 11,351 (473) TOTAL ASSETS LESS CURRENT LIABILITIES 11,580 (253) CREDITORS: amounts falling dueafter more than one yearConvertible debt - (6,725) NET ASSETS (LIABILITIES) 11,580 (6,978) CAPITAL AND RESERVESCalled up share capital 414 182Share premium account 17,074 -Profit and loss account (23,782) (17,555)Other reserve 17,874 10,395 EQUITY SHAREHOLDERS' FUNDS (DEFICIT) 11,580 (6,978) CONSOLIDATED CASH FLOW STATEMENT 52 weeks ended 26 February 2005 Note 52 weeks 52 weeks ended 26 ended 28 February February 2005 2004 £'000 £'000 Net cash outflow from operating activities 2 (3,677) (6,899) Returns on investments and servicing of financeInterest paid (309) (129)Interest received 253 -Finance costs incurred in issue of other loans - (55) Net cash outflow from returns on investments andservicing of finance (56) (184) Capital expenditure and financial investmentPayments to acquire plant and equipment (311) (139)Sale of tangible fixed assets - 22 Net cash outflow from capital expenditure and financialinvestment (311) (117) Net cash outflow before management of liquid resourcesand financing (4,044) (7,200) Management of liquid resourcesIncrease in short term deposits (11,128) - FinancingIssue of ordinary share capital 17230 -Repayment of short term debt facility - 1,264Issue of convertible loans - 6,095Bank loan (1,841) - Net cash inflow from financing 15,389 7,359 (Decrease) increase in cash in the period 3 217 159 NOTES: 1. BASIC AND DILUTED LOSS PER ORDINARY SHARE The calculation of loss per ordinary share for the current year is based on theloss for the year of £6,227,000 (2004 - loss of £7,476,000) and the weightedaverage number of ordinary shares of 32,310,492 (2004 - 18,213,601). Thecompany had ordinary shares in issue of 41,418,022 as of 26 February 2005. FRS14 requires presentation of diluted earning per share where a company couldbe called upon to issue shares that would decrease net profit or increase netloss per share. For a loss making company with outstanding share options, thenet loss per share would be decreased by the exercise of options, and hence noadjustment has been made to the diluted loss per share as presented. 2. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS 52 weeks 52 weeks ended 26 ended 28 February February 2005 2004 £'000 £'000 Operating loss (5,338) (6,650)Depreciation 299 287Loss on sale of fixed assets 4 2Increase in debtors (1,997) (1,414)Increase in creditors 3,692 1,086Increase in stocks (337) (210) Net cash outflow from operating activities (3,677) (6,899) 3. ANALYSIS AND RECONCILIATION OF NET FUNDS (DEBT) At 26 At 1 March Cash Non-cash February 2004 flow movement 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand - 4 - 4Bank overdraft (218) 213 - (5) 217 Debt due after one year (6,725) - 6,725 -Debt due within one year (2,058) 1,841 - (217)Liquid resources - 11,128 - 11,128 Total net funds (debt) (9,001) 13,186 6,725 10,910 26 February 28 February 2005 2004 £'000 £'000 Increase in cash in the period 217 159Cash outflow from decrease in debt financing 1,841 (7,359)Cash outflow from increase in liquid resources 11,128 - Change in net debt resulting from cash flows 13,186 (7,200) (Decrease) increase in debt financing 6,725 (630) Change in net debt resulting from non cash flows 6,725 (630) Change in net debt 19,911 (7,830)Net debt at 1 March 2004 (9,001) (1,171) Net funds (debt) at 26 February 2005 10,910 (9,001) 4. POST BALANCE SHEET EVENTS On 14 April 2005, Blueheath holdings plc acquired the entire share capital ofCTM Wholesale Limited ("CTM") for up to £4.9 million in cash. CTM is atraditional delivered wholesale business to the grocery wholesale market andalso has a small cash and carry operation. It operates from a single warehousedepot located in Wrexham, Wales. Based on the audited financial accounts ofthat business for the year ended 4 April 2004, CTM Wholesale Limited reportedturnover of £47.9 million and made a profit of £0.4 million. Based on theDirectors' review of unaudited management accounts and forecasts for the yearending 2 April 2005, the Directors of Blueheath Holdings expect CTM to reportturnover of £45.0 million, operating profit of £0.5 million and net assets of£3.4 million. Of the total cash consideration, £3.9 million is payable on completion, withthe remaining £1.0 million paid into a retention account to be released on theanniversary of completion of the Acquisition dependent on, amongst othermatters, the net operating assets of CTM as at completion. In order to finance the Acquisition the Company raised £6,000,003.50 (beforeexpenses) through a vendor placing and cash placing of 3,870,970 new ordinaryshares ("New Ordinary Shares") by Evolution Securities (as agent for theCompany) with institutional investors (the "Placing"). Of the total cashconsideration payable by Blueheath, £3.9 million will be funded by the netproceeds of the vendor placing of 2,516,130 New Ordinary Shares, which will bepaid directly to the vendors. The balance of the cash consideration will besatisfied by the net proceeds of the cash placing of 1,354,840 New OrdinaryShares. The New Ordinary Shares represented approximately 9.34 per cent of the Company'sexisting issued share capital and approximately 8.54 per cent of the Company'sissued share capital following the Placing. The New Ordinary Shares rank paripassu in all respects with the existing ordinary shares of the Company. 5. These results have been extracted from the full accounts. 6. The financial information represents the first set of auditedinformation prepared by the Company. The accounts have been prepared usingmerger accounting principles and comparative figures have been prepared on thatbasis. The auditors have issued an unqualified report which did not contain astatement under section 232 (2) or (3) in the full accounts which will bedistributed to shareholders and delivered to the Registrar of Companies in duecourse. Further copies of the Preliminary Results are available at the Company'sRegistered Office: Blueheath Holdings PLC 132 Upper Street London N1 1QP This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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