RNS Number:4975Z
Deltron Electronics PLC
08 June 2004
For Immediate Release 8 June, 2004
DELTRON ELECTRONICS plc
Interim results for the period ending 31 March 2004
Deltron Electronics plc (LSE: DET), the specialist European electromechanical
solutions provider, announces its interim results for the six months ended 31st
March 2004.
Business highlights
* Return to profit
* Value of orders increased by 6%
* Confident for full year
Financial highlights
* Turnover up 0.3% to #31.8M (2003: #31.7M)
* Gross margins up at 32.5% (2003: 31.3%)
* Profit before goodwill, exceptional items and tax: #0.8M (2003: #0.3M)
* No exceptional items in 2004 (2003: #0.3M)
* Profit before tax after goodwill and exceptional items: #0.3M (2003: loss
#0.4M)
* Basic EPS of 0.2p (2003: loss of 1.5p)
* Adjusted EPS doubled to 1.4p (2003: 0.7p)
* Net debt down from #15.7M to #6.0M
* Gearing decreased to 31% (2003: 112%)
* Interim dividend maintained at 0.585p (2003: 0.585p)
Paul Gourmand, Chairman of Deltron commented:
"Deltron has returned to profit at the half year with improved margins and
gearing reduced from 112% to 31%. There is an increased air of confidence in the
sector and the value of orders received has increased by 6% over the same period
last year. As a result the Board now expects the Group to generate profit before
tax and goodwill for the full year to 30th September 2004 ahead of market
expectations."
For further information, please contact:
Deltron Electronics plc Tel: 01638 561156
Christopher Sawyer
Buchanan Communications Tel: 020 7466 5000
Tim Anderson/Mary-Jane Johnson
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that Deltron has returned to profit at the half year
compared to a loss last time after exceptional items and goodwill. With an
increased air of confidence about the industry we have enjoyed a successful
start to the financial year.
The benefits of the Group's restructuring that took place throughout 2003 are
now being realised resulting in improved margins and improved cash generation.
Gross margins have maintained the upward trend seen in the second half of last
year to 32.5%, back in line with historic levels.
Our order book continues to be strong with the value of orders having increased
by 6% in comparison to the same reporting period last year.
Whilst there is bound to be some caution given the strength of the Euro and
Pound against the US Dollar, market sentiment is more buoyant than we have seen
in recent years.
As a result the Board now expects the Group to generate profit before tax and
goodwill for the full year to 30th September 2004 ahead of market expectations.
Market and Business Development
Our strategy of expanding the breadth of our product range has continued
successfully in the period. This gives us far greater reach than many
competitors and coupled with this we have made investment in new products for
sale in Germany, Italy, Belgium and Norway.
With a strengthened balance sheet following the successful fundraising in late
2003, we have cash at bank and in hand of #6.0M, in addition to our unutilised
facilities. This places us in a strong position allowing us to respond to
market opportunities as they arise.
Financial Results
In the six months to 31 March 2004 turnover was #31.8M. This reflects a 0.3%
increase over the same period last year and if the effect of foreign exchange
differences is removed, this would have produced a 1.0% increase over this
period. This is the first organic growth in turnover that Deltron has reported
since the financial year ending September 2001.
Gross margin increased to #10.4M compared with #9.9M in the first six months of
last year, whilst overheads remained unchanged at #9.2M.
Interest cover, pre-goodwill and exceptional items, was almost doubled to 2.8
times from 1.5 at the previous interim stage.
The Group is able to report a profit before tax, exceptional items and goodwill
of #0.8M, compared with #0.3M last year and achieved a profit after tax,
exceptional items and goodwill of #0.1M against a loss of #0.4M last year.
The adjusted earning per share has doubled to 1.4p in the period from 0.7p last
year. The basic earning per share was 0.2p compared with a 1.5p loss per share
in 2003.
The balance sheet has been strengthened significantly following the net #6.4M
placing and open offer, which combined with positive operating cash generation,
has reduced net debt from #15.7M to #6M resulting in gearing falling from 112%
to 31%.
The dividend remains unchanged from the equivalent period last year at 0.585p to
be paid on 20th August 2004 to shareholders on the register at 23rd July 2004.
Prospects
The present situation is encouraging. During the past six months we have seen
good signs of stability with some growth, albeit masked by the weakness in the
dollar, coupled with a 6% increase in the value of orders. Our own sentiment
has been reinforced by that of AFDEC which reported, in April 2004, that
indications have been positive and improving over the past three months and
given the economic situation, the components industry seems to be set fair for
at least the next several months.
Deltron's range of products and expanded European network means we are well
positioned for organic growth. Additionally, other opportunities will arise in
the market and our strong balance sheet will enable Deltron to accelerate its
growth.
P R Gourmand
Chairman
8 June 2004
GROUP PROFIT AND LOSS ACCOUNT (unaudited)
For 6 Months ended 31 March
2004 2004 2004 2003 2003 2003 Year
Before Goodwill Total Before Goodwill Total ended
Goodwill and goodwill and 30 Sep.
and operating and operating 2003
operating exceptional operating exceptional
exceptional items (note exceptional items (note
items 2) items 2)
Note #000 #000 #000 #000 #000 #000 #000
Turnover 31,806 - 31,806 31,709 - 31,709 64,019
Cost of Sales (21,453) - (21,453) (21,788) - (21,788) (43,742)
Gross profit 10,353 - 10,353 9,921 - 9,921 20,277
Operating expenses (9,172) (438) (9,610) (9,193) (719) (9,912) (20,832)
Operating profit / 1,181 (438) 743 728 (719) 9 (555)
(loss)
Profit on sale of
properties - - - 188 - 188 188
Profit / (loss) on
ordinary activities
before interest 1,181 (438) 743 916 (719) 197 (367)
Interest payable (441) - (441) (618) - (618) (1,167)
Interest receivable 17 - 17 10 - 10 14
Profit /(loss) on
ordinary activities 757 (438) (319) 308 (719) (411) (1,520)
before tax
Taxation 3 (241) - (241) (107) 87 (20) 114
Profit /(loss) on
ordinary activities
after tax 516 (438) 78 201 (632) (431) (1,406)
Dividends (240) - (240) (172) - (172) (517)
Profit /(loss) retained
for the financial
period 276 (438) (162) 29 (632) (603) (1,923)
Earnings /(loss) per 4 0.2p -1.5p -4.8p
share - (basic and
diluted)
Adjusted earnings per 4 1.4p 0.7p 1.6p
share - basic and
diluted
Dividends per share 0.585p 0.585p 1.755p
All activities derive from continuing operations.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
For 6 Months ended 31 March
2004 2003 Year ended
30 Sep
2003
#000 #000 #000
Profit/(loss) for the period 78 (431) (1,406)
Exchange differences 305 (316) (366)
Total Gains and Losses recognised during period 383 (747) (1,772)
MOVEMENT IN SHAREHOLDERS' FUNDS (unaudited)
For 6 Months ended 31 March
2004 2003 Year
ended
30
Sep 2003
#000 #000 #000
Opening shareholders' funds 12,547 14,760 14,760
Retained profit/(loss) for the period (162) (603) (1,923)
Share capital issued 6,434 76 76
Exchange differences 305 (316) (366)
Increase / (decrease) in shareholders' funds for the period 6,577 (843) (2,213)
Closing shareholders' funds 19,124 13,917 12,547
GROUP BALANCE SHEET (unaudited)
As at 31 March
2004 2003 As at
Total Total 30 Sep. 2003
#000 #000 #000
Fixed Assets:
Tangible assets 2,743 3,378 3,099
Intangible assets 14,413 15,254 14,540
17,156 18,632 17,639
Current Assets:
Stocks 7,880 8,934 8,065
Debtors 13,963 17,400 14,093
Cash at bank and in hand 5,994 1,774 1,565
27,837 28,108 23,723
Creditors:
Amounts falling due within one year (18,498) (18,839) (19,016)
Net Current Assets 9,339 9,269 4,707
Total assets less current liabilities 26,495 27,901 22,346
Creditors - amounts falling due after more than one year (7,037) (12,839) (9,380)
Provision for liabilities and charges (334) (1,145) (419)
19,124 13,917 12,547
Capital and Reserves:
Called up share capital 2,052 1,471 1,471
Share premium 21,058 15,205 15,205
Reserves (3,986) (2,759) (4,129)
Equity Shareholders' funds 19,124 13,917 12,547
GROUP CASH FLOW STATEMENT (unaudited)
For 6 Months ended 31 March
2004 2003 Year
Total Total ended
30 Sep. 2003
Note #000 #000 #000
Cash flow from operating activities 5 1,448 1,357 2,186
Returns on investment and servicing of finance (424) (606) (1,231)
Taxation 722 (318) 291
Capital expenditure (net of proceeds) (133) 2 1,341
Acquisitions 6 - (542) (769)
Equity dividend paid (344) (345) (517)
Cash flow before financing 1,269 (452) 1,301
Financing 3,771 (1,233) (3,415)
Change in Cash: 5,040 (1,685) (2,114)
NOTE TO THE GROUP CASH FLOW STATEMENT (unaudited)
Reconciliation of cash flow to movement in net debt:
Opening net debt (14,070) (14,747) (14,747)
Change in Cash: 5,040 (1,685) (2,114)
Cash flow from change in debt 2,663 1,309 3,491
Change in net debt 7,703 (376) 1,377
Inception of finance leases (33) - -
Amortisation of issue costs (26) (21) (39)
Exchange differences 398 (506) (661)
Movement in net debt 8,042 (903) 677
Closing net debt (6,028) (15,650) (14,070)
INDEPENDENT REVIEW REPORT TO DELTRON ELECTRONICS PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2004, which comprises the profit and loss account,
the statement of total recognised gains and losses, the balance sheet, the cash
flow statement, the reconciliation of cash flow to movement in net debt, and the
related notes 1 to 7 together with the movement in shareholders' funds. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2004.
Deloitte & Touche LLP
Chartered Accountants
Cambridge
8 June 2004
Notes to the interim accounts
1. Basis of preparation
The financial information for the year ended 30 September 2003 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 but have been reviewed by the Auditors whose report is on page 8. The
interim accounts have been prepared using accounting policies consistent with
those used for the statutory accounts for the year ended 30 September 2003.
2. Goodwill and operating exceptional items
Included within administration costs is a charge of #438,000 (2003: #438,000) in
respect of the amortisation of goodwill for the period.
In 2003 the operating exceptional item of #281,000 was predominantly for the
closure and relocation of the Birmingham Sales office of Deltron UK Ltd. This
was relieved by a tax credit of #87,000.
3. Taxation
The taxation charge is based on the estimated effective rate for the year ending
30 September 2004.
4. Earnings per share
Earnings per share are calculated in accordance with Financial Reporting
Standard 14 (FRS 14). The calculation of earnings per share, for the half-year
is based on the profit attributable to equity shareholders of #78,000 (2003:
loss of #431,000) and 37,467,603 (2003: 29,383,494) shares being the daily
average of the number of shares in issue during the period.
The diluted earnings per share is based on weighted average of 37,544,438 shares
after allowing for the exercise of share options. The number of qualifying
options is insufficient to dilute the earning per share.
In 2003 the position was different, FRS 14 requires presentation of diluted EPS
when a company could be called upon to issue shares that would decrease net
profit or increase net loss per share. For a loss making company with
outstanding share options, net loss per share would only be increased by the
exercise of out-of-the-money options. Since it seems inappropriate to assume
that option holders would act irrationally, no adjustment was made, in 2003, to
dilute EPS for out-of-the-money share options and as there are no other diluting
future share issues, diluted EPS equals basic EPS.
An adjusted earnings per share value is presented after adding back the
amortisation of goodwill of #438,000 (2003: after adding back the amortisation
of goodwill and the operating exceptional item, net of taxation of #632,000).
This has been presented in order to provide comparability with other companies.
5. Net cash flow from operating activities
2004 2003 Year ended
30 Sept 2003
#000 #000 #000
Operating profit/(loss) 743 197 (555)
Release of government grant - (104) (104)
Amortisation of issue costs 26 21 39
Amortisation of goodwill 438 438 876
Depreciation 449 522 977
(Profit)/loss on disposal (17) (158) 23
of fixed assets
Changes in
Stocks (66) (466) 518
Debtors (629) 855 2,671
Creditors 504 52 (2,259)
Net cash flow from
operating activities. 1,448 1,357 2,186
6. Share Capital
In November 2003 the company successfully raised #6,434,000 (net of expenses) of
new equity by means of a placing and open offer of 11,620,572 at 60.0 pence per
new ordinary share.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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