RNS Number : 5611V
Glen Group PLC
30 May 2008
30 May 2008
Glen Group plc
Interim Results for the six months ended 31 March 2008
Glen Group plc, the Edinburgh based provider of integrated telecommunication solutions, today announces interim results for the six
months ended 31 March 2008
Key points:
* Successful sale of the businesses operated by Eclectic Group Ltd ("Eclectic") and I G Software Limited ("inGroup") for a net cash
consideration of �2.72m
* Elimination of all group debt
* Turnover from the continuing business of �725,695 compares to �415,921 in the equivalent period last year. Half year turnover,
including turnover from the discontinued businesses Eclectic and inGroup, of �2,393,186.
* Operating loss excluding discontinued operations reduced from �738,264 in the half year to 31 March 2007 to �428,983 for this half
year.
* Changing mix of services has resulted in materially better gross margins. This half year margins of 49.0% were achieved compared
to 41.1% in the equivalent period last year, and 23.3% for the whole of 2007.
* Restructuring of Board to focus on pursuing a telecom-centric strategy.
Eric Hagman CBE, Chairman of Glen Group, commented:
"Going forward, we now have a strong balance sheet, capital to rebuild the group and a strategy which maximises the skill set of the
management team. Although the sale has materially reduced the size of the business, we now have an income stream that is largely of a
recurring nature and we will take a measured approach to acquisitions, concentrating on telecom-centric businesses which have recurring
revenues."
Enquiries:
Glen Group plc
Graham J Duncan, Chief Executive Officer Tel: 0845 119 2100
Pelham PR
Alex Walters Tel: 0203 170 7435
Seymour Pierce
Jonathan Wright Tel: 0207 107 8000
GLEN GROUP PLC
CHAIRMAN'S STATEMENT
For the half year, the Group has incurred an operating loss excluding discontinued operations of �428,983 (2007 half year: �738,264).
Not all of the cost reductions implemented last year and in the first half of this year have yet materialised, but the improved trend is
evident. The changed mix of services and increased turnover has also delivered a materially better gross profit with the half year yielding
�355,866 compared to �170,844 in the equivalent period last year. The half year is better than the gross profit for the whole of 2007. The
improvement has been helped by a better margin percentage with this half year at 49.0% compared to the equivalent period last year at 41.1%.
We are also now starting to see a downward trend in our overheads.
In the first half, we completed the transformation of the Group into a telecom-centric business. We exited the project IT services sector by
selling the two main businesses that operated in this field; we have made major changes to our operating structure, restructured the Board;
and have repaid our debt, which amounted to over �800,000, from the net sale proceeds of �2.72m in respect of the assets and the business of
the IT project companies, Eclectic Group Limited (*Eclectic*) and I G Software Limited (*inGroup*) as at 31 December 2007.
The financial results, and their presentation for the half year, reflect the operational changes that have been made to the Group. The
results of the businesses sold are again presented as divorced from the operating results for the retained businesses with the former
included in a single line on the income statement under discontinued operations. Taken together, Eclectic and inGroup have incurred further
operating losses up to the date of their sale. I believe that this disposal was timely and concluded at a fair price, given a weakening
market for project based IT services.
As announced on 9 May 2008, I am stepping down from the Board at the end of this month. The size of the retained businesses means that
my input will, inevitably, be diluted and, as announced to shareholders on 9 May 2008, Graham J Duncan, the current CEO, will become
non-executive Chairman effective 1 June 2008, with Alan Bonner who is currently the MD of Pinnacle Group, our continuing telecom-centric
business, taking over Graham's role as Group CEO. As also announced on 9 May 2008, Graham will retain a key responsibility within the Group
for AIM matters, finance, and mergers and acquisitions.
Going forward, we now have a strong balance sheet, capital to rebuild the group and a strategy which maximises the skill set of the
management team. Although the sale has materially reduced the size of the business, we now have an income stream that is largely of a
recurring nature and we will take a measured approach to acquisitions, concentrating on telecom-centric businesses which have recurring
revenues.
Eric M Hagman CBE
CHAIRMAN
30 May 2008
GLEN GROUP PLC
BUSINESS REVIEW
The half year has seen the sale of our IT project businesses, the elimination of all group debt and a material reduction in our head
count, mainly as a result of the sale of the Eclectic and inGroup business which became effective on 31 December 2007.
The results of Eclectic and inGroup up to the date of sale are presented as discontinued operations in the income statement and shown as
a single line item. This gives readers a better understanding of the operating results of the continuing businesses.
1) Turnover
Turnover of the continuing businesses for the half year was �725,695 compared to �415,921 in the equivalent period last year, a rise of
nearly 75%, due to the acquisition of Pinnacle Group Limited in June 2007 and a turnover reduction in the other SME focussed businesses as
effort was moved from IT services to telecom-centric services. The half-year turnover also compares favourably with turnover for the whole
of the previous year which was �1,014,870.
Had the turnover from Eclectic and inGroup for the period up to 31 December 2007 been included, the half year turnover would have been
�2,393,186. The difference from the published turnover of �725,695 is netted against relevant costs and shown as discontinued operations.
2) Gross Margins
The overall gross profit of the continuing businesses for the half year was �355,866 (2007 first half: �170,844 and 2007 full year:
�236,959). Our gross margins have materially improved with the changing mix of services. For the half year we returned a gross margin
percentage of 49.0% which compares against the half year last year of 41.1% and against just 23.3% for the whole of 2007. The maintenance of
our margins is an important objective and monitoring margin on a monthly basis is a key performance indicator of the Board.
3) Exceptional Costs
Other than the amortisation of intangibles, which is a requirement of IFRS accounting and which has impacted the half year results by
�81,711, the half year has been free of exceptional costs resulting from the continuing business.
4) Operating Loss
In the half year we have incurred an operating loss of �428,983 excluding discontinued operations (2006 half year: �738,264). Our half
year operating loss includes amortisation of intangible assets of �81,711,as required under IFRS. The overheads of the business, compared
against the full year, are now beginning to reduce and we expect further reductions to come through in the second half, given the many
changes that we have made to the business.
5) Financing
The sale of Eclectic and inGroup was structured as a sale of the assets and undertakings of the two companies (including a transfer of
the employees to the purchaser), and not a sale of the share capital of these entities. This had several advantages, not the least of which
was speed, but it has left us with the legacy of the businesses to wind down. From a practical point of view, we have taken steps to
in-gather all the receivables of the businesses at 31 December 2007 (the effective sale date) and pay down all the creditors.
We received two payments from the purchaser: one of �2.25m in early January 2008 and the balance of a net �0.47m during March 2008. The
total, �2.72m, has been applied to pay the costs of the transaction; pay an agreed bonus of �0.25m to certain members of the management team
of Eclectic, as approved by shareholders on 4 January 2008 as a related party transaction; and pay down all group debt, approximating to
�0.8m. We expected the receivables of the businesses to broadly match the payables and this has proved to be correct. As at 31 March 2008,
the group had �1,092,107 of net cash in hand and group trade and other receivables stood at �727,275 of which �393,960 remained on the
balance sheets of Eclectic and inGroup. We are actively seeking to recover the Eclectic and inGroup debt, in some cases in conjunction with
the purchaser.
Although this transaction has materially reduced the size of our business, it has left the Group with net cash and no debt which, in the
opinion of the directors, gives us some strength in the current economic climate.
We have made significant changes to the business in the first half and it is our intention to organically grow the telecom-centric
business going forward, as this business is underpinned by recurring revenues which are more stable than the project based revenues of the
businesses that we have recently sold. We do not rule out acquisitions in the telecom space provided that we can acquire at acceptable
prices and see a way of extracting costs from the acquired business to the advantage of our shareholders.
Graham J Duncan MA CA
CHIEF EXECUTIVE
30 May 2008
GLEN GROUP PLC
CONSOLIDATED INTERIM INCOME STATEMENT - UNAUDITED
For the six months ended 31
March 2008
6 months to 6 months to 12 months to
31 March 31 March 30 September
2008 2007 2007
Note � � �
Revenue 2 725,695 415,921 1,014,870
Cost of sales (369,829) (245,077) (777,911)
Gross profit 355,866 170,844 236,959
Administrative expenses (703,138) (662,230) (1,445,020)
Operating loss before amortisation, impairment of
goodwill
and exceptional cost (347,272) (491,386) (1,208,061)
Amortisation of intangibles (81,711) (10,000) (65,741)
Impairment of goodwill - - (994,111)
Exceptional cost of - (236,878) (305,415)
fundamental reorganisation
Operating loss (428,983) (738,264) (2,573,328)
Interest receivable 1,628 500 2,771
Interest payable (3,333) (5,599) (12,600)
Finance costs (1,705) (5,099) (9,829)
Loss before tax 3 (430,688) (743,363) (2,583,157)
Taxation - - (439)
Loss for the period from (430,688) (743,363) (2,583,596)
continuing operations
Discontinued operations
(Loss) / profit for the period 3 (433,040) 145,620 (421,781)
from discontinued operations
Loss for the period 3 (863,728) (597,743) (3,005,377)
Loss per share
- basic and fully diluted - 4 (0.03) p (0.19) p (0.46)
continuing
- basic and fully diluted - 4 (0.04) p 0.03 p (0.07)
discontinued
- basic and fully diluted - 4 (0.07) p (0.16) p (0.53)
total
GLEN GROUP PLC
CONSOLIDATED INTERIM BALANCE SHEET -
UNAUDITED
As at 31 March 2008
31 March 31 March 30 September
2008 2007 2007
Note � � �
Assets
Non-current assets
Goodwill - 3,564,504 -
Intangible assets 669,657 90,000 751,368
Property, plant and equipment 83,524 139,072 105,132
Total non-current assets 753,181 3,793,576 856,500
Current assets
Inventories 3,344 46,475 22,524
Trade and other receivables 727,275 1,703,122 1,729,599
Cash and cash equivalents 1,116,749 111,022 157,361
Total current assets 1,847,368 1,860,619 1,909,484
Assets included in disposal - - 2,749,005
groups
Total assets 2,600,549 5,654,195 5,514,989
Liabilities
Short term borrowings (27,042) (658,925) (587,308)
Trade and other payables (357,096) (543,912) (1,234,194)
Other taxes and social (31,144) (187,606) (442,776)
security costs
Accruals and other payables (232,193) (948,064) (384,987)
Total current liabilities (647,475) (2,338,507) (2,649,265)
Non current liabilities
Long term borrowings (16,233) (85,235) (65,155)
Total liabilities (663,708) (2,423,742) (2,714,420)
Net assets 1,936,841 3,230,453 2,800,569
Equity attributable to equity
holders of the parent
Share capital 4,807,680 4,115,089 4,807,680
Share premium account 3,207,593 1,262,434 3,207,593
Other reserve 16,544 29,635 16,544
Fair value adjustment (1,064,130) (417,221) (1,064,130)
Profit and loss reserve 5 (5,030,846) (1,759,484) (4,167,118)
Total equity 1,936,841 3,230,453 2,800,569
GLEN GROUP PLC
CONSOLIDATED INTERIM CASH FLOW STATEMENT -
UNAUDITED
For the six months ended 31
March 2008
6 months to 6 months to 12 months to
31 March 31 March 30 September
2008 2007 2007
� � �
Cash flows from operating
activities
Operating loss (including (859,204) (565,350) (2,491,961)
discontinued operations)
Adjustments for:
Depreciation 39,312 54,744 93,778
Amortisation 81,711 - 65,741
Impairment of goodwill - - 994,110
Release of negative goodwill - - (9,557)
Other non-cash items - 9,607 (3,484)
Payment of corporation tax - - (8,712)
Decrease / (increase) in 19,180 (19,723) 11,228
inventories
Decrease / (increase) in trade 1,002,324 (131,651) 331,844
and other receivables
(Decrease) / increase in trade
payables,
accruals and other creditors (1,458,591) 324,942 70,872
Net cash flow from operating (1,175,268) (327,431) (946,141)
activities
Cash flows from investing
activities
Purchase of property, plant (11,550) (71,149) (135,220)
and equipment
Sale of property, plant and 58,464 - -
equipment
Disposal of subsidiary company 2,684,387
Acquisition of subsidiaries, - (1,762) 25,292
net of cash acquired
Net cash used in investing 2,731,301 (72,911) (109,928)
activities
Cash flows from financing
activities
Interest paid less interest (4,525) (32,393) (62,195)
received
Issue of shares - 500,000 1,380,000
Receipt of bank finance - 15,000 -
Repayment of borrowing (98,603) (22,019) (28,716)
Repayment of former director's - (25,000) -
loan
Former subsidiary director's - - (50,000)
loan notes less repayments
Receipt from finance leases (11,341) 13,223 34,695
less repayment
Expenses paid in connection - (47,625) (91,625)
with share issue
Net cash used in financing (114,469) 401,186 1,182,159
activities
Net increase in cash 1,441,564 844 126,090
Cash and cash equivalents at (349,457) (475,547) (475,547)
beginning of period
Cash and cash equivalents at 1,092,107 (474,703) (349,457)
end of period
GLEN GROUP PLC
CONSOLIDATED INTERIM CASH FLOW STATEMENT - UNAUDITED (CONTINUED)
For the six months ended 31
March 2008
6 months to 6 months to 12 months to
31 March 31 March 30 September
2008 2007 2007
� � �
Analysis of changes in net debt
Cash and cash equivalents
comprise:
Cash and cash equivalents 1,116,749 111,022 157,361
Bank overdrafts (24,642) (585,725) (506,818)
1,092,107 (474,703) (349,457)
GLEN GROUP PLC
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY - UNAUDITED
For the six months ended 31 March 2008
Share Share Shares to Other Fair Retained
capital premium be issued reserve value earnings Total
At 1 October 2006 3,276,831 860,817 787,500 20,028 (417,221) (1,161,741) 3,366,214
Loss for the year - - - - - (3,005,377) (3,005,377)
Recognised directly in equity
Share issue 1,530,849 - - - (646,909) - 883,940
Shares to be issued as part
of acquisition - - (787,500) - - - (787,500)
Premium on share issue - 2,438,401 - - - - 2,438,401
Share based payments - - - 8,272 - - 8,272
Lapse of share options - - - (11,756) - - (11,756)
Expenses incurred on
share issue - (91,625) - - - - (91,625)
Net change directly in equity 1,530,849 2,346,776 (787,500) (3,484) (646,909) - 2,439,732
Total movements 1,530,849 2,346,776 (787,500) (3,484) (646,909) (3,005,377) (565,645)
Equity at 30 September 2007 4,807,680 3,207,593 - 16,544 (1,064,130) (4,167,118) 2,800,569
At 1 October 2007 4,807,680 3,207,593 - 16,544 (1,064,130) (4,167,118) 2,800,569
Loss for the period - - - - - (863,728) (863,728)
Equity at 31 March 2008 4,807,680 3,207,593 - 16,544 (1,064,130) (5,030,846) 1,936,841
GLEN GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31 March 2008
1 Basis of preparation
This interim financial information has been prepared in accordance with the Company's accounting policies as disclosed in the
financial statements for the year ended 30 September 2007. The interim statements were approved by the Board of Directors on 30 May
2008.
2 Analysis of revenue
6 months to
6 months to 12 months to
31 March
31 March 30 September
2008
2007 2007
�
� �
By business sector
Mobile services 117,993
149,011 221,939
IT 83,773
266,910 423,503
Other communication 523,929
- 369,428
services
Continuing 725,695
415,921 1,014,870
operations
IT - discontinued 1,667,491
2,508,898 5,670,935
operations
Total revenue 2,393,186
2,924,819 6,685,805
By destination
United Kingdom 2,393,186
2,924,819 6,685,805
Total revenue 2,393,186
2,924,819 6,685,805
By origin
Glen Communications 142,581
415,921 638,077
- continuing
operations
Pinnacle -continuing 583,114
- 376,793
operations
Eclectic and IG - 1,667,491
2,508,898 5,670,935
discontinued
operations
Total revenue 2,393,186
2,924,819 6,685,805
GLEN GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 31 March
2008
3 Analysis of losses
6 months to 6 months to 12 months to
31 March 31 March 30 September
2008 2007 2007
� � �
By business sector
Mobile services
Loss from operations (30,859) (497,702) (578,964)
before exceptional
items
Reorganisation costs - - (278,843)
Impairment of - - (935,314)
goodwill
Loss from operations (30,859) (497,702) (1,793,121)
after exceptional
items
IT
Loss from operations (19,815) (11,947) (124,927)
before exceptional
items
Reorganisation costs - - (12,184)
Amortisation (10,000) (10,000) (20,000)
Impairment of - - (58,796)
goodwill
Loss from operations (29,815) (21,947) (215,907)
after exceptional
items
Other communication
services
Profit from 6,200 - 49,636
operations before
exceptional items
Reorganisation costs - - (14,388)
Amortisation (71,711) - (45,741)
Loss from operations (65,511) - (10,493)
after exceptional
items
Head office (304,503) (223,714) (564,075)
Continuing (430,688) (743,363) (2,583,596)
operations
IT - discontinued (433,040) 145,620 (421,781)
operations
Total losses (863,728) (597,743) (3,005,377)
By destination
United Kingdom (863,728) (597,743) (3,005,377)
Total losses (863,728) (597,743) (3,005,377)
By origin
Glen Group - (304,503) (223,714) (564,075)
continuing
operations
Glen Communications (60,674) (519,649) (2,009,028)
- continuing
operations
Pinnacle - (65,511) - (10,493)
continuing
operations
Total losses (430,688) (743,363) (2,583,596)
Eclectic and IG - (433,040) 145,620 (421,781)
discontinued
operations
Total losses (863,728) (597,743) (3,005,377)
GLEN GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 31 March
2008
4 Loss per share
6 months to 6 months to
12 months to
31 March 31 March
30 September
2008 2007
2007
� �
�
Basic and fully (0.07) p (0.16) p
(0.53) p
diluted
Loss for the period
attributable to
shareholders:
Losses basic and (863,728) (597,743)
(3,005,377)
fully diluted
Weighted average
number of shares in
issue:
Basic and fully 1,194,099,804 364,595,986
567,346,340
diluted
5 Profit and loss
reserve
6 months to 6 months to
12 months to
31 March 31 March
30 September
2008 2007
2007
� �
�
Opening deficit (4,167,118) (1,161,741)
(1,161,741)
Loss for the period (863,728) (597,743)
(3,005,377)
Closing deficit (5,030,846) (1,759,484)
(4,167,118)
6 Statutory accounts
These financial statements do not constitute statutory accounts. Although the information has been reviewed by the auditors,
it is unaudited. The
statutory accounts for the year ended 30 September 2007, contained an unqualified audit report and are filed with the
Registrar of Companies.
INDEPENDENT REVIEW REPORT TO GLEN GROUP plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 31March 2008 which comprises the consolidated interim income statement, consolidated interim balance sheet, consolidated
interim cash flow statement, consolidated interim statement of changes in equity, accounting policies and the related notes. We have read
the other information contained in the half yearly financial statements which comprise only the highlights, Chairman's Statement and
Business Review and considered whether it contains any apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim
Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the
company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.
As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union.
GRANT THORNTON UK LLP
AUDITOR
EDINBURGH
30 May 2008
This information is provided by RNS
The company news service from the London Stock Exchange
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