Preliminary Results
Volex Group PLC
17 June 2002
VOLEX GROUP p.l.c.
Preliminary Announcement of Group Results for the Year to 31
March 2002
- Sales down 34% to £276m
- Operating loss for year of £0.5m
Before one-off costs and goodwill*
- Pre-tax loss of £14.0m
- Borrowings down £8.0m during year
* before goodwill, exceptional operating items and fundamental
restructuring costs
Volex Group p.l.c., the international electrical and
electronic cable assemblies group, today announces a 34% fall
in turnover to £276m for the year ended 31 March 2002. The
operating result for the year was a loss of £0.5m before one
off-costs (see next paragraph) and goodwill.
The one-off costs during the year comprised £1.0m in respect
of the closure of a U.S. factory and £6.3m relating to the
fundamental restructuring of the Group's data/telco and power
cords activities in Europe --see the following Chief
Executive's Review and the Financial Review for greater
detail.
Today the Group also announces that is has successfully
concluded negotiations with its principal bankers on a
refinancing package covering the needs of the business for the
next two to three years - see the Financial Review and Note 14
to the preliminary results for further details.
An interim dividend of 5.5p per share, in aggregate costing
£1.6m, was declared in respect of the first half year. In the
light of the out-turn for the full year the Company is not
recommending the payment of a final dividend for the year.
The Chairman of Volex, Bill Goodall, commented:
'The 2002 financial year saw the first break in growth the
Group has had for many years. At this time last year we
indicated that a high degree of uncertainty existed in our
markets, in particular in the communications and computer
area. As we went through the year, the Group's trading
position deteriorated and in mid December 2001 we updated the
market of the likely out-turn for the full year.
In the event, and in line with those indications, Group sales
were down 34% to £275.7m and we recorded an operating loss
before restructuring costs and goodwill amortisation of £0.5m
(2001 - operating profit of £34.3m).
In the light of the low levels of business the Group took
steps to optimise cash flows and reduce overheads. Stocks,
debtors and trading creditors reduced by £26.0m and capital
additions of £4.6m, representing some 53% of depreciation,
were restricted to priority items. Overall, net borrowings
fell by £8.0m during the year. Overhead costs had been
reduced by the year end by more than £15m per annum or
approximately 17%, compared with overhead levels at the same
time last year.
We believe our strategy of focusing on cable assemblies and
related value-added products and services will enable the
Group to maintain growth in the future. Overall, the
financial year 2002/03 is likely to see business volumes
broadly in line with the previous year with sales in the first
half similar to the current year's second half and an upturn
towards the end of the year. This increased demand is
anticipated to come largely from opportunities presented by
our customers continuing to consolidate their supply base
globally and not from immediate material growth in underlying
markets.
In this changed market environment and with the benefit of our
reduced cost base, I am confident that the Group can look
forward to a period of sustained growth and profitability.'
Dom Molloy, Volex Chief Executive, concluding his review of
the year, commented:
'Foremost in our plans is the assumption that this year is
concentrated on consolidation and growth through existing and
new accounts already identified. It recognises a new and
expanding opportunity with marketplace consolidation and a
need for partnership and relationship strength.
There are external factors, both economic and technical, which
continue to impact the Group. However, the management action
of the past year has positioned Volex competitively and the
Group can look forward to a period of increased market share
and sustainable long-term growth'
For further information, please contact:
Volex Group p.l.c. Today: 020 7950 2800 Thereafter: 01925 830101
Bill Goodall, Chairman
Dom Molloy, Group Chief Executive
Ken Hooper, Group Finance Director
Weber Shandwick Square Mile 020 7950 2800
Chris Lynch / Graham Herring
VOLEX GROUP p.l.c.
Preliminary Announcement of Group Results for the Year to 31 March 2002
CHIEF EXECUTIVE'S REVIEW
The year to March 2002 proved to be very challenging for the
Volex Group with falling demand in each of its major markets.
However, current demand indicators point to a levelling off
and a return to modest increases as marketplace inventories
reduce to the level of real-time requirements.
The Group has used this period well to re-structure its global
operations, to reduce operating expenses and to re-focus the
organisation in how it addresses new market opportunities. We
reacted quickly to the changing environment and, while this
necessitated a reduction in our employee base, the changes and
re-structuring activities have created a platform for a return
to growth with a more focused, efficient and cost-effective
organisation.
During the year, consolidation of the customer base and
outsourcing continued to dominate the changing profile of
targeted markets. Volex has used its global presence both to
adapt to those changes and to identify opportunities to
service the new market more effectively. The customer profile
continues to reflect global manufacturers of
telecommunications equipment, storage devices, computers,
consumer goods and transportation products. Utilising our
global account approach and regional account management
strength, we maintained our market share and have developed
new opportunities for growth within our existing customer base
and with new accounts.
The Group has emerged stronger and leaner with a cost base
correctly profiled to secure new business. Many internal
initiatives targeted on continuous improvement have delivered
efficiencies in manufacturing processes, order fulfilment,
inventory management capabilities and in time-to-market
routines for new product and process introduction. The
challenge is to quickly capitalise on these improvements and
grow our market presence in new segments, with new customers
and within our existing customer base.
Global Markets
The telecommunications (telecom) sector, specifically in the
wire line and internet segments, experienced the most dramatic
decline, with funding pressures on the operators and carriers
combined with both excess inventories and delayed technology
introduction contributing to reductions in hardware spending.
When the demand collapsed the market was flooded with excess
inventory of products such as routers, PBXs, optical switches
and related equipment. Dramatic as the reduction in demand
was, the period required to liquidate excess inventories was
even more pronounced.
On the wireless side, recent years have seen an explosion in
the mobile technology market. While there have been differing
standards (GSM, CDMA and TDMA), the infrastructure for each
standard has delivered the same level of bandwidth. This is
largely sufficient for voice communications but wholly
inadequate for combined voice and data communications.
Significant resources have been expended by the equipment
manufacturers on increasing the speed and efficiency of the
networks and to support the arrival of 2.5G (or GPRS) and 3G
(or UMTS) promising speeds capable of efficient video
streaming and high packet data communications. However, this
market opportunity has stalled due both to capital shortages
at the carrier level and technology challenges to the handset
and application level.
While the optical networking infrastructure has been put in
place at the backbone level, the last mile and specifically
the metro area has not been extensively fibred. Therefore, the
utilisation of office and domestic networks is still limited
by the speed of the copper capacity and much of the fibre
backbone remains unlit.
Our power cords business has been impacted over the year by a
soft recessionary environment. However, with aggressive
interest rate cuts in the US and some downward movement in
Europe, there are indications of modest returns in demand.
While investment in technology at the corporate level is
focused on systems security, consumers will continue to drive
spending on electronic equipment for the home as long as the
economic environment improves. We also expect demand to return
to the consumer appliance sector.
Sales, Marketing and Operations
After several years of unprecedented growth in our industry,
the market rapidly declined throughout the financial year and
as a result our sales fell by 34% overall.
We have continued to strengthen our presence across all of the
supported technologies, customers and market segments. The
strategy of targeting specific accounts and segments yielded
significant market share benefit in Asia, particularly with a
number of Japanese-based multi-national companies. We have
tracked the movement of many organisations to lower-cost
environments and continue to support their requirements in the
new location.
In each of the regions, the customer base has benefited from
our location coverage and our global product and sourcing
approach. We will continue the work of the past year in
positioning the Group as an organisation with global reach and
local presence. We will also continue our approach of re-
profiling existing capacity to meet the local requirements of
our key customers as they consolidate and re-locate.
The drive for value-added services continued across design,
order fulfilment and logistics and a number of key accounts
have been identified where such services can create value for
the customer and the Group.
In all regions, significant focus was placed on Lean business
methodologies to increase operational effectiveness in all
areas. External assessments under the European Foundation For
Quality Management process were also used successfully to
identify opportunities for business improvement.
The Americas
Sales in the Americas declined by 40% year on year. The
trading and operational environment for the Americas matched
the decline in the communications and computing market
segments. The first indicators of global market difficulties
were experienced in this region and the increasing outsourcing
and global consolidation within our industry saw the demise of
smaller regional competitors. The Group's market share has
improved and its position strengthened through strategic
alliances with key customers in the Electronic Manufacturing
Service (EMS) sector.
In order to reduce the cost base and improve the flexibility
and responsiveness required in today's market, the Group's US
North East coast facility was closed and consolidated into
various US and Mexican sites. Further, the full range of
product technologies, including fibre optics, has been added
to our facilities in Mexico.
The operation in Brazil was severely impacted by the market
and economic downturn there. However, this location remains
strategic from a regional perspective and we have strengthened
the management team. We expect that our focus will drive
opportunities with new accounts and maximise revenue potential
with existing global accounts. Cost reduction initiatives,
including head count reductions and improved facility
utilisation, have minimised the overall impact on the Group of
the poor market conditions within which Volex Brazil currently
operates.
Asia
Sales in Asia fell by 20%, largely caused by the dramatic
reduction in demand from other Volex regions and from a
reduction in order levels from telecom customers. As the
telecom market weakened, there was further acceleration of
outsourcing of manufacture by the telecom companies to low
cost manufacturers in Asia but market demand has dampened the
opportunity to realize the benefit of this for Volex. The
outlook for the telecom business remains positive, as there
will be ongoing need to build basic telecom infrastructure
throughout the region.
The power cord market remains strong with the continuing
movement of high volume production of consumer electronics to
the region. We improved our market share with Japanese
customers as they continue to invest in China and elsewhere in
the region. Our regional and global reach is a key advantage
in our relationships with the many multinational companies
operating in Asia.
From an operational perspective we have established one
quality and manufacturing system for power cord products in
Asia that we can promote as a competitive advantage to our
customers worldwide. In addition to process standardization,
we are making organizational changes to better distribute the
support staff to lower cost sites, particularly in China. The
supplier base for raw materials has grown in China and we will
continue to develop these sources for our regional and global
benefit.
Europe
Sales declined overall in Europe by 40% compared to the prior
financial year. The data/telecom side of this operation was
severely impacted by market conditions during this period,
although the effect on the power cord business was not as
significant.
In line with the changing structure of the Group's world-wide
markets, particularly the growing presence of multinational
EMS companies, the Group merged its European based
data/telecom and power cord assembly operations in the last
quarter of the year. This brings our European structure in
line with that already existing in the Americas and Asia.
Our power cord production in Europe is now confined to fully
automated plant, with the majority of products for the region
being manufactured in our facilities in Asia. This approach,
combined with supply line management strengths in Europe,
delivers a very competitive solution to the customer base in
this region.
The Group had identified opportunities to service the global
EMS companies as they expanded and re-organised their
facilities in Europe. Volex has established a presence in
Poland, complementing our existing facilities in Croatia, to
capitalize on the migration of EMS customers to Eastern
Europe. This new facility will provide the complete technology
breadth to support the total requirements of our customers and
will create opportunity for further account growth in the
coming year.
The wiring harness businesses, focused on custom harnesses for
niche applications, continued to grow in the commercial
vehicle and off-highway vehicle markets, and in aircraft and
defence wiring. Further offshore sub-contract manufacturing
was employed to reduce costs. Overall, these businesses made a
worthwhile contribution to the performance of the Group during
the year.
Technology
Investment in technical resources and equipment was focused on
opportunities to realise revenue in the medium term. The
structuring of our engineering resource along global lines has
enhanced our ability to quickly react to customer demand for
global deployment or to intra Group moves into lower-cost
environments. The Group concentrated on increasing its
technical capabilities in each region and on leveraging the
strength of its RF Centre of Excellence in the USA to deliver
opportunities within our global customer base. In this period
the Group expanded its technical capabilities to ensure that
we are positioned for recovery in market demands across fibre,
RF, fibre channel and copper products.
In the field of fibre optic technologies, the Group retained
its focus on development of standardised products and
processes. We strengthened our capability on device
termination, miniaturisation, passive and active technologies
and higher bandwidth products. In radio frequency we supported
our customers' demand across coaxial and semi-rigid and
conformable products. Passive intermodulation, corrugated and
micro-miniature technologies were also focused on to deliver
revenue potential and market share growth.
Strategy
Our strategy remains intact: leveraging our independence and
global presence to service target markets with flexibility and
responsiveness to customers' changing needs. We expect to
deliver growth through existing accounts by increasing our
product and service coverage, target new accounts within the
industry segments we currently support and develop
opportunities in new market segments where global cable
assembly capability is required.
As a responsive and flexible supplier with global reach, we
can further integrate ourselves into the operations of our
customer base with a clear value proposition of total supply
from design to delivery. By leveraging our engineering
competence, our supply chain processes and our IT strength we
can provide our customers with a complete solution to their
cable provision needs. This will have the benefit of driving
cost from our customers' operations and delivering opportunity
for growth for us.
With the intensity and pace of consolidation within our
market, we constantly identify the opportunities created and
re-shape our sales account focus to address the new entities.
The outsourcing programmes from the Original Equipment
Manufacturers (OEMs) have already created opportunity for us
to increase our market share and will continue to do so, as
our independence enables us to service a wide range of OEMs
through our alignment to the key EMS providers.
The Future
Over the next few years the Volex Group has a significant
opportunity to capitalise both on a potential upturn in the
market and on the current difficulties experienced by our
competition. We enter the year with a stable financial base
and a competitive and capable platform delivered through:
- a re-aligned and competitive cost base, with
manufacturing operations structured for growth across the
range of required technologies;
- a focused sales plan with a powerful offering: the
complete breadth of product portfolio required by our
customers and a competitive go-to-market model according to
price and service sensitivity;
- a market leading supply chain model, capable of
delivering product to point of use or storage, in a cost-
competitive but service-driven way;
- a proven value-added service offering, spanning design to
delivery; and
- a focused management structure and team who intend to
grow targeted revenue with optimum investment and minimal
increase in overhead costs.
Foremost in our plans is the assumption that this year is
concentrated on consolidation and growth through existing and
new accounts already identified. It recognises a new and
expanding opportunity with marketplace consolidation and a
need for partnership and relationship strength.
There are external factors, both economic and technical, which
continue to impact the Group. However, the management action
of the past year has positioned Volex competitively and the
Group can look forward to a period of increased market share
and sustainable long-term growth.
FINANCIAL REVIEW
Turnover for the year at £275.7m was down 34% over last year.
An analysis of sales by market sector showed sales into the
Group's major markets of communications and computers
(including industrial and medical segments) declining by 40%
and accounting for 68% of sales (2001 - 75%). Sales into the
appliance markets declined by 30% and accounted for 20% of
sales (2001 - 18%), whilst sales into the vehicle and
aerospace markets increased by 15% and accounted for 12% (2001
- 7%) of Group sales.
A review of sales by product category showed that
communications and data assemblies declined in value by 46%
and accounted for 49% (2001 - 60%) of Group sales and that
power cords sales fell by 21% and as a percentage of Group
sales represented 39% (2001 - 33%), with harness products
increasing 15% and accounting for 12% (2001 - 7%) of Group
sales.
A geographical review of sales by destination showed sales in
the Americas fell by 39% over last year and represented 41% of
Group sales (2001 - 45%), sales to customers in Asia decreased
by 8% but as a percentage of Group sales increased by eight
percentage points to 23% and sales in Europe as a whole
declined by 40% to 36% of Group sales (2001 - 40%). Intra-
Group sales, largely manufactured in Asia for ultimate sale
into Europe and the Americas, decreased by 47% over last year.
A comparison of Group sales by origin or manufacturing
location, based on total sales including intra-Group trading
(i.e. output at selling prices), showed a decline in Europe of
40%, with Europe now producing 36% of the Group's output, a
decline of three percentage points over last year. Asia's
output (i.e. to the external customers and intra-Group)
declined by 20% in value over the previous year: this region
now produces 25% of Group output (last year - 20%), whilst
output in the Americas declined by 40% and accounted for 39%
of Group output (2001 - 41%).
The Group recorded an operating loss (pre goodwill
amortisation and exceptional operating items) for the year of
£0.5m (2001 - profit of £35.2m). The Group's gross profit
margin fell by five percentage points to 12%, due to the large
drop in volumes compared with last year and consequent under
recovery of production overheads.
During the second half of the year the Group took two major
steps to re-structure and thereby reduce its cost base.
Firstly it closed a factory on the US East coast at a cost of
£1.0m, this being separately identified in the Profit & Loss
Account as an exceptional operating item in arriving at gross
profit. Secondly the Group's European infocom cable assembly
and powercords operations were fundamentally restructured,
reducing considerably the number of employees both in the UK
and Ireland. This restructuring cost £6.3m and is shown in the
Profit & Loss Account as an exceptional charge after arriving
at the operating result for the year.
The combined effect of these major restructurings and Group-
wide cost reductions throughout the year has been a
substantial reduction in production and other overheads:
comparison of the results for the final quarter of this year
with the same period a year ago reveals cost savings on an
annual basis in excess of £15m. As a result the Group has
reduced its operating profit break-even point to an annual
sales level of approximately £240m depending on product and/or
geographic mix.
Interest charges (net) for the full year were £3.1m as
compared with £4.4m last year. This fall in financing cost
was due in part to a decrease in net borrowings (referred to
later) and in part to lower average borrowing costs compared
with the prior year.
The result for the year after tax was a loss of £10.1m (2001 -
profit of £18.8m).
The translation of foreign currency turnover and operating
profits into sterling compared with last year's average rates
resulted in a turnover gain of £1.6m (or 0.4%) and a profits
gain of £0.3m (or 0.8%).
Taxation
The tax credit for the year resulted in an effective composite
rate of 27.8% (2001 tax charge - 29.0%).
Different tax rates apply to the Group's world-wide
operations, the highest rate relating to the North American
operations, with lower than average tax rates currently
applying in Asia and Ireland.
Funds Flow
During the year there was a net inflow of funds of £7.8m,
comprising inflows of £30.2m from operations and £0.1m from
the issue of share capital, in part offset by outgoings of
£5.1m on capital expenditure, £4.2m on tax, £4.0m on final
deferred payments for prior years' acquisitions, £2.9m on
interest/financing costs and £6.9m on dividends (last year's
final and the current year's interim). Currency translation of
£0.3m impacted favourably on the funds flow during the year.
Capital Expenditure
Fixed asset additions in the Group totalled £4.6m (2001 -
£14.2m) during the year, a multiple of depreciation of 0.5
times compared with 1.8 times last year. This reduction was
part of the Group's action programme to reduce borrowings and
was carried out without detriment to the longer term strategic
plan, the downturn in business having resulted in under-
utilised production capacity.
Borrowings
The Group's net borrowings at the end of the year were £50.4m
(2001 - £58.4m). These borrowings resulted in a year-end
gearing ratio of net borrowings to shareholders' funds of 85.0
% (2001 - 81.6%). Excluding the exceptional item in respect of
the fundamental restructuring in Europe the gearing ratio
would have been 75%.
After the year-end, and in the light of the results for the
year, the Company completed the re-negotiation of the terms of
its borrowings with its three principal bankers shortly before
the approval of the 2002 Annual Report & Accounts. The Group
has successfully negotiated adequate bank facilities for its
foreseeable requirements; the majority of facilities are multi-
currency and extend for a period of two years from June 2002,
with an option to extend for a further year subject to
compliance with certain performance criteria. These new
facilities, which will be on a secured basis, will increase
the average cost of borrowing by the Group by approximately
250 basis points (2.5%) over the average cost of borrowings in
the 2002 year, with pre-determined reductions in these margins
being agreed against scheduled repayments. In addition, the
Company has issued option warrants to the banks in respect of
5% of its issued ordinary share capital exercisable between
June 2004 and June 2005 at a 10% premium to the average share
price over the 30 day period starting 18 June 2002. The total
cost of achieving the refinancing was £2.5m: of this £2.3m is
charged against the results for the year with £0.2m being
carried forward in respect of facility issue costs to be
written off over the initial two year term of the facilities.
Employees
The number of Volex employees world-wide at the year end was
8,175 (2001 - 11,445) representing a reduction of 29% during
the year. At the year end 51% of our employees were in Asia,
29% in the Americas and 20% in Europe.
Volex Group plc
Preliminary Announcement of Group results for the year to 31 March 2002
A. RESULTS
Pre goodwill Goodwill
& exceptional & exceptional
operating operating
item item
Total Total
2002 2002 2002 2001
Notes £'000 £'000 £'000 £'000
------------------------------------------------------------------------------
Turnover
Continuing operations 1 275,696 - 275,696 418,299
Cost of sales 3 (243,598) (1,033)(244,631)(346,273)
--------- ------- -------- -------
Gross profit 32,098 (1,033) 31,065 72,026
--------- ------- -------- -------
Other operating expenses
pre-goodwill (net) 2 (32,646) - (32,646) (36,807)
Goodwill amortisation 2 - (871) (871) (899)
--------- ------- -------- -------
Other operating
expenses (net) 2 (32,646) (871) (33,517) (37,706)
--------- ------- -------- -------
Operating (loss)/profit
- continuing operations (548) (1,904) (2,452) 34,320
--------- ------- -------- -------
Costs of fundamental
restructuring of
continuing operations 4 (6,278) (3,344)
-------- -------
(Loss)/profit on ordinary
activities before
finance costs (8,730) 30,976
Finance costs
- interest (net) 6 (3,060) (4,448)
- refinancing costs 7 (2,260) -
-------- -------
(Loss)/profit on ordinary
activities before taxation (14,050) 26,528
Tax on (loss)/profit on
ordinary activities 8 3,907 (7,690)
-------- -------
(Loss)/profit for the
financial year (10,143) 18,838
-------- -------
Dividends paid and proposed
on equity and
non-equity shares 9 (1,585) (8,028)
------------------------------------------------------------------------------
(Loss)/profit for the
year transferred
(from)/to reserves (11,728) 10,810
------------------------------------------------------------------------------
Headline (loss)/earnings
per ordinary share 10 (8.4)p 79.9p
Basic (loss)/earnings
per ordinary share 10 (35.5)p 66.1p
Diluted (loss)/earnings
per ordinary share 10 (35.5)p 65.4p
B. GROUP BALANCE SHEETS
At 31 March 2002
Group
2002 2001
Notes £'000 £'000
------------------------------------------------------------------------------
Fixed assets
Intangible 12 14,065 14,844
Tangible assets 41,232 49,335
--------- ---------
55,297 64,179
--------- ---------
Current assets
Stocks 35,735 58,982
Debtors 52,344 70,704
Investments 1,482 -
Cash at bank and in hand 13,090 18,632
--------- ---------
102,651 148,318
--------- ---------
Creditors: amounts falling
due within one year
Borrowings (2,897) (15,454)
Trade creditors and provisions (34,995) (63,814)
--------- ---------
(37,892) (79,268)
--------- ---------
Net current assets 64,759 69,050
--------- ---------
Total assets less current
liabilities 120,056 133,229
Creditors: amounts falling
due after more than one year
Borrowings (60,602) (61,591)
Other liabilities - (21)
Provisions for liabilities and charges (139) -
------------------------------------------------------------------------------
Net assets 59,315 71,617
------------------------------------------------------------------------------
Capital and reserves
Called-up share capital
(inc. non-equity) 7,231 7,223
Reserves 52,084 64,394
------------------------------------------------------------------------------
Total capital employed 59,315 71,617
------------------------------------------------------------------------------
Gearing 85.0% 81.6%
C. Consolidated Cash Flow Statement
For the year ended 31 March 2002
2002 2001
£'000 £'000 £'000 £'000
------------------------------------------------------------------------------
Net cash inflow from
operating activities 30,222 24,506
(see note 13a)
Return on investments and
servicing of finance
Interest received 305 898
Interest paid (2,862) (4,847)
Refinancing costs (347) -
Interest element of
finance lease rentals (12) -
Preference dividends paid (6) (3)
Net cash outflow from returns
on investments and servicing
of finance (2,922) (3,952)
Taxation
UK corporation tax paid (700) (626)
Overseas tax paid (3,469) (5,894)
Tax paid (4,169) (6,520)
Capital expenditure
Purchase of tangible
fixed assets (5,084) (14,419)
Sale of tangible fixed
assets and current
asset investments 689 870
Net cash outflow from
capital expenditure (4,395) (13,549)
Acquisitions and disposals
Purchase of subsidiary
undertakings (4,015) (2,155)
Net cash outflow from acquisitions (4,015) (2,155)
Equity dividends paid (6,893) (7,529)
------------------------------------------------------------------------------
Cash inflow/(outflow)
before financing 7,828 (9,199)
Financing
Issue of ordinary share capital 121 801
(Decrease)/increase in
short term borrowings (590) 15,381
Capital element of finance
lease rentals (138) -
Net cash (outflow)/inflow
from financing (607) 16,182
------------------------------------------------------------------------------
Increase in cash in year 7,221 6,983
------------------------------------------------------------------------------
Note 1. Segment information
External sales Total sales
Turnover by geographical area by destination by source
2002 2001 2002 2001
£'000 £'000 £'000 £'000
------------------------------------------------------------------------------
United Kingdom 49,529 65,500 64,883 74,241
Republic of Ireland 7,340 5,140 34,648 83,977
Other Europe 43,026 95,193 9,362 22,090
------- ------- ------- -------
Total Europe 99,895 165,833 108,893 180,308
The Americas 112,391 183,322 117,807 194,579
Asia 63,410 69,144 76,257 94,884
Less: Inter-divisional (27,261)(51,472)
------------------------------------------------------------------------------
275,696 418,299 275,696 418,299
------------------------------------------------------------------------------
Operating profit, profit before tax and net assets by
geographical area and by class of business and turnover by
class of business are not given as such disclosure is
considered seriously prejudicial to the interests of the
Group.
Note 2. Other operating expenses (net)
2002 2001
Other operating expenses comprise: £'000 £'000
------------------------------------------------------------------------------
Selling and distribution expenses 15,518 17,959
Administrative expenses
- goodwill amortisation 871 899
- other 17,898 19,295
Other operating income (770) (447)
------------------------------------------------------------------------------
Other operating expenses (net) 33,517 37,706
------------------------------------------------------------------------------
Note 3. Exceptional operating item
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Closure of US facility 1,033 -
------------------------------------------------------------------------------
This represents the costs of closure of the Group's US East
Coast facility at Dartmouth, Massachussetts and all its
associated costs.
Note 4 Costs of a fundamental restructuring of continuing operation
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Restructuring costs of
European/UK operations 6,278 3,344
------------------------------------------------------------------------------
This year's cost represents a fundamental restructuring of the
Group's European power cord and infocom assembly operations.
The fundamental restructuring has occurred because of the
changing nature of its customers which increasingly comprise
strategically located intermediary EMSs rather than OEMs.
The resultant total cost included the impairment of £1,706,000 of fixed
assets.
The tax effect of this exceptional item was £979,000 (2001:£319,000).
Note 5 Exchange rates
The principal exchange rates used in the preparation of the
accounts are:
Average % Year End %
2002 2001 Change 2002 2001 Change
------------------------------------------------------------------------------
United States dollar 1.44 1.48 (2.7%) 1.42 1.42 -
Singapore dollar 2.56 2.58 (0.8%) 2.62 2.57 2.0%
Euro 1.63 1.63 - 1.63 1.61 1.2%
Canadian dollar 2.23 2.22 0.5% 2.27 2.24 1.3%
Brazilian real 3.49 2.81 24.2% 3.31 3.08 7.5%
Swedish krona 15.00 13.80 8.7% 14.75 14.70 0.3%
------------------------------------------------------------------------------
Note 6 Finance Costs - interest (net)
2002 2001
Net finance costs represent: £'000 £'000
------------------------------------------------------------------------------
Income receivable on bank deposits (309) (834)
Interest payable on bank loans
and overdraft 3,369 5,282
------------------------------------------------------------------------------
Finance costs - net 3,060 4,448
------------------------------------------------------------------------------
Note 7 Finance costs - refinancing costs
Refinancing costs of £2,260,000 (2001 - £nil) represent the
expenses incurred on re-negotiating the Group's bank
facilities with its major lenders (see post balance sheet
event note 14).
Note 8 Tax on (loss)/profit on ordinary activities 2002 2001
The tax (credit)/charge is based
on the (loss)/profit for the
year and comprises: £'000 £'000
------------------------------------------------------------------------------
Current Tax
UK corporation tax (231) 1,640
Foreign tax (2,892) 7,004
Adjustments in respect of prior years
Foreign tax (1,346) -
------------------------------------------------------------------------------
Total current tax (4,469) 8,644
Deferred taxation
Origination and reversal
of timing differences (141) (954)
Decrease in estimate of recoverable
deferred tax asset 703 -
------------------------------------------------------------------------------
Total deferred tax 562 (954)
------------------------------------------------------------------------------
Total tax on (loss)/profit on
ordinary activities (3,907) 7,690
------------------------------------------------------------------------------
UK and overseas taxation is based on losses for the year and
the Group tax credit has been influenced by the differing tax
rates in overseas countries.
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Tax on (loss)/profit of ordinary
activities at standard UK
corporation tax rate of
30% (2001 - 30%) (4,215) 7,958
Effects of:
Expenses not deductible for tax purposes 2,125 2,983
Capital allowances in excess of depreciation 93 516
Timing differences 1,043 669
Utilisation of tax losses (315) -
Higher tax rates on overseas earnings (1,854) (3,482)
Adjustments to tax charge in respect
of previous periods (1,346) -
------------------------------------------------------------------------------
Group current tax (credit)/charge for the year (4,469) 8,644
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Note 9 Dividends paid and proposed on equity and non-equity shares
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Equity shares:
Ordinary dividends
- prior year final dividend on shares
issued after 31 March 2001 under
share option schemes 6 26
- interim paid of 5.5p per share
(2001 - 9.4p per share) 1,573 2,682
- final proposed of nil p per share
(2001 - 18.6p per share) - 5,314
Non-equity shares:
Cumulative preference dividends
- interim paid 3 3
- final payable 3 3
------------------------------------------------------------------------------
1,585 8,028
------------------------------------------------------------------------------
Note 10 (Loss)/earnings per ordinary share
The calculations of (loss)/earnings per share are based on the
following (losses)/profits and numbers of shares:
2002 2001
£'000 £'000
------------------------------------------------------------------------------
(Loss)/profit for the financial year (10,143) 18,838
Preference dividends (6) (6)
------------------------------------------------------------------------------
Basic (loss)/earnings (10,149) 18,832
Goodwill amortisation 871 899
Cost of fundamental restructuring 6,278 3,344
Finance restructuring costs 2,260 -
Tax on exceptional items (1,657) (319)
------------------------------------------------------------------------------
Headline (loss)/earnings (2,397) 22,756
------------------------------------------------------------------------------
Weighted average number of shares:
No. of Shares No. of Shares
------------------------------------------------------------------------------
For basic (loss)/earnings per share 28,592,218 28,487,198
Exercise of share options 11,794 303,928
------------------------------------------------------------------------------
For diluted (loss)/earnings per share 28,604,012 28,791,126
------------------------------------------------------------------------------
Headline (loss)/earnings per share (full) (8.4)p 79.9p
Basic (loss)/earnings per share (full) (35.5)p 66.1p
Diluted (loss)/earnings per share (full) (35.5)p 65.4p
Headline (loss)/earnings per share has been calculated on the
basis of continuing activities before goodwill amortisation,
exceptional restructuring costs and exceptional refinancing
costs in each case net of tax. The directors consider that
this gives a better understanding of the Group's
(loss)/earnings.
------------------------------------------------------------------------------
Note 11 Reconciliation of movements in shareholders' funds
2002 2001
£'000 £'000
------------------------------------------------------------------------------
(Loss)/profit for the financial year (10,143) 18,838
Dividends paid and proposed - see note 9 (1,585) (8,028)
------------------------------------------------------------------------------
(Loss)/profit for the year transferred
(from)/to reserves (11,728) 10,810
Currency variations (695) 732
New share capital subscribed 121 801
------------------------------------------------------------------------------
Net (decrease)/increase in shareholders' funds (12,302) 12,343
Opening shareholders' funds 71,617 59,274
------------------------------------------------------------------------------
Closing shareholders' funds 59,315 71,617
------------------------------------------------------------------------------
Note 12 Intangible assets - goodwill
£'000
------------------------------------------------------------------------------
Cost
Beginning of year 16,294
Exchange adjustment 105
------------------------------------------------------------------------------
End of year 16,399
------------------------------------------------------------------------------
Amortisation
Beginning of year 1,450
Charge for the year 871
Exchange adjustment 13
------------------------------------------------------------------------------
End of year 2,334
------------------------------------------------------------------------------
Net book value - end of year 14,065
Net book value - beginning of year 14,844
------------------------------------------------------------------------------
13 Consolidated cash flow statement
a. Reconciliation of operating (loss)/profit 2002 2001
to net cash inflow from operating activities £'000 £'000
------------------------------------------------------------------------------
Operating (loss)/profit (2,452) 34,320
Depreciation charges 8,517 7,883
Goodwill amortised 871 899
Government grants (434) (565)
Profit on sale of tangible fixed assets (258) (186)
Decrease/(increase) in stocks 23,698 (9,664)
Decrease/(increase) in debtors 19,735 (1,903)
Decrease in creditors (17,480) (6,278)
Cash impact of fundamental restructuring (1,975) -
------------------------------------------------------------------------------
Net cash inflow from operating activities 30,222 24,506
------------------------------------------------------------------------------
b. Analysis of net debt:
1 April Other Non-cash Exchange 31 March
2001 Cash Flow Changes Movement 2002
£'000 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------
Cash at bank -------
and in hand 18,632 (5,365) - (177) 13,090
Overdraft (15,454) 12,586 - 41 (2,827)
-------
7,221
-------
Loans (61,591) 590 - 438 (60,563)
Finance Leases - 138 (242) (5) (109)
-------
728
------------------------------------------------------------------------------
Net debt (58,413) 7,949 (242) 297 (50,409)
------------------------------------------------------------------------------
c. Reconciliation of net cash flow to 2002 2001
movement in net debt: £'000 £'000
------------------------------------------------------------------------------
Increase in cash in the year 7,221 6,983
Cash outflow/(inflow) from
decrease/(increase) in debt & lease
financing 728 (15,381)
------------------------------------------------------------------------------
Change in net debt resulting from cash flows 7,949 (8,398)
New finance leases (242) -
Translation difference 297 (6,211)
------------------------------------------------------------------------------
Movement in net debt in the year 8,004 (14,609)
Net debt at 1 April 2001 (58,413) (43,804)
------------------------------------------------------------------------------
Net debt at 31 March 2002 (50,409) (58,413)
------------------------------------------------------------------------------
14 Post balance sheet event
Since the year end the Company has completed the re-
negotiation of the terms of its borrowing facilities with its
principal bankers (Barclays Bank PLC, Royal Bank of Scotland
PLC and Fleet National Bank). These facilities include 80% of
medium term multi-currency loans together with short term
facilities (i.e. less than 1 year). The medium term loans are
for an initial period of two years with the Company having an
option for a further one year extension subject to its meeting
certain specified conditions. These new facilities, which will
be on a secured basis, will increase the average cost of
borrowing by the Group by approximately 250 basis points
(2.5%) over the average cost of borrowings in the 2002 year,
with pre-determined reductions in these margins being agreed
against scheduled repayments.
In addition, the Company has issued option warrants to the
banks in respect of 5% of its issued ordinary share capital
exercisable between June 2004 and June 2005 at a 10% premium
to the average share price over the 30 day period starting 18
June 2002.
The Company considers that the new facilities are adequate for
its working capital purposes in the foreseeable future.
The costs of this refinancing are set out below, together with
the accounting treatment thereof:-
£'000
- Expensed direct to profit and loss account (see note 7) 2,260
- to be amortised over loan term 210
------------------------------------------------------------------------------
Total cost of bank refinancing 2,470
------------------------------------------------------------------------------
Note 15 Miscellaneous
(I) The current and prior year results set out in this
announcement are non-statutory accounts within the meaning of
Section 240 of the Companies Act 1985.
(ii) The results for the year ended 31 March 2002 are extracts
from the 2002 Group accounts which, if adopted by members in
General Meeting on 22 July 2002 will be filed with the
Registrar of Companies. These have been audited and reported
upon without qualification.
(iii)The results for the year ended 31 March 2001 are extracts
from the 2001 Group statutory accounts, which have been
reported upon without qualification by the auditors and
have been delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 5 hours ago Alphawave IP Group
- 6 hours ago WH Smith
- 6 hours ago Staffline Group
- 6 hours ago Manchester & London Investment Trust
- 7 hours ago Associated British Foods