RNS Number:7099A
Deltron Electronics PLC
12 November 1999
DELTRON ELECTRONICS plc
Preliminary Results for the year ended 30 September 1999
Deltron Electronics, the Pan-European specialist distributor and manufacturer of
electromechanical components, announces its Preliminary Results for the period
ended 30 September 1999.
Key Points
* Excellent second half recovery continuing
* Order intake in the second half was 28% up on the same period last year
* Acquisition of C&K Components GmbH in Germany, announced today, takes us into
the largest market for electronic components in the EU
* Placing of 925,000 shares at 76 pence per share raising #0.7 million
Financials 1999 1998
Turnover #38.1 million #35.98
Pre-tax profits #1.24 million Million
Earnings per share 3.9 pence #3.2 million
Proposed final dividend 1.5p for year 11.6 pence
of 1.0p #1.9 million 3.56 pence
Cashflow from op. #4.8 million
Activities
Paul Gourmand, Chairman said ...."A year ago I mentioned tough trading
conditions in my report and so it proved, although tougher than our expectation
at the time. Since then the economic climate and the strength of the Group has
improved. We believe the next 12 months will take the Group forward to
significant new heights and the conclusion of the acquisition of C & K
Components GmbH in Germany is an indication of the progress we are making."
For further information contact:
Christopher Sawyer 0171 466 5000 (today)
Chief Executive, Deltron Electronics plc 01638 561156 (thereafter)
Andy Yeo/Tim Anderson 0171 466 5000
Buchanan Communications
Chairman's statement
Introduction
The contrast between Deltron's first and second half performance is stark and
very encouraging. In the six months ended 31 March 1999, pre-tax profits were
just #219,000. For the full year pre-tax profit has reached #1.24m (1998:
#3.2m). Even more importantly, I am pleased to report that the recovery is
continuing.
Turnover for the year was up 6% to #38.1m (1998: #35.98m). However, turnover in
the second half increased 15% compared to the second six months in 1998 and by
19% compared to the first six months of 1999. The trend is clear. Order intake
in the second six months was 28% up on the same period in 1998.
Trading and Strategy
Of course my enthusiasm must be tempered. The year to 30 September 1999 as a
whole was both difficult and disappointing. Weak demand in the UK and an
unexpected destocking by some major customers, which appeared to be anticipating
a recession that didn't materialise, were the main causes of our difficulties at
the beginning of the financial year. Other factors made matters worse. Principle
among them was the conversion of overseas profits into sterling at the current
high levels which depressed our performance further.
Our problems were recognised early and swift action was initiated. A review of
our activities led to changes in senior management. This produced some one off
costs of approximately #470,000.
Our strategy remains unchanged as it has over the last three years. The goal is
to develop Deltron's activities into a pan-European specialist distributor of
electromechanical components. Acquisitions have always been key to meeting this
aim.
Acquisitions
Today we have announced the #2.8m acquisition of C & K Components GmbH in
Germany which has revenues of c #9 million. It represents a further important
strategic development for the Deltron Group. It takes us into the largest market
for electronic components in the EU and is also a step toward the developing
markets in Central Europe. Acquisitions accelerate the creation of critical mass
which is important to the manufacturers for which we distribute and the stock
market which prefers larger companies.
In May this year we also acquired the business of Cirkit Distribution for #1.3m
which brought with it a number of franchises, some of which we expect to develop
on a pan-European basis. Cirkit is a good fit, contributing as it does to
Deltron's core strength which is to provide electromechanical solutions which
are designed in to customers' products.
Pan-European Expansion
Acquisitions and organic growth have increased our capacity to offer
distribution across Europe, although we still have one or two gaps to fill. This
capability is highly attractive to manufacturers as it enables them to get
products rapidly and efficiently to market. The acquisition of C&K Components
GmbH alone significantly improves our coverage of the European market, which in
turn, will allow us to market our services to manufacturers on a truly
pan-European basis.
Balance Sheet
The financial position of the Group remains healthy even after the difficult
trading of the first 6 months. Interest cover has remained above 3 times. The
net debt at the year end was #7.2m (#4.1m in 1998). Including goodwill in the
balance sheet this gives a gearing ratio of 175%, although with all goodwill
eliminated, this increases gearing to 233%. This is stated after spending #2.0m
on acquisitions in cash during the year with the inclusion of further goodwill
of #1.0m. Cash flow from operating activities was #1.9m during the year.
The Board is proposing to recommend a final dividend for the year of 1p per
share to be paid on 25 February 2000 to shareholders on the register on 21
January 2000. This will bring the total for the year to 1.5p. This is covered
2.6 times by earnings.
I am pleased to announce the placing of 925,000 shares for cash raising #703,000
at a price of 76p per share. This will provide further support for our plan to
develop the Group across Europe. Application has been made to the London Stock
Exchange for the new ordinary shares to be admitted to the Official List which
is expected to take place on 18 November 1999.
Employees
I have mentioned the key role of people in our plans for development on previous
occasions. It remains the quality and commitment of our staff that will be a
vital ingredient in our future success. In particular, we have strengthened our
management team via the promotion to Managing Director of the former Sales and
Marketing Director of Freber, Sweden as well as recruiting some notable
newcomers to the group which includes new Managing Directors at Roxburgh
Distribution and C&K EUROiNDustrie SA in France. Our thanks must go to all our
staff for their sterling efforts in this demanding year.
Prospects
A year ago I mentioned tough trading conditions in my report and so it proved,
although tougher than our expectation at the time. Since then the economic
climate and the strength of the Group has improved. We believe the next 12
months will take the Group forward to significant new heights and the conclusion
of the acquisition of C & K Components GmbH in Germany is an indication of the
progress we are making.
Paul Gourmand
Chairman
Group Profit and Loss Account
for the twelve months
ended 30 September 1999 1998
Note #000 #000
Turnover:
Continuing Operations 36,375 35,982
Acquisitions 1,771 -
38,146 35,982
Cost of Sales (24,550) (22,387)
Gross Profit
Continuing Operations 13,033 13,595
Acquisition 563 -
13,596 13,595
Selling and distribution costs (4,443) (4,067)
Administrative costs (7,136) (5,822)
Exceptional costs 3 (205) -
Operating profit:
Continuing Operations 1,694 3,706
Acquisitions 118 -
1,812 3,706
Interest (574) (534)
Profit on ordinary 1,238 3,172
activities before tax
(474) (976)
Taxation
Profit on ordinary 764 2,196
activities after tax
Dividends (311) (675)
Profit retained for the
financial period 453 1,521
Earnings per share - basic 2 3.9p 11.6p
Earnings per share - diluted 2 3.8p 11.2p
Dividend per share 1.5p 3.56p
Total Recognised Gains and Losses
for the twelve months ended
30 September 1999 1998
#000 #000
Profit for the period 764 2,196
Exchange differences (227) (95)
Total gains and losses
recognised during period 537 2,101
Movement in Shareholders' Funds
for the twelve months
ended 30 September 1999 1998
#000 #000
Opening shareholders' funds 2,350 4,948
Profit for the period 764 2,196
Dividends (311) (675)
Share capital issued 1,136 527
Goodwill written back 369 (4,551)
Exchange differences (227) (95)
Increase/(decrease) in
shareholders' funds for the
period 1,731 (2,598)
Closing shareholders' funds 4,081 2,350
Group Balance Sheet
as at 30 September 1999 1998
#000 #000
Fixed assets
Tangible assets 5,120 5,051
Goodwill 1,018 -
Current assets 6,138 5,051
Stocks 5,412 4,845
Debtors 9,782 7,523
Cash 1,727 833
16,921 13,201
Creditors:
Amounts falling due within one year (14,503) (10,366)
Net current assets 2,418 2,835
Total assets less current liabilities 8,556 7,886
Creditors:
Amounts falling due after more
than one year (4,165) (5,230)
Deferred income (310) (306)
4,081 2,350
Capital and reserves
Called up share capital 1,012 954
Reserves 3,069 1,396
Equity shareholders' funds 4,081 2,350
Group Cash Flow Statement
for the twelve months
ended 30 September 1999 1998
Note #000 #000
Cash flow from operating
activities 4 1,858 4,759
Returns on investment and
servicing of finance (541) (539)
Taxation (1,160) (1,119)
Capital expenditure (521) (544)
Acquisitions 5 & 6 (1,956) (4,167)
Equity dividend paid (551) (604)
Cash flow before financing (2,871) (2,214)
Financing (818) (537)
Change in cash (3,689) (2,751)
Reconciliation of cash flow to
movement in net debt
Opening net debt (4,141) (1,349)
Change in cash (3,689) (2,751)
Cash flow from change in debt 805 563
Change in net debt (2,884) (2,188)
Acquired with subsidiary (61) (409)
Inception of finance leases (168) (228)
Amortisation of issue costs (30) (15)
Exchange differences 130 48
Movement in net debt (3,013) (2,792)
Closing net debt (7,154) (4,141)
Notes to the Preliminary Announcement
1. Basis of preparation
The financial information for the year ended 30 September 1998 is derived from
the statutory accounts filed with the Registrar of Companies. The auditors'
report on the statutory accounts was unqualified and did not contain a statement
under Section 237 of the Companies Act 1985. The preliminary announcement does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985 but have been reviewed by the Auditors
2. Earnings per share
Earnings per share for 1999 have been calculated using Financial Reporting
Standard 14 and comparative figures have been restated accordingly. The
calculation of earnings per share, is based on profit attributable to equity
shareholders of #764,000 (1998 #2,196,000) and 19,577,389 (1998 19,013,717)
shares being the daily average of the number of shares in issue during the
period. The diluted earnings per share is based on a weighted average of
19,960,303 (1998: 19,664,589) shares after allowing for exercise of options.
3. Exceptional costs
These represent redundancy and other related costs resulting from the
reorganisation and restructuring of the UK businesses, primarily in
Manufacturing.
4. Net cash flow from operations
1999 1998
#000 #000
Operating profit 1,812 3,706
Release of government grant (14) (14)
Amortisation of issue costs - 15
Depreciation 670 616
(Profit)/loss on disposal of fixed assets 11 (4)
Changes in:
Stocks (69) (268)
Debtors (1,189) 1,578
Creditors 637 (870)
1,858 4,759
5. Acquisitions
On 17th May, Deltron acquired the business of Cirkit Distribution Limited from
Bulgin plc. There was also a minor "bolt-on" acquisition made by C&K
EUROiNDustrie SA. The cash flow shown includes the payment of deferred
consideration in respect of the acquisitions of EUROiNDustrie SA, C & K
Composants SA and EUROiNDustrie EMC.
6. Goodwill
The Company has upon implementation of FRS10 capitalised goodwill arising on the
acquisitions made during the year. Goodwill arising in previous years has been
written off to reserves. The deferred consideration in respect of the
acquisition of Freber Elektronik Leasing AB, has been written back because in
the opinion of the Directors it will not be paid.
7. Post Balance Sheet Events
Deltron has acquired the entire share capital of C&K Components GmbH for a
maximum consideration of DM 8.5 million. The consideration is satisfied by the
issue of 575,431 ordinary shares together with DM 5.7 million of cash and a
deferred loan note of DM 1.4million payable in 4 equal six monthly instalments
commencing on 15th May 2001.
Deltron has raised #703,000 via the placing of 925,000 shares at 76p per share.
END
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