RNS Number:3658R
Deltron Electronics PLC
28 October 2003


For Immediate Release                                            28 October 2003



              DELTRON ELECTRONICS plc ("Deltron" or the "Company")


             PLACING & OPEN OFFER OF 11,620,572 NEW ORDINARY SHARES
                       AT 60 PENCE PER NEW ORDINARY SHARE


Introduction

Deltron Electronics Plc, the pan-European specialist distributor of
electromechanical components and solutions, has today announced proposals to
raise #6.5 million, net of expenses, by way of a Placing and Open Offer of
11,620,572 New Ordinary Shares at 60p per share (the "Issue Price").

Qualifying Shareholders are invited to apply for 2,453,906 of the New Ordinary
Shares under the Open Offer on the basis of 1 Open Offer Share for every 12
Ordinary Shares held on the Record Date. The balance of 9,166,666 New Ordinary
Shares have been placed firm, primarily with institutional investors.

Of the 2,453,906 Open Offer Shares, 698,663 Open Offer Shares, being those held
by Unicorn Asset Management Limited (a significant institutional shareholder)
and David Weir (a director of the Company) ("Firm Taken Shares"), are subject to
irrevocable undertakings to take up entitlements under the Open Offer in full,
1,460,460 Open Offer Shares have been placed subject to clawback to satisfy
Valid Applications and 294,783 Open Offer Shares, being those shares which the
Directors have irrevocably undertaken not to take up, have been placed firm with
institutions. As a result, a total of 9,461,449 New Ordinary Shares, being 81.4
per cent. of the New Ordinary Shares, are being placed firm, primarily with
institutions, and are not subject to clawback.

The Placing and Open Offer have been fully underwritten by Evolution Beeson
Gregory, save in respect of the Firm Taken Shares and the 2,604,392 New Ordinary
Shares being placed with Unicorn Asset Management Limited ("Unicorn") pursuant
to the Placing.

The purpose of the Placing and Open Offer is to enable the Group to continue its
expansion both organically and through franchise expansion and to provide
ongoing working capital resources to maintain an appropriate level of gearing.

The Placing and Open offer is conditional upon the approval of Shareholders,
which is to be sought at the Extraordinary General Meeting which is expected to
be held on 25 November 2003, notice of which is set out in the circular
(comprising a prospectus) which is due to be sent to Shareholders shortly.

Information on the Group

Business

The Group is a pan-European specialist distributor of electromechanical
components and solutions. These components include switches, connectors, audible
alarms and magnetics. The Group is also a manufacturer of electromechanical
components, sub-assemblies and related tools/production aids. These products and
subassemblies include electromagnetic compatibility filters, a variety of
connectors and other interconnect devices. The products distributed by the Group
are used in a range of equipment from medical systems to aeroplanes and
motorcars, from telecoms equipment and mainframe computers to electronic point
of sale equipment and automatic cash dispensers, and from professional
broadcasting equipment to factory automation.

The majority of these components are incorporated within customers' products
during the design stage of new products at the customer's location.
Representatives from Deltron help customers select and incorporate the most
suitable component into the design during product development; the component is
then referred to as being ''designed-in''.

Deltron concentrates on markets where the Directors believe that the Group's
depth of product knowledge and customer understanding, combined with its
reputation for supplying specialist components for customised service, provide
it with a competitive advantage.

Strategy

To date, the Group's strategy has been to develop as a pan-European specialist
distributor of electromechanical components and solutions, with the objective of
supplying a wide range of industrial customers in a variety of industries whilst
limiting exposure to any particular market, product or supplier.

During the six month period ended on 31 March 2003, no customer represented more
than 3.5 per cent. of the Group's turnover for that period and no supplier
represented more than 15.5 per cent. of the Group's cost of sales for that
period. The Group currently operates in the United Kingdom, Republic of Ireland,
France, Italy, Netherlands, Sweden, Denmark, Germany, Austria, the Czech
Republic, Poland, Slovakia and Hungary. The Directors believe that the Group
currently has representation in territories covering over 80 per cent. of the
European electromechanical components market. The Group also operates several
pan-European franchise agreements with a range of component manufacturers.

Despite the downturn within the European electromechanical components market,
the Directors' believe that this strategy has enabled Deltron to increase the
Group's market share while maintaining gross margins exceeding 31.5 per cent.

The Group has recently undertaken a rationalisation programme that has included
the consolidation of UK manufacturing from two sites into one purpose-built site
in Scunthorpe and the closing of a regional sales office, resulting in reduced
costs and improved efficiency. Headcount has also been reduced from a peak of
515 employees in 2001, to approximately 380 employees at present. The Board
intends to monitor Group staff levels and structure to ensure their continuing
appropriateness for the Group's business as it develops.

The European Electromechanical components market

The European electromechanical components market in 2002 was estimated to be
worth $8.6 billion (source: M.E. Williams & Associates) per annum with
distribution within its principal territories representing approximately 20 per
cent. of this. This market, while being large, is highly cyclical and has
experienced approximately a 30 per cent. reduction in the last three years
(source: M.E. Williams & Associates).

Background to and reasons for the Placing and Open Offer

The net proceeds of the Placing and Open Offer will strengthen the Group's
balance sheet and will allow the Group to respond to the Directors' expectation
of an upturn in the electromechanical components market. Specifically, the
Directors anticipate that the funds raised will assist the Group in accelerating
its organic growth, including the further development of its franchise network.
The focus of the Group's efforts will be to continue to improve its gross
margins whilst maintaining tight controls over its overheads.

In addition, the Group has agreed new term and revolving banking facilities with
its existing bank to carry through to between 2008 and 2010. As a result the
Group should be in a position upon Admission to continue to pursue it strategy
of growth and development whilst maintaining an appropriate level of gearing.

Current trading and prospects

The results for the Group for the six months to 31 March 2003 were announced on
5 June 2003 and showed a profit before interest, taxation, operating exceptional
items and goodwill amortisation of #0.9m (2002: #1.1m) on turnover of #31.7m
(2002: #32.6m).

Within recent challenging market conditions, in which there has been a decline
of approximately 30 per cent. in total sales in the electromechanical components
market during the last three years (source: M.E. Williams & Associates),
Deltron's annual turnover has increased from #54 million in 2000 to at least #63
million for the year ended 30 September 2003.

The Group has achieved this increase while maintaining a tight control on costs
and stringent internal targets to maximise the Group's trading performance. As a
result of these actions during the year to 30 September 2003 the Group has
achieved:

  * an increase in gross margins from 31.7 per cent. in the first six months
    to at least 32 per cent. in the second six months;
  * an annual stock turnover of approximately six times, which is twice the
    industry average as stated by AFDEC, the electronic distributor's trade
    association;
  * order book levels of approximately 2.5 months sales; and
  * a continuation of its investment in electronic trading, warehouse
    automation and the Group's IT platform.

The Directors estimate the Group's profit before interest, taxation, operating
exceptional items and goodwill amortisation for the year ended 30 September 2003
to be at least #1.6 million. Further to this, operating exceptional items are
expecting to be approximately #1.3million for the same period, covering business
reorganisation and a headcount reduction during the year. Goodwill amortisation
for the period is estimated to be #0.9 million.

Details of the Placing and Open Offer

The Company is proposing to raise approximately #7 million (before expenses) by
the issue of 11,620,572 New Ordinary Shares, in aggregate, at the Issue Price
pursuant to the Placing and Open Offer. The Issue Price represents a discount of
2.5 per cent. to the closing mid-market price per Ordinary Share of 61.5 pence
on 27 October 2003, being the latest practicable date before the date of this
announcement.

Pursuant to the Placing, 9,166,666 New Ordinary Shares have been placed firm at
the Issue Price with Unicorn and other institutional investors and are not
subject to the Open Offer. In addition, 294,783 New Ordinary Shares (which are
the subject of the irrevocable undertakings by certain Directors of the Company,
them being P.R. Gourmand, C.J. Sawyer, N.K. Nielsen, F. Feldman, Sir I.H. Cohen
and P. Romano, not to take up entitlements under the Open Offer) have been
placed firm with institutional and certain other investors (including D.T. Weir
and D.P. O'Neill both Directors of the Company). The remaining 1,460,460 New
Ordinary Shares (other than the Firm Taken Shares) have been placed by Evolution
Beeson Gregory at the Issue Price with institutional investors, subject to the
right of clawback to satisfy Valid Applications.

Pursuant to the Open Offer, Qualifying Shareholders are invited by Evolution
Beeson Gregory, as agent for the Company, to apply to subscribe for the Open
Offer Shares at the Issue Price in full on application and free of expenses, on
the following basis of 1 Open Offer Share for every 12 Ordinary Shares held at
the close of business on the Record Date (27 October 2003) and so in proportion
for any greater number of Ordinary Shares then held.

The New Ordinary Shares will be issued fully paid and will, on issue, rank pari
passu with the Existing Ordinary Shares save that they will not rank for the
proposed final dividend in respect of the Group's financial year ended 30
September 2003.

Application will be made to the UK Listing Authority for admission of the New
Ordinary Shares to the Official list and to the London Stock Exchange for their
admission to trading on its listed securities market. It is expected that
Admission will become effective and that dealings in the New Ordinary Shares
will commence on the London Stock Exchange at 8.00 a.m. on 26 November 2003.

Related party transaction

Owing to the size of its shareholding in the Company, Unicorn, who holds
approximately 28.41 per cent. of the Company's current issued share capital, is
a related party of the Company for the purposes of the Listing Rules. The issue
of 2,604,392 New Ordinary Shares to Unicorn under the Placing will be a separate
transaction with a related party for the purposes of the Listing Rules and will
require the separate approval of Shareholders at the EGM. Unicorn has undertaken
that it will not, and will take reasonable steps to ensure that its associates
(as defined in the Listing Rules) will not, vote on the Ordinary Resolution
relating to its related party transaction.

Christopher Sawyer, Chief Executive of Deltron Electonics plc, commented:

"I am delighted by the overwhelming support from our current and new investors
in response to this fundraising.  The money raised provides us with additional
confidence in our business strategy and gives us the opportunity to take
advantage of the hard work that has already been achieved by the Company to
date."



Contacts:


Deltron Electronics plc                           01638 561156
Christopher Sawyer, Chief Executive

Buchanan Communications                           020 7466 5000
Tim Anderson / Mary-Jane Johnson

Evolution Beeson Gregory                          020 7071 4300
Chris Callaway / Bobbie Hilliam




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            The company news service from the London Stock Exchange
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