Business Direct Group PLC
AIM : BDG

Business Direct Group PLC

March 27, 2006 01:15 ET

Business Direct Group plc-Preliminary Results for the 12 Months to 31 December 2005

LONDON, UNITED KINGDOM--(CCNMatthews - March 27, 2006) - Business Direct Group (AIM:BDG), the specialist provider of logistic solutions to the field services engineer market and developer of the ParcelXchange intelligent locker distribution system, reports its Preliminary Results for the 12 months ended 31 December 2005.

Business Highlights

- ParcelXchange daily revenues grew 200% in the year

- ParcelXchange occupancy levels rose to 39% compared to 35% in 2004 on an increased ParcelXchange base of 279 sites, containing 3,900 lockers (2004: 195 sites and 2,700 lockers)

- Sales team increased to 15 people

- A number of new contracts with blue chip customers have been secured during the year including Exel, Leisure Link and Bayer

- The acquisitions in the year of the Concord courier businesses and ANC's field service business have been fully integrated into the Group

Financials Highlights

- Group Turnover increased to Pounds Sterling 13.5 million (2004 Pounds Sterling 3.8 million)

- ParcelXchange turnover increased to Pounds Sterling 1.7 million (2004 Pounds Sterling 0.4 million)

- Gross profit rose to Pounds Sterling 3.7m (2004 Pounds Sterling 1.1m)

- Additional Pounds Sterling 1.4m raised in October 2005 through a placing to assist with the roll out of ParcelXchanges and the investment made in integrating the acquisitions.

Commenting on the Preliminary Results, Tim Houstoun, Chief Executive, said: "2005 has been a very important year in our development. We have continued the roll out of the ParcelXchange intelligent locker distribution system, and the acquisitions made in the year have enabled us to offer full service logistics solutions to the field service engineer market."



For further information:
Business Direct Group plc

Tim Houstoun, Chief Executive Tel: +44 (0) 1788 821215
tim.houstoun@businessdirectltd.co.uk www.businessdirectltd.co.uk

Media enquiries:
Abchurch

Ariane Comstive/Dana Thomas Tel: +44 (0) 20 7398 7700
ariane.comstive@abchurch-group.com www.abchurch-group.com


Chairman's statement

I am pleased with the progress made by the group in the year as we begin to achieve critical mass in our market. During 2005 we have continued to expand the business, introducing a number of new offerings to the field-engineers market. As a result we have seen an increase in new business and have added a number of new blue chip customers to our client base.

Acquisitions

During the year the opportunity arose to acquire two businesses offering a range of services complimentary to our ParcelXchange intelligent locker distribution system.

Concord

The acquisition of the business and assets of four associated companies, Concord Couriers Limited ("CCL"), Concord Logistics Limited ("CLL"), Concord Welwyn Garden City Limited, and the entire issued share capital of Bcomp 236 Limited ('Concord'), completed in January 2005. This has enabled the Group to offer a full portfolio of Service Logistics including field engineering, specialist logistics and strategic warehousing to its existing and new clients. The rationalisation and integration of the Concord business is now complete.

The total cost of the Concord acquisitions is expected to be Pounds Sterling 1.6m over three years. The bulk of this acquisition has been satisfied in equity, with Pounds Sterling 266,482 incurred on pre acquisition expenses and costs. The vendors are entitled to an earn-out, based on achieving specific revenue and profitability targets on the acquired businesses. This is payable monthly up to December 2007 and is projected at Pounds Sterling 108,000 with a cap of Pounds Sterling 360,000.

Esprit In Night Express

The business of Esprit In Night Express ("ANC") was acquired in March 2005. ANC's business delivers components directly to engineers' vehicles. The acquisition has accelerated Business Direct's pace of growth and the customers of ANC have the opportunity to migrate to the ParcelXchange intelligent locker solution in the future.

The total cost of the ANC acquisition is expected to be Pounds Sterling 450,000. During the year Pounds Sterling 281,000 was paid with the balance payable monthly through to April 2007, contingent upon future performance.

Exceptional costs of Pounds Sterling 459,000 were incurred during 2005 relating to the fundamental restructuring of part of the group following the acquisitions. This covered the rationalisation of the group's delivery network, locations and management.

Financial Review

Turnover for the year ended 31 December 2005 was Pounds Sterling 13.5m (2004: Pounds Sterling 3.8m) with gross profit of Pounds Sterling 3.7m (2004: Pounds Sterling 1.1m). The operating loss was Pounds Sterling 2.4m (2004: Pounds Sterling 1.0m) and administrative expenses rose to Pounds Sterling 6.2m (2004: Pounds Sterling 2.2m) following the acquisitions. Operating losses have reduced throughout the year as the acquisitions have been integrated.

During the year the company raised an additional Pounds Sterling 1.4m through a placing to assist with the roll out of ParcelXchanges and to finance the investment made in integrating the acquisitions.

During March 2006 the company secured Pounds Sterling 1.7m of additional banking facilities, giving overall banking facilities of Pounds Sterling 4.5m. These will fund the roll out of further ParcelXchanges and finance the additional working capital needs of the business as it continues to grow.

Outlook

The market in which we operate continues to expand and the outlook for the next 12 months is positive. Customers continue to look for cost effective solutions to their distribution needs and our range of products fulfils this criteria.

Trading in the first two months across the group is in line with budget. We are confident that the investments we have made in 2005 combined with our clear market focus will stand us in good stead in the next 12 months.

Finally, I would like to thank the staff for their significant contribution over the year. Their efforts have enabled the Business Direct group to make the considerable progress in the year.

Paul Keane

Chief Executive's review

The year got off to a busy start with the acquisition of the Concord businesses in January 2005; this was followed with the acquisition of ANC in March 2005, both were fully integrated into the group by August 2005. During the year we reviewed our structure and now operate through three divisions, providing our customers with a total approach to their logistic requirements and offering services that suit various budget and operational requirements. The breakdown of revenue by division is;



-----------------------------------------------------------
2005
Pounds Sterling M
-----------------------------------------------------------
Turnover
-----------------------------------------------------------
ParcelXchange 4.8
-----------------------------------------------------------
Technical 2.3
-----------------------------------------------------------
Express 6.4
-----------------------------------------------------------
Total Turnover 13.5
-----------------------------------------------------------


ParcelXchange (ParcelXchange and ANC)

This division provides services to clients that have logistics issues with the expensive last mile delivery; typically this would be a requirement to distribute parts to field engineers. The Group provides an end to end service and charges a rental fee for the ParcelXchange or per unit fee for deliveries into engineers' vehicles.

Daily sales within the division have grown by 200% between January 2005 and December 2005, as shown below;



---------------------------------------------------------------------
Jan 2005 June 2005 Dec 2005
---------------------------------------------------------------------
Pounds Sterling 8.8k Pounds Sterling 20.5k Pounds Sterling 26.7k
---------------------------------------------------------------------


The ParcelXchanges currently operate at 39% capacity each month up from 35% in 2004 with 1,200 lockers added in the year. At 31 December 2005 there were 279 ParcelXchange sites located throughout the U.K. giving a total of 3,900 (2004: 2,600) individual lockers. This proliferation of sites along with our delivery to vehicle offering enables us to provide our customers with national coverage.

ParcelXchanges have been installed in Northern Ireland and will be further expanded in 2006.

Technical (formerly CLL)

The Technical Division specialises in servicing the field engineer market through a nationwide network of technicians and forward stocking locations. Focusing primarily on the computer support sector the division is also carrying out engineering and maintenance work for our ParcelXchanges.

The services provided by the division are often complimentary to those offered to ParcelXchange customers. It is often the case that those customers who are looking for last mile engineer delivery solutions also require technical mobile engineer support and strategic stock holding close to the point of use.

Express (formerly CCL)

The Express division provides our customers with a range of distribution solutions. Principal service offerings include National Next Day parcel delivery, Same Day urgent deliveries and International Shipping. Recently the division has developed specialist computer handling delivery solutions that focus on high value deliveries.

Client Acquisitions

We continue to make significant progress in securing additional blue chip clients, attracted by the broad range of solutions we are able to offer. During the year we have continued to promote our brand and within the market we operate we are seen as an innovator and market leader, offering higher value solutions than our competitors through our use of sophisticated IT solutions.

The number of clients using ParcelXchange is currently 30 against 15 in January 2005 an increase of 100%.

We have continued to invest in the direct sales team during the year adding additional sales and account managers. Wayne Crew, who joined in 2005, was promoted to the Board on 20 February 2006 as sales and marketing director.

Estates Department

In order to roll out further ParcelXchanges we need to continue to develop a national portfolio of available sites, we are making excellent progress on this. We now have four major site owners (two petrol forecourt operators and two supermarkets) as business partners which should provide us with the sites we need in 2006.

Sales & Cross Selling

Following the acquisitions made during the year the sales team has undergone comprehensive training enabling them to sell the portfolio of product offerings. The sales teams of Concord and ANC have been merged with ParcelXchange.

Summary

The field engineer market is continually looking for innovative solutions to the last mile delivery problem. We are becoming widely recognised as the business to bring these solutions to the market. The investments made in 2005 have put us in an excellent position to continue to make progress.

Tim Houstoun



Business Direct Group Plc
PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2005
Preliminary results


2005 2005 2005
Ongoing Acquisitions Total 2004
Notes Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
GROUP
TURNOVER 2 3,403,292 10,108,129 13,511,421 3,767,676

Cost of sales (1,990,407) (7,778,994) (9,769,401) (2,645,720)
-------------------------------------------------------

Gross profit 1,412,885 2,329,135 3,742,020 1,121,956
42% 23% 28% 30%

Administrative
expenses (3,256,092) (2,984,106) (6,240,198) (2,184,963)
Other income 15,000 101,775 116,775 15,000
-------------------------------------------------------

OPERATING
LOSS (1,828,207) (553,196) (2,381,403) (1,048,007)
-------------------------------------------------------

Profit on
Sale of
Investments 15,000 -
Exceptional
Items 3 (459,024) -
------------------------
(2,825,427) (1,048,007)

Interest
receivable 16,714 29,746
Interest
payable
and
similar
charges (175,249) (14,324)
------------------------
LOSS ON
ORDINARY
ACTIVITIES
BEFORE
TAXATION (2,983,962) (1,032,585)

Taxation 4 - (501,501)
------------------------
LOSS FOR
THE
FINANCIAL
YEAR (2,983,962) (531,084)
------------------------
Basic loss
per share
- pence 5 (9.5)p (2.4)p
Fully
diluted
loss per
share -
pence 5 (9.5)p (2.4)p



Business Direct Group Plc
GROUP BALANCE SHEET
31 December 2005
Preliminary results

Restated
(see note 1)
2005 2004
Pounds Sterling Pounds Sterling
FIXED ASSETS
Intangible assets 2,158,751 -
Tangible assets 2,191,139 1,197,760
Investments - 5,000
---------------------------------------

4,349,890 1,202,760
---------------------------------------

CURRENT ASSETS
Debtors 2,980,137 1,566,194
Cash at bank and in hand 293,590 1,158,482
---------------------------------------

3,273,727 2,724,676

CREDITORS: Amounts
falling due within
one year 2,700,035 827,976
---------------------------------------

NET CURRENT ASSETS 573,692 1,896,700
---------------------------------------

TOTAL ASSETS LESS
CURRENT LIABILITIES 4,923,582 3,099,460

CREDITORS: Amounts
falling due after
more than one year 3,362,002 1,137,420
---------------------------------------

1,561,580 1,962,040
PROVISIONS FOR
LIABILITIES AND CHARGES
Government grants 116,250 131,250
---------------------------------------

1,445,330 1,830,790
---------------------------------------

CAPITAL AND RESERVES
Called up share capital 763,088 381,952
Share premium account 5,025,467 2,808,101
Profit and loss account (4,343,225) (1,359,263)
---------------------------------------

EQUITY SHAREHOLDERS' FUNDS 1,445,330 1,830,790
---------------------------------------



Business Direct Group Plc
GROUP CASH FLOW CASH FLOW STATEMENT
For the year ended 31 December 2005
Preliminary results


Restated
(see note 1)
2005 2004
Notes Pounds Sterling Pounds Sterling

Net cash flow from
operating activities 6 (2,961,994) (1,244,572)

Returns on investments
and servicing of finance 6 (158,535) 15,422

Taxation 6 - -

Capital expenditure and
financial investment 6 (1,248,484) (512,140)

Acquisitions and disposals 6 (337,950) -
------------------------------

CASH OUTFLOW BEFORE FINANCING (4,706,963) (1,741,290)

Financing 6 3,842,071 2,864,381
------------------------------


(DECREASE)/INCREASE IN
CASH IN THE PERIOD (864,892) 1,123,091
------------------------------



RECONCILIATION OF NET
CASH FLOW TO MOVEMENT
IN NET DEBT
2005 2004
Pounds Sterling Pounds Sterling
(Decrease)/increase in
cash in the period (864,892) 1,123,091

Net cash (inflow)/outflow
from debt financing (2,611,677) 315,670
Contingent consideration
on acquisition of
businesses (358,011) -
------------------------------

CHANGE IN NET (DEBT)/FUNDS 7 (3,834,580) 1,438,761

NET DEBT AT 1 JANUARY 2005 7 (121,773) (1,560,534)
------------------------------

NET DEBT AT 31 DECEMBER 2005 7 (3,956,353) (121,773)
------------------------------


Notes to the Preliminary Announcement

For the year to 31 December 2005

1. PRESENTATION OF FINANCIAL INFORMATION

Information in this preliminary announcement does not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2005 are audited. The preliminary announcement is prepared on the same basis as set out in the previous year's statutory accounts except for the changes in accounting standards as detailed below.

FRS 21 "Events after the Balance Sheet Date" and FRS 22 "Earnings Per Share" are effective for accounting periods beginning on or after 1 January 2005 but have had no impact on the financial statements. The disclosure requirements of FRS 25 "Financial Instruments: Disclosure and Presentation" are effective for accounting periods beginning on or after 1 January 2005. The standard requires that preference shares that are obligations be classified as liabilities rather than shareholders' funds. This change in accounting policy has resulted in a prior year adjustment for the Group with shareholders' funds at 31 December 2004 reducing by Pounds Sterling 945,000 and Creditors: amounts falling due after more than on year increasing by Pounds Sterling 945,000.

Statutory accounts for the year ended 31 December 2004, which were prepared under accounting practices generally accepted in the UK, have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under Section 237 (2) or (3) of the Companies Act 1985.

2. TURNOVER AND SEGMENTAL ANALYSIS

The Group operates in the provision of one activity, supplying logistic solutions to corporate entities. Revenues generated are wholly within the UK. Revenues generated through Parcel Exchanges in the year grew by 320% to Pounds Sterling 1,704,000 (2004: Pounds Sterling 405,000). Further analysis of sales, net assets and results has not been given as in the opinion of the directors such disclosure would be prejudicial to the interests of the Group.



3. EXCEPTIONAL ITEMS


2005 2004
Pounds Sterling Pounds Sterling
Fundamental restructuring
of the business 459,024 -
----------------------------------


4. TAXATION ON ORDINARY ACTIVITIES

2005 2004
Pounds Sterling Pounds Sterling
Current tax:
Corporation tax at 30% (2004: 30%) - -
----------------------------------

Total current tax - -
----------------------------------

Deferred tax:
Origination of and reversal
of timing differences - (501,501)
----------------------------------
Tax on loss on ordinary activities - (501,501)
----------------------------------



2005 2004
Pounds Sterling Pounds Sterling

Factors affecting the tax
charge for the year
Loss on ordinary activities
before taxation (2,983,962) (1,032,985)
----------------------------------

Loss on ordinary activities
before taxation multiplied
by standard rate of UK
corporation tax of 30.00%
(2004: 30.00%)
(895,189) (309,776)

Effects of:
Non deductible expenses 24,505 20,767
Capital allowances in excess
of depreciation (59,982) (28,994)
Capital gain 4,500 -
Losses not recognised arising
in the period 926,166 318,003
----------------------------------

- -
----------------------------------

Current tax credit - -
----------------------------------


Deferred tax: 2005 2004
Pounds Sterling Pounds Sterling

Balance brought forward (501,501) -
Movement in year - (501,501)
----------------------------------

(501,501) (501,501)
----------------------------------

Accelerated capital allowances 147,900 92,418
Tax losses available (649,401) (593,919)
----------------------------------

(501,501) (501,501)
----------------------------------


Factors that may affect future tax charges

The Group has an additional amount of unprovided deferred taxation of Pounds Sterling 877,933 representing trading losses available to carry forward to relieve profits of the same trade in future years.

5. EARNINGS PER SHARE

Earnings per share are calculated in accordance with Financial Reporting Standard 22 (FRS 22). The calculation of basic loss per ordinary share is based on losses of Pounds Sterling 2,983,962 (2004 Pounds Sterling 531,084) and on 31,372,653 ordinary shares (2004 22,095,529) being the weighted average number of shares in issue during the year.

The loss for the period and the weighted average number of ordinary shares for calculating the diluted loss per share for the year ended 31 December 2005 are identical to those used for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of FRS 22.



6. CASHFLOWS

Reconciliation of operating
loss to net cash outflow
from operating activities 2005 2004
Pounds Sterling Pounds Sterling
Operating loss (2,381,403) (1,048,007)
Costs of fundamental restructuring (459,024) -
Depreciation 343,055 168,626
Amortisation of goodwill 103,750 -
Amortisation of government grants (15,000) (15,000)
Increase in debtors (1,413,843) (282,795)
Increase/(decrease) in creditors 860,471 (67,396)
----------------------------------

Net cash outflow from operating
activities (2,961,994) (1,244,572)
----------------------------------

Returns on investment and
servicing of finance 2005 2004
Pounds Sterling Pounds Sterling
Interest received 16,714 29,746
Interest paid (175,249) (14,324)
----------------------------------

Net cash inflow from returns on
investments and servicing
of finance (158,535) 15,422
----------------------------------

Taxation 2005 2004
Pounds Sterling Pounds Sterling
Taxation paid - -
----------------------------------

Capital expenditure and
financial investment 2005 2004
Pounds Sterling Pounds Sterling
Disposal of investments 20,000 -
Payments to acquire tangible
fixed assets (1,268,484) (512,140)
----------------------------------

Net cash outflow for capital
expenditure and financial
investment (1,248,484) (512,140)
----------------------------------

Acquisitions and disposals 2005 2004
Pounds Sterling Pounds Sterling
Purchase of businesses (337,950) -
----------------------------------
Net cash outflow from
acquisitions and disposals (337,950) -
----------------------------------


Financing 2005 2004
Pounds Sterling Pounds Sterling
Issue of equity share capital 227,416 369,700
Share premium on issue of equity
share capital 1,002,978 2,709,351
Issue of share capital in subsidiary - 101,000
Advances from/(repayments to) factors 401,109 (315,670)
Payment of contingent consideration (89,432) -
Bank term loan 2,300,000 -
----------------------------------

Net cash inflow from financing 3,842,071 2,864,381
----------------------------------


7. ANALYSIS OF NET DEBT


Restated
(see note 1) At
At 1 Jan Cash Non cash 31 Dec
2005 flows Acquisitions movements 2005
Pounds Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling Sterling
Cash in hand
and at bank 1,158,482 (864,892) - - 293,590
--------------------------------------------------------

1,158,482 (864,892) - - 293,590
Debt:
Factoring debt (142,835) 142,835 - - -
Invoice
discounting - (543,944) - - (543,944)
Contingent
consideration - 89,432 (358,011) - (268,579)
Bank loan - (2,300,000) - -(2,300,000)
Director's
loans (192,420) - - - (192,420)
Preference
shares (945,000) - - - (945,000)
--------------------------------------------------------

Net debt (121,773)(3,476,569) (358,011) -(3,956,353)
--------------------------------------------------------


8. ACQUISITIONS OF BUSINESESS DURING THE YEAR

During the year ended 31 December 2005, the Group made the following
acquisitions:-

Name Company Acquiring Company Purchased Date

Concord Concord Couriers Business Direct Assets 13 January
Limited Limited 2005
Concord Logistics Business Direct Assets 13 January
Limited Limited 2005
Concord Welwyn Business Direct Assets 13 January
Garden City Limited Limited 2005
BComp 236 Limited Business Direct Company 13 January
plc 2005
ANC Esprit In-Night Business Direct Assets 10 March
Express Limited Limited 2005


On 13 January 2005 the Group acquired the assets, trade, customers and goodwill of Concord Couriers Limited ("CCL"), Concord Logistics Limited ("CLL") and Concord Welwyn Garden City Limited and the entire issued share capital of Bcomp 236 Limited ("Bcomp"), a company which had the benefit of a management contract to run the above businesses, for a total maximum consideration of Pounds Sterling 2 million.

The consideration in respect of the acquisition of the businesses was satisfied by the payment of Pounds Sterling 117,950 in cash. Consideration for the acquisition of shares in Bcomp was satisfied by the allotment to the shareholders of Bcomp of 3,074,400 new ordinary shares in the company representing approximately 10 per cent of the company's enlarged issued share capital equity, to the shareholders of Bcomp 236 Limited. These shares are subject to a two-year lock in and a two-year orderly market agreement.

The Group will also pay an additional sum of up to Pounds Sterling 360,000 in conditional consideration to the shareholders of Bcomp if the businesses meet certain turnover and profit criteria over the next 3 years. It is estimated that total consideration will be Pounds Sterling 108,011, of which Pounds Sterling 8,011 was paid in 2005 and Pounds Sterling 100,000 has been provided in respect of the following two years.

The six directors of the Concord companies have also been granted options over 1,049,850 shares in the Company at an exercise price of 45p per share.

The exercise of the share options is subject to the businesses achieving a total turnover of Pounds Sterling 18 million for the year ended 31 December 2005 or Pounds Sterling 20 million for the year ended 31 December 2006 with a 7.5% EBIT being achieved in each such year. The combined current turnover for CCL and CLL for the year ended 31 May 2004 was Pounds Sterling 15.1 million with a pre-tax loss of Pounds Sterling 105,000.

On 10 March 2005 the Group acquired the turnover and goodwill of the in-boot division of Esprit In-Night Express Limited ("Esprit"), a wholly owned subsidiary of ANC Limited, a leading UK parcels carrier. The acquisition will be satisfied in cash based on 18 per cent of Esprit's acquired turnover for the 12 months commencing on the date of completion of the acquisition. The consideration will be paid over 24 months, with a minimum guaranteed payment of Pounds Sterling 200,000 paid on completion. The annualised turnover for the acquired business is expected to be Pounds Sterling 2.5 million.

It is estimated that total consideration will be Pounds Sterling 450,000, of which Pounds Sterling 281,421 was paid in 2005 and Pounds Sterling 168,579 has been provided in respect of the following year.



Bcomp
236
Esprit Concord Limited
Fair Fair Fair
Value Value Value Total
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
--------------------------------------------

Tangible fixed assets - 67,950 - 67,950
Other debtors - - 100 100
Creditors due within
one year - (266,482) - (266,482)
--------------------------------------------

Net assets - (198,532) 100 (198,432)

Goodwill arising on
acquisition of
subsidiary - - 1,368,008 1,368,008
Goodwill arising on
acquisition of
businesses 450,000 444,493 - 894,493
--------------------------------------------

450,000 245,961 1,368,108 2.064,069
--------------------------------------------

Discharged by:
Fair value of
shares issued - - 1,368,108 1,368,108
Cash consideration 200,000 117,950 - 317,950
Contingent consideration 250,000 108,011 - 358,011
Costs associated with
acquisition - 20,000 - 20,000
--------------------------------------------

450,000 245,961 1,368,108 2,064,069
--------------------------------------------


9. OTHER INFORMATION

The board of directors of Business Direct Group plc approved the preliminary results on 24 March 2006.

The statutory accounts for the year ended 31 December 2005 will be delivered to the Registrar of Companies following the Annual General Meeting. The statutory accounts will be posted to shareholders on 19 April 2006. Other copies will be available to the public, free of charge, at the Company's registered office Xchange House, 1 Great Central Way, Butlers Leap, Rugby, CV21 3XH.

The Annual General Meeting will be on 23 May 2006 at 2pm at Salisbury House, London Wall, London EC2M 5TA.

Contact Information