Interim Results

Delling Group PLC 18 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 record business volumes in July and August, which continues to reflect the increasing pace 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 is looking forward to the future with considerable confidence'. Contact: Delling Group Plc Aksel Bratvedt, Chairman Tel: 020 7484 5663 James Robinson, Finance Director Tel: 020 7484 5664 www.dellinggroup.com ---------------------- Adventis Financial PR Tarquin Edwards/Peter Binns Tel: 020 7034 4758/020 7034 4760 Kreab AS Brynjulf Freberg Tel: +47 9066 3646 Notes to Editors Delling Group is a leading supplier of marketing support services for marketing and communication departments throughout The Nordic countries. Delling manages all fields of graphic support in many different forms and formats including trade fairs, exhibitions and interactive digital solutions for the 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 both marketing and information departments. However, its major strength is that the Group can deliver complete turnkey solutions, tailor-made for its customers' every need. Delling also offers outsourcing solutions that can substantially save costs and improve efficiency. The Group's major activities are today concentrated in the Norwegian and Swedish markets, however, it is quickly expanding into other Nordic areas, as well as having customers and production facilities in Eastern Europe. It also has well respected suppliers as far afield as China and Thailand. Delling Group has today 80 employees. It is rapidly developing its organisation by focusing on supplying its customers with the quality they demand, delivered on time at the right price. Central to its philosophy lies the fact that its customers will obtain greater effects and efficiency for every pound they invest in marketing and information. The Group has strong growth, both through further development of existing clients and establishment of many new relationships, together with acquiring companies that enhance and further develop our business concept. Delling's goal is within the course of the next two years, through both satisfied customers and recommendations, to be the largest and most profitable company in the field of marketing support services within the Nordic countries, and a significant player within Eastern Europe. In October 2004, Delling was the first Scandinavian business to be listed on the Alternative Investment Market ('AIM'), the London Stock Exchange's international market for smaller growing companies. This has given Delling access to capital funds for the further development of the Group. CHAIRMAN'S STATEMENT Financial results: I am delighted to present the Company's interim results for the half year to 30 June 2006. Delling has continued to make pleasing progress both organically and by 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 to first half of 2005 (£2.4m) and almost the same turnover as for the whole year 2005 (£5.3m). This expansion is generated both from the full effect of last year's acquisitions and the acquisition of n3prenor in January 2006 as well as the expansion of our outsourcing contracts. Trading activity The results are affected by a lower gross profit margin of 49% compared to our historic rate of 55%. The reason for this is the product mix in the period of a larger volume of subcontracted print. It is expected that the gross profit margin in the second half of 2006 is going to be improved as more print jobs are being placed in low cost countries such as Poland. Delling is currently able to mark-up work subcontracted to Poland by a significant amount compared to mark-ups earned from local subcontractors, giving the Group great potential to improve its gross margins. The product mix is expected to change towards more value added services commanding a higher gross margin, such as pre-press as well as motion media in the screen advertising arena, as we see a considerable pick-up in business in these areas. The Group has historically invested and spent considerable resources in building a screen advertising business and has announced earlier this year a number of pilot projects which are performing well. A pleasing example of the conversion of a pilot project into a contract is the two year £2 million contract for Expert Group, which is the largest electronic retailer in the Nordic area with 900 shops. The contract is for screen advertising systems as well as printed advertising in 30 shops in Sweden. Another contract which also has exciting potential is the Nordic outsourcing agreement with Bristol Squibb Myers. This contract was announced in June this year. As a result of the acquisition of n3prenor AB during the period a number of staff were made redundant in the Stockholm office resulting in some one-off costs, shown as an exceptional item together with compensation paid to M Hudgell who resigned at the start of the year. The Board intend to thoroughly review costs being incurred by the Group in order improve the net margin in subsequent reporting periods. Fundraising Delling announced in June, July and August a fundraising and new issue totalling approx. £7.5 million, which included the conversion of shareholder loans of £1.4 million and the issue of £1million of loan notes. These actions have dramatically improved our balance sheet, and a pro-forma showing the effect of this 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 not yet paid 1,148 - 1,148 Fixed assets Intangible assets 4,366 - 4,366 Tangible assets 611 - 611 ----------- ----------- ------------ 4,977 - 4,977 ----------- ----------- ------------ Current assets Stocks 65 - 65 Debtors 3,648 (818) 2,830 Cash at bank 381 1,915 2,296 ----------- ----------- ------------ 4,094 1,097 5,191 Creditors: amounts falling due within one year (8,743) 3,000 (5,743) ----------- ----------- ------------ Net current liabilities (4,649) 4,097 (552) ----------- ----------- ------------ Total assets less current liabilities 1,476 4,097 5,573 Creditors: amounts falling due 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 of Eckerud Scandinavian Group AB for approximately £1.5million and has exchanged contracts to acquire Princenter i Linkoping AB for approximately £0.37 million. The Company, with a strengthened balance sheet now should have the ability to debt finance future acquisitions. As of last week, the Company is pleased to report that a first facility of approximately £800,000 was agreed and is now in place with a Scandinavian bank. The Board hopes that the Group will be able to conclude further acquisition bank finance so as to fund its acquisition program without recourse to further equity issues. Acquisitions The Group concluded two new acquisitions in August. The companies Eckerud Scandinavian Group and Printcenter are both located in Sweden. The first company is a specialist in design and production of exhibition material and together with our existing business in Norway places Delling Group as one of the leaders in this area in the Nordic area. Printcenter is a specialist print company and complements our existing business in Stockholm generating considerable potential cost efficiencies. These companies had a combined turnover during the first half of 2006 of approximately £3.0 million. Future Strategy Delling Group Plc is the only marketing support services company listed on Aim with the ambition of consolidating this sector within the Nordic area. The company aims to continue its expansion, both through growth in the outsourcing of marketing support services from corporate marketing departments as well as through the acquisition of small to medium-sized companies in the industry at lower price earnings ratios than the Group is currently trading on. As the Group will only consider acquisition targets that are cash flow positive, Delling's aim is to finance its growth through bank borrowing. Delling Group's geographic focus is presently the four Nordic countries with a focus on Norway and Sweden where scope for cost efficiencies are largest at the moment. 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 of increasing new business from existing and new customers in these countries. The size of Delling's marketplace across the Nordic countries is such that it can easily accommodate a profitable company with £100m in sales, giving Delling plenty of scope for further growth. Delling Group will continue to focus on business opportunities in its locality, where it is best able to take advantage of opportunities as they present themselves. However, a number of our customers with businesses in London have increasingly inquired about the Group's ability to serve them in the UK. A smaller acquisition in the London area that could take advantage of potential business volumes from Delling's various international and Scandinavian customers, is a possible geographic extension to our strategy. Likewise based on our increasing business volume in the neighbouring Baltic States a local presence there would be a natural extension when the Group has reached its growth target in the Nordic countries. Organisation: To reflect our dual growth strategy based on acquisitions and organic growth, we have more clearly defined the various management responsibilities as they split between the Executive Chairman and the CEO. The Executive Chairman is responsible for acquisitions and financing while the CEO is responsible for organic growth and integration of acquired companies. The Finance Director concentrates on reporting systems and works with the Chairman on acquisitions and financial due diligence. The Group is being organised into the following business areas: Document design & production, Exhibition design and production, Graphical production and Digital services with a manager responsible for each division. This structure is being established to better identify and streamline operations, extract economies of scale and to further enhance 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 business volumes in July and August, which continues to reflect the increasing pace 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 is looking 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 5,315 Cost 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 - payroll costs (159) - - ------------ ------------ ------------ Operating loss (1,264) (1,552) (2,865) Interest receivable 8 - 2 Interest payable (142) (43) (131) ------------ ------------ ------------ Loss on ordinary activities before 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 year attributable to the shareholders of the parent company (1,398) (1,595) (2,994) Currency translation differences on foreign currency net investments (156) - 114 ----------- ---------- ------------ Total recognised gains and losses 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 not yet paid 1,148 1,148 1,148 Fixed assets Intangible assets 4,366 2,821 3,068 Tangible assets 611 605 612 ------------ --------- ------------ 4,977 3,426 3,680 ------------ --------- ------------ Current assets Stocks 65 106 70 Debtors 3,648 1,423 1,748 Cash at bank 381 5 304 ------------ --------- ------------ 4,094 1,534 2,122 Creditors: amounts falling due within one year (8,743) (4,368) (5,741) ------------ --------- ------------ Net current liabilities (4,649) (2,834) (3,619) ------------ --------- ------------ Total assets less current liabilities 1,476 1,740 1,209 Creditors: amounts falling due 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 £'000 Net cash inflow/(outflow) from operating activities 765 (1,352) (1,487) Returns on investments and servicing of finance Interest paid (141) (43) (130) Interest element of finance leases (1) - (1) Interest received 8 - 2 ----------- ----------- ----------- Net cash outflow from returns on investments and servicing of finance (134) (43) (129) Taxation - - - ----------- ----------- ----------- Capital expenditure and financial investment Payments to acquire intangible fixed assets (78) - (117) Payments to acquire tangible fixed assets (92) (7) (233) ----------- ----------- ----------- Net cash outflow for capital expenditure and financial investment (170) (7) (350) Acquisition Purchase of subsidiary undertaking (1,385) - - Cash acquired with subsidiaries 14 - 58 ----------- ----------- ----------- Net cash (outflow)/inflow from acquisitions (1,371) - 58 ----------- ----------- ----------- Cash outflow before financing (910) (1,402) (1,908) Financing Net issue of equity share capital - 1,096 1,104 Capital element of finance leases (4) - (2) Increase in long term loans 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 5,468,796 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. On the 20 June 2006 the Company issued 10,218,750 ordinary shares of 1p at a price of 8p for cash, for which the terms of settlement were after the 30 June 2006. 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 99 222 Depreciation 93 76 195 Loss on disposal of shares held for resale - - 3 Decrease/(increase) in stocks 8 (64) (30) Increase in debtors (1,006) (725) (1,068) Increase in creditors 2,783 857 2,056 ------- -------- ------------ Net cash inflow/(outflow) from operating activities 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 £000 Increase/(decrease) in cash in the period 46 (306) (123) Change in net debt Net funds at start of period 89 221 221 Foreign exchange movement (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 2006 Net cash: Cash in hand and at bank 304 90 (13) 381 Overdrafts (215) (44) 9 (250) -------- -------- -------- --------- 89 46 (4) 131 ======== ======== ======== ========= 6 months ending 30 June 2005 Net cash: Cash in hand and at bank 284 (279) - 5 Overdrafts (63) (27) - (90) -------- -------- -------- --------- 221 (306) - (85) ======== ======== ======== ========= Year ending 31 December 2005 Net cash: Cash in hand and at bank 284 12 8 304 Overdrafts (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 do not constitute accounts within the meaning of section 240 of the Companies Act 1985. The interim results have been drawn up using accounting policies and presentation consistent with those applied in the audited accounts for the period ended 31 December 2005. The information in respect of the period ended 31 December 2005 has been extracted from the audited statutory accounts which have been delivered to the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified. 5.5 Exceptional item - payroll costs The exceptional item relates to compensation paid to M Hudgell who resigned as a director during the period, together with sums paid to employees in Sweden who were made redundant after a duplication of roles following the acquisition of n3prenor AB. 5.6 Tax on loss on ordinary activities There is no tax charge on the result for the six month period due to available losses. 5.7 Dividends No dividend is proposed. 5.8 Share capital During the period Delling Group plc issued the Company issued 10,218,750 ordinary shares of 1p at a price of 8p for cash, for which the terms of settlement were after the 30 June 2006. 5.9 Loss per share The calculation of loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue carrying the right to receive dividends, which excludes the shares issued to the directors and not fully paid. The weighted number of shares in issue is as follows: 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 1p were 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 8p raising a gross amount of £600,000. On the 22 August 2006 Delling Group plc issued 11,897,436 ordinary shares of 1p at a price of 9.75p raising a gross amount of £1.16m. Delling Group plc also issued £1m of loan notes together with 2,000,000 ordinary shares, credited as fully paid at 9.5p, as a commitment fee for the loan. On 22 August 2006 Delling Group plc also exchanged contracts to acquire Eckerud Scandinavian Group AB ('Eckerud') for approximately £1.5 million. For the year ending 31 December 2006 Eckerud is expected to turnover approximately £4.4 million and generate profits before tax of £260,000. On 31 August 2006 Delling Group plc exchanged contracts to acquire Printcenter i Linkoping AB ('Printcenter') for approximately £0.37 million. For the year ending 31 August 2006 Printcenter is expected to turnover approximately £1 million and generate profits before tax of £70,000. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Direct Line Insurance Group (DLG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today