12th Jul 2006 07:00
Delling Group PLC12 July 2006 For Release 7:00am 12 July 2006 DELLING GROUP PLC (DLG/L) The AIM-listed marketing services group Half year trading update Delling Group PLC ("Delling" or "the Company"), the AIM-listed marketing supportservices company, is delighted to present a positive update on performance forthe six months ended 30 June 2006, with further contract gains from globalbrands across the Scandinavian markets. Trading The first six months have seen the Company continue to grow its group revenue inline with historically achieved rates. Delling has announced outsourcingcontracts with McDonald's and Northface in Norway, and the Bristol-Myers Squibbgroup across the Nordic region. These three contracts should add £1.5m to groupturnover on an annualised basis. It is significant that two of these contracts were won by Delling in Norway, andthe directors believe that this demonstrates the success of creating the Dellingconcept in Oslo, achieved by acquisitions and successful integration. TheCompany also believes the win of the Bristol-Myers Squibb contract signals a newphase of Delling's growth as the Company continues its proven ability to deliveracross a large geographical area. Delling has continued its work in Poland and the Baltics and now has a fullyoperational supply chain in place for the sourcing of high quality low costprinting, and the Company is starting to feel the benefits of this, particularlyfor large volume print jobs. Delling has grown its trading presence in Polandand the Baltics, winning contracts for services at three airports in the region. The Company has also seen substantial interest in screen media in both Norwayand Sweden and has installed a number of pilot projects. The pilot projects haveprogressed well and have all been fully installed. The Company is confident thatlarger contracts will be won on the back of the successful testing in the secondhalf of the year. Several new screen installations have been won, most notablyat Riga and Krakow international airports. Delling has also seen a large proportion of its sales fulfilled in the firsthalf through further outsourcing to partners where it operates more as a projectmanager. Such sales are lower margin than internally fulfilled orders andDelling is susceptible to such changes in product mix until it reaches a largersize. Overall gross margins are therefore slightly lower in the first six monthscompared to previous periods, although the directors expect this to reverse asthe product mix reverts to its more usual levels in the second six months. Acquisitions Delling acquired n3prenor AB in January 2006 and this company has fulfilled theexpectations of the Company in delivering profits and positive cashflow andDelling expects to pay an earn-out on this transaction, although the amount isnot yet finalised. Delling has begun to target the customer base of n3prenor andalthough only small jobs have been won so far the Company is building areputation and hopes for larger contracts in the near future. The acquisition of n3prenor also allowed the Company to realise some synergiesin the Stockholm office and reduce the staffing where roles were duplicated. Delling continues to actively seek further acquisition targets and hopes tocomplete further acquisitions in the second half of its financial year. Financing An important step was taken by the Company in concluding the recent placing. The£4.7m of funds raised will allow Delling to strengthen its balance sheet andnegotiate with suppliers on more favourable terms. The balance sheetstrengthening should allow the Company access to bank financing with which topursue its acquisition programme, whilst stronger negotiating power shouldimprove margins. Announcement of interim results The detailed interim results will be announced on 18 September 2006. Aksel Bratvedt, Executive Chairman of Delling Group commented: "The first six months of 2006 have been exciting for the Company and positionedit very strongly for the future. Not only have we continued to win outsourcingcontracts from large well known brands, but we have completed a placing to helpthe Company to pursue its objectives. Our strategy includes taking advantage ofconsolidation within the fragmented industry sector in Scandinavia in which itoperates. We have a number of potential acquisition targets and with ourcontinuing growth I look forward to a further successful six months." ENDS For further information please contact: Contact:Delling Group PlcAksel Bratvedt, Executive Chairman Tel 020 7484 6160James Robinson, Finance Director Tel 020 7484 6160 Adventis Financial PRTarquin Edwards Tel: 020 7034 4758Peter Binns Tel: 020 7034 4760 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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