RNS Number:4050N
Dipford Group PLC
07 December 2006
DIPFORD GROUP PLC
Dipford stabilises after tough first half
Dipford Group plc, a consolidator in the business broking market, today
announces its interim results for the six-month period ended 31 October 2006.
Highlights:
Financial (compared to 6 months ended 31 October 2005):
* Adjusted profit (before tax and goodwill amortisation of #230,332)
#166,389 (2005: #254,744)
* Loss before tax #(63,943) (2005: profit of #104,512)
* Adjusted EPS (before goodwill amortisation) was 1.3p per share (2005:
2.01p)
Business
* Business sales and businesses are operating against a tougher market
environment
* Redwoods Dowling Kerr disappointed with lower than forecast sales
* Recent acquisitions Kings Business Transfer and Bruce & Co have both
performed well
* Significantly higher levels of bad debt write offs
Jonathan Custance Baker, Executive Chairman, said:
"The set of results is closely in line with the revised expectations indicated
at our AGM in September. Our two most recent acquisitions - Kings Business
Transfer and Bruce & Company Limited - have performed ahead of expectation with
a consequent impact on their earn-out. Turnover at Redwoods Dowling Kerr,
staying at levels achieved earlier this calendar year, was lower than
anticipated. The business has also been carrying a higher level of costs in
expectation of future growth. From this platform, we expect an improved level
of earnings going forward. The company has no immediate plans for a further
acquisition."
- ends -
For further information please call:
Jonathan Custance Baker - Executive Chairman Tel: 01392 256800
Miles MacEacharn - Finance Director Tel: 01392 256800
Barrie Newton - Corporate Synergy/Rowan Dartington Tel: 01179 330011
Interim Results for the Period ended 31 October 2006
The Board is pleased to present the six months results for the period to 31
October 2006.
Trading Results
Following the loss of two recent cases for recovery of our fees we have
conducted an extensive debtor review which has resulted in significantly higher
bad debt provisioning which we expect will continue albeit it at a reduced
level.
Redwoods Dowling Kerr (RDK)
As anticipated in the AGM statement, sales have stabilised at levels achieved
earlier in the calendar year and costs have continued to rise. Delays in
subletting part of our Huddersfield office have resulted in higher than budgeted
costs. Following a disappointing six months, and to bring it into line with our
other operating divisions, we will be recruiting a full-time Chief Executive for
RDK. Pending this appointment, Jonathan Custance Baker has been seconded
full-time to the Yorkshire office of RDK. It is expected that both the interim
and long term measures will have a positive impact on the growth prospects for
this important area of our business as the cost of recruiting and training key
staff is matched by future growth.
Kings Business Transfer (Kings)
This has been another successful period which included the completion of the
acquisition earn-out. Under the leadership of one of the original owners, the
division is growing steadily.
Bruce & Company Limited (Bruce)
This is the first full six-month period since we acquired Bruce in January. The
company is performing ahead of expectations. Using the expertise of the rest of
the Group in certain specialist areas e.g. day nurseries, Bruce is developing
these sectors in Scotland as well.
Systems
Both Kings and Bruce will shortly be migrating onto Unite, the Group's bespoke
web-based customer relationship management system. Whilst each business will
remain autonomous, this will bring the major advantage of being able to share
buyer databases, thus improving the service to vendors and speeding up potential
sales. It will also enhance our management reporting capabilities.
Marketing
Under the Director of Marketing, the centralised service provision is ensuring a
more cost-effective use of our resources. We have, in addition, taken in house
the PR of our main operating divisions with a consequent uplift in coverage in
the relevant trade publications.
Marketing environment
It has been noticeable that bank lending to prospective purchasers has become
more cautious over the recent past. This slows down prospective sales as
vendors adjust their expectations to a less rapidly growing climate.
Balance Sheet
The balance sheet at 31 October 2006 showed net assets of #5.8m (2005: #5.3m).
Goodwill of #8.9m, arising on acquisitions, is being written off over twenty
years.
The Group had an overdraft of #46,473 at 31 October 2006 (2005: cash at bank and
on hand of #152,834). These balances exclude deposit monies held on behalf of
clients.
Dividends
While it is the intention of the Board in due course to ensure that shareholders
benefit from the success of the Group with a progressive dividend policy, the
need to balance this with continuing investment in the business means that the
Board is not recommending an interim dividend for the period.
Outlook
This has been a difficult period for the Group with our largest division
performing below expectation. We have been working actively to ensure that
future revenues rise from their present levels.
Jonathan Custance Baker
Executive Chairman
7th December 2006
Dipford Group plc - Interim results for 6 months to 31 October 2006
Consolidated Profit and Loss Account 6 months to 31 6 months to 31 Year ended 30
October 2006 October 2005 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Turnover
Continuing operations 2,921,381 2,198,413 5,040,384
Discontinued operations - - 46,340
2,921,381 2,198,413 5,086,724
Cost of sales
Continuing operations (587,105) (441,001) (845,523)
Discontinued operations - - (40,230)
(587,105) (441,001) (885,753)
Gross profit 2,334,276 1,757,412 4,200,971
Net operating expenses
Continuing operations (2,318,449) (1,611,470) (3,514,740)
Other operating income - - 11,950
Operating profit
Continuing Operations 15,827 145,942 692,071
Discontinued operations - - 6,110
15,827 145,942 698,181
Interest receivable 9,900 5,416 14,651
Interest payable (89,670) (46,846) (122,728)
(Loss)/profit on ordinary activities (63,943) 104,512 590,104
before taxation
Tax on (loss)/profit on ordinary (14,850) (53,000) (200,000)
activities
(Loss)/profit for the financial year (78,793) 51,512 390,104
(Loss)/earnings per share (0.68p) 0.51p 3.63p
Adjusted earnings per share after 1.30p 2.01p 6.96p
adding back amortisation of goodwill
Consolidated Balance Sheet 31 October 2006 31 October 2005 30 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Fixed assets
Intangible assets 8,498,691 6,639,891 8,772,915
Tangible assets 204,480 168,612 239,082
8,703,171 6,808,503 9,011,997
Current assets
Debtors 1,098,424 673,587 1,037,380
Cash at bank and in hand 500,300 811,332 762,472
1,598,724 1,484,919 1,799,852
Creditors due within one year (2,713,822) (1,745,406) (2,574,184)
Net current liabilities (1,115,098) (260,487) (774,332)
Total assets less current liabilities 7,588,073 6,548,016 8,237,665
Creditors due after one year (1,756,808) (1,230,740) (2,327,607)
Provisions - deferred taxation (4,190) - (4,190)
Net assets 5,827,075 5,317,276 5,905,868
Capital and reserves
Called up share capital 581,126 560,801 581,126
Share premium account 5,117,259 4,887,584 5,117,259
Profit and loss account 128,690 (131,109) 207,483
Shareholders' funds 5,827,075 5,317,276 5,905,868
Consolidated Cash Flow Statement 6 months to 31 6 months to 31 Year ended 30
October 2006 October 2005 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Net cash inflow from operating 247,366 584,678 999,216
activities (note 4)
Returns on investments and
servicing of finance
Interest received 9,900 532 14,651
Interest paid (89,670) (41,962) (122,728)
Net cash outflow from returns on investments (79,770) (41,430) (108,077)
and servicing of finance
Taxation (169,781) - (36,628)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (47,040) (17,311) (96,538)
Payments to acquire intangible fixed assets (19,437) (77,608) (111,710)
Receipts from sales of tangible fixed assets 23,947 - -
Purchase of subsidiary undertaking - - (2,163,429)
Payments to acquire businesses - (1,754,372) (1,755,146)
Payment of deferred consideration (33,000) (176,038) (192,714)
Cash acquired with subsidiary undertaking - - 768,535
Net cash outflow from investing activities (75,530) (2,025,329) (3,551,002)
Net cash outflow before use of liquid (77,715) (1,482,081) (2,696,491)
resources and financing
Financing
Issue of ordinary share capital - 1,511,190 1,511,190
New bank loan - 534,000 1,934,000
Repayment of bank loans (187,231) (42,926) (270,566)
Repayment of finance leases (29,000) - -
Capital element of finance lease rental (14,699) (9,745) (16,555)
payments
Net cash (outflow)/inflow from financing (230,930) 1,992,519 3,158,069
(Decrease)/increase in cash (note 5) (308,645) 510,438 461,578
Notes
1 Basis of reporting
The interim financial statements have been prepared under the historical cost convention and in
accordance with applicable accounting standards in the United Kingdom. The accounting policies
adopted are consistent with those disclosed in the group's statutory accounts in the year ended 30
April 2006.
The financial information contained in this interim statement does not constitute full accounts as
defined in section 240 Companies Act 1985. The interim financial information in this statement has
been neither audited nor reviewed by the company's auditors.
The financial information for the preceding year is based on the statutory accounts for the financial
year ended 30 April 2006. Those accounts, on which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies.
2 Exceptional item
Operating profit is arrived at after charging #275,739 in respect of bad debt write-offs and increases
in the provision for bad debts.
3 Earnings per share
The calculation of the basic earnings per share is based on the loss attributable to ordinary
shareholders for the period of #78,793 (2005 interim profit: #51,512; 2006 final profit #390,104)
divided by the average number of shares in issue during the period of 11,622,515 (2005 interim:
10,022,877; 2006 final: 10,741,502).
4 Reconciliation of operating profit to net cash inflow from operating activities
6 months to 31 6 months to 31 Year ended 30
October 2006 October 2005 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Operating profit 15,827 145,942 698,181
Depreciation 54,263 46,740 83,325
Amortisation 244,221 150,232 383,181
Loss on sale of fixed assets 3,432 - -
Increase in debtors (105,902) (169,323) (491,245)
Increase in creditors 35,525 411,087 325,774
Net cash inflow from operating 247,366 584,678 999,216
activities
5(a) Analysis of changes in net debt 6 months to 6 months to Year ended
31 October 2006 31 October 2005 30 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Increase/(decrease) in cash (308,645) 510,438 461,578
Repayment of bank loans and finance 230,930 52,671 287,121
leases
New bank loans and finance leases - (534,000) (1,934,000)
Change in net debt (77,715) 29,109 (1,185,301)
resulting from cash flows
Finance leases acquired - (35,148) (47,231)
Net debt at beginning of period (1,718,556) (486,024) (486,024)
Net debt at end of period (1,796,271) (492,063) (1,718,556)
5(b) Analysis of net debt At 1 May 2006 Cashflow At 31
(Audited) (Unaudited) October 2006
(Unaudited)
# # #
Cash at bank and in hand 762,472 (262,172) 500,300
Bank overdraft - (46,473) (46,473)
762,472 (308,645) 453,827
Debt:
- due within one year (453,885) - (453,885)
- due after one year (2,027,143) 230,930 (1,796,213)
(1,718,556) (77,715) (1,796,271)
6 Client account balances 31 October 2006 31 October 2005 30 April 2006
(Unaudited) (Unaudited) (Audited)
# # #
Cash at bank and in hand includes
client account balances of: 500,300 658,498 490,250
7 Interim report
Copies of the interim report for the six months ended 31 October 2006 will be sent to shareholders on
11 December 2006. Further copies will be available from the Company Secretary, Dipford Group plc,
Narrow Quay House, Narrow Quay, Bristol BS1 4AH and at the Group's website at www.dipford.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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