Bizzbuild falling apart

The results themselves did not make easy reading when they eventually were released, showing write-offs of 1.3m, pre-tax losses of 2.5m, and debts of 1.83m falling in less than one year. Add another 0.2m in debts due in more than a year and Bizzbuild's balance sheet shows net liabilities of 0.4m.

The company blames a rapid decline in turnover from its Value Direct online electrical appliances e-commerce business for setting in motion a chain of events that led to its present troubles.

In order to compensate for this fall in sales, Bizzbuild acquired Mortek and Import Marques, the company that operates carbusters.com, a direct retailer of cars, in April. This however appears to have done little to boost its flagging turnover. Of its 2.9m in turnover for the six months to the end of June, Bizzbuild acknowledges that it was “almost entirely from Value Direct”. Although gross margin improved to 4%, this was not enough to cover company's overheads, which were “nearly 850,000”, according to Bizzbuild, contributing to group overheads of 1.2m for the half.

With 0.79m in write-offs of investments in Value Direct, Hotel Associates, Import Marques, and Mortek and a 0.5m write-down of the company's investment in corporate venturing company Edengene, net losses reached 2.4m and net liabilities of 0.4m at the end of June. With its share price already on the slide, Bizzbuild was no longer in a position to use its paper for further acquisitions that may have helped stem the fall in revenues and after selling the trading business and assets of Value Direct to Home Electrical Direct for 0.23m in cash, the company was in effect left without the core of its operating business.

Another hit came from having to write down its 7% stake in corporate venturing company Edengene to 0.25m, despite Edengene having six FTSE100 clients and further funding in Q2 and then again in July this year. Now, according to Bizzbuild, Mortek has begun a voluntary winding up.

The balance sheet at the end of June shows little in terms of assets for the company's creditors to take comfort in, with tangible assets of just 0.225m, investments of just 0.25, stocks worth 0.26m, 0.3m in payment it is owed and cash of 0.57m.

Despite what is being referred to as a “deterioration in the company's working capital position”, the company claims it is “exploring a number of options and holding discussions with a third party, which may or may not lead to a substantial transaction.” Bizzbuild also claims it has cut costs to a level that allows it to “operate within its current cash resources for the immediate future.”

The company says that if the initiatives being considered are not successful within the timescale allowed for by its current cash resources, it will make “further very significant reductions to its operating costs and ways in which to generate further working capital”, but it is not immediately apparent what these might be.