RNS Number:6408M
Blueheath Holdings PLC
24 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, proprietary
technology to offer a service advantage over established players in the #16.4bn
grocery wholesale sector. The Company today announces its Interim results for
the 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 actions
being implemented will result in a material improvement in the shortest possible
time
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 2
September 2006.
Sales for the six month period ending 2 September 2006 were #77.2 million (27
August 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 million
relating to the closure of our Tamworth warehouse and restructuring the
business.
Following the cash raising in August 2006 the Company's cash resources at the 2
September 2006 comprised: a net overdraft of #0.2 million, #3.1 million of cash
deposits held against tobacco credit, and #4.1 million of un-drawn invoice
discounting facilities.
Business Review
On 13 September 2006 at our AGM, I referred to the logistics restructuring
instigated by the previous management, and to the strategic review being carried
out by the new management team appointed on 1 September 2006. Detailed below is
an update on these initiatives:
Logistics Restructure
The logistics restructure involved the closure of the Tamworth site, with the
transfer of volume to the company's existing operations in the North West and
South East. The objective of this move was to reduce logistics costs.
On undertaking a review of the completed project the new management team has
concluded that the move did not deliver the projected savings and is at best
cost neutral.
As detailed in the AGM statement, whilst the transfer of volume to Wrexham was
successful, the move to Thurrock resulted in a drop in customer service with a
resultant loss of sales (albeit temporary).
Strategic Review
The strategic review of the business is now complete. The review has identified
the primary contributors to the current operational losses as well as the
actions 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 through
further acquisitions.
Management
Our new Chief Executive Mark Aylwin brings more than 20 years of strategic and
operational experience in this sector and various new executive appointments are
adding 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 restored
through our Thurrock depot. CTM in the North West is trading particularly well
and remains very profitable. This performance is providing the benchmark for the
rest of the business.
All the recovery actions detailed above are currently being implemented and we
expect to see the financial benefits shortly. Whilst the result of some actions
are within our control and therefore have predictable outcomes, others are not
and we must therefore reserve judgement on the exact quantum and timing of the
achieved benefits. In total, the actions are planned to take us through break
even into profit during the first quarter of 2007. We will be closely monitoring
the results over the coming months.
Outlook
As mentioned above, current sales activity, in the context of our new strategic
direction, is satisfactory. The majority of our costs are variable and this
gives me confidence that the identified savings can be realised.
There is a definite opportunity in the market to build the business once
stability has been achieved and so, at this juncture, I'm feeling confident
about 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 expenses
Goodwill 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 65 280 398
similar income
Interest 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 and
preceding 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 #'000
FIXED ASSETS
Intangible assets 4,983 2,177 5,094
Tangible assets 802 275 873
5,785 2,452 5,967
CURRENT ASSETS
Stocks 6,107 3,018 5,349
Debtors 15,895 11,416 14,849
Current investments 3 3,063 8,200 3,005
Cash at bank and in hand 898 4,306 900
25,963 26,940 24,103
CREDITORS: amounts falling due
within one year (17,697) (13,900) (17,191)
NET CURRENT ASSETS 8,266 13,040 6,912
TOTAL ASSETS LESS CURRENT
LIABILITIES 14,051 15,492 12,879
CREDITORS: amounts falling due
after more than one year (333) - (380)
NET ASSETS 13,718 15,492 12,499
CAPITAL AND RESERVES
Called up share capital 720 455 457
Share premium account 27,858 22,926 23,152
Share option reserve 185 124 159
Profit 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 of
finance
Interest paid (280) (37) (233)
Interest received 65 280 398
Net cash inflow (outflow) from returns
on investment and servicing of finance (215) 243 165
Taxation
UK corporation tax paid - - (333)
Net cash outflow from taxation - - (333)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (112) (34) (125)
Sale of tangible fixed assets 13 - -
Net cash outflow from capital
expenditure and financial investment (99) (34) (125)
Acquisitions
Purchase of subsidiary undertakings (19) (5,619) (8,635)
Net cash acquired with subsidiary - 1,261 1,261
undertakings
Net cash outflow from acquisitions (19) (4,358) (7,374)
Net cash outflow before management of
liquid resources and financing (3,813) (4,852) (16,990)
Management of liquid resources
(Increase) / Decrease in short term (58) (3,100) 2,095
deposits
Financing
Issue of ordinary share capital (net of 4,969 5,893 6,121
issue costs)
Repayment of finance leases - - (570)
Bank loan (repaid) / drawn down (1,305) - 3,368
Finance 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 set
out in the statutory financial statements of Blueheath Direct Limited for the 53
weeks ended 4 March 2006.
These interim financial statements do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985. Results
for the six month periods ended 2 September 2006 and 27 August 2005 have not
been audited. The results for the 53 weeks ended 4 March 2006 have been
extracted from the statutory financial statements of Blueheath Holdings plc. The
financial statements for the 53 weeks ended 4 March 2006 have been filed with
the Registrar of Companies and upon which the auditors reported without
qualification.
2. Loss per share
Basic and diluted loss per ordinary share has been calculated by dividing the
loss 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 upon
to 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 share
would only be increased by the exercise of out of the money options. Since it
seems inappropriate to assume that option holders would act irrationally and
there 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 short
term deposits with Lloyds Commercial Finance Limited. This deposit is restricted
as it is held by Lloyds Commercial Finance Limited as security for guarantees to
suppliers for the provision of credit.
4. Share capital and share premium
Blueheath Holdings plc ("the Company") incorporated on 4 June 2004 with 1
ordinary share of #0.01. Subsequently it effected a group reconstruction in
order to acquire, on a share for share basis, Blueheath Direct Limited. As part
of 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 obtained
admission for the entire share capital of the Company to the Alternative
Investment 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 premium
after deduction of #1,549,418 in respect of costs associated with the raising of
equity.
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 proceeds
from 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 premium
after the deduction of #281,673 in respect of costs associated with the raising
of equity. The proceeds from this placing will be used to fund the restructuring
of 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 - - 382
Restructuring 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 40 140
Depreciation charge 180 173 372
FRS 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) 154
Increase (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) 898
Overdrafts (854) (266) (1,120)
(268)
Current asset investments 3,005 58 3,063
Debt 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 6,339
Share issue costs (282) (210) (218)
Movement in share option reserve 27 44 79
Net increase in shareholders' funds 1,219 3,912 919
Opening 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 Exchange
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