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September 12, 1995


By CBR Staff Writer

A company name that accurately describes your business, or at least the vast majority of it, would seem like a valuable asset. Apparently not so, as Delphi Group Plc, formerly Computer People Group Plc, before that VLI Group, will testify. The London-based computer and telecommunications recruitment company and consultancy had its name change approved by shareholders last week. A combination of strong organic growth, acquisitions and last year’s reoganisation have resulted in a return to healthy levels of profitability. Pre-tax profits were up from ú733,000 to ú4.1m in the six months to June 30. Turnover rose 119% to ú83.2m. Some 71% of the group’s revenues were generated in the UK in the half, up 159% to ú59.3m. The proportion increased significantly following the group’s acquisition of the Span Consultancy in July 1994 (CI No 2,446). UK operating profits improved to ú4.1m this time from ú1.1m a year ago. At the start of August the group completed the acquisition of Cathy Tracey & Associates Ltd, an information technology and telecommunications placement company (CI No 2,717). Interskill, the fledgling systems development and training business turned over ú1.6m and made unspecified profits in the half. Europe outside the UK did not exist for Delphi a year ago. It acquired VNG Group Ltd in October 1994 (CI No 2,515) to plug this gap and it turned in profits of ú237,000 from turnover of 7.6m in the first half. Chairman Tony Reeves said in his statement that it was ahead of internal budgets. The US made its fair share of the profits, up 24% to the equivalent of about ú900,000 from turnover up 22% to ú16.2m. Of that 22%, 17% came from organic growth and 5% from the acquisition of the Los Angeles contract programming business of Automated Concepts Inc in March this year (CI No 2,618). Delphi paid $900,000 up front with an earn-out of up to a further $1.1m. The company is confident of staying ahead of the buoyant market in the US, aided by the increased number of consultants on billing in the first half. Net borrowings and gearing of ú6.7m and 90% at the year-end increased to ú10.2m and 107% respectively at the half-way stage. This was put down to increased working capital requirements in the UK and the ú600,000 cash laid out for the US acquisition in March. Since the end of June, however, gearing is said to have been reduced to around 70% as borrowings have fallen. The company said at the year-end that it planned to get its gearing down to around 30% to 40% by the end of the year (CI No 2,624). Tax charges will remain low, at around 30% due to previous US tax losses. The interim dividend of one and half pence is up from a penny last time. The market liked what it saw from Delphi, the shares rising 14 pence to 343 pence.

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