Interim Results
Dowlis Corporate Solutions plc
19 September 2006
Date: 19 September 2006
On behalf of: Dowlis Corporate Solutions plc ('Dowlis' or 'the Company')
Embargoed until: 0700hrs
Dowlis Corporate Solutions plc
Unaudited Interim Results
Dowlis Corporate Solutions plc, the marketing, information and logistics
solutions business, today announced its interim results for the six month ended
30 June 2006.
The key highlights are:
• Profit before exceptional items and goodwill amortisation of £0.31m (2005:
£0.39m)
• Turnover of £9.38m (2005:£8.54m)
• Exceptional charge of £0.6m
• Profit/(loss) before tax (£0.37m) (2005:£0.16m)
• Profit/(loss) per ordinary share (0.81p) (2005:1.43p)
• Net cash of £0.37m (2005:£0.4m)
• Disappointing performance from the corporate promotional products business
• Acquisition of Ross and Envoy businesses
• Strong growth in trade supply and information services businesses
• Appointment of Barrett Bedrossian as Group FD and Craig Slater as
Non-Executive Director
Post Balance Sheet Events
• Acquisition of Customer Focus (Software) Limited renamed Industry Software
Limited
Enquiries:
Dowlis Corporate Solutions plc www.dowlis.com
Martin Varley (Chief Executive) 0870 224 6677
Barrett Bedrossian (Finance Director) 07775 848 252
Redleaf Communications
Emma Kane/Sanna Lehtinen 020 7822 0200
Corporate Synergy PLC
Rhodri Cruwys 020 7448 4400
Zeus Capital
Alex Clarkson 0161 831 1512
• Publication quality photographs are available via Redleaf.
CHAIRMANS STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2006
Trading Results
The Group reports a profit before exceptional items and goodwill amortisation of
£0.31m (2005:£0.39m) from sales of £9.38m (2005:£8.54m) in the six months to 30
June 2006. These results include four months contribution from 'Ross' the
Glasgow based distributor which was acquired in February 2006 and five months
from Envoy the catalogue publishing business which was acquired in January 2006.
After an exceptional charge of £0.60m (explained further below) and goodwill
amortisation, the Group's operating loss before taxation was £0.37m (2005:profit
of £0.16m), representing a loss per ordinary share of 0.81p (Dec 2005: profit of
1.43p).
The Group's result reflects a disappointing performance from the corporate
promotional products business which has now been restructured, implementing
substantial cost savings over the past three months. This performance has
however been partially offset by encouraging sales growth and profits from both
the acquisitions and the information service and distribution division.
The balance sheet remains strong, with net cash of £0.37m (2005:£0.40m), this
being achieved despite a net cash outlay of £0.9m in acquiring both the Ross and
Envoy businesses.
Exceptional Charge
To take full advantage of the potential arising from the merger of Corporate
Solutions and Dowlis and in order to improve profits in the traditional
promotional products division we have restructured that business. As a result,
we have reduced ongoing costs in this specific area and diverted some resources
to the faster growing trade supply and information services divisions.
This resulted in an exceptional charge recognised in the period of £0.6m which
comprised £0.15m asset write-offs and £0.45m staff redundancy costs. The
resulting annual reduction in overheads achieved from this exercise is £0.53m.
The changes made in the business do not reduce capacity, nor will they have any
detrimental impact on customers. Indeed, we expect the revised structure to
improve customer service through a clearer account management structure.
Progress against strategy
Our strategy is based largely upon the ability to acquire businesses that can
operate more profitably and grow more rapidly as part of our Group and the
expectation that our distribution and information offerings will provide strong
and highly profitable growth.
Early indications are that the Envoy and Ross acquisitions prove the first of
these aims. Each of these businesses has exceeded our initial expectations at
the time of acquisition, with Envoy attracting additional customers due to the
enhanced product offering through the use of 'group' resources such as
technology. Ross has recently won a number of new orders helped by the increased
buying power of the group and greater comfort that customers take from dealing
with a larger company.
Similarly, we are very pleased with progress in Trade Only where the product
sales division has grown sales strongly in the period. The Information Services
division has also performed strongly, with many new suppliers joining the
product portal in the first six months of the year. We expect this business to
contribute significantly to the Group's expansion. A segmental analysis of
turnover and operating profit is shown within this report.
Post Balance Sheet Event
In continuing our strategy to deliver complete business solutions for our
industry, on 3 July 2006 the Group announced the acquisition of 80% of Customer
Focus (Software) Limited, since renamed Industry Software Limited (ISL). The
synergies between ISL, a provider of marketing business software designed for
the SME market, and the Group, mean that we are well placed to enhance
significantly our technology offering.
Board Changes
On 9 June 2006, we announced the appointment of Barrett Bedrossian as Group
Finance Director and Craig Slater as a Non Executive Director.
Barrett worked in a variety of financial and operational roles for 14 years at
Product Plus International, a subsidiary of 4imprint Group plc. Craig Slater has
worked for a number of quoted companies, including 4imprint Group plc as C.O.O.
Outlook
We are confident that the strategy set out at the time of our admission to AIM
is both appropriate and deliverable. Our recent acquisitions have proved
successful to date and the Trade Only product and information offerings are
market-leading and high growth. These are both key elements of our strategy.
The performance of the traditional promotional merchandise business has however
been disappointing. In the short term we will continue to take action to improve
profits in this area but the full benefit of these actions are unlikely to be
felt until 2007.
We remain confident that decisive short-term actions already executed and a
clear focused strategy will ensure the business performs broadly in line with
the previous year and place it in a position to take advantage of the future
benefits of the lower cost base now in place.
Colin Cooke
Chairman
19 September 2006
DOWLIS CORPORATE SOLUTIONS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 JUNE 2006
Unaudited Unaudited Audited
6 months 6 months 17 months
ended ended ended
30 June 30 June 31 December
2006 2005 2005
Note £ 000's £ 000's £'000's
Turnover 2 9,376 8,540 26,225
Cost of sales (6,277) (5,824) (17,709)
------- ------- -------
Gross profit 3,099 2,716 8,516
Administrative expenses (3,476) (2,494) (7,162)
------------------------------- ------- ------- -------
Operating profit before
exceptional items and goodwill
amortisation 313 392 1,582
Goodwill amortisation (90) (170) (228)
Operating exceptional items
- Admin (600) - -
------------------------------- ------- ------- -------
Operating (loss)/profit on
ordinary activities 2 (377) 222 1,354
Non-operating exceptional
items - - (446)
Other interest receivable and
similar income 10 5 22
Interest payable and similar
charges (2) (63) (170)
------- ------- -------
(Loss)/profit on ordinary
activities before taxation (369) 164 760
Tax on (loss)/profit on
ordinary activities 64 (102) (380)
------- ------- -------
(Loss)/profit on ordinary
activities after taxation (305) 62 380
======= ======= =======
Earnings per share p p p
Basic 3 (0.81) N/A 1.43
Diluted 3 (0.81) N/A 1.43
The profit and loss account has been prepared on the basis that all operations
are continuing operations. There are no recognised gains and losses other than
those passing through the profit and loss account.
DOWLIS CORPORATE SOLUTIONS PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2006
Unaudited Unaudited Audited
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Fixed assets
Intangible assets 2,360 1,727 1,669
Tangible assets 834 427 815
Investments - 3 -
-------- -------- --------
3,194 2,157 2,484
-------- -------- --------
Current assets
Stocks 1,295 1,020 1,245
Debtors 4,769 4,614 4,918
Cash at bank and in hand 374 400 1,537
-------- -------- --------
6,438 6,034 7,700
Creditors: amounts
falling due within one year (4,188) (5,735) (4,596)
-------- -------- --------
Net current assets 2,250 299 3,104
-------- -------- --------
Total assets less
current liabilities 5,444 2,456 5,588
Creditors: amounts
falling due after
more than one year (6) (1,165) (15)
Provisions for liabilities (77) - (77)
-------- -------- --------
5,361 1,291 5,496
======== ======== ========
Capital and reserves
Called up share capital 3 151 100 150
Share premium account 3 5,135 765 4,966
Profit and loss account 3 75 426 380
-------- -------- --------
Shareholders' funds 5,361 1,291 5,496
======== ======== ========
DOWLIS CORPORATE SOLUTIONS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2006
Unaudited Unaudited Audited
6 months 6 months 17 months
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Net cash outflow from
operating activities (251) (98) 930
Returns on investments and servicing
of finance
Interest received 10 10 22
Interest paid (2) (100) (167)
Interest element of
finance lease rentals - (2) (3)
Net cash inflow/(outflow)
for returns on
investments and servicing
of finance 8 (92) (148)
Taxation (168) (88) (96)
Capital expenditure
Purchase of tangible
fixed assets (103) (163) (660)
Sales of tangible fixed
assets 15 3 14
Net cash inflow/(outflow)
for capital expenditure (88) (160) (646)
Purchase of subsidiary
undertakings (860) (336) (128)
Net cash/ (overdrafts)
acquired with subsidiary 205 - (541)
Payment for intangible
assets - - (120)
Deferred consideration
paid - - (214)
Acquisitions and
disposals (655) (336) (1,003)
Net cash outflow before
management of liquid
resources and financing (1,154) (774) (963)
Issue of ordinary share
capital - - 4,500
Cost of share issue - - (165)
Repayment of bank loan - - (110)
Repayment of loan notes - - (1,200)
Repayment of loans
acquired - - (490)
Capital element of hire
purchase contracts (9) (26) (35)
Net cash inflow/(outflow)
from financing (9) (26) 2,500
-------- -------- --------
(Decrease)/Increase in
cash in the period (1,163) (800) 1,537
======== ======== ========
DOWLIS CORPORATE SOLUTIONS PLC
Reconciliation of operating Unaudited Unaudited Audited
profit to net cash (outflow)/inflow 6 months 6 months 17 months
from operating activities ended ended ended
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Operating (loss)/profit (377) 222 1,354
Depreciation of tangible assets 84 79 152
Amortisation of intangible assets 90 170 228
(Profit)/Loss on disposal of tangible
assets (15) 9 39
Increase in stocks (27) (33) (188)
Decrease/(increase) in debtors 557 (265) (480)
(Decrease)/Increase in creditors
within one year (563) (280) 153
Exceptional items - - (328)
========= ========== ==========
Net cash (outflow)/inflow from
operating activities (251) (98) 930
DOWLIS CORPORATE SOLUTIONS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2006
1 Basis of preparation
The results for the six months ended 30 June 2006 and the comparative
figures for the six months ended 30 June 2005 are unaudited. They
have been prepared on accounting bases and policies that are consistent
with those used in the preparation of the financial statements of the
Group for the period ended 31 December 2005. The financial information
contained in this report does not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985 (as amended). The
results of Dowlis Corporate Solutions Plc for the period ended
31 December 2005 were reported on by the auditors and received an
unqualified report and contained no statement under Section 237(2) or (3)
of the Companies Act 1985 (as amended). Statutory accounts for the
period ended 31 December 2005 have been
delivered to the Registrar of Companies.
The audited accounts of the group for the seventeen months ended
31 December 2005 were the first prepared after its admission to AIM.
The company prepared proforma results for the twelve months ended
31 December 2005 for information purposes only in its annual report
for the same period copies of which are available from its registered
office.
2 The analysis of turnover and (loss)/profit before taxation and goodwill
amortisation by business segment is as follows:
Corporate Distribution Total
6 months ended 30 June 2006: £000's £000's £000's
Turnover 8,283 1,093 9,376
Operating (Loss)/Profit before
exceptional items and goodwill
amortisation 72 241 313
Exceptional items (600) - (600)
Goodwill amortisation (90) - (90)
Operating (Loss)/Profit (618) 241 (377)
Corporate Distribution Total
6 months ended 30 June 2005: £000's £000's £000's
Turnover 7,498 1,042 8,540
Operating (Loss)/Profit before
exceptional items and goodwill
amortisation 223 169 392
Exceptional items - - -
Goodwill amortisation (170) - (170)
Operating Profit 53 169 222
The total turnover of the group for the period has been derived from its
principal activity of manufacture and sale of business gifts which is mainly
undertaken in the United Kingdom.
DOWLIS CORPORATE SOLUTIONS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2006
3 (Loss)/earnings per share:
Unaudited Unaudited Audited
6 months 6 months 17 months
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£'000's £'000's £'000's
Basic and diluted earnings (305) N/A 304
Adjustment for goodwill amortization 90 N/A 184
----------------- -----------------
Adjusted loss before amortization of
goodwill (215) N/A 488
Adjustment for exceptional items 600 N/A 446
Tax on exceptional items (97) N/A (62)
----------------- -----------------
Adjusted loss before goodwill amortization
and exceptional items 288 N/A 872
========== ==========
Earnings per share p p p
Basic (0.81) N/A 1.43
Before goodwill amortization (0.57) N/A 2.29
Before goodwill amortization and
exceptional items 0.76 N/A 3.74
Diluted (0.81) N/A 1.43
4 Reconciliation of movements in shareholders' funds
Share Capital Share premium Profit and Shareholders'
£000's £000's Loss Funds
£000's £000's
At 1st Jan 2006 150 4,966 380 5,496
Shares issued 1 169 - 170
(Loss)/Profit for Financial period - - (305) (305)
At 30th June 2006 151 5,135 75 5,361
This information is provided by RNS
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