10th Sep 2007 07:02
Delling Group PLC10 September 2007 Press Release 7.00am 10 September 2007 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 2007 Highlights •Turnover up 110 per cent. to £10.5m (2006 interims: £5.0m) reflecting the full effect of recent acquisitions in addition to new contracts and good organic growth •Maiden operating profit of £214,000 (2006 interims: Loss £1.3m) with the Company benefiting from significantly improved economies of scale and critical mass allied to an increasingly strong footprint within its markets •Consolidation of the business and cost cutting continue the ongoing process of realising the profit potential within the business •Successful completion of the acquisitions of Domain of Graphics AB and Sandbergs Exhibition Group AB took place during the period. Combining Sandbergs with our existing exhibition businesses makes Delling Group the largest provider of such services in Scandinavia, a strategically important position, upon which the Group is well placed to build. Commenting, Aksel Bratvedt, Executive Chairman, said: "Delling is now turning over sufficient volumes to give it critical mass,allowing the Company to extract those economies of scale that have long existedand enabling it to generate operating profits for the first time in itshistory". "The Group has had a stable start to the 3rd quarter and expects this tocontinue into the Autumn with organic growth generated both by increased salesof single services as well as through new outsourcing contracts." "With the present demand for our services and the increasing profitability ofthe Group, the Board is looking forward to the future with considerableconfidence." Contact: Delling Group PlcAksel Bratvedt, Chairman Tel: 020 7484 5663James Robinson, Finance Director Tel: 020 7484 5664www.dellinggroup.com---------------------- Adventis Financial PR Tel: 020 7034 4758Tarquin Edwards 07879 458 364 Seymour PierceNicola Marrin Tel: 020 7107 8000 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 140 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 2007. Delling has continued to make good progress, both organically and byacquisition and the Company is pleased to announce a substantial increase inturnover and a move from significant losses into operating profitability. Financials Our performance for the first half of 2007 represents a doubling of turnover to£10.5m compared to the comparative period last year (2006: £5.0m) and it equalsthe turnover for the full year 2006 (£10.5m). This sales growth was generatedboth from the full effect of last year's acquisitions and also the acquisitionsof Sandberg Expo and D.O.G in January 2007 as well as the expansion of ouroutsourcing contracts and good organic growth. Most importantly however, the Group has for the first time moved into operatingprofit. Delling has benefited from significantly improved economies of scale andcritical mass, allied to an increasingly strong footprint within its markets.Consolidation of the business and synergistic cost cutting continue the ongoingprocess of realising the profit potential within the business. Trading Activity The Group is seeing increasing demand for its services, most especially withregard to its outsourcing concept. Delling has a customer base of more than 300customers with international brand names such as Bristol-Myers Squibb, Ericsson,ABB, Coca Cola, McDonalds and others. These customers are increasingly seeingthe benefits of converting to the outsourcing model, whereby Delling can reducecosts and increase quality and efficiency for their respective marketingdepartments. We are very excited by the significant potential for cross sellingto these international customers more of our services and also the potential forintroducing our outsourcing concepts to the customer bases of those companies wehave acquired. Processes for integrating our sales staff are ongoing within theGroup and we are very optimistic that the result of these processes will lead toimproved sales. Profit Improvement Program As previously announced, our focus continues to be on improving theprofitability of the Group. We have come a long way in bringing that process tofruition since the beginning of the year. Out of our 4 subsidiaries, only onesubsidiary was still in loss during the period. While this subsidiary accountedfor 15% of Group turnover, it accounted for all of the loss, thereby reducingthe impact of the profitable performance of other companies in the Group. TheBoard believes that the process of cost cutting and actions to increaseefficiency will turn this subsidiary around in the short term. We are focussing on both integrating our sales efforts and improving organicgrowth in turnover along with enhanced efficiency and cost cutting activitiesthroughout the organisation. The Board and management have decided that ouracquisition programme will temporarily cease, apart from small infillacquisitions that will have a short term identifiable impact on margins, andfurther substantial acquisitions will not be considered until the Company cansee the final results of the profit improvement programme. Financing Financing costs are a consequence of expensive short term acquisition financing,which the Group is currently working on refinancing. In addition, the Group hasexperienced cash flow constraints during the period, causing financial expensesowing to late payment of suppliers. In connection with the loan refinancing ofthe subsidiaries, the Board believes that in the coming months, these expenseswill cease and that the Group's purchasing power with suppliers will improvesubstantially, improving the Group terms of trade with positive effects onworking capital and the gross profit margin. Acquisitions The Group acquired Sandberg Expo in January 2007 and fused with our existingbusinesses in this sector, has created the leading exhibition design andproduction company in Scandinavia. The Board can confirm already that this hasbeen a successful acquisition, which has generated a strong strategic positionfor further growth in this arena. An example of this is our contract withEricsson, announced on 5th June 2007 to deliver their exhibition material overthe next 2 years. Although our focus is on profits rather than growth at the moment, the Group hasa large pipeline of potentially interesting acquisition candidates. The Groupwill start pursuing these acquisitions as soon as the Board feels confident thatthe Group's financial position has stabilised and that Group cash flow is strongenough to support leveraged acquisition financing. Future Strategy The objectives and strategy of Delling Group are unchanged. Delling Group Plc isthe only marketing support services company listed on AIM with the ambition ofconsolidating this sector within the Nordic area. The Company aims to continueits expansion, both through organic growth and subsequently throughacquisitions. 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, Linkoping, Gavle and Gothenburg. A gradual expansioninto Finland and Denmark is anticipated on the back of increasing new businessfrom existing and new customers in these countries. The size of Delling'smarketplace across the Nordic countries is such that it can easily accommodate aprofitable company with £100m in sales, giving Delling plenty of scope forfurther growth. Delling Group will continue to focus on business opportunitiesin its locality, where it is best able to take advantage of opportunities asthey present themselves. However, a number of our customers with businesses in London have increasinglyenquired about the Group's ability to service 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. Current Trading and Future Prospects The Group has had a stable start to the 3rd quarter and expects this to continueinto the Autumn with organic growth generated both by increased sales of singleservices as well as through new outsourcing contracts. With the present demand for our services and the increasing profitability of theGroup, the Board is looking forward to the future with considerable confidence. Aksel Bratvedt Executive Chairman 7 September 2007 1. CONSOLIDATED INCOME STATEMENT 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 unaudited unaudited audited £'000 £'000 £'000 TurnoverContinuing operations 8,382 4,995 7,053Acquisitions 2,144 - 3,409 ------------ ------------ ------------ Group turnover 10,526 4,995 10,462 Cost of sales (5,485) (2,525) (6,037) ------------ ------------ ------------ Gross profit 5,041 2,470 4,425 Administrative expenses (4,827) (3,734) (9,628) ------------ ------------ ------------Operating profit/(loss) Continuing operations (423) (1,264) (5,135)Acquisitions 637 - (68) ------------ ------------ ------------ Group operating profit/(loss) 214 (1,264) (5,203) Interest receivable - 8 4Interest payable (409) (142) (472) ------------ ------------ ------------ Loss on ordinary activitiesbefore taxation (195) (1,398) (5,671) Tax on loss on ordinaryactivities - - (129) ------------ ------------ ------------ Loss for period (195) (1,398) (5,800) ------------ ------------ ------------ Retained loss for period (195) (1,398) (5,800) ============ ============ ============ Loss per share (pence) (0.12)p (2.02)p (5.22)p 2. CONSOLIDATED BALANCE SHEET As at As at As at 30 June 2007 30 June 2006 31 December 2006 unaudited unaudited audited (restated) £'000 £'000 £'000 Called up share capital notyet paid 847 1,148 1,148 Fixed assetsIntangible assets 8,620 4,366 7,321Tangible assets 688 611 599 ------------ ---------- ------------ 9,308 4,977 7,920 ------------ ---------- ------------ Current assets Stocks 57 65 55 Debtors 5,632 3,648 3,382Cash at bank 298 381 290 ------------ ---------- ------------ 5,987 4,094 3,727 Creditors: amounts fallingdue (13,151) (8,743) (11,360)within one year ------------ ---------- ------------ Net current liabilities (7,164) (4,649) (7,633) ------------ ---------- ------------ Total assets less currentliabilities 2,991 1,476 1,435 Creditors: amounts fallingdue after (909) (2,105) (625)more than one year ------------ ---------- ------------ Net assets/(liabilities) 2,082 (629) 810 ============ ========== ============ Capital reserves Called up share capital 1,715 844 1,566 Shares to be issued underoption 255 18 239 Share premium account 11,931 5,643 10,623 Profit and loss account (11,819) (7,134) (11,618) ------------ ---------- ------------ Shareholders' funds 2,082 (629) 810 ============ ========== ============ 3. STATEMENT OF CHANGES IN EQUITY Share capital Share premium Shares to be Retained Total account issued under earnings option £'000 £'000 £'000 £'000 £'0006 months ended 30June 2007 As at 1January 2007 1,566 10,623 239 (11,618) 810 Issue of shares 149 1,362 - - 1,511 Difference inrespect ofdirectors'shareacquisitionscheme - - - (156) (156) Share issuecosts - (54) - - (54) Share basedpayments - - 16 - 16 Loss for thefinancialperiodattributableto theshareholdersof the parentcompany - - - (195) (195) Currencytranslationdifferences onforeigncurrency netinvestments - - - 150 150 ------- ------- --------- -------- ------ As at 30 June2007 1,715 11,931 255 (11,819) 2,082 ======= ======= ========= ======== ====== 6 months ended 30June 2006 As at 1January 2006 742 4,928 18 (5,580) 108 Issue of shares 102 715 - - 817 Loss for thefinancialperiodattributableto theshareholdersof the parentcompany - - - (1,398) (1,398) Currencytranslationdifferences onforeigncurrency netinvestments - - - (156) (156) ------- ------- --------- -------- ------ As at 30 June2006 844 5,643 18 (7,134) (629) ======= ======= ========= ======== ====== Year ending 31December 2006 As at 1January 2006 742 4,928 18 (5,580) 108 Issue of shares 824 6,015 - - 6,839 Share issuecosts - (320) - - (320) Share basedpayments - - 221 - 221 Loss for theperiod - - - (5,800) (5,800) Currencytranslationdifferences onforeigncurrency netinvestments - - - (238) (238) ------- ------- --------- -------- ------ As at 31December 2006 1,566 10,623 239 (11,618) 810 ======= ======= ========= ======== ====== 4. CONSOLIDATED CASH FLOW STATEMENT 6 months ended 6 months ended Year ended 31 30 June 2007 30 June 2006 December 2006 unaudited unaudited audited £'000 £'000 £'000 Net cash flows fromoperating activities (1,310) 765 (3,236)(Note 5.1) Cash flows from investingactivitiesPayments to acquireintangible fixed assets - (78) (2,143)Payments to acquire tangiblefixed assets (91) (92) (311)Purchase of subsidiaryundertakings (819) (1,385) -Cash/(overdraft) acquiredwith subsidiaries 126 14 (706) ----------- ----------- ----------- Net cash flows frominvesting activities (784) (1,541) (3,160) Cash flows from financingactivitiesNet issue of equity sharecapital 1,103 - 4,670Proceeds from directors'share acquisition scheme 145 - -Interest element of financeleases (1) (1) (1)Interest received - 8 4Interest paid (215) (141) (271)Capital element of financeleases (3) (4) (6)Repayment of loans - - (405)Increase in loans 295 960 1,000 ----------- ----------- ----------- Net cash flows fromfinancing activities 1,324 822 4,991 ----------- ----------- ----------- Net change in cash and cashequivalents (770) 46 (1,405) Cash and cash equivalents atthe beginning of the period (1,313) 89 89Foreign exchange movement 24 (4) 3 ----------- ----------- ----------- Cash and cash equivalents atthe end of the period (2,059) 131 (1,313) =========== =========== ===========Consisting of:Cash and cash equivalents 298 381 290Bank overdrafts (2,357) (250) (1,603) ----------- ----------- ----------- Net cash and cashequivalents (2,059) 131 (1,313) =========== =========== =========== Non-cash transactions In the year ended 31 December 2006 the Company converted short termnon-institutional loans totalling £1.4m into equity. The Company also issuedshares to the value of £271,000 as part payment for the acquisitions of n3prenorAB and Eckerud Scandinavian Group AB. Additionally in the year ended 31 December 2006 the Company had share basedpayments totalling £398,000, being £203,000 (2005: £18,000) in option coststogether with £195,000 as a commitment fee for a loan. During the period ended 30 June 2006 the Company issued 343,633 ordinary sharesof 1p at a price of 10.85p in partial consideration of an acquisition. 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) 2007 2006 2006 £'000 £'000 £'000 Operatingprofit/(loss) 214 (1,264) (5,203)Depreciation andamortisation 234 244 684Loss on disposalof fixed assets - - 121Share basedpayments 8 - 398Decrease/(increase) in stocks 20 8 19Increase indebtors (1,699) (1,006) (749)(Decrease)/increase in creditors (87) 2,783 1,494 ------- -------- ------------ Net cashinflow/(outflow)from operatingactivities (1,310) 765 (3,236) ======= ======== ============ 5.2 Financial information and comparatives The results for the half year ended 30 June 2007 and the half year ended 30 June2006 are unaudited. The financial information set out above, including theaudited comparative figures for the year ended 31 December 2006 does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The Group's published accounts, prepared under UK Generally Accepted AccountingPrinciples ("UK GAAP") for the year ended 31 December 2006 have been reported onby the Company's auditors and filed with the Registrar of Companies. The reportof the auditors' was unqualified and did not contain a statement under section237 (2) or (3) of the Companies Act 1985. Delling Group plc has adopted International Financial Reporting Standards("IFRS") from 1 January 2007, in accordance with the European Union Regulationsand AIM rules. The first annual report prepared under IFRS will be the yearending 31 December 2007. The interim financial information has been prepared in accordance with therecognition and measurement requirements of IFRS as endorsed by the EuropeanUnion. The Directors do not consider that there are any significant changes tothe Group's accounting policies (as set out in the 2006 Annual Report) resultingfrom the adoption of IFRS and there are no material differences between theresults, equity and cash flows as previously reported under UK GAAP and thosereported in accordance with IFRS. Consequently, there is no requirement forexplanation or note reconciling equity and results for comparative periodsreported under UK GAAP to those reported for the periods under IFRS. The Group has elected not to apply IFRS 3 "Business Combinations"retrospectively to business combinations that took place before 1 July 2004. 5.3 Tax on loss on ordinary activities There is no tax charge on the result for the six month period due to availablelosses. 5.4 Dividends No dividend is proposed. 5.5 Share capital During the period Delling Group plc issued the Company issued 11,500,000ordinary shares of 1p at a price of 10p for cash and 3,343,633 ordinary sharesof 1p at a price of 10.85p in partial consideration of an acquisition. 5.6 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. The weighted number of shares in issue is asfollows: 30 June 30 June 31 December 2007 2006 2006 Number '000 Number '000 Number '000 Weighted average number of shares 168,395 69,291 111,217 ========== ========== ========= There is no dilution of earnings per share as a result of losses. Independent review report to the directors of Delling Group plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the income statement, thebalance sheet, the statement of changes in equity and the cash flow statementand the related notes to the accounts and we have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for theCompany for the purpose of their interim report and for no other purpose. We donot, therefore in producing this report, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. It is bestpractice that the accounting policies and presentation applied to the interimfigures should be consistent with those applied in preparing the precedingannual accounts except where any changes, and the reasons for them, aredisclosed. Review Work Performed We conducted our review in accordance with the guidance contained in Bulletin1999/4: 'The review of interim financial information' issued by the AuditingPractices Board. A review consists principally of making enquiries of managementand applying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the accounting policies andpresentation have been consistently applied unless otherwise disclosed. A reviewexcludes audit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) 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 thatshould be made to the financial information as presented for the period ended 30June 2007. CLB Littlejohn Frazer Chartered Accountants 1 Park Place Canary Wharf London E14 4HJ 7 September 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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