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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Dipford Grp | LSE:DIP | London | Ordinary Share | GB0031318883 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 5.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:9425Z Dipford Group PLC 10 July 2007 Dipford reports year of consolidation Dipford Group plc, a leading operator in the business broking market, announces its preliminary results for the year ended 30 April 2007. Non-Executive Chairman, Chris Pople, comments "It has been a difficult year resulting in reduced expectations as outlined in our trading statement last September. Since then, we have assessed the problems, formulated the solutions and have been actively implementing them. The second half results have met revised expectations indicating that we are back on track and we look forward to a resumption of steady growth." For further information please contact:- Jonathan Custance Baker, Chief Executive, Dipford Group plc 01392 256800 Miles MacEacharn, Finance Director, Dipford Group plc 01392 256800 Mike Coe, Director, Blue Oar Securities Plc 0117 933 0020 www.dipford.com Non-Executive Chairman's Statement Introduction Although I have been a non-Executive Director since the Group's formation, this is my first statement as Chairman of Dipford Group plc following my appointment in February 2007. Notwithstanding significant advances made by the Group during 2006/7, the final results did not meet the market expectations that existed at the start of the year. Since our trading statement in September 2006, the management team has been very active in restructuring the business. I am very pleased that these efforts have led to us meeting the revised adjusted earnings per share expectations for the year. Further information on our results can be found in the Financial Review. Overview of the business Dipford acts, in simple terms, as an "estate agent" for small businesses. During the year to 30 April 2007, the Group, through its three trading divisions, sold approximately 800 businesses worth around #150m. With a hugely experienced operational management team and a state of the art central computer system, Dipford is well placed to capitalise on the UK's appetite for entrepreneurial activity and help people realise the dream of running their own business. Results The Group achieved a 12% increase in sales during the year, up from #5,086,724 to #5,704,207. However, as mentioned in our trading statement in September 2006, our ongoing prudent approach to debt management has led to increased levels of provision. The overall charge and associated debt recovery costs are #537,000 higher than in 2006 including an amount related to the end of the earnout year for Kings Business Transfer. This increased level of provision, together with disappointing earnings from the other two divisions, have contributed to our earnings before exceptional items, tax, and amortization of goodwill being down 38%, from #950,192 to #585,569. Board Changes In February, Dipford's former Group Managing Director, Rupert Cattell left the Group. Mr Cattell's position had become redundant with the planned recruitment of a Chief Executive for Redwoods Dowling Kerr which is presently underway. The costs associated with Mr Cattell's departure are shown in the accounts as an exceptional item. Consequent upon this departure, Jonathan Custance Baker moved from Executive Chairman to a new role as Chief Executive and I took over as non-Executive Chairman. These changes have worked well. I wish to thank both Jonathan and Miles MacEacharn, the Finance Director, for the great resolve which they have shown during this period of transition and express my confidence that we have in place a team which will enable us to grow strongly in the future. Outlook Despite rising interest rates and a possible slowdown in the housing market, our business continues to thrive on all fronts. There will, inevitably, be variations from sector to sector but we are well placed to position our activities to take advantage of changes in our different markets. In the near term I foresee a period of organic growth before looking to resume expansion through acquisitions. C J Pople Non-Executive Chairman 9 July 2007 Chief Executive's Statement Overview After five years of expansion through acquisition, this has been a year of reconstruction and stabilisation. Each of the three divisions which make up the Group has been configuring itself to meet the challenges and opportunities which lie ahead. This process is largely complete and we look forward to future organic growth based on cleaner, more focussed lines of approach. Central Marketing Based in Honley, Yorkshire, the Central Marketing department provides marketing and PR services to the rest of the Group. A new Marketing Manager has just been appointed to provide additional resource to the department. With substantial PR activity, major advertising programmes and over 700,000 pieces of direct mail sent out from this office, Central Marketing is a vital part of the Group. Information Technology and Systems (IT) The Group's bespoke customer relationship management software, Unite, was initially set up to service Redwoods Dowling Kerr and its clients. During the year, Unite has been substantially upgraded and rolled out to the other two divisions. This would not have been possible without the (internal) appointment of a Systems and Training Manager whose experience and expertise significantly reduced the potential hazards of such an operation. Whilst the rollout process inevitably caused disruption during its implementation, the benefits are now starting to come through. A common platform creates significant efficiencies as well as economies of scale. Being able to match businesses for sale from any part of the group with prospective buyers regardless of their source of origin allows a superior service to be provided to both sides of the transaction. In addition, management reporting, accounting and a Group overview are available more quickly and with less time spent, enabling us to have a closer control of a more efficient business. I must thank all the staff who have coped valiantly with the transition process and congratulate them on the helpful and effective way they have enabled it to take place. Bruce & Company Limited Previously this division, which operates solely within Scotland, has focussed on the licensed sector (Pubs and Hotels). This has now been extended to include Day Nurseries and Care Homes using expertise from other parts of the Group to extend the penetration into these sectors. In addition, the staffing has been strengthened by the recruitment of more valuers and negotiators. Allied to the move onto Unite, Bruce & Co has been able to offer a wider range of services at an enhanced level. Despite the increased competition from newer and smaller entrants to the Scottish market, we expect to see further growth as a result of these developments. Kings Business Transfer Headquartered in Bury, Lancashire, Kings has always had a strong North Western focus. This has been extended into the North East and is now broadening its activities into the Midlands. It is intended that this expansion will continue resulting, ultimately, in full national coverage. This will be governed by the need to ensure that each stage of the growth is cost effective and is matched by the recruitment of high quality business managers in each new area. Like Bruce & Co, Kings has moved onto Unite during the year and the business has used this opportunity to raise the standard and training of its staff and is now fully prepared for the expansion as it takes place. This has been a year in which the investment in marketing and staff that we have made in Kings has started to pay dividends with sharply increased sales. However, the nature of the market sector in which Kings operates means that the level of debt provision has been much higher than expected. We have now substantially improved our debt management procedures and expect that this will lead to a reduction in the provision over the medium term. Redwoods Dowling Kerr As was announced in September 2006, we have decided to appoint a Chief Executive for this business, to provide a focal point for what is the Group's largest trading division and to align the structure to that of Bruce & Co. and Kings. The recruitment for this position is continuing and, in the interim, I have been taking direct responsibility for the division. A number of changes have taken place in recent months, including the streamlining of the negotiations team (with a consequent lifting of both quality and efficiency) and a major improvement in the marketing and mailing material. By using the skills and experience of the senior members of the RDK management team, a fresh approach has been adopted which is already producing increased response rates which should, in due course, translate into increased revenues. In addition, we have decided to stick to the division's strengths by focussing on a limited number of sectors where the strength and reputation already lies. This has resulted in an increase in the average fee level and an improved service. Summary This year has been one in which the final results were below initial expectations. However, since our trading statement in September 2006, the changes and improvements we have made to the business have started to have an effect and we were delighted to be able to meet the revised expectations for the year to 30 April 2007. As additional resources become available, we look forward to increasing our rate of growth. I would like to take this opportunity to thank the Group's staff for their hard work during this difficult period and look forward to capitalising on their efforts in the coming months. J J Custance Baker Chief Executive 9 July 2007 Financial Review Capital Structure As at 30 April 2007, Group shareholders' funds were #4,529,627. Cash at hand totalled #527,664, of which #521,775 represented deposits held on behalf of purchasers. Debt totalled #2,399,097 consisting of #2,204,827 in respect of bank loans, #174,558 in relation to bank overdraft and #19,712 in respect of finance leases. Turnover and Pre-tax Profit Results for year to 30 April 2007 The Group achieved turnover of #5,704,207 in the year to 30 April 2007 (2006: #5,086,724). The operating profit for the year before exceptional items was #297,139 (2006: #698,181) and the loss before tax was #1,536,241 (2006: profit of #590,104). The loss per share for the year was 11.8p (2006: earnings of 3.6p). After adding back to the fully diluted loss per share of 11.8p the goodwill amortisation of #461,580, exceptional items of goodwill write down of #1,500,000 and termination costs of #160,230, and then applying a composite tax rate equivalent to 22.5%, the Group's adjusted EPS equated to 4.5p (2006: 7.0p) For future accounting periods the Group will be required to adopt International Financial Reporting Standards. Under these rules, the adjusted EPS of 4.5p mentioned above would reduce to 3.9p. Exceptional items There are two exceptional items for the year to 30 April 2007. a) Departure of founding Group Managing Director As previously mentioned, Rupert Cattell left the Group by mutual agreement in February 2007. The total costs of his departure amounted to #160,230. b) Write down of goodwill Having given regard to the carrying value of goodwill in respect to its acquisition of Redwoods Agencies in the period November 2005 - May 2006, the Directors felt it was appropriate to adjust this value to reflect the current state of the Company's business activities. Consequently on 30 April 2007 an impairment charge of #1,500,000 was made against the carrying value of goodwill. A result of this write down was the generation of significant tax losses that have been applied to the taxable profits of Bruce & Co Limited for the 12 months to 30 April 2007 and to the profits of Dipford Group plc for the previous 12 months to 30 April 2006. This generated the tax credit of #160,000 for the year to 30 April 2007. MCM MacEacharn Finance Director 9 July 2007 Group Profit and Loss Account Year Ending 30 April 2007 2007 2006 # # Turnover Continuing operations 5,704,207 5,040,384 Discontinued operations - 46,340 5,704,207 5,086,724 Cost of sales Continuing operations (1,058,970) (845,523) Discontinued operations - (40,230) (1,058,970) (885,753) Gross profit 4,645,237 4,200,971 Net operating expenses Continuing operations (4,381,861) (3,514,740) Other operating income 33,763 11,950 Operating profit Continuing operations 297,139 692,071 Discontinued operations - 6,110 Operating profit before exceptional items 297,139 698,181 Exceptional items (1,660,230) - Operating (loss)/profit after exceptional items (1,363,091) 698,181 Interest receivable 21,002 14,651 Interest payable (194,152) (122,728) (Loss)/profit on ordinary activities before taxation (1,536,241) 590,104 Tax on (loss)/profit on ordinary activities 160,000 (200,000) (Loss)/profit for the financial year (1,376,241) 390,104 (Loss)/Earnings per share basic (11.8p) 3.6p fully diluted (11.8p) 3.6p There are no other recognised gains or losses other than the loss for the year. Group Balance Sheet 30 April 2007 2007 2006 # # Fixed assets Intangible assets 6,820,013 8,772,915 Tangible assets 176,236 239,082 6,996,249 9,011,997 Current assets Debtors 1,432,476 1,037,380 Cash at bank and in hand 527,664 762,472 1,960,140 1,799,852 Creditors - Amounts falling due within one year (2,480,729) (2,574,184) Net current liabilities (520,589) (774,332) Total assets less current liabilities 6,475,660 8,237,665 Creditors - Amounts falling due after more than one year (1,941,843) (2,327,607) Provision for liabilities and charges Deferred taxation (4,190) (4,190) 4,529,627 5,905,868 Capital and reserves Called up share capital 581,126 581,126 Share premium account 5,117,259 5,117,259 Profit and loss account (1,168,758) 207,483 Shareholders' funds 4,529,627 5,905,868 Group Cash Flow Statement Year Ending 30 April 2007 2007 2006 # # Net cash inflow from operating activities 705,561 999,216 Returns on investments and servicing of finance Interest received 21,002 14,651 Interest paid (194,152) (122,728) Net cash outflow from returns on investments and servicing of finance (173,150) (108,077) Taxation Corporation tax paid (327,281) (36,628) Capital expenditure and financial investment Payments to acquire tangible fixed assets (68,908) (96,538) Payments to acquire intangible assets -goodwill - (50,062) -other (53,861) (61,648) Proceeds on sale of fixed assets 30,813 - Purchase of subsidiary undertaking - (2,163,429) Purchase of Kings Business Transfer - (1,755,146) Deferred consideration paid (291,118) (192,714) Cash acquired with subsidiary undertaking - 768,535 Net cash outflow from investing activities (383,074) (3,551,002) Net cash outflow before financing (177,944) (2,696,491) Financing Issue of ordinary share capital for cash - 1,511,190 New bank loans - 1,934,000 Loans from directors 75,000 - Repayment of bank loans (248,206) (270,566) Capital element of finance lease rental payments (58,216) (16,555) Net cash (outflow)/inflow from financing (231,422) 3,158,069 (Decrease)/increase in cash (409,366) 461,578 Notes 1 The basic earnings per share has been calculated by dividing the loss on ordinary activities after taxation of #1,376,241 (2006: profit of #390,104) by 11,622,512 (2006: 10,741,502), the weighted average number of 5p ordinary shares in issue during the financial year. 2 The financial information on the Group set out above does not constitute statutory information within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 30 April 2007 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Group's Annual General Meeting. 3 Copies of the 2007 Report and Accounts will be sent to shareholders in due course. Further copies will be available from Dipford Group plc, Pynes, Upton Pyne, Exeter, EX5 5EF or on the Company's website - www.dipford.com. Note to editors: Dipford Group is an AIM listed company which acts as an agent for vendors of small and medium sized businesses throughout the UK across a wide range of sectors. Dipford's business broking activities operate under the brand names Redwoods Dowling Kerr, Kings Business Transfer and Bruce & Company. The strategy for the Group is to expand the business through a combination of organic growth and acquisition, consolidating what is a fragmented market. It is also part of the strategy to develop activities which are complementary to the core business broking sector. This information is provided by RNS The company news service from the London Stock Exchange END FR RLMRTMMAMBTR
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