Altitude Group Regulatory News (ALT)

27 Sep 2007 07:02

Dowlis Corporate Solutions plc27 September 2007 Date: 27 September 2007 On behalf of: Dowlis Corporate Solutions plc ("Dowlis", "the Company" or "the Group") Embargoed until: 0700hrs Dowlis Corporate Solutions plc Unaudited Interim Results Dowlis Corporate Solutions plc (AIM: DWL), the marketing, information andlogistics solutions business, today announced its interim results for the sixmonths ended 30 June 2007. The key highlights are: • Turnover of £10.4m (2006: £9.4m), an increase of 11.1% on 2006 interim period • Pre-tax profits of £0.48m against loss of £0.28m in the same period last year • Earnings per share at 0.74p (2006: loss of 0.57p) • Acquisitions made in 2006 performing strongly and each producing increased profits • Launch of PromoServe in USA • Successful launch of Dowlis.com online business • Craig Slater appointed as CEO Commenting on the results, Colin Cooke, Chairman, said: "I am pleased with the performance of our divisions and the progress made in thepast year. The results from our Promotional Marketing division are much improvedreflecting the considerable work done by the team to refocus this business. TheTrade Only division has shown strong revenue growth and we look forward tocontinuing to develop this division further. "We are delighted to welcome Craig Slater to his new role as Chief Executive.He brings with him a wealth of experience and we are confident that he will makea substantial contribution to the Group." Enquiries: Dowlis Corporate Solutions plc www.dowlis.comMartin Varley /Barrett Bedrossian 0870 224 6677 Redleaf CommunicationsEmma Kane/Sanna Lehtinen/Susan Quigley 020 7822 0200 Daniel Stewart & Company plcLindsay Mair / Tom Jenkins 020 7776 6550 Zeus CapitalAlex Clarkson 0161 831 1512 • Publication quality photographs are available via Redleaf. CHAIRMAN'S STATEMENT Review of Operations Promotional Marketing (Under IFRS) Half year Half year Full year 2007 2006 2006 £000's £000's £000's Turnover 8,597 8,283 16,272Operating Profit (before exceptional items) 363 72 683Operating Profit/(Loss) (after exceptional items) 363 (528) (2) This division provides Promotional Merchandise to corporate customers whoseaggregate UK spend is estimated at over £1 billion. All products arepersonalised in line with the customer's brand or wider marketing message, themajority of orders are required for particular events or promotions andtherefore customer service is seen as a key differentiator. Key clients of thisdivision include HBOS, Daimler Chrysler and O2. Ross Promotional This company was acquired 18 months ago and continues to perform strongly, withsales this year some 20% ahead of 2006. The business collects orders primarilyby phone from regular clients and has achieved solid returns from an increasedinvestment in catalogue mailings to customers and defined prospects. We expectthe full year to show good progress in this business with strong cashgeneration. DCS Manchester This business continues to build on the successes of 2006 and revenues are aheadof the same period last year. One of the key trends in the industry is the shifttowards online sales and this is being addressed. Based on our research, we havespent the last six months developing an online business that launched earlierthis month, backed up by highly experienced customer service staff at theManchester facility. DCS Byfleet Last year, Dowlis in Byfleet put in place both a new structure and ManagingDirector. We have started to see some benefits from this, with new account winsand improved levels of service to key clients. Distinctive Ideas Acquired 11 months ago, Distinctive Ideas is performing well and is fullyintegrated into the Group. At the end of June, profits were 20% ahead of thesame period last year and the customer base has been strengthened. Overview This segment of the Group is exploring ways to serve customers in moreeconomical ways, and we are confident that the combination of a highly motivatedmanagement team, combined with the online strategy will deliver solid resultsover the next 18 months. We continue to explore other acquisition opportunitiesbased on our model of acquiring a majority shareholding, with the balancepurchased through 'put' and 'call' options at agreed earnings enhancingmultiples in future years. We believe that keeping management teams highlyincentivised and focused is a key element to future growth and profitability. Information and Exhibitions (under IFRS) Half year Half year Full year 2007 2006 2006 £000's £000's £000's Turnover 1,818 1,093 2,586Operating profit before exceptional items 117 241 608Operating Profit/(Loss) 117 241 578 This business supplies products and services to distributors of PromotionalProducts. The division has three key areas: Product Supply Supplying products to distributors through AdProducts based in Manchester. Thisbusiness holds stock of fast moving products and personalises them in house withthe latest technology such as laser engraving, pad printing and fully automaticmulti colour screen print. Formed four years ago, this business has sales thatare 22% ahead of the same period last year. Trade Only This is the umbrella business for our various information, publishing andexhibition services that we provide to both distributors and suppliers. Our 'Spectrum' catalogue has performed in line with expectations and the 2008edition will show revenue increases again. Our second catalogue is 'Envoy' whichis a publication purchased 15 months ago; the 2007 edition was published inMarch this year and has been well received with revenue growing over 2006. The www.tradeonly.co.uk site continues to grow in popularity. New functions havebeen added and it now has registered users from an estimated 75% of promotionalproduct distributors in the UK. Users access the site to research products, findsuppliers, view prices and make virtual samples. In addition, they can ordersamples and request detailed quotations from suppliers without ever needing toleave the site. The exhibitions part of the business had been modest prior to this year.However, we launched a two-day show during March 2007 at which more than 190companies exhibited their products and services to the distributors. I ampleased to report that the level of rebooking for the 2008 event is in line withexpectations at 76% of saleable space and ahead of the final space sold for the2007 event. Industry Software (ISL) This business became part of the Group last summer. The company has developedPromoServe as the leading software for the promotional products industry, forthe management of customer relationships, order processing and accounting. ISL has six times more installs than the number two in the market place in theUK and we are now seeing results from the reseller we have appointed for theBenelux countries. I am particularly pleased to announce our first customer in the USA for thisproduct, where one of the fastest growing distributors and the 26th fastestgrowing company in the USA has recently agreed an initial three year term to usePromoServe for all of their clients. This is a major development for the Group,with the USA having around 30,000 distributors of Promotional Products supplyingUS$18 billion of products to end customers. The services we provide to suppliers and distributors of promotional productsenable small and medium size businesses to operate with resources normally onlyavailable to much larger companies. By using our services, distributors are ableto market their business, source products and suppliers, take orders online andmanage their complete accounting functions at a fraction of the cost associatedwith having to purchase a franchise. Overall, this division's sales are ahead of last year, although a heavyinvestment in establishing new events has limited profit growth this year. Board Changes Following the successful establishment of the Group and development of itsstrategy, Martin Varley will now concentrate on driving growth in the Group'sofferings to distributors and will continue to identify earnings enhancingdevelopments across the Group. I am therefore delighted to welcome Craig Slater to the Company in his new roleof Chief Executive Officer, an appointment that he takes up on 1st October.Craig has industry specific business experience that will be of tremendous valueto the Company in the next phase of our development, and I am sure that hisknowledge of the promotional products sector gained from his time with 4imprintas Chief Operating Officer will prove invaluable to the Dowlis CorporateSolutions Group. Having previously worked together at 4imprint Group, Martin and Craig intend towork closely to continue the growth of the Group both through the profitabledevelopment of existing businesses as well as through further acquisitions. Outlook We enter the last quarter of the year with renewed confidence, and manyopportunities to deliver value to shareholders. We will explore more of theexcellent business potential that exists in both of our divisions in comingmonths. We are confident that the initiatives in place across the Group will provideprofit growth in future periods and I am pleased to report improved cashgeneration since the half year. Colin CookeChairman 27 September 2007 Dowlis Corporate Solutions plcConsolidated Income Statement (Unaudited)For the Period Ended 30 June 2007 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 restated restated £000's £000's £000's RevenueContinuing 10,415 8,216 16,125Acquisitions 2,733 - 1,160 10,415 9,376 18,858 Operating profitBefore exceptional operating charges 480 313 1,291Exceptional operating charges - (600) (715) 480 (287) 576 Analysed between: Continuing 480 (581) (86) Acquisitions - 294 662 Interest payable and similar charges (22) (2) (16)Interest receivable 6 10 26Profit/(Loss) on ordinary activities before 464 (279) 586taxation Analysed between: Before exceptional operating charges 464 321 1,301 Exceptional operating charges - (600) (715) Taxation (180) 64 41Profit/(Loss) for the period 284 (215) 627 Attributable to: Equity holders of the parent 284 (215) 627 Earnings per ordinary share p p pBasic 0.74 (0.57) 1.65 Diluted 0.74 (0.57) 1.65 Dowlis Corporate Solutions plcConsolidated Balance Sheet (Unaudited)As at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 £000's £000's £000'sASSETSNon-current assetsGoodwill 2,954 2,450 2,935 Intangible assets 324 - 256Property, plant and equipment 997 834 926 4,275 3,284 4,117 Current AssetsInventories 1,718 1,295 1,684Trade and other receivables 6,286 4,744 5,215Current taxation recoverable 131 25 366Cash and cash equivalents - 374 - 8,135 6,438 7,265 Total Assets 12,410 9,722 11,382 LIABILITIESCurrent LiabilitiesBorrowings 516 18 201Trade and other payables 4,072 3,889 3,699Current tax liabilities 834 281 765 5,422 4,188 4,665 Non Current LiabilitiesBorrowings 22 6 35Provisions 147 - 147Deferred tax liabilities 83 77 83 252 83 265 Total Liabilities 5,674 4,271 4,930 Net Assets 6,736 5,451 6,452 EQUITYCalled up share capital - equity 153 151 153Share premium account 5,293 5,135 5,293Retained earnings 1,290 165 1,006Total equity and reserves 6,736 5,451 6,452 Dowlis Corporate Solutions plcConsolidated Cash Flow Statement (Unaudited)For the Period Ended 30 June 2007 6 months 6 months year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000's £000's £000's Cash flows from operating activities 94 (419) (130) Cash flows from investing activitiesAcquisition of subsidiaries net of cash acquired (114) (655) (1,206)Purchase of intangibles (109) - -Purchase of Property, Plant & Equipment (156) (103) (716)Disposal of Property, Plant & Equipment - 15 15Capital element of hire purchase contracts (30) (9) (19)Interest received 6 10 26Net cash outflow from investing activities (403) (742) (1,900) Cash flows from financing activitiesIssue of share capital 330Interest paid (20) (2) (14)Interest element on hire purchase contracts (2) - (2)Net cash outflow from financing activities (22) (2) 314 (Decrease) in cash in the period (331) (1,163) (1,716) Reconciliation of operating profit to net cash outflow/inflow from operating activities Operating profit/(loss) 480 (287) 576Depreciation of Property, Plant & Equipment 85 84 242Amortisation of intangibles 41 - 41(Profit)/Loss on disposal of Property, Plant & - (15) 148EquipmentDecrease/(Increase) in inventories (34) (27) (395)Decrease/(Increase) in receivables (1,071) 557 129Increase/(Decrease) in payables 429 (563) (740)Taxation (paid)/recovered 164 (168) (131) 94 (419) (130) Dowlis Corporate Solutions plcConsolidated statement of changes in equity Share Profit Share Premium and Loss Total Capital Account Account Equity £000's £000's £000's £000's Balance at 31 December 2005 150 4,966 380 5,496 Changes in Equity for first half of 2006 Loss for the period (215) (215)Shares issued 1 169 170Balance at 30 June 2006 151 5,135 165 5,451 Share Profit Share Premium and Loss Total Capital Account Account Equity £000's £000's £000's £000's Balance at 31 December 2005 150 4,966 380 5,496 Changes in Equity for 2006 Profit for the year 626 626Shares issued 3 327 330 Balance at 31 December 2006 153 5,293 1,006 6,452 Share Profit Share Premium and Loss Total Capital Account Account Equity £000's £000's £000's £000's Balance at 31 December 2006 153 5,293 1,006 6,452 Changes in Equity for first half of 2007 Profit for the period 284 284Shares issued Balance at 30 June 2007 153 5,293 1,290 6,736 Dowlis Corporate Solutions plcAdoption of International Financial Reporting StandardsFor the Period Ended 30 June 2007 As at As at As at 31 December 30 June 01 January 2006 2006 2006 £000's £000's £000's Net assets and equity under UK GAAP 6,167 5,361 5,496 Adjustments (after taxation) IFRS 3 - Business Combinations 285 90 - Net assets and equity under IFRS 6,452 5,451 5,496 Year 6 months ended ended 31 December 30 June 2006 2006 £000's £000's Net income under UK GAAP 301 (369) Adjustments (before taxation) IFRS 3 - Business Combinations 285 90 586 (279) a) IFRS 3 - Business Combinations Goodwill used to be capitalised and amortised over its useful economic life.Under IFRS 3 - Business Combinations, goodwill which is considered to have anindefinite life, is subject to an annual impairment review. The goodwillamortised under UK GAAP has been reversed. Dowlis Corporate Solutions plcEarnings per share (Unaudited)For the Period Ended 30 June 2007 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000's £000's £000's Basic and diluted earnings 284 (215) 627 Adjustment for exceptional items - 600 715 Tax on exceptional items - (97) (214)Adjusted profit before exceptional items 284 288 1,128 p p p Basic 0.74 (0.57) 1.65 Diluted 0.74 (0.57) 1.65 Adjusted EPS 0.74 0.76 2.97 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 2007 1. Basis of preparation From 1 January 2007, Dowlis Corporate Solutions plc is required to prepare itsconsolidated financial statements in accordance with International FinancialReporting Standards (IFRS) endorsed by the European Union. The reconciliations and descriptions of the effect of the transition from UKGAAP to IFRS on the Group's equity and its income statement are provided in thisinterim report. The last consolidated financial statements under UK GAAP were for the year ended31 December 2006 and the date of transition to IFRS was therefore 1 January2006. As this is the first time the Group is reporting under IFRS there are a numberof areas where judgement and estimates may have been used in order to reach thefinal numerical outcome. The Group has applied the recognition and measurementrequirements of IFRS that will be applicable to its first IFRS financialstatements. It is expected that the full financial effect of reporting under IFRS will beapplied and reported in the Group's first IFRS financial statements for the yearended 31 December 2007. 2. Basis of Consolidation The interim financial statements incorporate the financial statements of theGroup and its subsidiaries made up to 30 June 2007. On acquisition the assets (including identifiable intangible assets, excludinggoodwill) and liabilities and contingent liabilities of a subsidiary aremeasured at their fair values at the date of acquisition. Any excess of the costof acquisition over the fair values of the identifiable net assets acquired isrecognised as goodwill. 3. Impact of IFRS on Significant Accounting Policies The interim financial statements of the Group prepared in accordance with IFRSare unaudited and do not comprise statutory accounts within the meaning ofSection 240 of the Companies Act 1985. The Group's statutory financialstatements for the year ended 31 December 2006, prepared under UK GAAP, havebeen filed with the Registrar of Companies. The auditor's report on thosefinancial statements was unqualified and did not contain a statement underSection 237(2) of the Companies Act 1985. The disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS are given in this report. The financial statements have been prepared under the historical cost basis. Theprincipal accounting policies considered under IFRS and their resultingtreatment are set out below. i) Goodwill Goodwill arising on acquisitions before the date of transition to IFRS of 1January 2006 has been retained at the previous UK GAAP amounts subject to beingtested for impairment at that date. Goodwill written off to reserves under UKGAAP prior to this date has not been reinstated. The application of IFRS 3 Business Combinations requires Goodwill to have anindefinite value and not be amortised. Instead it should be tested forimpairment annually and adjusted accordingly. Therefore, the Goodwill amortisedsince 1 January 2006 (being the transition date) has been reversed leading to awrite back of £285,000 for the year ending 31 December 2006. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTDFOR THE PERIOD ENDED 30 JUNE 2007 In June 2007 the Group purchased the assets of Poyle Promotions for a totalconsideration of £114,000. Under IFRS 3 this cost has been capitalised asGoodwill and will be subject to an annual impairment review. Additionally, Goodwill has been adjusted down by £95,000 being unpaid deferredconsideration in relation to Aviation Gifts, an acquisition made in May 2005. ii) Intangible Assets In February 2007 the Group paid £30,000 for the Intellectual Property Rights ofAdvertising Products Group Limited. Under IAS 38 this payment has been includedwithin Intangible Assets. In applying IAS 38 to development expenditure the standard requires write offunless a project is technically, commercially and financially viable. TheGroup's treatment of software development cost is consistent with this standardtherefore no adjustment is required. iii) Share Based Payments The Group had already adopted FRS 20 for the first time last year which directlyreflects the new standard IFRS 2. There were no adjustments made to the incomestatement due to the immaterial nature involved though full details of shareoption agreements in place were disclosed in the notes to the financialstatements for the year ending 31 December 2006. Although there were no further issues made in the period to 30 June 2007 anannouncement in early May 2007 stated the intention to issue new managementoptions which were eventually granted on 26 July 2007. iv) Leases The majority of leases within the Group are operating leases where the risk andreward remains with the lessor. Included within operating leases are the Group'sproperties all of which are short term with rentals payable charged to theIncome Statement on a straight line basis over the term of the relevant lease. Assets held under finance lease and hire purchase contracts are recognised asassets of the Group at their fair value, or, if lower, at the net present valueof the minimum lease payments. The adoption of IAS 17 by the Group has not led to any adjustments being madebetween UK GAAP and IFRS. v) Revenue Recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business. Sales of goods are recognised when goods aredelivered and title has passed. Other revenues including fixed fee maintenancecontracts are spread evenly over the term of the contract or agreement. The adoption of IAS 18 by the Group has not led to any adjustments being madebetween UK GAAP and IFRS. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 2007 CONTD vi) Employee Benefits Under IFRS an accrual is required for holidays earned but not taken. As theGroup's holiday year is coterminous with the financial year no adjustment wouldbe required at year end though one may be required for interim purposes ifmaterial. The adoption of IAS 19 by the Group has not led to a material adjustment beingmade between UK GAAP and IFRS. vii) Deferred Tax Under IFRS a full provision of deferred tax liabilities is required except whereit arises from disallowable amortisation of goodwill. Deferred tax assets are recognised for all deductible temporary differences tothe extent that it is probable that taxable profit will be available againstwhich the deductible temporary difference can be utilised. The adoption of IAS 12 by the Group has not led to an adjustment being madebetween UK GAAP and IFRS. 4. Exceptional items Exceptional items are material items in the Income Statement which derive fromevents or transactions that fall within the ordinary activities of the Group andwhich individually or, if of a similar type, in aggregate need to be disclosedby virtue of their size or incidence if the financial statements are to give atrue and fair view. This information is provided by RNS The company news service from the London Stock Exchange