In July, Acal (ACL) completed its £69m acquisition of Noratel, a designer and manufacturer of electromagnetic parts. The purchase underlines the shift in Acal's corporate identity from general electronics supplier to specialised electronics designer and manufacturer. It also boosted these results, to the tune of about £1.5m at the operating level. On an annualised basis it will double group profits, management told us.
However, partly funded by a £55m rights issue, the purchase hit earnings per share, and also saddled the income statement with £2.5m of acquisition and integration costs, sapping reported profits. These exceptional costs aside, the group's focus on its design and manufacturing division - now responsible for less than a third of sales, but about 60 per cent of profits - seems to be paying off. The unit more than doubled its underlying operating profits to £4.6m.
The low-margin 'custom distribution' business performed more solidly, with sales up 6 per cent at constant currencies to £82.3m. The group intends to develop both divisions organically, with design and manufacturing probably accounting for two-thirds to three-quarters of growth, management said. Expansion plans include pushing further into the American market by developing Noratel's small US business, and developing sales and engineering capabilities in China.
Broker Oriel Securities expects adjusted EPS of 15.7p for the full year, up from 11.6p in 2013-14.
ACAL (ACL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 207p | MARKET VALUE: | £130m | |
| TOUCH: | 206-209p | 12-MONTH HIGH: | 304p | LOW: 180p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 122 | |
| NET ASSET VALUE: | 153p* | NET DEBT: | 15% | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 100 | 2.7 | 5.8** | 1.80** |
| 2014 | 121 | 0.1 | -1.1 | 2.20 |
| % change | +20 | -96 | -120 | +22 |
Ex-div: 29 Dec Payment: 16 Jan *includes intangible assets of £69m or 110p per share **Adjusted for £55m rights issue in July 2014 | ||||
