Eyebrows should arch whenever companies make a big deal of their worker safety record. So too with 'translation benefits'; a familiar refrain in the second half of this year, which usually serves to obfuscate underlying performance. Acal (ACL) recorded a double-digit rise in revenue at the half-year mark, but strip out currency effects, and include the pre-acquisition revenue of acquired businesses, and ongoing revenue fell as European sales fell in its custom distribution division, which serves the industrial, healthcare and medical markets.
On the plus side, Acal did crank up the gross margin by 140 basis points, but exceptional costs relating to the customised electronics group's efficiency and cost reduction programme fed through into a steep fall in reported earnings. By management's own measure, which discounts exceptional items, amortisation and pension charges, the group's earnings were actually 10 per cent to the good.
There may be a fog in the space between reported and adjusted earnings, but shareholders can certainly take encouragement from Acal's operating performance. The group entered the second half with a record order book, while comparable operating cash flow was 37 per cent ahead.
Broker Peel Hunt forecasts adjusted profit of £16.6m for the March 2017 year-end, leading to EPS of 18.5p (from £14.5m and 17p FY2016).
| ACAL (ACL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 210p | MARKET VALUE: | £135m | |
| TOUCH: | 208p-211p | 12-MONTH HIGH: | 285p | LOW: 205p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 170p* | NET DEBT: | 38% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 142 | 4.8 | 5.7 | 2.33 |
| 2016 | 157 | 1.9 | 1.9 | 2.45 |
| % change | +10 | -60 | -67 | +5 |
Ex-div: 22 Dec Payment: 13 Jan *Includes intangible assets of £94m, or 146p a share | ||||
