LONDON The Abacus Group plc has seen its turnover rise 44 percent to £257 million for the year ended Sept 30 2006 while the gross profit was up 48 percent to £64.7million before exceptionals (59 percent increase to £63.9 million after exceptionals).
Since its acquisition in January 2006 for £36.1 million in shares, Deltron Electronic plc has provided additional sales of £55 million and operating profit of £4.4million as well as providing the group with geographic expansion.
“In 2007 the Abacus Group sales will no longer be dominated by the U.K. with nearly half the business being overseas. All these factors considerably enhance the opportunities for us going forward as well as delivering a more cost effective and higher margin business. In these circumstances the Board has confidence for the future,” said Harry Westropp, Abacus Group chairman.
Deltron, along with Axess Technology acquired in April for £15.8million contributed £75.5 million to the total group sales and £6.5 million to the group operating profit. Westropp expects some further margin enhancement in 2007 as the result of a full year's contribution from both Deltron and Axess. During the integration of Deltron and Axess there has been a net decreaseof 63 in the total number employed by Abacus Group, which stood at 1,147 at the end of September.
A one-off exceptional cost of £9.4 million has been incurred to provide for, amongst other things, the reorganisation of Trident to exit the higher risk finished product business and refocus on distribution and value added opportunities.
According to Westropp the UK market for electronic components was sluggish in the early months of the financial year but appeared to have stabilised by March and thereafter an improvement was seen which continued through the summer months. “For Abacus thisresulted in a sales increase of 2 percent for our total U.K. business although the figure would have been higher but for the decision to withdraw from Trident's finished product business.”
“In Italy our team at ECC were successful in growing sales by 4 percent, but in Nordic, Promax sales fell by 14 percent, some of which can be attributed to the decision to close the business in Finland in 2005. However, the 2005 reorganisation of Promax and its integration with the Deltron businesses in Sweden and Norway will result in a larger and much more solid organisation.”
“Indeed the prospects for all the European territories look promising with the strengthening of the existing Abacus companies and the additions of France and Germany, where previously we had no presence. Since the year end Germany has not only been reorganised but also considerably enlarged by the recruitment of a high quality team from within the industry.”
Despite the geographic expansion in Europe chief executive, Martin Kent, was keen to stress that the group doe not to be seen as a 'pan-European distributor'. “Whilst we are delighted to have a presence in the major markets which we believe will bring, over time, additional benefits to the Group with regard to customer and franchise coverage, we do not intend to portray ourselves as a Pan European distributor. That creates an impression of a business trying to be the same as our major competitors, the USA based global distributors, something we are definitely not.”
“Our strategy is driven by a recognition that the countries in Europe, and the regions within those countries, have different languages and cultures and to be successful one must work with these differences.” “We have set ourselves a target of having a minimum 5 percent market share in all of the major countries as we believe that at this level Abacus will be a significant player on the market whereby customers will wish to consider us as a strategic supplier and franchisors will want to speak to us because of our customer coverage.