Preliminary Results

RNS Number : 8017M

Volex Group PLC

01 June 2010

 



For immediate release                                                                                                          1 June 2010

VOLEX GROUP PLC

Preliminary Announcement of the Group Results

for the Financial Year ended 4 April 2010

Volex Group plc ("Volex"), a leading global provider of power products and interconnect cable assemblies today announces its preliminary results for the financial year ended 4 April 2010.

Operational Highlights

·    Re-organisation along market sector and functional lines completed, enabling implementation of coherent, global initiatives

·     Strategy of increasing Volex designed content driving gross margin increases

·    Targeted investment in new product development reaping benefits in Halogen-free power cords, high-speed data transmission products and outdoor fibre-optic solutions

·     Investment in IT systems and infrastructure initiated

·    Executive management team fully integrated and focused on driving continued strategic and operational improvements

·     Relocation of the Group's corporate headquarters from Warrington to London completed in July 2009

Financial Highlights

·     Revenue down 14% (19% at constant currency) to £229.0m (2009: £265.1m)

·     Revenue in Q2, Q3 & Q4 all showed sequential improvement over the preceding quarter

·     Gross margin improved to 20.2%, from 15.9% last year

·     Adjusted operating profit⁽ⁱ⁾ up 19% on prior year, at £13.4m (2009: £11.2m)

·     Adjusted profit before tax⁽ⁱⁱ⁾ of £10.0m, up 22% on last year (2009: £8.2m)

·     Profit before tax up 93% to £6.9m (2009: £3.6m)

·     Adjusted earnings per share (EPS) of 14.8p (2009: 10.9p). Basic EPS of 9.3p (2009: 2.8p)

·     Cash generated by operations before non-recurring items of £18.6m (2009: £21.8m)

·     Net debt reduced to £7.6m at 4 April 2010 (5 April 2009: £14.8m) 

(i)     Adjusted operating profit is defined as operating profit before non-recurring items and share-based payments

(ii)    Adjusted profit before tax is defined as profit before tax, non-recurring items and share-based payments

Outlook

The Chairman of Volex, Mike McTighe, commented:

"The Board and executive management have worked hard in the last year to restore confidence in the Group following a prolonged period of underachievement.  The new senior team has made substantial progress in its mission to improve trading performance and restore financial stability to the Group, focussing on a single, cross-functional global strategy for Volex. Furthermore, I am pleased to report that this strategy is already starting to deliver results in the face of the exceptionally difficult general economic environment. However, there is scope for considerable further improvement and significant challenges still lie ahead.

The Board and executive team remain cautiously optimistic about the prospects for the upcoming financial year and beyond." 

For further information please contact:

Volex Group plc                                                                                [phone]

Ray Walsh, Group Chief Executive

Andrew Cherry, Group Finance Director

Buchanan Communications                                                            [phone]

Charles Ryland

Jeremy Garcia

Forward looking statements

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward looking statements.

Chairman's Statement

A strong performance

Following a very challenging and turbulent period, Volex entered the financial year under the strong leadership of a new Group Chief Executive, Ray Walsh, and Group Finance Director, Andrew Cherry, and achieved a much improved performance, increasing operating profits, improving margins and significantly reducing net debt.

The new team has made substantial progress in its mission to restore financial stability to the Group. The team has concentrated on bringing the global operations together under a new unified organisational structure focused on delivering on a single, global strategy for Volex.

This strategy is already starting to achieve results. Adjusted operating profit has improved quarter on quarter throughout the year, contributing £13.4m in 2010, 19% ahead of 2009 (2009: £11.2m). Net debt has been almost halved to £7.6m - the lowest level in ten years (2009: £14.8m). Equally importantly, quarter on quarter revenue growth from Q2 has been achieved during exceptionally challenging economic conditions.

Building a world class team

The new Chief Executive, Ray Walsh was appointed to the Board in April 2009, bringing to Volex considerable experience of leading technology companies. Working with Andrew Cherry, who was appointed towards the end of the last financial year, he has made an immediate impact on the business and put in place a clear strategy for the future.

The executive management team has also been strengthened with the addition of two senior executives to lead the critical sales and marketing and operations functions. The executive team has a clear mandate; to deliver world class quality and customer service, cost competitiveness, improving margins, and to return the business to growth.

It has been a tough year and I would like to thank all our employees, in every location, for their hard work and positive response to the huge changes being implemented across the Group.

Restoring market confidence

The Board and executive management have worked hard in the last year to restore confidence in the Group, following a period of underachievement. As the new team's strategy, which is already delivering results in a difficult economic environment, becomes fully embedded throughout the business, we hope to build confidence in the Group still further.

Outlook

Although we are operating well within our banking covenants, we remain focused on cash generation and reducing net debt.

The Board remains cautious on revenue growth rates as a slow return to global financial stability and emergence from recession is likely to continue in the near-term. However, this will not diminish our focus on improving our proposition to customers and effecting wide-ranging internal improvements to help deliver continuing improvements to our P&L and balance sheet. We believe that this will in turn translate into long-term value for our shareholders.

Chief Executive's Statement

Return to Growth

Our objective last year was to demonstrate clearly to all Volex stakeholders that we have stabilised the business - both operationally and financially. Our quarter on quarter improvements in revenues, operating profit and cash flow are evidence of our progress and set the stage for the next phase of development - a return to growth. 

Sound foundations for the future have been put in place. Volex now has a strong, dynamic executive team with in-depth experience in our products and markets, combined with leadership, organisational and process capabilities honed in organisations much larger than Volex today. This talented team brings a high level of professionalism to the Group and the strategies we are currently implementing will grow Volex to a size and scale that matches this expertise.

Developing a clear strategy

Setting a clear direction and purpose has been key to revitalising the business. Our strategy focuses on becoming a truly global business, driving sales growth via strong global, sector-based sales and account management. Our sales and operations focus is on the high growth, emerging economies in India, Brazil and China, while continuing to deliver for our established customers in North America and Europe.

Margin improvement is also a key strategic objective through designed-in content and early engineering engagement with customers. This investment in early product lifecycle and key client engagement was integral to our improved gross margin performance in the last financial year, increasing to 20.2% (2009: 15.9%). To continue that improvement, we need to increase the percentage of products shipped that contain this Volex engineered content.

In our manufacturing operations we are implementing LEAN manufacturing techniques to increase utilisation of existing factory capacity and to deliver improved speed, efficiency and quality.

To provide a firm foundation for our growth targets, we will be implementing standardised processes, measurements and IT systems to provide a platform for sound, data-driven decisions and to help optimise operations. Standardising our products, organisation, processes and platforms will enable us to produce real and sustainable growth in revenues and significant efficiency and quality gains in operations and supply chain processes.

Aligning the organisation

During the year, the business was reorganised along market sector and functional lines, under the new management team. We can now implement coherent, global strategies that cross geographical boundaries.

Our market sectors are now defined as Telecommunications/DataCommunications (Telecoms/Datacoms), Healthcare, Consumer and Industrial. Today, all staff across the Group report to their functional, global head including Sales & Marketing, Operations, Finance, Engineering and Human Resources. Through this organisation structure, Volex can align its global strategies and capabilities with our strategic clients and targets. Building a more balanced business will also increase our resilience to market fluctuations and enhance our ability to capitalise on opportunities.

Telecoms/Datacoms

This market sector serves the mobile connectivity, broadband networks and high-performance datacentre markets. In the last year, the segment has penetrated key emerging accounts such as Huawei and ZTE in China at a strategic level, while keeping our long-term relationships healthy with core clients like Ericsson and Alcatel-Lucent. Although we maintain a modest capital expenditure to revenue ratio, we have invested in product development in this area, particularly in high-speed copper and fibre connectivity. These are used in all types of communications networks and are particularly effective in extremely dense, high performance cloud-computing environments. Our industry leadership in standards definition in these areas allows us to play an important part in our customers' product development lifecycles.

Healthcare

Volex has a long and successful history of servicing key accounts in the medical equipment field including all forms of imaging technologies from x-ray to MRI machinery, where we supply cable assembly and connector technologies. This segment is optimally aligned with our strategy of engineering content as our clients require customised solutions and early product lifecycle engagement. We are now taking our best-in-class expertise in serving European and North American clients and applying this to emerging suppliers of these technologies in China, Japan and India. The Group expects significant long term growth in this sector not only due to well-documented demographics on ageing populations and anticipated spend on medical care, but also as a result of our broadening product scope to include home-healthcare products, patient monitoring cables, patient-related equipment and consumables.

Consumer

Representing more than half of our revenue in the last financial year, our Consumer sector supplies power and data cables and cable assemblies for consumer and business hardware such as laptop/desktop computers, printers, televisions, power tools, floor cleaning equipment and many other applications. We are the market leader in this sector and have been able to leverage this strong position to significantly increase production allocations from our key clients. Our considerable engineering talent and experience has developed an industry leading, environmentally responsible, halogen-free powercord production process which is beginning to replace traditional PVC compounds. This not only meets or exceeds the environmental safety expectations of our clients, but also enables us to take market share from competitors who have not invested in next generation technology.

Industrial

The Industrial sector, while the smallest by share of revenues, has some of the most exciting growth prospects. Historically this area of the business served industrial manufacturing and test equipment, large scale cooling hardware, satellite tracking systems and even vending machines. We are extending our product range to include green energy and smart grid technologies. Volex has developed specific cables, assemblies and connectors for the solar energy market where we have already signed new clients. The team is now developing products and relationships in the wind power segment where we can supply power and control cable assemblies for what is an exciting and growing market opportunity.

Operational Excellence

All our factories and operations are now functioning under a single management structure and are beginning to implement a common set of operational processes and measurements, in addition to implementing a unified LEAN manufacturing strategy. While we start the new financial year with a utilisation rate of approximately 50% across our total factory capacity, we expect to add an additional 30% capacity through efficiency programmes and LEAN manufacturing by the end of the year. We have no plans to further restructure or reduce our factory footprint, but intend to capitalise on our current fixed cost base as we grow revenues. This will increase our operating margin through more efficient use of space, equipment and labour and give us a more competitive cost base. Our factories are rapidly becoming a strategic asset to the Group, helping us differentiate our offering to the market based on capability, cost and quality.

Volex continues to drive efficiency through our supply chain processes. In the last year we reduced the supplier base by more than 30% and anticipate we will repeat that performance in the coming year. Consolidating our spend with fewer suppliers gives negotiating leverage in price and enables us to participate in supplier managed hubs so we only replenish inventories when raw materials are consumed.

Good progress, but much more to do…

While we have done much in the last year to stabilise the business, there is still demanding work ahead as we return to growth and further improve the business.

We enter the new financial year with the tools to face the challenging tasks ahead in driving efficiency improvements in all of our factories and operational processes, reforming our Information Technology platforms, accelerating the deployment of higher margin/engineered products and serving our customers with a more strategic and global perspective. It is only the talent and dedication of our people across the globe that makes such complex and far-reaching change possible and it is in this resource that we entrust our future.

Financial Review

The Group has made significant progress during the year to 4 April 2010, despite a challenging market environment.

Revenues in the year ending April 2010 (Financial Year 2010, or FY2010) were down on the prior year (FY2009). However, the decline was less than experienced by our major competitors and the industry as a whole, giving encouragement that if anything the Group has strengthened its competitive positioning during the year. Equally importantly, revenues grew consistently quarter on quarter during FY2010 (from Q2) and we anticipate the current financial year (FY2011) will see year on year growth.

Gross profit, adjusted operating profit, adjusted profit before tax and adjusted profit after tax (adjusting for non-recurring items and share-based payments) were all significantly ahead of the prior year - up 10%, 19%, 22% and 35% respectively. Indeed this illustrates the operational leverage enjoyed by the business which positions the Group well for the anticipated economic recovery amplified further by a range of ongoing commercial and operational improvements which will begin to deliver financial improvements during FY2011.

The Group also remains focused on cash generation and strengthening the balance sheet with net debt halved during the year from £15m to £8m and shareholders' equity doubled from £6m to £13m.

Revenues

Revenue from continuing operations of £229m was 14% down in FY2010 compared with FY2009, due to reduced consumer and business spending associated with the difficult economic conditions. Currency movements, in particular the weakening of Sterling against the US Dollar, benefited the year on year comparison, with revenue down 19% on a constant currency basis (17% on a pro-rated 52 week basis). Constant currency comparisons are derived by translating both years at FY2010 exchange rates.

Encouragingly, after three quarters of declining sales from the third quarter of FY2009, the final three quarters of FY2010 saw quarter on quarter revenue growth, with performance since the year end suggesting a continuation of this momentum into FY2011.

Telecoms / Datacoms

Our Telecoms / Datacoms sector experienced the largest year on year revenue decline falling 27% from £81m to £59m. Telecoms / Datacoms revenues are primarily driven by infrastructure spend on wireless and broadband network builds or upgrades and on investments in high-performance computing centers and data centers. During FY2009 revenue growth in this sector was especially driven by network rollouts in China and India. However, investment levels were reduced by the telecommunications service providers following the global credit crunch and this adversely impacted on Volex revenues. In India this was compounded by delays in the award of the 3G licences which were originally scheduled to be auctioned in August 2009 but which were only awarded in May 2010 and also by the introduction, by the Indian Department of Telecommunications in December 2009, of a requirement to get security clearance for specified telecommunications equipment which essentially stalled the market in the final quarter of FY2010. Year on year comparisons are also adversely impacted by the loss of Nortel, which had been one of the sector's principal accounts. However, we have seen confidence return to the Telecoms / Datacoms sector in recent months and, with the exception of temporary considerations in India, this has already translated into improved sales and an increasing order book. In addition to this improving business backdrop we are also confident that FY2011 revenues will benefit from investment made during FY2010 into new products, in particular High Speed copper products, and into relationships with a number of new accounts including leading edge Datacoms equipment providers and fast growing Chinese Telecoms OEMs such as Huawei and ZTE.

Consumer

Consumer, our largest Sector, experienced a 9% year on year decline in revenues from £153m to £139m. Consumer revenues are driven by underlying consumption of electrical and electronic equipment - generally by end consumers, although businesses also account for a significant proportion of spend especially in the computer and peripherals segments. As such our Consumer revenues declined in response to falling consumer confidence post the Lehman collapse which was exacerbated by destocking by OEMs and retailers. Since the beginning of FY2010 we have experienced improving confidence on behalf of our customers and a gradual increase in our Consumer order book. This improving scenario is most pronounced in Asia where consumer confidence was less impacted and which has benefited from the shifting regional focus of our OEM customers. At the same time the migration from traditional PVC based products to more environmentally friendly halogen free products has boosted revenues since Volex enjoys a competitive advantage in this emerging technology and by increasing our average selling price per unit. The Group is also enjoying higher allocations of our customer spend due to improved quality, our much improved credit rating and the trend by our OEM customers to consolidate their vendor portfolio - something which generally favours Volex given our clear market leadership in Consumer products.

Healthcare

Healthcare delivered a solid performance during the year, down slightly in FY2010 from £21m to £19m. Healthcare was the first of our sectors to be formed in our new market sector driven sales organisation and is already gaining significant traction with new accounts outside of our traditional customer base. There are significant long term growth prospects in this sector driven by growing and ageing populations. Volex's Healthcare revenues have historically been concentrated in developed economies but we are rapidly increasing our presence in emerging markets and expect that this will drive growth in FY2011 and beyond.

Industrial

Industrial is currently the smallest of our sectors but is also the best performing, up 10% from £10m to £11m during FY2010. While the majority of this increase is due to just a couple of accounts we anticipate that additional customer wins and new product introductions, particularly in the renewable energy segment, will help to continue this momentum.

Profits

In addition to top line growth, Volex's other main objective is margin improvement. The last two years have demonstrated significant success in this respect, with gross margin increasing from 15.9% in FY2009 to 20.2% in FY2010. Reported gross margins in Q4 FY2010 decreased slightly to 19.9%, with the decrease from previous quarters entirely due to £1.0m of one-off charges in India explained further below. Excluding this, the gross margin percentage in Q4 FY2010 would have been 21.5%.

Even with reduced revenues absolute gross margin has increased by 10% from £42m to £46m. Given our focus on this measure, we have enhanced the presentation of our Income Statement to include Gross Margin and we will also be reporting Gross Margins by Sector on an annual and half-yearly basis. One of the main contributors to improved margins has been an increasing proportion of Volex designed-in content within our products and advanced engineering engagement with our customers at an earlier stage in the product lifecycle, allowing us to contribute greater value added to the design and development of our customer's products. This strategic repositioning is an ongoing process and we expect to continue increasing the proportion of Volex designed content in our products. We have also seen benefits from our new global procurement and logistics practices, reduced factory overheads and favourable year on year reductions in the cost of commodities - primarily copper and oil. Looking forward the introduction of LEAN manufacturing methodologies and upgraded and harmonised manufacturing systems will yield additional benefits in FY2011.

Consumer, Healthcare and Industrial all saw strong year on year improvements in gross margin % - moving from an average of 15.2% in FY2009 to 22.1% in FY2010. Reported Telecoms / Datacoms gross margin % fell to 14.8% which after adjusting for the £1.0m one-off India charge described above would have been 16.4%. Telecoms / Datacoms margins were impacted by the suppressed market noted above and by the amortisation of fixed factory overheads across a significantly reduced revenue base.

Gross margin % of ongoing operations by sector
	FY 10	FY 09
Telecoms / Datacoms	14.8%	17.4%
Consumer	22.1%	15.2%
Healthcare	21.6%	16.2%
Industrial	22.7%	14.1%
Total ongoing operations	20.2%	15.9%

Despite the year on year decline in revenue, operating profit increased by £3.6m (56%) from £6.6m to £10.2m - due entirely to the higher gross margin noted above. On an adjusted basis operating profit increased £2.2m (19%) from £11.2m to £13.4m. The Board considers this to be the best indicator of underlying profit and we are delighted to have returned the group to a path of steady improvement following years of fluctuating and unpredictable profitability or intermittent losses. In particular, the Group has now delivered five consecutive quarters of quarter on quarter profit growth. Similar improvements have also been achieved in adjusted profit before tax which has increased by £1.8m (22%) from £8.2m to £10.0m.

Reported operating expenses were largely unchanged year on year at £35.9m, up £0.3m (1%) on FY2009. On a normalised basis the increase was greater - up £1.8m from £31.0m to £32.8m. However, half of this increase is due to charges of £0.9m in India relating to legacy issues. In particular, following the appointment of a new Indian Finance Director, we have effected improvements in a number of controls particularly pertaining to accounting for excise taxes and customs duties. As a result of these improvements we have written off or provided for amounts totalling £2.0m, including £1.0m charged to cost of sales and £0.9m within operating expenses. These expenses are one-off items that relate exclusively to issues which existed prior to FY2010 and in some cases several years previously. However, consistent with the Group's stated objective of minimising the classification of items as "non-recurring charges" we have incorporated the £2.0m of charges above adjusted operating profit. The remaining £0.9m increase in normalised operating expenses reflects targeted strategic investments primarily in strengthening management across the Group. The Group will continue to focus on its cost base and fixed/variable cost structure and stands to benefit from significant operating leverage effects as and when the anticipated revenue increases materialise.

Non-recurring items

The Group incurred £3.1m of non-recurring charges in the year as part of management's transformation programme which, together with a small share-based payments charge, reconcile the statutory operating profit of £10.2m with the adjusted operating profit of £13.4m discussed above. These charges relate to:

(i)  £1.2m of redundancy, recruitment and set-up costs associated with the relocation of the Group's corporate headquarters from Warrington to London

(ii)  a non-cash charge of £0.9m relating to an onerous lease provision established on exiting the Warrington premises

(iii)  £0.9m of costs associated with a facilities rationalisation programme

(iv)  £0.5m resulting from the conclusion of all outstanding issues pertaining to the disposal of the Wiring Harness business in the prior year

(v)  offset by a partial write-back of £0.4m on the onerous lease provision relating to a vacant UK property which was sub-let during the year

Cashflows, net debt and gearing

The Group continues to be strongly cash generative with cash generated by operations before non-recurring items of £18.6m in FY2010 compared to £21.8m in FY2009. After aggregate outflows for tax, interest and capital expenditures, operating cash flow before non-recurring items was £13.2m (2009:  £17.9m). One-off outflows which we would not expect to be repeated in FY2011 totalled £6.2m - comprising non-recurring items of £2.7m, refinancing costs of £1.5m and outflows associated with the disposal of VWS of £2.0m. Despite these outflows the Group was able to repay £6.0m of borrowing and halved its net debt from £14.8m to £7.6m.

Shareholders' funds increased during the year from £6.3m to £12.7m mainly due to retained profit for the year of £5.3m. Also impacting shareholders' funds during the period was a favourable foreign exchange movement of £1.6m and a charge of £0.5m in respect of the IAS 19 actuarial loss on the Group's two defined benefit pension schemes. A full analysis of the movement in shareholders' funds is shown in the Consolidated Statement of Changes in Equity.

As a result of these movements, headline gearing (defined as net debt divided by shareholders' funds) at year end decreased to 60% (2009: 236%).

Total interest costs in the year increased to £3.4m from £3.2m in FY2009. Interest on bank borrowings decreased by £0.1m compared to prior year, with lower average borrowings broadly offsetting the small increases in margin over LIBOR payable on the extended Lloyds facility. This bank interest saving was offset by increases in non-cash interest costs of £0.3m in the year, primarily relating to amortisation of bank fees and net pension interest, charged to the income statement in accordance with IAS 19.

Banking facilities

The Group has a revolving credit facility (RCF) with Lloyds Banking Group plc which, after amortisation, had an available limit of US$57.7m as at 4 April 2010, comprising both a US Dollar and a Euro component. At the year end, amounts drawn under this facility were US$21.7m and €13.5m and average combined utilisation during the year was US$45.6m. In addition, the Group has a separate €6.8m invoice discounting facility with Lloyds Banking Group plc, (a facility that had previously been established with HBOS plc, now a part of Lloyds). At 4 April 2010 the Group had undrawn committed borrowing facilities of £14.0m (2009: £11.4m). These Lloyds facilities (the RCF and the former HBOS invoice discounting facility) mature in March 2012. The RCF amortises by US$2.5m per calendar quarter, with the remaining facility balance amortising on maturity. The invoice discounting facility does not reduce until the maturity date.

Based on the Group's projected financial performance the Board is confident that the combination of the above facilities provides adequate liquidity and covenant headroom for the Group's operations and the successful execution of its strategy.

Tax

The Group incurred a tax charge of £1.6m (2009: £2.0m) representing an effective tax rate (ETR) of 24% (2009: 56%). The principal cause of the reduction in the ETR in FY2010 is the release of £1.1m of tax provisions previously held in respect of tax exposures associated with local tax authority compliance. Following successful finalisation of tax computation filings in a number of regions and across a number of tax years, these provisions are no longer required and have been released back to the income statement.

In addition, the group has recognised £0.1m of deferred tax asset in respect of unused tax losses, following the initiation of a global supply chain optimisation project. This deferred tax asset is only in respect of a small proportion of the Group's tax losses. The Group expects to increase the recognition of deferred tax assets relating to tax losses over the next few years as the benefits anticipated from the global supply chain project accrue with greater certainty. Total Group losses at 4 April 2010 were £54m (2009: £46m). On a full recognition basis this represents a potential deferred tax asset of £14.6m. We expect that the above optimisation project will result in a significantly lower ETR and tax cash outflows in future years than has been the case in the past.

Earnings per share

Basic earnings per share from continuing operations for the year was 9.3p, significantly ahead of the 2.8p reported last year on account of the substantial improvement in profit after tax. Adjusted earnings per share increased to 14.8p from 10.9p last year.

Dividends

The Company has negative distributable reserves and accordingly is currently unable to declare and pay a dividend. Management is reviewing ways in which it can reorganise the Company balance sheet. Any such reorganisation would need shareholder approval and the sanction of the courts and it is anticipated that proposals to address this issue will be developed during FY2011.

Defined benefit pension schemes

The Group's net pension deficit under IAS 19 at the year end increased from £1.8m at 5 April 2009 to £2.4m at 4 April 2010. While the fair value of assets increased during the period from £9.2m to £11.1m, the present value of the defined benefit obligations increased from £11.1m to £13.5m, primarily due to a decrease in discount rate used to value the pension scheme's obligations. As required by IAS 19, the discount rate used by the Group is determined with reference to yields on corporate bonds and these yields decreased significantly between 5 April 2009 and the balance sheet date.

Principal risks and uncertainties

Customer concentration

A significant proportion of the Group's trading activity is with a relatively small number of large global accounts. Approximately three-quarters of total Group revenue is generated by the Group's top 25 customers, mostly prestigious global OEMs. Two of the Group's customers individually account for more than 10% of total Group revenue, with the Group's largest customer, operating in the wireless infrastructure sector, accounting for 11% of total Group revenue.

In practice these key global customers operate across a number of different business sectors and regions with somewhat independent customer relationships in each of the sectors and geographies. The loss of business in one particular geography or sector would not necessarily result in the loss of all of that customer's business.

The Group continues to mitigate the risk of fluctuations in revenues from these customers through closer trading relationships with individual customers while diversifying into other customers and market segments.

Counter party risk

The Group regularly reviews the credit worthiness of all customers and operates appropriate credit limits to manage the exposure to any given customer. The degree of customer concentration inherent in the Group's business means that the Group has substantial credit exposure to a few key customers. Typically, however, these key customers are large, blue chip OEMs for whom the risk of default is relatively low. The Group had no material bad debt write-offs in the year.

The Group is also dependent upon a limited number of suppliers, particularly in respect of cable materials. However, the Board believes that in the event of one of these suppliers failing to honour its obligations to the Group, alternative sources of supply could be engaged without substantial disruption to the business, nor any material financial loss.

Commodity prices

Many of the Group's products, in particular power cords used in the Consumer sector, are manufactured from components that contain significant proportions of copper and, to a lesser extent, other metals and oil-based products such as PVC. Increases in the prices of these commodities are reflected in the prices charged to our customers but delays in passing through these cost changes can cause short-term volatility in the Group's gross margins and working capital requirements.

The Board regularly reviews the prices of these commodities and effects a number of measures to mitigate the impact of excessive volatility. With respect to copper specifically these include, but are not limited to, the use of purchase and sale contracts to more closely align committed customer orders with purchases from suppliers, to reduce the volatility caused by the time lag between purchase from supplier and sale to customer.

Management assume that during financial year 2011 copper will continue in the range of US$7,000 - US$8,000 / ton.

Foreign exchange

A substantial portion of the Group's revenues and expenditures are denominated in US Dollars and Euros. During the financial year Sterling appreciated by 3% against the US Dollar and by 2% against the Euro.

The Group's costs and revenues are broadly denominated in the same currencies. For example, the majority of US Dollar denominated revenues are serviced from locations where the costs are incurred in US Dollars or US Dollar related currencies and likewise for the Euro. As such there is no significant trading advantage or disadvantage resulting from these currency movements.

The main impact of these movements is in the translation of foreign currency denominated income and expenses in the consolidated Income Statement and foreign currency denominated assets and liabilities in the consolidated Statement of Financial Position. The impact of foreign exchange movements on the consolidated Statement of Financial Position is mitigated by a natural hedge arising as a result of the Group's US Dollar and Euro denominated borrowings.

Competition

The Group's markets are highly competitive and we expect this competition will continue in the future. Our overall competitive position depends on a number of factors including the price, quality and performance of our products, the level of customer service, the development of new technology and our ability to participate in emerging markets. Competition may intensify from various international competitors and new market entrants and our markets have become increasingly concentrated and global. Increased competition may result in price reductions, reduced margins or loss of market share, any of which could materially and adversely affect our business and trading performance.

Exposure to global economic conditions

The Group's business and trading performance have been, and will continue to be, affected by global economic conditions. As global economic conditions deteriorate or economic uncertainty increases, our customers and potential customers may experience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products. This may have a material adverse effect on the Group's trading results.

Consolidated Income Statement
For the 52 weeks ended 4 April 2010 (53 weeks ended 5 April 2009)
		Group
	Notes	2010 £'000	2009 £'000
Continuing operations
Revenue	2	228,995	265,116
Cost of sales		(182,834)	(222,963)
Gross margin	2	46,161	42,153
Operating expenses		(35,912)	(35,586)
Operating profit	2	10,249	6,567
Analysed as:
Operating profit before non-recurring items and share based payments		13,353	11,175
Restructuring costs	3	(3,095)	(4,740)
Share based payments (charge) / credit		(9)	132
Operating profit		10,249	6,567
Investment income		71	226
Finance costs		(3,410)	(3,210)
Profit on ordinary activities before taxation		6,910	3,583
Taxation	4	(1,631)	(1,991)
Profit for the period from continuing operations attributable to owners of the parent		5,279	1,592
Discontinued operations
Loss for the period from discontinued operations attributable to owners of the parent		-	(20,976)
Profit / (loss) for the period attributable to the owners of the parent		5,279	(19,384)
Earnings / (loss) per share (pence)*
From continuing operations
Basic	5	9.3	2.8
Diluted	5	9.1	2.8
From continuing and discontinued operations
Basic	5	9.3	(34.1)
Diluted	5	9.1	(34.1)

* Earnings per share before non-recurring items, loss on disposal and share based payments is shown in note 5

Consolidated Statement of Comprehensive Income
For the 52 weeks ended 4 April 2010 (53 weeks ended 5 April 2009)
		Group
		2010 £'000	2009 £'000
Profit / (loss) for the year		5,279	(19,384)
Other comprehensive income:
Gain / (loss) on hedge of net investment taken to equity		532	(5,554)
Exchange difference on translation of foreign operations		1,073	8,948
Actuarial losses on defined benefit pension schemes		(516)	(285)
Other comprehensive income for the year		1,089	3,109
Total comprehensive income for the period attributable to the owners of the parent		6,368	(16,275)

Consolidated Statement of Financial Position
As at 4 April 2010 (5 April 2009)
	Notes	2010 £'000	2009 £'000
Non-current assets
Goodwill		1,930	1,930
Other intangible assets		658	566
Property, plant and equipment		7,501	8,040
Trade and other receivables		213	-
Deferred tax asset		268	692
		10,570	11,228
Current assets
Inventories		27,502	24,135
Trade and other receivables		60,146	59,751
Current tax assets		385	56
Cash and cash equivalents		18,220	16,877
		106,253	100,819
Total assets		116,823	112,047
Current liabilities
Bank overdrafts and loans		282	-
Obligations under finance leases		64	2
Trade and other payables		61,949	56,332
Current tax liabilities		5,402	5,842
Retirement benefit obligation		155	153
Provisions	10	4,055	3,735
Liability for share based payments		-	14
Derivative financial instruments		371	248
		72,278	66,326
Net current assets		33,975	34,493
Non-current liabilities
Bank loans	7	25,356	31,662
Obligations under finance leases		89	-
Trade and other payables		-	631
Deferred tax liabilities		65	-
Retirement benefit obligation		2,231	1,683
Provisions	10	4,064	5,396
Non-equity preference shares		80	80
		31,885	39,452
Total liabilities		104,163	105,778
Net assets		12,660	6,269
Equity attributable to owners of the parent
Share capital		14,205	14,205
Share premium account		1,357	1,357
Hedging and translation reserve		3,138	1,533
Accumulated losses		(6,040)	(10,826)
Total equity		12,660	6,269

Consolidated Statement of Cash Flows
For the 52 weeks ended 4 April 2010 (53 weeks ended 5 April 2009)
	Notes	2010 £'000		2009 £'000
Net cash generated from operating activities	9	11,868		13,359
Cash flows from investing activities
Interest received		71		226
Proceeds on disposal of intangible assets, property, plant & equipment		73		283
Purchases of property, plant & equipment		(1,619)		(2,016)
Purchases of intangible assets		(237)		(418)
Net cash outflow arising on disposal of operations		(1,979)		(762)
Net cash used in investing activities		(3,691)		(2,687)
Cash flows before financing activities		8,177		10,672
Cash generated before non-recurring items		12,811		15,966
Net cash outflow arising on disposal of operations		(1,979)		(762)
Cash utilised in respect of non-recurring items		(2,655)		(4,532)
Cash flows from financing activities
Repayments of borrowings	8	(5,994)		(49,038)
Advances of borrowings		-		49,038
Refinancing costs paid		(1,512)		-
Repayments of obligations under finance leases		(2)		(42)
Net cash used in financing activities		(7,508)		(42)
Net increase in cash and cash equivalents	8	669		10,630
Cash and cash equivalents at beginning of period	8	16,877		4,317
Effect of foreign exchange rate changes	8	392		1,930
Cash and cash equivalents at end of period	8	17,938		16,877

Consolidated Statement of Changes in Equity
For the 52 weeks ended 4 April 2010 (53 weeks ended 5 April 2009)
	Share capital	Share premium account	Hedging and translation reserve	Accumulated loss	Total equity
	£'000's	£'000's	£'000's	£'000's	£'000's
Balance at 30 March 2008	14,205	1,357	(1,861)	8,935	22,636
Loss for the period attributable to the owners of the parent	-	-	-	(19,384)	(19,384)
Reverse entry for share option charge	-	-	-	(92)	(92)
Actuarial loss on defined benefit pension schemes	-	-	-	(285)	(285)
Exchange difference on translation of overseas operations	-	-	8,948	-	8,948
Loss recognised on net investment hedge	-	-	(5,554)	-	(5,554)
Balance at 5 April 2009	14,205	1,357	1,533	(10,826)	6,269
Profit for the period attributable to the owners of the parent	-	-	-	5,279	5,279
Reverse entry for share option charge	-	-	-	23	23
Actuarial loss on defined benefit pension schemes	-	-	-	(516)	(516)
Exchange difference on translation of overseas operations	-	-	1,073	-	1,073
Profit recognised on net investment hedge	-	-	532	-	532
Balance at 4 April 2010	14,205	1,357	3,138	(6,040)	12,660

1.     Basis of preparation

The preliminary announcement for the 52 weeks to 4 April 2010 has been prepared in accordance with the accounting policies as disclosed in the Group's Annual Report and Accounts 2009, updated to take effect of any new accounting standards applicable for the year as set out in Volex Group plc's Interim Statement 2009.

The annual financial information presented in this preliminary announcement for the 52 weeks to 4 April 2010 is based on, and is consistent with, that in the Group's audited financial statements for the 52 weeks to 4 April 2010, and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The independent auditors' report on those financial statements is unqualified and does not contain any statement under section 498 (2) or 498 (3) of the Companies Act 2006. Information in this preliminary announcement does not constitute statutory accounts of the Group within the meaning of section 434 of the Companies Act 2006. The full financial statements for the Group for the 53 weeks to 5 April 2009 have been delivered to the Registrar of Companies. The independent auditor's report on those financial statements was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.

Going concern

As highlighted in note 7, the group meets its day to day working capital requirements through a committed revolving credit facility which is available until March 2012.

The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facility. The Group has access to additional undrawn committed facilities together with long established contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the directors believe that the group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

This preliminary announcement was approved by the Board of Directors on 1 June 2010.

2.     Business and geographical segments

Operating segments Following the disposal last year of the Wiring Harness division and the corporate restructuring initiatives implemented in the year, management have changed the organisation structure to a market sector focus. This change enables the Group to align itself more closely with its customers and markets, to better leverage our global customer relationships and to maximize opportunities for cross selling. These new market sectors, namely Consumer, Telecom/Datacom, Healthcare and Industrial, are based on the end markets that our products are supplied into. In this, the year of transition to market sector focus, management considers it useful to present its operating segment information on both the outgoing divisional basis, Power Products and Interconnect, and the new market sector basis, in which future segmental information will be reported. The segmental information has also been amended to reflect the requirements of IFRS 8. The Chief Operating Decision Maker is the Board. The Group's revenue predominantly relates to the sale of goods. Former operating segments
Revenue	2010 £'000	2009 £'000
Continuing operations
Power Products	135,373	150,680
Interconnect	93,622	114,436
	228,995	265,116
Discontinued operations
Wiring Harness	-	37,704
	228,995	302,820

2.     Business and geographical segments (cont)

Operating profit before non-recurring items and share based payments	2010 £'000	2009 £'000
Continuing operations
Power Products	11,842	6,014
Interconnect	1,511	5,161
	13,353	11,175
Non-recurring items and share based payments
Power Products	(1,884)	(2,619)
Interconnect	(1,220)	(1,989)
	(3,104)	(4,608)
Operating profit
Power Products	9,958	3,395
Interconnect	291	3,172
	10,249	6,567
Investment Income	71	226
Finance costs	(3,410)	(3,210)
Profit before tax from continuing operations	6,910	3,583
Tax	(1,631)	(1,991)
Profit from continuing operations	5,279	1,592
Loss from discontinued operations	-	(20,976)
Profit / (loss) after tax and discontinued operations	5,279	(19,384)

New operating segments

Revenue	2010 £'000	2009 £'000
Continuing operations
Consumer	139,350	152,516
Telecoms / Datacoms	59,384	81,495
Healthcare	19,281	21,093
Industrial	10,980	10,012
	228,995	265,116
Discontinued Operations
Wiring Harness	-	37,704
	228,995	302,820

2.     Business and geographical segments (cont)

Gross profit	2010 £'000	2009 £'000
Continuing operations
Consumer	30,738	23,178
Telecoms / Datacoms	8,769	14,154
Healthcare	4,166	3,412
Industrial	2,488	1,409
	46,161	42,153
Unallocated overhead costs	(32,808)	(30,978)
Non-recurring items and share-based payments	(3,104)	(4,608)
Operating profit	10,249	6,567
Investment Income	71	226
Finance costs	(3,410)	(3,210)
Profit before tax from continuing operations	6,910	3,583
Tax	(1,631)	(1,991)
Profit from continuing operations	5,279	1,592
Loss from discontinued operations	-	(20,976)
Profit / (loss) after tax and discontinued operations	5,279	(19,384)

Overhead costs and charges for non-recurring items and share-based payments have not been allocated to sectors as management report and analyse sector profitability at the gross profit level and there is no meaningful basis for any such allocation.

Geographical segments
The following table provides an analysis of the Group's sales by geographical market, based both on source and destination of the sale. Segment assets and capital expenditure are allocated on the basis of where the assets are located.
	External revenue by source		External revenue by destination
	2010 £'000	2009 £'000	2010 £'000	2009 £'000
Continuing operations
Asia (excluding India)	133,351	142,190	113,003	110,260
India	22,209	31,692	22,222	30,219
Americas	49,170	52,889	51,286	60,587
Europe (including UK)	24,265	38,345	42,484	64,050
	228,995	265,116	228,995	265,116
Discontinued operations
Asia (excluding India)	-	8,334	-	46
India	-	-	-	-
Americas	-	-	-	7
Europe (including UK)	-	29,370	-	37,651
	-	37,704	-	37,704
	228,995	302,820	228,995	302,820

3.     Non-recurring items

	2010	2009
	£'000	£'000
Continuing operations
Corporate restructuring	2,154	720
Facilities rationalisation	941	-
Provision for onerous lease arising on disposal of discontinued operations	-	3,000
Aborted disposal costs	-	1,020
Restructuring costs	3,095	4,740
Discontinued operations
Restructuring programme	-	2,628
	3,095	7,368

Continuing operations

Corporate restructuring

As part of the corporate restructuring programme commenced last year, the Group relocated its corporate headquarters (HQ) from Warrington to London. Costs associated with this HQ relocation include £1,233,000 of redundancy, recruitment and office set-up costs and £905,000 relating to an onerous lease provision established on exiting the Warrington premises. The provision represents management's best estimate, following appropriate advice, of the anticipated net cost of the lease taking into account the remaining lease term and the level of sub-lease rental income, if any, that can be obtained from sub-tenants.

During the year the Group successfully completed an agreement to sub-lease one of its vacant premises in the UK. Management have revised the required onerous lease provision accordingly, to reflect the commercial terms of the sub-lease agreement, resulting in a partial write-back of the provision of £439,000, which is included above.

Also included in corporate restructuring costs above is additional disposal costs of £455,000 in respect of the conclusion of all outstanding issues arising from the disposal of the Wiring Harness business in the prior year.

Costs of £720,000 in the prior period include an estimate of the compensation for loss of office payable to the former CEO of the Group, who left the Group on 9 March 2009.

Facilities rationalisation

In response to a strategic review of business operations the Board initiated a rationalization programme to align the Group's manufacturing capacity and support facilities more closely with its customer base and market environment. Costs associated with this rationalisation programme relate primarily to redundancy and severance costs.

Provision for onerous lease arising on disposal of discontinued operations

In the prior year the Group completed the disposal of its Wiring Harness Division. As part of the conditions pertaining to the disposal the Group retains the liability for the lease of the Wiring Harness premises in the UK until 2020 and as a consequence reflected a provision for the resulting onerous lease. The provision represents management's best estimate, following appropriate advice, of the anticipated net cost of the lease taking into account the remaining lease term and the level of sub-lease rental income, if any, that can be obtained from sub-tenants.

Aborted disposal costs

Costs of £1,020,000 were incurred last year in relation to the Board's investigation into the potential for realising value from a possible sale or flotation of its Power Products business. The Board announced on 9 February 2009 that it had terminated the divestment process.

 

The taxation effect of the above charges in the year was £nil (2009: £nil).

Discontinued operations

Pre-disposal restructuring programme

Prior to completing the disposal of the Wiring Harness Division the Group implemented a substantial redundancy programme to reduce the cost base of the division, in response to continued trading losses. Costs incurred in the year to 5 April 2009 relating to this programme amounted to £1,278,000.

In addition, as part of the disposal of the Wiring Harness Division, the Group recognised a further exceptional charge of £1,350,000, following the acquirer's decision to terminate a supply agreement for wiring harness products manufactured in China. This amount comprised redundancy costs of £350,000 and asset impairment charges of £750,000 in respect of inventory and £250,000 in respect of fixed assets. 

4.     Taxation

Group	Continuing Operations		Discontinued Operations		Total
	2010	2009	2010	2009	2010	2009
	£'000	£'000	£'000	£'000	£'000	£'000
Current tax - charge for the period	2,972	2,685	-	-	2,972	2,685
Current tax - adjustment in respect of previous periods	(1,801)	(205)	-	-	(1,801)	(205)
Total current tax	1,171	2,480	-	-	1,171	2,480
Deferred tax	460	(489)	-	(101)	460	(590)
Income tax expense	1,631	1,991	-	(101)	1,631	1,890

5.     Earnings per share

From continuing and discontinued operations

The calculations of the earnings per share are based on the following data:

Earnings		2010	2009
	Notes	£'000	£'000
Profit / (loss) for the purpose of basic earnings / (loss) per share being net loss attributable to equity holders of the Parent		5,279	(19,384)
Adjustments for:
Non-recurring items	3	3,095	7,368
Share based payments charge / (credit)		9	(132)
Loss on disposal of discontinued operations		-	14,373
Adjusted earnings		8,383	2,225
		No.shares	No.shares
Weighted average number of ordinary shares for the purpose of basis earnings per share		56,821,563	56,821,563
Effect of dilutive potential ordinary shares - share options		958,703	45,579
Weighted average number of ordinary shares for the purpose of diluted earnings per share		57,780,266	56,867,142
		2010	2009
Basic earnings per share		pence	pence
Basic earnings / (loss) per share		9.3	(34.1)
Adjustments for:
Non-recurring items		5.5	13.0
Share based payments charge / (credit)		-	(0.2)
Loss on disposal of discontinued operations		-	25.2
Adjusted basic earnings per share		14.8	3.9
Diluted earnings per share
Diluted earnings / (loss) per share		9.1	(34.1)
Adjustments for:
Non-recurring items		5.4	13.0
Share based payments credit		-	(0.2)
Loss on disposal of discontinued operations		-	25.2
Adjusted diluted earnings per share		14.5	3.9

5.     Earnings per share (cont)

The adjusted earnings per share has been calculated on the basis of continuing activities before non-recurring items, share based payments and loss on disposal of discontinued operations, net of tax.   The Directors consider that this earnings per share calculation gives a better understanding of the Group's earnings per share in the current and prior period.

Earnings per share from continuing operations		2010	2009
	Notes	£'000	£'000
Earnings / (loss) for the purpose of basic earnings / (loss) per share being net loss attributable to equity holders of the parent		5,279	(19,384)
Adjustments to exclude loss for the period from discontinued operations		-	20,976
Earnings from continuing operations for the purpose of basic earnings per share		5,279	1,592
Adjustments for:
Non-recurring items	3	3,095	4,740
Share based payments charge / (credit)		9	(132)
Earnings from continuing operations for the purpose of adjusted earnings per share		8,383	6,200
The denominator (number of shares) is the same, for both basic and diluted earnings per share, as that used in the calculation of EPS from continuing and discontinued operations.
		2010	2009
		pence	pence
Basic earnings per share from continuing operations		9.3	2.8
Adjustments for:
Non-recurring items		5.5	8.3
Share based payments credit		-	(0.2)
Adjusted basic earnings per share		14.8	10.9
Diluted earnings per share from continuing operations		9.1	2.8
Adjustments for:
Non-recurring items		5.4	8.3
Share based payments credit		-	(0.2)
Adjusted diluted earnings per share		14.5	10.9
Loss per share from discontinued operations		2010	2009
		pence	pence
Basic and diluted loss per share from discontinued operations		-	(36.9)

6.     Dividends

The Directors do not recommend a dividend on the ordinary shares for the period (2009: £nil).

7.     Bank facilities

The Group's principal funding is provided via a multi-currency combined revolving, overdraft and guarantee facility. The facility commenced on 8 December 2006 and was extended in March 2009 for a further 3 years to March 2012. The amount available under the facility at 4 April 2010 was US$57.7 million (2009: US$62.7 million). Under terms of the restated facility the amount available will be reduced by a minimum, depending on the level of surplus funds available, of US$2.5 million for each financial quarter thereafter. The facility is secured by fixed and floating charges over the assets of certain group companies. At 4 April 2010, the facility incurred interest at a margin of 3.25% (2009: 4.00%) above LIBOR.

8.     Analysis of net debt

	5 April 2009 £'000	Cash flow £'000	Exchange movement £'000	Other non cash changes £'000	4 April 2010 £'000
Cash & cash equivalents	16,877	669	392	-	17,938
Bank loans	(33,144)	5,994	803	-	(26,347)
Finance leases	(2)	2	-	(153)	(153)
Debt issue costs	1,482	131	-	(622)	991
Net debt	(14,787)	6,796	1,195	(775)	(7,571)

Debt issue costs relate to Bank facility arrangement fees. Amortisation of debt issue costs in the year amounted to £622,000 (2009: £520,000)

9.     Notes to cash flow statement

	2010 £'000	2009 £'000
Profit/(loss) for the period	5,279	(19,384)
Adjustments for:
Investment revenue	(71)	(226)
Finance costs	3,410	3,210
Income tax expense	1,631	1,890
Loss on disposal of discontinued operations	-	14,373
Depreciation on property, plant and equipment	2,200	2,575
Impairment on property, plant & equipment	-	250
Amortisation of intangible assets	92	42
Loss on disposal of property, plant and equipment	6	18
Share option charge / (credit)	9	(132)
(Decrease) / increase in provisions	(1,301)	929
Operating cash flow before movement in working capital	11,255	3,545
(Increase) / decrease in inventories	(3,354)	12,660
(Increase) / decrease in receivables	(523)	10,709
Increase / (decrease) in payables	8,528	(9,662)
Movement in working capital	4,651	13,707
Cash generated from operations	15,906	17,252
Cash generated by operations before non-recurring items	18,561	21,784
Cash utilised by non-recurring items	(2,655)	(4,532)
Taxation paid	(1,840)	(1,622)
Interest paid	(2,198)	(2,271)
Net cash generated from operating activities	11,868	13,359

10.  Provisions

	Restructuring provisions
	Property	Corporate restructuring	Other	Total
	£'000's	£'000's	£'000's	£'000's
At 5 April 2009	7,371	1,370	390	9,131
Charge in the year	560	385	322	1,267
Utilisation of provision	(1,681)	(1,037)	(118)	(2,836)
Unwinding of discount	281	-	-	281
Transfers	403	(161)	18	260
Exchange differences	(130)	54	92	16
At 4 April 2010	6,804	611	704	8,119
Less: included in current liabilities				4,055
Non-current liabilities				4,064

Property Provisions

Property provisions represent the anticipated net costs of onerous leases. The provisions have been recorded taking into account management's best estimate, following appropriate advice, of the anticipated net cost of the lease taking into account the remaining lease term and the level of sub-lease rental income, if any, that can be obtained from sub-tenants. This provision will be utilised as the rental payments, net of any sub-lease income, fall due through to 2020.

As referred to in note 3, the Group relocated its corporate headquarters (HQ) from Warrington to London during the year and has recognised a provision for £905,000 for the resulting onerous lease.

During the year the Group successfully completed an agreement to sub-lease one of its vacant premises in the UK. Management have revised the required onerous lease provision accordingly, to reflect the commercial terms of the sub-lease agreement.

Corporate restructuring

Following the disposal of the Wiring Harness Division last year, the Board initiated a review of the corporate management structure. This review has been completed during the year, with the establishment of a new corporate HQ and the appointment of a new, experienced management team. The provision remaining at 4 April 2010 of £611,000 includes an amount relating to compensation for loss of office payable to the former CEO of the Group, who left the Group on 9 March 2009. The Company has been advised that the amount provided is adequate, should it be unsuccessful in defending the claims made by the former CEO, which are scheduled to be heard at an Employment Tribunal in July 2010.

 

END

 

 

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