27th Apr 2007 07:00
Delling Group PLC26 April 2007 For Release 7:00 am 27 April 2007 DELLING GROUP PLC (DLG.L) The AIM-listed marketing support services group Trading update for the year ended 31 December 2006 and Q1 2007 Delling Group PLC ("Delling" or the "Company"), the only listed marketingsupport services group on AIM whose principal assets are in Scandinavia,announces that it expects its final results for the year ended 31 December 2006to be below market expectations, however it is pleased to report positiveearnings before interest and tax during the first quarter of 2007. The Company expects to report a loss in the region of £5.5m, when the financialstatements are published in June 2007. This loss is a result of the product mixnot developing as expected combined with higher restructuring costs. The loss,whilst disappointing, reflects the scale of investment, both in time and money,of Delling's major acquisition programme during the period and of therestructuring and integration work conducted in the last quarter of 2006 onthose acquisitions. Of the expected loss for the year, the Swedish exhibition company EckerudScandinavian Group AB ("Eckerud"), an acquisition announced on 22 August 2006and forecast to make annual profits of £260,000 and create beneficial synergieswith the rest of the group has reported a loss for the three months sinceacquisition in the region of £500,000. The loss has resulted due to what theDirectors believe to be both an overstated result for the first half 2006 andless than expected turnover from Eckerud in the autumn. As a result of this, theoriginal terms of the acquisition are under renegotiation and the largepotential earn-out will be substantially reduced. Since the year end, Delling ispleased to announce that in Q1 2007, Eckerud has reported profits before tax of£140,000 as a result of successful increased sales efforts and changes inmanagement. With the fourfold increase in the size of the group's turnover from £5m in 2005to a present run-rate of more than £20m, the reporting systems and capacity ofour finance function in Scandinavia were found to be inadequate. In addition tothe lack of sufficient capacity in terms of personnel and competence, the groupwas running 4 different accounting and management systems. The Board took actionto correct these problems and has, during the first months of 2007, thoroughlyreviewed the financial position of each of its businesses. In connection withour review, the systems and staff competences have been significantlystrengthened by the hiring of new staff and the integration of reportingsystems. The board is confident that the above review has generated an accurate pictureof the current position of each subsidiary company and that the Group now hassufficient capacity in its finance function and financial reporting system goingforward. As a consequence, Delling believes that it will now be easier tointegrate future acquisitions as well as enabling the Group to produce financialreports substantially earlier. Delling therefore expects the interim results forthe first six months of 2007 to be announced towards the end of July. The group is starting to reap the rewards of the hard work put in during theperiod and particularly during the last quarter of 2006. The Group currently hasa turnover run-rate of approximately £22 million giving it critical mass interms of covering its fixed costs and generating the economies of scale that acompany offering outsourcing services is dependant upon. The Board is now concentrating on cost reductions and further integration andDelling is pleased to report a profit before tax and interest for the firstquarter of 2007. Commenting, Aksel Bratvedt, Executive Chairman of Delling Group, said: "Whilst the loss for the year was disappointing, I believe that the hard workundertaken across the group during the period, in terms of growing sales,cutting costs and streamlining our acquisition and integration controls andprocedures, has been effective and the group's move into profit during the firstquarter of the new financial year is an encouraging indicator of this." "With group turnover now substantially increased and with an immediate focus onreducing our cost base, I look forward to our being able to build on this Q1profit and increasingly leverage upon tangible economies of scale to create aprofitable, dynamic business in what is a niche market". For further information please contact: ENDS Contact:Delling Group PlcAksel Bratvedt, Chairman Tel: 020 7484 5663James Robinson, Finance Director Tel: 020 7484 5664www.dellinggroup.com Adventis Financial PRTarquin Edwards/Chris Steele Tel: 020 7034 4758 Seymour PierceNicola Marrin Tel: 020 7107 8000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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