RNS Number:1938G
Deltron Electronics PLC
09 December 2004
For Immediate Release 9 December 2004
DELTRON ELECTRONICS plc
PRELIMINARY RESULTS
Financial Highlights:
* Profit before tax, operating exceptionals and goodwill amortisation
up 233% to #2.0m (2003: #0.6m)
* Profit before tax was #1.1m (2003: loss of #1.5m)
* Gross margins for the 12 months improved to 32.6% (2003: 31.7%)
* Interest costs #0.7m - 38% lower than 2003
* Strengthened balance sheet following #6.4m fund raising in October
2003
* Gearing reduced to less than 40% (2003:112%)
* Adjusted basic EPS 3.7p (2003: 1.6p)
* Basic EPS 1.5p (2003: loss 4.8p)
* Net cashflow from operating activities up 55% to #3.4m (2003: #2.2m)
* Final dividend increased by 10% to 1.287p (2003: 1.17p)
Post year end business highlights:
* Acquisition of Quiller Holdings for #2.3M
Paul Gourmand, Chairman of Deltron, commented:
"An improved financial performance across all areas of the business led to two
profit upgrades, so it is doubly pleasing to meet these revised expectations of
#2.0m before tax and goodwill amortisation."
"The Company has a strong order book and a strengthened balance sheet. The
acquisition of Quiller strengthens our position in the UK market and is earnings
enhancing this year. The Board recommends a 10% increase in the final
dividend, this resumption of dividend growth reflects the performance in the
year under review and the Board's expectations for the coming year."
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
9 December 2004
DELTRON ELECTRONICS plc
PRELIMINARY RESULTS
Chairman's Statement
I am pleased to be able to report that the recovery in the first half which saw
Deltron return to profitability continued and accelerated in the second half of
our financial year. This rising trend led to two profit upgrades, so it is
doubly pleasing to meet these revised expectations of #2m before tax and
goodwill amortisation. Profit after tax was #0.6m, significantly better than
the loss of #1.4m in 2003.
Our order intake for the year was up 5% on last year, with the order book
representing 2.5 months of sales. The Group is also in a strong position to
supplement organic growth with small bolt-on acquisitions following the #6.4m
fund raising in October 2003 which strengthened our balance sheet; consequently
interest costs, gearing and debt all saw significant improvements.
Since the year end Deltron acquired Quiller Holdings Limited a UK distributor of
electromechanical components for a net consideration of #2.3m. Quiller will be
earnings enhancing in this current financial year and plans are well advanced
for its integration into our UK operation.
In a year of modest sales growth, tight control of overheads and further
improved margins Deltron has been able to make the most of its strong
operational gearing. As the year progressed it was very pleasing to be able to
report an improved financial performance across all areas of the business.
Financial Performance
Turnover increased 3% mostly in the second half, to #65.7m from #64.0m. Profit
before tax, operating exceptionals and goodwill amortisation for the year was
#2.0m compared to #0.6m in 2003. Profit before tax was #1.1m compared with a
loss of #1.5m in 2003.
Gross margins continued their recovery, improving to 32.7% in the second six
months from 32.5% in the first half and a low of 31.3% in the first half of last
year. Interest costs of #0.7m (2003: #1.1m) were 38% lower compared to our last
financial year. Gearing was under 40%, down from 112% and net debt had virtually
halved at #7.3m (2003: #14.1m).
Strong cash inflow from operating activities at #3.4m against #2.2m in 2003, was
achieved during the year which we feel represents a good performance.
Dividend
The Board recommends a 10% increase in the final dividend to 1.287p (2003 :
1.17p) to be paid on 25 February 2005 to shareholders on the register on 28
January 2005. This brings the total for the year to 1.872p (2003 : 1.755p) an
increase of 6.7% in the year. The resumption of dividend growth reflects both
the performance in the year under review and the Board's expectations for the
coming year.
Following the Placing and Open Offer in October 2003 there were 41,067,454
Ordinary Shares in issue on 30 September 2004.
Board Changes
Jerry Vaughan joined as the Managing Director of Deltron France and the Board
on 6 April 2004. During a 27 year career in distribution, Jerry spearheaded the
development programme of Electro-Components in France, building the business
rapidly over a 10 year period.
Werner P Hohmann joined the Board on 1 July 2004, he is the Managing Director of
Deltron in Germany and Austria. Werner has been with the Group since the
acquisition of the German business in November 1999.
In June 2004 Pierre Romano, a non executive director retired from the Board.
Pierre made a valued contribution to the Group and the development of our
Italian operation over a number of years and we wish him a happy retirement.
Francois Feldman, the founder of our French operations moved from an executive
to a non-executive role at the end of July 2004. We are pleased to be able to
retain Francois's experience and sound advice.
Sir Ivor Cohen a non-executive director retired from the board on 31 December
2003 after 9 years of valued advice and encouragement and we wish him a happy
retirement
The changing scene on the Deltron Board serves to underline the pan-European
nature of our Group and our determination to ensure that the construction of the
Board reflects the shape of Deltron across all its operations.
Prospects
The strong operational performance of Deltron is set against a stable economic
environment. The Group operates in 13 European countries, all of which forecast
GDP growth in 2005. Interest rates appear to be close to their peak as do oil
prices. There is no certainty to the outlook, but the climate looks reasonable.
Organic sales growth in the last financial year was modest, a trend we see
continuing. Following growth of 5% in the second half of 2004, part of which was
due to customers increasing their stockholding we anticipate continued growth in
2005. Current trading in the first two months is in line with market
expectations Through acquisition-driven expansion we will seek to add
businesses which contribute greater critical mass to existing territories, bring
new franchises and can be integrated into our existing businesses.
Finally, I would like to thank one of the cornerstones of Deltron, its staff for
their contribution over the year. It is heartening to see all their efforts
reflected in such a good performance.
P R Gourmand
Chairman
8 December 2004
DELTRON ELECTRONICS plc
Operational Review
The Deltron Group is a leading European, value-added electromechanical component
distributor providing specialist design-in sales and marketing services for
international suppliers of electronic components. These include alarms,
switches, connectors, sensors and magnetics. Our design-in approach generates
binding customer loyalty and is the reason we have an exceptionally long order
book for a distributor at 2.5 months of sales. Deltron's value added approach
and geographical coverage provides specialist knowledge and support to customers
on a pan-European basis. These services are supported by dedicated in-house
manufacturing and sub-assemblies which, together, enables Deltron to give a
focussed approach as a specialist in a European market sector of some Euro9
Billion. Design-in is the process by which Deltron's sales engineers work with
customers and suppliers to provide solutions which meet the specific technical
and performance needs of the customers.
The Deltron Group has a network of 18 operations in 13 countries - from Ireland
to Norway - giving Deltron coverage of over 80% of the European
electromechanical components market. This degree of market penetration has led
to some manufacturers appointing Deltron as their sole pan-European distributor.
Balance also comes with market reach; no customer currently represents more than
3.5% of turnover and no supplier is bigger than 13% of the Group's sales.
Deltron's Performance
Sales revenue increased in the year to #65.7m up from #64.0m - a 3% increase, we
stated in last year's report that we expected to be entering a year of growth
and it is satisfying that our results confirm this view. Following 3 years of
declining sales in our industry this growth is most welcome.
The order book in the first half pointed to better market conditions and whilst
sales revenue in the first half was only up 0.3% the second half was up 5%. Some
of this improvement has been customers increasing their stock holdings to
reflect market conditions; this should be regarded as the normal market step
change associated with an improving market. Orders taken in the year were 5%
higher than last year, resulting in our order book being 2.5 months of sales at
the year-end.
Operational performance improved during the year as evidenced by key management
ratios; stockturn, margins, debtor and credit days, all of which are better than
the average for our industry. This achievement is entirely due to the
experience and motivation of our employees who are all focussed and determined
to achieve best in class results.
Development
During October 2004, we extended our European reach through the opening of a
sales office in Norway, which will be supported by our existing Nordic
operation. We continue to invest for the future; implementation of a new
Management Information System was started in the summer for the Nordic region
and will go live early in 2005.
In addition to our organic growth and operational gearing benefits of increased
profitability, the recent acquisition of Quiller Holdings Limited will further
enhance operational efficiency by its integration into our UK operations.
Quiller's sales were #4.2m and profit before interest and tax was #0.3m in 2003
and has a beneficial mix of suppliers and customers in addition to good gross
margins. It will expand Deltron's exposure to the security and aviation sectors.
Its warehouse and back office functions are currently being moved from
Bournemouth to Scunthorpe.
It was very pleasing that recently Deltron was appointed a pan-European
distributor by ITT Cannon (a global US based supplier) for its connector range.
Additionally, we are negotiating to obtain a number of new franchises, which
will further strengthen both our market and customer position.
Environment
Deltron acknowledges the importance of effective protection of the environment
and is committed to ongoing improvements in its environmental performance.
Currently, we are engaged in providing a leading position on the subject of
RoHS (the restriction of the use of hazardous substances in electrical and
electronic equipment) and WEEE (Waste Electrical and Electronic Equipment
Directive) both effective in Europe by 1 July 2006. Already negotiations with
our suppliers and customers means that we are well advanced on this subject with
a very informative web site for all our business partners to help understand
Deltron's position.
Additionally, with respect to the European Information and Consultation
Directive effective in the UK from April 2005, we have set up a combined
management/employee team who, in conjunction with ACAS, have provided the
necessary training programmes to provide a Works Council with the required
skills and this is in place 12 months ahead of legislation.
Deltron's Employees
People are key to every business. At the year-end we employed circa 350 people,
over 60% of whom are customer facing. We have invested in ensuring that Deltron
has highly-trained staff and is able to attract some of the best talent in our
industry.
Our training programmes cover all levels and the majority of our employees,
ranging from improved key-board skills, sales development, product knowledge
together with general management courses at a leading business school. Equally,
we have put in place an appropriate succession plan and strengthened our Board.
Everyone at Deltron is determined to reap the benefits of an improved economic
outlook.
Current Position and Outlook
Organic growth at 3% is modest, but after years where the market contracted by
around 30% there is now a belief that we are once again in an expanding sector.
Our strengthened balance sheet enables your Board to evaluate the benefits of
small bolt-on acquisitions to further improve our market share, profitability
and strength in local markets.
Where strong financial returns can be generated, we will continue to invest. It
has been a good year, generating a healthy profit. Caution over the strength of
the recovery is sensible. A year ago, I said that we had structured the business
to maximise the return from a sector recovery; I congratulate all in the Group
for what has been an excellent performance.
C J Sawyer
Group Chief Executive
8 December 2004
DELTRON ELECTRONICS plc
Financial Review
Sales
Sales revenue increased in the year to #65.7m up from #64.0m - a 3% increase
over the previous year. Trading in the first two months of 2005 is in line with
market expectations.
Currency
60% of our businesses are sited in Euro denominated countries, and as a result
year on year variances can arise when translated into sterling. During the year
we experienced Sterling about 6% weaker against the Euro in the first four
months and circa 4% stronger in the final eight months of the year compared with
the preceding period. The dollar was about 12% weaker against sterling
throughout the year. Overall the net effect of these movements was minimal on
our revenue and profit before interest and tax. Currency fluctuations are an
ongoing commercial challenge, one that our local businesses have substantial
experience in managing. By maintaining a high stock turn, avoiding speculative
currency positions and by having commercial agreements adjustable for currency
movements outside of acceptable boundaries we continue to minimise the financial
risk. The portfolio of products we sell originate from North America, Far East
and Europe, enabling us to meet our customers' requirements and not leaving us
exposed to any one currency.
Margins
Gross margins for the first six months were 32.5% and improved to 32.6% for the
full year from a low of 31.3% last year, as can be seen below. Margins at 32.6%
are at the historic average of the business.
Expenses
Operating expenses, excluding goodwill amortisation, for the year were #18.7m
against #18.8m last year, being #9.2m in H1 and #9.5m in H2. As a proportion of
sales, these reduced to 28.4% from 29.3% in the previous year because of the
improvement in sales. Operating exceptional items were nil in the year compared
to #1.2m last year.
Interest costs in 2004 were #0.7m (2003: #1.1m), 38% lower than the previous
year reflecting the lower gearing following the share placing in October 2003.
Gearing at 30 September 2004 was under 40% down from 112% in 2002 with interest
cover increased to 3.8 times in 2004 from 1.5 times last year.
Profit
Profit before tax, operating exceptionals and goodwill amortisation ("PBTA") for
the year to 30 September 2004 was #2.0m against #0.4m in the previous year
(#0.6m if the #0.2m profit on the sale of properties in 2003 is included). Of
this #1.6m improvement #1.0m was due to higher revenues and gross margins with
the balance predominantly being lower interest costs.
Profit before tax was #1.1m compared with a loss of #1.5m in 2003. The
effective tax rate measured as a percentage of the profit before tax operating
exceptionals and goodwill amortisation is 27.5% (2003: 17.7%). Profit after tax
was #0.6m (2003: loss of #1.4m).
Balance Sheet
Fixed assets reduced during the year by #0.9m to #16.7m, #0.4m of the reduction
is because depreciation exceeded capital expenditure, #0.9m was the amortisation
of goodwill and the balance was primarily due to foreign exchange movements. The
balance sheet shows net debt at 30 September 2004 was #7.3m down from #14.1m at
30 September 2003.
Stock turn debtor days and creditor days are all shown in the table below. The
lower stock turn reflecting the additional investment made in the second half in
stock, supported by increased orders.
2004 2003
Stock turn 5.6 5.9
Debtor days 58 58
Creditor days 54 53
Despite the increase in stock the overall investment in working capital only
increased by #0.3m.
2004 2003
#m #m
Change in stock (0.9) 0.5
Change in debtors (1.1) 2.7
Change in creditors 1.7 (2.3)
Change in working capital (0.3) 0.9
Cashflow
The cash inflow from operating activities improved during the year to #3.4m from
#2.2m in 2003. The increased investment in stock at the end of 2004 reflects the
higher stock holding on the back of higher customer orders. Debtors increased
#1.1m reflecting the strong sales achieved in the second half of the year and
was offset by the #1.7m increase in creditors. Our overall investment in working
capital is tightly managed, at the end of the year it was 19% of annual sales
revenue unchanged from last year. During the year the final deferred
consideration in relation to acquisitions made in 2001 of #1.7m was paid.
The Placing and Open Offer in October 2003 raised #6.4m and helped reduce
gearing from 113% to under 40% at 30 September. At the year end cash was #4.6m
and committed undrawn banking facilities were #8.8m.
Post Balance Sheet Event
On the 29 October 2004 Deltron acquired the whole share capital of Quiller
Holdings Limited a UK distributor of electromechanical components. The
consideration was #3.2m and Quiller at completion had cash of #0.9m giving a net
consideration of #2.3m. At completion #2.6m was paid in cash and #0.3m was paid
by the issue of 340,740 of Deltron Electronics plc shares at 81 pence. The
balance of #0.3m is payable upon agreement of the completion accounts. The
acquisition of Quiller will be earnings enhancing in the year ending 30
September 2005.
D O'Neill
Group Finance Director
8 December 2004
Group Profit and Loss Account
for the year ended 30 September
2004
Before 2004 2003 2003
Goodwill Goodwill Before Goodwill
And And Goodwill And
Operating Operating And Operating Operating
Exceptional Exceptional 2004 Exceptional Exceptional 2003
Items Items Total Items Items Total
#000 #000 #000 #000 #000 #000
Turnover 65,709 - 65,709 64,019 - 64,019
Cost of Sales (44,290) - (44,290) (43,742) - (43,742)
---- ---- ---- ---- ---- ----
Gross profit 21,419 - 21,419 20,277 - 20,277
Operating Expenses
Selling & distribution (8,410) - (8,410) (8,438) - (8,438)
Administration (10,279) (876) (11,155) (10,314) (2,080) (12,394)
---- ---- ---- ---- ---- ----
Operating Profit/(loss) 2,730 (876) 1,854 1,525 (2,080) (555)
Profit on sale of properties - - - 188 - 188
---- ---- ---- ---- ---- ----
Profit/(loss) on ordinary 2,730 (876) 1,854 1,713 (2,080) (367)
activities be before interest
Interest payable and similar (748) - (748) (1,167) - (1,167)
charges
Interest receivable & similar 30 - 30 14 - 14
income
---- ---- ---- ---- ---- ----
Net finance costs (718) - (718) (1,153) - (1,153)
---- ---- ---- ---- ---- ----
Profit/(loss) on ordinary 2,012 (876) 1,136 560 (2,080) (1,520)
activities before taxation
Tax on profit/(loss) on ordinary (554) - (554) (99) 213 114
activities
---- ---- ---- ---- ---- ----
Profit/(loss) after taxation 1,458 (876) 582 461 (1,867) (1,406)
---- ---- ---- ----
Dividends (773) (517)
---- ----
Loss retained for the year (191) (1,923)
---- ----
Earnings/(loss) per share - 1.5p (4.8p)
basic and diluted
---- ----
Adjusted earnings per share - 3.7p 1.6p
basic and diluted
All activities derive from continuing ---- ----
operations.
Group Statement of Total Recognised 2004 2003
Gains and Losses for the year ended
30 September
#000 #000
Profit/(loss) for the year 582 (1,406)
Exchange adjustments 213 (366)
---- ----
Total gains and losses recognised 795 (1,772)
related to the year
---- ----
Group Balance Sheet
As at 30 September
2004 2003
#000 #000
Fixed assets
Intangible assets 13,922 14,540
Tangible assets 2,734 3,099
---- ----
16,656 17,639
Current assets
Stocks 8,815 8,065
Debtors 13,607 14,093
Cash at bank and in hand 4,633 1,565
---- ----
27,055 23,723
Creditors: amounts falling due within one
year (17,073) (19,016)
---- ----
Net current assets 9,982 4,707
---- ----
Total assets less current liabilities 26,638 22,346
Creditors: amounts falling due after more
than one year (7,287) (9,380)
Provision for liabilities and charges (369) (419)
---- ----
Net assets 18,982 12,547
====== ======
Capital and reserves
Called up share capital 2,053 1,472
Share premium 21,036 15,204
Profit and loss account (4,107) (4,129)
---- ----
Equity shareholders' funds 18,982 12,547
====== ======
The accounts were approved by the Board of Directors on 8 December 2004 and were
signed on its behalf by:
D O'Neill
Director
Group Cash Flow Statement
For the year ended 30 September
2004 2003
#000 #000
Net cash inflow from operating activities 3,388 2,186
Returns on investment and servicing of finance
Interest received 30 14
Interest paid (808) (1,221)
Interest element of finance lease rental payments (15) (24)
---- ----
(793) (1,231)
---- ----
Taxation 507 291
Capital expenditure
Purchase of tangible fixed assets (522) (405)
Sale of tangible fixed assets 128 1,746
---- ----
(394) 1,341
---- ----
Acquisitions (1,805) (769)
Equity dividends paid (584) (517)
---- ----
Cash inflow before financing 319 1,301
Financing 3,689 (3,415)
---- ----
Increase/(decrease) in cash 4,008 (2,114)
====== =======
Reconciliation of Cash Flow to Movement in Net Debt
2004 2003
#000 #000
Net debt at 1 October (14,070) (14,747)
---- ----
Increase/(decrease) in cash 4,008 (2,114)
Cash from change in debt and lease financing 2,724 3,491
---- ----
Change in net debt resulting from cash flows 6,732 1,377
Inception of finance leases (41) -
Amortisation of issue costs (129) (39)
Exchange differences 218 (661)
---- ----
Movement in net debt 6,780 677
---- ----
Net debt at 30 September (7,290) (14,070)
======= =======
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 2004 or 2003, but is derived
from those accounts. Statutory accounts for 2003 have been delivered to the
Registrar of companies and those for 2004 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
2005. Copies of the Annual Report and Accounts and of this announcement will be
available from the Company's registered office: Suffolk House, Fordham Road,
Newmarket, CB8 7AA
2. Goodwill and exceptional items
Goodwill amortisation is #876,000 (2003: #876,000) relating to goodwill arising
on acquisitions made in 2000 and 2001. The operating exceptional item in 2003 of
#1,204,000 includes the cost of completing the restructuring of the UK
manufacturing business, Deltron Emcon Limited, by moving from 2 sites to a
single purpose built site, the closure of a regional sales office in the UK
distribution business Deltron UK Ltd and the restructuring of the French
manufacturing business Deltron EMC srl. This was relieved by a tax credit of
#213,000.
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 #582,000 (2003: loss of
#1,406,000) and 39,262,624 (2003: 29,415,188) 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 39,317,847 shares
after allowing for the exercise of share options. The number of qualifying
options is insufficient to dilute the earnings 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 #876,000 (2003: after adding back the amortisation
of goodwill and the operating exceptional item, net of taxation of #1,867,000).
This has been presented in order to provide comparability with other companies.
4. Dividends
An interim cash dividend of 0.585p per ordinary share was declared during the
year and paid on 20 August 2004. The directors recommend payment of a final
dividend of 1.287p per ordinary share, to be paid on 25 February 2005 to
shareholders on the register on 28 January 2005 bringing the total dividend for
the year to 1.872p per ordinary share.
5. Net cash inflow from operating activities
2004 2003
#000 #000
Operating profit/(loss) 1,854 (555)
Release of government grant - (104)
Amortisation of issue costs 129 39
Amortisation of goodwill 876 876
Depreciation 789 977
(Profit)/loss on disposal of fixed assets (21) 23
Changes in
Stocks (880) 518
Debtors (1,079) 2,671
Creditors 1,720 (2,259)
---- ----
3,388 2,186
====== ======
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKFKQFBDDABK
Debts.Co.Uk (LSE:DET)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Debts.Co.Uk (LSE:DET)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
