22nd Jan 2007 16:03
Blueheath Holdings PLC22 January 2007 22nd January 2007 Blueheath Holdings PLC ("the Company") Update and Issue of Equity The Company announced the results of a strategic review on 24 November 2006. Thekey areas of focus were :- * unprofitable accounts; * an expensive delivery model; * inappropriate pricing architecture; * high central costs; and * overcomplicated buying model The Board is pleased to report that excellent progress has been made inremedying all of the areas detailed above and as a result the annualised levelof savings already achieved amounts to approximately £3.1 million. In additionthe gross margin improvement indicated from the results currently available forthe month of January 2007 would give rise to an annualised benefit in excess of£0.5 million with further margin benefits planned to materialise in February andMarch 2007. The Board is also pleased to report that service levels at theThurrock site have reached a level of over 97%. Although a lot of progress has been made, the update also indicated that whilstsome actions were within the Company's control and with predicable outcomes,others were not. This has proved to be the case as although the savingsindicated above are in line with the Board's original expectations, theresulting level of sales are at a lower level than that which was expected. Weare now focussed on growing profitable sales. The net result of all the factors set out above is that the Company is nowbeginning to record substantially reduced monthly losses and the currentexpectation is that monthly operating break even will now be achieved slightlylater, in the middle of the calendar year 2007, assuming that sales growth is inline with expectations. In order to ensure balance sheet strength is maintained, the Board has decidedto raise £3 million of equity capital. The Company therefore intends to issue60,000,000 ordinary shares of 1p each ("Subscription Shares") at a price of 5p.The Company has received commitments for the full amount of the SubscriptionShares from existing shareholders, principally Schroder Investment ManagementLimited and Smedvig Capital who currently own 21.24 per cent and 19.41 per cent.of the Company's current issued share capital. The Company intends to use the authority granted to it by Shareholders at theEGM held on 23 June 2006 to issue 3,599,822 Subscription Shares. A furtherannouncement about the issue of these Subscription Shares and application forsuch Subscription Shares to be admitted to trading on AIM will be made as soonas possible. The issue of the remaining Subscription Shares is conditional onthe approval of Shareholders at an Extraordinary General Meeting and a notice ofEGM will be despatched to Shareholders as soon as possible. Each of SchroderInvestment Management Limited, Smedvig Capital and the other subscribingshareholders have confirmed that they intend to vote in favour of allresolutions required to effect the issue of the 56,400,178 Subscription Shares. Richard Rose, executive Chairman commented "It is testament to the progress thathas been made by the new management team that the Company's working capitalrequirement has been readily secured from existing holders." ENDS For further information please contact: Richard Rose 07836 250 474Chairman This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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