RNS Number:4655U
Deltron Electronics PLC
22 November 2005
For immediate release 22 November 2005
DELTRON ELECTRONICS PLC
PRELIMINARY RESULTS
Deltron Electronics plc (LSE: DET), the specialist electronic component
solutions provider, is pleased to announce its financial results for the year
ended 30 September 2005.
Business highlights
* Completed three acquisitions during the year in the UK and Germany;
Quiller, Deltrona and BES
* First China office opened - March 2005
Financial highlights
* Sales increased to #67.0m (2004: #65.7m) +2%
* Profit before goodwill amortisation, operating exceptional items +25%
and tax: #2.5m (2004: #2.0m)
* Profit before tax after goodwill amortisation and operating exceptional
items: #0.8m (2004: #1.1m)
* Gross margins up at 33.2% (2004: 32.6%)
* Adjusted EPS of 4.6p (2004: 3.7p) +24%
* Basic EPS of 0.9p (2004: 1.5p)
* Net debt at #11.3m after the three acquisitions (2004: #7.3m)
* Gearing 61% (2004: 38%)
* Second interim dividend increased to 1.386p (2004: 1.287p) +8%
Post Balance Sheet Event
On 26 October 2005 the boards of Abacus Group plc and Deltron jointly announced
that they had reached agreement on the terms of a recommended all share offer
for Abacus to acquire the entire share capital of Deltron. The acquisition is to
be implemented by way of a Court approved scheme of arrangement pursuant to
section 425 of the Companies Act 1985.
Commenting on the results, David Potter, Chairman, said:
"Deltron has made substantial progress over the last 12 months with profits up
25% to #2.5m before tax, operating exceptionals and goodwill amortisation. The
combination of Deltron and Abacus will enable us to offer to our customers a
broader product range and an increased market to our suppliers. We are
confident that the investments we have made this year combined with our clear
market focus will stand us in good stead during the next 12 months despite the
subdued European economic conditions."
For further information please contact
Deltron Electronics plc Tel: 01638 561156
Christopher Sawyer, Derek O'Neill
Buchanan Communications Tel: 020 7466 5000
Tim Anderson/Mary-Jane Johnson
22 November 2005
DELTRON ELECTRONICS plc
PRELIMINARY RESULTS
Chairman's Statement
CHAIRMAN'S STATEMENT
As your new Chairman I am pleased to report that the last year has been another
year of substantial progress for Deltron with profits up 25% to #2.5m before
tax, operating exceptionals and goodwill amortisation. Following three
acquisitions in the year we incurred #0.8m (2004: Nil) of operating exceptional
items, goodwill amortisation was #0.9m (2004: #0.9m) resulting in #0.8m pre tax
profit (2004: #1.1m)
During the year we invested for growth with three bolt-on acquisitions
increasing our market share in Europe and opened our first office in China. The
Electronic Component market recovery as reported at the end of 2003/4 faded as
the year progressed, but, despite this backdrop we have continued to make good
progress this year by improving gross margins and expanding our market share.
PROPOSED RECOMMENDED OFFER
On 26 October 2005, the Boards of Abacus Group plc and Deltron jointly announced
that they had reached agreement on the terms of a recommended all share offer by
Abacus to acquire the entire issued share capital of Deltron, to be implemented
by way of a Court approved scheme of arrangement pursuant to section 425 of the
Companies Act 1985.
I believe the combination of Abacus and Deltron represents an exciting
opportunity to capitalise on the strengths of both groups and consequently,
together with the rest of the Deltron Board, recommend shareholders to vote in
favour of the offer at an Extraordinary General Meeting to be held on 15
December.
Under the terms of the offer, Deltron shareholders will receive 0.6432 new
ordinary shares in Abacus for each ordinary share in Deltron held, resulting in
Deltron shareholders holding approximately 38.5 per cent of the enlarged Abacus/
Deltron group following the offer. The offer is conditional upon, inter alia,
the approval of Deltron shareholders at a meeting convened by the High Court and
the subsequent EGM both to be held on 15 December, as well as the approval of
Abacus shareholders and the High Court. A Scheme Document setting out full
details of the offer, together with notices of the court convened meeting, the
Deltron EGM and the expected timetable, will be posted to Deltron shareholders
today.
ACQUISITIONS
During the year Deltron acquired three businesses in line with our strategy of
increasing our product offering within the geographical regions we operate.
These acquisitions generated #3.8m of turnover in the year. Quiller Holdings
Limited, a UK distributor of electromechanical components was acquired in
November 2004 for a net consideration of #2.3m and has already been fully
integrated into our UK operation. Deltrona Vertriebsgesellschaft fur
elektronische Bauelemente GmbH of Germany, a specialist distributor of
electromechanical components to the manufacturing industry, was acquired in July
2005 for a net consideration of #2.3m. In July 2005 the business and assets of
BES Electronics Limited, a well-respected supplier of products to the media and
broadcasting industry, were purchased for a net consideration of #0.5m.
FINANCIAL PERFORMANCE
Total turnover increased 2% to #67.0m from #65.7m. Gross margins continued
their recovery, improving to 33.2% from 32.6% last year. We continued to apply
strict controls on operating costs and in our management of working capital in a
year where interest rates fell. This resulted in interest costs 9% lower than
last year despite our acquisition programme. Gearing (being net debt expressed
against net assets) at 30 September 2005 was 61%, up from 38% and net debt rose
#4.0m to #11.3m (2004: #7.3m) significantly less than the #4.9m we expended on
acquisitions. A profit after tax of #0.4m was produced (2004: #0.6m) after the
exceptional costs incurred in restructuring the acquisitions made during the
year.
Strong cash inflow from operating activities at #3.5m, against #3.4m in 2004,
was achieved during the year, which we feel represents a good performance.
DIVIDEND
The Board announced on 26 October 2005 a second interim dividend of 1.386 pence
per Deltron share in lieu of the final dividend (1.287p in 2004). As explained
in the documents posted to all shareholders today, relating to the Abacus offer
by way of a scheme of arrangement, the dividend will be paid shortly after the
scheme becomes effective to those shareholders on the register on the scheme
effective date.
This brings the total for the year to 2.000p (2004: 1.872p) an increase of 6.8%
in the year (6.7% in 2004). The continued dividend growth reflects both the
performance in the year under review and the Board's expectations for the coming
year. There were 41,408,194 Ordinary Shares in issue on 30 September 2005.
BOARD CHANGES
Paul Gourmand retired as Chairman of the Board on 7 October 2005. On behalf of
the Board I would like to thank Paul for 12 years of valued advice and support
to the management and staff. The Board is deeply appreciative of his
significant contribution to the business over the years and we wish him a long
and happy retirement.
PROSPECTS
The strong operational performance of Deltron is set against a challenging
economic environment. Interest rates in Europe appear to have peaked as do oil
prices, which should dampen down European inflationary pressures, however rising
costs in China may filter through to customers. There is no certainty to the
outlook, but the climate looks reasonable, our order book continues at 2.5
months of sales and is 4% higher than last year. Turnover, including
acquisitions, in the last financial year increased 2% on 2004, growth in 2006
will come from the full year contributions from acquisitions made in the summer
of 2005. We expect our investment in a China office will enable us to gain
advantage from the enormous expansion in that region.
Although it is still very early in the new financial year, trading in the first
month across Europe is broadly in line with the Board's expectations. We are
confident that the investments we have made this year combined with our clear
market focus will stand us in good stead in the next 12 months despite the
subdued European economic conditions.
We acknowledge the fine relationships with our customers and suppliers, which
played a key role in our continued growth.
Finally, I would like to thank the staff, for their significant contribution
over the year. Their efforts have enabled the Deltron group to report such a
good performance.
D R W Potter
Chairman
21 November 2005
Group Profit and Loss Account
for the year ended 30 September
2005 2004
Before 2005 Before 2004
Goodwill Goodwill Goodwill Goodwill
And And And And
Operating Operating Operating Operating
Exceptional Exceptional 2005 Exceptional Exceptional 2004
Items Items Total Items Items Total
#000 #000 #000 #000 #000 #000
Turnover
Existing Operations 63,185 - 63,185 65,709 - 65,709
Acquisitions 3,829 - 3,829 - - -
---- ---- ---- ---- ---- ----
67,014 - 67,014 65,709 - 65,709
Cost of Sales (44,745) - (44,745) (44,290) - (44,290)
---- ---- ---- ---- ---- ----
Gross profit 22,269 - 22,269 21,419 - 21,419
Operating Expenses
Selling & distribution (8,601) - (8,601) (8,410) - (8,410)
Administration (10,498) (1,722) (12,220) (10,279) (876) (11,155)
---- ---- ---- ---- ---- ----
(19,099) (1,722) (20,821) (18,689) (876) (19,565)
Operating profit being
profit/(loss) on
ordinary activities
before interest
Existing Operations 2,882 (876) 2,006 2,730 (876) 1,854
Acquisitions 288 (846) (558) - - -
---- ---- ---- ---- ---- ----
3,170 (1,722) 1,448 2,730 (876) 1,854
Interest payable and (682) - (682) (748) - (748)
similar charges
Interest receivable & 37 - 37 30 - 30
similar income
---- ---- ---- ---- ---- ----
Net finance costs (645) - (645) (718) - (718)
---- ---- ---- ---- ---- ----
Profit/(loss) on
ordinary activities
before taxation 2,525 (1,722) 803 2,012 (876) 1,136
Tax on profit/(loss) on
ordinary activities (632) 195 (437) (554) - (554)
---- ---- ---- ---- ---- ----
Profit/(loss) after 1,893 (1,527) 366 1,458 (876) 582
taxation
---- ---- ---- ----
Dividends (NOTE 4) (828) (773)
---- ----
Loss retained for the (462) (191)
year
---- ----
Earnings per share - basic and diluted 0.9p 1.5p
(NOTE 3)
---- ----
Adjusted earnings per share - basic and diluted 4.6p 3.7p
(NOTE 3)
---- ----
All activities derive from continuing operations.
Statement of total recognised gains and losses
For the year ended 30 September
2005 2004
#000 #000
Profit for the period 366 582
Exchange differences (182) 213
---------- ---------
Total Gains and Losses recognised during period 184 795
---------- ---------
Movement in Shareholders' Funds
For the year ended 30 September
Note 2005 2004
#000 #000
Opening shareholders' funds 18,982 12,547
---------- ----------
Retained loss for the period (462) (191)
Share capital issued 6 272 6,413
Exchange differences (182) 213
---------- ---------
(Decrease)/increase in shareholders' funds (372) 6,435
for the period
---------- ---------
Closing shareholders' funds 18,610 18,982
---------- ---------
Group Balance Sheet
As at 30 September
2005 2004
#000 #000
Fixed assets
Intangible assets 17,349 13,922
Tangible assets 2,747 2,734
------- --------
20,096 16,656
Current assets
Stocks 8,546 8,815
Debtors 13,997 13,607
Cash at bank and in hand 3,974 4,633
------- --------
26,517 27,055
Creditors: amounts falling due within one year (17,326) (17,073)
------- --------
Net current assets 9,191 9,982
------- --------
Total assets less current liabilities 29,287 26,638
Creditors: amounts falling due after more than (10,275) (7,287)
one year
Provision for liabilities and charges (402) (369)
------- --------
Net assets 18,610 18,982
======= ========
Capital and reserves
Called up share capital 2,070 2,054
Share premium 21,035 21,035
Other reserve 256 -
Profit and loss account (4,751) (4,107)
------- --------
Equity shareholders' funds 18,610 18,982
======= ========
Group Cash Flow Statement
For the year ended 30 September
2005 2004
#000 #000
Net cash inflow from operating activities 3,521 3,388
(NOTE 5)
Returns on investment and servicing of
finance
Interest received 37 30
Interest paid (675) (808)
Interest element of finance lease rental (15) (15)
payments ------- -------
(653) (793)
------- -------
Taxation (509) 507
Capital expenditure
Purchase of tangible fixed assets (713) (522)
Sale of tangible fixed assets 52 128
------- -------
(661) (394)
------- -------
Acquisitions (4,903) (1,805)
Equity dividends paid (787) (584)
------- -------
Cash (outflow)/inflow before financing (3,992) 319
Financing 3,158 3,689
------- -------
(Decrease)/increase in cash (834) 4,008
======= =======
Reconciliation of Cash Flow to Movement in Net Debt
2005 2004
#000 #000
Net debt at 1 October (7,290) (14,070)
-------- --------
(Decrease)/increase in cash (834) 4,008
Cash from change in debt and lease (3,158) 2,724
financing -------- --------
Change in net debt resulting from cash (3,992) 6,732
flows
Inception of finance leases (13) (41)
Amortisation of issue costs (68) (129)
Exchange differences 39 218
-------- --------
Movement in net debt (4,034) 6,780
-------- --------
Net debt at 30 September (11,324) (7,290)
======== ========
Notes to the Accounts
1. Financial Information
The financial information set out above does not constitute the company's
statutory accounts for the years ended 30 September 2005 or 2004, but is derived
from those accounts. Statutory accounts for 2004 have been delivered to the
Registrar of companies and those for 2005 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under s237(2) or
(3) Companies Act 1985.
The Annual Report and Accounts will be posted to shareholders during January
2006. Copies of the Annual Report and Accounts and of this announcement will be
available from the Company's registered office: Cheveley House, Fordham Road,
Newmarket, CB8 7XN.
2. Goodwill and exceptional items
Goodwill and operating exceptional items included within administration costs is
a charge of #930,000 (2004: #876,000) in respect of the amortisation of goodwill
for the period. In addition, there is a charge of #14,000 (2004: Nil) in
respect of the amortisation of other intangible assets. The operating
exceptional item of #778,000 relates to restructuring costs. This was for the
closure and relocation of the Quiller Electronics operation in Bournemouth and
the BES Electronics operation in Shepton Mallett when these were merged with the
existing UK businesses in Scunthorpe. In addition, there are restructuring
costs at Deltrona in Germany. This was relieved by a tax credit of #195,000.
3. Earnings per share
Earnings per share are calculated in accordance with Financial Reporting
Standard 14 (FRS 14). The calculation of earnings per share is based on the
profit attributable to equity shareholders of #366,000 (2004: #582,000) and
41,379,254 (2004: 39,262,624) shares being the daily average of the number of
shares in issue during that period.
The diluted earnings per share is based on weighted average of 41,407,935 shares
after allowing for the exercise of share options. The number of qualifying
options is insufficient to dilute the earnings per share.
An adjusted earnings per share value is presented after adding back the
operating exceptional items and amortisation of goodwill, net of taxation of
#1,527,000 (2004: #876,000 after adding back the amortization of goodwill).
This has been presented in order to provide comparability with other companies.
4. Dividends
An interim cash dividend of 0.614p per ordinary share was declared during the
year and paid on 19 August 2005. The directors recommend payment of a further
interim dividend of 1.386p per ordinary share, to be paid to shareholders
shortly after the scheme of arrangement becomes effective, to those shareholders
on the register on the scheme effective date, bringing the total dividend for
the year to 2.0p per ordinary share.
5. Net cash inflow from operating activities
2005 2004
#000 #000
Operating profit 1,448 1,854
Amortisation of issue costs 68 129
Amortisation of intangible assets 944 876
Depreciation 689 789
Profit on disposal of fixed assets (24) (21)
Changes in
Stocks 1,420 (880)
Debtors 632 (1,079)
Creditors (1,656) 1,720
-------- -------
3,521 3,388
======== =======
6. Share Capital
In November 2004 the company issued #272,000 (net of expenses) of new equity as
part consideration for the acquisition of Quiller Holdings Limited ("Quiller").
The value attributed to this transaction in excess of the nominal share capital
has been taken to Other Reserves as required by S131 of the Companies Act.
7. Acquisitions
On 1 November 2004, the Group acquired 100% of the share capital of Quiller, the
holding company of Quiller Electronics Limited, a specialist distributor of
electromechanical components to the manufacturing industry, for a consideration
of #2.3m being inclusive of shares, expenses and net of cash acquired.
The consideration for the acquisition was satisfied by approximately #2.8m in
cash on completion and approximately #276,000 through the allotment, credited as
fully paid, of 340,740 new ordinary shares in Deltron ("the New Deltron Shares")
at an issue price of 81 pence per share.
In the year ended 31 December 2003, Quiller, which was founded in 1991, recorded
group turnover of approximately #4.2m and profit before interest and tax of
approximately #246,000 with strong 32% gross margins. Since its formation,
Quiller has extended its product range to represent a comprehensive selection of
international component manufacturers, a number of which have exclusivity in the
UK. Quiller brings with it a number of new UK franchises including additional
products for the aviation and security markets. Introduction of these products
into the Deltron European distribution network is likely over the medium term.
On 15 July 2005, the Group acquired 100% of the share capital of Deltrona
Vertriebsgesellschaft fur elektronische Baulemente mbH (Deltrona) of Germany, a
specialist distributor of electromechanical components to the manufacturing
industry for a consideration of #2.3m inclusive of expenses and net of cash
acquired. Deltrona, which was founded in 1975, operates from Stuttgart, which
is complimentary to Deltron's existing presence in Munich. Deltrona had a
turnover of #4.7m for the year ended 31 December 2004 and reported a profit
before interest and tax of #180,000. Deltrona is a well-established German
regional distributor, principally for Molex and Amphenol connector products,
which are the World's number 2 and 3 leading connector manufacturers. Deltrona
supplies these products to a broad and well established customer base of leading
German industrial businesses.
On 18 July 2005, the Group acquired the business and certain assets of BES
Electronics Limited, a well respected specialist supplier of products to the
media and broadcasting industry, for a consideration of #0.5m inclusive of
expenses. The consideration for the acquisition was satisfied by #0.4m in cash
on completion with the balance to be paid in cash on agreement of completion
accounts. In the year ended 31 December 2004, BES, which was founded in 1982,
recorded turnover of approximately #0.8m. BES fits very well with Deltron's
existing Media and emediamax range of broadcasting products, which is operated
out of Scunthorpe. BES supplies a number of leading companies including the
BBC.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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