Interim Results

Bulgin PLC 5 October 2000 Bulgin PLC Interim results Bulgin PLC ('Bulgin'), the manufacturer of electromechanical, electronic components and power electronics products announces interim results for the six months ended 31 July 2000. Key Points: * Pre-tax profits increased 11% to £448,000 (6 months ended 31 July 1999: £405,000) * Turnover increased 9% to £8.27 million (6 months ended 31 July 1999: £7.57 million) * Interim Dividend maintained at 0.25p per share on increased number of shares in issue * Acquisition of Milmega Ltd, a designer and manufacturer of solid state microwave amplifiers, for US $2 million * Sales in the electronic component trading operation up 176% compared with six month period to 31 July 1999 Alastair Winter, Chairman, commented 'The Group continues to set itself ambitious trading targets. There will be further major capital investment in automation and IT systems within our Electromechanical Components operation in order to achieve the operating efficiencies that are essential to match our competitors worldwide. We shall also expand our international sales network to improve access to the growth market sectors. The Board continues to look for and evaluate acquisition opportunities as an ongoing part of the Company's strategic development programme. I look forward to reporting further progress in my statement for the full year.' For further information please contact: Brian Emerson Hamish McFall Chief Executive Ana Nogales Bulgin PLC Tavistock Communications Tel: 020 8477 9300 Tel: 020 7600 2288 Chairman's Statement Review of Operations The Group has made good progress in this latest half year. Turnover of £8,270,000 represents a 9% increase over the corresponding period last year and profit before tax of £448,000 represents a slightly greater increase of 11%. This improvement in profits has been achieved at the same time as continuing high levels of investment in people and facilities to support future growth. Despite unfavourable sterling exchange rates exports now constitute over 40% of turnover as compared to 32% on average during the year to 31 January 2000. If discontinued operations and acquisitions are excluded, the increase in turnover over the comparable period last year was an encouraging 23% and is the direct result of our continuing focus on growth sectors by product, geography and industry. In addition, Milmega was acquired in time to make one month's contribution to these results. This acquisition represents the first step in the inorganic element of our strategy to increase the proportion of Group turnover generated by our Power Electronics and Electronic Component Trading operations, which now stands at 40%. I am pleased to report that the process of integrating Milmega into the Group has proceeded smoothly and it is already becoming apparent that the price paid for Milmega represents even greater value to the Group than was originally envisaged. The acquisition of Milmega also accounts for the bulk of the decrease in cash of £2,306,000 and corresponding increase in net gearing to 51% from 3% at 31 January 2000. The growth in turnover (especially export sales which typically require extended credit terms) has resulted in a higher working capital requirement. Electromechanical Components During the first half some £250,000 has been committed to the purchase of automation equipment as part of a £2 million programme. Overall a 30% increase in production capacity will be achieved during the course of the year. This is already starting to feed through to turnover which at £5,840,000 is 12% higher than the comparable period last year. The order book remained strong at approximately £2 million as at 31 July 2000. Product pricing and margins have been maintained. Power Electronics Bulgin Power Source recorded a loss in the first half as was forecast in the Annual Report for the year to 31 January 2000 but is expected to be profitable in the second half. Milmega made a very encouraging first contribution to the Group's results. A significant development has been the redesign of both companies' web sites to maximise interactive use by customers' design engineers. The majority of new enquiries are from the telecommunications market although the CATV order flow has been held back by corporate consolidations within the customer base. There has, however, been important new business in respect of computer networking and test systems in the areas of telecommunications and electronic pollution. The order book remained healthy at approximately £4 million as at 31 July 2000. Electronic Component Trading Overall, sales were up 176% compared with the same period last year. The US now accounts for 34% of business compared with almost zero in the first half last year. The recruitment of additional experienced brokers is already leading to significant growth in business from the UK and Continental Europe. Parent Company The recruitment of senior managers at the operational level has enabled the Group Chief Executive and Finance Director to devote more of their time to strategic development and in particular to analysing acquisition opportunities. These costs are not allocated to the operations. They and our small Corporate Headquarters staff will be relocated in October 2000 to new offices in Chelmsford, Essex. Dividends and Earnings Per Share Earnings per share were 0.72p in the first half, which is an increase from the 0.61p achieved in the comparable period last year. These are calculated after taking into account the issuing of 16 million new shares following the approval of the enfranchisement proposals in March 2000. Shareholders will recall that in the last Annual Report the Board expressed its intention to maintain dividend cover of at least 3 times in order to allow for re-investment throughout the Group. However, taking account of the increased number of shares in issue, the Board has decided to maintain the interim dividend at 0.25p per share, which will be payable on 1 December 2000 to shareholders on the register at 3 November 2000. Outlook The Group continues to set itself ambitious trading targets. There will be further major capital investment in automation and IT systems within our Electromechanical Components operation in order to achieve the operating efficiencies that are essential to match our competitors worldwide. We shall also expand our international sales network to improve access to the growth market sectors. The Board continues to look for and evaluate acquisition opportunities as an ongoing part of the Company's strategic development programme. I look forward to reporting further progress in my statement for the full year. A.S. Winter Chairman Group Profit and Loss Account Unaudited Interim Results to 31 July 2000 Half year to Half year Year to 31 July to 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Turnover - continuing operations 8,005 6,533 13,373 - acquisitions 265 - - ------- ------- ------- - discontinued operations 8,270 6,533 13,373 - 1,039 1,039 -------- ------- ------ 8,270 7,572 14,412 ===== ====== ===== Operating profit - continuing operations 441 345 707 - acquisitions 75 - - ------- ------- -------- 516 345 707 - discontinued operations - (10) (5) ------ ------- ------- 516 335 702 Discontinued operations: Profit/ (loss) on sale of operations - 20 (25) Profit on disposal of freehold property - 133 134 ------- ------- ------- Profit on ordinary activities before interest 516 488 811 Net interest payable (68) (83) (146) ------- ------- ------- Profit on ordinary activities before taxation 448 405 665 Tax on profit on ordinary activities (124) (129) (188) ------- ------- ------- Profit on ordinary activities after taxation 324 276 477 Dividends (113) (73) (186) ------- ------- ------- Retained profit for the period 211 203 291 ===== ===== ===== Earnings per share - Basic 0.72p 0.61p 1.06p ===== ===== ===== Earnings per share - Diluted 0.72p 0.61p 1.05p ===== ===== ===== Dividends per share 0.25p 0.16p 0.41p ===== ===== ===== Group Statement of Total Recognised Gains and Losses Unaudited Interim Results at 31 July 2000 Half year Half year to Year to to 31 July 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Profit for the financial period after taxation 324 276 477 Unrealised loss on fixed asset investments - (198) - ------- ------- ------- Total recognised gains and losses for the financial period 324 78 477 ===== ===== ===== Note of Historical Cost Profits and Losses Half year to Half year to Year to 31 July 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Reported profit on ordinary activities before taxation 448 405 665 Realisation of property revaluation gains of previous - 120 120 years Difference between a historical cost depreciation charge and the actual depreciation charge of the period calculated on the revalued amount 3 6 9 ------- ------- ------- Historical cost profit on ordinary activities before taxation 451 531 794 Taxation on profit on ordinary activities (124) (129) (188) Dividends (113) (73) (186) --------- -------- ---------- Historical cost profit for the period after taxation and dividends 214 329 420 ===== ===== ===== Group Balance Sheet Unaudited Interim Results at 31 July 2000 31 July 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Fixed assets Intangible assets 1,060 99 129 Tangible assets 3,968 3,490 3,497 Investments - 684 - ------- ------- ------- 5,028 4,273 3,626 ===== ===== ===== Current assets Stocks 1,938 1,459 1,344 Debtors 3,823 3,288 2,237 Cash at bank and in hand 902 651 2,111 ------- ------- ------- 6,663 5,398 5,692 Creditors: Amounts falling due within one year (5,265) (3,603) (3,201) ------- ------- ------- Net current assets 1,398 1,795 2,491 ------- ------- ------- Total assets less current liabilities 6,426 6,068 6,117 Creditors: Amounts falling due after more than one year (1,521) (1,744) (1,436) Provision for liabilities and charges (176) (92) (163) ------- ------- ------- Net assets 4,729 4,232 4,518 ===== ===== ===== Capital and reserves Called up share capital 2,260 1,460 1,460 Share premium 34 834 834 Revaluation reserve 122 (70) 125 Profit and loss account 2,313 2,008 2,099 ------- -------- ------- Shareholders' funds - equity 4,729 4,232 4,518 ===== ====== ===== Group Cash Flow Statement Unaudited Interim Results at 31 July 2000 31 July 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Cash flow from operating activities (69) 7 906 Returns on investments and servicing of finance (80) (117) (176) Taxation - (14) 76 Capital expenditure and financial investment (386) (264) 166 Acquisitions and disposals (1,466) 375 1,257 Equity dividends paid (113) - (365) ------ ------- ------- Net cash (outflow)/inflow before financing (2,114) (13) 1,864 Financing (192) (238) (703) ------ ------- ------- (Decrease)/Increase in cash (2,306) (251) 1,161 ===== ===== ===== Reconciliation of operating profit/(loss) to net cash flow from operating activities 31 July 31 July 31 January 2000 1999 2000 £'000 £'000 £'000 Operating profit 516 335 702 Depreciation charges 292 281 535 Amortisation of development costs and goodwill 46 8 21 Provision for exceptional administration costs (39) 56 40 (Profit)/loss on disposal of tangible fixed assets (22) 3 10 (Increase)/decrease in stocks (254) (109) 6 (Increase) in debtors (1,127) (976) (562) Increase in creditors 519 409 154 ------ ------- ------- - Cash flow from operating activities (69) 7 906 ===== ===== ===== Included in cash flow from operating activities is £39,000 (year ended 31 January 2000 - £156,000; six months ended 31 July 1999 - £98,000) net outflow in respect of exceptional items. Summary of Results Group profits before taxation for the first half of the financial year were £448,000 (1999: £405,000) details of which are as follows: 31 July 2000 31 July 1999 31 January 2000 Profit/(loss) Profit/(loss) Profit/(loss) before before before Turnover taxation Turnover taxation Turnover taxation £'000 £'000 £'000 £'000 £'000 £'000 Continuing operations Bulgin PLC - (263) - (196) - (378) Electromechanical Components 5,840 713 5,198 652 10,159 1,124 Power Electronics 1,514 (79) 1,003 (62) 2,330 (44) Electronic Component Trading 916 77 332 15 884 2 ------- ------ ------ ------ ------ ----- 8,270 448 6,533 409 13,373 704 Discontinued operations Cirkit Distribution Limited - - 1,039 (4) 1,039 (39) ------- ------ ------ ------ ------ ----- 8,270 448 7,572 405 14,412 665 ===== ====== ===== ===== ====== ===== Notes 1. Operating profit on continuing operations is after accounting for exceptional costs of £Nil (year ended 31 January 2000 - £185,000, six months ended 31 July 1999 - £154,000). 2. The financial information in this statement does not constitute statutory accounts. The financial information in respect of the year ended 31 January 2000 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under section 237 of the Companies Act 1985. 3. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 31 January 2000. Fixed annual charges are apportioned to the interim period on the basis of time elapsed. Other expenses are accrued in accordance with the same principle used in the preparation of the annual accounts. 4. The Board has declared an interim dividend of 0.25p per share (1999: 0.16p per share, post enfranchisement) payable on 1 December 2000 to shareholders on the register at 3 November 2000. 5. In accordance with FRS 14 the earnings per share calculations have been calculated to take account of the scrip issue of 16 million shares following enfranchisement on 6 April 2000.

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