Trading Update
Released: 31/03/2006
Glen Group PLC
31 March 2006
Glen Group plc ('Glen' or 'the Group')
Trading Update
Very significant progress has been made in the six month period
since 30 September 2005. On 15th February, just over six weeks
ago, we completed the acquisition of Eclectic Holdings Limited
('Eclectic'), an IT value added services provider with a
portfolio serving the corporate market. The consolidated interim
results to 31st March 2006 will therefore reflect the trading
performance of Eclectic since 15th February 2006 as well as the
results of Glen and our SME-focused operating company, Glen
Communications Limited ('Communications').
Eclectic
Eclectic was acquired for an initial consideration of 2,212,500.
A further maximum consideration of £787,500 will be payable, by
a further issue of shares in Glen, if Eclectic's profits before
interest, tax and amortisation ('PBITA') exceed certain targets
for the twelve month period ending 31st July 2006. The maximum
additional consideration is based on achieving PBITA of £400,000.
The directors are pleased to note that the financial performance
of Eclectic to 28th February 2006, as shown in the latest
unaudited management accounts, is materially better than the
equivalent period last year, and currently ahead of internal
budgets. The Board do, however, wish to stress that it is too
early to predict whether the maximum earn-out will be achieved,
although early signs are encouraging.
The Board have taken steps to integrate the Eclectic business
with the rest of the Group and have reorganised certain aspects
of the Group operations with the creation of a central support
team in Glen. This change allows the operating companies to
focus exclusively on the operational side of the business and
avoids duplication of back office functions.
Communications
Following the appointment in January 2006 of Craig Saunderson as
Managing Director of Communications, we have made a number of
significant changes to the business in order to materially
reduce its overhead costs and re-focus its sales activity. The
major changes are:
• The operational headquarters have been moved from Scotland
to Rotherham in South Yorkshire. This places Communications at
the heart of the English market, which is approximately ten
times larger than the Scottish market. A sales and support base
remains in Scotland to service Scottish customers.
• We have exited our prepaid phone card business, which had
ceased to be a core activity. This was achieved in a management
buy-out of this business, at a nominal sum, which allowed us to
take costs off our books.
• We have revisited and enhanced some aspects of our sales
performance and have reduced the size of our sales team. We now
have a fully focused, and more stable, sales group of six
individuals.
These changes are already starting to have a positive effect on
the business.
We are also pleased to report that Communications has recently
signed a reseller agreement which will allow us to launch a full
carrier-class Voice over IP ('VoIP' or 'broadband voice')
service to the business market. The Glen broadband voice
service, which will be hosted independently, will provide a rich
feature set and be competitively priced. We expect to formally
launch this early in the next quarter. Although we have used a
broadband voice service for the last year, we have been
reluctant to promote it widely as it lacked certain essential
business features. We are now confident that the new service has
the range of features and robustness required to satisfy our
target market.
We expect to issue our interim results by mid June.
Eric M Hagman CBE
Chairman
31st March 2006
ENQUIRIES
Glen Group plc
Graham J Duncan
Chief Executive 0845 119 2100
College Hill
Alex Walters 020 7457 2020
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