Final Results
Delling Group PLC
20 June 2006
For Release 7:00 am 20 June 2006
DELLING GROUP PLC (DLG)
The AIM-listed marketing services group
FINAL RESULTS
for the year ended 31 December 2005
Delling Group Plc ('Delling' or the 'Company' ), the AIM-listed integrated
marketing support services company, is delighted to announce its results for the
year ended 31 December, 2005.
Turnover for the period was £5,315,000 with a pre-tax loss of £ 2,994,000, both
of which are in line with expectations. The figures include contributions from
companies acquired during that period: Full Bredde AS (5 months' contribution)
and Unikum Professional Imaging and Andre Worldwide Visual Communications (both
8 months' contribution), all of which have since been incorporated into the
Company in Oslo.
Highlights:
• Turnover of £5.32m, up 140% on the previous period
• Contracts with a total expected revenue of £1.5m per annum have been
secured so far in 2006, including the Company's first pan-Nordic agreement.
• The acquisition in January 2006 of n3prenor, a niche business involved in
production of corporate documents for large listed companies in Sweden and
which should enable substantial cross-marketing opportunities for the
Group,.
• A substantial number of pilot projects in the screen advertising business
have been won, which the management believes constitutes a strategic
breakthrough.
• A substantial pipeline of acquisitions and sales prospects have been
developed over the past year, from which the group is gradually seeing the
results.
Aksel Bratvedt, Chairman of Delling Group Plc, said:
'The successful winning of several outsourcing contracts over the past year
demonstrates the effectiveness of our business model, and our ability to carry
out these contracts effectively. We have also built the business in Oslo through
acquisition and successful integration, together with the introduction of our
outsourcing concept. Looking to the current financial year, we anticipate
experiencing further growth and we will continue our hard work to secure more
outsourcing contracts as well as pursuing appropriate acquisition targets. I
look forward to the future with considerable confidence.'
For further information please contact:
Delling Group Plc:
Aksel Bratvedt, Executive Chairman Tel: 0207 484 5663
Geir Lolleng, CEO Tel: +46765276024
James Robinson, Finance Director Tel: 0207 484 5664
Tarquin Edwards: Tel: 07879 458 364
Chairman's statement:
During the last year we saw again a doubling of our turnover as a result of both
organic growth as well as acquisitions. It was also the first year in which we
put in place a number of outsourcing contracts, which represent an additional
revenue stream for the Group. So far this year, we have won a number of new
outsourcing contracts, which we believe is clear evidence of a market demand for
our business concept and we are also seeing more interest from our existing
customers in the outsourcing of many of their production processes, thereby
seeing a potential increase in the number of potential new contracts.
Since our listing on AIM in October 2004, we have acquired 5 companies. We have
bought them at a price range of 1-5 times pretax profit. After the successful
integration of the four companies that now constitute the base of our business
in Oslo, we believe that we have demonstrated not only can we identify and buy
companies on a sensible earnings multiple, but also that we are able to
integrate them successfully.
We are encouraged by the evident demand to date for our services in the market
place and are pleased by the interest shown from a number of smaller companies,
who have expressed a desire to join Delling Group.
The above factors combined generate a positive outlook for the development of
the Group. However, in our efforts to reach our goal of developing Delling into
a major player in the marketing support services sector in Northern Europe, we
are mindful of the major challenges ahead of us and are aware that the financing
of our growth will increase in importance as we go forward.
We believe that the Placing, announced on 20 June 2006, will improve our ability
to finance further growth, and it will also strengthen the Company's balance
sheet, thereby facilitating the possibility of bank finance. We intend to
explore a wide range of financing options and are conscious of ensuring that the
gearing of the Company is kept at an acceptable level.
I would like to thank our staff for all their hard work over the last year. The
range of skills within the Group has been further enhanced through the hiring of
a number of new employees during the year. We have also in connection with the
acquisitions been able to trim the organisation and reduce some costs from which
we should see benefit of this in the coming year. It is our belief that the
present organisation will enable us to continue the fast expansion that we have
planned and are experiencing.
Looking to the current financial year, we anticipate experiencing further growth
and we will continue our hard work to secure more outsourcing contracts as well
as actively pursuing acquisition targets. I look forward to the future with
considerable confidence.
Aksel Bratvedt
Chairman
19 June 2006
Chief Executive's Review
Introduction
Delling Group offers marketing departments in large and medium sized companies a
unique opportunity to reduce costs, increase speed to market and increase the
quality of production and handling of marketing and information material. Our
offering includes both graphical material as well as the digital distribution of
content on to screens or the Web. Our wide ranging, but closely linked service
offering makes it possible for customers to be offered an opportunity to
outsource their back office marketing department requirements - further driving
our organic growth.
We see however further opportunities. The marketing support services area is
populated with many small service providers for whom the extraction of economies
of scale is becoming an increasingly important requirement. We intend to become
a significant player in the ongoing consolidation of these services in the
Nordic region and Northern Europe. The underlying rationale behind our strategy
is the creation of increased shareholder value and we believe that this can only
be built in a sustainable way through a step by step approach.
Financial Results
Turnover for the year shows growth on the previous period of 140%. Of the total
turnover of £5.3m, approximately 50.2% was attributable to Delling in Norway and
49.8% attributable to Delling Group in Sweden.
Of the loss of £2.99m, 12.0% was attributable to the Group's activities in
Norway and 76.0% attributable to activities in Sweden.
In February 2005 a new share issue of 8,666,667 at 15p raised £1.3m before
expenses, and in October 2005, we issued 366,682 shares at 21.5p as part of the
consideration for Full Bredde AS.
Business and operating review
During 2005 we simplified the structure of the Company's business activities.
This included simplifying our branding and we now only use the 'Delling Group'
name. This has helped us to communicate better with our customers and helps to
underline the fact that our business model and services are consistent across
our different business areas.
The most important development in 2006 has been the successful integration of
the acquired businesses in Norway so that they are now one organisation in one
place. We are extremely pleased to see that the 'Delling concept' has been so
quickly adopted and we believe that this tells a positive story both in relation
to the concept itself as well as in relation to the quality of our staff.
The Group has for some time had a challenging liquidity situation. However, with
the support of staff and suppliers we still have continued to develop the
Group's business. We believe that the placing of new shares announced on 20 June
2006 (which in part is subject to approval at the AGM), will strengthen our
balance sheet and ultimately improve the cash flow, and thus enable us to
improve our efficiency and flexibility.
On the contract side we have won some important new outsourcing contracts and
are also experiencing a strong growth in all our business areas. The organic
growth and the acquisitions made in 2005 have, in spite of the loss, made an
excellent base for further progress in 2006.
The market
Delling Group is dependent on the development of the advertising market,
particularly in Scandinavia, where most of the business is presently located.
The advertising market in Sweden in particular has been gradually increasing
from a historic low point. That trend is expected to continue this year.
However, it is important to be aware that a major part of Delling Group's
service concept is based on making the processes in the marketing departments of
corporate entities more efficient by outsourcing production and production
management and by using software solutions that reduce costs and decrease time
to market campaigns. Our other markets, such as in Norway, the Baltics and
Poland are also experiencing good growth.
Human resources
At the end of 2005 we started a process of developing an organisation that is
focused on the processes that create value for our customers. The goal is to
keep the significance of hierarchical structures and 'departmental thinking' to
a minimum. In principle, all work that is not creating real value for our
customers has to be taken away. Obviously it is necessary to have strong support
from the staff within any business to effect a change in that organisation and
it is our belief that during 2006, we are going to see our customers benefit
from substantial efficiency gains to these processes.
Outlook
In 2006 we have continued our growth and we have already announced a number of
important contracts in the first half of the year. Furthermore, in January 2006
we announced the acquisition of n3prenor in Stockholm. This acquisition,
together with our organic growth, puts us in an excellent position for the rest
of 2006. In line with our business strategy, we also expect to consider further
acquisitions of companies which we believe to be a good fit with the Group
throughout the year.
Geir Lolleng
Chief Executive
Group turnover 2 5,315 2,173
Cost of sales (2,439) (795)
______ ______
Gross profit 2,876 1,378
Administrative expenses (5,741) (4,051)
______ ______
Operating loss 3 (2,865) (2,673)
Interest receivable 2 2
Interest payable 6 (131) (159)
______ ______
Loss on ordinary activities before taxation (2,994) (2,830)
Tax on loss on ordinary activities 7 - 33
______ ______
Loss on ordinary activities after taxation 9 (2,994) (2,797)
Dividends 10 - -
Loss for the financial year (2,994) (2,797)
______ ______
Loss per share 8 (4.43)p (6.74)p
====== ======
All of the activities of the group are classed as continuing.
The company has taken advantage of section 230 of the Companies Act 1985 not to
publish its own Profit and Loss Account.
2005 2004
£000 £000
Loss for the financial year attributable to the (2,994) (2,797)
shareholders of the parent company
Currency translation differences on foreign 114 97
currency net investments
______ _______
Total recognised gains and losses relating to the year (2,880) (2,700)
====== =======
Called up share capital not yet paid 11 1,148 -
Fixed assets
Intangible assets 12 3,068 2,920
Tangible assets 13 612 674
______ _______
3,680 3,594
______ _______
Current assets
Stocks 15 70 42
Debtors 16 1,748 698
Cash at bank 304 284
______ _______
2,122 1,024
Creditors: Amounts falling due within one year 17 (5,741) (3,535)
______ _______
Net current liabilities (3,619) (2,511)
______ _______
Total assets less current liabilities 1,209 1,083
Creditors: Amounts falling due after more
than one year 18 (1,101) (426)
______ _______
108 657
====== =======
Capital and reserves
Called-up share capital 22 742 597
Share premium account 23 4,946 2,700
Capital reserve - 60
Profit and loss account 23 (5,580) (2,700)
______ _______
Shareholder funds 24 108 657
====== =======
Called up share capital not yet paid 11 1,148 -
Fixed assets
Tangible assets 13 13 -
Investments 14 1,820 1,035
______ _______
1,833 1,035
Current assets
Debtors 16 3,691 2,264
Cash at bank - 21
______ _______
3,691 2,285
Creditors: Amounts falling due within one year 17 (1,441) (162)
______ _______
Net current assets 2,250 2,123
______ _______
Total assets less current liabilities 5,231 3,158
Creditors: Amounts falling due after more than one 18 (354) -
year
______ _______
4,877 3,158
====== =======
Capital and reserves
Called-up share capital 22 742 597
Share premium account 23 4,946 2,700
Profit and loss account 23 (811) (139)
______ _______
Shareholders' funds 24 4,877 3,158
====== =======
2005 2004
£000 £000
Net cash outflow from operating activities (1,487) (587)
Returns on investments and servicing of finance
Interest paid (130) (159)
Interest element of finance leases (1)
Interest received 2 2
_______ _______
Net cash outflow from returns on investments and (129) (157)
servicing of finance
Taxation - 33
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (117) (807)
Payments to acquire tangible fixed assets (233) (148)
_______ _______
Net cash outflow for capital expenditure and (350) (955)
financial Investment
Acquisition
Cash/(overdrafts) acquired with subsidiaries 58 (960)
_______ _______
Cash outflow before financing (1,908) (2,626)
Financing
Issue of equity share capital 1,104 2,847
Capital element of finance leases (2)
Increase in long term loans 683 -
_______ _______
Net cash inflow from financing 1,785 2,847
_______ _______
(Decrease)/increase in cash (123) 221
======= =======
Major non-cash transactions
In the year ended 31 December 2005 the company issued a total of 5,468,796
ordinary shares of 1p at a price of 21p unpaid to the directors in accordance
with the directors share acquisition scheme as approved at the AGM on 15 June
2005.
During the period ended 31 December 2004 the company issued 35,880,000 ordinary
shares of 1p in exchange for the net assets of Azzets AB, Butler Systems AB and
Depicta AB and E-Path PVT Limited.
Reconciliation of operating loss to net cash outflow
from operating activities
2005 2004
£000 £000
Operating loss (2,865) (2,673)
Amortisation 222 297
Depreciation 195 35
Loss on disposal shares held for resale 3 -
Increase in stocks (30) (42)
Increase in debtors (1,068) (415)
Increase in creditors 2,056 2,211
______ ______
Net cash outflow from operating activities (1,487) (587)
====== ======
Analysis of changes in net debt
At 31 Cash Foreign At 31
December Flows exchange December
2004 movement 2005
£000 £000 £'000 £000
Net cash:
Cash in hand and at bank 284 12 8 304
Overdrafts (63) (135) (17) (215)
_____ _____ _____ _____
221 (123) (9) 89
===== ===== ===== =====
Accounting policies
Basis of accounting
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the company and all group undertakings. These are adjusted, where
appropriate, to conform to group accounting policies. Acquisitions are accounted
for under the acquisition method and goodwill on consolidation is capitalised
and written off over twenty years from the year of acquisition. The results of
companies acquired or disposed of are included in the group profit and loss
account after or up to the date that control passes respectively. As a
consolidated group profit and loss account is published, a separate profit and
loss account for the parent company is omitted from the group financial
statements by virtue of section 230 of the Companies Act 1985.
Turnover
Turnover comprises the value of goods and services supplied by the
Group, net of value added tax and trade discounts.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that asset as
follows:
Goodwill - 5%-10% straight line
Fixed assets
All fixed assets are initially recorded at cost.
Depreciation
Depreciation is calculated so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that asset as
follows:
Plant & Machinery - 3-5 years straight line
Stocks
Stocks are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.
Foreign Currencies
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments, are translated into Pounds sterling at the foreign exchange
rates ruling at the balance sheet date. The revenues and expenses of foreign
operations are translated to Pounds sterling at the average exchange rate ruling
during the period. All exchange differences are taken to reserves.
Assets and liabilities in foreign currencies are translated into sterling at the
rates of exchange ruling at the balance sheet date. Transactions in foreign
currencies are translated into sterling at the rate of exchange ruling at the
date of the transaction. Exchange differences are taken into account in
arriving at the operating profit.
Investments
Fixed asset investments are stated at cost less any necessary provision for
impairment.
Capital instruments
Shares are included in shareholders' funds. Other instruments are classified as
liabilities if they contain an obligation to transfer economic benefits and if
not they are included in shareholders' funds. The finance cost recognised in
the profit and loss account in respect of capital instruments other than equity
shares is allocated to years over the term of the instrument at a constant rate
on the carrying amount.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profits on a straight line basis over the period of the lease.
Hire purchase agreements
Assets held under hire purchase agreements are capitalised and disclosed under
tangible fixed assets at their fair value. The capital element of the future
payments is treated as a liability and the interest is charged to the profit and
loss account on a straight line basis.
Pension costs
The company operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the company. The annual contributions
payable are charged to the profit and loss account.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more tax, with the following exceptions:
Provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, and gains on disposal of fixed
assets that have been rolled over into replacement assets, only to the extent
that, at the balance sheet date, there is a binding agreement to dispose of the
assets concerned. However, no provision is made where, on the basis of all
available evidence at the balance sheet date, it is more likely than not that
the taxable gain will be rolled over into replacement assets and charged to tax
only where the replacement assets are sold;
Deferred tax assets are recognised only to the extent that the
directors consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that
are expected to apply in the periods in which timing differences reverse, based
on tax rates and laws enacted or substantively enacted at the balance sheet
date.
Going concern
United Kingdom company law requires the company's directors to consider
whether it is appropriate to prepare the financial statements on the basis that
the group is a going concern. In considering this matter the directors have
reviewed the group's budget for 2006 and its plan for 2007. This included
consideration of the cash flow implications of the budget and plan. The
directors see no reason why the group and the company should not continue in
operational existence for the foreseeable future, based on the acceptance at the
forthcoming shareholders meeting of the proposed private placement of ordinary
shares and an unconditional guarantee provided by a major shareholder. For this
reason the directors have adopted the going concern basis in preparing the
group's financial statements.
2. Turnover
The turnover and loss before tax are attributable to the one principal
activity of the group.
An analysis of turnover is given below:
An analysis of turnover is given below:
2005 2004
£000 £000
Europe 5,315 2,173
===== =====
3. Operating loss
Operating loss is stated after charging:
2005 2004
£000 £000
Amortisation 222 297
Depreciation of tangible fixed assets
Owned assets 192 35
Leased assets 3 -
Auditors' remuneration
- as auditors 14 5
- non-audit services 4 123
Remuneration of foreign auditors 42 18
===== =====
4. Particulars of employees
The average number of staff employed by the group during the financial year
amounted to:
2005 2004
£000 No
Management 8 10
Sales 24 17
Production and development 33 33
Administrative 6 5
_____ ______
71 65
===== ======
The aggregate payroll costs of the above were:
2005 2004
£000 £000
Wages and salaries 2,502 2,187
Social security costs 528 859
Other pension costs, life cover & medical costs 142 181
_____ _____
3,172 3,227
===== =====
5. Directors' emoluments
The directors' aggregate emoluments in respect of qualifying services were:
2005 2004
£000 £000
Emoluments receivable - from the company 227 26
- from group companies 320 352
Benefits receivable 25 -
Value of company pension contributions to money 7 -
purchase schemes _____ _____
579 378
===== =====
During the year one director participated in a money purchase pension scheme
(2004: Nil)
Emoluments of highest paid director:
Total emoluments 197 206
===== =====
6. Interest payable and similar charges
2005 2004
£000 £000
Interest payable on bank borrowing 130 156
Other similar charges payable - 3
Interest element of finance leases 1 -
_____ _____
131 159
===== =====
7. Taxation on ordinary activities
(a) Analysis of charge in the year
Current tax:
2005 2004
£000 £000
UK Corporation tax based on the results for the year - -
at 30% (2004: 30%)
Overseas tax credits - 33
_____ _____
Total current tax credit - 33
===== =====
(b) Factors affecting current tax charge
The tax assessed on the loss on ordinary activities for the year is higher than
the standard rate of corporation tax in the UK.
2005 2004
£000 £000
Loss on ordinary activities before taxation (2,994) (2,830)
====== ======
Loss on ordinary activities by rate of tax at 30% (898) (849)
(2004: 30%)
Disallowed expenditure 7 15
Overseas tax credits - (33)
Losses carried forward 200 42
Overseas losses 691 792
______ ______
Total current tax - credit (note 7(a)) - (33)
====== ======
Deferred tax assets have not been recognised in the financial statements as the
directors are uncertain as to when they will be utilised.
8. Loss per share
2005 2004
Pence Pence
Loss per ordinary share (4.43) (6.74)
====== ======
The basic loss per share is calculated by dividing the loss on ordinary
activities after tax of £2,994,000 (2004: £2,797,000) and the weighted average
number shares in issue and carrying the right to receive dividend during year
ended 31 December 2005 being 67,467,351 (2004: 41,472,429), which excludes
shares issued to the directors and not fully paid.
The diluted earnings per ordinary share calculation is the same as the basic
earnings per share calculation. This is because no dilution arises as there is
a loss.
9. Loss attributable to members of the parent company
The loss dealt with in the accounts of the parent company was £672,000
(2004: £139,000).
10. Dividends
No dividends have been paid in respect of the year.
11. Called up share capital not yet paid
Subsequent to last year's AGM that took place on 15 July 2005 the following
directors were allotted ordinary shares at the then market price of 21p, under
the directors' share acquisition scheme:
Director Shares allotted
Geir Lolleng 1,298,839
Aksel Bratvedt 1,298,839
James Robinson 1,435,559
Mike Hudgell 1,435,559
These shares were issued and remain unpaid and no application will be made for
the shares to be admitted to trading on AIM whilst they remain unpaid. In the
case of Mr Bratvedt and Mr Lolleng, the shares cannot be paid up until after 8
July 2006 and, in the case of Mr Hudgell and Mr Robinson, the shares cannot be
paid up until after 1 June 2007. Whilst the shares remain unpaid they will have
no voting or dividend rights.
12. Intangible fixed assets
Group Brands, Goodwill Total
licences &
patents
£000 £000 £000
Cost
At 1 January 2005 215 3,002 3,217
Acquired in year - 370 370
_____ _____ _____
At 31 December 2005 215 3,372 3,587
===== ===== =====
Amortisation
At 1 January 2005 8 289 297
Charge for the year 21 201 222
_____ _____ _____
At 31 December 2005 29 490 519
===== ===== =====
Net book value
At 31 December 2005 186 2882 3,068
_____ _____ _____
At 31 December 2004 207 2,713 2,920
===== ===== =====
13. Tangible fixed assets
Group Plant & Total
machinery
£000 £000
Cost
At 1 January 2005 709 709
Acquired in year 133 133
Disposed in year (2) (2)
_____ _____
At 31 December 2005 840 840
===== =====
Depreciation
At 1 January 2005 35 35
Charge for the year 195 195
On disposals (2) (2)
_____ _____
At 31 December 2005 228 228
===== =====
Net book value
At 31 December 2005 612 612
_____ _____
At 31 December 2004 674 674
===== =====
Company Plant & Total
machinery
£000 £000
Cost
Acquired in year 16 16
_____ _____
At 31 December 2005 16 16
===== =====
Depreciation
Charge for the year 3 3
_____ _____
At 31 December 2005 3 3
===== =====
Net book value
At 31 December 2005 13 13
===== =====
All of the assets held by the company are held under hire purchase agreements.
14. Investments
Company Total
£000
Cost
At 1 January 2005 1,035
Additions 785
______
At 31 December 2005 1,820
======
Net book value
At 31 December 2005 1,820
======
At 31 December 2004 1,035
======
Subsidiary undertaking
Holding Country of Proportion Nature of
incorporation of voting business
rights
held
Name of company
Directly Held
Azzets Limited Ordinary UK 100% Dormant
Shares
Butler Systems Limited Ordinary UK 100% Dormant
Shares
Depicta Limited Ordinary UK 100% Dormant
Shares
Indirectly Held
Depicta AB Ordinary Sweden 100% Provides
outsourced
Shares solutions for all
types of
advertising media
Azzets AB Ordinary Sweden 100% Provides software
for media
shares management
Dellinger Group AB Ordinary Sweden 100% Provides
(previously called equipment and
Butler Systems AB) Shares support services
for displaying
advertising media
Delling Group AS Ordinary Norway 100% Photographic
(previously called reproduction
Depicta Fame AS) Shares
Full Bredde AS Ordinary Norway 100% Dormant
Shares
On 1 January 2006 the Group transferred the trades of Depicta AB and Azzets AB
into Dellinger Group AB, resulting in Depicta AB and Azzets AB becoming dormant.
Subsequent to this transfer of trade Depicta AB was sold to Kanonladdaren AB for
no consideration. Kanonladdaren AB is company controlled by Mr B Dysthe a
significant shareholder in Delling Group plc.
During the year the Group acquired 100% shareholding in Full Bredde AS. Net
assets/liabilities acquired are considered to be at fair value.
£000
Debtors (19)
Cash (58)
Creditors 56
____
Net assets acquired (21)
Cost: -shares issued 79
-cash 158
-deferred cash 79
____
Goodwill arising 295
====
In addition the trades of Unikum Professional Imaging and Andre Worldwide Visual
Communications were purchased for £75,000 giving rise to the same amount in
goodwill.
15. Stocks
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Finished goods 70 42 - -
===== ===== ===== =====
16. Debtors
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Trade debtors 1,279 342 - -
Shares held for disposal - 3 - 3
Amounts owed by group - - 3,559 2,227
undertakings
Other debtors 469 353 132 19
Taxation - - - 15
______ ______ ______ ______
1,748 698 3,691 2,264
====== ====== ====== ======
17. Creditors: Amounts falling due within one year
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Amounts due to debt factors 288 - - -
Bank overdrafts 215 63 82 -
Finance leases 5 - 5 -
Trade creditors 1,691 1,254 133 17
Other taxation & social 952 897 42 4
security
Other creditors 2,132 1,280 1,146 100
Accruals and deferred income 458 41 33 41
_____ _____ _____ _____
5,741 3,535 1,441 162
===== ===== ===== =====
The overdraft of a subsidiary is secured by a fixed and floating change over the
assets of that subsidiary.
18. Creditors: Amounts falling due after more than one year
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Other creditors 1,092 426 345 -
Finance leases 9 - 9 -
_____ _____ _____ _____
1,101 426 354 -
===== ===== ===== =====
Finance leases falling due in more than one are repayable as follows:
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Repayable in more than two
years but not more than five
years 9 - 9 -
===== ==== ===== =====
19. Treasury policy and financial instruments
The group operates informal treasury policies which include ongoing assessments
of interest rate management and borrowing policy. The board approves all
decisions on treasury policy.
Facilities are arranged, based on criteria determined by the board, as required
to finance the long term requirements of the group. The group has financed its
activities by the raising of funds through the placing of shares.
The Group has overdraft facilities across the group of £288,000 at variable
rates. The Group has a fixed loan of £750,000 at 7%pa until November 2007 and
further loans of £1,383,000 which are interest free for which there is no
repayment date.
The group has taken advantage of the exemption permitting it not to include
short term debtors and in the disclosures required by FRS 13 'Derivatives and
Other Financial Instruments: Disclosure' other than the currency disclosures.
At 31 December 2005 there were no net monetary assets denominated in currencies
other than the functional currencies of the operations.
The Group's major operating currencies in its subsidiaries are Norwegian Kroner
and Swedish Krona. It is not the Group's policy to hedge this exchange risk.
There are no material differences between the book value and fair value of the
financial assets at the year end.
20. Commitments under operating leases
At 31 December 2005 the group had annual commitments under
non-cancellable operating leases as set out below.
Group
2005 2004
Land and Other items Land and Other items
Buildings Buildings
£000 £000 £000 £000
Operating leases which expire:
Within 1 year 77 - - 10
Within 2 to 5 years 185 5 - 3
_____ _____ _____ _____
262 5 - 13
===== ===== ===== =====
Company
2005 2004
Land and Other items Land and Other items
Buildings Buildings
£000 £000 £000 £000
Operating leases which expire:
Within 1 year 30 - - 10
Within 2 to 5 years - 5 - -
_____ _____ _____ _____
30 5 - 10
===== ===== ===== =====
21 Related party transactions
The company is exempt from the requirement to disclose related party
transactions with other group companies under the provisions of Financial
Reporting Standard No. 8. All group transactions were eliminated on
consolidation.
During the year group companies were invoiced £135,000 by Nordic
Investment Management Ltd a company under the control of A Bratvedt for
directors' services. There was no outstanding balance at the year end.
During the year group companies were invoiced £185,000 by Nordic
Investment Management AS, a company under the control of G Lolleng for
directors' services. There was no outstanding balance at the year end.
During the year the directors were issued a number of shares unpaid.
Further details of which can be found in note 11.
The Group has certain loans totalling £552,000 with Mr B Dysthe a
significant shareholder in the company. The loans are interest free and
unsecured with no fixed repayment date.
22. Share capital
Authorised share capital
2005 2005 2004 2004
No £000 No £000
Ordinary shares of £0.01 each 200,000,000 2,000 200,000,000 2,000
============ ========= =========== ==========
2005 2005 2004 2004
No £000 No £000
Allotted, called up and fully paid:
Ordinary shares of £0.01 each 68,726,542 687 59,693,193 597
Allotted, called up and unpaid
Ordinary shares of £0.01 each 5,468,796 55 - -
____________ _________ ___________ __________
74,195,338 742 59,693,193 597
============ ========= =========== ==========
The following shares were issued in the year
£000 No Reason
February 2005 1,300 8,666,667 Placing
June 2005 1,148 5,468,796 Directors' share acquisition
scheme
October 2004 79 366,682 Acquisition
------- ---------
2,527 14,502,145
======= =========
Warrants
Delling has two warrants in existence as follows:
(1) 1% of the issued share capital at admission to AIM at the admission price
exercisable at any time over 5 years from the admission, and
(2) 3% of the issued share capital at admission to AIM at the admission price
exercisable at any time over 3 years from the admission.
23. Reserves
Group Share premium account Profit and loss account
2005 2004 2005 2004
£000 £000 £000 £000
At 1 January 2,700 (2,700) -
Premium arising on shares 2,382 3,096 - -
issued
Less share issue costs (136) (396) - -
_________ ______ _____ ______
4,946 2,700 (2,700)
Loss for the year - - (2,994) (2,797)
Exchange movement - - 114 97
_________ ______ _____ ______
Balance carried forward 4,946 2,700 (5,580) (2,700)
========= ====== ===== =====
Company Share premium account Profit and loss account
2005 2004 2005 2004
£00 £000 £000 £000
At 1 January 2,700 (139) -
Premium arising on shares 2,382 3,096 - -
issued
Less share issue costs (136) (396) - -
Retained loss for the year - - (672) (139)
_________ ______ _____ ______
Balance carried forward 4,946 2,700 (811) (139)
========= ====== ===== =====
24. Reconciliation of movements in shareholders' funds
Group
Equity shareholders' funds
2005 2004
£000 £000
Loss for the financial year (2,994) (2,797)
Exchange movement 114 97
Dividends - -
______ ______
(2,880) (2,700)
New equity share capital subscribed 2,391 3,297
______ ______
Net (decrease)/increase to funds (489) 597
Capital reserve movement (60) 60
Opening shareholders equity 657 -
______ ______
Closing shareholders' equity 108 657
====== ======
Company
Equity shareholders' funds
Loss for the financial year (672) (139)
New equity share capital subscribed 2,391 3,297
______ ______
Net addition to funds 1,719 3,158
Opening shareholders' funds 3,158 -
______ ______
Closing shareholders' equity funds 4,877 3,158
______ ______
24. Contingent liabilities
Depicta Guarantee
In 2002, Kanonladdaren AB sold software rights to a related party Cultmag
AS. Kanonladdaren agreed to guarantee Cultmag's bank borrowings for that
purchase. Subsequently, as part of Kanonladdaren's sale of its assets to
members of the Group, Depicta took over 2.5 million Swedish kronor of that
guarantee in favour of Sparebanken Spreetogo which it can be called on to pay
and contains no recourse.
Azzets Undertaking
In 2002, Kanonladdaren AB sold software rights to a related party,
Cultmag AD. Kanonladdaren agreed to guarantee Cultmag's bank borrowings for
that purchase. Subsequently, as part of Kanonladdaren's sale of its assets to
members of the Group. Azzets agreed to take over 14.3 million Swedish kronor of
that guarantee in favour of DNBOR which it can be called on to pay and contains
no recourse.
26 Controlling part
There is no controlling party
27. Post Balance Sheet Events
In January 2006 the Company announced the acquisition of a company in Sweden for
a total consideration o
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