DiscoverIE Regulatory News (DSCV)

26 Sep 2005 11:09

Acal PLC26 September 2005 FOR IMMEDIATE RELEASE 26 SEPTEMBER 2005 ACAL plc (A leading pan-European, value added distributor providing specialist design-in, sales and marketing services for international suppliers) Pre-Close Period Trading Update As anticipated at the time of the publication of our preliminary results in June2005, trading conditions have continued to be tough, particularly in ContinentalEurope for Electronic Components and in our IT Products division. The Group'sother activities have performed to expectations. With shortfalls in sales in the Group's IT Products and Continental EuropeanElectronic Components activities, and margin pressure in the former, Acal'sprofit before tax for the six months ending 30 September 2005 will be around athird lower than the corresponding period in the prior year. The salesshortfalls seen in the first half will not be recovered in the second half. Asdifficult trading conditions persist in some of our activities, the performancefor the second half is also likely to be affected. Electronic Components Although the UK Electronic Components activities have to date performed in linewith our expectations, trading conditions in Continental Europe deteriorated inthe first half of the current year and sales to date have fallen significantlyshort of our expectations. However, in the past three months, orders in thisdivision showed growth of over 15% compared to the corresponding period in theprior year. Whilst this growth is encouraging, the sales shortfall of the firsthalf will not be recovered in the second half. We have made progress in obtaining new product lines and extending thegeographic coverage of existing ones, particularly in the Nordic region and theUK, albeit later than expected. There have been no benefits in terms of salesfrom these in the first half, whereas there have been additional costs in hiringthe relevant product specialists. With an increasing need for pan-European coverage and product marketing support,we have reorganised our Electronic Components activities into a single unit. IT Products In June 2005, we said "Demand in the IT Products activities remains weak andoften volatile, but we continue to develop our product range, concentrating onhigher margin value-added activities." These conditions have deteriorated duringthe first half of the current year, with additional pressure on pricing andmargins, particularly in our Storage Networking activities. Sales have fallensignificantly short of our expectation, with further slippage in gross margins.The UK activities will in future act as a centre of excellence with centralisedpurchasing, technical and support functions and logistics. The overseas presencewill be limited to "customer-facing" activities. There have already beenmanagement changes to reflect this structure. IT Parts Services Acal's IT Parts Services activities have performed ahead of last year, in linewith our expectations; further opportunities are arising for us to benefit fromthe emerging trend for service organisations to outsource their parts managementand procurement. Industrial Controls This too has performed as expected. The reorganisation of the Electronic Components and IT Products activitiesdescribed above will, over time, enable Acal to eliminate some duplication ofinfrastructure across geographical territories, enabling better returns to beproduced. The interim results for the half year ending 30 September 2005 will be announcedon 5 December 2005. Acal will be releasing on 28 September 2005 an announcement which providesunaudited summaries, re-stated in accordance with International FinancialReporting Standards ("IFRS"), of its interim and full year consolidated incomestatements and balance sheets for the financial year ended 31 March 2005. Theinterim results for the half year ending 30 September 2005 will be the firstprepared by the Group under IFRS. For further information:- Tony Laughton - Chief Executive 01483 544500Jim Virdee - Finance Director 01483 544500Brian Coleman-Smith / Nia Thomas - Beattie Financial 020 7053 6400 Notes to Editors:- 1 The Acal Group is a leading European, value-added distributor providingspecialist design-in, sales and marketing services for international suppliersin the fields of Electronic Components, Information Technology Products, ITParts Services and Industrial Controls. Its value-added philosophy andgeographic coverage enables Acal to provide specialist knowledge and support tocustomers on a pan-European basis. 2 Design-in is the process by which Acal's sales engineers work withcustomers and suppliers to procure components which meet the specific technicaland performance needs of the customers. 3 Acal has operating companies in the UK, Netherlands, Belgium, Germany,France, Italy, Spain, Scandinavia and the USA. This information is provided by RNS The company news service from the London Stock Exchange