Final Results
21 August 2003 - 5:00PM
UK Regulatory
RNS Number:8947O
Dipford Group PLC
21 August 2003
Dipford Group plc
Announcement of Preliminary Results
for the Period 19 December 2001 to 30 April 2003
Chairman's Statement
Introduction
Dipford Group is an AIM listed company set up to exploit the opportunities
offered in the business transfer agency (BTA) and the small company broking
markets i.e. the preparation and sale of businesses in the sub-#10 million
market. We aim to achieve this by consolidating businesses within each of these
markets, by providing professional branding, marketing and public relations in
each sector and by adding centralised services to a widely dispersed range of
offices. Dipford's BTA business operates under the brand name of Redwoods and
our company broking business under the brand name of Prism Corporate Broking.
The Group has completed its first 16 months as a public company in good shape
and in a position to make further progress in achieving its aims. The period,
which included all the set-up and initial operating expenses, started with the
flotation on AIM for an all-in cost of under #100,000 and with sufficient
working capital to begin to implement our buy and build programme.
Market Opportunity
The BTA market is highly fragmented with very few companies providing national
coverage and, of those who do, none have offices throughout the UK. The small
company broking market consists, in the main, of small teams often with a local
focus and frequently associated with an accountancy firm. Dipford is creating a
national network operating under a single brand, free from conflicting ownership
and focussing solely on small to medium sized businesses, which will be well
placed to attract significant business.
Dipford intends to have a dominant presence in each of these markets.
Business Philosophy
In order to grow a substantial business from a small capital base it is
essential to keep a tight control on overheads and avoid the risk of excessive
costs. Dipford is achieving this by using an agency structure, whereby each
office, whether of Redwoods or of Prism, is an autonomous entity which bears all
its own costs. All business is conducted in the name of the parent company
which receives 100 per cent. of the revenue. The majority is then remitted to
the agent for handling the transaction. Dipford thus has an income stream which
is a percentage of its agents' income and thus dependent on their turnover, not
their profit.
It is the Group's policy to keep central staff to a minimum and utilise the
gearing offered by running each business on an agency basis. With controlled
costs of a tightly run head office providing central support services, such as
marketing, PR and computer services, and with insulation from the operating
costs of the regional offices, the Group is able to grow in a rapid, but
prudent, manner.
Business & Operational Performance
Redwoods
Five weeks after flotation we approached our first target company - a business
transfer agency called Redwoods Business Agents and Valuers Ltd. At the end of
September we completed the acquisition of the name and goodwill of Redwoods and
appointed all ten of its regional directors as agents, each managing their own
territory. This established the template for our business model.
The results for the period for Redwoods are as expected, with the original ten
regional offices producing results closely in line with forecasts. The Redwoods
turnover for the part year (since acquisition on 30 September 2002) was #971,389
and its profit contribution before management charges was #98,064.
Prism
In September 2002, we set up our first corporate broking office in Bristol under
the brand name Prism Corporate Broking and employed two fee earners. A second
office was established in Cambridge in April this year.
Following a slow start, with several major transactions being delayed, we
decided to follow the very successful model used for Redwoods and, with effect
from 1 July 2003, converted Prism from a wholly-owned business to a position
where it acts on an agency basis. This development has significantly reduced
the Group's operational gearing by giving us a minimal and predictable cost
basis for running all our fee-generating operations and an income which is,
effectively, insulated from the variations in profitability of each territory.
Outlook
Redwoods' business continues to fulfil our growth expectations and, with the
projected addition of eight new regional offices, one of which has already
opened, we anticipate a continued rise in revenue. This growth, which we intend
should be supplemented with further acquisitions, will continue our progress
towards becoming a dominant force in the sector. This has been further enhanced
by our presence on the back page of Daltons Weekly, the premier position in the
industry for selling small businesses.
On the Prism front, we plan to establish another three regional agencies in the
next eighteen months. This will give Prism greater coverage and strengthen the
brand as well as producing income streams for which we have no direct cost
responsibility.
Summary
Your management team has successfully completed the acquisition and integration
of one business, the setting up of another and the restructuring of Prism. It
is actively working on plans for future acquisitions. We can look back at our
Prospectus and say that we are creating what, initially, we set out to do and
are looking forward to continuing that progress and achieving a profitable and
growing business in the current year.
J J Custance Baker
Executive Chairman
20 August 2003
Group Profit and Loss Account
Period from 19 December 2001 to 30 April 2003
2003
#
Turnover 1,036,889
Cost of sales (820,647)
Gross profit 216,242
Net operating expenses (684,358)
Other operating income 96
Operating loss (468,020)
Interest receivable 6,130
Interest payable (24,116)
Loss on ordinary activities before taxation (486,006)
Tax on loss on ordinary activities -
Loss for the financial period (486,006)
Loss per share (19.44)p
All of the activities of the group are classified as continuing.
There are no other recognised gains or losses other than the loss for the
period.
Group Balance Sheet
30 April 2003
2003
#
Fixed assets
Intangible assets 1,328,425
Tangible assets 28,460
1,356,885
Current assets
Debtors 134,478
Cash at bank and in hand 121,535
256,013
Creditors
Amounts falling due within one year (544,526)
Net current liabilities (288,513)
Total assets less current liabilities 1,068,372
Creditors
Amounts falling due after more than one year (331,049)
737,323
Capital and reserves
Called up share capital 174,585
Share premium account 1,048,744
Profit and loss account (486,006)
Shareholders' funds 737,323
Group Cash Flow Statement
Period from 19 December 2001 to 30 April 2003
2003
#
Net cash outflow from operating activities (283,973)
Returns on investments and servicing of finance
Interest received 6,130
Interest paid (24,116)
Net cash outflow from returns on investments and servicing of finance (17,986)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (37,936)
Payments to acquire goodwill (630,581)
Net cash outflow from investing activities (668,517)
Net cash outflow before financing (970,476)
Financing
Issue of ordinary share capital 713,329
Inception of new loans 250,000
Repayment of bank loans (14,737)
Net cash inflow from financing 948,592
Decrease in cash (21,884)
The financial information set out above does not constitute the Company's
financial statements for the period ended 30 April 2003. The financial
statements for 2003 have been audited and will be delivered to the Registrar of
Companies. The auditors have reported on the 2003 statements; their report was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.
A copy of the Company's annual report and accounts for 2003 will be mailed to
shareholders shortly and will also be available for collection from the
Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
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