18th Sep 2006 07:01
Delling Group PLC18 September 2006 Press Release 7.00am 18 September 2006 DELLING GROUP PLC (DLG.L) The AIM-listed marketing services group INTERIM RESULTS Delling Group PLC ("Delling" or the "Company"), the only listed marketing support services group on AIM whose principal assets are in Scandinavia announces interim results for the six months ended 30 June 2006 Highlights •Interim results show 110 per cent. increase in turnover to £5.0 m when compared to the same six month period in 2005 (£2.4 m). £€1.5m annualised income won from new contracts during the period. •Fundraising and financing completed totalling £7.5m, including the conversion of shareholder loans and the issuing of loan notes. •The fundraising has strengthened the balance sheet, which the Board believe will allow the Group access to bank financing to allow inter alia financing of acquisitions. Post period end •Further acquisitions of Swedish companies, Eckerud Scandinavian Group and Printcenter were completed in August 2006. The addition of Eckerud, a specialist in design and production of exhibition material, and Printcenter, a specialist print company, offers both cost savings and strengthens further our leading positions in these specialties across the Nordic area. These companies had a combined turnover in the first half of 2006 of c. £3.0 million •Delling won a £2m two year contract for the supply of screens and graphic material to Expert Invest AB, the Group's largest contract to date for screen advertising services. •Promising start to Q3 2006 with record business volumes in July and August Commenting, Aksel Bratvedt, Executive Chairman, said: "The Group has had a very promising start to the 3rd quarter with recordbusiness volumes in July and August, which continues to reflect the increasingpace of growth in our business as more outsourcing contracts come on-stream". "With the present take-up of both acquisitions and business volume the Board islooking forward to the future with considerable confidence". Contact: Delling Group PlcAksel Bratvedt, Chairman Tel: 020 7484 5663James Robinson, Finance Director Tel: 020 7484 5664www.dellinggroup.com---------------------- Adventis Financial PRTarquin Edwards/Peter Binns Tel: 020 7034 4758/020 7034 4760 Kreab ASBrynjulf Freberg Tel: +47 9066 3646 Notes to Editors Delling Group is a leading supplier of marketing support services for marketingand communication departments throughout The Nordic countries. Delling manages all fields of graphic support in many different forms andformats including trade fairs, exhibitions and interactive digital solutions forthe web, mobile telephone marketing solutions, motion media for flat screens,plasma or LCD. It also supplies IT solutions which support and increase the efficiency of bothmarketing and information departments. However, its major strength is that theGroup can deliver complete turnkey solutions, tailor-made for its customers'every need. Delling also offers outsourcing solutions that can substantiallysave costs and improve efficiency. The Group's major activities are today concentrated in the Norwegian and Swedishmarkets, however, it is quickly expanding into other Nordic areas, as well ashaving customers and production facilities in Eastern Europe. It also has wellrespected suppliers as far afield as China and Thailand. Delling Group has today 80 employees. It is rapidly developing its organisationby focusing on supplying its customers with the quality they demand, deliveredon time at the right price. Central to its philosophy lies the fact that itscustomers will obtain greater effects and efficiency for every pound they investin marketing and information. The Group has strong growth, both through furtherdevelopment of existing clients and establishment of many new relationships,together with acquiring companies that enhance and further develop our businessconcept. Delling's goal is within the course of the next two years, through bothsatisfied customers and recommendations, to be the largest and most profitablecompany in the field of marketing support services within the Nordic countries,and a significant player within Eastern Europe. In October 2004, Delling was thefirst Scandinavian business to be listed on the Alternative Investment Market("AIM"), the London Stock Exchange's international market for smaller growingcompanies. This has given Delling access to capital funds for the furtherdevelopment of the Group. CHAIRMAN'S STATEMENT Financial results: I am delighted to present the Company's interim results for the half year to 30June 2006. Delling has continued to make pleasing progress both organically andby acquisition and has seen a substantial increase to its turnover. Financials The first half 2006 represents a doubling of the turnover to £5.0m compared tofirst half of 2005 (£2.4m) and almost the same turnover as for the whole year2005 (£5.3m). This expansion is generated both from the full effect of lastyear's acquisitions and the acquisition of n3prenor in January 2006 as well asthe expansion of our outsourcing contracts. Trading activity The results are affected by a lower gross profit margin of 49% compared to ourhistoric rate of 55%. The reason for this is the product mix in the period of alarger volume of subcontracted print. It is expected that the gross profitmargin in the second half of 2006 is going to be improved as more print jobs arebeing placed in low cost countries such as Poland. Delling is currently able to mark-up work subcontracted to Poland by asignificant amount compared to mark-ups earned from local subcontractors, givingthe Group great potential to improve its gross margins. The product mix isexpected to change towards more value added services commanding a higher grossmargin, such as pre-press as well as motion media in the screen advertisingarena, as we see a considerable pick-up in business in these areas. The Group has historically invested and spent considerable resources in buildinga screen advertising business and has announced earlier this year a number ofpilot projects which are performing well. A pleasing example of the conversion of a pilot project into a contract is thetwo year £2 million contract for Expert Group, which is the largest electronicretailer in the Nordic area with 900 shops. The contract is for screenadvertising systems as well as printed advertising in 30 shops in Sweden. Another contract which also has exciting potential is the Nordic outsourcingagreement with Bristol Squibb Myers. This contract was announced in June thisyear. As a result of the acquisition of n3prenor AB during the period a number ofstaff were made redundant in the Stockholm office resulting in some one-offcosts, shown as an exceptional item together with compensation paid to M Hudgellwho resigned at the start of the year. The Board intend to thoroughly reviewcosts being incurred by the Group in order improve the net margin in subsequentreporting periods. Fundraising Delling announced in June, July and August a fundraising and new issue totallingapprox. £7.5 million, which included the conversion of shareholder loans of £1.4million and the issue of £1million of loan notes. These actions havedramatically improved our balance sheet, and a pro-forma showing the effect ofthis financing, but before any acquisitions is as follows: As at Financing adjustments Pro-forma as at 30 June 2006 22 August 2006 unaudited unaudited £'000 £'000 Called up share capital notyet paid 1,148 - 1,148 Fixed assetsIntangible assets 4,366 - 4,366Tangible assets 611 - 611 ----------- ----------- ------------ 4,977 - 4,977 ----------- ----------- ------------ Current assets Stocks 65 - 65 Debtors 3,648 (818) 2,830Cash at bank 381 1,915 2,296 ----------- ----------- ------------ 4,094 1,097 5,191 Creditors: amounts fallingdue within one year (8,743) 3,000 (5,743) ----------- ----------- ------------ Net current liabilities (4,649) 4,097 (552) ----------- ----------- ------------ Total assets less currentliabilities 1,476 4,097 5,573 Creditors: amounts fallingdue after more than one year (2,105) 1,377 (728) ----------- ----------- ------------ Net assets (629) 5,474 4,845 =========== =========== ============ Capital reserves Called up share capital 844 686 1,530 Share premium account 5,661 4,788 10,449 Profit and loss account (7,134) - (7,134) ----------- ----------- ------------Shareholders' funds (629) 5,474 4,845 =========== =========== ============ Since the date of this pro-forma the Group has completed the acquisition ofEckerud Scandinavian Group AB for approximately £1.5million and has exchangedcontracts to acquire Princenter i Linkoping AB for approximately £0.37 million. The Company, with a strengthened balance sheet now should have the ability todebt finance future acquisitions. As of last week, the Company is pleased toreport that a first facility of approximately £800,000 was agreed and is now inplace with a Scandinavian bank. The Board hopes that the Group will be able toconclude further acquisition bank finance so as to fund its acquisition programwithout recourse to further equity issues. Acquisitions The Group concluded two new acquisitions in August. The companies EckerudScandinavian Group and Printcenter are both located in Sweden. The first companyis a specialist in design and production of exhibition material and togetherwith our existing business in Norway places Delling Group as one of the leadersin this area in the Nordic area. Printcenter is a specialist print company andcomplements our existing business in Stockholm generating considerable potentialcost efficiencies. These companies had a combined turnover during the first halfof 2006 of approximately £3.0 million. Future Strategy Delling Group Plc is the only marketing support services company listed on Aimwith the ambition of consolidating this sector within the Nordic area. Thecompany aims to continue its expansion, both through growth in the outsourcingof marketing support services from corporate marketing departments as well asthrough the acquisition of small to medium-sized companies in the industry atlower price earnings ratios than the Group is currently trading on. As the Groupwill only consider acquisition targets that are cash flow positive, Delling'saim is to finance its growth through bank borrowing. Delling Group's geographic focus is presently the four Nordic countries with afocus on Norway and Sweden where scope for cost efficiencies are largest at themoment. The Group has in Norway, operations in Oslo and Stavanger and in Sweden,operations in Stockholm and Linkoping. Expansion A gradual expansion into Finland and Denmark is anticipated on the back ofincreasing new business from existing and new customers in these countries. Thesize of Delling's marketplace across the Nordic countries is such that it caneasily accommodate a profitable company with £100m in sales, giving Dellingplenty of scope for further growth. Delling Group will continue to focus onbusiness opportunities in its locality, where it is best able to take advantageof opportunities as they present themselves. However, a number of our customers with businesses in London have increasinglyinquired about the Group's ability to serve them in the UK. A smalleracquisition in the London area that could take advantage of potential businessvolumes from Delling's various international and Scandinavian customers, is apossible geographic extension to our strategy. Likewise based on our increasing business volume in the neighbouring BalticStates a local presence there would be a natural extension when the Group hasreached its growth target in the Nordic countries. Organisation: To reflect our dual growth strategy based on acquisitions and organic growth, wehave more clearly defined the various management responsibilities as they splitbetween the Executive Chairman and the CEO. The Executive Chairman is responsible for acquisitions and financing while theCEO is responsible for organic growth and integration of acquired companies. TheFinance Director concentrates on reporting systems and works with the Chairmanon acquisitions and financial due diligence. The Group is being organised intothe following business areas: Document design & production, Exhibition designand production, Graphical production and Digital services with a managerresponsible for each division. This structure is being established to betteridentify and streamline operations, extract economies of scale and to furtherenhance efficiency, as Delling looks to sustain its present growth rates. Current Trading and future Prospects The Group has had a very promising start to the 3rd quarter with record businessvolumes in July and August, which continues to reflect the increasing pace ofgrowth in our business as more outsourcing contracts come on-stream. With the present take-up of both acquisitions and business volume the Board islooking forward to the future with considerable confidence. Aksel Bratvedt Executive Chairman 15 September 2006 1. CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 months ended 6 months ended Year ended 30 June 2006 30 June 2005 31 December 2005 unaudited unaudited audited £'000 £'000 £'000 Turnover 4,995 2,354 5,315Cost of sales (2,525) (1,310) (2,439) ------------ ------------ ------------Gross profit 2,470 1,044 2,876 Administrative expenses (3,575) (2,596) (5,741) Exception item - payrollcosts (159) - - ------------ ------------ ------------Operating loss (1,264) (1,552) (2,865) Interest receivable 8 - 2Interest payable (142) (43) (131) ------------ ------------ ------------Loss on ordinary activitiesbefore taxation (1,398) (1,595) (2,994) Tax on loss on ordinary activities - - - ------------ ------------ ------------ Loss for period (1,398) (1,595) (2,994)Dividends - - - ------------ ------------ ------------ Retained loss for period (1,398) (1,595) (2,994) ============ ============ ============ Loss per share (pence) (2.02)p (2.38)p (4.43)p 2. CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES 6 months ended 6 months ended Year ended 30 June 2006 30 June 2005 31 December 2005 unaudited unaudited audited £'000 £'000 £'000 Loss for the financial yearattributable to theshareholders of the parentcompany (1,398) (1,595) (2,994)Currency translationdifferences on foreigncurrency net investments (156) - 114 ----------- ---------- ------------Total recognised gains andlosses relating to the period (1,554) (1,595) (2,880) =========== ========== ============ 3. CONSOLIDATED BALANCE SHEET As at As at As at 30 June 2006 30 June 2005 31 December 2005 unaudited unaudited audited £'000 £'000 £'000 Called up share capital notyet paid 1,148 1,148 1,148 Fixed assetsIntangible assets 4,366 2,821 3,068Tangible assets 611 605 612 ------------ --------- ------------ 4,977 3,426 3,680 ------------ --------- ------------ Current assets Stocks 65 106 70 Debtors 3,648 1,423 1,748Cash at bank 381 5 304 ------------ --------- ------------ 4,094 1,534 2,122 Creditors: amounts fallingdue within one year (8,743) (4,368) (5,741) ------------ --------- ------------ Net current liabilities (4,649) (2,834) (3,619) ------------ --------- ------------ Total assets less currentliabilities 1,476 1,740 1,209 Creditors: amounts fallingdue after more than one year (2,105) (426) (1,101) ------------ --------- ------------ Net (liabilities)/assets (629) 1,314 108 ============ ========= ============ Capital reserves Called up share capital 844 738 742 Share premium account 5,661 4,871 4,946 Profit and loss account (7,134) (4,295) (5,580) ------------ --------- ------------Shareholders' funds (629) 1,314 108 ============ ========= ============ 4. CONSOLIDATED CASH FLOW STATEMENT 6 months 6 months Period ended ended ended 31 30 June 2006 30 June 2005 December 2005 unaudited unaudited audited £'000 £'000 £'000Net cash inflow/(outflow)from operating activities 765 (1,352) (1,487)Returns on investments and servicing offinanceInterest paid (141) (43) (130)Interest element offinance leases (1) - (1)Interest received 8 - 2 ----------- ----------- -----------Net cash outflow fromreturns on investments andservicing of finance (134) (43) (129) Taxation - - - ----------- ----------- -----------Capital expenditure and financialinvestmentPayments to acquireintangible fixed assets (78) - (117)Payments to acquiretangible fixed assets (92) (7) (233) ----------- ----------- -----------Net cash outflow forcapital expenditure andfinancial investment (170) (7) (350) AcquisitionPurchase of subsidiaryundertaking (1,385) - -Cash acquired withsubsidiaries 14 - 58 ----------- ----------- -----------Net cash (outflow)/inflowfrom acquisitions (1,371) - 58 ----------- ----------- -----------Cash outflow beforefinancing (910) (1,402) (1,908) FinancingNet issue of equity sharecapital - 1,096 1,104Capital element of financeleases (4) - (2)Increase in long termloans 960 - 683 ----------- ----------- -----------Net cash inflow/(outflow) 46 (306) (123) =========== =========== =========== Non-cash transactions In the year ended 31 December 2005 the Company issued a total of 5,468,796ordinary shares of 1p at a price of 21p unpaid to the directors in accordancewith the directors share acquisition scheme as approved at the AGM on 15 June2005. On the 20 June 2006 the Company issued 10,218,750 ordinary shares of 1p at aprice of 8p for cash, for which the terms of settlement were after the 30 June2006. 5. NOTES TO THE INTERIM STATEMENT 5.1. Reconciliation of operating loss to net cash inflow from operating activities 6 months ended 30 June Year ended 31 December (unaudited) (audited) 2006 2005 2005 £000 £000 £000 Operating loss (1,264) (1,595) (2,865)Amortisation 151 99 222Depreciation 93 76 195Loss on disposalof shares held forresale - - 3Decrease/(increase) in stocks 8 (64) (30)Increase indebtors (1,006) (725) (1,068)Increase increditors 2,783 857 2,056 ------- -------- ------------Net cashinflow/(outflow)from operatingactivities 765 (1,352) (1,487) ------- -------- ------------ 5.2 Reconciliation of net cash flow to movement in net funds/(debt) 6 months ended 30 June Year ended 31 December (unaudited) (audited) 2006 2005 2005 £000 £000 £000Increase/(decrease) in cash in theperiod 46 (306) (123)Change in net debtNet funds at startof period 89 221 221Foreign exchangemovement (4) - (9) ------- -------- ------------Net funds/(debt)at end of period 131 (85) 89 ------- -------- ------------ 5.3 Analysis of changes in net funds/(debt) At start of Cash flows Foreign At end of the period exchange period movement 6 months ending 30 June 2006Net cash:Cash in handand at bank 304 90 (13) 381Overdrafts (215) (44) 9 (250) -------- -------- -------- --------- 89 46 (4) 131 ======== ======== ======== =========6 months ending 30 June 2005Net cash:Cash in handand at bank 284 (279) - 5Overdrafts (63) (27) - (90) -------- -------- -------- --------- 221 (306) - (85) ======== ======== ======== =========Year ending 31 December 2005Net cash:Cash in handand at bank 284 12 8 304Overdrafts (63) (135) (17) (215) -------- -------- -------- --------- 221 (123) (9) 89 ======== ======== ======== ========= 5.4 Financial information and comparatives The interim results for the six months ended 30 June 2006 are unaudited and donot constitute accounts within the meaning of section 240 of the Companies Act1985. The interim results have been drawn up using accounting policies andpresentation consistent with those applied in the audited accounts for theperiod ended 31 December 2005. The information in respect of the period ended 31 December 2005 has beenextracted from the audited statutory accounts which have been delivered to theRegistrar of Companies. The report of the auditors on those statutory accountswas unqualified. 5.5 Exceptional item - payroll costs The exceptional item relates to compensation paid to M Hudgell who resigned as adirector during the period, together with sums paid to employees in Sweden whowere made redundant after a duplication of roles following the acquisition ofn3prenor AB. 5.6 Tax on loss on ordinary activities There is no tax charge on the result for the six month period due to availablelosses. 5.7 Dividends No dividend is proposed. 5.8 Share capital During the period Delling Group plc issued the Company issued 10,218,750ordinary shares of 1p at a price of 8p for cash, for which the terms ofsettlement were after the 30 June 2006. 5.9 Loss per share The calculation of loss per share is based on the loss attributable to ordinaryshareholders divided by the weighted average number of shares in issue carryingthe right to receive dividends, which excludes the shares issued to thedirectors and not fully paid. The weighted number of shares in issue is asfollows: 30 June 30 June 31 December 2006 2005 2005 Number '000 Number '000 Number '000 Weighted average number of shares 69,291 66,899 67,467 ---------- ---------- --------- There is no dilution of earnings per share as a result of losses. 5.10 Post balance sheet events On 12 July 2006 at the Annual General Meeting 49,279,686 ordinary shares of 1pwere issued at a price of 8p raising a gross amount of £3,942,374. On 10 August 2006 7,500,000 ordinary shares of 1p were issued at a price of 8praising a gross amount of £600,000. On the 22 August 2006 Delling Group plc issued 11,897,436 ordinary shares of 1pat a price of 9.75p raising a gross amount of £1.16m. Delling Group plc alsoissued £1m of loan notes together with 2,000,000 ordinary shares, credited asfully paid at 9.5p, as a commitment fee for the loan. On 22 August 2006 Delling Group plc also exchanged contracts to acquire EckerudScandinavian Group AB ("Eckerud") for approximately £1.5 million. For the yearending 31 December 2006 Eckerud is expected to turnover approximately £4.4million and generate profits before tax of £260,000. On 31 August 2006 Delling Group plc exchanged contracts to acquire Printcenter iLinkoping AB ("Printcenter") for approximately £0.37 million. For the yearending 31 August 2006 Printcenter is expected to turnover approximately £1million and generate profits before tax of £70,000. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Direct Line