Final Results
Acal PLC
04 June 2007
FOR RELEASE 7:00AM 4 JUNE 2007
ACAL plc
(Leading pan-European, value-added technology based distributor
providing specialist design-in, sales, marketing and other services)
Announcement of Preliminary Results
for the Year Ended 31 March 2007
£millions 2007 2006 Change
----------------------------- -------- ------- -------
Turnover - ongoing activities** £260.9m £257.0m + 1.5%
----------------------------- -------- ------- -------
EBIT* - ongoing activities £10.5m £9.9m +6.1%
----------------------------- -------- ------- -------
Profit before tax
- ongoing activities (excluding exceptionals) £ 9.8m £8.6m + 14.0%
- including disposed activities £ 14.8m £9.7m
----------------------------- -------- ------- -------
Basic earnings per share
- ongoing activities (excluding exceptionals) 25.0p 19.6p +27.6%
- including disposed activities 44.4p 22.3p
----------------------------- -------- ------- -------
Dividends per share - relating to year 21.9p 21.6p +1.4%
----------------------------- -------- ------- -------
(* EBIT - Earnings before interest, tax, the Group's share of profit of
associated companies and exceptional items)
(** Disposed activities represent the sold AC&R business and ongoing activities
represent the remaining business of the Group)
• Sales of ongoing activities up 1.5% at £260.9m
• Profit before tax and exceptionals of ongoing activities up 14.0% at £9.8m
• EPS of ongoing activities before exceptionals up 27.6% at 25.0p
• Electronics: Financial performance now benefiting from growing higher
technology product portfolio
• Parts Services: Weaker demand experienced in this division
• IT Solutions: Major success in Networking and Security Products;
stability in margins
• Total dividends for year up 1.4% at 21.9p per share
For further information:-
Acal plc 01483 544500
Tony Laughton - Chief Executive 01483 544500
Jim Virdee - Finance Director 020 7367 5100
Cubitt Consulting 020 7367 5100
Brian Coleman-Smith 020 7367 5100
James Verstringhe
Leanne Denman
Notes to Editors:
1 Acal is a leading European technology based distributor
providing specialist design-in, sales, marketing and other services through
three divisions: Electronics, Parts Services and IT Solutions. Its
value-added philosophy and geographic coverage enable Acal to provide
specialist knowledge and support to customers on a pan-European basis.
2 Design-in is the process by which Acal's sales engineers
work with customers and suppliers to procure components which meet the
specific technical and performance needs of the customers.
3 Acal has operating companies in the UK, Netherlands,
Belgium, Germany, France, Italy, Spain and Scandinavia. Westech Electronics,
an associated company, is based in Singapore and covers the Far East region.
CHAIRMAN'S STATEMENT
Following the disposal of the Air Conditioning & Refrigeration business in July
2006, the focus of the Company has been on implementing our strategy of
increasing market share to achieve profitable growth. In October 2006, as part
of the group's consolidation, Acal acquired the remaining minority interest in
CPI and commenced the process of integration of its customer-facing activities
with EAF, our other major Parts Services business.
Sales of ongoing activities grew 1.5% to £260.9m despite an 8.8% fall in Parts
Services. EBIT for the year grew by 6.1% to £10.5m reflecting significant
improvement in the performance of both Electronics and IT Solutions offsetting
the reduced profit in Parts Services. The Group's ongoing activities made a 40%
return on average capital employed, before exceptional items, up from 31% for
the prior year.
Costs have remained under close control across all businesses with further
consolidation of logistic and back office functions resulting in selective
headcount reductions. However, due to recent successes in mainland Europe we
have recruited additional staff in both Germany and Italy to address new
Electronics business.
Profit before taxation and exceptional items from ongoing activities grew by
14.0% from £8.6m to £9.8m and the corresponding earnings per share increased
27.6% to 25.0p.
Dividend
The Board is recommending a final dividend of 14.7p per share payable to
shareholders on the register as at 15 June 2007. This, together with the interim
dividend of 7.2p will make a total of 21.9p for the year, an increase of 1.4%.
Board Composition and Governance
There have been no changes to the composition of the Board or any of its
Committees during the year. The Directors remain of the view that the Board, as
currently constituted, is appropriate for a Company of Acal's size and
incorporates a suitable balance of skills; the matter is, however, kept under
review. Acal continues to strive for high standards of corporate governance,
full details of which are set out in the governance statement included as part
of the Annual Report and Accounts.
Employees
To succeed in a competitive environment requires commitment and dedication from
staff. We are fortunate at Acal to have a motivated, loyal and committed
workforce and I take this opportunity to thank them personally and on behalf of
the Board for their continued hard work and support.
Strategy and the Future
The growth in sales and profits of our two largest divisions, Electronics and IT
Solutions, has been very much in line with our plans and we continue to invest
in new resources, particularly in Electronics. The Parts Services business,
after an excellent prior year, suffered this year as a result of weaker demand
in the first half and a significant slowdown on a major contract. Whilst there
continue to be major opportunities going forward, their timing remains difficult
to predict.
Our strategy remains unchanged: to concentrate on Europe, selectively to expand
our supplier base in Electronics and IT Solutions and to extend our offerings to
the supply chain in Parts Services. We plan to continue our progress by growing
our market share rather than relying on market growth.
We strive for greater efficiency and continue to consolidate many administrative
and logistical functions across all three divisions.
We continue to consider ways of enhancing shareholder value and whilst our
strategy is primarily based upon organic growth we will consider selective
acquisitions where they accelerate the delivery of this strategy.
Richard Moon
4 June 2007
CHIEF EXECUTIVE'S REVIEW
The Group is a leading distributor of technology products and services for the
electronics and IT industries throughout Europe.
Performance Review Table
The performance of Acal's divisions in each of the years ended 31 March 2007 and
2006 is set out below:
2007 2006
Sales EBIT* Sales EBIT*
as % of as % of as % of as % of
£m Group £m Sales £m Group £m Sales
Electronics 107.6 41% 3.5 3.3% 104.0 41% 2.4 2.3%
Parts Services 51.9 20% 3.0 5.7% 56.9 22% 5.2 9.1%
IT Solutions 101.4 39% 4.0 3.9% 96.1 37% 2.3 2.4%
----- ------ ----- ------ ------ ------ ----- -----
260.9 100% 10.5 4.0% 257.0 100% 9.9 3.9%
===== ====== ===== ====== ====== ====== ===== =====
* EBIT - Earnings before interest, tax, the Group's share of profit of
associates and exceptional items, stated after full allocation of central
costs.
Last year saw an increase in both sales and profits in the two largest
divisions, Electronics and IT Solutions and a decline in Parts Services. In
total the ongoing businesses, after the sale in July 2006 of the Air
Conditioning and Refrigeration Division, showed a small increase in sales, up
from £257.0m to £260.9m. More significantly however, profit before taxation and
exceptionals of ongoing activities is up 14.0% from £8.6m in the prior year to
£9.8m. Again, this is due to the success of our Electronics and IT Solutions
Divisions.
Electronics
"The only Pan-European Demand Creation Distributor"
Sales up 3.5% from £104.0m to £107.6m
EBIT up 46% from £2.4m to £3.5m
Although the UK market for passive and electromechanical components has been
somewhat soft, growth continues in this division with the success of our higher
technology products, primarily semiconductors, power and RF & wireless products
which have been, and remain, a prime focus. Specialised semiconductors now
account for an increasing proportion of the division's sales. The major gains
have been in Continental Europe as the expansion of the product portfolio took
place earlier there than in the UK. There has also been significant investment
in people, particularly in Germany and Italy where in the second half of the
year we have recruited in excess of twenty dedicated semiconductor staff. These
comprise Sales Directors, Field Sales Engineers, Application Engineers and
Product Managers.
The restructuring process continues with further consolidation of the UK passive
and electromechanical components businesses: Radiatron has now merged with Acal
Technology. Logistics (primarily inventory) is being centralised into two
principal locations, one at Hook in the UK and the second in Eindhoven in the
Netherlands.
In line with the growth of our higher technology products our market share is
increasing, as too is our customer base which totalled nearly 9,500 Europe-wide
by the end of the year. This, together with our emphasis on the design
'pipeline' or funnel of prospects which continues to increase, provides a clear
indication of projects and potential business in the future.
Parts Services ('PS')
"Europe's premier IT Parts Management Company"
Sales down 8.8% from £56.9m to £51.9m
EBIT down 42% from £5.2m to £3.0m
After an excellent prior year, 2006/7 proved to be difficult, especially for CPI
and particularly in the first half. This was as a consequence of weaker demand,
some price erosion and cutbacks on a major contract. Despite this the division
has produced a creditable overall EBIT return of 5.7% of sales after the
allocation of central costs.
New "preferred supplier" arrangements are being agreed with several customers
and the 'opportunity funnel' is stronger than ever, although it can typically
take some while before these convert into new business. In addition, following
the acquisition of the minority interest in CPI we have completed the
integration of the sales and business development teams of CPI and our other
major UK IT parts operation, EAF. We are now better positioned to offer all the
division's services to existing and prospective customers.
IT Solutions
"Europe's Niche IT Solutions Distributor"
Sales up 5.5% from £96.1m to £101.4m
EBIT up 74% from £2.3m to £4.0m
The outstanding successes here have been Networking and Security product sales
and
Acal Value Added Services (AVAS), but across the whole spectrum of this division
the stabilisation, and in some cases improvement, of gross margins have had a
major influence. This margin improvement has come in part from a shift in
product mix to devices which have more capability and intelligence, and in part
from our focus of providing value added solutions which can command higher unit
prices than discrete hardware and consequently better margins.
The Headway document management business, which has experienced relatively flat
sales year-on-year, improved its profitability and is now embarking upon a
number of new initiatives which fit closely with its core focus. Although it
would be premature to forecast growth at this stage, there is considerable
optimism that these will lead to both an increase in revenue and further margin
improvement.
Similarly the Storage Networking business had flat sales but also improved its
profitability significantly. Again, this is largely due to a gradual shift to
more advanced higher value products that command better margins.
Lastly, Vertec, our medical imaging and instrumentation business, again put in a
strong performance with an improvement in both sales and net margins. Vertec has
now established an operation in South Africa with the same key suppliers that it
has worked with in the UK for many years. It is anticipated that this operation
will quickly move into profit, benefiting from the reputation of its key
suppliers and the market momentum behind private healthcare in that country.
Associates
Acal's major associate, Singapore-based Westech, in which we have a 36%
shareholding, increased sales and profits in its year ended 31 December 2006
with sales up 65% to S$330.2m and net profits up 69% to S$6.1m.
Acal People
Acal has a great team of people - enthusiastic, hardworking, motivated and
always prepared to go the extra yard for the customer. As importantly, they are
very supportive of the fact that change is the norm rather than the exception in
our industries. This is a spirit which stands us in good stead for the future
and provides a great deal of confidence in our ability to succeed.
I would like to express my appreciation and thanks to them all.
Tony Laughton
4 June 2007
FINANCE DIRECTOR'S REVIEW
Results for the Year
Following the sale of the Group's Air Conditioning and Refrigeration ("AC&R")
business, which was announced in May 2006 and completed in July 2006, that
business has been described as "disposed activities" and the remainder of the
Group's business as "ongoing activities" in the financial statements for the
year ended 31 March 2007.
Sales of the Group's ongoing activities increased from £257.0m in 2006 to
£260.9m for the year ended 31 March 2007, an overall increase of 1.5%. This
overall increase represented an increase of 3.5% for the Electronics division,
an increase of 5.5% for the IT Solutions division and a decline of 8.8% for the
Parts Services division. Earnings before interest, tax, the Group's share of
associated companies and exceptional items ("EBIT") increased from £9.9m in the
prior year to £10.5m for the year ended 31 March 2007, an increase of 6.1%. Both
the Electronics and IT Solutions divisions showed significant increases in EBIT
of 46% and 74% respectively, but the Parts Services division decreased by 42%.
Further information on each division's performance is set out in the Chief
Executive's Review.
Although most international business in the electronics industry is denominated
in US dollars, the principal exchange rate which affects the translation of the
results of the Group's non-UK activities is that between the Euro and Sterling.
During the year under review sterling was, on average, marginally (0.6%)
stronger against the Euro and 7.3% stronger against the US dollar as compared to
the previous year. Consequently variations in exchange rates had an
insignificant effect on the translation of Acal's sales and profits for the year
to 31 March 2007 relative to those for the prior year.
Average gross margin for the Group's ongoing activities during the year to 31
March 2007 was 25.4%, slightly ahead of 25.3% for the previous year. Whilst all
activities in the Electronics and IT Solutions divisions showed an improvement
in gross margins, there was a decline in the Parts Services division resulting
from a lower level of contracted business.
Net operating expenses of the Group's ongoing activities, excluding exceptional
items, were £55.6m for the year ended 31 March 2007 (2006: £55.2m). Although the
average number of employees working in Acal's ongoing activities during this
period, at 954, was unchanged from that for the previous year, there was
significant underlying change. There were some manning reductions in the passive
and electromechanical activities of the Electronics division and the Parts
Services division, but we have continued to invest in additional resources to
support the Group's strategy of expanding its specialist semiconductor
portfolio, in particular the establishment of dedicated teams, together
comprising over 20 members, for these products in Germany and Italy during the
second half of the year. Overall the Group has continued to maintain good
control over operating costs.
The exceptional item of £0.4m in the year to 31 March 2007 represented the
recovery of a receivable which was previously considered impaired and hence
provided against. In the prior year there were two exceptional items, a profit
of £0.6m on sale of investments and the cost of £0.8m of withdrawing from part
of the IT Solutions business.
Acal's principal associated company is Westech Electronics Limited. It
distributes electronic components throughout the Far East region, excluding
Japan, and has its head office in Singapore. Westech's sales grew from S$255m
(approximately £86.3m) for the year ended 31 March 2006 to S$321m (approximately
£108m) for the year under review. In the corresponding periods the Group's share
of profits of associate companies, which under International Financial Reporting
Standards is reported after tax, increased from £0.4m to £0.6m.
Although interest rates were higher, average net debt during the year was lower
and accordingly net interest cost at £1.1m (before IAS19 financing cost of
£0.2m) was lower than the previous year's figure of £1.6m (before IAS19
financing cost of £0.1m). Thus net interest cost was covered 9.5 times (2006:
6.2 times) by operating profit (before exceptional items) arising from the
Group's ongoing activities.
The Group's effective tax rate for the year to 31 March 2007, calculated on the
basis of profit before taxation excluding the Group's share of post-tax profit
from associates was 33.0% (2006: 33.8%).
The table below explains the effect of the Group's disposed (AC&R) activities on
the results for the year.
Before Tax After
------ --- -----
£m Tax Tax
--- ---
Trading profit for the period 0.4 (0.2) 0.2
Profit on disposal 6.0 (0.1) 5.9
Provision for retained obligations (1.8) 0.5 (1.3)
--------- -------- ---------
4.6 0.2 4.8
========= ======== =========
The retained obligations referred to in the table above related to people,
properties and IT systems.
In October 2006, Acal purchased the 28.4% minority interest in Computer Parts
International Limited, which is part of the Parts Services division, for a
consideration of approximately £6.7m. Hence the minority interest in the Group's
profit ceased to arise from that time onwards.
Acal's earnings per share from ongoing activities, before exceptional items,
were 25.0p for the year ended 31 March 2007 as compared to 19.6p for the year
before, an increase of 27.6%. Basic earnings per share, including disposed
activities, were 44.4p (2006: 22.3p).
The interim and proposed final ordinary dividends in respect of the year to 31
March 2007 will absorb £5.8m (2006: £5.7m). These are covered 2.0 times (2006:
1.0 times) by basic earnings, including disposed activities, and 1.1 times
(2006: 0.9 times) by earnings from ongoing activities before exceptional items.
Working Capital and Balance Sheet
The Group continues to place particular emphasis on the management of working
capital. For this purpose it uses a model which compares each item of trading
assets to the three-month moving average of sales (TMMA). The table below shows
the target model in comparison to the actual achievement.
Ongoing Activities
31 March 31 March
-------- --------
Target 2007 2006
------ ---- ----
TMMA TMMA TMMA
---- ---- ----
Ratio Ratio Ratio
----- ----- -----
Trading fixed assets 0.5 0.5 0.5
Current assets
Stock 1.2 1.0 0.9
Debtors 2.3 2.4 2.4
Current liabilities
Creditors (2.2) (2.5) (2.4)
Tax (0.1) (0.1) (0.1)
------- ------- -------
Total trading assets 1.7 1.3 1.3
======= ======= =======
(Note: This trading assets model excludes goodwill, investments, non-current tax
assets, net debt/cash and long-term liabilities).
The above table shows, for example, that our target is for stock to represent
1.2 months of sales and the actual level of stock at 31 March 2007 represented 1
month of sales.
The level of working capital at 31 March 2007 had benefited from a number of
short-term factors which were not sustainable and reversed in the period after
the year-end. This effect is estimated to have amounted to around £4m to £5m and
was reflected in the net debt of £5.4m (2006: £6.5m) at the year-end. As
reported last year there was a similar short-term benefit of between £8m to £9m
at 31 March 2006.
The Group's debt is provided principally under bilateral bank facilities
negotiated centrally in the UK and locally in territories where Acal operates.
There are committed long-term facilities of £25m available to the Group as well
as short-term facilities which are used mainly for working capital requirements.
Capital expenditure for the year to 31 March 2007 was £2.2m (2006: £2.5m) and
the charge to profits in respect of depreciation and amortisation of fixed
assets amounted to £3.1m (2006: £3.2m) for the same period.
It has always been Acal's policy that its pension schemes should be of the
defined contribution type so that the extent of the Group's financial
liabilities can be clearly ascertained. However, when Sedgemoor Limited, then a
listed public company, was acquired in June 1999, it brought with it certain
defined benefit schemes, the principal one of which was the Sedgemoor Group
Pension Fund (together "the Sedgemoor Scheme"). Soon after acquisition the
Sedgemoor Scheme was curtailed and all future service accrual ceased. A
triennial actuarial valuation of the Sedgemoor Scheme was conducted as at 31
March 2006. At that date the gross pension liability under IAS19 was £9.1m and
net of the relevant deferred tax it was £6.4m.
Primarily as a result of movements in bond yields, but also the contributions
made since then, the gross liability at 31 March 2007 was £7.4m and net of the
relevant deferred tax it was £5.2m.
Shareholders funds at 31 March 2007 were £75.8m (2006: £69.9m), the improvement
from last year primarily reflecting retained earnings. Net debt at that date
represented 7.1% of shareholders funds as compared to 9.3% a year earlier.
Return on Capital Employed
Return on average capital employed of the Group's ongoing activities, which is
calculated using operating profit before exceptional items and net assets
excluding goodwill but adding back net debt, was 40% for the year to 31 March
2007 as compared to 31% for the year before.
Jim Virdee
4 June 2007
consolidated income statement
for the year to 31 March 2007
Ongoing Disposed 2007 2006
activities activities
(note 7) Total
Continuing operations Note £m £m £m £m
Revenue 4 260.9 - 260.9 257.0
---------------------- ------- ------- ------- ------- --------
Operating
profit 10.9 (1.8) 9.1 9.7
---------------------- ------- ------- ------- ------- --------
Analysed between:
Operating profit before
exceptional items 10.5 - 10.5 9.9
Exceptional items - provision
for retained
obligations 5,7 - (1.8) (1.8) -
Exceptional items -
recovery of impaired receivable 5 0.4 - 0.4 -
Exceptional items -
profit on disposal of
investments 5 - - - 0.6
Exceptional items -
product withdrawal
costs 5 - - - (0.8)
---------------------- ------- ------- ------- ------- --------
Share of
post-tax
profits from
associates 3 0.6 - 0.6 0.4
Finance costs (1.7) - (1.7) (2.3)
Finance income 0.4 - 0.4 0.6
---------------------- ------- ------- ------- ------- --------
Profit before
taxation 10.2 (1.8) 8.4 8.4
---------------------- ------- ------- ------- ------- --------
Analysed between:
Profit before
taxation
before
exceptional
items 9.8 - 9.8 8.6
Exceptional
items -
provision for
retained
obligations 5,7 - (1.8) (1.8) -
Exceptional
items -
recovery of
impaired
receivable 5 0.4 - 0.4 -
Exceptional
items - profit
on disposal of
investments 5 - - - 0.6
Exceptional
items -
product
withdrawal
costs 5 - - - (0.8)
---------------------- ------- ------- ------- ------- --------
Taxation 3 (3.1) 0.5 (2.6) (2.7)
---------------------- ------- ------- ------- ------- --------
Analysed between:
Taxation
before
exceptional
items (3.0) - (3.0) (2.8)
Exceptional
items -
taxation
credit arising
consequent on
the disposal 3 - 0.5 0.5 -
Exceptional
items -
taxation
charge arising
on recovery of
impaired
receivable (0.1) - (0.1) -
Exceptional
items -
taxation
charge arising
on profit on
disposal of
investments - - - (0.1)
Exceptional
items -
taxation
credit arising
on product
withdrawal
costs - - - 0.2
---------------------- ------- ------- ------- ------- --------
Profit after
taxation for
the year from
continuing
operations 7.1 (1.3) 5.8 5.7
Discontinued operations
Profit for the
year from
discontinued
operations 7 - 6.1 6.1 0.9
---------------------- ------- ------- ------- ------- --------
Profit for the
year 7.1 4.8 11.9 6.6
---------------------- ------- ------- ------- ------- --------
Attributable to:
Equity holders
of the parent 11.7 6.0
Minority
interests 0.2 0.6
---------------------- ------- ------- ------- ------- --------
11.9 6.6
---------------------- ------- ------- ------- ------- --------
Earnings per share (note 9)
Continuing operations
Basic
- including
exceptional
items 26.1p (4.8p) 21.3p 19.1p
- excluding
exceptional
items 25.0p - 25.0p 19.6p
Diluted
- including
exceptional
items 26.1p (4.8p) 21.3p 19.1p
- excluding
exceptional
items 25.0p - 25.0p 19.6p
---------------------- ------- ------- ------- ------- --------
Including discontinued
operations
Basic 44.4p 22.3p
Diluted 44.4p 22.3p
---------------------- ------- ------- ------- ------- --------
Dividends
Dividends per
share declared
in respect of
year 21.9p 21.6p
Dividends per
share paid in
year 21.6p 21.6p
Dividends paid
in year £5.7m £5.7m
---------------------- ------- ------- ------- ------- --------
consolidated balance sheet
at 31 March 2007
------------------------- --------- ----------
2007 2006
£m £m
------------------------- --------- ----------
Non-current assets
Property, plant and equipment 6.3 6.7
Goodwill 53.5 48.8
Intangible assets - software 3.9 4.8
Investments in associates 5.0 4.7
Other financial assets 0.3 0.3
Deferred tax assets 4.0 4.0
------------------------- --------- ----------
73.0 69.3
------------------------- --------- ----------
Current assets
Inventories 23.7 21.4
Trade and other receivables 58.8 58.0
Current tax assets 0.4 1.7
Cash and cash equivalents 11.9 16.9
------------------------- --------- ----------
94.8 98.0
Current liabilities
Trade and other payables (58.9) (58.0)
Short-term borrowings (7.2) (11.2)
Current tax liabilities (2.8) (3.7)
Provisions (2.1) (1.0)
------------------------- --------- ----------
(71.0) (73.9)
------------------------- --------- ----------
Net current assets 23.8 24.1
Assets of discontinued operations classified as held for
sale - 6.2
Non-current liabilities
Long-term borrowings (10.1) (12.2)
Pension liability (7.4) (9.1)
Deferred tax liabilities (1.6) (1.8)
Provisions (1.9) (0.7)
------------------------- --------- ----------
(21.0) (23.8)
------------------------- --------- ----------
Liabilities of discontinued operations classified as held
for sale - (4.1)
------------------------- --------- ----------
Net assets 75.8 71.7
------------------------- --------- ----------
Equity
Share capital 1.3 1.3
Share premium account 38.0 38.0
Share scheme reserve 0.3 0.2
Other reserves 1.2 1.8
Retained earnings 35.0 28.6
------------------------- --------- ----------
Equity attributable to equity holders 75.8 69.9
of the parent
Minority interests - 1.8
------------------------- --------- ----------
Total equity 75.8 71.7
------------------------- --------- ----------
consolidated cash flow statement
for the year to 31 March 2007
----------------------------- --------- ---------
2007 2006
£m £m
----------------------------- --------- ---------
Profit for the year 11.9 6.6
Taxation expense (includes £0.3m (2006: £0.4m) from
discontinued operations) 2.9 3.1
Share of results of associates (0.6) (0.4)
Net finance costs 1.3 1.7
Depreciation of property, plant and equipment 1.9 2.1
Amortisation of intangible assets - software 1.2 1.1
Change in provisions 2.3 0.7
Gain on disposal of investments (6.0) (0.6)
Gain on disposal of property, plant and equipment - (0.1)
Pension scheme funding (1.0) (0.7)
Equity-settled share-based payment expense 0.1 0.1
----------------------------- --------- ---------
Operating cash flows before changes in working capital 14.0 13.6
----------------------------- --------- ---------
(Increase)/decrease in inventories (2.5) 2.1
Increase in trade and other receivables (1.9) (5.7)
Increase in trade and other payables 1.6 5.9
----------------------------- --------- ---------
(Increase)/decrease in working capital (2.8) 2.3
----------------------------- --------- ---------
Cash generated from operations 11.2 15.9
Interest paid (1.5) (2.1)
Income taxes paid (3.4) (2.9)
----------------------------- --------- ---------
Net cash flows from operating activities 6.3 10.9
----------------------------- --------- ---------
Cash flows from investing activities
Acquisition of shares in subsidiaries (6.7) (0.4)
Proceeds from sale of subsidiaries 8.3 -
Net overdrafts disposed of with subsidiaries 0.4 -
Proceeds from sale of investments - 2.5
Purchases of property, plant and equipment (1.8) (2.2)
Proceeds from sale of property, plant and equipment and
intangibles 0.2 0.3
Purchases of intangible assets (0.4) (0.3)
Interest received 0.4 0.6
Dividends received from associates 0.2 0.1
----------------------------- --------- ---------
Net cash inflow from investing activities 0.6 0.6
----------------------------- --------- ---------
Cash flows from financing activities
Repayments of borrowings (7.1) (3.1)
Dividends paid to company's shareholders (5.7) (5.7)
Dividends paid to minority interests (0.1) -
----------------------------- --------- ---------
Net cash outflow from financing activities (12.9) (8.8)
----------------------------- --------- ---------
Net (decrease)/increase in cash and cash equivalents (6.0) 2.7
Cash and cash equivalents at 1 April 10.8 8.0
Effect of exchange rate fluctuations - 0.1
----------------------------- --------- ---------
Cash and cash equivalents at 31 March 4.8 10.8
----------------------------- --------- ---------
----------------------------- --------- ---------
Reconciliation to cash and cash equivalents in the balance
sheet
Cash and cash equivalents shown above 4.8 10.8
Add back overdrafts 7.1 6.1
----------------------------- --------- ---------
Cash and cash equivalents shown within current assets in
the 11.9 16.9
balance sheet --------- ---------
-----------------------------
consolidated statement of recognised income and expense
for the year to 31 March 2007
-------------------------- --------- --------
2007 2006
£m £m
-------------------------- --------- --------
Actuarial profit/(loss) on defined benefit pension scheme 0.9 (3.4)
Deferred tax relating to pension scheme (0.5) 0.8
Investments - cumulative fair value adjustments taken to
income statement on disposal - (0.4)
Foreign currency translation differences (0.6) 0.7
-------------------------- --------- --------
Net income and expense recognised directly in equity (0.2) (2.3)
Profit for the year 11.9 6.6
-------------------------- --------- --------
Total recognised income and expense for the year 11.7 4.3
Restatement for the effects of IAS 32 and 39 (i) - 0.4
-------------------------- --------- --------
Total recognised income and expense 11.7 4.7
-------------------------- --------- --------
Total recognised income and expense attributable to:
Equity holders of the parent 11.5 4.1
Minority interests 0.2 0.6
-------------------------- --------- --------
11.7 4.7
-------------------------- --------- --------
(i) On 1 April 2005, the balance sheet was restated for the effects of IAS 32
and 39.
reconciliation of movements in shareholders' equity
for the year to 31 March 2007
-------------------------- --------- --------
2007 2006
£m £m
-------------------------- --------- --------
Shareholders' equity at start of year 69.9 71.3
Total recognised income and expense 11.5 4.1
Dividends (5.7) (5.7)
Share-based payments 0.1 0.1
Movements in associates' reserves - 0.1
-------------------------- --------- --------
Shareholders' equity at end of year 75.8 69.9
-------------------------- --------- --------
Notes to the preliminary statement
for the year ended 31 March 2007
1 Publication of non-statutory accounts
The preliminary results were approved by the Board on 4 June 2007. The financial
information set out above does not constitute the Company's statutory accounts
for the years ended 31 March 2007 or 2006, but is derived from those accounts.
Statutory accounts for 2006 have been delivered to the Registrar of Companies
whereas those for 2007 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 a statement under section 237 (2) or (3) of the
Companies Act 1985.
2 Basis of preparation
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for use in the
European Union and as applied in accordance with the provisions of the Companies
Act 1985.
3 Segmental analysis
Year to 31 March 2007
---------- ------- ------ ------- -------- -------- --------- --------
Electronics £m Parts Services IT Solutions £m Unallocated Total ongoing Disposed Total
activities activities operations
£m £m £m £m £m
---------- ------- ------ ------- -------- -------- --------- --------
Revenue 107.6 51.9 101.4 - 260.9 5.3 266.2
---------- ------- ------ ------- -------- -------- --------- --------
Segment 5.2 3.8 5.6 (3.7) 10.9 0.4 11.3
result
Provision
for
retained - - - - - (1.8) (1.8)
obligations
Profit on
disposal of
activities - - - - - 6.0 6.0
Net finance
costs - - - (1.3) (1.3) - (1.3)
Share of
post-tax
profits of
associates 0.6 - - - 0.6 - 0.6
---------- ------- ------ ------- -------- -------- --------- --------
Profit
before 5.8 3.8 5.6 (5.0) 10.2 4.6 14.8
taxation
Taxation (3.1) 0.2 (2.9)
---------- ------- ------ ------- -------- -------- --------- --------
Profit for
the 7.1 4.8 11.9
year ------- ------ ------- -------- -------- --------- --------
----------
The figures for total operations in the table above may be analysed between
continuing and discontinued operations as follows:
------------ -------- --------- --------
Continuing Discontinued Total
operations operations operations
£m £m £m
------------ -------- --------- --------
Revenue 260.9 5.3 266.2
------------ -------- --------- --------
Segment result 10.9 0.4 11.3
Provision for
retained
obligations (1.8) - (1.8)
Profit on
disposal of
subsidiaries - 6.0 6.0
Net finance
costs (1.3) - (1.3)
Share of
post-tax
profits of
associates 0.6 - 0.6
------------ -------- --------- --------
Profit before
taxation 8.4 6.4 14.8
Taxation (2.6) (0.3) (2.9)
------------ -------- --------- --------
Profit for the
year 5.8 6.1 11.9
------------ -------- --------- --------
Year to 31 March 2006
---------- ------- ------ ------- -------- -------- --------- --------
Electronics £m Parts Services IT Solutions £m Unallocated Total Discontinued Total
continuing activities operations
activities
£m £m £m £m £m
---------- ------- ------ ------- -------- -------- --------- --------
Revenue 104.0 56.9 96.1 - 257.0 18.4 275.4
---------- ------- ------ ------- -------- -------- --------- --------
Segment 3.5 6.0 3.6 (3.2) 9.9 1.3 11.2
result
Profit on
disposal of
investments - - - 0.6 0.6 - 0.6
Product
withdrawal
costs - - (0.8) - (0.8) - (0.8)
Net finance
costs - - - (1.7) (1.7) - (1.7)
Share of
post-tax
profits of
associates 0.4 - - - 0.4 - 0.4
---------- ------- ------ ------- -------- -------- --------- --------
Profit
before 3.9 6.0 2.8 (4.3) 8.4 1.3 9.7
taxation
Taxation (2.7) (0.4) (3.1)
---------- ------- ------ ------- -------- -------- --------- --------
Profit for
the 5.7 0.9 6.6
year ------- ------ ------- -------- -------- --------- --------
----------
4 Geographic analysis of revenue by destination
2007 2006
£m £m
United Kingdom 99.1 114.0
Continental Europe 154.3 136.8
Rest of the World 7.5 6.2
------------------------ ----------- -------
260.9 257.0
------------------------ ----------- -------
5 Exceptional items
2007 2006
£m £m
Other operating income:
Recovery of impaired receivable 0.4 -
Profit on disposal of investments - 0.6
------------------------ ----------- -------
0.4 0.6
------------------------ ----------- -------
Other operating expenses: - (0.8)
Product withdrawal costs
Provision for retained obligations (1.8) -
------------------------ ----------- -------
6 Acquisition of minority interest
On 13 October 2006, the Company acquired the remaining 28.4% minority interest
in Computer Parts International Limited for a consideration of £6.7 million.
7 Disposed activities
On 25 May 2006, the Company announced the disposal of its air conditioning and
refrigeration business. The disposal was completed on 3 July 2006 for a cash
consideration of £8.3 million.
The effect of the disposal during the year is as follows:
£m
--------------------------- ----------------
Sale proceeds 8.3
Total net assets sold (2.3)
--------------------------- ----------------
6.0
Tax effect of disposal (0.1)
--------------------------- ----------------
Profit on disposal 5.9
--------------------------- ----------------
In addition a provision of £1.8m has been made to cover certain obligations of
the disposed activities which have been retained by the Group. These obligations
represent costs relating to people, properties and impairment of IT systems.
Profit from discontinued operations comprises:
---------------------------- --------- ---------
Year ended Year ended
31 Mar 2007 31 Mar 2006
£m £m
---------------------------- --------- ---------
Profit on disposal of discontinued operations 5.9 -
Profit for the year from trading of discontinued
operations 0.2 0.9
---------------------------- --------- ---------
Profit for the year from discontinued operations 6.1 0.9
---------------------------- --------- ----------
8 Dividends
The Directors have proposed a final dividend of 14.7 pence per share, payable on
25 July 2007 to shareholders on the register at 15 June 2007. In accordance with
IAS 10, this dividend has not been reflected in the balance sheet at 31 March
2007. The amount of this final dividend is £3.9 million. An interim dividend of
7.2 pence per share was paid in January 2007, and the cost of this dividend was
£1.9 million.
9 Earnings per share
Basic earnings per share are calculated by dividing the net profit for the year
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share are the basic and adjusted earnings per share after
allowing for the dilutive effect of the conversion into ordinary shares of the
weighted average number of options outstanding during the year.
The following reflects the income and share data used in the basic and diluted
earnings per share calculations:
2007 2006
million million
Weighted average number of shares for basic earnings per
share 26.4 26.4
Effect of dilution - share options - -
-------------------------------- ---------- -------
Adjusted weighted average number of shares for diluted
earnings per share 26.4 26.4
-------------------------------- ---------- -------
2007 2006
£m £m
Profit attributable to equity holders of the parent 11.7 6.0
-------------------------------- ---------- -------
10 Reconciliation of net cash flow to movements in net debt
2007 2006
£m £m
Net (decrease)/increase in cash and cash equivalents (6.0) 2.7
Cash outflow from decrease in debt 7.1 3.0
Effect of exchange rate fluctuations - 0.1
------------------------ -------- --------
Decrease in net debt 1.1 5.8
Net debt at beginning of the year (6.5) (12.3)
------------------------ -------- --------
Net debt at end of the year (5.4) (6.5)
------------------------ -------- --------
11 Annual Report and Accounts
The Annual Report and Accounts will be mailed to shareholders on or before 20
June 2007. Copies will also be available from: -
Acal plc
2 Chancellor Court
Occam Road
Surrey Research Park
Guildford GU2 7AH
The results will not be advertised in any newspaper
Ends
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