Interim Results

Acal PLC 01 December 2003 FOR RELEASE 7:00AM 1 DECEMBER 2003 ACAL plc (Leading pan-European, value added distributor providing specialist design-in, sales and marketing services for international suppliers) Unaudited Interim Results for the six months to 30 September 2003 2003 2002 Change Turnover £127.1m £140.2m -9% Group earnings before interest, taxes and goodwill £6.7m £8.1m -17% amortisation Profit before tax (pre goodwill amortisation) £5.9m £7.3m -19% Earnings per share (pre goodwill amortisation) 14.1p 18.5p -24% Dividend 7.0p 6.7p +41/2% • Sound results in a demanding environment • Gross margins increased in all divisions - over 2 percentage points better overall • Further growth in dividend: Up 41/2% to 7.0p • Positive first-time contribution from Computer Parts International acquired in May 2003 • Signs of improvement in order rate • Well positioned to take advantage of growth opportunities For further information:- John Curry - Chairman 01483 544500 Jim Virdee - Finance Director 01483 544500 Brian Coleman-Smith/James Chandler 020 7398 3300 Beattie Financial Notes to Editors: 1 The Acal Group is a leading European, value-added distributor providing specialist design-in, sales and marketing services for international suppliers in the fields of Electronic Components, Information Technology Products, IT Parts Services and Industrial Controls. Its value-added philosophy and geographic coverage enables 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, Scandinavia and the USA. CHAIRMAN'S STATEMENT The demanding environment of the last two years has persisted throughout this half year, with Continental Europe weaker than the UK. Recovery in our industry, which has been seen in the USA and the Far East, has not as yet arrived in Europe. Our results are sound with a good return on capital employed, although below our targets. In spite of the market pressures year-on-year, we have achieved an increased gross margin in all divisions, giving an overall improvement from 23.6% to 26.4% which has partly compensated for the lower sales level. Results Headline sales fell 9% from £140.2m to £127.1m. However, excluding acquisitions and disposals, the underlying fall was 6% (made up of a 2% fall in the UK and 10% in Continental Europe). This pattern of weaker trading in Continental Europe was reflected broadly across all divisions. Below is a table showing each of the divisions' half-year results. 2003/4 2002/3 Sales EBITA Sales EBITA ------ ------------------------ ------ ----------------------- £m £m % of sales £m £m % of sales Electronic 43.7 1.6 3.7% 48.4 1.9 3.9% Components ------ ----- ------- ------ ----- ------- Industrial 8.8 0.5 5.7% 9.6 0.5 5.2% Controls ------ ----- ------- ------ ----- ------- Components 52.5 2.1 4.0% 58.0 2.4 4.1% TOTAL ------ ----- ------- ------ ----- ------- IT Products 45.4 1.8 4.0% 53.4 3.0 5.6% IT Parts Services 29.2 2.6 8.9% 28.8 2.5 8.7% ------ ----- ------- ------ ----- ------- IT TOTAL 74.6 4.4 5.9% 82.2 5.5 6.7% ------ ----- ------- ------ ----- ------- 127.1 6.5 5.1% 140.2 7.9 5.6% Associates 0.2 0.2 ------ ----- ------ ----- 127.1 6.7 140.2 8.1 ====== ===== ====== ===== Chairman's Statement Continued. .... It will be seen that the reduction in profit has occurred mainly in the IT Division. In IT Products, the results for the previous year included sales of £9.3m relating to the CISCO distribution business sold in October 2002. In the ongoing business, sales and gross margins have been maintained but investments made in people and infrastructure have not yet borne fruit, in hindsight probably because they have been made too early in the cycle. We have had satisfactory growth in the SAN/Fibre Channel part of the division, our difficulties lie in networking and security. HP/Compaq has changed its service strategy and as a result EAF, the original part of the IT Parts Services division, has suffered a setback. We overcame a similar setback a few years ago and plan to do so again. In the meantime the reduction in like-for-like sales of 13% and profits of 20% have been balanced by the acquisition of Computer Parts International. On a positive note, UK Electronic Components profits year-on-year have improved marginally in spite of a 5% reduction in sales, but a 14% fall in sales in the same period in Continental Europe has resulted in a decline in profits. It is pleasing to report that a number of major suppliers have either appointed us or increased our geographical coverage across Europe since the beginning of this year. Dividend The Board has declared an interim dividend of 7.0p net per share (6.7p), an increase of 4.5%. This will be paid on 26 January 2004 to shareholders on the register on 12 December 2003. Board Appointment I am pleased to announce the appointment of Graham Williams as a non-executive director. His early career was entrepreneurially based in the private equity market in the UK and France with Charterhouse and Barclays, followed by an executive director role helping to build Hays plc, an international support services group, into a FTSE 100 company. I know his experience will be invaluable to Acal. Current Trading Distribution companies in our sectors with a presence in the USA and the Far East have reported signs of growth in sales. Although not yet reflected in sales, our current order rate is greater than in the early part of the year. At the time of writing, the last quarter (September, October, November) shows signs of monthly bookings being 10% greater than the average rate for the first five months, and above the level for the corresponding quarter last year. Though we do not expect a rapid increase in sales, these limited signs of growth, together with the maintenance of increased gross margin should provide benefits in the second half results. The business remains financially strong, well positioned and able to take advantage, as it has in the past, of the long term growth opportunities which exist in our industry. John Curry 1 December 2003 ACAL plc Unaudited Summary Profit and Loss Account for Six Months ended 30 September 2003 Six Months ended Year ended 30 September 31 March 2003 2002 2003 (audited) £'000 £'000 £'000 Turnover Continuing business Ongoing activities 122,843 130,947 262,846 Activities sold (note 4) - 9,295 9,295 Acquisition 4,296 - - -------- -------- -------- 127,139 140,242 272,141 ======== ======== ======== Operating Profit Continuing business 5,878 7,910 16,710 Goodwill amortisation (1,400) (1,373) (2,774) -------- -------- -------- 4,478 6,537 13,936 -------- -------- -------- Acquisition 581 - - Goodwill amortisation (89) - - -------- -------- -------- 492 - - -------- -------- -------- Group Operating Profit 4,970 6,537 13,936 (excluding Associates) Group Share of Operating 238 250 440 Profits of Associates -------- -------- -------- Total Operating Profit (including Associates) Excluding goodwill 6,698 8,161 17,152 amortisation Goodwill amortisation (1,490) (1,374) (2,776) -------- -------- -------- 5,208 6,787 14,376 Profit on disposal of - - 575 business Net interest payable and (795) (778) (1,452) similar charges - group Net interest payable - (24) (62) (108) associates Profit before Taxation Excluding goodwill amortisation Continuing business 5,406 7,321 16,167 Acquisition 473 - - -------- -------- -------- 5,879 7,321 16,167 Goodwill amortisation (1,490) (1,374) (2,776) -------- -------- -------- Profit on Ordinary Activities before Taxation 4,389 5,947 13,391 Tax on Profit on Ordinary Activities United Kingdom (1,807) (1,535) (3,400) Overseas (95) (903) (1,889) Associates (98) (54) (73) -------- -------- -------- (2,000) (2,492) (5,362) -------- -------- -------- Profit after Taxation Excluding goodwill amortisation 3,879 4,829 10,805 Goodwill amortisation (1,490) (1,374) (2,776) -------- -------- -------- Profit on Ordinary Activities 2,389 3,455 8,029 after Taxation Minority Interest (169) - - -------- -------- -------- Profit Attributable to Ordinary Shareholders 2,220 3,455 8,029 Dividends on Ordinary Shares (1,844) (1,752) (5,262) -------- -------- -------- Retained Profit for the Period 376 1,703 2,767 ======== ======== ======== Earnings per Share 8.5p 13.2p 30.7p ======== ======== ======== Diluted Earnings per Share 8.4p 13.1p 30.6p ======== ======== ======== Earnings per Share Excluding 14.1p 18.5p 41.3p Goodwill Amortisation ======== ======== ======== Dividends per share 7.0p 6.7p 20.1p ======== ======== ======== ACAL plc Unaudited Balance Sheet as at 30 September 2003 At 30 September At 31 March 2003 2002 2003 Restated (audited) £'000 £'000 £'000 FIXED ASSETS Intangible assets 49,047 47,681 46,287 Tangible assets 14,698 13,778 13,827 Investments 6,077 5,390 6,028 -------- -------- --------- 69,822 66,849 66,142 -------- -------- --------- CURRENT ASSETS Stocks 27,241 28,098 24,443 Debtors 48,180 50,504 53,242 Cash at bank and in hand 9,754 10,641 20,246 -------- -------- --------- 85,175 89,243 97,931 CREDITORS: Amounts falling due within one year (58,366) (59,835) (65,413) -------- -------- --------- NET CURRENT ASSETS 26,809 29,408 32,518 -------- -------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 96,631 96,257 98,660 CREDITORS: Amounts falling due after more than (20,420) (23,533) (22,487) one year PROVISIONS FOR LIABILITIES AND CHARGES (595) (1,067) (2,279) -------- -------- --------- NET ASSETS - excluding pension 75,616 71,657 73,894 liability Net pension liability (5,738) (1,223) (5,931) -------- -------- --------- NET ASSETS - including pension liability 69,878 70,434 67,963 ======== ======== ========= CAPITAL AND RESERVES Called up share capital 1,317 1,308 1,309 Share premium account 37,668 37,009 37,109 Revaluation reserve 339 304 334 Profit and loss account and other reserves 29,712 31,813 29,211 -------- -------- --------- EQUITY SHAREHOLDERS' FUNDS 69,036 70,434 67,963 Minority interests (all equity) 842 - - -------- -------- --------- TOTAL CAPITAL EMPLOYED 69,878 70,434 67,963 ======== ======== ========= ACAL plc Unaudited Summary Cash flow Statement for Six Months ended 30 September 2003 Six Months ended 30 September Year ended 31 March 2003 2002 2003 (audited) £'000 £'000 £'000 OPERATING ACTIVITIES Group operating profit 4,970 6,537 13,936 Depreciation and amortisation 3,132 2,870 6,255 Profit on disposal of fixed assets (25) (60) (110) (Increase)/decrease in working capital (2,127) (1,166) 3,493 -------- -------- -------- NET CASH INFLOW FROM OPERATING ACTIVITIES 5,950 8,181 23,574 Dividends from associates 55 78 82 Net interest paid (795) (778) (1,527) Tax paid (3,600) (3,193) (7,250) Net expenditure on tangible fixed assets and investments (2,007) (2,787) (4,869) Net cash flow from acquisitions and disposals (6,643) (6,405) (3,920) Equity dividends paid (3,508) (3,181) (4,935) -------- -------- --------- NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (10,548) (8,085) 1,155 (Decrease)/ increase in debt and finance leases (3,693) 7,045 6,570 Issue of share capital 567 227 328 -------- -------- --------- NET (DECREASE)/INCREASE IN CASH (13,674) (813) 8,053 ======== ======== ========= Reconciliation of net cash flow to movement in net debt NET (DECREASE)/INCREASE IN CASH (13,674) (813) 8,053 -------- --------- Cash outflow/(inflow) from decrease/(increase) in debt and lease financing Issue of loan notes 3,693 (7,045) (6,570) Debt acquired with - - (1,616) subsidiary New finance leases - (257) (257) Translation differences - - (13) (7) (123) (123) -------- -------- --------- MOVEMENT IN NET DEBT (9,988) (8,238) (526) Net debt at beginning of the period (13,404) (12,878) (12,878) -------- -------- --------- Net debt at end of the period (23,392) (21,116) (13,404) ======== ======== ========= Unaudited Statement of Total Recognised Gains and Losses For Six Months Ended 30 September Six Months ended Year ended 30 September 31 March 2003 2002 2003 (audited) £'000 £'000 £'000 Profit attributable to ordinary shareholders 2,220 3,455 8,029 Actuarial loss on pension scheme - - (7,150) Deferred tax relating to pension scheme - - 1,911 Net gain on currency translation 130 43 1,646 ====== ======= ======= Total recognised gains and losses for the financial period 2,350 3,498 4,436 ====== ======= ======= NOTES: 1. The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. These interim results have been prepared in accordance with the accounting policies normally adopted by the Company and are consistent with those adopted at 31 March 2003. 3. As disclosed in the 2003 Annual Report and Accounts, the Group now accounts for pension costs and retirement benefits in accordance with FRS 17. Accordingly the balance sheet at 30 September 2002 has been restated to reflect a lower net pension liability, resulting in an increase in net assets of £1,227,000. The effect on the Profit and Loss account for the 6 months then ended is not material. A £1,227,000 prior year adjustment was recognised within the 31 March 2002 Statement of Total Recognised Gains and Losses. FRS 17 requires an annual actuarial assessment of the defined benefit pension schemes, which is carried out by independent actuarial advisers. In the six months ended 30 September 2003 the Group has charged the profit and loss account with £77,000 (period ended 30 September 2002: £nil; year ended 31 March 2003: £75,000 credit) of notional interest in respect of defined benefit schemes, all of which are closed schemes and relate to the acquisition of Sedgemoor in 1999, on the basis of the 2003 actuarial assessment. This will be updated during the second half of the year, and any actuarial gains and losses arising on pension assets and liabilities in the balance sheet will be shown in the statement of total recognised gains and losses for the year ending 31 March 2004. 4. Turnover of the Group's Cisco distribution business, which was sold in October 2002, has been shown under "Activities sold". 5. The interim dividend is payable on 26 January 2004 to shareholders on the register on 12 December 2003. 6. Earnings per share for the half year to 30 September 2003 have been calculated on the profit attributable to ordinary shareholders of £2,220,000 using the weighted average number of ordinary shares in issue during the period. 7. The company's interim report is being sent to shareholders by post. Copies will also be available at www.acalplc.co.uk or from: Acal plc, 2 Chancellor Court, Occam Road, Surrey Research Park, Guildford, Surrey, GU2 7AH The interim results will not be advertised in any newspaper Ends This information is provided by RNS The company news service from the London Stock Exchange

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