Final Results
The Chairman of Volex, Mike McTighe, commented:
'The financial year ended 30 March 2008 was a difficult year for Volex and although significant progress has been made in resolving the underlying issues, it will be some months before we reap the benefits.
'The Board has recently approved a three year strategic plan that will result in cash generation, improved operating margins and sustained revenue growth. The Board believes that this strategy will build on the foundations now in place, to grow and improve margins and that this will, in turn, lead to long-term growth in shareholder value
Ends
Volex will host an analysts' meeting today at 9.30 am at the offices of Hoare Govett, 250 Bishopsgate, London, EC2M 4AA.
For further information, please contact:
Volex Group plc Today: 020 7067 0700 Thereafter: 01925 830101
Mike McTighe, Chairman
Heejae Chae, Group Chief Executive
Ian Degnan, Group Finance Director
Weber Shandwick Financial 020 7067 0700
Terry Garrett / Nick Dibden / James White
VOLEX GROUP plc
Preliminary Announcement of the Group Results for the Financial Year ended 30 March 2008
CHAIRMAN'S STATEMENT
I was delighted to have been appointed Chairman of Volex in March 2008 and welcome the additional appointments of Chris Geoghegan and Karen Slatford as non-executive directors. Both Chris and Karen have extensive experience in distinct and relevant sectors of our business and will provide a valuable additional dimension to the Board.
The financial year ended 30 March 2008 was a difficult year for Volex. The Company not only faced challenging market conditions in its telecom product line but was also confronted with delays in implementing the Wiring Harness restructure. Significant progress has been made in resolving the underlying issues but it will be some months before we reap the benefits. Additionally, the Company has taken steps to strengthen its executive team in the area of operations with the recent appointment of Bill Taylor as Vice President of Global Operations.
Furthermore, the Board has recently approved a three year strategic plan that focuses on: maximising our market leadership in Power Products; restoring acceptable levels of profitability and working capital over the period; achieving operational excellence; and entering new and exciting technology markets. Collectively these objectives will result in cash generation, improved operating margins and sustained revenue growth. The senior executive team is dedicated to delivering on these objectives and indeed some progress on this front has already been achieved, although, we are mindful of the challenge ahead of us in executing the plan.
The Board considers that the strategy will build on the foundations now in place, to grow and improve margins and that this will, in turn, lead to long-term growth in shareholder value.
Mike McTighe
Chairman
9 June 2008
BUSINESS REVIEW
OVERVIEW
2008 was a challenging year for the Company. Whilst the first half of the year was in line with expectation, we were confronted with difficult external and internal circumstances during the second half. At the time of reporting our first half results, Wiring Harness had completed the transfer of production to Croatia and the UK redundancy programme, eliminating targeted cost as expected. It was also the expectation that Croatia would reach similar efficiency levels within the same timeframe as we had experienced with other recent plant closures; however, for a number of reasons, we fell significantly short of our expectations. The consequences of this meant increasing cost of inefficiencies and, in turn, additional costs to meet customers' requirements.
Another challenge we faced was the extent of the downturn of the wireless infrastructure market and its impact on our Interconnect customers. We were challenged with quickly extracting sufficient cost to mitigate the impact of this, but because the facilities were primarily servicing a single customer, the decrease in the business had a significant impact on margin due to fixed cost. Additionally, the ramp up we were expecting in India in the second half did not materialise until the very end of the year and new business awards in Interconnect arising from new technology products were slower than expected and have been pushed into FY2009. The impact of these delays was significant as the margin contribution from these activities is higher than our traditional business.
Despite the difficulties faced in recovering from those issues during the third quarter, the performance by Power Products was extremely positive. Order levels were at a record high with a strong new business pipeline. Our third quarter revenue was 19.5% higher than third quarter last year. The business pipeline for the fourth quarter was at a higher growth rate than the third quarter. Accordingly, we believed this growth would help mitigate the deterioration in Wiring Harness and Interconnect. Unfortunately, the North American market stalled dramatically in the first month of the fourth quarter due to the US credit crisis and this impacted on our growth expectations for Power Products' revenue. This downturn in North America caused us to fall short of our expectations as we finished the financial year, despite a continued strong performance in the Asian and European markets.
Development strategy
We understand the issues that impacted us and have recognised the areas that we need to work on to address the areas of improvement. To this extent we have produced a three year plan to support this, which has been endorsed by the Board. The key focus points of the plan are:
-
Capitalise on our market leading position in Power Products;
-
Reposition Interconnect technology into exciting high growth markets; and
-
Achieve operational excellence.
We believe that we have a great franchise in Power Products. The Power Products division continues to outperform its competitiors benefiting from its position as the global market leader. We will continue to capitalise on our advantage of scale and scope particularly in the current turbulent environment. As commodity prices continue to rise significantly and given the breadth of our customer base, we have the ability to be selective in our growth in order to maintain margins and manage working capital requirements.
The Interconnect division continues to reposition its business from traditional telecom to growth technologies and regions. Our entrance into fast growing areas of broadband technologies of high speed, fibre and radio frequencies has yielded significant wins. We are supplying Volex designed products and solutions to market leaders such as HP, Huawei and Idea. Additionally, we are benefiting from our focus on the fast growing emerging economies of India and China. We saw our revenue from India double last year and expect the pace to continue. In China, we have positioned ourselves with local market leaders in Huawei and Datang as China prepares to roll out the 3G network which will ultimately replace 250,000 base stations. Beyond the high growth rates, these new technology products and Asian business opportunities are significant because the margin we can achieve is comparable to the margin of our competitors in the interconnect market. We expect that these businesses will grow from less than 10% to more than 50% of our Interconnect revenue in the next three years.
The Wiring Harness division will continue to strengthen its position in niche markets, in particular the aerospace and military markets, which provide us with many opportunities. In the near term, we are focused on addressing the operational issues. We have identified the areas we need to improve and are tackling them aggressively. We have added new operational leadership both at the division and corporate level to address the issues. We have upgraded the information systems to provide us with better systems and control. We are leveraging the resources we have around the Group to resolve the situation quickly.
Our three year strategic plan represents further evolution of what has been achieved at Volex in the last two years and not a change in strategy. Our vision is clear and consistent; however, more recently, operational execution has been disappointing. The key to delivering our strategy of solid, sustainable growth is ensuring that we have the right people, structure and processes in place and these issues are kept under constant review. We have significantly reinforced the operational management particularly, with the appointment of Bill Taylor as the Vice President of Global Operations who has 30 years of operational experience at Jabil and Motorola. His key objective will be to deliver an optimal manufacturing footprint and achieve consistent operational excellence. This will involve consolidating our operations and footprint to leverage our scale and reduce our cost base.
Trading Performance
Markets
Consumer
We provide powercords to higher-value consumer products such as flat screen displays, personal computers and related products, vacuum cleaners and irons. Our customers comprise blue chip brands in the consumer market including Apple, Sony, Matsushita, Cannon, Dell and Philips. We derive 54% of our revenue from the consumer sector. Our revenue from the sector grew 9.4% continuing our strong performance despite the slowdown in the global economy and consumer demand. Our growth was primarily in the flat screen displays and personal computer related products. We continue to work closely with our customers on advancing product designs; for example, we are currently working with Dyson and Philips on retractable cords to be used in domestic appliances. We have also maintained our position as a major supplier to Apple of our Plug Receptacle (Duckhead) used in conjunction with their range of notebooks and devices.
Data, Telecommunications and Medical
Data and Telecom cover two distinct and broad areas of data and voice transmission. Our exposure in the sector has been primarily in the wireless infrastructure of the telecom sector. Until the past year, we have been insulated from much of the downturn of the wireless infrastructure market due to our focus on market leaders. Unfortunately, the severity of the downturn finally impacted our customers and in turn, our performance. During the past two years, we have worked hard to diversify and reposition our business more into the data portion of the sector that is experiencing significant growth due to the increasing bandwidth requirements. Our focus on high speed, radio frequency and fibre is part of that strategy.
The Medical sector continues to grow with our key customers who are further consolidating the global market. Our products are used in a wide range of medical devices including X-ray equipment, patient monitors and cardiac defbrillators.
Vehicle and Aerospace
This sector accounts for 14% of our revenue. Our participation in this sector is mostly driven by customers in agricultural vehicles and to a lesser extent in construction and other commercial vehicles. The agricultural sector has remained strong and the outlook is for this to continue as high food prices positively impact spending in this sector in developing countries. In the Aerospace sector, Rolls Royce remains one of our key customers.
Emerging Markets
Our participation in the emerging economies of Asia has been increasing rapidly. The revenue from the region grew 19.4% primarily due to the Chinese and Indian operations. Consumer demand in the regions has continued to be strong despite the slowdown in the rest of the world economy. As consumer purchasing power increases, Volex's business in these markets will increase to meet rising demand for higher value products. Additionally, the wireless infrastructure programme in India has finally begun to accelerate significantly and is driving our growth in this region. We expect that we should see substantial benefits for the next two years as the programme continues.
Divisional Performance
Power Products
Revenue from Power Products grew 10.6%. Our geographic and market leadership allowed us to manage a challenging environment as we saw strong performance in our Asian and European markets offsetting weakness in North America. During the year, we made significant progress with major Japanese accounts such as Sony and Matsushita. We believe that this success attests to our high standards of both quality and innovation. For instance, our joint initiative with Apple to develop halogen free products will put us in the forefront of the 'Green' initiatives that are becoming industry standard. We expect that as the market converts to 'Green' products, we will gain further market share as we leverage our technical leadership. Our continued effort to maintain our market leadership in innovation and quality provide us with a significant advantage in a very competitive market.
The focus on custom design products and innovative products allows us to continue to improve our operating margins despite a very challenging commodity market. During the past year, we saw raw material prices increase considerably, in particular copper and oil. We have worked hard to pass on the cost increases to the customers and also to further lower our costs.
Interconnect
Revenue at Interconnect declined 3.8%. Interconnect was negatively impacted by a decline of the key accounts in the wireless infrastructure market despite strong performance in targeted areas of data and medical. Although our revenue in data, telecom and medical declined 4.0% due to our exposure to the wireless infrastructure market, the more attractive data and medical portion grew by 29.6%.
Our focus on growth technologies has yielded significant wins in high speed and radio frequencies that should drive the growth and diversify our revenue base in the Interconnect market. Additionally, we are beginning to see the full impact of the infrastructure rollout in India. Our revenue in India doubled during the past year and we expect to continue to grow at the same rate in the coming year. We are also optimistic regarding our penetration of Chinese accounts in the light of the pending deployment of 3G during the next few years. We are working closely with companies such as Huawei and Datang who are expected to be key players in this deployment.
Our operating margins in Interconnect suffered significantly for the following reasons: (i) revenue decline of our largest customer; (ii) increased overhead cost to ramp-up for new business; and (iii) cost associated with consolidation of facilities in Europe. The impact of the downturn of revenue has been particularly severe, not only because of the speed, but because the facilities were dedicated to this particular customer which made it difficult to mitigate the fixed cost. As a result, our operational plan will focus on reducing such exposure in the future with a further consolidation of our manufacturing footprint. We also incurred additional cost as we ramped-up in preparation for an increase of new business. As we explained in our most recent Interim Report, we incurred cost during the transfer of production into Poland from Croatia and Sweden.
We expect our margin to improve as the business mix moves to the targeted areas of high speed products and India where our margin is in line with our competitors in Interconnect.
Wiring Harness
The revenue in Wiring Harness grew 6.4% driven by growth in industrial customers and the Rolls Royce contract wins. The operating loss for the division worsened to £3.1m as a result of the restructuring programme falling behind plan. Whilst cost reductions were achieved from the transfer of production out of the UK, we incurred significant additional costs from lower but improving productivity levels and in meeting customer requirements. Additionally, the delays resulted in a significant increase in inventory and cash utilisation. Although we are clear about the actions within the recovery plan, there remains some uncertainty as to how quickly these actions will impact the underlying profitability of the Division.
OUTLOOK
We face an uncertain market environment and one in which commodity prices continue to increase significantly. These factors necessitate a prudent approach in relation to business growth.
We expect the Power Products market to remain resilient with increased demand driven by the Asian markets compensating for weak demand in North America. Nevertheless, we remain cautious with our growth expectations given the high commodity prices, especially copper and oil, which continue to pose a significant challenge. Despite this we have been increasingly effective at mitigating these cost increases. As part of our focus on maintaining and increasing operating margins we have commenced the closure of our Powercords manufacturing facility in Hermosillo (Mexico).
For our Interconnect division, we expect demand for high speed and radio frequency products to strengthen. The markets for these products is expected to continue growing annually at 17% for radio frequency and 118% for high speed driven by the increasing requirement for bandwidth; however, we are more cautious in our short term outlook as we continue to reposition the mix of business away from the struggling wireless infrastructure sector. As part of our on-going efforts to improve operating margins and mitigate the impact of the downturn in the wireless infrastructure sector we have closed a small facility in Sweden during the year and are in the process of closing our facility in Kanata (Canada).
The Wiring Harness division will continue to service and maintain its existing customers while optimising the manufacturing operations. The rate of losses incurred has stabilised and the benefits of the corrective actions will emerge during the second half of the year.
Our focus will be to improve operating margins and generate cash, whilst managing the ongoing growth plan. We have put in place many actions to ensure these objectives are achieved and our goal for the coming years is to deliver consistent profit and growth. We acknowledge that there are still areas that we need to address and improve; however, we believe that despite the short term problems we have faced this year, we have made significant changes, which have begun to result in a more solid and sustainable operational platform from which we will continue to build and optimise the business.
FINANCIAL REVIEW
Trading for the year
Revenue for the 52 weeks ended 30 March 2008 was £259.8m, an increase over the previous year of 4.4%. Movements in foreign currency exchange rates, particularly the US Dollar, had a negative impact on revenue of £8.9m. At constant exchange rates, Group revenue increased 8.0%. The strong performance in Power Products was partly offset by a decline in the wireless infrastructure sector of Interconnect. We saw significant growth in Asia, in particular China and India, and a decline in North America reflecting the current global macro environment. Sales of Power Products increased 10.6% to £136.3m and now represent 52.5% of Group revenue. Interconnect sales declined 4.5% to £87.1m and Wiring Harness sales grew 6.4% to £36.3m.
Sales by destination in Asia and South America grew by 18.6% to £108.4m and in Europe (excluding UK) grew 4.2% to £66.4m. Sales declined in the UK by 2.7% to £32.8m and in North America by 12.9% to £52.1m.
A comparison of Group sales by source of manufacturing shows a further consolidation of our manufacturing output into Asia which now accounts for 56.4% (2007: 49.3%) of manufacturing. There was also a significant shift of manufacturing from the UK to Eastern Europe as a result of the reorganisation of the Wiring Harness division; including this change almost 99% of our direct labour is now located in low cost regions.
Adjusted operating profit for the year was £4.3m (2007: £9.6m.) The impact of foreign currency movements in the year on the results was limited to an unfavourable variance of £0.6m. Operating profit after the major restructuring charge and share based payments credit was £1.8m (2007: £7.3m).
The adjusted return on sales for 2008 was 1.7%, a reduction from 3.9% in 2007.
Adjusted profit before tax was £1.7m (2007: £6.7m) and after the major restructuring charge and the share based payment credit there was a loss before tax of £0.9m (2007: profit of £2.8m).
Adjusted Items
During the year we incurred a charge for further restructuring of our manufacturing footprint of £2.1m (2007: £1.8m, net of an exceptional property disposal). This charge was incurred due to the closure of three facilities in North America and Europe; the closure of one small facility has been completed and two are currently in progress. There was no charge for restructuring the Wiring Harness division in the year, as this was charged in the previous year. Additional onerous lease provisions of £0.5m (2007: £0.2m) were incurred against properties that had previously been vacated. The credit for share based payments was £0.1m (2007: charge £0.4m). In 2007 only, there was a write off of unamortized debt costs of £1.5m.
Finance and Interest
The Group has a three year Revolving Credit Facility for $76m with Lloyds TSB Bank plc, which continues until December 2009. This enables the Group to borrow at a rate of interest based on LIBOR plus a base margin of 1% rising to a maximum of 2.75%. The margin at the end of 2008 was 2.75%.
Net finance charges for the year were £2.9m (2007: £4.7m). In 2007, the charge was higher because of the write-off of unamortised debt issue costs.
Tax
The tax charge for the year increased to £2.5m from £2.0m in 2007, despite the loss after tax. This is a result of the charges for the major restructuring programme and the imbalance of taxable profit streams arising in different jurisdictions, especially within the Power Products division. In the future the Group should be well positioned to benefit from lower effective tax rates as profit streams improve in jurisdictions that allow utilisation of historical tax assets.
Earnings per share
There was a basic loss per share of 6.0p (2007: earnings per share 1.5p). Adjusted loss per share was 1.5p (2007: earnings per share 8.4p).
The weighted average number of shares in issue during the year was 56,780,292 (2007: 55,941,189).
Balance sheet
Net assets declined to £22.6m from £26.1m the previous year, mainly as a result of the loss for the year of £3.4m. Shares issued in the year increased equity by £0.2m. The translation of the Group's foreign operations resulted in a negative exchange difference of £0.9m.
Trade and other receivables increased by £13.0m. Apart from normal timing differences, the key driver of this increase was the strong revenue growth in the Power Products division in the second half of the year. This Power Products growth was also the main driver of the £2.9m increase in inventory.
Provisions for 2008 reduced by £0.8m to £7.1m. The provisions were increased by the charge for the major restructuring programme of £2.7m (2007: £3.2m) and were reduced by cash payments and exchange movements.
Cash flow
Cash consumed by operations was £2.2m (2007: cash generated £10.7m) before restructuring payments of £3.9m (2007: £4.1m). The cash consumption was a result of losses incurred in the Wiring Harness division and the high working capital requirement of the growth that was achieved, especially in the Power Products Division.
Net interest payments reduced to £1.5m from £1.8m in the previous year as a result of lower interest rates in the year.
Capital expenditure on fixed assets was £2.0m (2007: £2.3m). Shares issued in the year raised a further £0.1m compared with £1.3m in 2007.
During the year there was a total cash outflow before financing activities of £10.2m (2007: cash inflow £3.7m).
The Group's net debt increased to £21.0m from £9.6m at the start of the year. Apart from the cash outflow in the year, there was an unfavourable foreign exchange impact on net debt of £0.8m and a net reduction in debt issue costs held on the balance sheet of £0.5m.
The year-end gearing of net debt to shareholders' funds was 92.8% (2007: 36.8%).
A key strategic focus for the coming year is to stabilise growth in working capital and to generate cash from operations. The level of capital expenditure in the business will be at similar levels to previous years with a small increase for capacity expansion. Cash outflows for tax, interest, restructuring programmes and onerous property leases mean that net debt is not expected to reduce in the coming year.
Defined benefit pension schemes
The Group's net pension liability under IAS 19 at 30 March 2008 reduced to £1.7m (2007: £2.8m) largely as a result of actuarial gains (£0.8m) on the scheme assets and cash contributions (£0.4m) into the schemes.
Heejae Chae Ian Degnan
Group Chief Executive Group Finance Director
For the 52 weeks ended 30 March 2008 (1 April 2007)
|
Continuing operations |
|
Note |
|
2008 £'000 |
2007 £'000 |
|
|
|
|
|
|
|
|
Revenue |
|
2 |
|
259,765 |
248,725 |
|
|
|
|
|
|
|
|
Operating profit |
|
2 |
|
1,794 |
7,269 |
|
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
|
Operating profit before major restructuring programme and share based payments charge |
|
|
4,338 |
9,642 |
|
|
Major restructuring programme charge |
|
3 |
|
(2,676) |
(1,994) |
|
Share based payments credit / (charge) |
|
|
|
132 |
(379) |
|
Operating profit |
|
|
|
1,794 |
7,269 |
|
|
|
|
|
|
|
|
Investment income |
|
|
|
205 |
193 |
|
|
|
|
|
|
|
|
Finance costs |
|
|
|
|
|
|
- interest |
|
|
|
(2,167) |
(2,004) |
|
- interest on retirement benefit obligations and provisions |
|
|
(165) |
(283) |
|
|
- amortisation of debt issue costs |
|
|
(520) |
(896) |
|
|
- write-off of unamortised debt issue costs |
|
|
|
- |
(1,463) |
|
|
|
|
|
(2,852) |
(4,646) |
|
|
|
|
|
|
|
|
(Loss) / profit on ordinary activities before taxation |
|
|
(853) |
2,816 |
|
|
|
|
|
|
|
|
|
Taxation |
|
5 |
|
(2,530) |
(1,950) |
|
|
|
|
|
|
|
|
(Loss) / profit on ordinary activities after taxation, being (loss) / retained profit for the year |
9 |
|
(3,383) |
866 |
|
|
|
|
|
|
|
|
|
(Loss) / earnings per share (pence)* |
|
|
|
|
|
|
Basic and diluted |
|
6 |
|
(6.0) |
1.5 |
|
|
|
|
|
|
|
* The (loss) / earnings per share before the costs of the major restructuring programme, share based payments and the write-off of unamortised debt issue costs for each period is shown in note 6.
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
|
Losses on hedge of net investments taken to equity |
|
|
(3,354) |
(2,855) |
|
Exchange differences on translation of foreign operations |
|
|
2,513 |
14 |
|
Actuarial gains on defined benefit pension schemes |
|
|
776 |
335 |
|
Net expense recognised directly in equity |
|
|
(65) |
(2,506) |
|
|
|
|
|
|
|
(Loss) / profit for the year |
|
|
(3,383) |
866 |
|
|
|
|
|
|
|
Total recognised net expense for the year |
|
|
(3,448) |
(1,640) |
Consolidated balance sheet
As at 30 March 2008 (1 April 2007)
|
|
|
Note |
|
2008 |
2007 |
|
|
Non-current assets |
|
|
|
|
|
|
|
Goodwill |
|
|
|
1,930 |
1,930 |
|
|
Other intangible assets |
|
|
|
261 |
82 |
|
|
Property, plant and equipment |
|
|
|
7,784 |
9,191 |
|
|
Deferred tax asset |
|
|
|
312 |
347 |
|
|
|
|
|
|
10,287 |
11,550 |
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
|
|
35,050 |
32,107 |
|
|
Trade and other receivables |
|
|
|
63,876 |
50,866 |
|
|
Current tax assets |
|
|
|
353 |
968 |
|
|
Cash and cash equivalents |
|
|
|
4,317 |
12,235 |
|
|
|
|
|
|
103,596 |
96,176 |
|
|
Total assets |
|
|
|
113,883 |
107,726 |
|
|
Current liabilities |
|
|
|
|
|
|
|
Obligations under finance leases |
|
|
|
44 |
56 |
|
|
Trade and other payables |
|
|
|
52,367 |
44,593 |
|
|
Current tax liabilities |
|
|
|
4,343 |
3,817 |
|
|
Retirement benefit obligation |
|
|
|
149 |
378 |
|
|
Provisions |
|
|
|
3,359 |
3,914 |
|
|
Liability for share based payments |
|
|
|
214 |
129 |
|
|
|
|
|
|
60,476 |
52,887 |
|
|
Net current assets |
|
|
|
43,120 |
43,289 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Bank overdrafts and loans |
|
10 |
|
25,283 |
21,722 |
|
|
Obligations under finance leases |
|
|
|
- |
40 |
|
|
Deferred tax liabilities |
|
|
|
118 |
209 |
|
|
Retirement benefit obligation |
|
|
|
1,513 |
2,458 |
|
|
Long-term provisions |
|
|
|
3,773 |
4,013 |
|
|
Non-equity preference shares |
|
|
|
80 |
80 |
|
|
Liability for share based payments |
|
|
|
4 |
258 |
|
|
|
|
|
|
30,771 |
28,780 |
|
|
Total liabilities |
|
|
|
91,247 |
81,667 |
|
|
Net assets |
|
|
|
22,636 |
26,059 |
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
|
|
|
Share capital |
|
9 |
|
14,205 |
14,158 |
|
|
Share premium account |
|
9 |
|
1,357 |
1,219 |
|
|
Hedging and translation reserve |
|
9 |
|
(1,861) |
(1,020) |
|
|
Retained earnings |
|
9 |
|
8,935 |
11,702 |
|
|
Total equity |
|
9 |
|
22,636 |
26,059 |
|
|
|
|
Note |
|
2008 |
2007 |
|
|
|
|
|
|
|
|
|
|
Operating profit from continuing operations |
|
|
1,794 |
7,269 |
||
|
Adjustments for: |
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
|
2,906 |
2,822 |
|
|
Amortisation of intangible assets |
|
|
|
80 |
122 |
|
|
Loss / (gain) on disposal of property, plant and equipment |
|
|
4 |
(1,198) |
||
|
Share option (credit) / expense |
|
|
|
(113) |
283 |
|
|
Decrease in provisions |
|
|
|
(1,469) |
(1,130) |
|
|
Operating cash flows before movements in working capital |
|
|
3,202 |
8,168 |
||
|
|
|
|
|
|
|
|
|
Increase in inventories |
|
|
|
(2,791) |
(4,431) |
|
|
Increase in receivables |
|
|
|
(12,506) |
(2,318) |
|
|
Increase in payables |
|
|
|
5,994 |
5,219 |
|
|
|
|
|
|
|
|
|
|
Increase in working capital |
|
|
|
(9,303) |
(1,530) |
|
|
Cash (used in) / generated by operations |
|
|
|
(6,101) |
6,638 |
|
|
|
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
|
|
(Used) / generated before major restructuring programme |
|
|
(2,214) |
10,715 |
||
|
Used by major restructuring programme |
|
|
|
(3,887) |
(4,077) |
|
|
Cash (used in) / generated by operations |
|
|
|
(6,101) |
6,638 |
|
|
|
|
|
|
|
|
|
|
Income taxes paid |
|
|
|
(887) |
(797) |
|
|
Interest received |
|
|
|
205 |
193 |
|
|
Interest paid |
|
|
|
(1,666) |
(1,984) |
|
|
Net cash (outflow) / inflow from operating activities |
|
|
(8,449) |
4,050 |
||
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Proceeds on disposal of property, plant and equipment |
|
|
242 |
1,933 |
||
|
Purchases of property, plant and equipment |
|
|
|
(1,712) |
(2,198) |
|
|
Purchases of intangible assets |
|
|
|
(289) |
(70) |
|
|
Net cash used in investing activities |
|
|
|
(1,759) |
(335) |
|
|
Net cash (outflow) / inflow before financing activities |
|
|
|
(10,208) |
3,715 |
|
|
|
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
|
|
(Used) / generated before major restructuring programme |
|
|
(6,321) |
5,893 |
||
|
Used by major restructuring programme |
|
|
(3,887) |
(2,178) |
||
|
Net cash (outflow) / inflow before financing activities |
|
|
|
(10,208) |
3,715 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds on issue of shares |
|
9 |
|
138 |
1,321 |
|
|
Repayment of borrowings |
|
10 |
|
(18,823) |
(25,519) |
|
|
New bank loans |
|
10 |
|
20,410 |
23,322 |
|
|
Debt issue costs paid |
|
10 |
|
- |
(1,399) |
|
|
(Decrease) / increase in bank overdrafts |
|
10 |
|
(30) |
30 |
|
|
Repayments of obligations under finance leases |
|
10 |
|
(52) |
(114) |
|
|
Net cash from / (used in) financing activities |
|
|
|
1,643 |
(2,359) |
|
|
Net (decrease) / increase in cash and cash equivalents |
10 |
|
(8,565) |
1,356 |
||
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
10 |
|
12,235 |
11,646 |
||
|
Effect of foreign exchange rate changes |
|
|
|
647 |
(767) |
|
|
Cash and cash equivalents at end of year |
|
10 |
|
4,317 |
12,235 |
|
For 52 weeks ended 30 March 2008 (1 April 2007)
|
|
|
|
||
|
|
|
|
2008
£’000
|
2007
£’000
|
|
Revenue
|
|
|
|
|
|
Power Products
|
|
|
136,312
|
123,299
|
|
Interconnect
|
|
|
87,114
|
91,285
|
|
Wiring Harness
|
|
|
36,339
|
34,141
|
|
|
|
|
259,765
|
248,725
|
|
Operating profit / (loss) before major restructuring programme charge and share based payments:
|
|
|
|
|
|
Power Products
|
|
|
8,195
|
6,197
|
|
Interconnect
|
|
|
(786)
|
4,795
|
|
Wiring Harness
|
|
|
(3,071)
|
(1,350)
|
|
|
|
|
4,338
|
9,642
|
|
Major restructuring programme charge and share based payments:
|
|
|
|
|
|
Power Products
|
|
|
(1,672)
|
(40)
|
|
Interconnect
|
|
|
(901)
|
(153)
|
|
Wiring Harness
|
|
|
29
|
(2,180)
|
|
|
|
|
(2,544)
|
(2,373)
|
|
Operating profit / (loss)
|
|
|
|
|
|
Power Products
|
|
|
6,523
|
6,157
|
|
Interconnect
|
|
|
(1,687)
|
4,642
|
|
Wiring Harness
|
|
|
(3,042)
|
(3,530)
|
|
|
|
|
1,794
|
7,269
|
|
Investment income
|
|
|
205
|
193
|
|
Finance costs
|
|
|
(2,852)
|
(4,646)
|
|
(Loss) / profit before tax
|
|
|
(853)
|
2,816
|
|
Tax
|
|
|
(2,530)
|
(1,950)
|
|
(Loss) / profit from continuing operations
|
|
|
(3,383)
|
866
|
|
|
|
|
|
|
|
External revenue by product market sector
|
|
|
2008
£’000
|
2007
£’000
|
|
Consumer Products
|
|
|
139,705
|
127,703
|
|
Data, Telecommunications and Medical
|
|
|
82,855
|
86,138
|
|
Vehicle and Aerospace
|
|
|
37,205
|
34,884
|
|
|
|
|
259,765
|
248,725
|
|
|
|
External revenue by source
|
External revenue by destination
|
||
|
|
|
2008
£’000
|
2007
£’000
|
2008
£’000
|
2007
£’000
|
|
|
|
|
|
|
|
|
Asia and South America
|
|
146,608
|
122,772
|
108,436
|
91,417
|
|
North America
|
|
47,972
|
49,234
|
52,122
|
59,853
|
|
United Kingdom
|
|
7,030
|
34,141
|
32,784
|
33,690
|
|
Other Europe
|
|
58,155
|
42,578
|
66,423
|
63,765
|
|
|
|
259,765
|
248,725
|
259,765
|
248,725
|
|
|
|
|
2008
£’000
|
2007
£’000
|
|
|
|
|
|
|
|
Property provisions
|
|
|
545
|
202
|
|
Closure of manufacturing facilities
|
|
|
2,131
|
3,007
|
|
Profit on sale of property, plant and equipment
|
|
|
-
|
(1,215)
|
|
|
|
|
2,676
|
1,994
|
|
|
Average
|
% change
|
Year end
|
% change
|
|||
|
|
2008
|
2007
|
vs. £
|
2008
|
2007
|
vs. £
|
|
|
|
|
|
|
|
|
|
|
|
United States dollar
|
2.01
|
1.89
|
(5.9)
|
2.01
|
1.96
|
(2.5)
|
|
|
Euro
|
1.41
|
1.48
|
5.0
|
1.27
|
1.47
|
15.7
|
|
|
Canadian dollar
|
2.07
|
2.15
|
3.9
|
2.04
|
2.27
|
11.2
|
|
|
Brazilian real
|
3.71
|
4.07
|
9.7
|
3.48
|
4.04
|
16.1
|
|
|
Indian Rupee
|
80.56
|
85.47
|
6.1
|
80.61
|
85.91
|
6.6
|
|
|
|
|
|
2008
£’000 |
2007
£’000 |
|
|
|
|
|
|
|
Current tax – charge for the year
|
|
|
2,749
|
2,240
|
|
Current tax – adjustment in respect of previous years
|
|
(201)
|
83
|
|
|
Deferred tax
|
|
|
(18)
|
(373)
|
|
|
|
|
2,530
|
1,950
|
|
(Loss) / earnings
|
|
2008
£’000
|
2007
£’000
|
|
|
|
|
|
|
Basic (loss) / earnings
|
|
(3,383)
|
866
|
|
Adjustments for:
|
|
|
|
|
Major restructuring programme charge (note 3)
|
|
2,676
|
1,994
|
|
Share based payment (credit) / charge
|
|
(132)
|
379
|
|
Write-off of unamortised debt costs
|
|
-
|
1,463
|
|
Adjusted (loss) / earnings
|
|
(839)
|
4,702
|
|
|
|
|
|
|
Weighted average number of ordinary shares
|
|
No. shares
|
No. shares
|
|
|
|
|
|
|
For the purpose of basic EPS
|
|
56,780,292
|
55,941,189
|
|
Effect of dilutive potential ordinary shares – share options and warrants
|
-
|
96,093
|
|
|
For the purpose of diluted EPS
|
|
56,780,292
|
56,037,282
|
|
|
|
|
|
|
Basic (loss) / earnings per share
|
|
Pence
|
Pence
|
|
|
|
|
|
|
Basic (loss) / earnings per share
|
|
(6.0)
|
1.5
|
|
Adjustments for:
|
|
|
|
|
Major restructuring programme charge (note 3)
|
|
4.7
|
3.6
|
|
Share base payment (credit) / charge
|
|
(0.2)
|
0.7
|
|
Write-off of unamortised debt costs
|
|
-
|
2.6
|
|
|
|
|
|
|
Adjusted basic (loss) / earnings per share
|
|
(1.5)
|
8.4
|
|
|
|
|
|
|
Diluted (loss) / earnings per share
|
|
Pence
|
Pence
|
|
|
|
|
|
|
Diluted (loss) / earnings per share
|
|
(6.0)
|
1.5
|
|
Adjustments for:
|
|
|
|
|
Major restructuring programme charge (note 3)
|
|
4.7
|
3.6
|
|
Share base payment (credit) / charge
|
|
(0.2)
|
0.7
|
|
Write-off of unamortised debt costs
|
|
-
|
2.6
|
|
Adjusted diluted (loss) / earnings per share
|
|
(1.5)
|
8.4
|
7. Dividends
|
|
Share capital
|
Share premium
|
Hedging &
translation reserve |
Retained earnings
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Balance at 3 April 2006
|
13,888
|
168
|
1,821
|
10,218
|
26,095
|
|
Net proceeds from issue of equity shares
|
270
|
1,051
|
-
|
-
|
1,321
|
|
Net profit for the year
|
-
|
-
|
-
|
866
|
866
|
|
Reserve entry for share option charge
|
-
|
-
|
-
|
283
|
283
|
|
Actuarial gains on defined benefit pension schemes
|
-
|
-
|
-
|
335
|
335
|
|
Exchange differences on translation of foreign operations
|
-
|
-
|
14
|
-
|
14
|
|
Loss recognised on net investment hedge
|
|
|
(2,855)
|
-
|
(2,855)
|
|
Balance at 2 April 2007
|
14,158
|
1,219
|
(1,020)
|
11,702
|
26,059
|
|
Net proceeds from issue of equity shares
|
47
|
91
|
-
|
-
|
138
|
|
Reserve transfer on exercise of warrants
|
-
|
47
|
-
|
(47)
|
-
|
|
Net loss for the year
|
-
|
-
|
-
|
(3,383)
|
(3,383)
|
|
Reserve entry for share option charge
|
|
|
|
(113)
|
(113)
|
|
Actuarial gains on defined benefit pension schemes
|
-
|
-
|
-
|
776
|
776
|
|
Exchange differences on translation of foreign operations
|
-
|
-
|
2,513
|
-
|
2,513
|
|
Loss recognised on net investment hedge
|
-
|
-
|
(3,354)
|
-
|
(3,354)
|
|
Balance at 30 March 2008
|
14,205
|
1,357
|
(1,861)
|
8,935
|
22,636
|
10. Analysis of net debt
|
|
|
2 April 2007
|
Cash flow
|
Exchange movement
|
Other non-cash changes
|
30 March 2008
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
12,235
|
(8,565)
|
647
|
-
|
4,317
|
|
Overdraft
|
|
(30)
|
30
|
-
|
-
|
-
|
|
Debt due after one year
|
|
(22,819)
|
(1,587)
|
(1,484)
|
-
|
(25,890)
|
|
Finance leases
|
|
(96)
|
52
|
-
|
-
|
(44)
|
|
Debt issue costs
|
|
1,127
|
-
|
-
|
(520)
|
607
|
|
Net debt
|
|
(9,583)
|
(10,070)
|
(837)
|
(520)
|
(21,010)
|
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