DATE: 28th September 2006
Business Direct (BDG.L), the specialist provider of logistics solutions to the field services engineer market and developer of the ParcelXchange intelligent locker distribution system, announces significant progress in the half year to 30 June 2006. Paul Carvell, Chairman and Chief Executive, stated “In line with the Trading Update of 31 August 2006, EBITDA break-even is expected to be achieved on a monthly basis towards the end of 2006. ParcelXchange growth continues to be encouraging, with a strong pipeline of enquiries. Prospects for the other businesses remain positive; investment during the year in new sales people has seen an increase in the number of opportunities. The underlying operational cost base continues to be reduced, where possible. The Strategic Review of the business is currently underway, the results of which will be announced next month. This review will detail the future direction of the Company, together with the additional funding required to take the business forward. The quantum of funding required will be outlined in the Strategic Review. Enquiries: Business Direct Group plc 01788-821 200 Paul Carvell (Chief Executive) Derek O'Neill (Finance Director) Bankside Consultants Limited Charles Ponsonby 020-7367 8851 Notes for Editors: Business Direct is the leading specialist provider of logistics solutions to the field services engineer market and developer of the ParcelXchange intelligent locker distribution system. It provides innovative solutions to a blue-chip client base and has partnerships with global supply chain companies, such as DHL, Exel and TNT. Business Direct owns a national network of award-winning ParcelXchanges, providing a secure deposit and collection environment using sophisticated ATM technology with end-to-end track-and-trace. Over 300 ParcelXchanges, equating to over 4,000 individual lockers, are currently installed around the UK, largely at petrol stations and supermarkets. INTERIM STATEMENT In the half year to 30 June 2006, Business Direct made significant progress. Group pre-tax losses reduced by 41% whilst the turnover of ParcelXchange, its core business, almost tripled. Since the period end, I have been appointed Chief Executive, and the result of my strategic review will be announced next month. FINANCIAL REVIEW Turnover increased by 17% to £7.77m (2005: £6.64m). Of this, £1.88m (2005: £0.64m) related to the ParcelXchange product. The operating loss reduced to £0.63m (2005: £1.20m), following a significant increase in gross profit to £2.48m (2005: £0.63m). This was a result of increased sales and much improved gross margins of 31.9% (2005: 9.5%). However, administrative expenses increased to £3.11m (2005: £1.84m), largely due to the full period impact of the acquisition of Esprit In-Night Express (ANC) in March 2005 and the expansion of the sales team. With net interest payable increasing to £0.11m (2005: £0.05m), the pre-tax loss before goodwill amortisation was £0.70m (2005: £1.20m). This improvement reflected progress in growing the higher margin business of ParcelXchange and is in line with guidance given to the market on 31 August 2006. The pre-tax loss was £0.74m (2005: £1.25m). Following a nil tax charge, the basic and diluted loss per share improved to 2.14p (2005: 4.19p). No interim dividend is proposed. Net debt at 30 June 2006 totalled £4.38m (2005: £4.39m restated to comply with FRS 25 “Financial Instruments: Disclosure and Presentation”). BUSINESS REVIEW Business Direct is a specialist provider of logistics solutions to the field services engineer market. It has three Divisions: In-Night, Express and Technical. In-Night In-Night comprises ParcelXchange, Direct Vendor Trunking and Direct Engineer Delivery (“In-Boot”), providing logistics solutions for the final mile delivery. It provides innovative solutions to a blue-chip client base and has partnerships with global supply chain companies, such as DHL, EXEL and TNT. In the period, In-Night increased its turnover to £3.54m (2005: £1.81m). ParcelXchange Business Direct owns a national network of ParcelXchanges, providing a secure deposit and collection environment, using sophisticated technology with end-to-end track-and-trace. Customers rent ParcelXchange lockers for a fixed period of up to two years and pay a fixed weekly charge per locker. ParcelXchange represents the UK's largest network of intelligent drop boxes and the lockers are installed nationwide, typically at petrol stations and supermarkets, with an average drive time of just 15 minutes from an engineer’s home. In the period, Business Direct increased its ParcelXchanges to 300 from 279 and its individual lockers to approximately 4,300 from 3,900. The occupancy rate increased to 45% (2005: 39%). Direct Vendor Trunking & In-Boot Delivery 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. In-Boot is a service that provides direct delivery to engineers’ vehicles during the night and collects returned parts, enabling the field engineer to reduce stem mileage and increase productivity. During the period, progress was made on Direct Vendor Trunking, in particular with regard to new business gains. In-Boot lost some customers following substantial price increases in December 2005, but improved gross margins. Both products remain an important part of the Group’s product offering. Express Express provides a range of complementary distribution solutions to the same markets as the In Night Division. Principal service offerings include national next-day parcel delivery, same-day urgent delivery and international shipping. Express operates a central warehouse for clients, mainly in the hi-tech and electronic sectors. In the period, Express turnover was £3.24m (2005: £3.71m), reflecting principally the market downturn experienced across the express parcel sector. Technical Technical specialises in services for the field engineer market through a nationwide network of technicians, focusing primarily on the computer support sector. In the period, Technical turnover was £0.85m (2005: £1.13m). This reflected a streamlining of the product offering post the Concord acquisition in January 2005. BOARD A new Finance Director and a new Chairman were appointed from outside the Group in the period and a new Chief Executive was appointed subsequently. Derek O’Neill FCMA, aged 43, was appointed Finance Director on 13 June 2006. From October 2002 to January 2006, he was Finance Director of Deltron Electronics, a fully listed European electronics components distributor which was taken over by Abacus Group in January 2006. Prior to this, he spent 12 years in private equity-funded businesses MWP Communications and Admiral Homes. With effect from 4 September 2006, Paul Carvell, aged 51, was appointed Chief Executive. From February 2001 to December 2005, he was Chief Executive of Business Post Group, considerably expanding its express parcel business, successfully establishing it as the first mover and market leader in business mail in competition with the Royal Mail, and taking it into the FTSE 250. Previously, he was at Christian Salvesen as Board Director responsible for its Industrial Division, prior to which he held senior positions at a number of leading logistics and express parcel companies, including Penske, BET/Rentokil, TDG and TNT. From 13 June 2006, he has been Chairman of the Company, but it is intended that a replacement Chairman will be announced in due course. In line with the Trading Update of 31 August 2006, EBITDA break-even is expected to be achieved on a monthly basis towards the end of 2006. ParcelXchange growth continues to be encouraging, with a strong pipeline of enquiries. Prospects for the other businesses remain positive; investment during the year in new sales people has seen an increase in the number of opportunities. The underlying operational cost base continues to be reduced, where possible. The Strategic Review of the business is currently underway, the results of which will be announced next month. This review will detail the future direction of the Company, together with the additional funding required to take the business forward. The quantum of funding required will be outlined in the Strategic Review. Paul Carvell Chairman & Chief Executive 28 September 2006 GROUP PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 Total Total Total £ £ £ 2 7,762,408 6,645,000 13,511,421 Cost of sales (5,280,625) (6,011,186) (9,769,401) 2,481,783 633,814 3,742,020 Administrative expenses (3,112,182) (1,836,067) (6,123,423) (630,399) (1,202,253) (2,381,403) Profit on sale of investments - - 15,000 Exceptional items - - (459,024) (630,399) (1,202,253 (2,825,427) Net interest payable (113,500) (49,545) (158,535) (743,899) (1,251,798) (2,983,962) 6 - - - (743,899) (1,251,798) (2,983,962) 5 (2.14)p (4.19)p (9.51)p 5 (2.14)p (4.19)p (9.51)p Group Statement of Total Recognised Gains and Losses There were no recognised losses or gains other than the loss for the period/year. GROUP STATEMENT OF CASHFLOWS Unaudited Unaudited 6 months 6 months Year ended ended ended Notes 30 June 30 June 31 December 2006 2005 2005 £ £ £ Net cash outflow from operating activities 8 (150,535) (2,232,012) (2,961,994) Returns on investments and servicing of finance Interest received 4,514 10,888 16,714 Interest paid (118,014) (60,433) (175,249) (113,500) (49,545) (158,535) Capital expenditure Payments to acquire tangible fixed assets (319,106) (689,428) (1,268,484) Sale of investment - 20,000 20,000 (319,106) (669,428) (1,248,484) Acquisitions and disposals Purchase of businesses - (604,432) (337,950) - (604,432) (337,950) Net cash outflow before the management of liquid resources and financing (583,141) (3,555,417) (4,706,963) Financing Issue of ordinary shares 160,000 - 1,230,394 Share issue costs - (21,229) - New long term loans (200,000) 2,000,000 2,300,000 Payment of contingent consideration (70,924) - (89,432) Factoring debt 754,358 569,023 401,109 643,434 2,547,794 3,842,071 Increase/(decrease) in cash 9 60,293 (1,007,623) (864,892) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Unaudited Unaudited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ 60,293 (1,007,623) (864,892) Cash outflow/(inflow) from loans 200,000 (2,000,000) (2,300,000) Payment of contingent consideration 70,924 - - Factoring debt (754,358) (569,023) (311,677) Movement in net debt during the period (423,141) (3,576,646) (3,476,569) Other non cash changes: Contingent consideration arising on acquisitions (6,256) (700,00) (358,011) Net (debt)/funds at the start of the period (3,956,353) 823,227 (121,773) Net debt at the end of the period (4,385,750) (3,453,419) (3,956,353) NOTES TO THE INTERIM FINANCIAL STATEMENTS for the period to 30 June 2006 1 This interim statement for the period to 30 June 2006 is unaudited and was approved by the Directors on 28 September 2006. The information set out does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 2 Turnover Turnover and loss before taxation were all derived from the Group’s principal activities and arose principally in the United Kingdom. 6 months 6 months 12 months ended ended ended 30 June 30 June 31 December 2006 2005 2005 £’000 £’000 £’000 Turnover In Night ParcelXchange 1,882 635 1,704 Other 1,788 1,173 2,876 3,670 1,808 4,580 Express 3,242 3,707 6,877 Technical 850 1,130 2,054 7,763 6,645 13,511 Operating (loss)/profit In Night (367) (1,305) (2,314) Express (19) 98 (102) Technical (167) 5 (190) Unallocated overheads (77) - (220) (630) (1,202) (2,826) 3 The interim statements have been prepared on the basis of the accounting policies set out in the Group’s financial statements for the year ended 31 December 2005. The financial information for the full preceding year is based on the financial statements for the year ended 31 December 2005. These accounts, upon which the auditors issued an unqualified opinion and which did not contain a statement under s237(2) or (3) Companies Act 1985, have been delivered to the Registrar of Companies. 4 Basis of consolidation The interim statements have been prepared using, for the acquisition of Business Direct Limited, Softlocker Limited and Briar Holdings Limited, the reverse acquisition method as set out in International Financial Reporting Standard 3 - Business Combinations and Mergers (‘IFRS 3’). This treatment does not comply with the Companies Act 1985 or with Financial Reporting Standard 6 - ‘Acquisitions and Mergers’, which require merger accounting to be adopted. However, the directors are of the view that the reverse acquisition method should be adopted to give a true and fair view of the group restructure. The financial effect of this departure is not considered to be material to the Group balance sheet. All other subsidiaries are consolidated using the acquisition method, incorporating results from the date that control passed. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the separable net assets acquired is capitalised and written off on a straight line basis over its estimated economic life. Provision is made for impairment. 5 Loss per ordinary share The loss per ordinary share is based on the losses for the period of £743,900 (six months ended 30 June 2005: £1,251,798; year ended 31 December 2005: £2,983,962) and the weighted average number of ordinary shares in issue during the period of 34,697,976 (six months ended 30 June 2005: 29,863,440; year ended 31 December 2005: 31,372,653). The loss for the period and the weighted average number of ordinary shares for calculating the diluted earnings per share for the 6 months ended 30 June 2006 is identical to those used for the basic earnings 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 (FRS 22). 6 Taxation The deferred tax asset has been recognised to the extent that deferred taxation is expected to be recoverable out of future profits. The unrecognised deferred tax asset will be available for offset against qualifying taxable profits arising in future periods. The effect of the utilisation of the unrecognised deferred tax assets in future periods will be to reduce the future tax rate to below the standard rate for UK Corporation Tax. 7 Reconciliation of Movement in Group Shareholders’ Funds for the period to 30 June 2006 Unaudited 6 months ended 30 June 2006 Equity Shareholders’ Funds £ Loss for the period (743,899) New equity shares issued 43,243 Premium on new equity shares issued 116,757 Net reduction in shareholders’ funds (583,899) Opening equity shareholders’ funds 1,445,330 Closing equity shareholders’ funds 861,431 8 Reconciliation of operating loss to net cash flow from operating activities Unaudited Unaudited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Operating loss (630,399) (1,202,253) (2,381,403) Costs of fundamental restructuring - - (459,024) Profit on sale of investment - (15,000) - Depreciation of tangible fixed assets 192,167 152,424 343,055 Amortisation of goodwill 59,073 51,554 103,750 Amortisation of government grants (7,500) (7,500) (15,000) Increase in debtors (432,599) (2,132,139) (1,413,843) Increase in creditors 668,723 920,902 860,471 Net cash outflow from operating activities (150,535) (2,232,012) (2,961,994) 9 Analysis of net movement in net funds Other 1 January Cash non cash 30 June 2006 flow changes 2006 £ £ £ £ Cash at bank and in hand 293,590 60,293 - 353,883 Bank loan (2,300,000) 200,000 - (2,100,000) Factoring debt (543,944) (754,358) - (1,298,302) Director’s loan (192,420) - - (192,420) Contingent consideration (268,579) 70,924 (6,256) (203,911) Preference Shares (945,000) - - (945,000) (3,956,353) (423,141) (6,256) (4,385,750) Independent Review Report to Business Direct Group plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2006, which comprises the Group Profit and Loss Account, Group Statement of Total Recognised Gains and Losses, Group Balance Sheet, Group Statement of Cash Flows, and the related notes 1 to 9 and we have read the other information in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of their interim statement and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' responsibilities The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim Statement in accordance with the AIM Rules which require that the accounting policies and presentation applied to the interim figures must be consistent with those that will be adopted in the company’s annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board as if that Bulletin applied. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. BAKER TILLY Chartered Accountants Brazennose House Lincoln Square Manchester M2 5BL 28 September 2006Turnover Gross profit Operating loss Loss on ordinary activities before tax Taxation Loss for the period Loss per share Basic Diluted
GROUP BALANCE SHEET Increase/(decrease) in cash
For Further Information: Business Direct Group plc Tim Houstoun, Chief Executive T: +44 (0) 1788 821215 E: tim.houstoun@bdpx.com | For Media Enquiries: Bankside Charles Ponsonby T: +44 (0) 20 7367 8851 |
Founded in 1993 as a courier service provider, the Company evolved into a night-time product distributor to field engineers' vehicles and customer warehouses. The recognition of an opportunity in the market to develop and deliver intelligent outdoor locker systems to deal with the problems associated with timely delivery of parts to field engineers initiated the development of their intelligent locker distribution system, ParcelXchange™ in 2002.
Business Direct's ParcelXchange™ services key customers including DHL, TNT, and Exel. These customers rent the use of lockers within these ParcelXchanges™ for a fixed period, in some instances for up to two years, and pay a fixed weekly charge per locker.
