RNS No 2710j
DELTRON ELECTRONICS PLC
12th May 1998
DELTRON ELECTRONICS plc
INTERIM RESULTS ANNOUNCEMENT
Deltron Electronics, the Pan-European specialist distributor and
manufacturer of electromechanical components, announces its Interim
Results for the period ended 31st March 1998.
Key Points
* Interim pre-tax profits up 34.7% at #1.4m
* Underlying organic growth of 17% on a like for like basis
* Earnings per share up 26.3% to 4.8p
* Dividend up 18% to 1.18p
* Steady progress in the UK
* Europe continues to perform well
* Activity levels at Conelec and Freber have increased
substantially since acquisition
Paul Gourmand, Chairman said... "We are delighted with these results
which reaffirm our corporate strategy of concentrating on growth
opportunities in the electromechanical components market in Europe.
The fact that we are not involved in the distribution of
semiconductors and only sell some 2% of turnover to Asia, sets us
apart from the other suppliers in the electronics sector."
Christopher Sawyer, Chief Executive commented.."We are a stronger and
more broadly based business today than at the time of the flotation.
As we have previously reported the order book continues to build and
we look forward to the future with confidence."
CHAIRMANS STATEMENT
Results
I am delighted to report that interim pre-tax profits, for the six
months ended 31 March 1998 have risen to #1.4m, an increase of 34.7%
over the same period last year. Another indication of performance is
earnings per share which rose by 26.3% to 4.8p. Sales of #18.0m
(+46.0%), included a first time contribution of #4.9m from the
acquisition of Conelec and Freber. If these acquisitions are
excluded, organic growth was 6.4% (14% when adjusted for currency).
However, if the acquisitions are included, on a like for like basis
during Deltrons stewardship, organic growth would have been closer
to 17%. Despite industrial growth in the UK being restricted due to
the strong currency, we have made steady progress. Our subsidiaries
in Europe are enjoying excellent growth with Euroindustrie in France
showing the expected benefits following last years investment
programme. Conelec in Denmark and Freber in Sweden are performing
well and have increased activity substantially since acquisition.
Strategic developments
Since flotation, we have successfully acquired businesses in Denmark
and Sweden for a total of #6.7m utilising some of the new money
raised on flotation supplemented by surplus cash flows generated from
operations. There remains plenty of opportunity for further selective
expansion in Europe and we have set ourselves a goal of reaching
#100m of sales within the next three years with additional
representation in Europe.
We also operate in enduring growth markets. For the electromechanical
components we supply the available European market for distrbutors is
worth #1.5bn and growing at 5.5% per annum. Virtually every piece of
electrical or electronic equipment which is made needs one or more
switches, many need potentiometers to control levels of light, sound
or temperature and many rely on audible or visible indicators to
alert users to particular aspects or functions (Source: AFDEC).
Financials
In common with most other expanding companies, the reported balance
sheet reflects the reduction of goodwill following acquisitions.
Since the formation of the company in 1991, we have written off
#10.3m in goodwill reducing net assets to #2.6m.
At the half year stage, net debt stood at #4.4m - gearing of 172%.
More importantly, interest cover remains comfortable at 6.7 times and
rising.
#1.96m of positive cash was generated in the first half from
operations. With our higher than average industry stock turn and
gross margins we have generated cash to support our acquisition
programme and expect this to continue.
Dividends
The board has declared an interim dividend of 1.18p net per share, up
18% on last year, which is covered more than 4 times by earnings of
4.8p to be payable on 14 August 1998 to shareholders registered on 10
July 1998. It is our intention to continue to follow a progressive
dividend policy, supported by robust earnings per share growth.
Trading outlook
With operations in four European countries - UK, France, Denmark and
Sweden - we are a stronger and more broadly based business today than
at the time of flotation. This view is reinforced by the fact that a
large part of the growth generated in the first half came from
outside the UK. Currency issues will continue to influence the short
term, although we are not too disheartened, particularly when Yen
based products have become increasingly price competitive.
The acquisition of further operations in Europe is high on our
agenda, as is obtaining additional agencies with leading
international suppliers. We expect to remain strongly cash generative
and we have capacity within the operating units to increase activity
levels.
We are delighted with these results which reaffirm our corporate
strategy of concentrating on growth opportunities in the
electromechanical components market in Europe. The fact that we are
not involved in the distribution of semiconductors and only sell some
2% of turnover to Asia, sets us apart from the other suppliers in the
electronics sector.
P.R. Gourmand
Chairman
Group Profit and Loss Account (unaudited)
for the six months ended 31 March
Year ended
30 September
1998 1997 1997
Note #000 #000 #000
Turnover:
Continuing operations 15,274 12,296 26,460
Acquisitions 2,681 - -
------ ------ ------
17,955 12,296 26,460
Cost of sales (11,370) (7,409) (16,077)
------ -------- --------
Gross profit:
Continuing operations 5,850 4,887 10,383
Acquisitions 735 - -
------ ------- --------
6,585 4,887 10,383
Selling and distribution costs (1,504) (779) (1,539)
Administrative costs (3,429) (2,938) (5,908)
------- ------- --------
Operating profit:
Continuing operations 1,326 1,170 2,936
Acquisitions 326 - -
------ ------- -------
1,652 1,170 2,936
Interest (248) (128) (275)
------ ------- -------
Profit on ordinary activities
before tax 1,404 1,042 2,661
Taxation 2 (492) (344) (833)
------ ------- ------
Profit on ordinary activities
after tax 912 698 1,828
Dividends 3 (224) (185) (565)
------- ------- -------
Profit retained for the
financial period 688 513 1,263
===== ===== =====
Earnings per share 4 4.8p 3.8p 9.9p
===== ===== =====
Dividend per share 3 1.18p 1.00p 3.00p
===== ===== =====
Total Recognised Gains and Losses (unaudited)
for the six months ended 31 March
Year ended
30 September
1998 1997 1997
#000 #000 #000
Profit for the period 912 698 1,828
Exchange differences (265) (198) (259)
------ ----- ------
Total gains and losses recognised
during period 647 500 1,569
===== ===== =====
Movement in Shareholders Funds (unaudited)
for the six months ended 31 March
Year ended
30 September
1998 1997 1997
#000 #000 #000
Opening shareholders funds 4,948 5,997 5,997
Profit for the period 912 698 1,828
Dividends (224) (185) (565)
Share capital issued 500 - 210
Goodwill set off (3,293) (11) (2,263)
Exchange differences (265) (198) (259)
------ ------ --------
(Decrease)/increase in
shareholders funds
for the period (2,370) 304 (1,049)
------- ------- --------
Closing shareholders funds 2,578 6,301 4,948
===== ===== =====
Group Balance Sheet (unaudited)
as at 31 March
Year ended
30 September
1998 1997 1997
#000 #000 #000
Fixed assets
Tangible assets 4,696 4,146 3,961
------- ------ ------
Current assets
Stocks 4,340 3,477 3,331
Debtors 8,435 6,227 7,810
Cash 1,839 4,556 3,583
------ ------- -------
14,614 14,260 14,724
Creditors:
Amounts falling due within
one year (10,698) (7,284) (6,961)
------ ------ -------
Net current assets 3,916 6,976 7,763
------ ------- -------
Total assets less current
liabilities 8,612 11,122 11,724
Creditors:
Amounts falling due after more
than one year (5,721) (4,493) (6,456)
Deferred income (313) (328) (320)
----- ----- -----
2,578 6,301 4,948
===== ===== =====
Capital and reserves
Called up share capital 949 920 928
Reserves 1,629 5,381 4,020
----- ----- ------
Equity shareholders funds 2,578 6,301 4,948
===== ===== =====
Group Cash Flow Statement (unaudited)
for the six months ended 31 March
Year ended
30 September
1998 1997 1997
Note #000 #000 #000
Cash flow from operating
activities 5 1,956 1,887 3,245
Returns on investment and
servicing of finance (254) (156) (281)
Taxation (328) (156) (616)
Capital expenditure (171) (176) (321)
Acquisitions 6 (3,313) (321) (1,419)
Equity dividend paid (379) - (186)
------- ------ ------
Cash flow before financing (2,489) 1,078 422
Financing (332) 1,445 2,162
----- ----- -----
Change in cash (2,821) 2,523 2,584
===== ===== =====
Reconciliation of cash flow to
movement in net debt
Opening net debt (1,349) (1,199) (1,199)
----- ----- -----
Change in cash (2,821) 2,523 2,584
Cash flow from change in debt 332 (1,840) (2,535)
----- ----- -----
Change in net debt (2,489) 683 49
Acquired with subsidiary (409) - -
Inception of finance leases (114) (44) (110)
Amortisation of issue costs (3) (7) (15)
Exchange differences (67) (47) (74)
----- ----- -----
Movement in net debt (3,082) 585 (150)
----- ----- -----
Closing net debt (4,431) (614) (1,349)
===== ===== =====
Notes to the Interim Accounts
1. Basis of preparation
The financial information for the year ended 30 September 1997 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 interim accounts do not comprise statutory
accounts within the meaning of Section 240 of the Companies Act 1985.
2. Taxation
The taxation charge is based on the estimated effective rate for the
year ending 30 September 1998. The amount included in this charge in
relation to overseas taxation is #378,000 (1997 #50,000)
3. Dividend
The interim dividend of 1.18 p (1997 1.00 p) per share for the six
months ended 31 March 1998 will be paid on 14 August 1998 to
shareholders on the register on 10 July 1998.
4. Earnings per share
The calculation of earnings per share is based on profit attributable
to equity shareholders of #912,000 (1997 #698,000) and 18,968,973
(1997 18,405,726) shares being the daily average of the number of
shares in issue during the period.
5. Net cash flow from operations
Year ended
30 September
1998 1997 1997
#000 #000 #000
Operating profit 1,652 1,170 2,936
Release of government grant (7) (8) (16)
Amortisation of issue costs 3 8 15
Depreciation 337 279 522
(Profit)/loss on disposal of
fixed assets (5) 2 (89)
Changes in:
Stocks (328) 493 931
Debtors 263 353 (282)
Creditors 41 (410) (772)
----- ----- -----
1,956 1,887 3,245
===== ===== =====
Notes to the Interim Accounts
6. Acquisitions
The acquisition of the whole of the issued share capital of Freber
Electronik-Leasing AB (Freber) was completed on 3 October 1997. The
consideration for the acquisition comprised: issue of ordinary
shares to the value of #500,000, cash of #3,026,000 excluding
expenses of #140,000 and deferred consideration of #409,000. The
exact amount payable as deferred consideration depends on the average
pre-tax profits of Freber in the three years ending 30 September
2000.
7. Company information
Copies of this statement are being sent to all shareholders and are
also available from the Company Secretary, Deltron Electronics plc,
Suffolk House, Fordham Road, Newmarket, Suffolk, CB8 7AA.
For further information contact:
Christopher Sawyer 0171 466 5000 (today)
Chief Executive, Deltron Electronics plc 01638 561156(thereafter)
Tim Anderson/Kirsty Swan 0171 466 5000
Buchanan Communications
END
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