RNS Number:2182K
Dipford Group PLC
19 December 2007
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 2007.
Financial highlights (compared to 6 months ended 31 October 2006):
* Operating profit �258,999 (2006: �246,160)
* Profit before tax �153,700 (2006: �166,390)
* EPS 1.13p per share (2006: 0.96p)
Chris Pople, Non-Executive Chairman, said:
"We are now most of the way through what has been a difficult period for the
Group. We are beginning to see the benefits of improvements made to staffing and
procedures, although we still have some way to go."
- ends -
For further information please call:
Jonathan Custance Baker - Chief Executive, Dipford Group plc Tel: 01392 256800
Mike Coe - Director, Corporate Finance, Blue Oar Securities Plc Tel: 01179 330020
Interim Results for 6 months to 31 October 2007
The Board is pleased to present the six months results for the period to 31
October 2007.
Trading Results
This has been a mixed six month period. A steady first quarter has been followed
by difficult market conditions resulting in a subdued second quarter. These are
the first results prepared using International Financial Reporting Standards ('
IFRS') and comparative figures have been restated accordingly.
Redwoods Dowling Kerr (RDK)
We are very pleased with the appointment of Dave Fergus as the new Chief
Executive. Following his initial assessment, Dave has embarked on a programme of
restructuring which, while not yet compete, has already had a significant
positive impact on the business. It is frustrating that the delays in completing
the recruitment have meant, that while the outlook is now more positive, we are
six months behind in the development plans for the division.
Kings Business Transfer (Kings)
Led by Chris Rowlands, Kings has met overall growth expectations. However, the
slower than expected improvement in the quality of the revenue streams - as
evidenced by the higher cost of debt provisions - has led to reduced returns
from the business. The management of debtors has been tightened considerably
with the expectation that this area of concern will continue to diminish.
The division continues its geographic expansion which is heavily dependent on
finding good quality business development professionals in each new region.
Bruce & Company Limited (Bruce)
The Group's Scottish division is led by Derek Burgoyne and Gordon Mair. In an
ever more competitive environment, the division continues to meet all its
targets. Plans continue for Bruce to extend its services to a wider range of
sectors leveraging off the expertise of other parts of the Group.
Systems
All divisions are now fully up and running on our internally developed software
- Unite. Continued improvements now make this a very valuable management as well
as operational tool.
Marketing
Recent internal restructuring has allowed a greater emphasis on PR, a key area
of our business. The function of the PR Manager is not to publicise Dipford
Group but to promote the individual divisions in their respective market places.
A sustained programme of communication to both trade and regional press will
undoubtedly raise our profile and bring clear growth opportunities.
Market environment
Our second quarter was hampered by two main factors. The first was the 'credit
crunch' and the subsequent general market uncertainty. While this has not had a
direct impact, it has led to prospective purchasers being more circumspect in
their decisions. Secondly, the very wet summer extended the holiday period well
into September, which further delayed our deal flow.
While we believe that these problems are now moving behind us, the outlook for
the rest of the year remains conservative. Longer term, we see the trends being
positive in every sector of our business.
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
The business cycle in the SME business broking market is fairly lengthy. As
such, the current weak market climate will result in modest performance for the
first half of calendar 2008. Thereafter, we expect a pick up, in both activity
levels and profitability, as improvements to our business activity and cost
structures work through to enhanced revenues and margins.
Jonathan Custance Baker
Chief Executive
19th December 2007
Consolidated interim income statement
6 months to 6 months to Year ended
31 October 2007 31 October 2006 30 April 2007
(Unaudited) (Unaudited) *(Unaudited)
� � �
Revenue 2,760,919 2,921,381 5,704,207
Cost of sales (542,698) (587,105) (1,058,970)
Gross profit 2,218,221 2,334,276 4,645,237
Net operating expenses (1,984,210) (2,088,116) (3,920,281)
Other operating income 24,988 - 33,763
Operating profit before exeptional items 258,999 246,160 758,719
Exceptional items - - (1,892,590)
Operating profit/(loss) after exceptional 258,999 246,160 (1,133,871)
items
Interest receivable 14,016 9,900 21,002
Interest payable (119,315) (89,670) (194,152)
Profit/(loss) on before income tax 153,700 166,390 (1,307,021)
Income tax (expense)/credit (22,500) (54,850) 135,000
Profit/(loss) for the period 131,200 111,540 (1,172,021)
Earnings/(loss) per share (pence) 1.13 0.96 (10.08)
Earnings/(loss) per share (pence) - fully 1.13 0.96 (10.08)
diluted
*The UK GAAP income statement was audited for the year ended 30 April 2007.
Consolidated interim balance sheet
At 31 October At 31 October At 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Unaudited)
� � �
ASSETS
Non-current assets
Property, plant and equipment 136,512 204,480 176,236
Goodwill 6,853,857 8,552,402 6,853,857
Other intangible assets 188,957 176,622 195,376
7,179,326 8,933,504 7,225,469
Current assets
Trade and other receivables 1,085,333 1,098,424 1,432,476
Cash and cash equivalents 548,000 500,300 527,664
1,633,333 1,598,724 1,960,140
Total assets 8,812,659 10,532,228 9,185,609
EQUITY
Capital and reserves attributable to the
Company's equity holders
Share capital 581,126 581,126 581,126
Share premium account 5,117,259 5,117,259 5,117,259
Retained earnings (833,338) 319,023 (964,538)
Total equity 4,865,047 6,017,408 4,733,847
LIABILITIES
Non-current liabilities
Borrowings 1,594,405 1,756,808 1,941,843
Provisions - deferred taxation 4,190 4,190 4,190
1,598,595 1,760,998 1,946,033
Current liabilities
Trade and other payables 1,700,961 2,042,110 1,911,790
Current income tax liabilities 69,312 255,225 25,000
Borrowings 578,744 456,487 568,939
2,349,017 2,753,822 2,505,729
Total liabilities 3,947,612 4,514,820 4,451,762
Total equity and liabilities 8,812,659 10,532,228 9,185,609
Consolidated statement of changes in shareholders' equity
6 months to Year ended
31 October 2007 31 October 2006 30 April 2007
(Unaudited) (Unaudited) (Unaudited)
� � �
Profit/(loss) for the period 131,200 111,540 (1,172,021)
Opening equity 4,733,847 5,905,868 5,905,868
Closing equity 4,865,047 6,017,408 4,733,847
Consolidated interim cash flow statement
6 months to 6 months to Year ended
31 October 2007 31 October 2006 30 April 2007
(Unaudited) (Unaudited) (Unaudited)
� � �
Cash flow from operating activities
Cash generated from operations 345,808 247,366 705,561
Interest paid (119,315) (89,670) (194,152)
Income tax received / (paid) 143,126 (169,781) (327,281)
Net cash generated from / (used in)
operating activities 369,619 (12,085) 184,128
Cash flow from investing activities
Purchase of property, plant and
equipment (PPE) (20,820) (47,040) (68,908)
Purchase of intangible assets (10,513) (19,437) (53,861)
Proceeds from sale of PPE 10,000 23,947 30,813
Payment of deferred consideration (50,000) (33,000) (291,118)
Interest received 14,016 9,900 21,002
Net cash used in investing activities (57,317) (65,630) (362,072)
Cash flow from financing activities
Proceeds of borrowings from directors - - 75,000
Repayments of borrowings (197,997) (187,231) (248,206)
Capital element of finance lease
rental payments (10,729) (43,699) (58,216)
Net cash used in financing activities (208,726) (230,930) (231,422)
Net increase/(decrease) in net cash
(including bank overdrafts) 103,576 (308,645) (409,366)
Cash and bank overdrafts at beginning
of period 353,106 762,472 762,472
Cash and bank overdrafts at end of period 456,682 453,827 353,106
Cash and cash equivalents include client
account balances of 548,000 500,300 521,775
NOTES
1. Basis of reporting
The interim consolidated financial statements have been prepared under the
historic cost convention and are covered by IFRS 1, First-time Adoption of
International Financial Reporting Standards. The accounting policies are those
which the group intends to adopt for the year ending 30 April 2008 and are in
accordance with the IFRS that are either adopted by the European Union and
effective, or are expected to be effective, at 30 April 2008.
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 2007. Those accounts, prepared
under UK GAAP, and on which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies.
2. Earnings per share
The calculation of the basic earnings per share is based on the profit
attributable to ordinary shareholders for the period of �131,200 (2006 interim
profit: �111,540; 2007 final loss �1,172,021) divided by the average number of
shares in issue during the period of 11,622,512 (2006 interim: 11,622,512; 2007
final: 11,622,512).
3. Cash generated from (used in) operations
6 months to 6 months to Year ended
31 October 2007 31 October 2006 30 April 2007
(Unaudited) (Unaudited) (Unaudited)
� � �
Profit/(loss) for the period 131,200 111,540 (1,172,021)
Adjustments for:
- tax charge/(credit) 22,500 54,850 (135,000)
- finance costs 105,299 79,770 173,150
- exceptional amortisation charge - - 1,732,360
- depreciation 49,181 54,263 104,373
- amortisation of intangible assets 16,931 13,888 29,557
- loss/(profit) on sale of fixed assets 1,364 3,432 (3,433)
Changes in working capital
- decrease/(increase) in debtors 225,829 (105,902) (223,849)
- (decrease)/increase in creditors (206,496) 35,525 200,424
Cash generated from operations 345,808 247,366 705,561
4. Transition to International Financial Reporting Standards (IFRS)
4.1 Basis of transition to IFRS
Application of IFRS
The Group's financial statements for the year ended 30 April 2008 will be the
first annual financial statements which comply with IFRS. These interim
financial statements have been prepared under IFRS.
Dipford Group plc's transition date is 1 May 2006, and the Group has prepared
its opening IFRS balance sheet at that date. The reporting date of these
interim financial statements is 31 October 2007, and the Group's IFRS adoption
date is 1 May 2007.
The Group has taken advantage of the business combinations exemption in IFRS 1
and has not restated business combinations which occurred before the 1 May 2006
transition date.
Reconciliations between IFRS and UK GAAP
The following reconciliations quantify the effect of the transition to IFRS:
- equity at 31 October 2006 (note 4.3)
- equity at 30 April 2007 (note 4.4)
- net income 31 October 2006 (note 4.5)
- net income 30 April 2007 (note 4.6)
The adjustments from UK GAAP at 1 May 2006, as set out in the reconciliations,
comprise the reversal of goodwill which had been amortised in the relevant
periods in accordance with UK GAAP. IFRS does not permit the systematic
amortisation of goodwill. Goodwill is subject to an impairment review both
annually and where there are indications that the carrying value may not be
recoverable.
4.2 Summary of equity
1 May 31 October 30 April
2006 2006 2006
� � �
Total equity under UK GAAP 5,905,868 5,827,075 4,529,627
Reversal of goodwill amortised - 230,333 461,580
Corporation tax on reversal of goodwill - (40,000) (25,000)
Increase in exceptional impairment of goodwill - - (232,360)
Total equity under IFRS 5,905,868 6,017,408 4,733,847
4.3 Reconciliation of equity at 31 October 2006
UK Effect of
GAAP transition to
(Audited) IFRS IFRS
� � �
ASSETS
Non-current assets
Property, plant and equipment 204,480 - 204,480
Goodwill 8,322,069 230,333 8,552,402
Intangible assets 176,622 - 176,622
8,703,171 230,333 8,933,504
Current assets
Trade and other receivables 1,098,424 - 1,098,424
Cash and cash equivalents 500,300 - 500,300
1,598,724 - 1,598,724
Total assets 10,301,895 230,333 10,532,228
EQUITY
Capital and reserves attributable to the
Company's equity holders
Share capital 581,126 - 581,126
Share premium account 5,117,259 - 5,117,259
Retained earnings 128,690 190,333 319,023
Total equity 5,827,075 190,333 6,017,408
LIABILITIES
Non-current liabilities
Borrowings 1,756,808 - 1,756,808
Provisions - deferred taxation 4,190 - 4,190
1,760,998 - 1,760,998
Current liabilities
Trade and other payables 2,042,110 - 2,042,110
Current income tax liabilities 215,225 40,000 255,225
Borrowings 456,487 - 456,487
2,713,822 40,000 2,753,822
Total liabilities 4,474,820 40,000 4,514,820
Total equity and liabilities 10,301,895 230,333 10,532,228
4.4 Reconciliation of equity at 30 April 2007
UK Effect of
GAAP transition to
(Audited) IFRS IFRS
� � �
ASSETS
Non-current assets
Property, plant and equipment 176,236 - 176,236
Goodwill 6,624,637 229,220 6,853,857
Intangible assets 195,376 - 195,376
6,996,249 229,220 7,225,469
Current assets
Trade and other receivables 1,432,476 - 1,432,476
Cash and cash equivalents 527,664 - 527,664
1,960,140 - 1,960,140
Total assets 8,956,389 229,220 9,185,609
EQUITY
Capital and reserves attributable to the
Company's equity holders
Share capital 581,126 - 581,126
Share premium account 5,117,259 - 5,117,259
Retained earnings (1,168,758) 204,220 (964,538)
Total equity 4,529,627 204,220 4,733,847
LIABILITIES
Non-current liabilities
Borrowings 1,941,843 - 1,941,843
Provisions - deferred taxation 4,190 - 4,190
1,946,033 - 1,946,033
Current liabilities
Trade and other payables 1,911,790 - 1,911,790
Current income tax liabilities - 25,000 25,000
Borrowings 568,939 - 568,939
2,480,729 - 2,505,729
Total liabilities 4,426,762 - 4,451,762
Total equity and liabilities 8,956,389 204,220 9,185,609
4.5 Reconciliation of net income for the six months ended 31 October
2006
UK Effect of
GAAP transition to
(Audited) IFRS IFRS
� � �
Revenue 2,921,381 - 2,921,381
Cost of sales (587,105) - (587,105)
Gross profit 2,334,276 2,334,276
Net operating expenses (2,318,449) 230,333 (2,088,116)
Operating profit 15,827 230,333 246,160
Interest receivable 9,900 9,900
Interest payable (89,670) (89,670)
Profit/(loss) before income tax (63,943) 230,333 166,390
Income tax expense (14,850) (40,000) (54,850)
Profit/(loss) for the period (78,793) 190,333 111,540
4.6 Reconciliation of net income for the year ended 30 April 2007
UK Effect of
GAAP transition to
(Audited) IFRS IFRS
� � �
Revenue 5,704,207 - 5,704,207
Cost of sales (1,058,970) - (1,058,970)
Gross profit 4,645,237 4,645,237
Net operating expenses (4,381,861) 461,580 (3,920,281)
Other operating income 33,763 - 33,763
Operating profit before exceptional items 297,139 461,580 758,719
Exceptional items (1,660,230) (232,360) (1,892,590)
Operating loss after exceptional items (1,363,091) 229,220 (1,133,871)
Interest receivable 21,002 - 21,002
Interest payable (194,152) - (194,152)
Loss before income tax (1,536,241) 229,220 (1,307,021)
Income tax credit/(expense) 160,000 (25,000) 135,000
Loss for the period (1,376,241) 204,220 (1,172,021)
5. Exceptional items
�
Impairment of goodwill 1,732,360
Termination payment - director 160,230
1,892,590
6. Interim report
Copies of the interim report for the six months ended 31 October 2007 will be
sent to shareholders on 21st December 2007. 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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