19th Jun 2006 07:01
Acal PLC19 June 2006 FOR RELEASE 7:00AM 19 JUNE 2006 ACAL plc (Leading pan-European, value-added technology based distributor providing specialist design-in, sales and marketing services) Announcement of Preliminary Results for the Year Ended 31 March 2006 £millions 2006 2005 Change (restated**)----------------------------------------------------------------------- Turnover - Continuing operations 257.0 243.7 +5%-----------------------------------------------------------------------EBIT* - Continuing operations 9.9 11.4 -13%----------------------------------------------------------------------- Profit before tax Continuing operations 8.4 9.9 -15% Including discontinued operations 9.7 11.1 -13%-----------------------------------------------------------------------Basic earnings per share Continuing operations 19.1p 23.6p -19% Including discontinued operations 22.3p 26.6p -16%-----------------------------------------------------------------------Dividends per share - relating to period 21.6p 21.6p ------------------------------------------------------------------------ • Sales of continuing operations up 5.5% at £257m, with growth in all divisions • EBIT down 13.2% at £9.9m, with the decline almost entirely in the first half, and a recovery to £5.8m in the second half • Progress continuing in obtaining new product lines and extending geographic coverage of existing ones for Electronic Components • IT Parts Services benefits from developing trend towards outsourcing of parts procurement and management • Agreement announced in May 2006 for sale of Air Conditioning and Refrigeration business for an initial consideration of £8m. • Total dividends for year maintained at 21.6p per share * EBIT - Earnings before interest, tax, the Group's share of profit of associated companies and exceptional items ** The restatement of the prior year's figures arises from the adoption of IFRS, the reclassification of the Air Conditioning and Refrigeration activities as discontinued, in the light of their sale, and the reallocation of central costs following that reclassification For further information:- Tony Laughton - Chief Executive 01483 544500 Jim Virdee - Finance Director 01483 544500 Brian Coleman-Smith/Nia Thomas/Allison ReidCubitt Consulting 020 7367 5100 Notes to Editors: 1 The Acal Group is a leading European, value-added technology based distributor providing specialist design-in, sales and marketing, as well as stock planning and procurement services in the fields of Electronic Components, IT Parts Services and IT Solutions. 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, Spain and Scandinavia. Westech Electronics, an associated company, is based in Singapore and covers the Far East region. CHAIRMAN'S STATEMENT Having completed my first year as Chairman, I am pleased to report thatfollowing a strategic review, in which the Board formulated its plan fordeveloping the business over the medium term, Acal has made good progress duringthe second half-year. On 25 May 2006 Acal began the process of rationalising the Group and announcedthe disposal of its air conditioning and refrigeration business for aconsideration of £8m subject to an adjustment based upon the net tangible assetsat completion. This business has been treated as discontinued in the accounts. Year-on-year sales growth of the continuing businesses was 5.5% - the secondhalf showing growth of 7.5% over the corresponding period in the prior year -reflecting second half order growth of 11% over the first. EBIT for the yearfell 13.2% to £9.9m. However EBIT for the second half at £5.8m was a significantimprovement on the first and down only 2% on the same period last year. TheGroup's continuing businesses made a 30% return on average capital employed. Costs have remained under close scrutiny with further selective rationalisationof back office/ logistics functions and continued selective headcount reductionsachieved across all businesses. The company has also prepared itself for theintroduction of RoHS (Restriction of Hazardous Substances) legislation, whichcomes into effect in July 2006, minimising risks to the business. Profit before taxation of the continuing businesses fell from £9.9m to £8.4m. Dividend The Board is recommending a final dividend of 14.4p per share, unchanged fromlast year, payable to shareholders on the register at 30 June 2006. Togetherwith the interim dividend of 7.2p it will make a total of 21.6p for the year,again unchanged from 2005. Corporate Governance Acal continues to strive for high standards of governance, details of which willbe given in the governance statement included as part of the Annual Reports &Accounts. Board Composition As reported last year, Rhys Williams stood down as a Non-executive Director on20 July 2005. At that time, Eric Barton became Acal's Senior IndependentDirector and Graham Williams became Chairman of the Remuneration Committee. TheBoard considers that as currently constituted and for a Company of Acal's size,an appropriate balance of skills is available. For this reason a replacement forRhys Williams has not been sought. Employees Despite the tough competitive environment in which Acal continues to trade, theefforts of its hard working and loyal workforce have been very apparent and muchappreciated by the Board. The Future and Strategy Acal's Electronic Component activities continued to show sales growth in 2006with a number of franchise wins during the year in both the UK and Europe. Ourstrategy for this business is to continue to focus on demand creation andextension of the product range with a view to increasing market share andconsolidating Acal's position as the only pan-European demand creationdistributor. The IT Parts Services business has enjoyed a good year with a number of contractwins. With service organisations increasingly outsourcing their partsmanagement, procurement and logistics to third parties, we look to build uponour success and attract more customers to this model. We have renamed our IT Products business ' IT Solutions' to reflect ourmarketing philosophy of offering customers business solutions rather than justsupplying hardware. The IT market remains highly competitive and our emphasiswill be upon maintaining margins and improving profitability coupled withcontinued enhancement of the product portfolio. This division now includes oursmall medical imaging and diagnostic equipment business. Across the Group we will continue to strive for more effective and efficientback office, logistics and support functions. Acal's strategy is to continue to increase its market share and not rely uponimprovement in market conditions. We believe this strategy will return Acal to apath of profitable growth with Electronic Components and IT Parts Services asthe main contributors. Richard Moon19 June 2006 CHIEF EXECUTIVE'S REVIEW Introduction The past year has seen an increase in sales in all divisions and for the Companyas a whole, up from £260.7m to £275.4m with EBIT down from £12.6m to £11.2m. Thecontinuing businesses increased sales 5.5% from £243.7m to £257.0m with EBITdown from £11.4m to £9.9m. Growth in sales came in the second half of the yearwhich in total was 15% up on the first half, reflecting the execution of ourplans to develop major differentiation between Acal and others in our markets:in Electronic Components and IT Solutions we have added a number of new worldclass suppliers, and in IT Parts Services we have extended our capability tomanage outsourced supplies of IT parts and services. The reduction in EBIT results primarily from increased reorganisation costs, abad debt and inventory obsolescence arising from the RoHS Directive, amountingin aggregate to £1.7m. We have begun the process of rationalising the Group with the sale of our AirConditioning and Refrigeration Components division announced in May. Performance Review Table The performance of Acal's continuing divisions in each of the years ended 31March 2006 and 2005 is set out below:- 2006 2005 (restated**) Sales EBIT* Sales EBIT as % of as % of as % of as % of £m Group £m Sales £m Group £m Sales-----------------------------------------------------------------------------------ElectronicComponents 104.0 41% 2.4 2.3% 100.1 41% 3.4 3.4% IT PartsServices 56.9 22% 5.2 9.1% 51.3 21% 4.6 9.0% IT Solutions 96.1 37% 2.3 2.4% 92.3 38% 3.4 3.7% ------- ------- ------- ------- ------- ------- ------- ------- 257.0 100% 9.9 3.9% 243.7 100% 11.4 4.7% ------- ------- ------- ------- ------- ------- ------- ------- * EBIT = Earnings before interest, tax, the Group's share of profit of associates and exceptional items, stated after full allocation of central costs. ** The restatement of the prior year's figures arises from the adoption of International Financial Reporting Standards, the reclassification of the Air Conditioning and Refrigeration activities as discontinued, in the light of their sale, and the reallocation of central costs following that reclassification Electronic Components "The only 'Pan-European Demand Creation Distributor" The Electronic Components Division, our largest, continues to develop and growwith sales up 3.9% from £100.1m to £104.0m but a 29% reduction in EBIT from£3.4m to £2.4m. EBIT was affected by a charge of £1.2m, £0.6m by way of RoHSstock provision and £0.6m in increased reorganisation costs. The sales growthwas primarily from our technology products which comprise semiconductors, powercomponents, system components and microwave and wireless products. Concentrationin this area has led to Acal being appointed by a number of world classmanufacturers, including Actel, Linear Technology, Microchip and Vicor, as theirpartner to develop sales in many European countries. It has also put us in theunique position of being the leading demand creation distributor in Europe. With an increasing number of suppliers working with Acal across Europe we havecommenced centralising our back office and logistics facilities in order toimprove efficiency and reduce our cost base. We are however increasing ourcustomer-facing resources to cater for the enlarged product portfolio andgrowing customer base. IT Parts Services ('ITPS') "Europe's premier IT Parts Management Company" IT Parts Services had an excellent year overall with sales rising 10.9% from£51.3m to £56.9m and EBIT 13% from £4.6m to £5.2m. The growth came from ATMParts and Computer Parts International which were acquired in 2002 and 2003respectively. The major areas of expansion for these businesses were largely, asanticipated, the introduction of new product in ATM and CPI's success inattracting more service organisations to outsource procurement and supply of ITparts - a capability that has made ITPS "Europe's premier IT Parts ManagementCompany". IT Solutions "Europe's Niche IT Solutions Distributor" Although we have succeeded in growing sales 4.1% from £92.3m to £96.1m, this hasbeen the most challenging of our businesses. EBIT has declined 32% from £3.4m to£2.3m, having been affected by a £0.2m RoHS stock provision and a £0.3m bad debtprovision. Profit was also reduced by pressure on both price and margin in our storagenetworking products where unit prices have come down by as much as 30%year-on-year and although now stabilised, show little prospect of improvement inthe core host bus adapter market. However, new products for this market fromCISCO, who have appointed Acal as an exclusive distributor for their MDS familyof products in Europe, recognises our competence and provides an excellentopportunity to return to growth. Headway, our Document Management and Imaging Product group and the Networkingand Security group achieved growth in sales and the latter in particular turnedin an excellent performance meeting our expectations. Both also have new productofferings although it is too early to quantify the timing and benefit in revenueand margin. Vertec, our small Medical Instrumentation business, which was previouslyincluded in Industrial Controls, is now allocated to IT Solutions as a result ofthe discontinued classification of the AC&R activities which were the dominantpart of Industrial Controls. Air Conditioning and Refrigeration As previously mentioned this business is being sold to our major supplier,Parker Hannifin Corporation, and I would like to thank all those who will beleaving us and wish them all every success in the future. We had got to knowParker well since 2004 when they acquired Sporlan Valve Co. and I have no doubtthat with their breadth of product capability there will be ample scope forfurther successes. Acal Infrastructure Continuing consolidation and centralisation of many 'back office' functions ofour Electronic Components and IT Solutions Divisions has resulted inconsiderable change to our own IT and logistic processes during the past year. Iam pleased to report that the changes have increased our efficiency and customersupport without any disruption to the service that we provide to our customers. Acal People The last three years have seen considerable change in the markets in which weoperate and it is to the credit of large numbers of Acal people that we are nowsuccessfully executing the strategy which has been developed. I take thisopportunity to thank them all. Tony Laughton19 June 2006 FINANCE DIRECTOR'S REVIEW Results for the Year Acal adopted International Financial Reporting Standards - IFRS - for the firsttime during the year ended 31 March 2006. The prior year's figures have beenrestated to reflect this change as well as the reclassification of the Group'sAir Conditioning and Refrigeration business as discontinued in the light of itssale, which was announced on 25 May 2006, and the reallocation of central costsfollowing this reclassification. Sales from continuing activities increased from £243.7m in 2005 to £257.0m inthe year ended 31 March 2006, an overall increase of 5.5%, with each of theGroup's divisions showing sales growth as compared to the prior year. Earningsbefore interest, tax, the Group's share of profit of associated companies andexceptional items ("EBIT") reduced from £11.4m in 2005 to £9.9m in the yearended 31 March 2006, an overall decline of 13.2%. This decline arose from areduction in the average gross margin and an increase in net operating expensesas explained below. The table below shows the Group's performance in the first and second halveseach of the last two years. Year Ended 31 March 2006 2005 (restated)Continuing business 1st Half 2nd Half Total 1st Half 2nd Half Total -------- -------- ----- -------- -------- ----- £mSales 119.8 137.2 257.0 116.1 127.6 243.7EBIT 4.1 5.8 9.9 5.5 5.9 11.4 This shows that the second half of the year to 31 March 2006 saw a significantrecovery which was achieved by growing product coverage and increasing marketshare, against a generally difficult market background. Overall the average gross margin during the year to 31 March 2006 was 25.3%(2005: 26.7%). The main reasons for this decline were: • A higher level of stock provisions, in particular provisions of £0.8m in connection with the RoHS (Restriction of Hazardous Substances) Directive. • The continuing margin pressure in the Group's IT Solutions business, particularly in relation to Storage Area Networking products. • The changing "mix" of sales in the Electronic Components business which has seen significant growth in sales of specialist semiconductor products and a reduction, in line with the general market, in sales of higher margin passive and electromechanical components. Net operating expenses of the Group's continuing business, excluding exceptionalitems, were £55.2m for the year ended 31 March 2006 (2005: £53.8m). The majorfactors contributing to the change were an increase of £0.6m in redundancy andreorganisation costs as well as a provision of £0.3m against a receivable. Ifthese two specific factors are excluded the increase was less than 1%. Theaverage number of employees working in the Group's continuing businesses duringthe year to 31 March 2006 was similar to that in the previous year at 954 (2005:955). During this period Acal has continued to invest in additional resources tosupport the strategy of growing its specialist semiconductor product coverageand the winning of new customers in the IT Parts Services business. There were two exceptional items arising during the year to 31 March 2006: aprofit of £0.6m on the sale of an investment and a cost of £0.8m incurred inwithdrawing from a part of the IT Solutions business. This activity contributed£2.7m to the sales of the IT Solutions business during the year with no materialcontribution to profit. The year under review saw Sterling, on average, marginally (0.1%) strongeragainst the Euro and 3.9% weaker against the US Dollar as compared to the prioryear. Accordingly exchange rates had an insignificant effect on the Group'ssales and profits for the year to 31 March 2006 when compared to the prior year. Acal's main associated company is Westech, which has its head office inSingapore and which distributes electronic components throughout the Far Eastexcluding Japan. Its sales grew from S$119m (approximately £38.5m) for the yearended 31 March 2005 to S$255m (approximately £86.3m). A significant proportionof this increase in sales related to lower margin fulfilment business andtherefore the percentage growth in profits was lower. This, together with thesale of the Group's interest in its South African associate towards the end ofthe prior year, led to Acal's share of profits of associated companies, whichunder IFRS is reported after tax, being unchanged at £0.4m. Net interest cost for the year was £1.6m (2005: £1.7m) before IAS19 financingcost of £0.1m (2005: £0.2m), reflecting the slightly lower average level of debtand slightly higher interest rates during the year. The net interest cost wascovered 6.2 times (2005: 6.7 times) by operating profit (before exceptionalitems) from continuing activities. The Group's effective tax rate for the year to 31 March 2006 was 33.8% (2005:34.7%) when calculated on profit before taxation excluding the Group's share ofpost tax profit from associates. Earnings per share for the year to 31 March 2006 were 22.3p (2005: 26.6p). The interim and proposed final ordinary dividends for the year will absorb £5.7m(2005: £5.7m) and are covered 1.05 times (2005: 1.23 times). Working Capital and Balance Sheet The Group places particular emphasis on the management of working capital. Forthis purpose Acal uses a model which is based on comparing each item of tradingassets to the three-month moving average of sales (TMMA). The table below showsthe target model and how the actual position compared with the model. 31 MarchContinuing Target 2006 2005Business TMMA TMMA TMMA ratio Ratio Ratio Trading fixed assets 0.5 0.5 0.6Current assets:Stock 1.2 0.9 1.1Debtors 2.3 2.4 2.5Current liabilities:Creditors (2.2) (2.4) (2.5)Tax (0.1) (0.1) (0.1) ------- ------- -------Total trading assets 1.7 1.3 1.6 ------- ------- ------- (Note: This trading assets model excludes goodwill, investments, non-current tax assets, net debt/cash and long term liabilities). The table above shows, for example, that our target is for stock to represent1.2 months of sales and the actual level of stock at 31 March 2006 represented0.9 months. The level of working capital at 31 March 2006 benefitted from a number ofshort-term factors which were not sustainable and will reverse in the periodafter the year-end. This effect is estimated to have amounted to around £8m to£9m and was reflected in the abnormally low level of net debt, £6.5m (2005:£12.3m) at the year end. There was a similar short-term benefit of around £4m to£5m at 31 March 2005. The Group's debt is provided principally by bilateral bank facilities negotiatedcentrally in the UK as well as locally at the operating companies. There arecommitted long term facilities of around £25m available to the Group in additionto short-term facilities which are used mainly for working capital needs. Capital expenditure for the year was £2.5m (2005: £2.3m) with depreciation andamortisation of fixed assets amounting to £3.2m (2005: £3.2m). An aggregateamount of £0.4m was paid by way of the final instalment of the consideration forthe acquisition of Mecodis SA and the purchase of a small proportion of theminority shareholding in CPI which is part of the Group's IT Parts Servicesbusiness. It has always been Acal's policy that its pension schemes should be of thedefined contribution type so that the extent of the Group's financialliabilities can be clearly ascertained. However, when Sedgemoor Limited, then alisted public company, was acquired in June 1999, it brought with it certaindefined benefit schemes, the principal one of which was the Sedgemoor GroupPension Fund (together "the Sedgemoor Scheme"). Soon after acquisition theSedgemoor Scheme was curtailed and all future service accrual ceased. Atriennial actuarial valuation of the Sedgemoor Scheme was conducted as at 31March 2006. At that date the gross pension liability under IAS19 was £9.1m(2005: £6.4m) and net of the relevant deferred tax it was £6.4m (2005: £4.5m).The increase in the pension liability has arisen principally from movements inbond yields and the adoption of updated mortality assumptions. Shareholders funds at 31 March 2006 were £69.9m (2005: £71.3m), the reductionfrom last year having arisen from the increase in pension liability explainedabove. Net debt at the same date represented 9.3% of shareholders funds ascompared to 17.3% a year earlier. Return on Capital Employed Return on average capital employed of the Group's continuing businesses (whichis calculated using operating profit before exceptional items and net assetsexcluding goodwill but adding back net debt) was 30% as compared to 32% in theyear before. Jim Virdee19 June 2006 consolidated income statementfor the year to 31 March 2006 note 2006 2005 £m £m---------------------------------------------------------------------Continuing operationsRevenue 3 257.0 243.7--------------------------------------------------------------------- Operating profit 9.7 11.4---------------------------------------------------------------------Analysed between:Operating profit before exceptional items 3 9.9 11.4Exceptional items - profit on disposal of investments 5 0.6 -Exceptional items - product withdrawal costs 5 (0.8) ----------------------------------------------------------------------Share of post-tax profits of associates 0.4 0.4Finance costs (2.3) (2.5)Finance revenue 0.6 0.6---------------------------------------------------------------------Profit before tax 8.4 9.9---------------------------------------------------------------------Analysed between:Profit before taxation before exceptional items 8.6 9.9Exceptional items - profit on disposal of investments 5 0.6 -Exceptional items - product withdrawal costs 5 (0.8) ----------------------------------------------------------------------Corporation tax expense:United Kingdom taxation (2.6) (3.1)Overseas taxation (0.1) (0.2)--------------------------------------------------------------------- (2.7) (3.3)---------------------------------------------------------------------Profit after taxation for the yearfrom continuing operations 5.7 6.6Discontinued operationsProfit for the year from discontinued operations 6 0.9 0.8---------------------------------------------------------------------Profit for the year 6.6 7.4---------------------------------------------------------------------attributable to:Equity holders of the parent 6.0 7.0Minority interests 0.6 0.4--------------------------------------------------------------------- 6.6 7.4--------------------------------------------------------------------- Dividends proposed per share inrespect of the periodInterim 7.2p 7.2pFinal 14.4p 14.4p---------------------------------------------------------------------Total 21.6p 21.6p--------------------------------------------------------------------- 2006 2005Earnings per share Continuing Total Continuing Total operations operations operations operations---------------------------------------------------------------------------Basic for profit for the year 19.1p 22.3p 23.6p 26.6p Diluted for profit for the year 19.1p 22.3p 23.6p 26.6p consolidated balance sheetat 31 March 2006 2006 2005 £m £m-------------------------------------------------------------------------Non-current assetsProperty, plant and equipment 6.7 6.9Goodwill 48.8 48.7Intangible assets - software 4.8 5.7Investments in associates 4.7 3.9Other financial assets 0.3 2.2Deferred tax assets 4.0 2.1------------------------------------------------------------------------- 69.3 69.5------------------------------------------------------------------------- Current assetsInventories 21.4 25.5Trade and other receivables 58.0 55.6Current tax assets 1.7 0.9Cash and cash equivalents 16.9 15.9------------------------------------------------------------------------- 98.0 97.9Current liabilitiesTrade and other payables (58.0) (56.0)Short-term borrowings (11.2) (8.0)Current tax liabilities (3.7) (1.9)Provisions (1.0) (0.7)------------------------------------------------------------------------- (73.9) (66.6)-------------------------------------------------------------------------Net current assets 24.1 31.3 Assets of discontinued operations classified as held for sale 6.2 - Non-current liabilitiesLong-term borrowings (12.2) (20.2)Pension liability (9.1) (6.4)Deferred tax liabilities (1.8) (1.5)Provisions (0.7) (0.2)------------------------------------------------------------------------- (23.8) (28.3)------------------------------------------------------------------------- Liabilities of discontinued operations classified as held for sale (4.1) --------------------------------------------------------------------------Net assets 71.7 72.5------------------------------------------------------------------------- EquityShare capital 1.3 1.3Share premium account 38.0 38.0Share scheme reserve 0.2 0.1Other reserves 1.8 1.1Retained earnings 28.6 30.8------------------------------------------------------------------------- Equity attributable to equityholders of the parent 69.9 71.3Minority interests 1.8 1.2-------------------------------------------------------------------------Total equity 71.7 72.5------------------------------------------------------------------------- consolidated cash flow statementfor the year to 31 March 2006 2006 2005 £m £m-----------------------------------------------------------------Profit for the yearContinuing operations 5.7 6.6Discontinued operations 0.9 0.8----------------------------------------------------------------- 6.6 7.4Taxation expense (includes £0.4m (2005:£0.4m) from discontinued operations) 3.1 3.7Share of results of associates (0.4) (0.4)Net finance costs 1.7 1.9Depreciation of property, plant and equipment 2.1 2.3Amortisation of intangible assets - software 1.1 0.9Change in provisions 0.7 (0.2)Gain on disposal of investments (0.6) -Gain on disposal of property, plant and equipment (0.1) (0.4)Pension scheme funding (0.7) (0.7)Equity-settled share-based payment expense 0.1 0.1-----------------------------------------------------------------Operating cash flows before changes in working capital 13.6 14.6-----------------------------------------------------------------Decrease/(increase) in inventories 2.1 (1.3)(Increase)/decrease in trade and other receivables (5.7) 0.6Increase in trade and other payables 5.9 3.0-----------------------------------------------------------------Decrease in working capital 2.3 2.3----------------------------------------------------------------- Cash generated from operations 15.9 16.9Interest paid (2.1) (2.5)Income taxes paid (2.9) (3.9)-----------------------------------------------------------------Net cash flows from operating activities 10.9 10.5----------------------------------------------------------------- Cash flows from investing activitiesAcquisition of subsidiary (0.4) (2.3)Proceeds from sale of associate - 0.4Proceeds from sale of investments 2.5 -Purchases of property, plant and equipment (2.2) (1.5)Proceeds from sale of property, plant and equipment 0.3 1.0Purchases of intangible assets (0.3) (0.7)Interest received 0.6 0.6Dividends received from associates 0.1 0.3-----------------------------------------------------------------Net cash inflow/(outflow) from investing activities 0.6 (2.2)----------------------------------------------------------------- Cash flows from financing activitiesProceeds from issue of ordinary shares - 0.2Repayments of borrowings (3.1) (0.1)Dividends paid to company's shareholders (5.7) (5.6)Dividends paid to minority interests - (0.1)-----------------------------------------------------------------Net cash outflow from financing activities (8.8) (5.6)----------------------------------------------------------------- Net increase in cash and cash equivalents 2.7 2.7Cash and cash equivalents at 1 April 8.0 5.2Effect of exchange rate fluctuations 0.1 0.1-----------------------------------------------------------------Cash and cash equivalents at 31 March 10.8 8.0----------------------------------------------------------------- Reconciliation to cash and cash equivalentsin the balance sheetCash and cash equivalents shown above 10.8 8.0Add back overdrafts 6.1 7.9-----------------------------------------------------------------Cash and cash equivalents shown withincurrent assets in the balance sheet 16.9 15.9----------------------------------------------------------------- consolidated statement of recognised income and expensefor the year to 31 March 2006 2006 2005 £m £m------------------------------------------------------------Actuarial loss on defined benefit pension scheme (3.4) -Deferred tax relating to pension scheme 0.8 (0.2)Investments - cumulative fair valueadjustments taken to income statement on disposal (0.4) -Foreign currency translation differences 0.7 0.3------------------------------------------------------------Net income and expense recognised directly in equity (2.3) 0.1Profit for the year 6.6 7.4------------------------------------------------------------Total recognised income and expense for the year 4.3 7.5Restatement for the effects of IAS 32 and 39 (i) 0.4 -------------------------------------------------------------Total recognised income and expense 4.7 7.5------------------------------------------------------------ Total recognised income and expenseattributable to:Equity holders of the parent 4.1 7.1Minority interests 0.6 0.4------------------------------------------------------------ 4.7 7.5------------------------------------------------------------ (i) On 1 April 2005, the balance sheet was restated for the effects of IAS 32and 39. reconciliation of movements in shareholders' equityfor the year to 31 March 2006 2006 2005 £m £m------------------------------------------------------------Shareholders' equity at start of year 71.3 69.6Total recognised income and expense 4.1 7.1Dividends (5.7) (5.6)Share capital issued - 0.2Share-based payments 0.1 0.1Movements in associates' reserves 0.1 (0.1)------------------------------------------------------------Shareholders' equity at end of year 69.9 71.3------------------------------------------------------------ Notes to the preliminary statement for the year ended 31 March 2006 1 Publication of non-statutory accounts The preliminary results were approved by the Board on 19 June 2006. Thefinancial information set out above does not constitute the Company's statutoryaccounts for the year ended 31 March 2006 or 2005, but is derived from thoseaccounts. Statutory accounts for 2005 have been delivered to the Registrar ofCompanies whereas those for 2006 will be delivered following the Company'sAnnual General Meeting. The auditors have reported on those accounts; theirreports were unqualified and did not contain a statement under section 237 (2)or (3) of the Companies Act 1985. 2 Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the annual consolidatedfinancial statements of the Group, for the year to 31 March 2006, be prepared inaccordance with IFRS adopted for use in the EU ('Adopted IFRS'). These resultsrepresent the first annual financial statements prepared in accordance withIFRS. The comparative figures for the year to 31 March 2005 have been restatedto reflect the transition to IFRS as set out in note 10. The accounting policiesadopted are shown on the company's website at www.acalplc.co.uk. 3 Segmental analysis Year to 31 March 2006 Electronic IT Parts IT Total components Services Solutions Unallocated continuing Discontinued Total operations operations operations £m £m £m £m £m £m £m---------------------------------------------------------------------------------------------- Revenue 104.0 56.9 96.1 - 257.0 18.4 275.4---------------------------------------------------------------------------------------------- Segment result 3.5 6.0 3.6 (3.2) 9.9 1.3 11.2Exceptional items:-Profit on disposal ofinvestments - - - 0.6 0.6 - 0.6 -Product withdrawalcosts - - (0.8) - (0.8) - (0.8)Net finance costs - - - (1.7) (1.7) - (1.7)Share of post-tax profits ofassociates 0.4 - - - 0.4 - 0.4----------------------------------------------------------------------------------------------Profit before taxation 3.9 6.0 2.8 (4.3) 8.4 1.3 9.7 Taxation (2.7) (0.4) (3.1)----------------------------------------------------------------------------------------------Profit for the year 5.7 0.9 6.6---------------------------------------------------------------------------------------------- Year to 31 March 2005 Total Electronic IT Parts IT continuing Discontinued Total components Services Solutions Unallocated operations operations operations £m £m £m £m £m £m £m----------------------------------------------------------------------------------------------Revenue 100.1 51.3 92.3 - 243.7 17.0 260.7---------------------------------------------------------------------------------------------- Segment result 4.7 5.0 4.4 (2.7) 11.4 1.2 12.6Net finance costs - - - (1.9) (1.9) - (1.9)Share of post-taxprofits ofassociates 0.4 - - - 0.4 - 0.4----------------------------------------------------------------------------------------------Profit beforetaxation 5.1 5.0 4.4 (4.6) 9.9 1.2 1.1 Taxation (3.3) (0.4) (3.7)----------------------------------------------------------------------------------------------Profit for the year 6.6 0.8 7.4---------------------------------------------------------------------------------------------- 4 Geographic analysis of revenue by destination 2006 2005 £m £m------------------------------------------------------------------------United Kingdom 114.0 108.0Continental Europe 136.8 128.1Rest of the World 6.2 7.6------------------------------------------------------------------------ 257.0 243.7------------------------------------------------------------------------ 5 Exceptional items 2006 2005 £m £m------------------------------------------------------------------------Other operating income: Profit on disposal of investments 0.6 ------------------------------------------------------------------------- Other operating expenses: Product withdrawal costs (0.8) ------------------------------------------------------------------------- 6 Discontinued operations A contract for the disposal of the Air Conditioning and Refrigeration businesswas signed on 25 May 2006 with completion expected before the end of July 2006.The results of this business have been shown separately under discontinuedoperations and its assets and liabilities classified as held for sale. The profit for the year from discontinued operations is derived as follows: 2006 2005 £m £m------------------------------------------------------------------------Revenue 18.4 17.0Expenses (17.1) (15.8)------------------------------------------------------------------------Profit before financing and tax 1.3 1.2Finance costs (net) - -------------------------------------------------------------------------Profit before tax 1.3 1.2Income tax expense (0.4) (0.4)------------------------------------------------------------------------Profit for the year from discontinued operations 0.9 0.8------------------------------------------------------------------------ 7 Dividends The Directors have proposed a final dividend of 14.4 pence per share, payable on11 August 2006 to shareholders on the register at 30 June 2006. In accordancewith IAS 10, this dividend has not been reflected in the balance sheet at 31March 2006. The amount of this final dividend is £3.8 million. An interimdividend of 7.2 pence per share was paid in January 2006, and the cost of thisdividend was £1.9 million. 8 Earnings per share Basic earnings per share is calculated by dividing the net profit for the yearattributable to ordinary shareholders of by the weighted average number ofordinary shares outstanding during the year. Diluted earnings per share is the basic and adjusted earnings per share afterallowing for the dilutive effect of the conversion into ordinary shares of theweighted average number of options outstanding during the period. The following reflects the income and share data used in the basic and dilutedearnings per share calculations: 2006 2005 million million------------------------------------------------------------------------Weighted average number of shares for basic earnings per share 26.4 26.4Effect of dilution - share options - -------------------------------------------------------------------------Adjusted weighted average number of shares for diluted earnings per share 26.4 26.4------------------------------------------------------------------------ 2006 2005 £m £mProfit attributable to equity holders of the parent 6.0 7.0------------------------------------------------------------------------ 9 Reconciliation of net cash flow to movements in net debt 2006 2005 £m £m------------------------------------------------------------------------Net increase in cash and cash 2.7 2.7equivalentsCash outflow from decrease in debt 3.0 0.1Effect of exchange rate fluctuations 0.1 0.1------------------------------------------------------------------------Decrease in net debt 5.8 2.9 Net debt at beginning of the year (12.3) (15.2)------------------------------------------------------------------------ Net debt at end of the year (6.5) (12.3)------------------------------------------------------------------------ 10 Explanation of transition to IFRS A reconciliation of equity at 1 April 2004, the date of transition to IFRS, andat 31 March 2005 was provided in the IFRS restatement document issued on 28September 2005. A reconciliation of profit for the year ended 31 March 2005 wasalso provided within that document. A copy of the restatement document can befound on the Company's website at www.acalplc.co.uk. The comparatives reportedare unchanged from that statement except for an IAS 12 adjustment relating todeferred tax on the retained earnings of associates, detailed below, thereclassification of the revaluation reserve to retained earnings and, asrequired under IFRS, the separate disclosure of the results, assets andliabilities of discontinued operations. IAS 12 requires that a deferred tax liability be recognised to reflect the taxconsequences that would follow from the distribution of profits by the Company'sassociates. The Company has recognised an additional £0.3 million liability at 1April 2004 and 31 March 2005. There is no impact on the result for the year to31 March 2005. 11 Annual Report and Accounts The Annual Report and Accounts will be mailed to shareholders on or before 7July 2006. Copies will also be available from: - Acal plc 2 Chancellor Court Occam Road Surrey Research Park Guildford GU2 7AH The results will not be advertised in any newspaper Ends This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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