A strong second half brought full-year results in slightly ahead of expectations at customised electronics specialist Acal PLC (LON:ACL).
In the year to 31 March 2017, revenue of £338.2mln was up 18% (+6% on a constant exchange rates, or CER, basis) on the previous year’s £287.7mln and better than the £334.6mln the market had been expecting.
In the second half of the financial year, year-on-year organic sales growth was 6% while orders rose 7%.
WATCH: Acal PLC 'firing on all cylinders', says CEO Nick Jefferies
Underlying profit before tax rose 19% to £17.2mln from £14.5mln the year before, and topped market expectations of £16.98mln.
Reported profit before tax fell to £4.8mln from £9.4mln the previous year. The discrepancy between reported profit and underlying profit was partly due to exceptional costs of £6.9mln related to the group’s efficiency programme.
Underlying earnings before share clocked in at 19.2p, up 13% from 17.0p the year before and ahead of the consensus forecast of 18.68p.
Only the dividend failed to beat analysts’ forecasts, with the full-year pay-out rising to 8.5p from 8.05p the year before, versus analysts’ forecasts of 8.57p.
On the plus side, it was the seventh year in a row that the group had announced an increase in the annual pay-out.
READ Electronics group Acal to beat expectations after strong finish to the year
At the financial year-end the order book was 22% higher on a CER basis than it was a year earlier, and although some of this was down to acquired businesses chipping in for the first time, organic growth was still a healthy 13%.
Variohm, which was acquired in January 2017, is performing “very well”, with the first cross-selling design win achieved.
"As expected, the second half of the year saw accelerating levels of organic growth in sales and orders, and excellent cash flow. This strong momentum has continued into the new financial year which we entered with an order book 22% higher at CER than the prior year, and which is driving further good growth in this first quarter as the order book converts into sales,” said Nick Jefferies, group chief executive (CEO).
“Our efficiency plan has been implemented, delivering £4m in sustainable annual savings and at a better than anticipated cost of implementation,” Jefferies added.
The CEO highlighted that revenues have almost doubled in the last four years while underlying operating profits have quadrupled.
“We plan to continue this strong rate of progress through further organic growth and high quality acquisitions over the next five years," Jefferies said.
Broker finnCap reiterated its view that Acal has the market opportunity and services to build a significantly larger business.
“The addressable market in niche electronic components is worth £20bn globally. Our view remains that Acal’s true potential value lies in taking advantage of the digital transformation of industry. With its growing expertise in power supplies, fibre optics, wireless and sensors (amongst others) and its design to delivery services, Acal is very well placed to produce significant long-term growth,” the broker said.
Shares in Acal were volatile in the morning session, trading between 281.61p and 306.88p, compared to 292p overnight.
Coming up to noon, the shares were up 10p at 302p, still some 37p short of finnCap’s share price.