RNS Number:9419L
Deltron Electronics PLC
05 June 2003


For Immediate Release                                  5 June 2003


                            DELTRON ELECTRONICS PLC
                                INTERIM RESULTS



Deltron Electronics plc ("Deltron"), the specialist European electromechanical
solutions provider, announces its interim results for the six months ended 31st
March, 2003.


Financial Highlights:



  * Turnover at #31.7m (2002: #32.6m)
  * Gross margins at 31.3%
  * Profit before interest, tax, operating exceptional items and goodwill
    amortisation at #0.9m (2002: #1.1m)
  * Exceptional item of #0.3m for continued restructuring
  * Operating cash flow robust at #1.4m
  * Interim dividend maintained at 0.585p (2002: 0.585p)



Business Highlights:



  * Book-to-bill ratio above 1 throughout first half with order book at 2.7
    months of forecast sales
  * Franchises expanded, including Huber & Suhner, Harwin, Rafi, Alps & Toko
  * Design-in service continues to win market share



Paul Gourmand, Chairman of  Deltron commented:

"It remains too early to call a turn and we are determined to use our own
judgement and evidence from Deltron's performance rather than the assertions of
forecasters to plan for the future. We are winning customers, supplier support
and market share, but visibility remains poor."



For further information, please contact:


Deltron Electronics plc                                       Tel: 01638 561156
Christopher Sawyer, Derek O'Neill



Buchanan Communications                                       Tel: 020 7466 5000
Tim Anderson/Bobbie Swanson



CHAIRMAN'S STATEMENT



Introduction



The desire to call the turn in the electronic components cycle is almost
overwhelming.  After two years of unparalleled decline, around 40%, the danger
is that any good news is seen as the beginning of the recovery.



Turnover in the first half was 3% below last year. However, turnover in Q2 was
2% better than the corresponding period last year, a pleasant reversal of Q1
which was 8% below last year.



It is too early to say if this trend will continue.  In our AGM statement in
February we said that reading the market has never been more difficult and this
continues. Despite the poor first quarter, our book to bill ratio was above 1
throughout our first half and our order book has increased from #13.7m at 1
October 2002 to #15.7m at 31 March 2003 which represents 2.7 months of forecast
sales. All these factors would normally point to buoyant trading and, indeed,
our daily sales rate has increased every month since October.  The conundrum in
looking forward is that orders or bookings in the first quarter did not turn
into billings as would normally be expected. The position improved in the second
quarter, but feels too fragile and too soon for the Board to be confident of a
trend.



Deltron has always been second half loaded, but the poor first quarter means
Deltron produced a disappointing result in the first half.  Given the lack of
visablity and fragile economic climate the outcome for the year is too early to
call.



Market and Business Development



Throughout 2002, Deltron pursued the approval of manufacturers to extend the
sale of their products throughout our European network.  This has been a great
success.  We have also been very successful in gaining new franchises for our
network, which has increased from six countries in 2001 to nine after a series
of acquisitions.  We expect to continue winning new franchises during the coming
12 months.



Customers continue to be attracted by our design-in service.  It is the reason
why, as a specialist distributor, we have an exceptionally long order book.  We
continue to win market share, partly due, we believe, to service which has been
assisted by an expanding product range.



Prices remain relatively stable, an attribute of our selected area of activity -
electro-mechanical components.  However, cost savings from the merging of two
manufacturing sites have materialised more slowly than we had hoped, duplication
of effort while new equipment was still operating at sub-optimal levels
depressed margins.  Overall, our margins were down by 1% to 31.3% - still a
level far above that enjoyed by most distributors in other parts of the
electronic components market.



We said in February, customers are 'calling off' orders in smaller batches than
before and we believe that this is an industry trend at this stage of the
economic cycle.  This increases our activity and overhead levels for a lower
return.  It is to be expected in a risk-averse environment.  It also adds
uncertainty and decreases clarity, but is just another factor in a challenging
part of the cycle.



Financial Results



In the six months to 31 March 2003, turnover was #31.7m, 3% below last year. The
gross margin was 31.3% compared with 32.6% for the first half of last year, as
mentioned above this shortfall arises in the Manufacturing Division. Overheads
before operating exceptional items were #9.2m, compared with #9.6m for the same
period last year. The #0.2m profit on the sale of properties is for the sale and
leaseback of the UK Distribution site. The loss after taxation has reduced from
#1.0m to #0.4m in the first six month of the current year. The adjusted earnings
per share, excluding goodwill and operating exceptional items, were 0.7p
compared with 0.8p last year. The dividend has been kept at last year's level of
0.585p.



Prospects



Two years of decline with harsh economic and industry conditions seems to have
flattened out.  A poor first quarter was followed by three months, which met our
expectations.  Book to bill, order book and the success of our business model as
demonstrated by customers' enthusiasm for our design-in approach, are all
encouraging and have resulted in our increasing market share.  It remains too
early to call a turn and we are determined to use our own judgement and evidence
from Deltron's performance rather than the assertions of forecasters to plan for
the future. We are winning customers, supplier support and market share, but
visibility remains poor.



P R Gourmand
Chairman
4 June 2003



GROUP PROFIT AND LOSS ACCOUNT (unaudited)


For 6 Months ended 31 March


                                      2003         2003      2003           2002         2002      2002        Year
                                    Before     Goodwill     Total         Before     Goodwill     Total       ended
                                  Goodwill          and                 goodwill          and               30 Sep.
                                              operating                                                        2002
                                       and                                   and    operating
                                 operating  exceptional                operating
                               exceptional                                        exceptional
                                     items        items              exceptional        items 
                                                                           items
                         Note         #000         #000      #000           #000         #000      #000        #000

Turnover                            31,709            -    31,709         32,622            -    32,622      65,496
Cost of Sales                     (21,788)            -  (21,788)       (21,974)            -  (21,974)    (44,184)
Gross profit                         9,921            -     9,921         10,648            -    10,648      21,312
Operating expenses                 (9,193)        (719)   (9,912)        (9,582)      (1,326)  (10,908)    (20,750)
Operating profit /                     728        (719)         9          1,066      (1,326)     (260)         562
(loss)
Profit on sale of                      188                    188              -                      -         105
properties
Profit / (loss) on                     916        (719)       197          1,066      (1,326)     (260)         667
ordinary activities
before interest

Interest payable                     (618)            -     (618)          (625)            -     (625)     (1,321)
Interest receivable                     10            -        10             19            -        19          46

(Loss) / profit on                     308        (719)     (411)            460      (1,326)     (866)       (608)
ordinary activities
before tax
Taxation                    3        (107)           87      (20)          (237)          118     (119)        (60)

(Loss) / profit on                     201        (632)     (431)            223      (1,208)     (985)       (668)
ordinary activities
after tax
Dividends                            (172)            -     (172)          (165)            -     (165)       (515)

(Loss) / profit                         29        (632)     (603)             58      (1,208)   (1,150)     (1,183)
retained for the
financial period

Loss per share - (basic     4                              (1.5)p                                (3.5)p      (2.4)p
and diluted)
Adjusted earnings per       4                                0.7p                                  0.8p        3.5p
share - basic

Dividends per share                                        0.585p                                0.585p      1.755p



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)


For 6 Months ended 31 March
                                                                           2003         2002        Year ended
                                                                                                        30 Sep
                                                                                                          2002
                                                                           #000         #000              #000

(Loss) for the period                                                     (431)        (985)             (668)
Exchange differences                                                      (316)          269               125

Total Gains and Losses recognised during period                           (747)        (716)             (543)



MOVEMENT IN SHAREHOLDERS' FUNDS (unaudited)



For 6 Months ended 31 March


                                                                         2003          2002              Year
                                                                                                        ended
                                                                                                           30
                                                                                                     Sep 2002
                                                                         #000          #000              #000

Opening shareholders' funds                                            14,760        15,117            15,117
Loss for the period                                                     (603)       (1,150)           (1,183)
Share capital issued                                                       76             -               701
Exchange differences                                                    (316)           269               125

Decrease in shareholders' funds for the period                          (843)         (881)             (357)

Closing shareholders' funds                                            13,917        14,236            14,760



GROUP BALANCE SHEET (unaudited)



As at 31 March


                                                                             2003               2002          As at 30
                                                                            Total              Total         Sep. 2002
                                                                             #000               #000              #000
Fixed Assets:
Tangible assets                                                             3,378              5,185             5,157
Intangible assets                                                          15,254             16,057            15,608
                                                                           18,632             21,242            20,765
Current Assets:
Stocks                                                                      8,934              9,422             8,003
Debtors                                                                    17,400             15,941            15,328
Cash at bank and in hand                                                    1,774              2,419             2,389
                                                                           28,108             27,782            25,720
Creditors:
Amounts falling due within one year                                      (18,839)           (17,714)          (17,117)

Net Current Assets                                                          9,269             10,068             8,603

Total assets less current liabilities                                      27,901             31,310            29,368

Creditors:
Amounts falling due after more than one year                             (12,839)           (15,946)          (13,490)
Provision for liabilities and charges                                     (1,145)            (1,128)           (1,118)
                                                                           13,917             14,236            14,760

Capital and Reserves:
Called up share capital                                                     1,471              1,407             1,466
Reserves                                                                   12,446             12,829            13,294
Equity Shareholders' funds                                                 13,917             14,236            14,760



GROUP CASH FLOW STATEMENT (unaudited)



For 6 Months ended 31 March


                                                                                   2003           2002             Year
                                                                                  Total          Total            ended
                                                                                                           30 Sep. 2002
                                                                    Note           #000           #000             #000

Cash flow from operating activities                                    5          1,357          1,918            4,739
Returns on investment and servicing of finance                                    (606)          (584)          (1,257)
Taxation                                                                          (318)        (1,071)          (1,401)
Capital expenditure (net of proceeds)                                                 2          (436)            (543)
Acquisitions                                                           6          (542)          (465)            (750)
Equity dividend paid                                                              (345)          (562)            (731)
Cash flow before financing                                                        (452)        (1,200)               57
Financing                                                                       (1,233)        (1,634)          (2,787)

Change in Cash:                                                                 (1,685)        (2,834)          (2,730)



NOTE TO THE GROUP CASH FLOW STATEMENT (unaudited)



Reconciliation of cash flow to movement in net debt:


Opening net debt                                                               (14,747)       (15,163)         (15,163)

Change in Cash:                                                                 (1,685)        (2,834)          (2,730)
Cash flow from change in debt                                                     1,309          1,634            3,488

Change in net debt                                                                (376)        (1,200)              758
Inception of finance leases                                                           -           (47)            (236)
Amortisation of issue costs                                                        (21)           (16)             (35)
Exchange differences                                                              (506)             91             (71)

Movement in net debt                                                              (903)        (1,172)              416

Closing net debt                                                               (15,650)       (16,335)         (14,747)



INDEPENDENT REVIEW REPORT TO DELTRON ELECTRONICS PLC



Introduction



We have been instructed by the company to review the financial information for
the six months ended 31 March 2003, which comprises the profit and loss account,
the statement in total recognised gains and losses, the balance sheet, the cash
flow statement, the reconciliation of cash flow to movement in net debt, and
related notes 1 to 7 together with the movement in shareholder's funds. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.



This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board.  Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.



Directors' responsibilities



The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.



Review work performed



We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.  A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed.  A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions.  It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit.  Accordingly, we do not
express an audit opinion on the financial information.



Review conclusion



On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2003.



Chartered Accountants
Deloitte & Touche
Cambridge
4 June 2003



NOTES TO THE INTERIM ACCOUNTS



1.      Basis of preparation



The financial information for the year ended 30 September 2002 is derived
from the statutory accounts filed with the Registrar of Companies.  The
auditors' report on the statutory accounts was unqualified and did not contain a
statement under Section 237 of the Companies Act 1985.  The interim accounts do
not comprise statutory accounts within the meaning of Section 240 of the
Companies Act 1985 but have been reviewed by the Auditors whose report is on
page 8.



2.      Goodwill and Operating exceptional items



Included within administration costs is a charge of #438,000 (2002:
#432,000) in respect of the amortisation of goodwill for the period.



The Operating exceptional item of #281,000 is predominantly for the
closure and relocation of the Birmingham Sales office of Deltron UK Ltd. This is
relieved by a tax credit of #87,000. The comparative figure in the 2001 interim
was #894,000, before a tax credit of #118,000, in respect of the closure and
relocation of elements of the activity of Deltron Hawnt Ltd and for the
provision for the same of Deltron EMCON Ltd.



3.      Taxation



The taxation charge is based on the estimated effective rate for the year
ending 30 September 2003.



4.   Earnings per share



Earnings per share have been calculated using Financial Reporting Standard
14 (FRS 14).  The calculation of earnings per share, for the half-year is based
on the loss attribute to equity shareholders of #431,000 (2002: loss of
#985,000) and 29,383,494 (2002: 28,149,522) shares being the daily average of
the number of shares in issue during the period.



FRS 14 requires presentation of diluted EPS when a company could be called
upon to issue shares that would decrease net profit or increase net loss per
share. For a loss making company with outstanding share options, net loss per
share would only be increased by the exercise of out-of-the-money options. Since
it seems inappropriate to assume that option holders would act irrationally, no
adjustment has been made to dilute EPS for out-of-the-money share options and
there are no other diluting future share issues, diluted EPS equals basic EPS.



An adjusted earnings per share value is presented after adding back the
amortisation of goodwill and the operating exceptional item, net of taxation of
#632,000 (2001: #1,208,000). This has been presented in order to provide
comparability with other companies.



5.            Net cash flow from operating activities


                                                                                                    Year ended
                                                                2003               2002           30 Sept 2002
                                                                #000               #000                   #000

Operating profit/(loss)                                          197              (260)                    667
Release of government grant                                    (104)               (16)                   (84)
Amortisation of issue costs                                       21                 16                     14
Amortisation of goodwill                                         438                432                    864
Depreciation                                                     522                542                  1,052
(Profit)/loss on disposal of fixed assets                      (158)                  1                  (105)
Changes in
Stocks                                                         (466)              1,306                  2,373
Debtors                                                          855              1,202                  2,698
Creditors                                                         52            (1,305)                (2,741)
                                                               1,357              1,918                  4,739



6.      Acquisitions



The cash outflow shown of  #542,000 relates primarily to the payment of
deferred and contingent consideration in respect of the acquisition made in
November 1999 of the German distribution business C & K Components GmbH.



7.      Company information



Copies of this statement are being sent to all shareholders and are also
available from the Company Secretary, Deltron Electronics plc, Suffolk House,
Fordham Road, Newmarket, Suffolk CB8 7AA.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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