Final Results

Bulgin PLC 10 May 2001 Bulgin PLC NEWS RELEASE Hurst House, 131-133 New London Road Chelmsford, Essex CM2 0QN Telephone: 01245 494 542 Facsimile: 01245 211 939 Embargo: 0730 Hrs 10th May 2001 Strong export sales with an excellent performance from Milmega Bulgin PLC ('Bulgin'), which manufactures and distributes Electrical & Electronic Components and Power Electronics products, announces results for the year ended 31 January 2001. Highlights o Turnover increased by 22% to £17.5 million (2000: £14.4 million) o Profit before exceptionals, goodwill and tax increased by 33% to £1 million (2000: £0.75 million) o Earnings per share before goodwill amortisation increased by 48% to 1.57p (1.06p) o Unchanged final dividend of 0.25p per share (0.25p) o Milmega, a leading designer and manufacturer of high power solid state microwave amplifiers, acquired in June 2000 for £1.3 million in cash o Controlling interest in AFI, a radio frequency amplifier company in Long Island, New York, acquired in February 2001 o Management further strengthened with new appointments at Bulgin Components and at Bulgin Power Source o Export sales increased by 63% to £7.6 million Chairman Alastair Winter commented 'Bulgin is pursuing a strategy to develop by acquisition and to upgrade capacity, systems and professional management throughout the Group. The Bulgin brand is well known in components markets and the Group is committed to exploiting its full potential there. Substantial growth opportunities are available in the power electronics sector where the market is demanding ever more sophisticated and reliable solutions. Bulgin will ensure that a high level of technical skill and resource continues to be invested into our products and systems.' For further information please contact: Brian Emerson Rick Thompson Hamish McFall Chief Executive Dugald Carlean Ana Nogales Bulgin PLC Teather & Greenwood Tavistock Communications Tel: 01245 494 542 Tel: 020 7426 9073 Tel: 020 7600 2288 Chairman's Statement Bulgin PLC serves the global market with electrical and electronic products to meet customers' connectivity and power requirements. Results In the year to 31 January 2001 turnover on continuing operations increased by 19% from £13.4 million to £15.9 million. Total turnover increased by 22% from £14.4 million to £17.5 million. Profit before exceptional items, amortisation of goodwill and taxation increased satisfactorily by 33% from £0.75 million to £1.0 million. As a result of higher investment, net gearing increased to 38% from 3% and cash decreased by £1.6 million compared with a cash increase of £ 1.2 million in the year to 31 January 2000. Earnings per Share and Dividends Earnings per share before goodwill amortisation were 1.57p, up an encouraging 48% from 1.06p in the previous year (after taking into account the issue of 16 million new shares to effect the enfranchisement of the 'A' Non Voting Ordinary shares in April 2000), and were 1.35p after goodwill amortisation. In line with the dividend policy that I outlined in my statement last year your Board is recommending an unchanged final dividend of 0.25p per share to shareholders on the register at 29 June 2001, making a total dividend of 0.5p per share. This represents a continuing strong commitment to investing for future growth. Acquisitions In my statement last year I referred to discussions being held to acquire two power electronics businesses. In June 2000 Bulgin acquired the entire share capital of Milmega Ltd for £1.3 million in cash. Milmega, which is located in Ryde, Isle of Wight, is a leading designer and manufacturer of high power solid state microwave amplifiers and systems which are used in the communications, electromagnetic compatibility (EMC), medical and defence markets. I am pleased to report that Milmega has contributed strongly to the Group's performance in the year under review. Although discussions regarding the second business were terminated in December 2000, our active strategy means that we have a number of candidates under consideration at any one time. On 28 February 2001 Bulgin acquired a controlling interest in AFI, a small radio frequency amplifier company in Long Island, New York. This acquisition is the beginning of a stronger commitment to the USA market for power electronics products and builds logically on Milmega's activities. Future Strategy and Outlook Bulgin is pursuing a strategy to develop by acquisition and to upgrade capacity, systems and professional management throughout the Group. The Bulgin brand is well known in components markets and the Group is committed to exploiting its full potential there. Substantial growth opportunities are available in the power electronics sector where the market is demanding ever more sophisticated and reliable solutions. Bulgin will ensure that a high level of technical skill and resource is invested into products and systems. Despite our further progress in the year ended 31 January 2001 and our continuing confidence in the long term, trading conditions in the early part of 2001 have been patchy and uncertainty has led to some of our customers scaling back their buying plans. We shall not rely on a global economic recovery in the short term and expect to achieve growth in the current year. AS Winter Chairman Chief Executive's Review Components Bulgin Components and BP Purchasing continued with strategies to increase business from exports and sales to original equipment manufacturers. Both companies have modest shares of very large global markets where we believe that significant gains can be achieved through focus on strong marketing plans and operating efficiencies. Bulgin Components manufactures connectors, switches and other electromechanical products for industrial markets. The year under review featured several important developments with the appointment of Richard Hinds as Managing Director in May 2000 followed by further investment in new IT and production automation equipment to increase capacity, reduce costs and keep tight control over delivery commitments to our customers. Turnover increased by 7% to £10.9 million as new products came on stream and volumes of existing key products increased. Exports increased by 22% to £4.4 million. The market slowed in the second half and the order book at the end of January 2001 represented approximately 9 weeks of sales. Our cost reduction strategy resulted in a further improvement in gross margins. Net margins were very slightly depressed by the impact of upgrading the company's systems but are considered to be satisfactory as the company gears up for a bigger future. BP Purchasing sources electronic components for client customers throughout the industrialised world. Turnover increased by 107% to £1.8 million and the company generated a very satisfactory contribution to the Group's profits. Exports increased by 83% to £1.4 million. Although we are confident that the long term prospects for these companies are good, the current business climate is difficult and there is uncertainty within the components industry as to the timing of a recovery. This has impacted order levels and turnover in the first half of the current year. Consequently in April 2001 we took steps to cut our overhead costs by way of a workforce reduction at Bulgin Components which came into effect on 27 April. Overheads have been reduced by approximately 9% to offset what we believe will be the effect of the economic climate on the current year. Power Electronics Bulgin Power Source manufactures power supplies and power management systems for critical applications in information technology, security and access, automation, process control and communications. Turnover for the year under review increased by 35% to £3.1 million. Exports increased by 39% to £0.4 million. The company is investing to develop its product range and traded profitably in the second half as forecast in the Interim Report. At the year end the order book stood at £2.4 million. David Brannock was appointed Managing Director of Bulgin Power Source on 5 March 2001 and he will ensure that the strategic plan to turn this company into a high level power systems and solutions provider is carried through to its conclusion. Grant Ashley will focus on his role as Technical Director. Milmega manufactures high power, solid state, microwave amplifiers which are used in communication and electromagnetic compatibility (EMC) test systems. Milmega amplifiers are also used in sophisticated defence systems, medical equipment and for testing nuclear physics theory. In its first 7 months as a Bulgin company, Milmega's performance was excellent. Turnover was £1.7 million and the company has immediately contributed significantly to the Group's profitability. Exports accounted for 88% of turnover. At the year end Milmega's order book stood at £1.7 million. Milmega is recognised internationally for its high level design skills and solutions to customer needs. Exciting new products are under development and a high level of customer enquiries from around the world has continued. Strategy The Group's strategy is to grow its business interests through acquisitions and marketing agreements in order to extend the product and service offering to the customer. AFI, our new venture in Long Island, New York, will become the base for developing Milmega's business further in North America, which accounted for 13% of Milmega's turnover in the year under review. Long Island is one of the major high frequency technology areas in the USA and offers a good supply of well trained and experienced technical personnel. AFI is also developing its own complementary high frequency amplifier products for the USA and international markets. TMD Technologies, the UK manufacturer of high frequency, high power amplifiers and systems is in the process of appointing AFI as a distributor for the USA market. This appointment will allow AFI to offer products operating up to 18GHz and provides access to important markets not currently served by the Group. Overall I am satisfied that the Group is focused on improving returns to shareholders through exploiting its brand strength, technical skills and marketing expertise. B Emerson Group Chief Executive Group Profit and Loss Account Year ended 31 January 2001 Unaudited Audited 2001 2000 £'000 £'000 Turnover - continuing operations 15,876 13,373 - acquisitions 1,660 - - discontinued operations - 1,039 ----------- ----------- 17,536 14,412 Cost of sales (11,123) (9,284) ----------- ----------- Gross profit 6,413 5,128 Net operating expenses - normal (5,358) (4,237) - exceptional - (189) ----------- ----------- Operating profit - continuing operations 756 707 - acquisitions 399 - - amortisation of goodwill re acquisition (100) - - discontinued operations - (5) ----------- ----------- 1,055 702 Discontinued operations: (Loss) on sale of operations - (25) Profit on disposal of freehold property - 134 ----------- ----------- Profit on ordinary activities before interest 1,055 811 Net interest payable (150) (146) ----------- ----------- Profit on ordinary activities before taxation 905 665 Taxation on profit on ordinary activities (295) (188) ----------- ----------- Profit on ordinary activities after taxation 610 477 Dividends (226) (186) ----------- ----------- Transfer to reserves 384 291 ===== ===== Statement of Total Recognised Gains and Losses Year ended 31 January 2001 Unaudited Audited 2001 2000 £'000 £'000 Profit attributable to shareholders 610 477 Unrealised surplus on revaluation of properties 787 - ----------- ----------- Total recognised gains and losses for the financial year 1,397 477 ===== ===== Note of Historical Cost Profits and Losses Year ended 31 January 2001 Unaudited Audited 2001 2000 £'000 £'000 Reported profit on ordinary activities before taxation 905 665 Realisation of property revaluation gains of previous years - 120 Difference between a historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amount 6 9 -------- ------- Historical cost profit on ordinary activities before taxation 911 794 Taxation on profit on ordinary activities (295) (188) Dividends (226) (186) --------- ------- Historical cost profit for the year after taxation and dividends 390 420 ===== ===== Notes 1. A final dividend of 0.25p per share will be proposed at the Annual General Meeting on Wednesday 15 August 2001 to be paid on 22 August 2001 to holders on the register at 29 June 2001. 2. Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of the diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of dilutive options. On 6 April 2000 the 'A' Non-Voting Ordinary shares were enfranchised with a compensatory scrip issue of 16,000,000 Ordinary Shares of 5p each. The calculation of the basic and diluted earnings per share takes into account the scrip issue of ordinary shares. The adjusted earnings per share have been provided in order that the effects of goodwill amortisation on reported earnings can be fully appreciated. The calculation of earnings is based on the Group profit after taxation and is set out below: Unaudited Audited 2001 2000 Per-share Per-share Earnings amount Earnings amount £'000 Pence £'000 Pence Profit after taxation 610 1.35 477 1.06 Amortisation of goodwill 100 0.22 - - ----------- ----------- ----------- ----------- Adjusted profit after 710 1.57 477 1.06 taxation ===== ===== ===== ===== The weighted average number of shares used in the calculations is set out below: Unaudited Audited 2001 2000 Basic Diluted Basic Diluted Weighted average number of shares in issue - Ordinary shares 45,190,000 45,190,000 2,000,000 2,000,000 - 'A' Non-Voting Ordinary shares - - 27,190,000 27,190,000 ----------- ----------- ----------- ----------- 45,190,000 45,190,000 29,190,000 29,190,000 - share options 17,122 103,562 - 87,975 ----------- ----------- ----------- ----------- 45,207,122 45,293,562 29,190,000 29,277,975 - enfranchisement scrip issue - - 16,000,000 16,000,000 ----------- ----------- ----------- ----------- 45,207,122 45,293,562 45,190,000 45,277,975 ===== ===== ===== ===== Earnings per share - standard 1.35p 1.35p 1.06p 1.05p - adjusted earnings per share 1.57p 1.57p 1.06p 1.05p Group Balance Sheet Year ended 31 January 2001 Unaudited Audited 2001 2000 £'000 £'000 Fixed assets Intangible assets 950 129 Tangible assets 5,134 3.497 ----------- ----------- 6,084 3,626 ----------- ----------- Current assets Stocks 2,237 1,344 Debtors 3,553 2,237 Cash at bank and in hand 941 2,111 ----------- ----------- 6,731 5,692 Creditors: amounts falling due within one year (5,325) (3,201) ----------- ----------- Net current assets 1,406 2,491 ----------- ----------- Total assets less current liabilities 7,490 6,117 Creditors: amounts falling due after more than one year (1,589) (1,436) Provisions for liabilities and charges (207) (163) ----------- ----------- Net assets 5,694 4,518 ===== ===== Capital and reserves Called - up share capital 2,263 1,460 Share premium 36 834 Revaluation reserve 906 125 Profit and loss account 2,489 2,099 ----------- ----------- Shareholder's funds - Equity 5,694 4,518 ===== ===== Group Cash Flow Statement Year ended 31 January 2001 Unaudited Audited 2001 2000 £'000 £'000 Cash flow from operating activities 1,160 906 Returns on investments and servicing of finance (155) (176) Taxation (106) 76 Capital expenditure and financial investment (717) 166 Acquisitions and disposals (1,303) 1,257 Equity dividends paid (226) (365) ----------- ----------- Net cash (outflow) / inflow before financing (1,347) 1,864 Financing (232) (703) ----------- ----------- (Decrease) / increase in cash in the year (1,579) 1,161 ===== ===== Notes: 1. Audited financial statements will be sent to shareholders on Friday 8 June 2001. Copies of this announcement are available at the Company's registered office at Hurst House, 131 / 133 New London Road, Chelmsford, Essex, CM2 0QN and copies of the audited financial statements will be so available for at least 14 days from Friday 8 June 2001. 2. The Company's financial statements for 2001, from which the figures contained in this statement have been extracted, have not yet been reported on by the Company's auditors or filed with the Registrar of Companies. The financial statements for 2000, from which the figures contained in this preliminary statement have been extracted, have been filed and contain an unqualified audit report with no reference to section 237 of the Companies Act 1985.

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