Final Results
Volex Group PLC
11 June 2007
11 June 2007
VOLEX GROUP plc
Preliminary Announcement of the Group Results
for the Financial Year ended 1 April 2007
Volex Group plc, the global electrical and electronic cable assemblies group,
today announces its preliminary results for the financial year ended 1 April
2007.
Financial highlights:
• Operating profit (before major restructuring programme charge of £2.0m)
increased by 75% to £9.3m (2006: £5.3m). (1)
• Sales decreased by 0.7% to £248.7m (2006: £250.4m), although in local
currency terms, sales increased by 3.3%.
• Cash generated by operations:
Before major restructuring programme was £10.7m (2006: £13.2m)
After major restructuring programme was £6.6m (2006: £11.7m).
• Earnings per share before major restructuring programme and write-off of
unamortised debt issue costs was 7.7p (2006: loss per share 1.0p).
• Basic earnings per share was 1.5p (2006: loss per share 18.5p).
• Net borrowings at 1 April 2007 were £9.6m (2006: £13.3m) reducing
gearing to 37% (2006: 51%).
• Entered into a three-year US$76 million multicurrency revolving credit
facility with Lloyds TSB Bank on improved terms that provide greater
operational flexibility.
(1) The operating profit after major restructuring programme charge of £2.0m
(2006: £8.6m) was £7.3m (2006: loss £3.3m).
Operational highlights:
• Closed three manufacturing facilities and significantly downsized two.
We have reduced our manufacturing footprint from twenty five facilities at
the end of FY2005 to fifteen facilities (including two downsized sites).
• 96% of direct labour is located in low cost areas.
• Consolidated engineering and administrative support for Interconnect in
North America into a single location.
• Focused on high growth and margin businesses that are technology based.
• Expanded engineering and sales resources in advanced interconnect
technologies.
The Chairman of Volex, Richard Arkle, commented:
'I am confident that the Group's comprehensive restructuring programme is ahead
of plan. The benefits from the cost reductions will be further realised in the
coming year as the productivity and efficiency increases in the new facilities
and the full year impact is reflected in the results. I believe that the Group
is on track in the execution of its strategy to deliver growth through new
technologies and products.
The Group is positive on the outlook for the next financial year for each of its
businesses. Growth in Power Products continues to be driven by new and
innovative applications such as the Apple iPhone and Nintendo Wii. Interconnect
is leveraging its global position to gain market share and further expand into
higher margin products. In particular, the Company is excited about
Interconnect's growth in India driven by the investment in wireless
infrastructure. Wiring Harness looks encouraging due to the strong growth
prospects of the UK Defence Market and having recently secured a long-term
contract with Rolls-Royce.'
Ends
Volex will host an analysts' meeting today at 9.30 am at the offices of
Evolution Securities Limited, 100 Wood Street, London EC2V 7AN.
For further information, please contact:
Volex Group plc Today: 020 7067 0700 Thereafter: 01925 830101
Richard Arkle, Chairman
Heejae Chae, Group Chief Executive
Ian Degnan, Group Finance Director
Weber Shandwick Financial 020 7067 0700
Chris Lynch / Nick Dibden
VOLEX GROUP plc
Preliminary Announcement of the Group Results for the Financial Year ended
1 April 2007
CHAIRMAN'S STATEMENT
I am pleased to report another significant year for the Group. During the
financial year ended 2007, Volex completed the financial phase of the
restructuring programme and it is now in the final stage of its operational
turnaround. We have made significant progress to date and are excited at the
direction that the Group is moving. Specifically, we have accomplished the
following:
Financial
• Entered into a three-year US$76 million multicurrency revolving credit
facility with Lloyds TSB Bank on improved terms that provide greater
operational flexibility.
• Generated positive cash flow while funding the operational restructuring.
• Continued to drive down the net debt from £13.3m to £9.6m.
• Reduced our gearing to 37% and reduced our cost of borrowing.
Operational
• Closed three manufacturing facilities and significantly downsized two. We
have reduced our manufacturing footprint from twenty-five facilities at the
end of FY2005 to fifteen facilities (including two downsized sites).
• 96% of direct labour is located in low cost areas.
• Consolidated engineering and administrative support for Interconnect in
North America into a single location.
Strategic
• Focused on high growth and margin businesses that are technology based.
• Expanded engineering and sales resources with significant experience in
advanced interconnect technologies.
• Forged alliances and licensed technologies to expand our product
offerings.
Results
The revenues for the financial year ended 1 April 2007 were down slightly by
0.7% at £248.7m although, in local currency terms, the revenue grew by 3.3%. The
operating profit increased to £9.3m before the major restructuring programme
charge (2006: £5.3m). In addition, net borrowings were reduced by £3.7m to
£9.6m.
The Group took a one off charge of £3.2m in respect of the accelerated
restructuring programme relating to the Wiring Harness division; however, we
generated profit of £1.2m from fixed asset disposals (principally, the sale of
Butts Mill, Leigh). We consider the footprint of the business now to be
appropriate for the current business level and do not anticipate any further new
major restructuring activities in the coming fiscal year.
People
During the year we have further strengthened the Executive Team. Ian Degnan
joined us as Group Finance Director in December 2006 from Exel where he served
as Chief Financial Officer Europe. Additionally, Tom Aubin joined us as Director
of Global Technology. He is responsible for developing and leading the
implementation of the Group's Technology Roadmap and has oversight of the
Group's engineering activities. Tom has over 30 years of experience in advanced
interconnect technology and product development. Prior to Volex, Tom held senior
management roles at Amphenol Corporation and ADC. Since joining the Group, Tom
has established engineering competencies in North America and China to further
our efforts in High Speed and Radio Frequency technologies.
We continue to invest in new people across all regions of the Group as it
continues to grow. As a global organisation, we recognise that our people are
diverse in background, language and beliefs. Nevertheless, it is imperative that
we are defined by a set of core values that bind us together. The Board has
adopted a set of corporate values, which has been incorporated into our Social,
Ethical and Environmental Policy. These values outline the fundamental
expectation we hold of everyone in Volex.
I wish to thank everyone in the organisation for their contribution and effort.
We have an impressive and talented workforce across all disciplines, levels and
regions that have demonstrated not only dedication and hard work but also an
ongoing passion for the business.
Outlook
I am confident that the Group's comprehensive restructuring programme is ahead
of plan. The benefits from the cost reductions will be further realised in the
coming year as the productivity and efficiency increases in the new facilities
and the full year impact is reflected in the results. The Group is on course in
executing its strategy to deliver growth through new technologies and products.
We have a clear understanding of our markets and have made significant progress
with our key global customers. By continuing to enhance and leverage our
competencies we are able to respond quickly to our customers' cable assembly
needs by offering a Total Solution in terms of engineering, supply chain,
assembly and components.
The Group is positive on the outlook for the next financial year for each of its
businesses. Growth in Power Products continues to be driven by new and
innovative applications such as the Apple iPhone and Nintendo Wii. Interconnect
is leveraging its global position to gain market share and further expand into
higher margin products. In particular, the Company is excited about
Interconnect's growth in India driven by the investment in wireless
infrastructure. Wiring Harness looks encouraging due to the strong growth
prospects of the UK Defence Market and having recently secured a long-term
contract with Rolls-Royce.
The early indications for trading in Q1 for all of our divisions are positive
with order levels remaining sound.
The Board of Directors and senior management collectively have a significant
interest in the issued share capital of the Company. These holdings align our
interests with those of our other shareholders and we remain confident that we
are well placed to make further progress towards profitability and enhancing
shareholder value.
Richard Arkle
Chairman
BUSINESS REVIEW
BUSINESS OVERVIEW
As we complete our financial and operational restructuring, we now turn our
focus to growth. The markets we serve and our customer base provide excellent
opportunities for growth. Our customers are leaders in the markets they serve
and are growing faster than their respective markets. Our challenge is not only
to keep up with their growth but also to gain market share on the accounts. We
aim to gain market share not only with the current product lines but also by
expanding our product portfolio to address the full interconnect needs of our
customers.
Our Markets
Our largest market segment is the consumer product sector, which accounts for
45% of our revenue. We participate in the sector mostly through our powercord
products. Volex revenue in the consumer market grew 12.2% despite the slowdown
in the US economy and the US housing market. Our focus on application specific
products with leading edge customers allowed us to outperform the sector and
offset declines in personal computers and the DIY tool market. We expect our
growth to continue as our customers develop latest 'must have' products such as
Apple iPhone and Nintendo Wii. The importance of time to market and high quality
requirements of these products provide Volex with a competitive advantage as we
leverage our global scale and engineering excellence.
The Group's second largest market is Data and Telecommunications. The sector
covers a wide range of technology areas, which continue to broaden as multimedia
constantly redefines means of communication. The current trend is driven by
'Triple Play', the convergence of voice, video and data through a single
network. The landscape shifts constantly as the OEMs try to position themselves
in the new dynamics through mergers and acquisitions. These companies view
consolidation of the supply chain as a major source of cost saving, and with our
global footprint, low cost, and technology scope, we meet the criteria as they
seek to leverage their economies of scale. The Triple Play also impacts the
technology requirement for interconnect product with higher speed capability.
The High Speed interconnect technology is nascent and evolving. Through
alliances and technology licences, we have positioned ourselves as the leader in
the field.
Another market that will contribute to our growth is India, specifically with
respect to the wireless sector. India is currently adding six million mobile
phone subscribers per month. The wireless networks are running at 97% capacity
and every operator has announced plans for investment. Bharat Sanchar Nigam Ltd,
known as BSNL, the public sector telecommunications provider in India, recently
awarded a US$5 billion contract to Ericsson and Nokia. As the tender process
mandates that 30% of the products must be produced in India, the need for
localised suppliers is urgent. Volex has been in India since 1997 and is a
global supplier to both Ericsson and Nokia.
The global medical equipment market increased by 5% last year and continues to
offer a strong growth market for Volex. Our customers have market leading
positions and our Preferred Supplier status with them places us in a strong
position to benefit from their growth. Our capability in the medical sector was
recognised by Royal Philips who awarded Volex 'Breakthrough Supplier' of the
year for our engineering involvement in early stages of development.
Volex participates in the industrial and defence/aerospace sectors through the
Wiring Harness division. The defence/aerospace sector is growing rapidly given
the current geopolitical environment. Nevertheless, the barrier to entry into
the defence market is high given the approval and accreditation process of the
OEMs and Ministry of Defence ('MOD'). We are currently working towards upgrading
our classification from DEFCON 659 for MOD works to 'List X', which will expand
our opportunities in the defence market. We define the industrial sector to
include off highway equipment, speciality vehicles, automation and factory
equipment. The industrial sector offers attractive opportunities due to the
industrial growth in developing countries such as China and India. As a result
of the complexity of the harnesses and platform cycles of the equipment and
vehicles, the revenue horizon is longer and more stable than other parts of the
Group.
Strategy
We believe that the current market dynamics dictate that we must drive towards
becoming a Total Interconnect Solution Provider, providing a one stop solution
to our customers. We are ideally positioned to achieve this due to our
'Preferred Supplier' status with leading OEMs and our global footprint. Our
product portfolio currently accounts for only a small percentage of the
interconnect and cable assembly spend for most of our customers. Our strategy is
to engage our customers on all four levels of the value proposition:
engineering; supply chain; manufacturing; and components.
Significant efforts have already been made to expand our competencies beyond the
current level of assembly. We are engaging and controlling the engineering and
supply chain levels as the component definition and the assembly process are
determined at those levels of engagement. Our involvement in component
definition at the engineering level will allow us to control our material
content towards Volex suppliers. We are leveraging Volex's own preferred vendor
network in low cost areas to offer our customers alternatives to their current
component suppliers. Through the Volex brand, we assure the customers that the
components meet the world-class quality and service that they have come to
expect from us for the past century.
Furthermore, we will influence the interconnect component decisions beyond our
product portfolio and thus expand the addressable market. Our challenge and
opportunity is to expand our product portfolio in order to leverage through our
channel to market through development, acquisitions and alliances.
Power Products:
Volex Power Products is the global market leader in powercords, growing at an
average of 8% per year for the last three years. Despite its growth, it has been
challenged with aggressive competitors who compete against us solely on price.
While the value proposition of quality, reliability and service of Volex is
recognised by the market, there are certain segments such as personal computers
where price is the main differentiator. Our strategy is to address broad market
segments on a global basis and to drive our supply chain to achieve the lowest
cost without compromising quality, reliability and service. We recognise that we
must face our competition at all levels and we believe that we have the scale
and the purchasing power that will enable us to offer the lowest competitive
cost. Furthermore, Power Product's leadership and eminence in the market and
with its customers provide a valuable entry to other interconnect and cable
assembly products.
Interconnect:
Our strategy in Interconnect has been to reposition into higher growth and
margin businesses that are technology based. We are leveraging our strong
positions at cutting edge technology customers to enter the High Speed, Radio
Frequency and Fibre segment of Interconnect.
Our recent expansion of engineering resources with significant experience in
advanced interconnect technologies gives us the appropriate competence to
address the customers' development needs. We are also forging alliances and
licensing technologies to provide the full range of product needs of our
customers. We recently entered into an agreement with Leoni Special Cables, the
world's leading cable manufacturer, for collaboration on High Speed products,
specifically on newly developed Serial Attached SCSI (SAS 1.1) and Serial ATA
(SATA) cable and connector systems. We have also acquired licensed rights from
Molex Inc. to use the patented SAS/SATA High Speed connector technology and
Volex will be producing these products under the Volex brand. In addition, we
have launched Volex Radio Frequency (RF) Connectors to address the fast growing
RF connector market and expand our product offering beyond cable assemblies. As
the market evolves and customer dynamics shift, we will continue to evaluate all
options to better service our customers including additional alliances or
acquisitions.
Wiring Harness:
Our strategy in Wiring Harness is to accelerate and complete the operational
restructuring. We have made significant progress to date and continue to
streamline our operation and consolidate our manufacturing footprint. We will
exit the restructuring with a competitive cost basis and an operation that is
efficient and agile, but most importantly, we will have positioned the division
to attain the Group's margin goal. Our reputation, experience and customer base
provide us with ample opportunities for growth. We are already approved and
accredited with our defence, aerospace and automotive customers to participate
beyond the current platforms. We are not faced with barriers to entry which a
new supplier would need to overcome and we have achieved great success when we
have engaged the customer at all four levels of value propositions. Recently, we
secured a long-term contract with Rolls-Royce that significantly increases our
market share. We believe similar opportunities exist with defence customers. We
also see significant opportunity to leverage from our reputation in the European
market to global opportunities. Although the harness opportunities are more
local due to logistic and operational constraints, global customers are looking
for suppliers that can service them across the world. Our global brand positions
us well and we recently launched an Industrial Cable Assembly (ICA) sub-division
to address the growing opportunities in Asia.
Divisional Performance
Power Products:
Revenue increased 4.2%. The growth in sales was driven by both volume increases
as well as higher average selling prices reflecting the copper price increases
passed on to our customers. We continue to derive our growth from our successes
with the latest innovative applications and at premium segments of the consumer
market. We have grown faster than the market by focusing on new 'must have'
applications and premium brand products that are less impacted by market
slowdown. We did experience slowdown in more general consumer segments such as
personal computers and DIY tools.
During FY2007 the price of copper was particularly volatile and ranged from
$5,500/t to $8,200/t with an overall increase of 27% at the year-end. Our
challenge during the last year was to mitigate the volatility and speed of the
copper price changes. Although copper prices declined toward the end of the
year, the reduction was not sufficient to fully offset the negative impact
during the year. We have continued to reduce our labour and operating costs
through moving to lower labour cost areas and by improving manufacturing
processes to gain efficiency.
Interconnect:
The revenue from Interconnect decreased 8.2% as we continued to reposition the
division in higher growth and margin opportunities that are technology based. We
are very excited at the current pipeline of new opportunities, and although we
have begun to see the benefit during the year, the ramp-ups of new business were
not sufficient to offset the continuing rationalisation of the legacy business.
Furthermore, we were adversely impacted by the decline of revenue from a
customer in North America who is undergoing a major restructuring.
Operating margins showed a significant improvement despite lower revenue,
increasing from a loss of 3.0% to a profit of 5.1%. This improvement reflects
the benefits of the cost reductions we implemented over the last two years as
well as rationalisation of the lower margin business and was achieved against a
background of higher commodity prices. We expect that we will continue to see
further benefit as the full impact of the effort during FY2007 will not be
reflected until FY2008 when we expect to benefit from the growth in revenue from
higher margin business.
Wiring Harness:
Much of the focus and resources in FY2007 were dedicated to addressing the
operational challenges of the division. We restructured facilities in the UK and
are in the process of transferring manufacturing to lower cost regions. We took
a very selective approach to new business development in order to prioritise our
resources and efforts. Revenue increased 4.4% compared to FY2006. We began to
drive our sales effort towards the end of the year and have developed many
exciting opportunities that will contribute as we complete our restructuring. We
recently signed a long-term contract with Rolls-Royce, which significantly
increases our market share with them.
We commenced the final stage of our operations restructuring programme and took
a charge of £3.2m related to the restructuring of the division. We also
generated proceeds of £1.1m from the sale of Butts Mill, Leigh facility.
FINANCIAL REVIEW
Trading for the year
Turnover for the 52 weeks ended 1 April 2007 was £248.7m, a decline of 0.7% over
FY2006. Adverse movements in foreign currency exchange rates, particularly the
US Dollar, had a negative impact of £10m. At constant exchange rates, Group
turnover increased 3.3%.
Sales by destination in Asia and South America grew by 18.7% to £91.4m. Sales in
Other Europe declined 1.6% to £63.8m, in the UK by 2.5% to £33.7m and in North
America by 19.1% to £59.8m.
Sales of Power Products increased 4.2% to £123.3m and of Wiring Harnesses 4.4%
to £34.1m. Sales of Interconnect products declined 8.2% to £91.3m impacted by
the weak US dollar and the full year effect of the low margin business
rationalisation we highlighted in FY2006.
A comparison of Group sales by source of manufacturing shows a further
consolidation of our manufacturing output into Asia. £122.7m or 49.4% (2006:
£98.8m, 39.4%) of the Group's revenue now originates from manufacturing in Asia.
Sales manufactured in North America reduced to £49.2m, representing 19.8% of
total Group output (2006: £75.6m, 30.2%).
Gross profit declined by 2.2% to £38.2m. Gross margins remained stable at 15%
despite the impact of commodity price increases. Benefits from the restructuring
programme helped to mitigate the increase in copper prices during the year,
which could not be immediately passed onto customers. We estimate that the sharp
increase in copper prices, which was experienced in April 2006, had a
detrimental impact on the Group's results of approximately £3m, before we were
able to pass the increase onto our customers.
Operating profit for the period was £9.3m (2006: £5.3m) (before the major
restructuring programme charge of £2.0m, (2006: £8.6m)), an increase over FY2006
of 75%. The cost of the Long-term Incentive Plan ('LTIP') introduced during the
year was £0.3m. The adverse impact of foreign currency movements in the year on
the results was limited to £0.2m.
The return on sales for FY2007 was 3.7% (before the major restructuring
programme charge), an improvement from 2.1% in FY2006. This increase
demonstrates the benefit to profitability of the restructuring programme on
operations.
Major restructuring programme
As indicated in the Chairman's statement in the interim report, an extensive
restructuring programme to improve the performance of the Wiring Harness
division commenced in the second half of the year. This resulted in a
restructuring charge of £3.2m following the £1.1m profit on disposal of Butts
Mill, Leigh realised in the first half.
The operating profit after the major restructuring programme charge was £7.3m
compared to a loss of £3.3m in FY2006.
New banking arrangement and interest
During the year, the Group entered a new three year Revolving Credit Facility
for $76m with Lloyds TSB Bank plc. This enables the Group to borrow at a rate of
interest based on LIBOR plus a base margin of 1% rising to a maximum margin of
2.75%. The margin at the end of FY2007 was 2.25% and the current margin has
further reduced to 1.5%.
Total costs incurred in the new banking facilities exercise were £1.3m and these
are being amortised over 3 years.
Net finance charges for the year were £4.5m including a £1.5m write-off of
unamortised refinancing costs. Net bank interest for the year was £1.7m, a
reduction from £2.3m for the previous year.
Tax
The tax charge for the year reduced to £2.0m from £2.4m in FY2006. This
represents an effective rate of 69.2%, which is distorted by the charges for the
major restructuring programme (£2.0m) and rebanking (£1.5m). Adjusting for these
items the effective rate becomes 31.1%. In the future we expect this rate to
reduce further as the Group benefits from the utilisation of tax losses from
prior years.
Earnings per share
Basic earnings per share increased to 1.5p from a loss per share of 18.5p in
FY2006.
Adjusted earnings per share (after adjusting for the major restructuring
programme charge of £2.0m and the refinancing charge of £1.5m) was 7.7p (2006:
loss per share 1.0p).
The weighted average number of shares in issue during the year was 55,941,189
(2006: 49,247,645).
Balance sheet
Net assets remained unchanged compared to 2 April 2006 at £26.1m. Shares issued
in the year increased equity by £1.3m, mainly as a result of the contribution
made by senior management as a consequence of the LTIP introduction. The
translation of the Group's foreign operations resulted in a negative exchange
difference of £2.8m that was taken to the translation reserve.
Provisions for FY2007 reduced by £1.0m to £7.9m. The provisions were increased
by the charge for the major restructuring programme of £3.2m (excluding the sale
of Butts Mill, Leigh) and were reduced by cash payments and exchange movements.
Cashflow
Cash generated by operations was £10.7m (2006: £13.2m) before restructuring
payments of £4.1m (2006: £1.5m). The reduced inflow was a result of a higher
working capital requirement in trade debtors and inventory, that was partly
derived from the increases in copper prices over the year which impacted selling
prices to customers and inventory valuation.
Net interest payments reduced to £1.8m from £2.5m in the previous year, as a
result of reduced Group borrowings. Capital expenditure on fixed assets was
£2.3m (2006: £2.3m).
Shares issued in the year raised a further £1.3m compared with £17.6m in FY2006
from the rights issue in June 2005.
During FY2007 the Group's net debt reduced to £9.6m from £13.3m at the start of
the year. Apart from the cash generated in the year, there was a favourable
foreign exchange impact on net debt of £1.0m and a net reduction in debt issue
costs held on the balance sheet of £0.9m.
The year-end gearing ratio of net debt to shareholders' funds was 37% (2006:
51%).
Defined benefit pension schemes
The Group's net pension liability under IAS 19 at 1 April 2007 reduced to £2.8m
(2006: £3.5m) largely as a result of actuarial gains (£0.3m) on the schemes'
obligations and cash contributions (£0.4m) into the schemes.
Heejae Chae Ian Degnan
Group Chief Executive Group Finance Director
Consolidated Income Statement
For the 52 weeks ended 1 April 2007 (2 April 2006)
Continuing operations Note 2007 2006
£'000 £'000
______________________________________________________________________________
Revenue 2 248,725 250,378
______________________________________________________________________________
Operating profit/(loss) 2 7,269 (3,269)
Analysed as:
_______________
Operating profit before major restructuring
programme 9,263 5,329
Major restructuring programme charge 3 (1,994) (8,598)
_______________
Operating profit/(loss) 7,269 (3,269)
Investment income 193 111
Finance costs
_______________
- interest (2,287) (2,761)
- amortisation of debt issue costs (896) (739)
- write-off of unamortised debt issue costs 8 (1,463) -
_______________
(4,646) (3,500)
______________________________________________________________________________
Profit/(loss) on ordinary activities before
taxation 2,816 (6,658)
Taxation 5 (1,950) (2,448)
______________________________________________________________________________
Profit/(loss) on ordinary activities after
taxation, being retained profit/(loss) for
the year 9 866 (9,106)
_______________________________________________________________________________
Earnings/(loss) per share (pence)*
Basic and diluted 6 1.5 (18.5)
_______________________________________________________________________________
* The earnings/(loss) per share before the costs of the major restructuring
programme and the write-off of unamortised debt issue costs for each period is
shown in note 6.
Consolidated statement of recognised income and expense
For the 52 weeks ended 1 April 2007 (2 April 2006)
2007 2006
£'000 £'000
Exchange differences on translation of foreign
operations (2,841) 1,555
Actuarial gains on defined benefit pension schemes 335 379
______________________________________________________________________________
Net (expense)/income recognised directly in equity (2,506) 1,934
Profit/(loss) for the year 866 (9,106)
______________________________________________________________________________
Total recognised net expense for the year (1,640) (7,172)
______________________________________________________________________________
Consolidated Balance Sheet
As at 1 April 2007 (2 April 2006)
Note 2007 2006
£'000 £'000
Non-current assets
Goodwill 1,930 1,930
Other intangible assets 82 148
Property, plant and equipment 9,191 11,515
Deferred tax asset 347 244
______________________________________________________________________________
11,550 13,837
______________________________________________________________________________
Current assets
Inventories 32,107 30,274
Trade and other receivables 50,866 52,825
Current tax assets 968 1,087
Cash and cash equivalents 12,235 11,646
______________________________________________________________________________
96,176 95,832
______________________________________________________________________________
Total assets 107,726 109,669
______________________________________________________________________________
Current liabilities
Obligations under finance leases 56 124
Trade and other payables 44,593 42,685
Current tax liabilities 3,817 2,580
Retirement benefit obligation 378 357
Provisions 3,914 3,996
Liability for share based payments 129 95
______________________________________________________________________________
52,887 49,837
______________________________________________________________________________
Net current assets 43,289 45,995
______________________________________________________________________________
Non-current liabilities
Bank overdrafts and loans 21,722 24,690
Obligations under finance leases 40 106
Deferred tax liabilities 209 537
Retirement benefit obligation 2,458 3,154
Long-term provisions 4,013 4,983
Non-equity preference shares 80 80
Liability for share based payments 258 187
_____________________________________________________________________________
28,780 33,737
_____________________________________________________________________________
Total liabilities 81,667 83,574
_____________________________________________________________________________
Net assets 26,059 26,095
_____________________________________________________________________________
Equity attributable to equity holders of
the parent
Share capital 9 14,158 13,888
Share premium account 9 1,219 168
Translation reserve 9 (1,020) 1,821
Retained earnings 9 11,702 10,218
_____________________________________________________________________________
Total equity 9 26,059 26,095
_____________________________________________________________________________
Consolidated Cashflow Statement
As at 1 April 2007 (2 April 2006)
Note 2007 2006
£'000 £'000
_____________________________________________________________________________
Operating profit/(loss) from continuing
operations 7,269 (3,269)
Adjustments for:
Depreciation of property, plant and
equipment 2,822 3,842
Impairment of property, plant and
equipment - 1,523
Amortisation of intangible assets 122 79
(Gain)/loss on disposal of property,
plant and equipment (1,198) 133
Share option expense 283 350
(Decrease)/Increase in provisions (1,130) 4,411
_____________________________________________________________________________
Operating cash flows before movements in
working capital 8,168 7,069
_________________
Increase in inventories (4,431) (46)
(Increase)/decrease in receivables (2,318) 1,469
Increase in payables 5,219 3,216
_________________
(Increase)/decrease in working capital (1,530) 4,639
_____________________________________________________________________________
Cash generated by operations 6,638 11,708
Analysed as:
__________________
Generated before major restructuring
programme 10,715 13,249
Utilised by major restructuring
programme (4,077) (1,541)
_________________
Cash generated by operations 6,638 11,708
Income taxes paid (797) (4,359)
Interest received 193 111
Interest paid (1,984) (2,639)
_____________________________________________________________________________
Net cash inflow from operating activities 4,050 4,821
Cash flows from investing
activities ________________
Proceeds on disposal of property, plant
and equipment 1,933 29
Purchases of property, plant and
equipment (2,198) (2,252)
Purchases of intangible assets (70) (100)
________________
Net cash used in investing activities (335) (2,323)
_____________________________________________________________________________
Net cash inflow before financing
activities 3,715 2,498
Analysed as: ________________
Generated before major restructuring programme 5,893 4,039
Utilised by major restructuring programme (2,178) (1,541)
________________
Net cash inflow before financing activities 3,715 2,498
________________
Cash flows from financing activities
Proceeds on issue of shares 9 1,321 17,645
Repayment of borrowings 10 (25,519) (43,263)
New bank loans 10 23,322 25,793
Debt issue costs paid 10 (1,399) (2,486)
Increase/(decrease) in bank 10 30 (4,193)
overdrafts
Repayments of obligations under finance 10 (114) (144)
leases _________________
Net cash used in financing activities (2,359) (6,648)
______________________________________________________________________________
Net increase/(decrease) in cash and cash
equivalents 10 1,356 (4,150)
Cash and cash equivalents at beginning of year 10 11,646 14,962
Effect of foreign exchange rate changes (767) 834
______________________________________________________________________________
Cash and cash equivalents at end of year 10 12,235 11,646
______________________________________________________________________________
1. Basis of preparation
The financial information has been prepared in accordance with International
Financial Reporting Standards ('IFRSs') as adopted for use in the EU and in
accordance with those accounting policies disclosed in the Group's last
published financial statements for the 52 weeks ended 2 April 2006.
The information contained in this preliminary announcement for the 52 weeks
ended 1 April 2007 does not constitute the statutory accounts within the meaning
of section 240 of the Companies Act 1985 but has been extracted from those
accounts. The statutory financial statements for the 52 weeks ended 2 April 2006
have been delivered to the Registrar of Companies for England and Wales and
those for the 52 weeks ended 1 April 2007 will be delivered following the
Company's Annual General Meeting. The auditors' report on those accounts was
unqualified and did not contain any statements under Section 237(2) or (3) of
the Companies Act 1985.
Whilst the information included in this preliminary announcement has been
computed in accordance with IFRSs, this announcement does not itself contain
sufficient information to comply with IFRSs. The Company expects to publish full
financial statements that comply with IFRS later this month.
This preliminary announcement was approved by the Board of Directors on 8 June
2007.
2. Segments
Business segments
For management purposes, the Group is organised into three operating divisions -
Power Products, Interconnect and Wiring Harness. These classifications are based
upon the nature of the products that they supply. These divisions are the basis
on which the Group reports its primary segment information.
Revenue Operating profit/(loss)
2007 2006 2007 2006
£'000 £'000 £'000 £'000
________________________________________________________________________________
Power Products 123,299 118,275 6,157 3,597
Interconnect 91,285 99,398 4,642 (2,966)
Wiring Harness 34,141 32,705 (3,530) (3,900)
________________________________________________________________________________
Consolidated 248,725 250,378 7,269 (3,269)
________________________________________________________________________________
Investment income 193 111
Finance costs (4,646) (3,500)
_____________________
Profit/(loss) before tax 2,816 (6,658)
Tax (1,950) (2,448)
_____________________
Profit/(loss) from continuing operations 866 (9,106)
________________________________________________________________________________
External revenue by market sector 2007 2006
£'000 £'000
________________________________________________________________________________
Consumer Products 112,745 100,525
Data and Telecommunications 72,863 87,986
Industrial and Medical 28,233 27,845
Vehicle and Aerospace 34,884 34,022
________________________________________________________________________________
248,725 250,378
________________________________________________________________________________
The 2006 comparative segmental operating loss information has been restated to
reflect a more appropriate allocation of costs. Accordingly the 2006 operating
profit of the Power Products division has increased by £785,000 and the
operating losses of the Interconnect and Wiring Harness divisions have increased
by £770,000 and £15,000 respectively.
2. Segments (continued)
Geographical segments
External External
revenue by revenue by
source destination
________________________________________________________________________________
2007 2006 2007 2006
£'000 £'000 £'000 £'000
________________________________________________________________________________
Asia and South
America 122,772 98,761 91,417 77,033
North America 49,234 75,591 59,853 73,986
United Kingdom 34,141 32,705 33,690 34,560
Other Europe 42,578 43,321 63,765 64,799
________________________________________________________________________________
248,725 250,378 248,725 250,378
________________________________________________________________________________
3. Major restructuring programme charge
________________________________________________________________________________
2007 2006
£'000 £'000
________________________________________________________________________________
Global management restructuring - 1,535
Property provisions 202 3,149
Closure of manufacturing facilities 3,007 2,720
Impairment of property, plant and equipment - 1,523
Insurance claim - (329)
Profit on sale of property, plant and equipment (1,215) -
________________________________________________________________________________
1,994 8,598
________________________________________________________________________________
During financial year 2007, restructuring of the Wiring Harness division has
been announced and the movement of certain production from the United Kingdom to
lower cost areas has commenced. The Group's Butts Mill site in Leigh, United
Kingdom and production assets from the closed facility in Clinton, United States
of America have been sold during the year. Additional onerous lease provision
has been recorded against a property vacated as part of the major restructuring
programme.
4. Exchange rates
The principal exchange rates used in the preparation of the financial statements
are:
Average % change Year end % change
2007 2006 vs. £ 2007 2006 vs. £
________________________________________________________________________________
United States dollar 1.89 1.80 (4.8) 1.96 1.75 (10.7)
Euro 1.48 1.46 (1.4) 1.47 1.44 (2.0)
Canadian dollar 2.15 2.15 - 2.27 2.03 (10.6)
Brazilian real 4.07 4.23 3.9 4.04 3.82 (5.5)
________________________________________________________________________________
5. Taxation
2007 2006
£'000 £'000
________________________________________________________________________________
Current tax - charge for the year 2,240 1,865
Current tax - adjustment in respect of previous
years 83 584
Deferred tax (373) (1)
________________________________________________________________________________
1,950 2,448
________________________________________________________________________________
6. Earnings/(loss) per ordinary share
The calculations of the earnings/(loss) per ordinary share are based on the
following data:
________________________________________________________________________________
Earnings/(loss) 2007 2006
£'000 £'000
________________________________________________________________________________
Basic earnings/(loss) 866 (9,106)
Adjustments for:
Major restructuring programme charge (note 3) 1,994 8,598
Write-off of unamortised debt costs (note 8) 1,463 -
________________________________________________________________________________
Adjusted earnings/(loss) 4,323 (508)
________________________________________________________________________________
Weighted average number of ordinary shares No. shares No. shares
________________________________________________________________________________
For the purpose of basic EPS 55,941,189 49,247,645
Effect of dilutive potential ordinary shares -
share options and warrants 96,093 -
________________________________________________________________________________
For the purpose of diluted EPS 56,037,282 49,247,645
________________________________________________________________________________
Basic earnings/(loss) per share Pence Pence
________________________________________________________________________________
Basic earnings/(loss) per share 1.5 (18.5)
Adjustments for:
Major restructuring programme charge (note 3) 3.6 17.5
Write-off of unamortised debt costs (note 8) 2.6 -
________________________________________________________________________________
Adjusted basic earnings/(loss) per share 7.7 (1.0)
________________________________________________________________________________
Diluted earnings/(loss) per share Pence Pence
________________________________________________________________________________
Diluted earnings/(loss) per share 1.5 (18.5)
Adjustments for:
Major restructuring programme charge (note 3) 3.6 17.5
Write-off of unamortised debt costs (note 8) 2.6 -
________________________________________________________________________________
Adjusted diluted earnings/(loss) per share 7.7 (1.0)
________________________________________________________________________________
Basic earnings/(loss) per share represents net profit/(loss) attributable to
equity holders of the Company.
The adjusted earnings/(loss) per share has been calculated on the basis of
continuing activities before major restructuring costs and write-off of
unamortised debt issue costs, net of tax. The Directors consider that this
earnings/(loss) per share calculation gives a better understanding of the
Group's earnings/(loss) per share in the current and prior year. As the Group
recorded a loss per share in 2006, the share options were anti-dilutive and
therefore there was no difference between the basic and diluted loss per share
in that period.
7. Dividends
The Directors do not recommend a dividend on the ordinary shares for the year
(2006: £nil).
8. Bank facilities
On 8 December 2006, the Group entered into a new three-year US$76 million
multicurrency combined revolving, overdraft and guarantee facility. At that
date, the unamortised debt issue costs of £1,463,000 associated with the
previous facility were written-off in the income statement as finance costs.
9. Movements in shareholders' equity
Share Share Translation Retained
capital premium reserve 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 - - (2,841) - (2,841)
________________________________________________________________________________
Balance at 1 April 2007 14,158 1,219 (1,020) 11,702 26,059
________________________________________________________________________________
10. Analysis of net debt
Other
3 April Exchange non-cash 1 April
2006 Cash flow movement changes 2007
£'000 £'000 £'000 £'000 £'000
________________________________________________________________________________
Cash at bank
and in hand 11,646 1,356 (767) - 12,235
Overdraft - (30) - - (30)
Debt due after
one year (26,751) 2,197 1,735 - (22,819)
Finance leases (230) 114 20 - (96)
Debt issue costs 2,061 1,399 - (2,333) 1,127
________________________________________________________________________________
Net debt (13,274) 5,036 988 (2,333) (9,583)
________________________________________________________________________________
Non-cash changes include amortisation and write-off of debt issue costs
totalling £2,359,000 offset by a movement in debt issue costs accrual of
£26,000.
This information is provided by RNS
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