24th Nov 2006 07:00
Blueheath Holdings PLC24 November 2006 For Immediate Release 24 November 2006 Blueheath Holdings plc ("Blueheath" or the "Company") Interim Results Blueheath is a delivered grocery wholesaler using sophisticated, proprietarytechnology to offer a service advantage over established players in the £16.4bngrocery wholesale sector. The Company today announces its Interim results forthe six months ended 2 September 2006. Interim Results - Key Points • Sales up 48% to £77.2 million • Operating loss £3.6 million (2005 - £2.3 million) after exceptional costs of £1.0 million • Cash resources £7.0 million after recent fundraising • Strategic review complete by new management and resulting actions being implemented Commenting on the results and prospects, Richard Rose, Chairman, said: Clearly these results are unsatisfactory. The new Board believe that the actionsbeing implemented will result in a material improvement in the shortest possibletime For further details:Blueheath Holdings plc Richard Rose, Chairman Tel: 07836 250474 Buchanan Communications Mark Edwards / Nicola Cronk / Ben Romney Tel: 020 7466 5000 Chairman's Statement Blueheath is pleased to announce its interim results for the six months ended 2September 2006. Sales for the six month period ending 2 September 2006 were £77.2 million (27August 2005 - £52.3 million), an improvement of 48%. Operating loss was £3.6 million (2005 - £2.3 million). Gross margins were 6.12%(2005 - 6.02%). The operating loss included exceptional costs of £1.0 millionrelating to the closure of our Tamworth warehouse and restructuring thebusiness. Following the cash raising in August 2006 the Company's cash resources at the 2September 2006 comprised: a net overdraft of £0.2 million, £3.1 million of cashdeposits held against tobacco credit, and £4.1 million of un-drawn invoicediscounting facilities. Business Review On 13 September 2006 at our AGM, I referred to the logistics restructuringinstigated by the previous management, and to the strategic review being carriedout by the new management team appointed on 1 September 2006. Detailed below isan update on these initiatives: Logistics Restructure The logistics restructure involved the closure of the Tamworth site, with thetransfer of volume to the company's existing operations in the North West andSouth East. The objective of this move was to reduce logistics costs. On undertaking a review of the completed project the new management team hasconcluded that the move did not deliver the projected savings and is at bestcost neutral. As detailed in the AGM statement, whilst the transfer of volume to Wrexham wassuccessful, the move to Thurrock resulted in a drop in customer service with aresultant loss of sales (albeit temporary). Strategic Review The strategic review of the business is now complete. The review has identifiedthe primary contributors to the current operational losses as well as theactions required to deliver a profitable operation. The key areas included: •Unprofitable accounts •An expensive delivery model •Inappropriate pricing architecture •High central costs •Over-complicated buying model Accordingly our recovery plan is focused in the following areas: - •We have simplified our Buying and Sales operation, through forging a strategic partnership with the Key Lekkerland (KL) buying group. •Our brand offering will be enhanced through the introduction of a symbol group facia (Keystore). •Our ability to win national contracts will be enhanced through leveraging the skills of the KL group. •KL members will deliver to our customers outside of our own delivered area. The resulting cost saving in logistics will more than offset the loss in sales as all such customers were providing us with a negative contribution. •Our in-house sales teams will focus on growth through our delivered wholesale bases in the South East and North West of England. •A new pricing structure is being implemented - one that rewards customer loyalty. •We are reducing our staffing overhead across all areas of the business. Once the recovery plan is complete, we will seek to grow the business throughfurther acquisitions. Management Our new Chief Executive Mark Aylwin brings more than 20 years of strategic andoperational experience in this sector and various new executive appointments areadding further strength to the team. Current trading Notwithstanding the planned loss of business from unprofitable customers,current sales activity is satisfactory as service levels have been restoredthrough our Thurrock depot. CTM in the North West is trading particularly welland remains very profitable. This performance is providing the benchmark for therest of the business. All the recovery actions detailed above are currently being implemented and weexpect to see the financial benefits shortly. Whilst the result of some actionsare within our control and therefore have predictable outcomes, others are notand we must therefore reserve judgement on the exact quantum and timing of theachieved benefits. In total, the actions are planned to take us through breakeven into profit during the first quarter of 2007. We will be closely monitoringthe results over the coming months. Outlook As mentioned above, current sales activity, in the context of our new strategicdirection, is satisfactory. The majority of our costs are variable and thisgives me confidence that the identified savings can be realised. There is a definite opportunity in the market to build the business oncestability has been achieved and so, at this juncture, I'm feeling confidentabout future prospects. Richard Rose Chairman 24 November 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)RESULTS FOR THE SIX MONTHS ENDED 2 SEPTEMBER 2006 26 weeks 26 weeks 53 weeks ended ended ended 2 September 27 August 4 March 2006 2005 2006 Note £'000 £'000 £'000 Turnover 77,152 52,290 132,255 Cost of sales (72,429) (49,142) (124,688) Gross profit 4,723 3,148 7,567 Distribution costs (4,522) (3,098) (7,450)Administrative expensesGoodwill amortisation (130) (40) (140)Share option charges (27) (44) (79)Operating exceptionals (977) - -Other (2,628) (2,234) (5,344) (8,284) (5,416) (13,013) Operating (loss) (3,561) (2,268) (5,446) Interest receivable and 65 280 398similar incomeInterest payable and similar (280) (37) (233)charges Loss on ordinary activities (3,776) (2,025) (5,281)before taxation Tax on loss on ordinary - - -activities Retained loss for the (3,776) (2,025) (5,281)financial period Loss per share - basic and 2 (6.8) (4.5) (11.7)diluted (pence) All activities are derived from continuing operations. There are no recognised gains or losses for the current financial period andpreceding financial period other than as stated in the profit and loss account. CONSOLIDATED BALANCE SHEET (UNAUDITED)AT 2 SEPTEMBER 2006 2 September 27 August 4 March 2006 2005 2006 Note £'000 £'000 £'000FIXED ASSETSIntangible assets 4,983 2,177 5,094Tangible assets 802 275 873 5,785 2,452 5,967 CURRENT ASSETSStocks 6,107 3,018 5,349Debtors 15,895 11,416 14,849Current investments 3 3,063 8,200 3,005Cash at bank and in hand 898 4,306 900 25,963 26,940 24,103 CREDITORS: amounts falling duewithin one year (17,697) (13,900) (17,191) NET CURRENT ASSETS 8,266 13,040 6,912 TOTAL ASSETS LESS CURRENTLIABILITIES 14,051 15,492 12,879 CREDITORS: amounts falling dueafter more than one year (333) - (380) NET ASSETS 13,718 15,492 12,499 CAPITAL AND RESERVESCalled up share capital 720 455 457Share premium account 27,858 22,926 23,152Share option reserve 185 124 159Profit and loss account (32,919) (25,887) (29,143)Merger reserve 17,874 17,874 17,874 EQUITY SHAREHOLDERS' FUNDS 8 13,718 15,492 12,499 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)RESULTS FOR THE SIX MONTHS ENDED 2 SEPTEMBER 2006 26 weeks 26 weeks 53 weeks ended ended ended 2 September 27 August 4 March 2006 2005 2006 Note £'000 £'000 £'000 Net cash outflow from operations 6 (3,480) (703) (9,323) Returns on investments and servicing offinanceInterest paid (280) (37) (233)Interest received 65 280 398 Net cash inflow (outflow) from returnson investment and servicing of finance (215) 243 165 TaxationUK corporation tax paid - - (333) Net cash outflow from taxation - - (333) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (112) (34) (125)Sale of tangible fixed assets 13 - - Net cash outflow from capitalexpenditure and financial investment (99) (34) (125) AcquisitionsPurchase of subsidiary undertakings (19) (5,619) (8,635)Net cash acquired with subsidiary - 1,261 1,261undertakings Net cash outflow from acquisitions (19) (4,358) (7,374) Net cash outflow before management ofliquid resources and financing (3,813) (4,852) (16,990) Management of liquid resources(Increase) / Decrease in short term (58) (3,100) 2,095deposits FinancingIssue of ordinary share capital (net of 4,969 5,893 6,121issue costs)Repayment of finance leases - - (570)Bank loan (repaid) / drawn down (1,305) - 3,368Finance leases repaid (61) (27) - Net cash inflow from financing 3,603 5,866 8,919 (Decrease) in cash in the period 7 (268) (2,086) (5,976) 1. Basis of preparation The financial information has been prepared in accordance with the policies setout in the statutory financial statements of Blueheath Direct Limited for the 53weeks ended 4 March 2006. These interim financial statements do not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. Resultsfor the six month periods ended 2 September 2006 and 27 August 2005 have notbeen audited. The results for the 53 weeks ended 4 March 2006 have beenextracted from the statutory financial statements of Blueheath Holdings plc. Thefinancial statements for the 53 weeks ended 4 March 2006 have been filed withthe Registrar of Companies and upon which the auditors reported withoutqualification. 2. Loss per share Basic and diluted loss per ordinary share has been calculated by dividing theloss after taxation for the periods as shown in the table below. 26 weeks 26 weeks 53 weeks ended ended ended 2 September 27 August 4 March 2006 2005 2006 Losses (£'000) (3,776) (2,025) (5,281)Weighted average number of shares 55,401,584 44,578,163 45,147,626 The Company had ordinary shares in issue of 71,988,122 as of 2 September 2006. FRS14 requires presentation of diluted EPS when a company could be called uponto issue shares that would decrease net profit or increase net loss per share.For a loss making company with outstanding share options, net loss per sharewould only be increased by the exercise of out of the money options. Since itseems inappropriate to assume that option holders would act irrationally andthere are no other diluting future share issues, diluted EPS equals basic EPS. 3. Current asset investments The group has £3.1m (26 March 2006 : £3.0m; 27 August 2005 : £8.2m) of shortterm deposits with Lloyds Commercial Finance Limited. This deposit is restrictedas it is held by Lloyds Commercial Finance Limited as security for guarantees tosuppliers for the provision of credit. 4. Share capital and share premium Blueheath Holdings plc ("the Company") incorporated on 4 June 2004 with 1ordinary share of £0.01. Subsequently it effected a group reconstruction inorder to acquire, on a share for share basis, Blueheath Direct Limited. As partof this re-organisation the Company issued 25,768,399 ordinary shares. On 19 July 2004 the Company placed 15,289,256 new ordinary shares and obtainedadmission for the entire share capital of the Company to the AlternativeInvestment Market ("AIM") of the London Stock Exchange. The placing raised£16,950,582 being £152,893 of share capital and £16,797,689 of share premiumafter deduction of £1,549,418 in respect of costs associated with the raising ofequity. Share capital and share premium (continued) On 8 April 2005 the Company placed 3,870,970 new ordinary shares that raised£38,709 share capital and £5,751,297 of share premium after the deduction of£209,996 in respect of costs associated with the raising of equity. The proceedsfrom this placing were used to fund the acquisition of CTM Wholesale Limited. 179,789 staff share options were exercised raising £1,797 share capital and£105,409 share premium. On 26 June 2006, the Company placed 26,250,000 new ordinary shares raising£4,968,327, being £262,500 of share capital and £4,705,827 of share premiumafter the deduction of £281,673 in respect of costs associated with the raisingof equity. The proceeds from this placing will be used to fund the restructuringof the business. 5. Operating exceptional costs 26 weeks 26 weeks 53 weeks ended ended ended 2 September 27 August 4 March 2006 2005 2006 £'000 £'000 £'000 Acquisition integration costs - - 382Restructuring costs 977 - - 977 - 382 6. Reconciliation of operating loss to operating cash outflow 26 weeks 26 weeks 53 weeks ended ended ended 2 September 27 August 4 March 2006 2005 2006 £'000 £'000 £'000 Operating loss (3,561) (2,268) (5,446)Goodwill amortisation charge 130 40 140Depreciation charge 180 173 372FRS 20 share option movement 27 44 79(Profit) on disposal of fixed assets (10) - -(Increase) / decrease in stocks (758) 1,570 2,433(Increase) decrease in debtors (1,046) (2,129) 154Increase (decrease) in creditors 1,558 1,867 (7,055) Net cash outflow from operating (3,480) (703) (9,323)activities 7. Analysis and reconciliation of net debt 4 March Cash 2 September 2006 flow 2006 £'000 £'000 £'000 Cash at bank and in hand 900 (2) 898Overdrafts (854) (266) (1,120) (268) Current asset investments 3,005 58 3,063Debt due within one year (6,723) 1,716 (5,007)Finance leases (501) 61 (440) Net debt (4,173) 1,567 (2,606) 8. Reconciliation of movements in group shareholders' (deficit) 2 September 27 August 4 March 2006 2005 2006 £'000 £'000 £'000 Loss for the financial period (3,776) (2,025) (5,281)New shares issued 5,250 6,103 6,339Share issue costs (282) (210) (218)Movement in share option reserve 27 44 79 Net increase in shareholders' funds 1,219 3,912 919Opening shareholders' funds 12,499 11,580 11,580 Closing shareholders' funds 13,718 15,492 12,499 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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