Business Direct Group PLC
AIM : BDG

Business Direct Group PLC

August 31, 2005 04:08 ET

Business Direct Group PLC: Unaudited Interim Results for the Six Months to 30 June 2005

LONDON, UNITED KINGDOM--(CCNMatthews - Aug. 31, 2005) - Business Direct Group (AIM:BDG), the developer and operator of the ParcelXchange intelligent locker distribution system, reports its Interim Results for the six months ended 30 June 2005.

Highlights

- Group turnover Pounds Sterling 6.64m (2004: Pounds Sterling 1.89m)

- ParcelXchange turnover Pounds Sterling 635,000 (2004: Pounds Sterling 168,000)

- Gross profit totalled Pounds Sterling 634,000 (2004: Loss Pounds Sterling 33,000)

- Net loss pre tax higher at Pounds Sterling 1.25m (2004:- Net loss Pounds Sterling 400,000) reflecting the continued investment in the ParcelXchange network and infrastructure. There were circa Pounds Sterling 300,000 of exceptional costs relating to the ANC acquisition.

- Customer base strengthened by recent acquisitions of Concord and the ANC 'in-boot' business.

- Revenue of In Night (ParcelXchange/and ANC) picking up with highest level of recorded business in June.

- 260 ParcelXchange sites now up and running and a further 60 expected to be installed in the second half of 2005 giving a total of 4,500 individual lockers.

- Demonstration ParcelXchange installed in Singapore and new service in Northern Ireland due to be launched in third quarter of 2005

Commenting on the Interim Results, Tim Houstoun, Chief Executive, said: "Although the Group has fallen behind with the integration of ANC and the roll out of ParcelXchanges, the Board believes that its ongoing strategy of concentrating on innovation and intelligent logistics will lead to a better business performance."



For further information:

Business Direct Group PLC
Tim Houstoun, Chief Executive Officer Tel: +44 (0) 178 882 1200
www.bdpx.co.uk

Media enquiries:

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


About the business

Business Direct Group plc designs, develops and commissions the manufacture of an intelligent outdoor locker distribution system, marketed as ParcelXchange.

ParcelXchange provides a secure deposit and collection environment using sophisticated ATM style technology with end-to-end track and trace to overcome the existing costly and time-consuming last mile delivery solutions.

Business Direct offers clients an end to end solution, operating a nightly replenishment service; the client simply pays an all encompassing rental charge.

Introduction

Business Direct Group plc is now a substantially larger company than it was a year ago as a result of two strategic acquisitions that have been undertaken to give the Group immediate scalability and access to an established client base.

During the period the Group has focused on developing and establishing a corporate sales pipeline and on integrating acquisitions. This has taken longer than expected, however the Board expects to see the benefits of these changes in 2006.

Financial Review

Turnover for the six months ended 30 June 2005 was Pounds Sterling 6.64 million as compared to Pounds Sterling 1.89 million in 2004.

Turnover related to ParcelXchange for the six months ended 30 June 2005 was Pounds Sterling 635,000 and is expected to be circa Pounds Sterling 1m for the six months to 31 December 2005.

Gross profit was Pounds Sterling 634,000 (2004: Loss Pounds Sterling 33,000), while the net loss widened to Pounds Sterling 1.25 million (2004: Pounds Sterling 400,000) reflecting the continued investment in the ParcelXchange network and infrastructure predominantly in the UK. This investment has been made to build capacity which will allow the Group to absorb major clients as they come on.

The facility at the Bank of Scotland is Pounds Sterling 3m of which Pounds Sterling 2.3m has been drawn down to date.

Acquisitions

Esprit In Night Express

Esprit In Night Express ("ANC") was acquired in March 2005. ANC's business delivers components directly to engineers' vehicles with an annualised turnover of circa Pounds Sterling 2.5 million.

Apart from speeding up Business Direct's pace of growth as customers of ANC have the opportunity of using ParcelXchange, the resulting distribution network allows for material cost savings and improved customer service.

The benefits of this acquisition should start to accrue in latter half of 2005 with circa Pounds Sterling 750,000 per annum of savings made from the combined distribution networks. There are likely to be further financial benefits as ANC's former clients either award Business Direct new business or opt to use the ParcelXchange instead of distribution to the engineers' vehicle.

The total cost of the acquisition is expected to be Pounds Sterling 450,000, paid over two years and is contingent on turnover. Exceptional costs of circa Pounds Sterling 300,000 relating to the integration of the combined distribution networks have been incurred in the period.

Concord

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

The total cost of these acquisitions is expected to be less than Pounds Sterling 2 million over three years. The bulk of this acquisition has been satisfied in equity, with Pounds Sterling 275,000 cash earmarked for pre acquisition expenses and costs. The vendors have also agreed to an earn-out, based on achieving specific revenue and profitability targets of a 6 per cent EBIT margin on the acquired businesses. This is payable monthly between 2005 and 2007 and is capped at Pounds Sterling 360k.

Operational Review

In conjunction with the acquisitions the Group undertook a review of its internal structure. There are now three distinct divisions: ParcelXchange, Express and Technical

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 this.

The performance of this division was affected by lower than expected figures in May, but business is now picking up with the highest level of recorded business in June.

There are now 260 ParcelXchange sites up and running and we are expecting a further 60 to be installed in the second half of the year giving a total of 4,500 individual lockers. The number of ParcelXchanges that are at 100% capacity is increasing and in areas of high activity the Group have deployed further ParcelXchanges. The current occupancy rate is circa 35% reflecting the recent deployments which have reduced the average.

ParcelXchanges have been installed in Northern Ireland and this service is due to be launched in Q3 2005 while a demonstration ParcelXchange has been installed in Singapore.

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 ParcelXchange.

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 point of use.

Express (formerly CCL)

The Express division provides our customers with a range of distribution solutions. Principal service offerings includes 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 Acquisition

The strategy of the Group, to roll-out ParcelXchanges and aggressively pursue new business to increase average locker occupancy rates, whilst cross-selling into our customer base remains unchanged.

We expect by the year end at least 30 clients to be using ParcelXchange and the Group has a strong pipeline of new business. The majority of these clients will be blue-chip customers.

In April the Group appointed Wayne Crew as sales director of Business Direct Limited. He is responsible for driving sales for ParcelXchange where he has recruited a senior sales team who are accomplished at generating new business.

Outlook

The Group has fallen behind with the integration of ANC and the roll out of ParcelXchanges. However innovation and intelligent logistics is still key to Business Direct's ongoing strategy as customers are still looking for greater service for less cost.



Group Profit and Loss Account
-----------------------------

Unaudited Audited
6 months Year
ended ended
Unaudited 30 June 31 December
Notes 6 months ended 30 June 2005 2004 2004
Continuing Acquisitions Total Total Total
Pounds Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling Sterling

Turnover 2 1,476,748 5,168,252 6,645,000 1,894,231 3,767,676

Cost of
sales (2,383,136) (3,628,050) (6,011,186) (1,927,240) (2,645,720)

------------------------------------------------------------------------
Gross
(loss)/
profit (906,388) 1,540,202 633,814 (33,009) 1,121,956

Administrative
expenses (215,663) (1,620,404) (1,836,067) (361,603) (2,169,963)

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

Operating
Loss (1,122,051) (80,202) (1,202,253) (394,612) (1,048,007)
------------------------
------------------------

Net interest
(payable)/
receivable (49,545) (5,302) 15,422

------------------------------------
Loss on
ordinary
activities
before tax (1,251,798) (399,914) (1,032,585)

Taxation 6 - - 501,501

------------------------------------
Loss for
the period (1,251,798) (399,914) (531,084)
------------------------------------
------------------------------------

Earnings
per
share

Basic 5 (4.19)p (2.04)p (2.40)p
------------------------------------
Diluted 5 (4.19)p (2.04)p (2.40)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 Balance Sheet
-------------------

Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Notes Sterling Sterling Sterling
Fixed assets
Intangible assets 2,553,036 - -
Tangible assets 1,802,714 985,717 1,197,760
Investments - 5,000 5,000
------------------------------------------------------------------------
4,355,750 990,717 1,202,760

Current assets
Debtors 3,698,333 748,466 1,566,194
Cash 150,859 148,432 1,158,482
------------------------------------------------------------------------
3,849,192 896,898 2,724,676

Creditors: amounts falling
due within one year (4,131,901) (1,758,535) (827,976)

------------------------------------------------------------------------
Net current (liabilities)/assets (282,709) (861,637) 1,896,700

------------------------------------------------------------------------
Total assets less current
liabilities 4,073,041 129,080 3,099,460

Creditors: amounts falling
due after more than one year (1,078,420) (192,420) (192,420)

Provisions for liabilities
and other charges (123,750) (108,750) (131,250)

------------------------------------------------------------------------
Net assets/(liabilities) 2,870,871 (172,090) 2,775,790
------------------------------------------------------------------------

Capital and reserves

Called up share capital 1,480,672 957,252 1,326,952
Share premium 4,001,260 98,750 2,808,101
Profit and loss account (2,611,061) (1,228,092) (1,359,263)

------------------------------------------------------------------------
Shareholders' funds/(deficit) 7 2,870,871 (172,090) 2,775,790
------------------------------------------------------------------------



Group Statement of Cashflows
----------------------------

Unaudited Unaudited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Notes Sterling Sterling Sterling

Net cash (outflow)/inflow
from operating activities 8 (2,232,012) (205,342) (1,244,572)
------------------------------------------------------------------------

Returns on investments and
servicing of finance
Interest received 10,888 - 29,746
Interest paid (60,433) (5,299) (14,324)

------------------------------------------------------------------------
(49,545) (5,299) 15,422
------------------------------------------------------------------------

Capital expenditure
Payments to acquire tangible
fixed assets (689,428) (201,953) (512,140)
Sale of investment 20,000 - -

------------------------------------------------------------------------
(669,428) (201,953) (512,140)
------------------------------------------------------------------------

Acquisitions and disposals
Purchase of businesses (604,432) - -

------------------------------------------------------------------------
(604,432) - -
------------------------------------------------------------------------

Net cash outflow before the
management of liquid
resources and financing (3,555,417) (412,594) (1,741,290)
------------------------------------------------------------------------

Financing
Issue of ordinary shares - 100,000 3,597,000
Share issue costs (21,229) - (517,949)
Issue of ordinary shares in
subsidiary - - 101,000
New long term loans 2,000,000 - -
New short term loans - 200,000 200,000
Repayment of short term loans - - (200,000)
Factoring debt 569,023 225,635 (315,670)

------------------------------------------------------------------------
2,547,794 525,635 2,864,381
------------------------------------------------------------------------

------------------------------------------------------------------------
(Decrease)/increase in cash 9 (1,007,623) 113,041 1,123,091
------------------------------------------------------------------------



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
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

(Decrease)/increase in cash (1,007,623) 113,041 1,123,091

Cash inflow from increase
in loans (2,000,000) (200,000) -
Factoring debt (569,023) (225,635) 315,670

------------------------------------------------------------------------
Movement in net funds during
the period (3,576,646) (312,594) 1,438,761

Other non cash changes:
Contingent consideration
arising on acquisitions (700,000) - -
Net funds/(debt) at the start
of the period 823,227 (615,534) (615,534)
------------------------------------------------------------------------

Net (debt)/funds at the end
of the period (3,453,419) (928,128) 823,227
------------------------------------------------------------------------



Notes to the Interim Financial Statements
-----------------------------------------
For the period to 30 June 2005
------------------------------


1. This interim statement for the period to 30 June 2005 is unaudited and was approved by the Directors on 30 August 2005. 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 30 June
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Turnover In Night ParcelXchange 635 168 405
Other 1173 1726 3362
------------------------------------------------------------------------
1808 1894 3767
Express 3707 - -
Technical 1130 - -

------------------------------------------------------------------------
6645 1894 3767
------------------------------------------------------------------------


In 2005 Pounds Sterling 360,00 of non InNight business was transferred from InNight to Express and Technical since it was more appropriate to be managed by these divisions.

3. The interim statement has been prepared on the basis of the accounting policies set out in the Group's financial statements for the year ended 31 December 2004. The financial information for the full preceding year is based on the financial statements for the year ended 31 December 2004. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

4. Basis of Consolidation

The Group 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 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 Pounds Sterling 1,251,798 (six months ended 30 June 2004: Pounds Sterling 399,914; year ended 31 December 2004: Pounds Sterling 531,084) and the weighted average number of ordinary shares in issue during the period of 29,863,440 (six months ended 30 June 2004: 19,600,000; year ended 31 December 2004: 22,095,529).

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 2005 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 2005

Unaudited
6 months ended
30 June 2005
Equity Shareholders' Funds Pounds Sterling

Loss for the period (1,251,798)
New equity shares issued 153,720
Premium on new equity shares issued 1,193,159

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

Net addition to shareholders' funds 95,081

Opening equity shareholders' funds 1,830,790

------------------------------------------------------------------------
Closing equity shareholders' funds 1,925,871
------------------------------------------------------------------------
------------------------------------------------------------------------

Non-equity Shareholders' Funds Pounds Sterling

Opening equity shareholders' funds 945,000

------------------------------------------------------------------------
Closing equity shareholders' funds 945,000
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------
Total Shareholders' Funds 2,870,871
------------------------------------------------------------------------
------------------------------------------------------------------------



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
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Operating loss (1,202,253) (394,612) (1,048,007)
Profit on sale of investment (15,000) - -
Depreciation of tangible
fixed assets 152,424 70,482 168,626
Amortisation of goodwill 51,554 - -
Amortisation of government grants (7,500) (22,500) (15,000)
(Increase)/decrease in debtors (2,132,139) 19,432 (282,795)
Increase/(decrease) in creditors 920,902 121,856 (67,396)

------------------------------------------------------------------------
Net cash outflow from operating
activities (2,232,012) (205,342) (1,244,572)
------------------------------------------------------------------------



9. Analysis of net movement in net funds

Other
1 January Cash non cash 30 June
2005 Flow changes 2005
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

Cash at bank and in hand 1,158,482 (1,007,623) - 150,859
Bank loan - (2,000,000) - (2,000,000)
Factoring debt (142,835) (569,023) - (711,858)
Director's loan (192,420) - - (192,420)
Contingent consideration - - (700,000) (700,000)

------------------------------------------------------------------------
823,227 (3,576,646) (700,000) (3,453,419)
------------------------------------------------------------------------


10. Acquisitions

On 13 January 2005 the Company acquired the assets, trade, customers and goodwill of Concord Couriers Limited, Concord Logistics Limited and Concord Welwyn Garden City Limited and the entire issued share capital of Bcomp 236 Limited for a total maximum consideration of Pounds Sterling 2m to be satisfied in cash and shares. The initial consideration was satisfied by the payment of Pounds Sterling 118,000 in cash and the allotment of 3,074,400 new ordinary shares.

Goodwill arose as follows:



Book value and fair
value to the group
Pounds Sterling

Tangible assets 67,950
Creditors due within one year (266,482)

------------------------------------------------------------------------
Net liabilities (198,532)
Goodwill arising on acquisition 1,954,590
------------------------------------------------------------------------
1,756,058
------------------------------------------------------------------------
------------------------------------------------------------------------

Consideration satisfied by:

Cash consideration 117,950
Fair value of shares issued 1,368,108
Contingent consideration 250,000
Costs of acquisition 20,000
------------------------------------------------------------------------
1,756,058
------------------------------------------------------------------------
------------------------------------------------------------------------


On 10 March 2005 the Company acquired the turnover and goodwill of the in-boot division of Esprit In-Night Express Limited, a wholly owned subsidiary of ANC Limited. The acquisition is to be satisfied in cash based on 18 per cent of the acquired turnover for the 12 months commencing on the date of completion of the acquisition. An initial minimum guaranteed consideration of Pounds Sterling 200,000 was payable on completion with the remainder to be paid over a period of 24 months.

Goodwill arose as follows:



Book value and fair
value to the group
Pounds Sterling

Net assets acquired -
Goodwill arising on acquisition 650,000
------------------------------------------------------------------------
650,000
------------------------------------------------------------------------
------------------------------------------------------------------------

Consideration satisfied by:

Cash consideration 200,000
Contingent consideration 450,000
------------------------------------------------------------------------
650,000
------------------------------------------------------------------------
------------------------------------------------------------------------


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 2005, 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 10 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 2005.



BAKER TILLY
Chartered Accountants
Brazennose House
Lincoln Square
Manchester
M2 5BL
30 August 2005


Corporate Details

Company: Name Business Direct Group plc
Address Xchange House
1 Great Central Way
Butlers Leap
Rugby
Warwickshire
CV21 3XH

Phone: +44 (0)1788 821200 Fax: +44 (0)1788 821201
Email: info@businessdirectltd.co.uk Web: www.bdpx.com

Board of Directors: Paul Keane Non Executive Chairman
Tim Houstoun Chief Executive Officer
Carl Wylde Estates Director
Dr Stephen Dakin Non Executive Director
Graham Norfolk Non Executive Director

Company Secretary: HL Secretaries Limited

Nominated Adviser: Daniel Stewart & Company plc
48 Bishopsgate
London
EC2N 4AJ

Broker: J M Finn & Co
Salisbury House
London Wall
London
EC2M 5TA

Auditors: Baker Tilly
Brazennose House
Lincoln Square
Manchester
M2 5BL

Registrars: Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham
BR3 4TU

Solicitors: Halliwells LLP
St James's Court
Manchester
M2 2JF


Contact Information