Acal grows in challenging markets

Acal saw further underlying earnings growth in the six months to the end of September in challenging markets and has revised upwards its strategic targets and announced the appointment of a chairman designate.

Group sales for the first half increased by 10% to £156.7m and by 1% at constant exchange rates, the difference reflecting the benefit of sterling weakness since last year.

First half underlying operating profit, which excludes acquisition-related costs, exceptional costs and IAS19 pension cost, increased by £1.1m to £8.8m (up 14% and up 1% CER). Underlying profit before tax increased by £0.5m to £7.3m (up 7%).

Underlying operating margin increased by 0.2ppts to 5.6% reflecting the focus on higher margin products and solutions, a key differentiator for the group. Underlying earnings per share for the period increased by 10% to 8.5p (up from 7.7p last year).

There were exceptional costs for the period of £3.4m mainly related to the Group's efficiency and cost reduction programme, meaning that on a reported basis, profit before tax for the period was £1.9m (H1 2015/16: £4.8m) with fully diluted earnings per share of 1.8p (H1 2015/16: 5.4p).

Net debt at 30 September 2016 was £41.1m, with a Group gearing ratio of 1.9 times, being defined as net debt divided by underlying EBITDA, annualised for acquisitions.

The group says that given the good progress in recent years and the level of opportunities ahead, the board has increased each of the mid-term KSIs. The target share of D&M sales has increased to 75% from 65%; target underlying operating margin has increased to 8.5% from 7%; and the target for internationalising the business beyond Western Europe has increased to 30% from 20%.

The board is recommending an increase in the interim dividend of 5% to 2.45p per share (H1 2015/16: 2.33p per share). Since 2010, the full year dividend per share has risen by 58%.

Group chief executive Nick Jefferies said: "With underlying earnings per share up 10%, the Group is making good progress and we remain on track for the full year. Whilst, as expected, organic sales slowed during the period as a consequence of the wider economic uncertainty, we have benefited from the translation of overseas profits at more favourable exchange rates. Orders continue to strengthen and we enter the second half with a record high period end order book.

"Margins remain robust, reflecting the strength of our value proposition, and we have taken decisive actions to make the Group more efficient which will deliver benefits next year and beyond.

"Acquisition activity was slower in the first half as a consequence of these macro uncertainties, but we are now seeing greater activity and have a pipeline of opportunities being developed.

"Over the last three years, underlying EPS has increased by over 70%. We are building a world class electronics business and have many exciting opportunities to deliver value ahead of us."

Acal also announced the appointment of Malcolm Diamond as non-executive chairman with effect from 1 April 201 He will succeed Richard Moon, who will step down from the Acal board with effect from 31 March, having served as non-executive chairman since April 2005.

Diamond joined the Acal board as a non-executive director on 1 November 2015.

At 8:16am: (LON:ACL) Acal PLC share price was +7.75p at 212.25p