Final Results

Delling Group PLC 20 June 2006 For Release 7:00 am 20 June 2006 DELLING GROUP PLC (DLG) The AIM-listed marketing services group FINAL RESULTS for the year ended 31 December 2005 Delling Group Plc ('Delling' or the 'Company' ), the AIM-listed integrated marketing support services company, is delighted to announce its results for the year ended 31 December, 2005. Turnover for the period was £5,315,000 with a pre-tax loss of £ 2,994,000, both of which are in line with expectations. The figures include contributions from companies acquired during that period: Full Bredde AS (5 months' contribution) and Unikum Professional Imaging and Andre Worldwide Visual Communications (both 8 months' contribution), all of which have since been incorporated into the Company in Oslo. Highlights: • Turnover of £5.32m, up 140% on the previous period • Contracts with a total expected revenue of £1.5m per annum have been secured so far in 2006, including the Company's first pan-Nordic agreement. • The acquisition in January 2006 of n3prenor, a niche business involved in production of corporate documents for large listed companies in Sweden and which should enable substantial cross-marketing opportunities for the Group,. • A substantial number of pilot projects in the screen advertising business have been won, which the management believes constitutes a strategic breakthrough. • A substantial pipeline of acquisitions and sales prospects have been developed over the past year, from which the group is gradually seeing the results. Aksel Bratvedt, Chairman of Delling Group Plc, said: 'The successful winning of several outsourcing contracts over the past year demonstrates the effectiveness of our business model, and our ability to carry out these contracts effectively. We have also built the business in Oslo through acquisition and successful integration, together with the introduction of our outsourcing concept. Looking to the current financial year, we anticipate experiencing further growth and we will continue our hard work to secure more outsourcing contracts as well as pursuing appropriate acquisition targets. I look forward to the future with considerable confidence.' For further information please contact: Delling Group Plc: Aksel Bratvedt, Executive Chairman Tel: 0207 484 5663 Geir Lolleng, CEO Tel: +46765276024 James Robinson, Finance Director Tel: 0207 484 5664 Tarquin Edwards: Tel: 07879 458 364 Chairman's statement: During the last year we saw again a doubling of our turnover as a result of both organic growth as well as acquisitions. It was also the first year in which we put in place a number of outsourcing contracts, which represent an additional revenue stream for the Group. So far this year, we have won a number of new outsourcing contracts, which we believe is clear evidence of a market demand for our business concept and we are also seeing more interest from our existing customers in the outsourcing of many of their production processes, thereby seeing a potential increase in the number of potential new contracts. Since our listing on AIM in October 2004, we have acquired 5 companies. We have bought them at a price range of 1-5 times pretax profit. After the successful integration of the four companies that now constitute the base of our business in Oslo, we believe that we have demonstrated not only can we identify and buy companies on a sensible earnings multiple, but also that we are able to integrate them successfully. We are encouraged by the evident demand to date for our services in the market place and are pleased by the interest shown from a number of smaller companies, who have expressed a desire to join Delling Group. The above factors combined generate a positive outlook for the development of the Group. However, in our efforts to reach our goal of developing Delling into a major player in the marketing support services sector in Northern Europe, we are mindful of the major challenges ahead of us and are aware that the financing of our growth will increase in importance as we go forward. We believe that the Placing, announced on 20 June 2006, will improve our ability to finance further growth, and it will also strengthen the Company's balance sheet, thereby facilitating the possibility of bank finance. We intend to explore a wide range of financing options and are conscious of ensuring that the gearing of the Company is kept at an acceptable level. I would like to thank our staff for all their hard work over the last year. The range of skills within the Group has been further enhanced through the hiring of a number of new employees during the year. We have also in connection with the acquisitions been able to trim the organisation and reduce some costs from which we should see benefit of this in the coming year. It is our belief that the present organisation will enable us to continue the fast expansion that we have planned and are experiencing. Looking to the current financial year, we anticipate experiencing further growth and we will continue our hard work to secure more outsourcing contracts as well as actively pursuing acquisition targets. I look forward to the future with considerable confidence. Aksel Bratvedt Chairman 19 June 2006 Chief Executive's Review Introduction Delling Group offers marketing departments in large and medium sized companies a unique opportunity to reduce costs, increase speed to market and increase the quality of production and handling of marketing and information material. Our offering includes both graphical material as well as the digital distribution of content on to screens or the Web. Our wide ranging, but closely linked service offering makes it possible for customers to be offered an opportunity to outsource their back office marketing department requirements - further driving our organic growth. We see however further opportunities. The marketing support services area is populated with many small service providers for whom the extraction of economies of scale is becoming an increasingly important requirement. We intend to become a significant player in the ongoing consolidation of these services in the Nordic region and Northern Europe. The underlying rationale behind our strategy is the creation of increased shareholder value and we believe that this can only be built in a sustainable way through a step by step approach. Financial Results Turnover for the year shows growth on the previous period of 140%. Of the total turnover of £5.3m, approximately 50.2% was attributable to Delling in Norway and 49.8% attributable to Delling Group in Sweden. Of the loss of £2.99m, 12.0% was attributable to the Group's activities in Norway and 76.0% attributable to activities in Sweden. In February 2005 a new share issue of 8,666,667 at 15p raised £1.3m before expenses, and in October 2005, we issued 366,682 shares at 21.5p as part of the consideration for Full Bredde AS. Business and operating review During 2005 we simplified the structure of the Company's business activities. This included simplifying our branding and we now only use the 'Delling Group' name. This has helped us to communicate better with our customers and helps to underline the fact that our business model and services are consistent across our different business areas. The most important development in 2006 has been the successful integration of the acquired businesses in Norway so that they are now one organisation in one place. We are extremely pleased to see that the 'Delling concept' has been so quickly adopted and we believe that this tells a positive story both in relation to the concept itself as well as in relation to the quality of our staff. The Group has for some time had a challenging liquidity situation. However, with the support of staff and suppliers we still have continued to develop the Group's business. We believe that the placing of new shares announced on 20 June 2006 (which in part is subject to approval at the AGM), will strengthen our balance sheet and ultimately improve the cash flow, and thus enable us to improve our efficiency and flexibility. On the contract side we have won some important new outsourcing contracts and are also experiencing a strong growth in all our business areas. The organic growth and the acquisitions made in 2005 have, in spite of the loss, made an excellent base for further progress in 2006. The market Delling Group is dependent on the development of the advertising market, particularly in Scandinavia, where most of the business is presently located. The advertising market in Sweden in particular has been gradually increasing from a historic low point. That trend is expected to continue this year. However, it is important to be aware that a major part of Delling Group's service concept is based on making the processes in the marketing departments of corporate entities more efficient by outsourcing production and production management and by using software solutions that reduce costs and decrease time to market campaigns. Our other markets, such as in Norway, the Baltics and Poland are also experiencing good growth. Human resources At the end of 2005 we started a process of developing an organisation that is focused on the processes that create value for our customers. The goal is to keep the significance of hierarchical structures and 'departmental thinking' to a minimum. In principle, all work that is not creating real value for our customers has to be taken away. Obviously it is necessary to have strong support from the staff within any business to effect a change in that organisation and it is our belief that during 2006, we are going to see our customers benefit from substantial efficiency gains to these processes. Outlook In 2006 we have continued our growth and we have already announced a number of important contracts in the first half of the year. Furthermore, in January 2006 we announced the acquisition of n3prenor in Stockholm. This acquisition, together with our organic growth, puts us in an excellent position for the rest of 2006. In line with our business strategy, we also expect to consider further acquisitions of companies which we believe to be a good fit with the Group throughout the year. Geir Lolleng Chief Executive Group turnover 2 5,315 2,173 Cost of sales (2,439) (795) ______ ______ Gross profit 2,876 1,378 Administrative expenses (5,741) (4,051) ______ ______ Operating loss 3 (2,865) (2,673) Interest receivable 2 2 Interest payable 6 (131) (159) ______ ______ Loss on ordinary activities before taxation (2,994) (2,830) Tax on loss on ordinary activities 7 - 33 ______ ______ Loss on ordinary activities after taxation 9 (2,994) (2,797) Dividends 10 - - Loss for the financial year (2,994) (2,797) ______ ______ Loss per share 8 (4.43)p (6.74)p ====== ====== All of the activities of the group are classed as continuing. The company has taken advantage of section 230 of the Companies Act 1985 not to publish its own Profit and Loss Account. 2005 2004 £000 £000 Loss for the financial year attributable to the (2,994) (2,797) shareholders of the parent company Currency translation differences on foreign 114 97 currency net investments ______ _______ Total recognised gains and losses relating to the year (2,880) (2,700) ====== ======= Called up share capital not yet paid 11 1,148 - Fixed assets Intangible assets 12 3,068 2,920 Tangible assets 13 612 674 ______ _______ 3,680 3,594 ______ _______ Current assets Stocks 15 70 42 Debtors 16 1,748 698 Cash at bank 304 284 ______ _______ 2,122 1,024 Creditors: Amounts falling due within one year 17 (5,741) (3,535) ______ _______ Net current liabilities (3,619) (2,511) ______ _______ Total assets less current liabilities 1,209 1,083 Creditors: Amounts falling due after more than one year 18 (1,101) (426) ______ _______ 108 657 ====== ======= Capital and reserves Called-up share capital 22 742 597 Share premium account 23 4,946 2,700 Capital reserve - 60 Profit and loss account 23 (5,580) (2,700) ______ _______ Shareholder funds 24 108 657 ====== ======= Called up share capital not yet paid 11 1,148 - Fixed assets Tangible assets 13 13 - Investments 14 1,820 1,035 ______ _______ 1,833 1,035 Current assets Debtors 16 3,691 2,264 Cash at bank - 21 ______ _______ 3,691 2,285 Creditors: Amounts falling due within one year 17 (1,441) (162) ______ _______ Net current assets 2,250 2,123 ______ _______ Total assets less current liabilities 5,231 3,158 Creditors: Amounts falling due after more than one 18 (354) - year ______ _______ 4,877 3,158 ====== ======= Capital and reserves Called-up share capital 22 742 597 Share premium account 23 4,946 2,700 Profit and loss account 23 (811) (139) ______ _______ Shareholders' funds 24 4,877 3,158 ====== ======= 2005 2004 £000 £000 Net cash outflow from operating activities (1,487) (587) Returns on investments and servicing of finance Interest paid (130) (159) Interest element of finance leases (1) Interest received 2 2 _______ _______ Net cash outflow from returns on investments and (129) (157) servicing of finance Taxation - 33 Capital expenditure and financial investment Payments to acquire intangible fixed assets (117) (807) Payments to acquire tangible fixed assets (233) (148) _______ _______ Net cash outflow for capital expenditure and (350) (955) financial Investment Acquisition Cash/(overdrafts) acquired with subsidiaries 58 (960) _______ _______ Cash outflow before financing (1,908) (2,626) Financing Issue of equity share capital 1,104 2,847 Capital element of finance leases (2) Increase in long term loans 683 - _______ _______ Net cash inflow from financing 1,785 2,847 _______ _______ (Decrease)/increase in cash (123) 221 ======= ======= Major 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. During the period ended 31 December 2004 the company issued 35,880,000 ordinary shares of 1p in exchange for the net assets of Azzets AB, Butler Systems AB and Depicta AB and E-Path PVT Limited. Reconciliation of operating loss to net cash outflow from operating activities 2005 2004 £000 £000 Operating loss (2,865) (2,673) Amortisation 222 297 Depreciation 195 35 Loss on disposal shares held for resale 3 - Increase in stocks (30) (42) Increase in debtors (1,068) (415) Increase in creditors 2,056 2,211 ______ ______ Net cash outflow from operating activities (1,487) (587) ====== ====== Analysis of changes in net debt At 31 Cash Foreign At 31 December Flows exchange December 2004 movement 2005 £000 £000 £'000 £000 Net cash: Cash in hand and at bank 284 12 8 304 Overdrafts (63) (135) (17) (215) _____ _____ _____ _____ 221 (123) (9) 89 ===== ===== ===== ===== Accounting policies Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and all group undertakings. These are adjusted, where appropriate, to conform to group accounting policies. Acquisitions are accounted for under the acquisition method and goodwill on consolidation is capitalised and written off over twenty years from the year of acquisition. The results of companies acquired or disposed of are included in the group profit and loss account after or up to the date that control passes respectively. As a consolidated group profit and loss account is published, a separate profit and loss account for the parent company is omitted from the group financial statements by virtue of section 230 of the Companies Act 1985. Turnover Turnover comprises the value of goods and services supplied by the Group, net of value added tax and trade discounts. Amortisation Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Goodwill - 5%-10% straight line Fixed assets All fixed assets are initially recorded at cost. Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Plant & Machinery - 3-5 years straight line Stocks Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Foreign Currencies The assets and liabilities of foreign operations, including goodwill and fair value adjustments, are translated into Pounds sterling at the foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Pounds sterling at the average exchange rate ruling during the period. All exchange differences are taken to reserves. Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit. Investments Fixed asset investments are stated at cost less any necessary provision for impairment. Capital instruments Shares are included in shareholders' funds. Other instruments are classified as liabilities if they contain an obligation to transfer economic benefits and if not they are included in shareholders' funds. The finance cost recognised in the profit and loss account in respect of capital instruments other than equity shares is allocated to years over the term of the instrument at a constant rate on the carrying amount. Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease. Hire purchase agreements Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a straight line basis. Pension costs The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the profit and loss account. Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions: Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold; Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Going concern United Kingdom company law requires the company's directors to consider whether it is appropriate to prepare the financial statements on the basis that the group is a going concern. In considering this matter the directors have reviewed the group's budget for 2006 and its plan for 2007. This included consideration of the cash flow implications of the budget and plan. The directors see no reason why the group and the company should not continue in operational existence for the foreseeable future, based on the acceptance at the forthcoming shareholders meeting of the proposed private placement of ordinary shares and an unconditional guarantee provided by a major shareholder. For this reason the directors have adopted the going concern basis in preparing the group's financial statements. 2. Turnover The turnover and loss before tax are attributable to the one principal activity of the group. An analysis of turnover is given below: An analysis of turnover is given below: 2005 2004 £000 £000 Europe 5,315 2,173 ===== ===== 3. Operating loss Operating loss is stated after charging: 2005 2004 £000 £000 Amortisation 222 297 Depreciation of tangible fixed assets Owned assets 192 35 Leased assets 3 - Auditors' remuneration - as auditors 14 5 - non-audit services 4 123 Remuneration of foreign auditors 42 18 ===== ===== 4. Particulars of employees The average number of staff employed by the group during the financial year amounted to: 2005 2004 £000 No Management 8 10 Sales 24 17 Production and development 33 33 Administrative 6 5 _____ ______ 71 65 ===== ====== The aggregate payroll costs of the above were: 2005 2004 £000 £000 Wages and salaries 2,502 2,187 Social security costs 528 859 Other pension costs, life cover & medical costs 142 181 _____ _____ 3,172 3,227 ===== ===== 5. Directors' emoluments The directors' aggregate emoluments in respect of qualifying services were: 2005 2004 £000 £000 Emoluments receivable - from the company 227 26 - from group companies 320 352 Benefits receivable 25 - Value of company pension contributions to money 7 - purchase schemes _____ _____ 579 378 ===== ===== During the year one director participated in a money purchase pension scheme (2004: Nil) Emoluments of highest paid director: Total emoluments 197 206 ===== ===== 6. Interest payable and similar charges 2005 2004 £000 £000 Interest payable on bank borrowing 130 156 Other similar charges payable - 3 Interest element of finance leases 1 - _____ _____ 131 159 ===== ===== 7. Taxation on ordinary activities (a) Analysis of charge in the year Current tax: 2005 2004 £000 £000 UK Corporation tax based on the results for the year - - at 30% (2004: 30%) Overseas tax credits - 33 _____ _____ Total current tax credit - 33 ===== ===== (b) Factors affecting current tax charge The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK. 2005 2004 £000 £000 Loss on ordinary activities before taxation (2,994) (2,830) ====== ====== Loss on ordinary activities by rate of tax at 30% (898) (849) (2004: 30%) Disallowed expenditure 7 15 Overseas tax credits - (33) Losses carried forward 200 42 Overseas losses 691 792 ______ ______ Total current tax - credit (note 7(a)) - (33) ====== ====== Deferred tax assets have not been recognised in the financial statements as the directors are uncertain as to when they will be utilised. 8. Loss per share 2005 2004 Pence Pence Loss per ordinary share (4.43) (6.74) ====== ====== The basic loss per share is calculated by dividing the loss on ordinary activities after tax of £2,994,000 (2004: £2,797,000) and the weighted average number shares in issue and carrying the right to receive dividend during year ended 31 December 2005 being 67,467,351 (2004: 41,472,429), which excludes shares issued to the directors and not fully paid. The diluted earnings per ordinary share calculation is the same as the basic earnings per share calculation. This is because no dilution arises as there is a loss. 9. Loss attributable to members of the parent company The loss dealt with in the accounts of the parent company was £672,000 (2004: £139,000). 10. Dividends No dividends have been paid in respect of the year. 11. Called up share capital not yet paid Subsequent to last year's AGM that took place on 15 July 2005 the following directors were allotted ordinary shares at the then market price of 21p, under the directors' share acquisition scheme: Director Shares allotted Geir Lolleng 1,298,839 Aksel Bratvedt 1,298,839 James Robinson 1,435,559 Mike Hudgell 1,435,559 These shares were issued and remain unpaid and no application will be made for the shares to be admitted to trading on AIM whilst they remain unpaid. In the case of Mr Bratvedt and Mr Lolleng, the shares cannot be paid up until after 8 July 2006 and, in the case of Mr Hudgell and Mr Robinson, the shares cannot be paid up until after 1 June 2007. Whilst the shares remain unpaid they will have no voting or dividend rights. 12. Intangible fixed assets Group Brands, Goodwill Total licences & patents £000 £000 £000 Cost At 1 January 2005 215 3,002 3,217 Acquired in year - 370 370 _____ _____ _____ At 31 December 2005 215 3,372 3,587 ===== ===== ===== Amortisation At 1 January 2005 8 289 297 Charge for the year 21 201 222 _____ _____ _____ At 31 December 2005 29 490 519 ===== ===== ===== Net book value At 31 December 2005 186 2882 3,068 _____ _____ _____ At 31 December 2004 207 2,713 2,920 ===== ===== ===== 13. Tangible fixed assets Group Plant & Total machinery £000 £000 Cost At 1 January 2005 709 709 Acquired in year 133 133 Disposed in year (2) (2) _____ _____ At 31 December 2005 840 840 ===== ===== Depreciation At 1 January 2005 35 35 Charge for the year 195 195 On disposals (2) (2) _____ _____ At 31 December 2005 228 228 ===== ===== Net book value At 31 December 2005 612 612 _____ _____ At 31 December 2004 674 674 ===== ===== Company Plant & Total machinery £000 £000 Cost Acquired in year 16 16 _____ _____ At 31 December 2005 16 16 ===== ===== Depreciation Charge for the year 3 3 _____ _____ At 31 December 2005 3 3 ===== ===== Net book value At 31 December 2005 13 13 ===== ===== All of the assets held by the company are held under hire purchase agreements. 14. Investments Company Total £000 Cost At 1 January 2005 1,035 Additions 785 ______ At 31 December 2005 1,820 ====== Net book value At 31 December 2005 1,820 ====== At 31 December 2004 1,035 ====== Subsidiary undertaking Holding Country of Proportion Nature of incorporation of voting business rights held Name of company Directly Held Azzets Limited Ordinary UK 100% Dormant Shares Butler Systems Limited Ordinary UK 100% Dormant Shares Depicta Limited Ordinary UK 100% Dormant Shares Indirectly Held Depicta AB Ordinary Sweden 100% Provides outsourced Shares solutions for all types of advertising media Azzets AB Ordinary Sweden 100% Provides software for media shares management Dellinger Group AB Ordinary Sweden 100% Provides (previously called equipment and Butler Systems AB) Shares support services for displaying advertising media Delling Group AS Ordinary Norway 100% Photographic (previously called reproduction Depicta Fame AS) Shares Full Bredde AS Ordinary Norway 100% Dormant Shares On 1 January 2006 the Group transferred the trades of Depicta AB and Azzets AB into Dellinger Group AB, resulting in Depicta AB and Azzets AB becoming dormant. Subsequent to this transfer of trade Depicta AB was sold to Kanonladdaren AB for no consideration. Kanonladdaren AB is company controlled by Mr B Dysthe a significant shareholder in Delling Group plc. During the year the Group acquired 100% shareholding in Full Bredde AS. Net assets/liabilities acquired are considered to be at fair value. £000 Debtors (19) Cash (58) Creditors 56 ____ Net assets acquired (21) Cost: -shares issued 79 -cash 158 -deferred cash 79 ____ Goodwill arising 295 ==== In addition the trades of Unikum Professional Imaging and Andre Worldwide Visual Communications were purchased for £75,000 giving rise to the same amount in goodwill. 15. Stocks Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Finished goods 70 42 - - ===== ===== ===== ===== 16. Debtors Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Trade debtors 1,279 342 - - Shares held for disposal - 3 - 3 Amounts owed by group - - 3,559 2,227 undertakings Other debtors 469 353 132 19 Taxation - - - 15 ______ ______ ______ ______ 1,748 698 3,691 2,264 ====== ====== ====== ====== 17. Creditors: Amounts falling due within one year Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Amounts due to debt factors 288 - - - Bank overdrafts 215 63 82 - Finance leases 5 - 5 - Trade creditors 1,691 1,254 133 17 Other taxation & social 952 897 42 4 security Other creditors 2,132 1,280 1,146 100 Accruals and deferred income 458 41 33 41 _____ _____ _____ _____ 5,741 3,535 1,441 162 ===== ===== ===== ===== The overdraft of a subsidiary is secured by a fixed and floating change over the assets of that subsidiary. 18. Creditors: Amounts falling due after more than one year Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Other creditors 1,092 426 345 - Finance leases 9 - 9 - _____ _____ _____ _____ 1,101 426 354 - ===== ===== ===== ===== Finance leases falling due in more than one are repayable as follows: Group Company 2005 2004 2005 2004 £000 £000 £000 £000 Repayable in more than two years but not more than five years 9 - 9 - ===== ==== ===== ===== 19. Treasury policy and financial instruments The group operates informal treasury policies which include ongoing assessments of interest rate management and borrowing policy. The board approves all decisions on treasury policy. Facilities are arranged, based on criteria determined by the board, as required to finance the long term requirements of the group. The group has financed its activities by the raising of funds through the placing of shares. The Group has overdraft facilities across the group of £288,000 at variable rates. The Group has a fixed loan of £750,000 at 7%pa until November 2007 and further loans of £1,383,000 which are interest free for which there is no repayment date. The group has taken advantage of the exemption permitting it not to include short term debtors and in the disclosures required by FRS 13 'Derivatives and Other Financial Instruments: Disclosure' other than the currency disclosures. At 31 December 2005 there were no net monetary assets denominated in currencies other than the functional currencies of the operations. The Group's major operating currencies in its subsidiaries are Norwegian Kroner and Swedish Krona. It is not the Group's policy to hedge this exchange risk. There are no material differences between the book value and fair value of the financial assets at the year end. 20. Commitments under operating leases At 31 December 2005 the group had annual commitments under non-cancellable operating leases as set out below. Group 2005 2004 Land and Other items Land and Other items Buildings Buildings £000 £000 £000 £000 Operating leases which expire: Within 1 year 77 - - 10 Within 2 to 5 years 185 5 - 3 _____ _____ _____ _____ 262 5 - 13 ===== ===== ===== ===== Company 2005 2004 Land and Other items Land and Other items Buildings Buildings £000 £000 £000 £000 Operating leases which expire: Within 1 year 30 - - 10 Within 2 to 5 years - 5 - - _____ _____ _____ _____ 30 5 - 10 ===== ===== ===== ===== 21 Related party transactions The company is exempt from the requirement to disclose related party transactions with other group companies under the provisions of Financial Reporting Standard No. 8. All group transactions were eliminated on consolidation. During the year group companies were invoiced £135,000 by Nordic Investment Management Ltd a company under the control of A Bratvedt for directors' services. There was no outstanding balance at the year end. During the year group companies were invoiced £185,000 by Nordic Investment Management AS, a company under the control of G Lolleng for directors' services. There was no outstanding balance at the year end. During the year the directors were issued a number of shares unpaid. Further details of which can be found in note 11. The Group has certain loans totalling £552,000 with Mr B Dysthe a significant shareholder in the company. The loans are interest free and unsecured with no fixed repayment date. 22. Share capital Authorised share capital 2005 2005 2004 2004 No £000 No £000 Ordinary shares of £0.01 each 200,000,000 2,000 200,000,000 2,000 ============ ========= =========== ========== 2005 2005 2004 2004 No £000 No £000 Allotted, called up and fully paid: Ordinary shares of £0.01 each 68,726,542 687 59,693,193 597 Allotted, called up and unpaid Ordinary shares of £0.01 each 5,468,796 55 - - ____________ _________ ___________ __________ 74,195,338 742 59,693,193 597 ============ ========= =========== ========== The following shares were issued in the year £000 No Reason February 2005 1,300 8,666,667 Placing June 2005 1,148 5,468,796 Directors' share acquisition scheme October 2004 79 366,682 Acquisition ------- --------- 2,527 14,502,145 ======= ========= Warrants Delling has two warrants in existence as follows: (1) 1% of the issued share capital at admission to AIM at the admission price exercisable at any time over 5 years from the admission, and (2) 3% of the issued share capital at admission to AIM at the admission price exercisable at any time over 3 years from the admission. 23. Reserves Group Share premium account Profit and loss account 2005 2004 2005 2004 £000 £000 £000 £000 At 1 January 2,700 (2,700) - Premium arising on shares 2,382 3,096 - - issued Less share issue costs (136) (396) - - _________ ______ _____ ______ 4,946 2,700 (2,700) Loss for the year - - (2,994) (2,797) Exchange movement - - 114 97 _________ ______ _____ ______ Balance carried forward 4,946 2,700 (5,580) (2,700) ========= ====== ===== ===== Company Share premium account Profit and loss account 2005 2004 2005 2004 £00 £000 £000 £000 At 1 January 2,700 (139) - Premium arising on shares 2,382 3,096 - - issued Less share issue costs (136) (396) - - Retained loss for the year - - (672) (139) _________ ______ _____ ______ Balance carried forward 4,946 2,700 (811) (139) ========= ====== ===== ===== 24. Reconciliation of movements in shareholders' funds Group Equity shareholders' funds 2005 2004 £000 £000 Loss for the financial year (2,994) (2,797) Exchange movement 114 97 Dividends - - ______ ______ (2,880) (2,700) New equity share capital subscribed 2,391 3,297 ______ ______ Net (decrease)/increase to funds (489) 597 Capital reserve movement (60) 60 Opening shareholders equity 657 - ______ ______ Closing shareholders' equity 108 657 ====== ====== Company Equity shareholders' funds Loss for the financial year (672) (139) New equity share capital subscribed 2,391 3,297 ______ ______ Net addition to funds 1,719 3,158 Opening shareholders' funds 3,158 - ______ ______ Closing shareholders' equity funds 4,877 3,158 ______ ______ 24. Contingent liabilities Depicta Guarantee In 2002, Kanonladdaren AB sold software rights to a related party Cultmag AS. Kanonladdaren agreed to guarantee Cultmag's bank borrowings for that purchase. Subsequently, as part of Kanonladdaren's sale of its assets to members of the Group, Depicta took over 2.5 million Swedish kronor of that guarantee in favour of Sparebanken Spreetogo which it can be called on to pay and contains no recourse. Azzets Undertaking In 2002, Kanonladdaren AB sold software rights to a related party, Cultmag AD. Kanonladdaren agreed to guarantee Cultmag's bank borrowings for that purchase. Subsequently, as part of Kanonladdaren's sale of its assets to members of the Group. Azzets agreed to take over 14.3 million Swedish kronor of that guarantee in favour of DNBOR which it can be called on to pay and contains no recourse. 26 Controlling part There is no controlling party 27. Post Balance Sheet Events In January 2006 the Company announced the acquisition of a company in Sweden for a total consideration o 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