Hanson bid target Scholes improves by over 60%

SCHOLES, the electrical components supplier that has recommended a bid from Hanson, has increased profits by nearly two- thirds, writes Robert Cole.

For the year to 30 June, Scholes made pre-tax profits of pounds 7m, compared with pounds 4.3m last time. The advance at the operating level was 50 per cent, and earnings per share rose 60 per cent to 12.3p from 7.7p.

The operating-profit margin widened from 7.6 per cent to 11 per cent.

Bill Riches, Scholes chairman, said the improvement stemmed from increased efficiency. 'These results demonstrate that we are moving forward strongly, following the measures taken over the past two years to realign our cost base with anticipated activity levels,' he said. He refused to give details of the changes implemented.

Hanson, through its electricals subsidiary Crabtree, has offered 250p a share for Scholes. When it launched the agreed offer at the end of July, it used 1993 figures - the latest available - to indicate the exit price to earnings multiple.

For the 250p-a-share offer, this was 32 times earnings. On the latest figures, the multiple would be 20.

The shares were unchanged at 248p yesterday.

Scholes had net cash at the year- end of pounds 4.9m, up from pounds 1.6m.