TIDMACL
RNS Number : 7928Z
Acal PLC
01 June 2016
1 June 2016
ACAL plc
Preliminary Results for the year ended 31 March 2016
Underlying earnings per share up 23% CER
Further growth in operating margins
Acal plc (LSE: ACL, "Acal" or "the Group"), a leading
international supplier of customised electronics to industry, today
reports strong full year results for the year ended 31 March
2016.
FY 2015/16 FY 2014/15 Growth CER
% (2)
Growth
%
------------ ------------ --------- --------
Revenue GBP287.7m GBP271.1m +6% +14%
Underlying operating
profit(1) GBP16.3m GBP13.4m +22% +36%
Underlying operating
margin (1) 5.7% 4.9% +0.8ppts +1.0ppt
Underlying profit
before tax(1) GBP14.5m GBP11.8m +23% +37%
Underlying diluted
EPS(1) 17.0p 15.4p +10% +23%
--------
Reported profit
before tax GBP9.4m GBP4.3m +119%
Reported fully
diluted EPS 10.9p 4.8p +127%
Full year dividend
per share 8.05p 7.60p +6%
------------ ------------ ---------
Highlights
-- Strong growth in profits and earnings per share
o Sales up 14% CER(2) and gross profit up 18% CER
o Ongoing sales(4) up 3%
o Underlying profit before tax up 37% CER
o Underlying earnings per share up 23% CER
-- Excellent progress made towards our target key performance and strategic indicators
o Underlying operating margin increased to 5.7% (2014/15:
4.9%)
o Design & Manufacturing sales up to 51%(5) of Group sales
(2014/15: 37%)
o International sales(6) increased to 17% of Group sales
(2014/15: 12%)
o Cross-selling accounts for 5% of Group revenues
o Operating cash flow(7) at 100% of underlying operating
profit
-- New customer contract wins support growth plans
-- Acquisitions of Contour, Flux and Plitron further build
capabilities and generate efficiencies
-- Group well positioned for further growth
o Highest ever order book at GBP85m
o Developing acquisition opportunities
-- Full year dividend up 6%
Nick Jefferies, Group Chief Executive, commented:
"This is a strong set of results with underlying operating
profit increasing by 36% on sales growth of 14% at constant
exchange rates. Underlying operating margins have almost doubled
over the last two years. Over 50% of ongoing revenue is now from
our higher margin Design & Manufacturing division, which is
generating almost 80% of Group profits.
Whilst challenging trading conditions are likely to continue in
the first half of the year, we expect an improvement in the second
half in line with our expectations for the full year. We have
GBP20m of funding available for acquisitions and will continue to
take advantage of opportunities that will enhance growth and
shareholder value.
We are building a highly differentiated, international
electronics business, supplying essential technologies to growth
markets, and are confident of making further progress in the year
ahead."
Acal plc 01483 544 500
Nick Jefferies - Group Chief Executive
Simon Gibbins - Group Finance Director
Instinctif 020 7457 2020
Mark Garraway
Helen Tarbet
James Gray
Notes:
(1) 'Underlying Operating Profit', 'Underlying Operating Costs',
'Underlying Operating Margin', 'Underlying Profit before Tax' and
'Underlying EPS' are non-IFRS financial measures used by the
Directors to assess the underlying performance of the Group. These
measures exclude provision for earn-out payments (included in
exceptional items) of GBP0.6m, other exceptional items of GBP1.2m,
amortisation of acquired intangible assets of GBP2.8m and the IAS19
pension charge relating to a legacy defined benefit scheme of
GBP0.5m; totalling GBP5.1m for FY 2015/16. Equivalent exclusions
within the FY 2014/15 underlying results totalled GBP7.5m. For
further information see note 5 of the attached summary financial
statements.
(2) Growth rates at constant exchange rates ("CER"). Unless
stated, growth rates refer to the comparable prior year period. The
average Sterling rate of exchange strengthened 7% against the Euro
for the year ended 31 March 2016 compared with the average rate for
last year (rising from 1.275 to 1.367) and strengthened 9% against
Nordic currencies on average, together negatively affecting Group
reported sales for this period by 6% and underlying operating
profit by 8%.
(3) Organic growth for the Group of -2% is calculated at CER
including the pre-acquisition periods of the Noratel Group and the
Foss Group which were acquired during the last financial year (on
17 July 2014 and 7 January 2015 respectively) and of the Flux
Group, Contour, and Plitron which were acquired this financial year
(on 5 November 2015, 7 January 2016 and 1 February 2016
respectively).
(4) Ongoing sales growth for the Group of 3% excludes large,
non-repeating orders from last year within Custom Distribution and
sales of its final major non-specialist, low margin supplier, which
was discontinued last year.
(5) Design & Manufacturing sales, annualised for
acquisitions, expressed as a percentage of Group sales.
(6) International sales are sales outside the UK and Western Europe.
(7) Operating cash flow is net cash generated from operations
before financing, taxation and dividends, payment of acquisition
related costs, exceptional items, earn-out payments and legacy
pension costs.
Notes to Editors:
Acal is a leading international supplier of customised
electronics to industry. It designs, manufactures and distributes
customer-specific electronic products and solutions to 25,000
industrial manufacturers and is listed on the London Stock Exchange
(LSE: ACL).
Acal has two divisions: Design & Manufacturing and Custom
Distribution. The majority of its sales comes from products and
solutions which are created specifically for a customer. Acal works
across a range of technologies, namely Communications &
Sensors, Power & Magnetics, Electromechanical & Shielding,
Embedded Systems, and Photonics & Imaging.
Acal operates through the following wholly-owned businesses:
Acal BFi, Contour, Flux, Foss, Hectronic, MTC, Myrra, Noratel,
Plitron, RSG, Stortech and Vertec. It has operating companies and
manufacturing facilities in a number of markets, including the UK,
Germany, France, the Nordic region, Benelux, Italy, Poland,
Slovakia and Spain, as well as in Asia (China, India, South Korea,
Sri Lanka and Thailand), North America (the US and Canada), and
South Africa.
CHAIRMAN'S STATEMENT
The Group strategy, established in 2009, has created a highly
differentiated, growth business in customised electronics that has
delivered superior results and value for shareholders through the
economic cycle. This year's strong results reflect this. With over
50% of revenues (annualised for acquisitions) and nearly 80% of
profit contribution now being generated from the design and
manufacture of own products, which generate much higher margins
than distribution, operating margins have doubled over the last
five years.
There are significant opportunities ahead which will enable the
Group to continue this progress and further build a successful,
differentiated business.
Strategy
The Group is creating a leader in custom electronics which will
become increasingly global in nature. We are focusing on markets
with long term fundamental growth drivers where technology is
essential, such as transportation, medical, renewable energy and
industrial device connectivity. These markets grow ahead of GDP,
are stable and have excellent long term prospects.
Around half of revenues in our Design & Manufacturing
division are generated in these higher growth markets. We are
investing in these areas and will continue to grow this
position.
Group Results
Group sales for the year increased by 6%, and by 14% at constant
exchange rates ("CER"), to GBP287.7m driven by acquisitions made
over the last 2 years in the Design & Manufacturing
division.
Underlying operating profit, which excludes acquisition related
costs, exceptionals and IAS19 pension cost, increased by GBP2.9m to
GBP16.3m (up 22%) and by GBP4.3m CER (up 36%). Underlying profit
before tax increased by GBP2.7m to GBP14.5m (up 23%) and by GBP3.9m
CER (up 37%).
Underlying operating margin increased by 0.8ppts to 5.7%,
reflecting our focus on higher margin products and solutions.
Underlying earnings per share for the year increased by 10% to
17.0p (up from 15.4p last year) and increased by 23% CER.
On a reported basis, profit before tax for the year was GBP9.4m,
an increase of GBP5.1m over last year, with fully diluted earnings
per share of 10.9p, 6.1p higher than last year.
Net debt at 31 March 2016 was GBP38.1m (FY 2014/15: GBP19.0m),
with a Group gearing ratio of 1.7 times (defined as net debt
divided by underlying EBITDA, adjusted for a full year's inclusion
from acquisitions) compared with our target gearing range of 1.5 to
2.0 times. The increase in net debt over last year reflects the
acquisitions made during the year.
Acquisitions
In the second half of the year, the Group made three
acquisitions, Flux A/S ("Flux") based in Denmark, Contour Holdings
Limited ("Contour") based in the UK and Plitron Manufacturing Inc
("Plitron") based in Canada. Flux and Plitron are both designers
and manufacturers of customised magnetic components, while Contour
is a designer and manufacturer of custom cabling assemblies and
connectors. The total initial consideration for these three
acquisitions of GBP22m was funded by the issue of GBP3.0m of new
equity with the balance from our long term debt facility. All three
businesses have performed well since joining the Group, in line
with our expectations.
We are delighted to welcome their employees into the Group.
Dividend
The Board is recommending an increase in the final dividend per
share of 6% to 5.72 pence per share, giving a full year dividend
per share of 8.05 pence, representing an increase of 6% for the
year and a cover against underlying earnings of 2.05 times. Since
2010, the annual dividend per share has risen by 58%. The final
dividend is payable on 29 July 2016 to shareholders registered on
10 June 2016.
The Board's aim is to maintain a progressive dividend policy
together with a long term dividend cover of between 2 to 3 times
underlying earnings.
Board changes
On 1 November 2015, Tracey Graham and Malcolm Diamond MBE joined
the Board as Non-Executive Directors. Both bring significant
experience of international manufacturing businesses and we are
delighted to welcome them to the Group.
Tracey is a Non-Executive Director of Ibstock plc, Royal London
Mutual Building Society and Link Scheme Limited, and was previously
the Chief Executive of Talaris Limited from 2008 to 2010 and
Managing Director of De La Rue Cash Systems from 2005 to 2008.
Malcolm is Executive Chairman of Trifast Plc and Non-Executive
Chairman of Flowtech Fluidpower PLC, and was previously the
Managing Director of Trifast Plc from 1984 to 2002 and Senior
Non-Executive Director of Dechra Pharmaceuticals Plc from 2000 to
2010.
Employees
The Group consists of 3,800 employees in 23 countries around the
world. The Board believes that by adopting a decentralised
operating environment within an established framework, supported by
rigorous control and review processes, the Group is able to
continue to foster an ambitious and entrepreneurial culture.
On behalf of the whole Board, I would like to thank all our
employees for their commitment and hard work once again this year.
Their dedication is critical in helping us achieve our goals.
Summary
Acal continues to build a business that is differentiated,
successful and ambitious. The Group's focus on the design,
manufacture and supply of differentiated electronics products and
solutions will not only enable it to continue to increase operating
margins, but also positions Acal as a leader and a consolidator in
the fragmented customised electronics industry.
Richard Moon
Chairman
1 June 2016
CHIEF EXECUTIVE'S REVIEW
Overview
Group revenues increased by 14% CER to GBP287.7m, with ongoing
sales growing by 3% CER organically. Gross profit was up 18% CER
driven by stronger gross margins. Underlying operating profit
increased to GBP16.3m (from GBP12.0m CER last year), representing a
5.7% operating margin, with underlying EPS increasing by 10% (and
by 23% CER). At the year end, the Group order book was GBP85m, the
highest level since the Group's strategy was launched in 2009.
Currency headwinds have been considerable this year,
particularly from a net weakening of Euro and Nordic currencies,
which had a 6% adverse translational impact on reported revenue and
a 8% adverse impact on operating profits. Our active Group hedging
policy has minimised transactional effects and contributed to the
continuing stable development of Group profitability.
We made three further acquisitions during the year into our
Design & Manufacturing division, which, together with our
organic growth, has lifted annualised revenues in that division to
over 50% of Group revenues, delivering nearly 80% of the Group's
profit contribution.
Growth strategy
Acal supplies essential technologies to growth markets which are
driven by the increasing requirement for electronics and
technology. We estimate our market to be worth GBP12bn globally, of
which Europe accounts for approximately GBP4bn, North America
GBP6bn and Asia GBP2bn.
Our focus markets are ultimately driven by long term global
trends such as a growing middle class population, a growing older
affluent population, a growing need for green sources of energy and
a reducing cost of technology through its widespread adoption.
Influenced by global population growth, a United Nations study is
predicting over 30% growth by 2050; and global GDP growth, the
World Bank is forecasting 3% annual growth out to 2030 (4.5% in the
developing world and 2% in the emerging world); such growth leads
to four key macro trends that are the demand drivers for our
business and underpin our 'GDP plus' organic growth rates:
1. Growth in travel
Road, rail, air, automotive and electric vehicle transportation
is expected to continue both its rapid growth in carrying capacity
and its use of technology. As an example, in the automotive sector,
electronics content is forecast to grow by 8% per annum to 2019
(source: Gartner, PWC).
2. Growth in medical spending
Driven by the increasingly affluent ageing population which
accounts for the majority of healthcare spending in developed
economies, along with the increasing use of technology in
diagnosing, monitoring and controlling medical conditions, the
medical semiconductor market, a proxy for the medical electronics
market, is forecast to grow by 12% per annum between 2012 and 2018
(Source: IC Insights).
3. A shift to renewable energy
In 2015, the International Energy Authority predicted that
renewable energy will be the largest source of global power
generation by 2030, provided primarily by three technologies;
hydro, wind and solar. Wind power generation is expected to account
for 50% of the incremental power generated over this period.
4. Growth in device connectivity
New technologies are creating new markets and applications. For
example, the emergence of affordable wireless electronics has
enabled the smart utility meter market to become a commercial
reality and additionally, the internet of things is leading to a
boom in the connectivity of devices across a wide range of
applications. As an example, Gartner & PWC are forecasting
demand for industrial semiconductors to grow by 9.7% CAGR 2014 -
2019.
By focussing on the above markets the Group will continue to
build a high quality, differentiated business.
The Group's strategy can be summarised as follows:
1. Moving up the electronics value chain into the design and
manufacture of our own products. This generates better returns,
from higher margin products (see Key Strategic Indicator ('KSI') 1
below).
2. Growing sales organically and well ahead of GDP by focusing
on higher growth markets with above average growth prospects (see
KSI 2 below).
3. Acquiring high quality D&M businesses with attractive
growth prospects. This will involve both larger 'platform'
acquisitions that establish a position and smaller 'bolt-on'
acquisitions that integrate into existing businesses (see KSI 1, 2
& 3 below).
4. Developing sales internationally by further expansion into
North America, both by following existing customers' international
needs and by developing local market sales (see KSI 3 below).
Performance
The Group's principal objective is to deliver consistent growth
in total shareholder return (TSR), over the short and long term,
driven by consistent growth in underlying earnings per share
(EPS).
Over the last seven years, since the introduction of the current
strategy, TSR growth has been 380%, well within the upper quartile
when compared with the FTSE Small Cap Index. Similarly, over the
last three years, TSR growth was 62%, again within the upper
quartile compared to the FTSE Small Cap Index (see KSI 5
below).
The Group's aim is to continue this upper quartile performance
through consistently delivering organic sales growth with robust
margins, supplemented by the acquisition of high quality businesses
with similar growth prospects.
Key Strategic and Performance indicators
Three Key Strategic Indicators measure the progress of the Group
on achieving its key strategic objectives, while five Key
Performance Indicators measure the financial performance of the
business. The targets set out below were established in November
2014.
Key Strategic Indicators ('KSIs')
Mid
FY 2010 FY 2014 FY 2015 FY 2016 term
Target*
-------- -------- -------- -------- --------
1. Increase share
of Group revenue
from Design & Manufacturing
(1) 5% 18% 37% 51%(2) 65%
2. Increase cross-selling
(1) 0% 2.7% 4% 5% 4-5%
3. Build sales
beyond Europe (1) 0% 5% 12% 17% 20%
(1) As a proportion of Group revenue
(2) Annualised for acquisitions
* Mid-term target refers to a three to five year period.
1. Revenues from the Design & Manufacturing division
increased to 51% (annualised for acquisitions) as a proportion of
total Group revenue, compared with 37% last year. This was achieved
through the acquisitions of Noratel and Foss last year, the
acquisitions of Contour, Flux and Plitron this year, together with
organic sales growth of 3%. The mid-term target is 65%.
2. Cross-selling initiatives exist to accelerate organic sales
growth and improve the efficiency of Group businesses. In the year,
cross-selling generated GBP14.2m of business representing 4.9% of
Group revenues. The mid-term target is for these initiatives to
generate 4-5% of Group sales after factoring in the initial
dilutive effect on this ratio of future acquisitions. Cross-selling
revenue grew by GBP4.0m CER in the year.
3. Growth in sales beyond Europe was achieved this year,
principally through organic growth, together with the full year
impact of last year's Noratel acquisition. Overall, sales beyond
Europe were GBP48.7m and represented 17% of Group sales (up from
12% last year). Key regions expressed as a percentage of Group
sales are North America (4.5%), Asia (6%), Eastern Europe (5%) and
Africa (1.5%). The mid-term target is 20%.
Key Performance Indicators ('KPIs')
3 yr
FY 2014 FY 2015 FY 2016 Average target
(H1
2018)
-------- -------- -------- -------- ---------
1. Organic sales Well
growth 2% 3% 3%(1) 3% ahead
of GDP
2. Increase underlying
operating margin 3.4% 4.9% 5.7% n/a 7%
3. Attractive ROTCE
(2) 24% 24% 23% 23.3% > 25%
4. Generate strong > 75%
free cash flow (2) 86% 76% 70% 77% PBT
5. Generate long
term value for shareholders:
3 year TSR +5% +101% +62% n/a Upper
--------
(percentile vs FTSE (Top (Top (Top Quartile
Small Cap Index) 71(st) 20(th) 22(nd)
) ) )
-------- -------- -------- -------- ---------
(1) Percentage of ongoing sales
(2) Defined in note 5 of the attached summary financial
statements
1. Ongoing sales growth was 3% for the year, with similar growth
rates delivered in both Design & Manufacturing and Custom
Distribution (after excluding, as previously announced, two large
one-off orders and a discontinued commodity supplier from last year
in the Custom Distribution division). Weighted average GDP growth
in the Eurozone and UK during the year was 1.6%. Our target is to
achieve sales growth well ahead of GDP and we expect that, as
economies pick up, our organic growth rates will pick up too,
likely being a few percentage points ahead of GDP.
2. The underlying operating margin for the year increased to
5.7% (and was 5.9% for the second half), due to further operating
efficiencies achieved from our increasing scale, as well as from
the positive effect of acquisitions. We have increased our target
from 6% to 7% and we'll keep this under review.
3. Return on trading capital employed ('ROTCE') was 23% for the
year, compared with a three year target for ROTCE to be greater
than 25%. Over the last three years, ROTCE has averaged 23.3%. This
ratio is slightly lower than last year due to the initial impact of
acquisitions, which we expect to drive ratio growth over the medium
term.
4. Free cash flow as a percentage of underlying profit before
tax ('PBT') was 70%, with a three year target being for free cash
flow to exceed 75% of underlying PBT over that period. Over the
last three years, the free cash flow ratio has averaged 77%.
Operating cash flow for the year was GBP16.3m and 100% of operating
profit compared to a 3 year target of 85%. Details of the free cash
flow and operating cash flow calculations are given in the Cash
Flow section within the Finance Review.
5. A core objective of the Group is long term growth in total
shareholder return ('TSR') driven by consistent growth in
underlying earnings per share ('EPS'). In the year, underlying EPS
grew by 10% from 15.4p to 17.0p (and by 23% CER), while over a
seven year period underlying EPS has risen by 19.8p from a loss per
share of 2.8p in FY 2008/09. TSR has increased by 62% over the last
three years. This was in the top 22(nd) percentile of FTSE Small
Cap Index constituents and in line with our upper quartile
target.
Divisional results
Divisional performances for the year ended 31 March 2016 are set
out and reviewed below.
FY 2015/16 FY 2014/15 CER Organic Ongoing(2)
------------------------------ ------------------------------ ----- -------- -----------
Revenue Underlying Margin Revenue Underlying Margin
GBPm operating GBPm operating
profit profit
(1) (1)
GBPm GBPm
-------- ----------- ------- -------- ----------- ------- ----- -------- -----------
Design &
Manufacturing 137.6 16.5 12.0% 92.0 10.4 11.3% 50% 3% 3%
Custom Distribution 150.1 4.7 3.1% 160.9 6.3 3.9% (7%) (7%) 3%
Unallocated
costs (4.9) (4.7)
-------- ----------- ------- -------- ----------- ------- ----- -------- -----------
Total CER(3) 287.7 16.3 5.7% 252.9 12.0 4.7% 14% (2%) 3%
----- -------- -----------
Reported
FX rate(4) 18.2 1.4 0.2%
-------- ----------- ------- -------- ----------- -------
Total reported 287.7 16.3 5.7% 271.1 13.4 4.9%
-------- ----------- ------- -------- ----------- -------
(1) Underlying operating profit excludes exceptional items,
earn-out accruals, amortisation of acquired intangibles and IAS19
pension costs (see Finance Review).
(2) Ongoing sales exclude large, non-repeating orders from last
year within Custom Distribution and sales of its final major
non-specialist, low margin supplier, which was discontinued last
year.
(3) Revenue and operating profit at CER with last year's results
translated at this year's average exchange rate.
(4) The difference between the reported results last year and
the results at CER.
For the last two years, Group results, while strong, were
significantly impacted by the strength of Sterling. Some 72% of
sales and 90% of underlying operating profit were generated in
either Euro or Nordic currencies which have depreciated by 7% and
9% respectively against Sterling this year (and by 13% and 20% in
the last two years).
Design & Manufacturing division
The Design & Manufacturing division ("D&M") manufactures
custom electronic products that are uniquely designed or modified
from a standard product for a specific customer requirement. The
products are manufactured at one of Acal's in-house manufacturing
facilities or, in a few cases, by third party contractors. The
division now has ten businesses which are aligned with the Group's
core technology areas, namely Flux, Myrra, Noratel, Plitron and RSG
(within Power and Magnetics); Foss (within Communication and
Sensors); Contour, MTC and Stortech (within Electromechanical and
Shielding); and Hectronic (within Embedded Systems). The division's
principal manufacturing facilities are in China, India, Poland and
Sri Lanka.
Divisional revenue increased by 50% to GBP137.6m CER, driven by
last year's acquisitions of Noratel and Foss, this year's
acquisitions of Contour, Flux and Plitron, together with organic
growth of 3%. Underlying operating profit of GBP16.5m was GBP6.1m
higher than last year at CER (up 59%) with an underlying operating
margin of 12.0%, up 0.7ppts over last year. Divisional revenue was
48% of Group revenue (51% when annualised for acquisitions)
generating 78% of the Group's profit contribution, a strong
increase on last year (37% of Group revenue generating 63% of Group
profit contribution). This represents further good progress towards
the mid-term divisional targets for Design & Manufacturing,
being 65% of Group revenue with underlying operating margins in
excess of 10%.
A number of new large customer contracts were won during the
second half of the year, which are expected to support the Group's
medium term growth plans with revenue starting as early as the end
of FY 2016/17. Whilst absolute timing and demand volumes are
generally linked to macro economic conditions, it is nevertheless
encouraging to have secured these contracts, which will help drive
longer term organic growth.
During the 2014/15 financial year, the Group made two important
acquisitions: Noratel, a global designer and manufacturer of
electromagnetic products, acquired in July 2014, and Foss, a
designer and manufacturer of fibre optic cables and support
products, acquired in January 2015. Both businesses have performed
well since acquisition, generating good levels of organic sales and
profit growth since last year. Noratel's North American business
was returned to profitability in the second half of last year as
planned and continued to deliver strong levels of organic growth
this year. Foss has also performed well, with strong organic growth
driven by demand for greater communication bandwidth in Norway and
Eastern Europe.
During the second half of this year, the Group made three
further acquisitions, Flux, Contour and Plitron, all of which were
funded primarily from the Group's existing debt facilities. Each
acquisition should benefit from the access they now have to Acal's
broad customer base and international reach, creating new revenue
opportunities from cross-selling across the Group. All three
companies have performed well since joining Acal, in line with our
expectations.
Flux
In November 2015, the Group acquired Flux, a Danish designer and
manufacturer of customised magnetic components for use across a
range of industrial, high reliability and space grade applications.
Flux builds on Acal's growing custom magnetics capabilities
following the previous acquisitions of Noratel and Myrra. It has
manufacturing facilities in Denmark and Thailand, and is working
closely with Myrra to achieve efficiencies in production.
Flux was acquired for a cash consideration of DKK 28m (GBP2.7m).
Flux's revenue for its year ended 31 December 2014 (its final year
before acquisition) was DKK 89m (GBP8.5m) generating a pre-tax
profit of DKK 7.2m (GBP0.7m).
Contour
In January 2016, the Group acquired Contour, a UK based designer
and manufacturer of custom cabling assemblies and connectors for
use in industrial and medical applications. Engineering and low
volume production is located at Contour's UK facility in Hampshire
with higher volume production undertaken through partners in Asia.
The addition of Contour to Acal's custom cabling capability more
than doubled the Group's revenue in this technology area.
Contour was acquired for an initial consideration of GBP17.5m
(GBP14.5m in cash and GBP3.0m in new ordinary shares).
Additionally, contingent consideration of GBP1.0m is payable in
April 2019, subject to certain conditions, and earn-out
consideration of up to GBP6.0m will be payable after July 2019,
subject to Contour achieving certain growth targets. Contour's
revenue for its year ended 30 June 2015 was GBP10.7m, generating an
underlying profit before tax of GBP1.8m.
Plitron
In February 2016, the Group acquired Plitron, a Canadian
designer and manufacturer of custom toroidal transformers for
transportation, medical and industrial applications. Plitron has a
well established track record of supplying high quality,
custom-engineered magnetic products in North America.
Plitron was acquired for a cash consideration of C$4.0m
(GBP1.8m). Plitron's revenue for its year ended 31 May 2015 was
C$8.2m (GBP4.0m).
Custom Distribution division
The Custom Distribution division provides technically demanding
customised electronic, photonic and medical products to the
industrial, medical and healthcare markets, both from a range of
high quality international suppliers (often on an exclusive basis)
and from Acal's Design & Manufacturing division. A high degree
of technical knowledge is required during the sales process, with
Acal's engineers helping industrial manufacturers solve their
design challenges. Acal is the only industrial electronics business
which provides such a comprehensive range of customer-specific
products and solutions across Europe. The division comprises two
businesses, Acal BFi and Vertec.
Acal BFi supplies industrial markets and accounts for the
majority of Custom Distribution revenue. It uses products from a
range of complementary suppliers (including Acal's own Design &
Manufacturing businesses) and supplies over 20,000 customers in
five technology areas: Communications & Sensors, Power &
Magnetics, Electromechanical & Shielding, Embedded Systems, and
Photonics & Imaging. The business operates across Europe, with
centralised warehousing, purchasing, finance, customer contact
management and IT systems. Vertec supplies exclusively-sourced
medical imaging and radiotherapy products into medical and
healthcare markets in the UK and South Africa.
Divisional revenue of GBP150.1m (52% of Group revenue) was 7%
below last year at CER. As expected, the organic growth rate was
impacted by two large non-repeating orders from the prior year and
the discontinuation from the end of the last financial year of Acal
BFi's final major non-specialist, low margin supplier, in line with
the Group's strategy. Excluding this revenue, ongoing divisional
sales grew by 3% with continental Europe growing by 7% driven by
strong growth in Germany and Italy.
In the UK, where market conditions continued to be soft, ongoing
sales were down 8%. Following its restructure, sales in the UK
business have now stabilised, with the priority being on growing
and converting the pipeline of new projects into orders. The final
element of this restructuring was the appointment of a new UK
managing director at the end of this year. The UK electronics
market was weaker than expected in both electronic distribution and
manufacturing: the International Distribution of Electronics
Association (IDEA) reported UK electronics distribution sales were
down 6% at the end of 2015, while the Manufacturing of Computer,
Electronic & Optical goods index declined overall by 7% in the
same period.
Underlying operating profit of GBP4.7m was down GBP1.6m CER on
last year reflecting the impact of the large orders and
discontinued supplier mentioned above. Underlying operating margin
was 3.1% compared with our mid-term target of 5%.
Cross-selling
Cross-selling initiatives are changing the nature of the Acal
business, broadening the range of products which it sells to
existing customers, developing more valuable customer relationships
and achieving more efficient use of sales resources. This is
achieved in two ways:-
i) D&M cross-selling: this is selling between Group (sister)
companies. Programmes are underway to develop sales with the
customers of other Group companies. This initiative, which started
three years ago, generated sales of GBP3.0m this year, an increase
of GBP2.0m year-on-year.
ii) Acal BFi cross-selling: this involves increasing the range
of Acal BFi products from different technology areas being sold to
existing Acal BFi customers. This initiative, launched five years
ago, generated total sales of GBP11.2m this year, of which GBP2.8m
were new sales in the year and GBP8.4m were recurring sales from
projects designed in previous years. This compares with GBP10.2m
last year.
In total, GBP14.2m of business was generated from these
cross-selling initiatives. This represents 4.9% of Group revenue
and is GBP3.0m higher than last year (GBP4.0m CER).
Acquisitions
The Group sees the opportunity for significant value creation by
acquiring complementary, high quality Design & Manufacturing
businesses. Customised electronics is a fragmented market in which
Acal is seen by vendors as an attractive acquirer. The Group
enables companies to further develop within the Acal network,
providing them with new organic growth opportunities whilst
retaining their entrepreneurial culture. There are broadly two
categories of acquisition. A 'platform' acquisition is larger and
creates a new position in a market technology and/or geography. A
'bolt-on' acquisition is smaller and expands the position of an
existing business, by being integrated into it. Both categories are
being developed.
Following acquisition, new Design & Manufacturing businesses
operate to a pre-agreed business plan, supported by the Group's
governance, controls and centralised treasury function, whilst
retaining their commercial capability and branding. These
businesses gain access to a much wider range of similar customers
via both the Custom Distribution network and other Group Design
& Manufacturing business. Financial incentives are in place
internally which encourage cross-selling activities.
Newly acquired businesses can realise a number of benefits by
being part of the Acal Group, becoming positively differentiated
from their competitors, and generating new sales opportunities.
By joining Acal, being a much larger group, major customer
exposure is diluted, often a limiting factor for major customers
when engaging with smaller suppliers. Additionally, the secure
financial position of Acal provides customers with greater comfort
of supply.
Outlook
Acal has delivered another strong set of results this year
demonstrating the strength of its well established growth
strategy.
Whilst challenging trading conditions are likely to continue in
the first half of the year, we expect an improvement in the second
half in line with our expectations for the full year. We have
GBP20m of funding available for acquisitions and will continue to
take advantage of opportunities that will enhance growth and
shareholder value.
We are building a highly differentiated, international
electronics business, supplying essential technologies to growth
markets, and are confident of making further progress in the year
ahead.
Nick Jefferies
Group Chief Executive
1 June 2016
FINANCE REVIEW
Revenue
Group revenue for the year increased by 14% CER and by 6% at
reported rates (the difference reflecting the impact of Sterling
strength since last year). While organic revenue reduced by 2%,
ongoing sales (sales excluding two large, non-repeating orders from
last year in Custom Distribution and sales from its final major
non-specialist, low margin supplier discontinued last year)
increased by 3%.
Gross profit
Gross profit for the year increased by 18% CER over last year.
This growth rate is higher than the corresponding revenue growth
rate of 14%, reflecting further improvements in gross margin which
increased by 1.1ppts to 32.2%. Growth has been achieved both
organically and through acquisition. This is the Group's highest
annual gross margin since our strategy was introduced in 2009. The
strategy has delivered an increase of 6.3ppts in the last seven
years, and is a key indicator of the increasingly differentiated
nature of the business.
Underlying operating costs
Group underlying operating costs were up 15% CER reflecting the
inclusion of the cost bases of companies acquired since last year,
as well as the annualisation effect of last year's acquisitions.
Organic underlying operating costs for the Group were at the same
level as last year with increased investment in the Design &
Manufacturing division and related central costs being offset by a
5% reduction in operating costs in Custom Distribution, mainly due
to the restructuring of the UK business.
Group operating profit and margin
Group underlying operating profit for the year was GBP16.3m, an
increase of GBP2.9m (+22%) on last year, delivering a Group
underlying operating margin of 5.7%, up 0.8ppts on last year. At
CER, the increase in underlying operating profit was GBP4.3m
(+36%), with the underlying operating margin up 1.0ppt.
Reported Group operating profit for the year (after accounting
for the underlying adjustments discussed below) was GBP11.4m, an
increase of GBP5.3m on last year.
FY 2015/16 FY 2014/15
------------------------------ ------------------------------
Operating Finance Profit Operating Finance Profit
Profit cost before profit cost before
GBPm tax tax
---------- -------- -------- ---------- -------- --------
Underlying 16.3 (1.8) 14.5 13.4 (1.6) 11.8
Underlying adjustments
Exceptional items (1.2) - (1.2) (4.2) - (4.2)
Earn-out accruals (0.6) - (0.6) (0.8) - (0.8)
Amortisation of acquired
intangibles (2.8) - (2.8) (2.1) - (2.1)
IAS 19 pension cost (0.3) (0.2) (0.5) (0.2) (0.2) (0.4)
Reported 11.4 (2.0) 9.4 6.1 (1.8) 4.3
---------- -------- -------- ---------- -------- --------
Translation impact of foreign exchange
During the year, over 80% of revenues were generated in
non-Sterling currencies of which around 50% were in Euro and 22% in
Nordic currencies. 90% of underlying operating profit was generated
in Euro and Nordic currencies. The average Sterling rate of
exchange for the year strengthened 7% against the Euro compared
with the average rate for last year (rising from 1.275 to 1.367)
and strengthened 9% against Nordic currencies on average; together,
this negatively affected reported sales for this year by around 6%
and underlying operating profit by around 8%. As the following
table illustrates, had this year's exchange rates been the same as
the average rates in the prior year, revenue would have been higher
by GBP17.2m and underlying operating profit higher by GBP1.3m.
FY 2015/16
-----------------------
GBPm Underlying
Revenue operating
GBPm profit
GBPm
---------- -----------
Revenue (FY 15
rates) 304.9 17.6
Translation impact (17.2) (1.3)
---------- -----------
Reported revenue
(FY 16 rates) 287.7 16.3
---------- -----------
Translation impact
% (6%) (8%)
---------- -----------
Conversely, the prior year's revenue and underlying operating
profit, restated at this year's average exchange rates, would have
been lower by GBP18.2m and GBP1.4m respectively (see the divisional
results table in the Chief Executive's Review).
Through its centralised treasury function, the Group continues
to hedge its material transactional exposures from the time of
order through to payment using forward contracts, thereby
minimising the impact of exchange rates on gross margin.
Underlying adjustments
Underlying adjustments for the period comprise earn-out accruals
of GBP0.6m (FY 2014/15: GBP0.8m), other exceptional items of
GBP1.2m (FY 2014/15: GBP4.2m), the amortisation of acquired
intangibles of GBP2.8m (FY 2014/15: GBP2.1m) and IAS19 legacy
pension costs of GBP0.5m (FY 2014/15: GBP0.4m).
Exceptional items (excluding earn-outs) for the year were
GBP1.2m. Of this, GBP1.0m were costs related to the acquisition and
integration of Flux, Contour and Plitron during the year and
GBP0.2m were costs relating to the finalisation of the restructure
of Acal BFi UK.
The GBP0.7m increase in the amortisation charge since last year
relates to the amortisation of intangibles identified as part of
the acquisitions of Noratel and Foss last year and the acquisitions
of Flux, Contour and Plitron this year.
The IAS 19 pension administration cost increased by GBP0.1m in
the year following an increase in the Pension Protection Fund levy
payable to the Pensions Regulator.
Net financing costs
Net financing costs for the year were GBP2.0m (FY 2014/15:
GBP1.8m), being an underlying finance cost of GBP1.8m and an IAS 19
pension finance cost of GBP0.2m relating to the Group's legacy
defined benefit pension scheme.
Underlying finance costs consist of interest and facility fees
arising from the Group's banking facilities during the year.
Finance costs for the year were up GBP0.2m to GBP1.8m due to the
debt funding of acquisitions this year, together with a full year's
finance charge in respect of last year's acquisitions.
The IAS19 pension finance cost of GBP0.2m was in line with last
year's charge.
Underlying tax rate
The underlying effective tax rate for the year of 22% was 2ppts
higher than last year (FY 2014/15: 20%), principally because the
underlying tax rates of the businesses acquired in the last two
years are higher than that of the Acal Group prior to the
acquisitions. Some growth in future rates is expected as the full
effects of acquisitions annualise and existing tax losses are
utilised.
The overall tax rate was 1ppts higher at 23%, reflecting the
impact of non-tax deductibility of exceptional acquisition
costs.
Profit before tax and earnings per share
Underlying profit before tax for the year was GBP14.5m, an
increase of GBP2.7m (+23%) compared with last year and an increase
of 37% CER. With the higher underlying tax rate and the increased
weighted average number of shares (up 10% on last year following
the full annualised effect of the rights issue in July 2014 and the
issue of 1.08 million shares (valued at GBP3.0m) forming part of
the consideration for the acquisition of Contour), underlying
diluted earnings per share for the year was 17.0 pence, up 10% on
last year and up 23% CER.
After the underlying adjustments discussed above, reported
profit before tax was GBP9.4m, up GBP5.1m from last year, with
reported fully diluted earnings per share of 10.9 pence, up 6.1
pence on last year.
GBPm/p FY 2015/16 FY 2014/15
-------------- --------------
PBT EPS PBT EPS
------ ------ ------ ------
Underlying 14.5 17.0p 11.8 15.4p
Underlying adjustments
Exceptional items (1.2) (4.2)
Earn-out accruals (0.6) (0.8)
Amortisation of
acquired intangibles (2.8) (2.1)
IAS 19 pension
cost (0.5) (0.4)
------ ------ ------ ------
Reported 9.4 10.9p 4.3 4.8p
------ ------ ------ ------
Working capital and ROTCE
Working capital of GBP53.2m at 31 March 2016 (FY 2014/15:
GBP43.8m) was 17% of final quarter annualised sales (FY 2014/15:
14%). This ratio is higher than last year due to the increasing
size of the more profitable Design & Manufacturing division
(with working capital of 21% as a percentage of sales, compared to
12% in Custom Distribution, primarily because of higher inventory
requirements). In the year, Design & Manufacturing accounted
for 48% of sales (51% when annualised for acquisitions), compared
with 37% last year. The increase in working capital of GBP9.4m
(+21%) over last year relates mainly to acquisitions in the year
and movements in exchange rates, with organic growth in working
capital limited to 3%.
Group trade debtors and trade creditors outstanding at 31 March
2016 were both slightly higher than last year at 56 days (up 3
days) and 62 days (up 2 days) respectively, mainly due to the
impact of acquisitions during the year (Flux, Contour and Plitron).
Group inventory turns were lower at 5.4 times (down 0.5 turns) due
to the acquired businesses being manufacturers, which carry higher
levels of inventory than Custom Distribution.
ROTCE (return on trading capital employed, as defined in note 5
to the attached summary financial statements) for the year was 23%.
This ratio is slightly lower than last year (FY 2014/15: 24%) due
to the initial impact of acquisitions, which should help drive
ratio growth over the medium term. Our three year target is to
achieve a ROTCE of at least 25%.
Cash flow
The Group had net debt of GBP38.1m at 31 March 2016 compared
with GBP19.0m at the end of last year. The movement primarily
relates to the debt funding of acquisitions during the year,
partially offset by strong free cash flow.
FY
GBPm 2015/16 FY 2014/15
--------- -----------
Net (debt)/cash at
1 April (19.0) 2.3
Free cash flow (table
below) 10.2 9.0
Acquisitions/disposals
(inc earn-outs/costs) (20.8) (74.2)
Exceptional payments (1.4) (2.1)
Customer prepayment - (3.2)
Net equity proceeds - 52.7
Legacy pension (1.6) (1.6)
Dividends (4.9) (3.6)
Cash flow from discontinued
operations - (0.2)
Foreign exchange impact (0.6) 1.9
Net debt at 31 March (38.1) (19.0)
--------- -----------
Acquisition costs of GBP20.8m include the cost of acquiring Flux
in November 2015 for GBP2.7m, Contour in January 2016 for a
GBP14.5m initial cash payment and Plitron in February 2016 for
GBP1.8m, together with related acquisition costs.
Exceptional cash payments in the year totalled GBP1.4m and
related mainly to the cash cost of Acal BFi restructuring costs
which were accrued for last year. Last year saw the reversal of a
significant customer prepayment of GBP3.2m which had been received
in two instalments (FY 2012/13: GBP2.6m and FY 2013/14: GBP0.6m)
but was only invoiced last year.
The increase in the dividend cash payment by GBP1.3m to GBP4.9m
reflects the increase in dividend per share (increased by 12% last
year) and the increased number of shares following the rights issue
in July 2014. The Group will continue to review the level of future
dividend increases in relation to its policy of long term dividend
cover of 2 to 3 times.
Operating cash flow and free cash flow for the year (see
definitions in note 5 to the financial statements), compared with
last year, are shown below.
FY FY
GBPm 2015/16 2014/15
--------- ---------
Underlying profit
before tax 14.5 11.8
Finance cost 1.8 1.6
Non cash items(1) 3.5 3.4
--------- ---------
Underlying EBITDA 19.8 16.8
Working capital (1.2) (0.5)
Capital expenditure (2.3) (2.4)
--------- ---------
Operating cash
flow 16.3 13.9
Interest (1.8) (1.6)
Taxation (4.3) (3.3)
---------
Free cash flow 10.2 9.0
Free Cash Flow
% 70% 76%
--------- ---------
(1) Key non-cash items are depreciation, amortisation and
share-based payments
Underlying EBITDA of GBP19.8m was 18% higher than last year.
GBP1.2m was invested into working capital, principally to support
growth in the Design & Manufacturing division during the year.
Capital expenditure of GBP2.3m was similar to last year.
Operating cash flow of GBP16.3m was GBP2.4m higher than last
year and represents 100% of underlying operating profit. This
compares favourably to our three year average target of 85%.
The increase in tax cash payments by GBP1.0m to GBP4.3m reflects
the higher profitability of the Group.
Free cash flow for the year (after finance costs and taxation)
of GBP10.2m was GBP1.2m higher than last year and represented 70%
of underlying profit before tax.
Banking facilities
During the second half of the year, the Group extended its five
year syndicated banking facility to GBP90m through the exercise of
its GBP20m accordion facility. The syndicated facility was set up
in June 2014 and is available both for acquisitions and for working
capital purposes. Average net debt was GBP43m across the final
quarter of the year.
With net debt at 31 March 2016 of GBP38.1m, the Group's gearing
ratio was 1.7 times (defined as net debt divided by underlying
EBITDA, adjusted for a full year's inclusion from acquisitions)
compared with our target gearing range of 1.5 to 2.0 times.
Balance sheet
Net assets of GBP101.9m at 31 March 2016 were GBP9.2m higher
than at the end of the last financial year (31 March 2015:
GBP92.7m). The increase primarily relates to the net profit after
tax for the year of GBP7.2m, net equity funding of GBP3.0m and
translation gains on currency net assets of GBP3.4m, partly offset
by dividends paid of GBP4.9m. The movement in net assets is
summarised below:
GBPm FY 2015/16
-----------
Net assets at 1 April
2015 92.7
Net profit after tax 7.2
Dividend paid (4.9)
Net equity funding 3.0
Currency net assets
- FX translation impact 3.4
Gain on defined benefit
scheme 0.5
Changes in fair value
of cash flow hedges (0.7)
Share based payments
(including tax) 0.7
Net assets at 31 March
2016 101.9
-----------
Risks and uncertainties
The principal risks faced by the Group will be covered in more
detail in the Group's Annual Report, due to be published later this
month. These risks include but are not limited to: the economic
environment, particularly within Europe; the risk of the UK leaving
Europe; the performance of acquired companies; major business
disruption; exposure to adverse foreign currency movements;
technological change; regulatory environment; cyber security;
international trade risk; obligations in respect of a legacy
defined benefit pension scheme; loss of key personnel; and
operational risks.
Acal's risk management processes cover identification, impact
assessment, likely occurrence and mitigating actions. Some level of
risk, however, will always be present. The Group is well positioned
to manage such risks and uncertainties, if they arise, given its
strong balance sheet and committed banking facility of GBP90m at
the end of the year.
Simon Gibbins
Group Finance Director
1 June 2016
Consolidated income statement
for the year ended 31 March
2016
2016 2015
notes GBPm GBPm
Revenue 6 287.7 271.1
Cost of sales (195.1) (186.7)
-------------------------------------------------- ------ -------- --------
Gross profit 92.6 84.4
Selling and distribution
costs (43.4) (44.0)
Administrative expenses
(including exceptional items) 7 (37.8) (34.3)
Operating profit 11.4 6.1
Finance revenue 0.3 0.1
Finance costs (2.3) (1.9)
Profit before tax 9.4 4.3
Tax expense (2.2) (1.4)
-------------------------------------------------- ------ -------- --------
Profit for the year 7.2 2.9
-------------------------------------------------- ------ -------- --------
Earnings per share 9
Basic 11.4p 5.0p
Diluted 10.9p 4.8p
Supplementary income statement
information
--------
2016 2015
Underlying Performance Measure GBPm GBPm
Operating profit 11.4 6.1
Add back: Exceptional items 7 1.8 5.0
Amortisation of acquired
intangible assets 2.8 2.1
IAS 19 pension administrative
charge 0.3 0.2
-------------------------------------------------- ------ -------- --------
Underlying operating profit 16.3 13.4
-------------------------------------------------- ------ -------- --------
Profit before tax 9.4 4.3
Add back: Exceptional items 7 1.8 5.0
Amortisation of acquired
intangible assets 2.8 2.1
Total IAS 19 pension charge 0.5 0.4
-------------------------------------------------- ------ -------- --------
Underlying profit before
tax 14.5 11.8
-------------------------------------------------- ------ -------- --------
Underlying earnings per
share 9
Basic 17.9p 16.3p
Diluted 17.0p 15.4p
Consolidated statement of comprehensive income
for the year ended 31 March 2016
2016 2015
notes GBPm GBPm
------------------------------------- ------- ------- ------
Profit for the year 7.2 2.9
---------------------------------------------- ------- ------
Other comprehensive income:
Items that will not be subsequently
reclassified to profit or loss:
Actuarial gain/(loss) on defined
benefit pension scheme 0.7 (2.0)
Deferred tax (charge)/credit
relating to defined benefit
pension scheme (0.2) 0.4
0.5 (1.6)
--------------------------------------------- ------- ------
Items that may be subsequently
reclassified to profit or loss:
Exchange differences on translation
of foreign subsidiaries 3.4 (8.0)
Effective portion of changes
in fair value of cash flow hedges (0.7) 0.6
---------------------------------------------- ------- ------
2.7 (7.4)
Other comprehensive profit/(loss)
for the year, net of tax 3.2 (9.0)
Total comprehensive profit/(loss)
for the year, net of tax 10.4 (6.1)
---------------------------------------------- ------- ------
Consolidated statement of financial position
at 31 March 2016
2016 2015
notes GBPm GBPm
------------------------------- ------ -------- --------
Non-current assets
Property, plant and equipment 14.7 13.8
Intangible assets - goodwill 13 63.6 51.6
Intangible assets - other 24.6 18.3
Deferred tax assets 5.5 4.9
------------------------------- ------ -------- --------
108.4 88.6
------------------------------- ------ -------- --------
Current assets
Inventories 42.9 39.8
Trade and other receivables 65.5 60.2
Other financial assets - 0.6
Cash and cash equivalents 19.9 26.7
------------------------------- ------ -------- --------
128.3 127.3
------------------------------- ------ -------- --------
Total assets 236.7 215.9
------------------------------- ------ -------- --------
Current liabilities
Trade and other payables (55.2) (56.2)
Other financial liabilities (0.8) (0.2)
Current tax liabilities (2.7) (2.3)
Provisions (3.0) (3.4)
------------------------------- ------ -------- --------
(61.7) (62.1)
------------------------------- ------ -------- --------
Non-current liabilities
Other financial liabilities (57.2) (45.5)
Pension liability 15 (5.6) (7.4)
Provisions (3.5) (2.7)
Deferred tax liabilities (6.8) (5.5)
(73.1) (61.1)
------------------------------- ------ -------- --------
Total liabilities (134.8) (123.2)
------------------------------- ------ -------- --------
Net assets 101.9 92.7
------------------------------- ------ -------- --------
Equity
Share capital 14 3.2 3.1
Share premium 95.6 92.7
Merger reserve 3.0 3.0
Currency translation reserve (4.4) (7.8)
Retained earnings 4.5 1.7
------------------------------- ------ -------- --------
Total equity 101.9 92.7
------------------------------- ------ -------- --------
These financial statements were approved by the Board of
Directors on 1 June 2016 and signed on its behalf by:
N J Jefferies S M Gibbins
Chief Executive Group Finance Director
Consolidated statement of changes in equity
for the year ended 31 March 2016
Attributable to equity holders of the Company
---------------------------------------------------------------------------------------------------
Currency
Share Share Merger translation Retained Total
capital premium reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2014 1.6 40.7 3.0 0.2 3.0 48.5
Profit for the
year - - - - 2.9 2.9
Other comprehensive
loss - - - (8.0) (1.0) (9.0)
---------- ---------- --------- --------------- ----------- --------
Total comprehensive
loss - - - (8.0) 1.9 (6.1)
Shares issued 1.5 54.4 - - - 55.9
Share issue costs - (2.4) - - - (2.4)
Share-based payments
including tax - - - - 0.4 0.4
Dividends (note
8) - - - - (3.6) (3.6)
At 31 March 2015 3.1 92.7 3.0 (7.8) 1.7 92.7
Profit for the
year - - - - 7.2 7.2
Other comprehensive
income - - - 3.4 (0.2) 3.2
---------- ---------- --------- --------------- ----------- --------
Total comprehensive
income - - - 3.4 7.0 10.4
Shares issued (note
14) 0.1 2.9 - - - 3.0
Share-based payments
including tax - - - - 0.7 0.7
Dividends (note
8) - - - - (4.9) (4.9)
At 31 March 2016 3.2 95.6 3.0 (4.4) 4.5 101.9
----------------------- ---------- ---------- --------- --------------- ----------- --------
On 14 January 2016, the Company issued 1,080,420 shares
("Consideration Shares") to the shareholders of Contour Holdings
Limited and its affiliate Contour Electronics Asia Limited
(together defined as "Contour") in connection with the acquisition
of Contour. The fair value of the shares issued was GBP3.0m.
The difference between the nominal value of the shares issued
and the gross proceeds was credited to the share premium
account.
During the year to 31 March 2016, 82,928 share options were
exercised by employees under the terms of the various share option
schemes (2015: nil).
Consolidated statement of cash flows
for the year ended 31 March 2016
2016 2015
notes GBPm GBPm
-------------------------------------- ------ ------- -------
Net cash flow from operating
activities 12 8.2 1.6
Investing activities
Acquisition of shares in
subsidiaries (net of cash/(debt)
acquired) 10 (19.9) (42.7)
Proceeds from the disposal
of business (net of disposal
costs) - 5.3
Purchase of property, plant
and equipment (1.6) (2.2)
Purchase of intangible assets
- software (0.7) (0.3)
Proceeds from disposal of
property plant and equipment 0.1 0.1
Interest received 0.3 0.1
Net cash used in investing
activities (21.8) (39.7)
-------------------------------------- ------ ------- -------
Financing activities
Net proceeds from the issue
of shares 14 - 52.7
Proceeds from borrowings 9.9 56.2
Repayment of borrowings - (51.2)
Dividends paid 8 (4.9) (3.6)
Net cash from financing activities 5.0 54.1
-------------------------------------- ------ ------- -------
Net (decrease)/increase in
cash and cash equivalents (8.6) 16.0
Cash and cash equivalents
at 1 April 26.6 11.9
Effect of exchange rate fluctuations 1.2 (1.3)
-------------------------------------- ------ ------- -------
Cash and cash equivalents
at 31 March 19.2 26.6
-------------------------------------- ------ ------- -------
Reconciliation to cash and
cash equivalents in the consolidated
statement of financial position
Cash and cash equivalents
shown above 19.2 26.6
Add back: bank overdrafts 0.7 0.1
Cash and cash equivalents
presented in current assets
in the consolidated statement
of financial position 19.9 26.7
---------------------------------------- ----- -----
1. Publication of non-statutory accounts
The preliminary results were authorised for issue by the Board
of Directors on 1 June 2016. The financial information set out
above does not constitute the Company's statutory accounts for the
years ended 31 March 2016 or 2015, but is derived from those
accounts. Statutory accounts for 2015 have been delivered to the
Registrar of Companies whereas those for 2016 will be delivered
following the Company's Annual General Meeting. 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 2006.
2. Basis of preparation
The financial information in this statement is 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 2006.
3. Going concern
The Group's business activities, together with factors which may
adversely impact its future development, performance and position,
are set out in the Chief Executive's Review. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities are described in the Finance Review.
The Group has significant financial resources, well established
distribution contracts with a number of suppliers and a broad and
stable customer base. As a consequence, the Directors believe that
the Group is well placed to manage its principal risks and
uncertainties successfully.
The Group's forecasts and projections, taking account of the
sensitivity analysis of changes in trading performance, show that
the Group is well placed to operate within the level of its current
committed facilities for the foreseeable future.
After making due enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
4. Accounting Policies
The accounting policies adopted are consistent with those of the
previous financial year.
5. Underlying Performance Measures
The Group uses a number of alternative (non Generally Accepted
Accounting Practice ("non GAAP")) financial measures, which are not
defined within IFRS. The Directors use these measures in order to
assess the underlying operational performance of the Group and as
such, these measures are important and should be considered
alongside the IFRS measures. The following non GAAP measures are
referred to in this Annual Report:
Underlying operating profit
"Underlying operating profit" is defined as operating profit
excluding exceptional items, amortisation of acquired intangible
assets and the IAS19 pension administration charge relating to the
Group's legacy defined benefit pension scheme.
Underlying EBITDA
"Underlying EBITDA" is defined as underlying operating profit
with depreciation, amortisation and equity settled share-based
payment expense added back.
Underlying profit before tax
"Underlying profit before tax" is defined as profit before tax
excluding exceptional items, amortisation of acquired intangible
assets and the total IAS19 pension charge relating to the Group's
legacy defined benefit pension scheme.
Underlying effective tax rate
"Underlying effective tax rate" is defined as the effective tax
rate on underlying profit before tax.
Underlying earnings per share
"Underlying earnings per share" is calculated as underlying
profit before tax reduced by the underlying effective tax rate,
divided by the weighted average number of ordinary shares (for
diluted earnings per share purposes) in issue during the
period.
Free cash flow
"Free cash flow" is defined as net cash flow before the
payment/receipt of exceptional items, payments to the legacy
defined benefit pension scheme, dividend payments, net proceeds
from equity fund raising, the cost of acquisitions and proceeds
from business disposals.
Return On Trading Capital Employed ("ROTCE")
"ROTCE" is defined as underlying operating profit, annualised
for acquisitions, as a percentage of net operating assets. Net
operating assets are defined as tangible and intangible assets
(excluding goodwill) plus working capital.
Organic basis
Reference to 'organic' basis included in the Chairman's
statement, Chief Executive's Operating review and Finance review of
the Strategic Report means at constant exchange rates ("CER"),
including the matching pre-acquisition periods of the Noratel Group
and Foss Group, which were acquired last year, and of Flux A/S,
Contour and Plitron Inc, which were acquired this year.
6. Operating segment information
The Group organises its businesses into two divisions, Design
& Manufacturing and Custom Distribution.
-- The Design & Manufacturing division manufactures custom
electronic products that are uniquely designed or modified from a
standard product for a specific customer requirement. The products
are manufactured at one of our in-house manufacturing facilities
or, in a few cases, by third party contractors.
-- The Custom Distribution division provides technically
demanding, customised electronic, photonic and medical products to
the industrial, medical and healthcare markets, both from a range
of high-quality, international suppliers (often on an exclusive
basis) and from Acal's Design & Manufacturing division.
These two divisions have been assessed as the reportable
operating segments of the Group. Within each reportable operating
segment are aggregated businesses units with similar
characteristics such as the method of acquiring products for sale
(manufacturing versus distribution), the nature of customers and
products, risk profile and economic characteristics.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
reported and evaluated based on operating profit or loss earned by
each segment without allocation of central administration costs
including directors' salaries, investment revenue and finance
costs, and income tax expense.
Segment revenue and results
Design Custom
& Manufacturing Distribution Unallocated Total
2016 GBPm GBPm GBPm GBPm
-------------------------- ----------------- --------------- -------------- --------
Revenue 137.6 150.1 - 287.7
-------------------------- ----------------- --------------- -------------- --------
Result
Underlying operating
profit/(loss) 16.5 4.7 (4.9) 16.3
Exceptional items
- Earn-outs (0.6) - - (0.6)
Exceptional items
- acquisition and
related
integration costs (1.0) - - (1.0)
Exceptional items
- restructuring - (0.2) - (0.2)
Amortisation of acquired
intangible assets (2.5) (0.3) - (2.8)
IAS 19 pension charge - - (0.3) (0.3)
-------------------------- ----------------- --------------- -------------- --------
Operating profit/(loss) 12.4 4.2 (5.2) 11.4
-------------------------- ----------------- --------------- -------------- --------
Design Custom
& Manufacturing Distribution Unallocated Total
2015 GBPm GBPm GBPm GBPm
-------------------------- ----------------- --------------- -------------- --------
Revenue 101.3 169.8 - 271.1
-------------------------- ----------------- --------------- -------------- --------
Result
Underlying operating
profit/(loss) 11.4 6.7 (4.7) 13.4
Exceptional items
- Earn-outs (0.8) - - (0.8)
Exceptional items
- acquisition and
related
integration costs (2.1) (0.4) - (2.5)
Exceptional items
- restructuring - (1.7) - (1.7)
Amortisation of acquired
intangible assets (1.6) (0.5) - (2.1)
IAS 19 pension charge - - (0.2) (0.2)
-------------------------- ----------------- --------------- -------------- --------
Operating profit/(loss) 6.9 4.1 (4.9) 6.1
-------------------------- ----------------- --------------- -------------- --------
The Group's revenue from external customers based on customer
locations is detailed below:
Revenue from Non current
external customers assets
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
UK 52.9 49.9 21.7 13.0
Europe 197.5 186.9 79.6 70.6
Rest of the World 37.3 34.3 7.1 5.0
287.7 271.1 108.4 88.6
------------------- ---------- ---------- ------ ------------
7. Exceptional items
2016 2015
GBPm GBPm
Earn-outs (a) (0.6) (0.8)
Acquisition and related integration
costs (b) (1.0) (2.5)
Acal BFi restructuring costs (c) (0.2) (1.7)
Net exceptional items (included
within administrative expenses) (1.8) (5.0)
-------------------------------------------- ------ ------
Tax impact of exceptional
items above - 0.1
Exceptional items after tax (1.8) (4.9)
-------------------------------------------- ------ ------
a) A GBP0.6m charge was provided for the earn-outs relating to
the acquisition of the Myrra Group and Contour.
b) Acquisition and related integration costs relate mainly to
the acquisitions of Flux, Contour and Plitron.
Last year, the acquisition and related integration costs related
mainly to the acquisitions of Noratel and Foss, and residual costs
relating to the integration of YEG into Acal BFi .
c) Acal BFi restructuring costs were GBP0.2m, which relate to
the termination of the UK Managing Director.
Last year, the Acal BFi business undertook a restructuring
programme to improve organisational efficiency in the business,
mainly in the UK. As a result, redundancy costs of GBP1.7m were
incurred during the year, of which a GBP0.4m charge was incurred in
respect of the termination of a major non-specialist supplier.
8. Dividends
Dividends recognised in equity as distributions
to equity holders in the year:
2016 2015
GBPm GBPm
------------------------------------- ------ ------
Equity dividends on ordinary
shares:
Final dividend for the year ended
31 March 2015 of 5.4p (2014:
5.0p) 3.4 2.1
Interim dividend for the year
ended 31 March 2016 of 2.33p
(2015: 2.2p) 1.5 1.5
------------------------------------- ------ ------
Total amounts recognised as equity
distributions during the year 4.9 3.6
------------------------------------- ------ ------
2016 2015
Proposed for approval at AGM: GBPm GBPm
Equity dividends on ordinary
shares:
Final dividend for the year ended
31 March 2016 of 5.72p (2015:
5.4p) 3.7 3.4
----------------------------------- ------ ------
Summary
Dividends per share declared
in respect of the year 8.05p 7.60p
Dividends per share paid
in the year 7.73p 7.20p
Dividends paid in the year GBP4.9m GBP3.6m
------------------------------- -------- --------
9. Earnings per share
Basic earnings per share is calculated by dividing the net
profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share is the basic 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 computations:
2016 2015
GBPm GBPm
Profit for the year attributable
to equity holders of the parent: 7.2 2.9
No No
Weighted average number of shares
for basic earnings per share 63,304,752 57,631,407
Effect of dilution - share options 3,008,388 3,318,230
------------------------------------- ----------- -----------
Adjusted weighted average number
of shares for diluted earnings per
share 66,313,140 60,949,637
------------------------------------- ----------- -----------
Basic earnings per share 11.4p 5.0p
Diluted earnings per share 10.9p 4.8p
------------------------------------- ----------- -----------
At the year end, there were 4,541,801 ordinary share options in
issue that could potentially dilute earnings per share in the
future, of which 3,008,388 are currently dilutive (2015: 4,194,192
in issue and 3,318,230 dilutive).
Underlying earnings per share is calculated as follows:
2016 2015
GBPm GBPm
Earnings for the year 7.2 2.9
Exceptional items 1.8 5.0
Amortisation of acquired intangible
assets 2.8 2.1
IAS 19 pension charge 0.5 0.4
Tax effect of the above (1.0) (1.0)
Underlying earnings 11.3 9.4
------------------------------------- ----------- -----------
No No
Weighted average number of shares
for basic earnings per share 63,304,752 57,631,407
Effect of dilution - share options 3,008,388 3,318,230
------------------------------------- ----------- -----------
Adjusted weighted average number
of shares for diluted earnings per
share 66,313,140 60,949,637
------------------------------------- ----------- -----------
Underlying basic earnings per share 17.9p 16.3p
Underlying diluted earnings per
share 17.0p 15.4p
------------------------------------- ----------- -----------
At the year end, there were 4,541,801 ordinary share options in
issue that could potentially dilute underlying earnings per share
in the future, of which 3,008,388 are currently dilutive (2015:
4,194,192 in issue and 3,318,230 dilutive).
10. Business combinations
During the year, the Group completed the acquisitions of three
businesses, namely: Flux A/S ("Flux"); Contour Holdings Limited and
its affiliate Contour Electronics Asia Limited (together defined as
"Contour") and Plitron Manufacturing Inc ("Plitron"). These
acquisitions have expanded the Group's design and manufacturing
capabilities.
The net cash flow on the acqusitions (including net cash/(debt)
acquired and before transaction costs) during the year was GBP19.9m
including GBP0.5m payments of working capital adjustment relating
to Foss AS Fiberoptisk Systemsalg ("Foss") and GBP0.2m deferred
consideration relating to RSG Electronic Components GmbH.
Acquisition of Flux
On 5 November 2015, the Group completed the acquisition of 100%
of the share capital and voting equity interests of Flux A/S
("Flux"), for a cash consideration of GBP2.7m. Flux owns 100% of
the share capital and voting equity interests of Flux International
Limited based in Thailand. The cash consideration and related
acquisition expenses were met from the Group's debt facility.
Flux, which is headquartered in Denmark and has a manufacturing
facility in Thailand, is a designer and manufacturer of customised
magnetic components for use across the range of industrial, high
reliability and space grade applications. Flux has been acquired
from Niels Overgaard Christensen Holdings A/S, a Danish company
founded in 1980 and which is wholly owned by Mr Niels Overgaard
Christensen.
The provisional fair value of the identifiable assets and
liabilities of Flux at the date of acquisition were as follows. The
Group is in the process of finalising the fair value of the
acquired assets and liabilities.
Provisional
fair value
recognised
at acquisition
GBPm
------------------------------- ----------------
Property, plant and equipment 0.5
Intangible assets - other 0.1
Intangible assets - customer
relationships 0.4
Inventories 1.6
Trade and other receivables 2.2
Net debt (1.3)
Trade and other payables (1.0)
Current tax liabilities (0.2)
Deferred tax liabilities
(non-current) (0.2)
--------------------------------- ----------------
Total identifiable net
assets 2.1
Provisional goodwill arising
on acquisition 0.6
----------------
Total investment 2.7
----------------
Discharged by
Cash 2.7
----------------
The fair value of the trade receivables is equal to their gross
amounts. It is expected that the full contractual amounts of the
trade receivables can be collected.
Included in the GBP0.6m of goodwill recognised above are certain
intangible assets that cannot be individually separated and
reliably measured from the acquiree, due to their nature. None of
the goodwill recognised is expected to be deductible for corporate
tax purposes.
Net cash outflows in respect of the acquisition comprise:
Total
GBPm
Cash consideration 2.7
Transaction costs of the acquisition
(included in cash flows from operating
activities)* 0.2
Net debt acquired 1.3
4.2
----------------------------------------- ------
*Transaction costs of GBP0.2m were expensed as incurred in the
year ending 31 March 2016 and were included as an exceptional item
within administrative expenses (note 7).
Acquisition of Contour
On 7 January 2016, the Group completed the acquisition of 100%
of the share capital and voting equity interests of Contour
Holdings Limited and its affiliate Contour Electronics Asia Limited
(together defined as "Contour"), for an initial consideration of
GBP17.5m. The initial consideration comprises GBP14.5m in cash,
funded from the Group's existing debt facilities, and the issue to
the vendors of new ordinary shares of 5p each in Acal ("New
Ordinary Shares") to the fair value of GBP3.0m. Contingent
consideration of GBP1.0m is payable in April 2019, subject to
certain conditions and an earn-out of up to GBP6.0m will be payable
after July 2019, subject to Contour achieving agreed growth
targets.
The fair value of the earn-out at acquisition was estimated to
be GBP1.1m. There were no changes in the fair value between the
acquisition date and 31 March 2016. The contingent consideration of
GBP1.0m is linked to the continued employment of the management
sellers and will be expensed on a straight line basis over the
period from acquisition date to 31 March 2019.
Contour designs and manufactures custom cabling assemblies and
connectors for use in industrial and medical applications.
Engineering and low volume production is located at Contour's
facility in Hampshire in the UK with higher volume production
undertaken through partners in Asia. The addition of Contour to
Acal's cabling capability will more than double the Group's
revenues in this technology area.
The provisional fair value of the identifiable assets and
liabilities of Contour at the date of acquisition were as follows.
The Group is in the process of finalising the fair value of the
acquired assets and liabilities.
Provisional
fair value
recognised
at acquisition
GBPm
------------------------------- ----------------
Property, plant and equipment 0.4
Intangible assets - customer
relationships 7.4
Inventories 1.0
Trade and other receivables 2.8
Cash and cash equivalents 1.3
Trade and other payables (1.2)
Current tax liabilities (0.5)
Provisions (current) (0.1)
Deferred tax liabilities
(non-current) (1.5)
--------------------------------- ----------------
Total identifiable net
assets 9.6
Provisional goodwill arising
on acquisition 9.0
----------------
Total investment 18.6
----------------
Discharged by
Cash 14.5
Shares 3.0
Contingent consideration 1.1
----------------
18.6
----------------
The fair value of the trade receivables is equal to their gross
amounts. It is expected that the full contractual amounts of the
trade receivables can be collected.
Included in the GBP9.0m of goodwill recognised above are certain
intangible assets that cannot be individually separated and
reliably measured from the acquiree, due to their nature. None of
the goodwill recognised is expected to be deductible for corporate
tax purposes.
Net cash outflows in respect of the acquisition comprise:
Total
GBPm
Cash consideration 14.5
Transaction costs of the acquisition
(included in cash flows from operating
activities)* 0.3
Cash acquired (1.3)
13.5
----------------------------------------- ------
*Transaction costs of GBP0.3m were expensed as incurred in the
year ending 31 March 2016 and were included as an exceptional item
within administrative expenses (note 7).
Acquisition of Plitron
On 1 February 2016, the Group completed the acquisition of 100%
of the share capital and voting equity interests of Plitron
manufacturing Inc. "Plitron" for a cash consideration of GBP1.8m.
The acquisition was funded from Acal's existing debt facility.
Contingent consideration of GBP0.3m will be payable to the
sellers upon receipt of certain trade receivables. The fair value
of the contingent consideration at acquisition date and 31 March
2016 was nil.
An additional contingent consideration of up to GBP0.1m will be
payable after March 2018, subject to Plitron achieving agreed
customer revenue targets. The fair value of the additional
contingent consideration at acquisition date and 31 March 2016 was
nil.
Plitron, based in Toronto, Canada, is a designer and
manufacturer of custom toroidal transformers for transportation,
medical and industrial applications.
The provisional fair value of the identifiable assets and
liabilities of Plitron at the date of acquisition were as follows.
The Group is in the process of finalising the fair value of the
acquired assets and liabilities.
Provisional
fair value
recognised
at acquisition
GBPm
------------------------------- ----------------
Property, plant and equipment 0.2
Intangible assets - customer
relationships 0.7
Inventories 0.5
Trade and other receivables 1.0
Cash and cash equivalents (0.2)
Trade and other payables (1.0)
Current tax liabilities (0.1)
Deferred tax liabilities
(non-current) (0.3)
--------------------------------- ----------------
Total identifiable net
assets 0.8
Provisional goodwill arising
on acquisition 1.0
----------------
Total investment 1.8
----------------
Discharged by
Cash 1.8
----------------
The fair value of the trade receivables is GBP0.3m lower than
their gross amounts.
Included in the GBP1.0m of goodwill recognised above are certain
intangible assets that cannot be individually separated and
reliably measured from the acquiree, due to their nature. None of
the goodwill recognised is expected to be deductible for corporate
tax purposes.
Net cash outflows in respect of the acquisition comprise:
Total
GBPm
Cash consideration 1.8
Transaction costs of the acquisition
(included in cash flows from operating
activities)* 0.1
Net debt acquired 0.2
2.1
----------------------------------------- ------
*Transaction costs of GBP0.1m were expensed as incurred in the
year ending 31 March 2016 and were included as an exceptional item
within administrative expenses (note 7).
11. Movements in cash and net debt
Year to 31 March 2016
31 March Foreign 31 March
2015 Cash exchange 2016
GBPm flow GBPm GBPm
GBPm
Cash at bank and in
hand 26.7 (8.4) 1.6 19.9
Bank overdrafts (0.1) (0.2) (0.4) (0.7)
--------------------------- --------- ------- ---------- ---------
Cash and cash equivalents 26.6 (8.6) 1.2 19.2
--------------------------- --------- ------- ---------- ---------
Bank loans under one
year (0.1) 0.2 (0.2) (0.1)
Bank loans over one
year (45.5) (10.1) (1.6) (57.2)
--------------------------- --------- ------- ---------- ---------
Total loan capital (45.6) (9.9) (1.8) (57.3)
--------------------------- --------- ------- ---------- ---------
Net debt (19.0) (18.5) (0.6) (38.1)
--------------------------- --------- ------- ---------- ---------
Bank loans over one year above include GBP56.8m (2015:GBP45.1m)
drawn down against the Group's revolving credit facility.
Year to 31 March 2015
31 March Foreign 31 March
2014 Cash exchange 2015
GBPm flow GBPm GBPm
GBPm
Cash at bank and in
hand 18.6 10.2 (2.1) 26.7
Overdrafts (6.7) 5.8 0.8 (0.1)
--------------------------- --------- ------- ---------- ---------
Cash and cash equivalents 11.9 16.0 (1.3) 26.6
--------------------------- --------- ------- ---------- ---------
Bank loans under one
year (0.1) (1.3) 1.3 (0.1)
Bank loans over one
year (9.5) (37.9) 1.9 (45.5)
--------------------------- --------- ------- ---------- ---------
Total loan capital (9.6) (39.2) 3.2 (45.6)
--------------------------- --------- ------- ---------- ---------
Net cash/(debt) 2.3 (23.2) 1.9 (19.0)
--------------------------- --------- ------- ---------- ---------
Supplementary information to the statement of
cash flows
Underlying Performance Measure
2016 2015
Continuing operations GBPm GBPm
Decrease in net cash (18.5) (23.2)
Add: Business combinations 20.8 79.5
Exceptional cash flow 1.4 2.1
Legacy pension scheme funding 1.6 1.6
Customer prepayment - 3.2
Dividends paid 4.9 3.6
Less: Net proceeds from share
issue - (52.7)
Net proceeds from disposal
of business - (5.3)
Cash flows from discontinued
operations - 0.2
----------------------------------------- ------- -------
Free cash flow 10.2 9.0
----------------------------------------- ------- -------
12. Reconciliation of cash flows from operating activities
2016 2015
GBPm GBPm
-------------------------------------- ------ --------
Profit for the year 7.2 2.9
Tax expense 2.2 1.4
Net finance costs 2.0 1.8
Depreciation of property,
plant and equipment 2.2 2.1
Amortisation of intangible
assets - other 3.4 2.6
Loss on disposal of intangible
assets - 0.1
Change in provisions (0.5) 0.3
Loss on disposal of business - 0.1
Pension scheme funding (1.6) (1.6)
IAS 19 pension administration
charge 0.3 0.2
Equity-settled share-based
payment expense 0.7 0.6
---------------------------------------- ------ --------
Operating cash flows before
changes in working capital 15.9 10.5
Decrease/(increase) in inventories 1.7 (2.3)
Decrease in trade and other
receivables 3.4 1.1
Decrease in trade and other
payables (6.4) (2.7)
---------------------------------------- ------ --------
Increase in working capital (1.3) (3.9)
---------------------------------------- ------ --------
Cash generated from operations 14.6 6.6
Interest paid (2.1) (1.7)
Income taxes paid (4.3) (3.3)
---------------------------------------- ------ --------
Net cash flow from operating
activities 8.2 1.6
---------------------------------------- ------ --------
13. Intangible assets - goodwill
Cost GBPm
At 1 April 2014 58.0
Arising from business combinations 36.6
Exchange adjustments (6.2)
At 31 March 2015 88.4
Arising from business combinations 10.6
Exchange adjustments 1.4
At 31 March 2016 100.4
------------------------------------ -------
Impairment GBPm
At 31 March 2015 and 31 March 2016 (36.8)
------------------------------------ -------
Net book value at 31 March 2016 63.6
------------------------------------ -------
Net book value at 31 March 2015 51.6
------------------------------------ -------
The carrying value of goodwill is analysed as follows:
2016 2015
GBPm GBPm
Custom Distribution
Acal BFi UK 3.3 3.3
Compotron 4.7 4.4
Medical 0.6 0.6
Design & Manufacturing
Stortech 3.6 3.6
Hectronic 0.6 0.5
MTC 2.0 1.9
Myrra 4.7 4.3
RSG 1.1 1.0
Noratel 27.1 26.8
Foss 5.2 5.2
Flux 0.6 -
Contour 9.0 -
Plitron 1.1 -
63.6 51.6
------------------------ ------ ------
14. Share capital
Allotted, called 2016 2016 2015 2015
up and fully paid Number GBPm Number GBPm
--------------------- ----------- ------ ----------- ------
Ordinary shares
of 5p each 64,212,568 3.2 63,049,220 3.1
--------------------- ----------- ------ ----------- ------
On 14 January 2016, the Company issued 1,080,420 shares
("Consideration Shares") to the shareholders of Contour Holdings
Limited and its affiliate Contour Electronics Asia Limited
(together defined as "Contour") in connection with the acquisition
of Contour. The fair value of the shares issued was GBP3.0m.
The difference between the nominal value of the shares issued
and the gross proceeds was credited to the share premium
account.
During the year to 31 March 2016, 82,928 share options were
exercised by employees under the terms of the various share option
schemes (2015: nil).
15. Pensions
The pension liability relates to the Sedgemoor Group Pension
Fund, which was brought into the Group on the acquisition of the
Sedgemoor Group in 1999. The fund, which is a defined benefit
scheme, is operated as a 'paid up' pension scheme with only
pensioners and deferred members.
Based upon the results of the triennial funding valuation at 31
March 2015, the Sedgemoor Scheme's Trustees agreed with Sedgemoor
Limited on behalf of the participating employers to continue the
participating employers' contributions under the deficit recovery
plan agreed at the previous valuation at 31 March 2012. This
required contributions of GBP1.6m p.a. increasing by 3% each April
payable over the period to 31 March 2022.
The results of the triennial funding valuation as at 31 March
2015 were updated to the accounting date by an independent
qualified actuary in accordance with IAS 19.
The pension liability at 31 March 2016 was GBP4.9m (2015:
GBP6.8m) and total pension charge was GBP0.4m (2015: GBP0.4m).
Additionally, a related deferred tax liability of GBP0.7m (2015:
GBP0.6m) is included in the pension liability resulting in total
liability of GBP5.6m (2015: GBP7.4m)
16. Events after the reporting date
Dividend
A final dividend of 5.72p per share (2015: 5.4p), amounting to a
dividend of GBP3.7m (2015: GBP3.4m) and bringing the total dividend
for the year to 8.05p (2015: 7.6p), was declared by the Board on 23
May 2016. The Acal plc financial statements do not reflect this
dividend.
17. Exchange rates
The profit and loss accounts of overseas subsidiaries are
translated into sterling at average rates of exchange for the year
and consolidated statement of financial positions are translated at
year end rates. The main currencies are the US Dollar and the Euro.
Details of the exchange rates used are as follows:
Year to 31 Year to 31
March 2016 March 2015
Closing Average Closing Average
rate rate rate rate
US Dollar 1.4383 1.5081 1.4793 1.6135
Euro 1.2633 1.3665 1.3750 1.2751
18. Annual Report and Accounts
The Annual Report and Accounts will be mailed to shareholders
and made available on the company's website (www.acalplc.co.uk) on
or before 17 June 2016. Copies will also be available at the
company's registered office: 2 Chancellor Court, Occam Road, Surrey
Research Park, Guildford, GU2 7AH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAVVRNOAVOAR
(END) Dow Jones Newswires
June 01, 2016 02:00 ET (06:00 GMT)