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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Deltron Elec. | LSE:DET | London | Ordinary Share | GB0002618410 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 262.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:8436S Deltron Electronics PLC 04 December 2003 4 December 2003 DELTRON ELECTRONICS plc PRELIMINARY RESULTS Financial Highlights: * Turnover #64.0M (2002: #65.5M) * 2% organic growth in second six months compared to first half * Gross margin in second half improved to 32% against 31.3% in first six months * Profit before interest, tax, operating exceptional items and goodwill amortisation #1.7M (2002: #2.7M) in line with expectations * Net debt reduced by #1.6M from 31 March 2003 to #14.1M * Final dividend 1.17p making total of 1.755p for the year Business Highlights: * Placing and Open Offer, after year-end, raises #6.4M net of expenses at 60p - a 2.5% discount to prevailing share price * Recent franchise wins include: Harwin, Alps, Littelfuse, Toko, Rafi and Grayhill Paul Gourmand, Chairman, Deltron, commented: "The range of products in our portfolio and the volume of product carried combined with our strong pan-European presence have contributed to Deltron becoming a leader in the supply and distribution of electromechanical components in Europe. With proceeds from our recent fund raising and a tight control on our cost base when the upturn comes we will maximise the benefit from our strong operational gearing." 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 CHAIRMAN'S STATEMENT Deltron has continued to win market share in a year in which once again tough market conditions have prevailed. Restructuring has made the Group lean and efficient without a reduction in the quality of customer service which continues to be one of our great strengths, founded as it is on our design-in approach. The improvement in the second quarter which we reported in our Interim Results unfortunately did not continue during the second six months. Despite this, a rising market share enabled the Group to hold turnover at almost the same level as last year. Gross margins improved in the second half to 32% from 31.3% in the first six months, stock turnover reached six times, which is twice the industry average and the order book was maintained at 2.5 months. Continual investment in electronic trading, business systems and the Group's IT platform have all made significant contributions to maintaining this high level of efficiency. The #6.4m, net of expenses, Placing and Open Offer approved at the EGM on 25 November 2003 has strengthened our balance sheet, this together with additional unutilised borrowing facilities of #4.1m as at the year end, mean that Deltron has #10.5m to respond to market opportunities as they arise. The funds will assist the Group in accelerating its organic growth, including the further development of our franchise network together with supporting working capital requirements when the market recovery comes. The Directors were encouraged by the support from new and existing shareholders, which we believe points to a confidence in Deltron's prospects. Since the year-end the Group have agreed new term and revolving banking facilities which carry through to 2008 and 2010. Financial Performance Turnover slipped marginally to #64.0m from #65.5m, continuing the decline seen in the previous year. This is against a market background which has seen volumes decline in the electromechanical components market by approximately 30% over the last three years. As in previous years, Deltron continues to win a substantial increase in its market share. Whilst the loss after taxation for the year was #1.4m the gross margins improvement in the second half is an excellent achievement resulting in 31.7% for the full year, this was down on last year's 32.5%. As a result operating profit before goodwill amortisation and exceptional items decreased to #1.7m from #2.7m. Interest incurred in the year was #1.2m down from #1.3m in the previous year. Operating exceptional items incurred as the business reorganises to reduce future costs were #1.2m. Goodwill amortisation for the period was #0.9m. The steady reduction in net debt continued with a fall of #0.7m during the year to #14.0m at the year-end. Following the post-year end fund raising net debt, being total debt less cash, has reduced to circa #7.6m, substantially strengthening Deltron's balance sheet. Dividend The Board recommends a final dividend of 1.17p (2002: 1.17p) to be paid on 27 February 2004 to shareholders on the register on 30 January 2004. This brings the total for the year to 1.755p (2002: 1.755p). The recommendation reflects the current performance of the Group, set against the improving balance sheet and the prospects for Deltron in 2003/2004 The 11,620,572 new Ordinary Shares issued 26 November 2003, will not rank for the final dividend above. The new Ordinary Shares will rank pari passu in all respects will all the other shares from 31 January 2004. Board Changes David Weir FCA became a non-Executive Director in September 2003 and serves on both the remuneration and audit committees. David was chief executive from 1993 to 1999 of Caird Group plc and is now a non-executive director of various companies including Dee Valley Group plc. David Weir takes over from Sir Ivor Cohen who retires from Deltron at the end of the year. Over his many years with Deltron, Sir Ivor's advice and encouragement have been invaluable. His wisdom, wit and good humour will be long appreciated. On behalf of all the Board, I would like to thank Sir Ivor for his loyal and valued service with Deltron. Prospects Recent macro economic indicators for Europe at last show a recovery. It is too early to say that this heralds an immediate upturn in our markets. However, the rate of decline has slowed and the willingness of customers to enter into long term contracts are all encouraging signs. The range of products in our portfolio and the volume of product carried combined with our strong pan-European presence have contributed to Deltron becoming a leader in the supply and distribution of electromechanical components in Europe. We will continue to keep a tight control on our cost base so that when the upturn comes we will maximise the benefit from our strong operational gearing. I would like to thank all our employees for a strong performance during another tough period. This is a people business and their contribution is appreciated and is the key to our future. P R Gourmand Chairman 3 December 2003 OPERATIONAL REVIEW 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 sub-assemblies include electromagnetic compatibility ("EMC") filters, a variety of connectors and other interconnect devices. Deltron is a balanced business in terms of operations and customers. No customer currently represents more than 3.5% of the Group's turnover and no supplier represents more than 15.5% of the Group's cost of sales. We operate in 13 countries from Ireland to Hungary, which gives Deltron coverage of over 80% of the European electromechanical components market. Importantly, our market penetration has led to some manufacturers appointing Deltron as their sole pan-European distributor. We are able to provide pan-European coverage as a result of six acquisitions in 2001. Over the last two years we have set about maximising the efficiency of the expanded Group. The rationalisation which is reflected in the exceptional item in these results includes the consolidation of UK manufacturing from two sites into one purpose-built site in Scunthorpe and the closing of a regional office, resulting in reduced costs and improved efficiency. Headcount has also been reduced from a peak of 515 employees in 2001, to approximately 380 at present. Deltron has also increased its market position across Europe over the last two years by extending franchises held in one or two countries to other countries and in some instances across our whole network. Recent franchise wins for the Group include: Harwin plc, Alps Electric Co, Ltd., Littelfuse Inc, TOKO UK Ltd, RAFI GmbH & Co, Grayhill Inc. The Board believes that Deltron's success in obtaining these new franchises has, in large part, been due to our ability to offer European coverage whilst providing a local service satisfying local needs. The Company is engaged in negotiations to get new franchises for the Group and we are confident we will progressively add to our list of products over the coming year. Design-in remains a key strength of the Group. Representatives from Deltron help customers select and incorporate the most suitable component into the design during product development. We concentrate on markets where the Group's depth of product knowledge and customer understanding combined with our reputation for supplying specialist components for customised service give us a competitive edge. Over the last year we have steadily expanded our product offering adding to a range, which has been built up over several years. We believe the differentiation from our competitors in Europe is the range of emech components we carry combined with our design-led, consultative sales process. It is this offering which attracts our wide range of customers who produce equipment from medical systems to aeroplanes and motorcars, from telecoms equipment and computers to electronic point of sale equipment and automatic cash dispensers, and from professional broadcasting equipment to factory automation. Outlook We have integrated the acquired companies, rationalised the resultant structure and now have a lean and hungry business capable of dealing with an increase in throughput with little or no increase in cost. In other words, Deltron is highly operationally geared. Our fund raising since the year-end has greatly strengthened our ability to capitalise on the opportunities, which will arise when the upturn finally takes hold. There are many indicators, which give the Board hope that the cycle may have turned. We know that the decline has slowed and that customers are gaining in confidence. The Board of Deltron, whilst recognising the decline in sales over the last three years has considerably slowed, have positioned the company so that it is not reliant upon recovery. We have structured the business to maximise the return from an upturn while optimising the performance in current conditions. We expect to continue to increase market share and to expand our franchise base. Whatever the outlook, Deltron will make the most of it. C J Sawyer Group Chief Executive 3 December 2003 FINANCIAL REVIEW The implementation of operational efficiencies and expanding the number of product franchises during the last 12 months combined with the post year end placing and open offer means the Deltron group is well placed for a recovery in the market. Revenue for the year was #64.0m, down 2.2% from the #65.5m in 2002, a credible performance given the market conditions. We advised at the time of our Interim results announcement in June 2003 that revenue for the 6 months to March 2003 was 2.8% down on the corresponding period last year against a 15% drop in 2002. It is pleasing to report that the decline for the last six months to September 2003 has shown further easing with a decline of 1.8% on the corresponding period last year. Therefore whilst talk of a turnaround is early we do appear to be at the bottom of the market cycle. The margins in the first six months of the year were 31.3% compared with 32.5% in the previous year. The margin in the second half has been increased to 32.0% giving 31.7% for the full year. Operating expenses, before Goodwill and Operating Exceptional items, were #18.7m, this is in line with last year. However, as a proportion of sales, overheads are 29.0%- up from 28.4% in the previous year because of the decline in sales. Interest costs in 2003 were 10% lower than the previous year reflecting the lower level of borrowings. Net debt at 30 September 2003 is down #1.6m since the interims as shown in the table below. The Group's gearing at the year-end was 112% and interest cover was 1.5 times. The recent share placing has subsequently reduced gearing to 40%. #'000 2003 2002 Opening Net Debt 14,747 15,163 Net Debt at Interim - 31 March 15,650 16,335 Net Debt at year end - 30 September 14,070 14,747 Net debt post placing* 7,700 Net Interest Cost 1,153 1,275 * Proforma figure using closing net debt of #14.1m less #6.4m net proceeds from the placing and open offer approved at the EGM of 25 November 2003. Profit before interest, tax, goodwill amortisation and exceptionals was #1.7m against #2.7m in 2002 because of the fall in revenues and the lower Gross Margin in the first half, which was partially restored in the second half. The Group's effective tax rate for the year (based on profit before tax and amortisation of goodwill) was 17.7% against 23.4% the previous year. Cashflow The cash inflow from operating activities continues to be strong with #2.2m for the year, against #4.7m in 2002. The inflow is lower than last year because of the lower gross profit and because in 2002 the reduction in stock was #1.9m greater than this year, reflecting the 15% sales decline suffered in 2002. The stock reduction is obviously a one-off gain although tight management of working capital remains one of the Group's key objectives. The Group investment in working capital is right for this stage of the cycle and we have sufficient facilities to fund additional investment in stock and financing growth as the market recovers. Balance Sheet Tangible fixed assets reduced in the year by #2.1m to #3.1m, predominantly due to the sale and leaseback of the UK warehouse premises. The balance sheet shows net debt of #14.1m compared with #15.7m reported in the interims in March 2003. Stock turn, debtor days and creditor days continue to be key performance indicators for the Group. Because of a mix change the debtor and creditor days as shown below have both reduced, this reflects the Group's success in expanding the German business where debtor and creditor terms are shorter. 2003 2002 Stock Turn 5.9 Times 5.9 Times Debtor Days 58 Days 61 Days Creditor Days 53 Days 61 Days Despite the reduction in debtor and creditor days the overall investment in working capital reduced, the cash inflow from working capital in the year was #0.7m as shown below. 2003 #m 2002 #m Change in stock 0.5 2.4 Change in debtors 2.7 2.7 Change in creditors (2.5) (2.8) Change in working capital 0.7 2.3 D O'Neill Group Financial Director 3 December 2003 GROUP PROFIT AND LOSS ACCOUNT for the year ended 30 September 2003 2002 Before 2003 Before 2002 Goodwill Goodwill Goodwill Goodwill And And And And Operating Operating Operating Operating Exceptional Exceptional 2003 Exceptional Items Exceptional 2002 Items Items Total Total Items Total #000 #000 #000 #000 #000 #000 Sales 64,019 - 64,019 65,496 - 65,496 Cost of Sales (43,742) - (43,742) (44,184) - (44,184) ----------------------------------------------------------------------------------- Gross profit 20,277 - 20,277 21,312 - 21,312 Operating Expenses Selling & distribution (8,438) - (8,438) (8,384) - (8,384) Administration (10,314) (2,080) (12,394) (10,351) (2,015) (12,366) ----------------------------------------------------------------------------------- Operating Profit/(Loss) 1,525 (2,080) (555) 2,577 (2,015) 562 Profit on sale of properties 188 - 188 105 - 105 ----------------------------------------------------------------------------------- Profit/(Loss) on ordinary activities be before interest 1,713 (2,080) (367) 2,682 (2,015) 667 Interest payable and similar charges (1,167) - (1,167) (1,321) - (1,321) Interest receivable & similar income 14 - 14 46 - 46 ----------------------------------------------------------------------------------- Net finance costs (1,153) - (1,153) (1,275) - (1,275) ----------------------------------------------------------------------------------- Profit/(Loss) on ordinary activities before taxation 560 (2,080) (1,520) 1,407 (2,015) (608) Tax on (loss)/profit on ordinary activities (99) 213 114 (405) 345 (60) ----------------------------------------------------------------------------------- Profit/(loss) after taxation 461 (1,867) (1,406) 1,002 (1,670) (668) ----------------------------------------------------------------------------------- Dividends (517) (515) ------- ------- Loss retained for the year (1,923) (1,183) ------- ------- Loss per share - basic and diluted (4.8p) (2.4p) ------- ------- Adjusted earnings per share - basic 1.6p 3.5p ------- ------- All activities derive from continuing operations GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 September 2003 2002 #000 #000 Loss for the year (1,406) (668) Exchange adjustments (366) 125 ------------------------ Total gains and losses recognised related to the year (1,772) (543) ------------------------ GROUP BALANCE SHEET As at 30 september 2003 2002 #000 #000 Fixed assets Intangible assets 14,540 15,608 Tangible assets 3,099 5,157 ------------------------ 17,639 20,765 Current assets Stocks 8,065 8,003 Debtors 14,093 15,328 Cash at bank and in hand 1,565 2,389 ------------------------ 23,723 25,720 Creditors: amounts falling due within one year (19,016) (17,117) ------------------------ Net current assets 4,707 8,603 ------------------------ Total assets less current liabilities 22,346 29,368 Creditors: amounts falling due after more than one year (9,380) (13,490) Provision for liabilities and charges (419) (1,118) ------------------------ Net assets 12,547 14,760 ======================== Capital and reserves Called up share capital 1,471 1,466 Share premium 15,205 15,134 Profit and loss account (4,129) (1,840) ------------------------ Equity shareholders' funds 12,547 14,760 ======================== The accounts were approved by the Board of Directors on 3 December 2003 and were signed on its behalf by: D O'Neill Director GROUP CASH FLOW STATEMENT For the year ended 30 September 2003 2002 #000 #000 Net cash inflow from operating activities 2,186 4,739 Returns on investment and servicing of finance Interest received 14 46 Interest paid (1,221) (1,269) Interest element of finance lease rental payments (24) (34) ------------------------ (1,231) (1,257) ------------------------ Taxation 291 (1,401) Capital expenditure Purchase of tangible fixed assets (405) (1,165) Sale of tangible fixed assets 1,746 622 ------------------------ 1,341 (543) ------------------------ Acquisitions (769) (750) Equity dividends paid (517) (731) ------------------------ Cash inflow before financing 1,301 57 Financing (inclusive of #0.1m (2002: #0.7m) from issue of shares) (3,415) (2,787) ------------------------ Decrease in cash (2,114) (2,730) ======================== Reconciliation of Cash Flow to Movement in Net Debt 2003 2002 #000 #000 Net debt at 1 October (14,747) (15,163) ------------------------ Decrease in cash (2,114) (2,730) Cash from change in debt and lease financing 3,491 3,488 ------------------------ Change in net debt resulting from cash flows 1,377 758 Inception of finance leases - (236) Amortisation of issue costs (39) (35) Exchange differences (661) (71) ------------------------ Movement in net debt 677 416 ------------------------ Net debt at 30 September (14,070) (14,747) ======================== 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 2003 or 2002, but is derived from those accounts. Statutory accounts for 2002 have been delivered to the Registrar of companies and those for 2003 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 December 2003. 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 (2002: #864,000) 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. In 2002 there was an operating exceptional item of #1,151,000 for the initial phase of restructuring the UK manufacturing business Deltron Emcon Limited and also the restructuring of parts of the activity of Hawnt Electronics Ltd and Discomp SA in France which were acquisitions made during 2001. This was relieved by a tax credit of #345,000. 3. Earnings per share Earnings per share have been calculated in accordance with Financial Reporting Standard 14 (FRS14). The calculation of the basic and diluted loss per share is based on the loss attributable to equity shareholders of #1,406,000 (2002: loss of #668,000) and 29,415,188 (2002: 28,261,057) shares being the daily average of the number of shares in issue during the year. FRS14 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 share options. Since it seems inappropriate to assume that option holders would act irrationally, no adjustment has been made to dilute the EPS for out-of-the-money share options and there are no other diluting future share issues, diluted EPS equals basic EPS. An adjusted earnings per share value is shown after adding back the amortisation of goodwill and operating exceptional item, net of taxation of #1,867,000 (2002: #1,670,000). 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 15 August 2003. The directors recommend payment of a final dividend of 1.17p per ordinary share, to be paid on 27 February 2004 to shareholders on the register on 30 January 2004 with the exception of 11,620,572 new Ordinary Shares issued on 26 November 2003, which will not rank for the final dividend above. The new Ordinary Shares will rank pari passu in all respects with all the other shares from 31 January 2004. This will bring the total dividend for the year to 1.755p per ordinary share. 5. Net cash inflow from operating activities 2003 2002 #000 #000 Operating (loss)/profit (555) 562 Release of government grant (104) (84) Amortisation of issue costs 39 14 Amortisation of goodwill 876 864 Depreciation 977 1,052 Loss on disposal of fixed assets 23 - Changes in Stocks 518 2,374 Debtors 2,671 2,698 Creditors (2,259) (2,741) ------------------------- 2,186 4,739 ========================= This information is provided by RNS The company news service from the London Stock Exchange END FR NKNKKFBDDBBK
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