Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,512.38 -3.89 -0.03%
TOPIX 1,171.40 -1.97 -0.17%
HANG SENG 22,760.24 64.23 0.28%

Volex PLC VLX Half-year results


Attachment:

  Volex PLC (VLX) - Half-year results

RNS Number : 9048P
Volex PLC
31 October 2012
 



                                                                              

 

31 October 2012

                                  VOLEX plc

          Half-year results for the 26 weeks ended 30 September 2012

 

Volex plc  ('Volex'  or  the  'Group'),  the  global  provider  of  customised 
electrical and optical interconnect  solutions, today announces its  unaudited 
half-year results for the 26 weeks ended 30 September 2012 ('H1 FY2013').

     

    First half financial summary:

·     Revenue in H1 FY2013 of $249.3m (H1 FY2012: $270.7m);

·     Gross margin of 17.8% for H1 FY2013 (H1 FY2012: 19.2%);

·     Normalised^* operating profit of $5.3m (H1 FY2012: $14.9m);

·     Normalised^* diluted earnings per share  for H1 FY2013 of 5.8 cents  (H1 
FY2012: 17.6 cents). Basic  earnings per share of  3.1 cents (H1 FY2012:  15.0 
cents);

·      Capex  of  $14.2m  (H1  FY2012:  $4.8m),  to  drive  future  production 
efficiencies and revenue opportunities;

·     Return on  capital employed  ('ROCE') of 17%  in H1  FY2013 (H1  FY2012: 
46%);

·     Free cash outflow of $6.3m in  the first half (H1 FY2012: $1.3m  inflow) 
primarily as a result of the increased capex;

·     Net debt of $4.6m at end of H1 FY2013 (H1 FY2012 : $11.9m); and

·     Interim dividend of 2.0 cents per share declared (H1 FY2012: 1.5 cents).

*          Before  exceptional restructuring  costs and  share based  payments 
charge

     

    First half operating highlights:

·     Restructuring programme initiated targeting annualised savings of  circa 
$10m;

·     Increased  allocations  generating  60% increase  in  revenue  from  the 
Group's largest customer;

·     Continued growth in non-Consumer gross margin;

·     Greater sales pipeline than at any time in the past 4 years; and

·     Highly experienced Chief Operating Officer appointed to drive production
efficiency. 

 

    The Chairman of Volex, Mike McTighe, commented:

The Board  recognises  that trading  in  the first  half  of FY2013  has  been 
challenging, which  coupled with  our investment  in production  capacity  and 
capabilities, has  led  to the  disappointing  H1 FY2013  financial  results.  
Whilst we believe that  the significant revenue growth  seen with our  largest 
customer supports our strategy,  the Board has initiated  a number of  revenue 
and productivity initiatives as well  as a group wide restructuring  programme 
aimed at returning Group profitability to its long-term forecast levels. 

 

As a result, the Board expects revenue growth across all sectors in the second
of half of FY2013 and is confident that profits for the full year FY2013  will 
be in  line with  new market  expectations, following  the 18  September  2012 
trading update.   Furthermore, the  Board  is optimistic  on the  outlook  for 
FY2014.

The Company will be presenting its half year results at 09.00 am on  Wednesday 
31 October  2012.   A live  audio  webcast facility  with  the option  to  ask 
questions will be available at the following link:

 

http://www.media-server.com/m/p/389ykipn 

 

 

                                     END

 

For further information please contact:

 

    Volex Group plc                        
Ray Walsh, Group Chief Executive      +44 20 3370 8830
Andrew Cherry, Group Finance Director +44 20 3370 8830
    Buchanan
Charles Ryland / Louise Hadcocks      +44 20 7466 5000

 

 

    Forward looking statements

Certain statements in this  announcement are forward-looking statements  which 
are based on  Volex's expectations, intentions  and projections regarding  its 
future operating performance and objectives, anticipated events or trends  and 
other matters that  are not historical  facts. Forward-looking statements  are 
sometimes, but not always, identified by their use of a date in the future  or 
such words  as 'anticipates',  'aims',  'could', 'may',  'should',  'expects', 
'believes', 'intends', 'plans',  'targets', 'goal' or  'estimates'.  By  their 
very  nature   forward-looking   statements  are   inherently   unpredictable, 
speculative and involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in  the future. There are a number  of 
factors that could cause actual results and developments to differ  materially 
from those expressed or implied  by these forward-looking statements.  Factors 
that could cause or contribute to such differences include, by way of  example 
only and not limited to,  general economic conditions, currency  fluctuations, 
competitive factors,  the loss  or failure  of one  or more  major  customers, 
changes  in  raw  materials  or  labour  costs,  and  issues  associated  with 
implementing our restructuring programmes among other risks. Given these risks
and uncertainties,  prospective investors  are cautioned  not to  place  undue 
reliance on forward-looking statements. Forward-looking statements speak  only 
as of the date of such statements  and, except as required by applicable  law, 
Volex  undertakes   no   obligation  to   update   or  revise   publicly   any 
forward-looking statements, whether  as a  result of  new information,  future 
events or otherwise.

 

 

 

 

HALF YEAR RESULTS

  26 Weeks ended 30 September 2012

As previously announced the  first half of FY2013  has been challenging,  with 
the Group's significant investment in its production capacity and capabilities
failing to  deliver the  forecast financial  returns as  quickly as  had  been 
anticipated. Adverse market conditions have hampered growth across all sectors
while customer specific  growth programmes  have been slower  to deliver  than 
projected.  In  response,  management  has  initiated  a  programme  of   cost 
reductions across  the  Group in  order  to underpin  the  FY2014  performance 
targets.

 

                        Revenue         Norm. gross profit  Norm. gross margin
                 H1 13    H1 12         H1 13  H1 12        H1 13 H1 12  H2 12
                Y112011                                           122010
                 $'000    $'000   % Var $'000  $'000  % Var   %     %      %
Consumer        164,6630 169,8906  (3)  24,439 29,261 (16)  14.8   17.2  17.7
Telecoms / Data  45,192   56,246  (20)  10,412 11,528 (10)  23.0   20.5  22.0
Healthcare       22,024   24,193   (9)  5,939  6,143   (3)  27.0   25.4  29.3
Industrial       17,372   20,325  (15)  3,553  4,926  (34)  20.5   24.2  20.5
Total           249,251  270,6544  (8)  44,343 51,858 (15)  17.8   19.2  19.9

 

Group revenue in  H1 FY2013 decreased  by 8%  to $249.3m, from  $270.7m in  H1 
FY2012.   Whilst  revenue  in  the  Consumer  sector  as  a  whole   decreased 
year-on-year, sales to the Group's largest customer increased by 60%, with the
Group enjoying increased allocations as a result of its competitive  advantage 
in production  capabilities,  particularly  in  the  halogen  free  cable  and 
duckhead markets. Growth in this account, together with new business wins with
several customers, was more  than offset by a  decline across the majority  of 
other  accounts,  as  a  result  of  weakened  demand  due  to  macro-economic 
pressures.

 

Telecoms/datacoms revenue in  the first half  of FY2013 was  20% down on  last 
year, primarily due to reduced investment by telecoms operators as a result of
general economic uncertainty. Encouragingly, however, Q2 FY2013 revenue was 9%
ahead of Q1 FY2013 with revenue  in a key telecoms account increasing  towards 
more historic levels, following three quarters of slower activity. Furthermore
Q2 FY2013 saw a significant improvement in Telecoms trading performance in our
Indian business, which  had been  particularly affected  by curtailed  network 
operator spend.

 

Revenue in the  Healthcare sector  was down  9% on last  year as  a result  of 
weaker demand from our key account due to a contraction of their own  business 
and customer design  release delays  on new  products in  the imaging  systems 
space. These new imaging systems products are expected to drive revenue growth
in the second half, as legacy products start to be phased out.  Significantly, 
Q2 FY2013 revenue was 14% ahead of  Q1 FY2013 revenue driven by a new  cabling 
solution programme that came on stream during the second quarter.

 

Industrial revenue was  down 15% in  H1 FY2013 compared  to last year.  Whilst 
there have been notable  smaller business wins in  the first half, the  weaker 
demand previously reported  in the second  half of FY2012  from our  principal 
customer in  this sector  has  continued. Reduced  orders  after a  period  of 
de-stocking last  year  and continued  delays  in the  anticipated  regulatory 
changes that  will  drive market  adoption  of new  telematics  products  have 
combined to arrest revenue growth in H1. Revenue growth is expected to  return 
in the second half as the effects of these temporary drags on growth decrease.

 

Group normalised gross margin in Q2 FY2013 was 18.0%, an improvement over  the 
17.6% recorded in the first quarter,  and resulted in an H1 FY2013  normalised 
gross margin of 17.8%,  a reduction of 1.4  percentage points over last  year. 
This decrease  is  principally  due to  the  previously  communicated  advance 
investment in production capacity and capability which commenced in Q1  FY2013 
and continued to a lesser extent in Q2, in anticipation of significant revenue
growth in our largest customer in  the Consumer sector. This adverse  leverage 
effect, due to lower than forecast revenue, held gross margin back, offsetting
the positive mix  effects of  increased revenue from  higher margin  products, 
particularly in the Healthcare and Telecoms/Datacoms sectors.

 

Normalised operating profit (operating  profit before non-recurring items  and 
share based  payment charge)  in  H1 FY2013  decreased  to $5.3m  (H1  FY2013: 
$14.9m). This disappointing operating profit performance in the first half  is 
due to a combination of three factors; i) reduced revenue across all  sectors, 
ii) reduced gross margin  in our Consumer  sector as a  result of the  advance 
production ramp-up costs and production inefficiencies relating to new product
launches  with  our  largest  customer  mentioned  above  and  iii)  increased 
operating expenses  caused  by  investments  in  our  sales,  engineering  and 
operations  functions  ahead  of   significant  anticipated  revenue   growth. 
Management has already initiated  programmes in each of  these three areas  to 
bring revenue, margins and profitability back to a level commensurate with its
objectives for  the  business.  In  addition the  Board  has  re-iterated  its 
confidence in the longer term growth  prospects for the Group and declared  an 
increased interim dividend of 2.0 cents per share (H1 FY2012: 1.5 cents).

  Focus for H2 FY2013

Revenue growth

The first half of FY2013 has seen  significant revenue growth of 60% with  our 
largest customer but  has also  produced an  aggregate contraction  of 21%  in 
revenue from  the  remainder of  the  Group's business.  Although  challenging 
macro-economic conditions are expected to  continue, a key strategic focus  in 
H2 FY2013 is to  drive revenue growth across  all sectors whilst also  growing 
gross margin. Encouragingly we are seeing a greater sales pipeline than at any
time during the last four years  with several new customers set to  contribute 
significant revenues across all sectors over the next 12-36 months.

 

In the Consumer sector we currently  expect revenue from our largest  customer 
to be broadly flat in H2 compared  to H1 and accordingly we have focussed  our 
efforts on diversifying our customer base, including securing substantial  new 
Duckhead business from alternative customers.

 

In the Telecoms/Datacoms, Healthcare  and Industrial sectors, delayed  product 
introductions which have contributed to revenue in H1 FY2013 being lower  than 
last year are expected to benefit revenue in the second half. Imaging  systems 
products in  the European  Healthcare market  and new  telematics products  in 
Industrial are  set to  drive revenue  growth in  H2 FY2013.  Furthermore,  in 
Telecoms/Datacoms we expect to be able to announce a significant initiative in
the high speed optical arena during H2.

 

As a  result we  expect that  all  four sectors  will see  half-over-half  and 
year-on-year growth in H2 FY2013.

 

Gross margin improvement plan

Production improvements and operational efficiencies have also been identified
as a  critical focus  for H2  FY2013,  in order  to restore  overall  Consumer 
margins to their  long run  average of  18% by the  end of  FY2013. Under  the 
guidance of  our  new Chief  Operating  Officer significant  initiatives  have 
already commenced, including:

·     the introduction of a New Product Introduction process;

·     the redesign of our Shenzhen facility including the piloting of  robotic 
automation;

·     establishing focussed quality and engineering teams; and

·     reviewing targeted  core processes with  a view to  bringing certain  of 
these in  house  (eg. printed  circuit  board assembly  "PCBa"  and  precision 
tooling).

In addition to driving immediate improvements in production yields and  labour 
productivity which will positively impact gross margin in H2 FY2013, these new
programmes  will   provide  the   processes  and   foundation  for   efficient 
manufacturing of new  products, avoiding the  significant start-up costs  that 
have hindered recent financial performance.

 

Allied to these new initiatives, we have a number of on-going programmes which
will be important in restoring Consumer margins.  These include:

·     the  continued  rolling  out  of  new  precision  moulding  and  tooling 
equipment;

·     the continued application of core lean manufacturing techniques; and

·     completing  the upgrade  of  our production  capabilities at  our  Batam 
facility

 

The FY2013 Group-wide restructuring initiative, covered in more detail  below, 
will also be  effective in improving  gross margin in  H2 FY2013. While  there 
will be some direct labour savings, the more significant gross margin benefits
will accrue from  reductions in  indirect labour  in the  factories, which  is 
expected to decrease by approximately 15%.    

 

Whilst these  new  programmes will  address  Consumer margins,  the  Group  is 
encouraged that non-Consumer margins have  continued on their upward trend  of 
the last three years. Aggregate gross margin in the Interconnect sectors in H1
FY2013 was 23.5%, an increase of 1.1 percentage pts over H1 FY2012, which  was 
itself higher  than  that  recorded  in H1  FY2011.  Our  stated  strategy  of 
increasing Volex  content through  greater collaboration  and engagement  with 
customers at an early stage of their product development cycles has  continued 
to be successful  and will remain  a focus in  the second half  of FY2013  and 
beyond.

 

FY2013 Group-wide restructuring initiative

As reported  in  the trading  update  of  18 September  2012,  management  has 
initiated a  restructuring programme  across all  functions and  regions  that 
aligns the Group's manufacturing and support facilities more closely with  its 
revised revenue and operating profit expectations.

 

Following a comprehensive review of  its cost base, management has  identified 
potential savings in  both indirect labour/fixed  production overheads and  in 
operating expenditures  ('Opex'). We  have  identified approximately  $10m  of 
combined savings  across these  two cost  categories with  Opex in  particular 
likely to be around $70m in FY2014, $13m below the analyst consensus prior  to 
the recent Trading  Update and $5m  below the consensus  immediately prior  to 
this announcement.

 

This programme  will  give  rise to  non-recurring  restructuring  charges  of 
approximately $5m for the  full year FY2013, $0.7m  of which has already  been 
incurred in Q2 FY2013.   The Opex reduction  programme primarily involves  the 
downsizing of supporting  back-office functions and  will reduce headcount  by 
approximately 150,  driving  a c.15%  reduction  in non-factory  staff  costs. 
Importantly vital business  and customer facing  functions will be  relatively 
unaffected and the savings will be  achieved by delayering, the relocation  of 
some functions to lower cost locations  and the elimination of less  value-add 
activities.

 

In addition  we  are also  investigating  further structural  cost  reductions 
beyond those already identified.  These second phase opex savings will  reduce 
FY2014 opex further below $70m but  may also increase H2 FY2013  restructuring 
charges. 

 

Consumer sector

                                       

Our Consumer sector continues  as a world  leader in power  cords for a  large 
range of  consumer and  computing  products.  Our  customers in  the  Consumer 
sector  are  well-known  brand-name  manufacturers  of  consumer   electronics 
(including TVs and games consoles), personal computing devices (PCs,  laptops, 
tablets, printers)  and household  appliances (refrigerators,  freezers,  rice 
cookers, floor care equipment, DIY products). 

 

Traditionally our business  has been the  supply of AC  power cords taking  AC 
high voltage  from  the  wall  socket to  the  customer's  AC:DC  low  voltage 
transformer.  This  power cord  would in  the most  simplistic of  terms  have 
comprised of a cable and an engineered  plug at either end.  This is  referred 
to  as  "in-line"  power  supply  as  opposed  to  "wall-plug"  in  which  the 
appliance's power  adaptor  plugs  directly  into  the  wall  socket,  thereby 
dispensing with the  need for a  separate power cord.   The in-line market  is 
forecast to grow at  10%^1 per annum  out to 2016  and therefore continues  to 
provide substantial opportunity for growth.  Alongside our in-line  offerings, 
however, we have also  developed a number of  new wall-plug products and  this 
gives us access to a market that is forecast to grow at 14%^1 per annum out to
2016.

 

In recent years, due to both our customers' desire for distinctive design  and 
also greater adaptability we have developed our duckhead connector  offering.  
The duckhead connects  to a customer's  transformer and then  may either  plug 
directly into a wall socket or be attached to a cable with a traditional  wall 
plug.  We have seen significant demand  for the duckhead connector and  expect 
this to continue into the foreseeable future.

 

A recent trend that we have identified in the lower power range market is  the 
move to the USB plug (which includes an in-built transformer) with a number of
mobile phone manufacturers favouring this  option.  Due to limitations on  the 
level of power that can be transformed through the USB plug, the applicability
of this  offering is  currently  restricted to  lower  power devices  such  as 
smartphones. However, we believe Volex is well positioned to take advantage of
this emerging trend.

 

The Consumer  revenue for  H1 FY2013  of $164.7m  was 3%  down on  H1  FY2012, 
however, encouragingly 3% up on H2 FY2012.  Business with our largest customer
continued to  show significant  growth, up  60% on  H1 FY2012  and 20%  on  H2 
FY2012, on the  back of  demand for our  duckhead connector  offering and  our 
halogen free cables, the majority of which are new products introduced  during 
the last 18 months.  Business away from our largest customer has proved to  be 
challenging.  The  impact  of  the  uncertain  macro-economic  environment  on 
consumer electronics has been well documented and we have been impacted by the
resultant reduced spend.  In the second quarter of FY2013 we achieved  several 
new significant project  wins, primarily with  existing customers, which  have 
enabled us to arrest the quarterly revenue decline observed in the past  three 
quarters.

 

Consumer gross profit for H1 FY2013 of $24.4m (H1 FY2012: $29.3m)  represented 
a 14.8% gross margin (H1 FY2012: 17.2%).  As previously reported, in Q1 FY2013
we incurred  approximately  $2.1m  of production  capacity  enhancement  costs 
including the  recruitment and  training  of more  than 1,000  new  production 
employees together with  additional tooling  and site  expansion costs.   This 
level of spend  was predicated  on certain  forecast revenue  levels from  our 
largest  customer.   Whilst  the  60%  increase  in  sales  noted  above   was 
encouraging and demonstrated the demand for our power offerings, it fell below
that forecast.  As a  consequence of this, the  Consumer gross margin for  the 
half year has fallen.   In response, management has  initiated a programme  of 
substantial cost reductions in order to  realign the cost base to the  revised 
forecasts and to return the Consumer gross  margin to its long run average  of 
18% by the end of FY2013.  

 

 

In addition to the production capacity enhancement costs, temporary production
inefficiencies arising on our new  product range (including scrap rates  above 
the historic average and labour productivity rates below the historic average)
have held  back the  sector  gross margin  in the  period.   A number  of  new 
initiatives have  been enacted  in  the period,  alongside the  on-going  lean 
manufacturing programme,  designed  to  return  the  sector  to  its  expected 
efficiency levels. 

 

1 Source: External AC-DC Power  Supplies: Worldwide Forecasts, Tenth  Edition, 
published April 2011 by Darnell Group Inc

 

 

Telecoms / Datacoms sector

Volex  delivers  customised  interconnect   solutions  for  global   equipment 
manufacturers in the telecommunications  and data communications  industries.  
Our interconnect solutions are used in  mobile telecoms networks, both at  the 
cell-site  and  for  the  core  network,  fixed-line  telecoms  equipment  and 
high-performance computing (HPC) and data-centre environments.

 

Telecoms/datacoms revenue of $45.2m  in H1 FY2013 was  20% down on H1  FY2012, 
primarily due to reduced investment by  telecoms operators as a result of  the 
on-going economic uncertainty. Encouragingly however, Q2 FY2013 revenue was 9%
ahead of Q1 FY2013 with revenue  in a key telecoms account increasing  towards 
more historic levels, following three quarters of slower activity. Furthermore
Q2 FY2013 saw a significant improvement in Telecoms trading performance in our
Indian business, which  had been  particularly affected  by curtailed  network 
operator spend.  Along with new account wins in H1 FY2013 which are  beginning 
to yield significant  revenues, we are  optimistic that the  modest growth  in 
this sector can continue for the remainder of the year.

 

Telecoms/datacoms gross  profit of  $10.4m in  H1 FY2013  (H1 FY2012:  $11.5m) 
represented a  23% gross  margin, up  3% on  H1 FY2012.   This improved  gross 
margin is due  to several  factors including  better pricing  on new  products 
brought to market particularly  in our Asia and  India regions and tight  cost 
control especially with respect to freight.

 

Healthcare sector

Volex provides  interconnect  cabling  solutions  to  the  healthcare  sector, 
traditionally for imaging systems such as MRI and ultrasound machines.  Whilst
imaging systems contribute  approximately 70%  to Healthcare  revenue we  have 
seen recent growth in other  fields, including clinical diagnostics,  surgical 
systems and patient monitoring equipment.  The Healthcare customer  engagement 
model  is  typified  by  long  term,  deep  collaboration  and  early   design 
involvement which historically have yielded the highest gross margins observed
in any of our sectors. 

 

Healthcare revenue of  $22.0m in H1  FY2013 was 9%  down on H1  FY2012 due  to 
reduced demand in the nuclear medicine  imaging field and delayed orders  from 
the sector's largest customer as they postponed their roll out of new  imaging 
systems.  Encouragingly, however, the  Q2 FY2013 revenue was  14% ahead of  Q1 
FY2013 with a new MRI cabling solution programme generating significant  sales 
in Europe and North America.

 

Gross profit of $5.9m in H1 FY2013 (H1 FY2012: $6.1m) represented a 27%  gross 
margin, up  2%  on H1  FY2012.   This continues  the  high levels  of  margins 
achieved for the sector during FY2012  and supports the strategy of  extensive 
customer engagement and increasing Volex design content in our products.    

 

Industrial sector

The Industrial sector for Volex comprises  a diverse set of markets  including 
test  and  measurement  equipment,  manufacturing  automation,  refrigeration, 
trucking telematics, agricultural and renewable energy. 

 

Industrial revenue of $17.4m  in H1 FY2013  was 15% down on  H1 FY2012 due  in 
part to reduced orders  from the sector's largest  customer and also  on-going 
delays in the approval of regulatory  changes that will drive market  adoption 
of new telematics products.   Once these changes are  ratified, we believe  we 
are well placed to take advantage of the new market requirements. 

 

Gross profit of $3.5m in H1 FY2013 (H1 FY2012: $4.9m) represented a 20%  gross 
margin, down  4%  on H1  FY2012.   This reduction  was  primarily due  to  the 
leverage effect with fixed production costs shared over a lower revenue base. 
In addition the transfer of business from our North America region to Asia did
incur some write downs.

  Financial Review

    Revenue and normalised gross profit

Revenue in the 26  weeks ending 30 September  2012 ('H1 FY2013') was  $249.3m, 
down 8% on the same period in the prior year ('H1 FY2012'). 

 

Normalised gross profit decreased 15% from $51.9m in H1 FY2012 to $44.3m in H1
FY2013, in part due to the reduced revenue  but also due to the ramp up  costs 
incurred within  the Consumer  sector.  This  resulted in  a normalised  gross 
margin of 17.8% in H1 FY2013 versus a H1 FY2012 gross margin of 19.2%.

 

    Normalised Operating Profit

Normalised operating profit  in H1 FY2013  was $5.3m, down  $9.5m on the  same 
period in the prior year.

 

The normalised  operating profit  was arrived  at after  deducting  normalised 
operating expenditure of  $39.0m in  H1 FY2013, up  $2.0m on  H1 FY2012.   The 
majority of  this  increase was  targeted  at  the support  functions  at  the 
manufacturing  facilities,  including   sales,  engineering,  purchasing   and 
logistics.  This level of spend was predicated on high forecast sales from the
Consumer sector's largest customer,  however, whilst significant sales  growth 
was achieved it was insufficient to support this on-going spend.  As a result,
a cost reduction programme  has been initiated seeking  to realign the  future 
operating  expenditure   to  the   revised   revenue  and   operating   profit 
expectations.       

 

    Non-recurring items and share-based payments

During H1  FY2013, $0.7m  of redundancy  costs were  incurred as  part of  the 
restructuring programme.  This programme is  expected to continue on into  the 
second half of the  year with full year  restructuring charges forecast to  be 
approximately $5m.

 

The share based payment charge  of $1.2m in H1  FY2013 has decreased by  $0.9m 
from $2.1m in H1 FY2012.

 

    Net finance costs

Total net finance costs in H1 FY2013  decreased by 52% to $1.2m from $2.5m  in 
H1 FY2012.  The principal reason  for this was the  write-off in H1 FY2012  of 
$0.8m of  capitalised  debt issue  costs  associated with  the  old  financing 
facility which was replaced in May 2011. 

 

    Tax

The Group incurred a tax charge  of $0.5m (H1 FY2012: $1.9m), representing  an 
effective tax  rate  (ETR)  of  21% (H1  FY2012:  18%),  consistent  with  our 
expectation of the ETR for the full FY2013 financial year.

 

    Earnings per share

Basic earnings per share for H1 FY2013 was 3.1 cents compared with 15.0  cents 
in H1  FY2012.  Normalised  fully  diluted earnings  per share  (adjusted  for 
non-recurring items and  share based  payments charge)  in H1  FY2013 was  5.8 
cents versus 17.6 cents in H1 FY2012.

 

    Dividends

At the Volex plc Annual General Meeting held on 26 July 2012, the shareholders
approved the proposed  final dividend for  FY2012 of 3  cents per share.   The 
dividend was paid out on the 56,621,763 shares on the share register as at  27 
July 2012, resulting in a dividend cash outflow of $1.7m. 

 

The Board has recommended  an interim dividend  of 2.0 cents  per share to  be 
paid on 15 February 2013 to shareholders on the register as at 11 January 2013
(the 'record  date').   Shareholders will  have  the option  to  receive  this 
dividend in  either USD  or  GBP with  the  Company's Registrars  providing  a 
currency election facility.  Shareholders who prefer to receive their dividend
in USD must make their election to  receive their dividend in USD by 17:00  on 
25 January 2013.  If no  election is made, the dividend  will be paid in  GBP, 
the default currency for the dividend, with the GBP amount payable  calculated 
by reference to the GBP:USD exchange  rate prevailing at the record date.   If 
you hold your  ordinary shares  in certificated form,  you may  only elect  to 
receive your  dividend in  US  dollars by  signing  and returning  a  currency 
election form,  available  from  Capita  Registrars,  Corporate  Actions,  The 
Registry, 34  Beckenham Road,  Beckenham,  Kent BR3  4TU.   If you  hold  your 
ordinary shares in uncertificated form, to  elect to receive your dividend  in 
US dollars  you  must  input  a valid  Dividend  Election  Input  Message,  in 
accordance with the CREST procedures  described in the CREST manual.   Partial 
elections will not be permitted. 

 

    Return on Capital Employed ('ROCE')

    ROCE for H1 FY2013 was 17% versus 46% for H1 FY2012.  The reduction in
    ROCE is primarily due to the reduced normalised operating profit which
    fell from $14.9m in H1 FY2012 to $5.3m in H1 FY2013.  The capital base
    on which  the ratio  is calculated  has remained  relatively flat  (H1 
    FY2013 of $62.8m versus $64.6m in  H1 FY2012) with the higher  current 
    asset balances as at 2 October  2011 replaced with higher fixed  asset 
    balances as at 30 September 2012.

 

    Cash flow, free cash flow and net debt

Operating cash flow before movements in working capital in H1 FY2013 was $6.6m
(H1 FY2012: $15.9m) with the  $9.3m reduction attributed primarily to  reduced 
operating profit.

 

The impact of working capital movements on  the cash flow in H1 FY2013 was  an 
outflow of $1.2m (H1 FY2012:  outflow of $6.4m).  This  is primarily due to  a 
$10.3m build-up of stock to service customers  in the second half of the  year 
and a $4.0m increase in debtors arising from the higher level of sales in  the 
second quarter of  FY2013 versus  the fourth quarter  of FY2012.   Off-setting 
these outflows was a  $13.0m inflow (H1 FY2012:  $7.6m) through management  of 
supplier payments.  

 

After aggregate outflows for tax and interest of $2.8m (H1 FY2012: $3.4m), net
cash generated from operating activities was $2.6m (H1 FY2012: $6.1m).

 

Capital expenditure  has increased  to $9.0m  in H1  FY2013 from  $4.8m in  H1 
FY2012.  This  expenditure  has  largely   been  targeted  at  enhancing   our 
manufacturing facilities in Asia with significant site expansion at two of our
factories with  accompanying  investment in  new  tooling and  machinery.   In 
addition to the $9.0m of  cash spend, a further  $5.2m of capital assets  have 
been acquired for which payment will be made in H2 FY2013.

 

The above has  resulted in  a free  cash outflow for  H1 FY2013  of $6.3m  (H1 
FY2012: inflow of $1.3m).

 

In the  prior year,  the Group,  through its  employee share  trust,  acquired 
769,800 shares in Volex plc at a cost of $3.3m.  These shares are held for the
benefit of Volex employees  and directors to  facilitate participation in  the 
Company's share option  schemes.  130,000  such options were  exercised in  H1 
FY2012 yielding a cash inflow of $0.1m.  In H1 FY2013, 55,000 further  options 
have been exercised.

 

The full year dividend  for FY2012 of 3  cents per share was  paid out in  the 
period, generating a cash outflow of $1.7m (H1 FY2012: $1.9m).

 

In the prior year,  Volex entered into its  current financing facility.  As  a 
result of this $26.4m was paid out by the Group to close out the  pre-existing 
facility and $39.5m was drawn down under the current arrangement.  In securing
the new facility, the Company  incurred $1.4m in arrangement and  professional 
fees.  In H1 FY2013, $14.0m of the loan facility has been repaid.

 

In the  prior period,  80,000 cumulative  preference shares  of £1  each  were 
cancelled at a cost of $0.1m.  The  interest that had accrued on these  shares 
was also  paid  and  has been  included  in  the interest  paid  cash  outflow 
category.

 

As a result of the above cash flows, net debt at 30 September 2012 amounted to
$4.6m (H1 FY2012: $11.9m).

 

Financial instruments and cash flow hedge accounting

In accordance with  the Group's policy  to minimise exposure  to copper  price 
volatility observed  in cost  of sales,  the Group  has continued  to  utilise 
contracts with financial institutions which  are linked to the average  copper 
price as published by the London Metal Exchange ('LME'). 

 

These contracts  are accounted  for as  cash flow  hedges of  forecast  future 
purchases of copper under IAS 39.  As at 30 September 2012, an asset of  $0.3m 
has been  recognised  (1  April  2012:  $1.5m)  with  a  corresponding  credit 
recognised in reserves.  This credit will  be retained in reserves until  such 
time as the forecast copper purchase takes place. 

 

A charge  of $0.2m  has been  recognised in  cost of  sales in  H1 FY2013  (H1 
FY2012: $nil) in  respect of  closed out  contracts.  This  charge has  arisen 
since the average LME copper price in the period has been below the contracted
price.

 

    Defined benefit pension schemes

The Group's net pension deficit under IAS 19 decreased by $0.3m from $3.6m  at 
1 April 2012 to $3.3m at 30 September 2012.  This decrease is in line with the
current funding plan.

 

  Current Trading and Prospects

The Board recognises that  the first half  of FY2013 has  been tough and  that 
lower than anticipated growth with the largest customer in the Consumer sector
and  a  challenging   economic  environment   have  combined   to  produce   a 
disappointing set of H1 results.  Although this uncertain economic environment
is expected to  continue, the Board  is confident that  the revenue and  gross 
margin improvement  initiatives and  cost saving  plans already  initiated  by 
management  will  return  consumer  profitability  to  expected  levels.    In 
addition, the  Board  is encouraged  by  the  healthy sales  pipeline  in  all 
sectors. 

 

As a result, the Board expects growth across all sectors in the second of half
of FY2013 and is confident  that profits for the full  year FY2013 will be  in 
line with new  market expectations,  following the 18  September 2012  trading 
update.  Furthermore, the Board is optimistic on the outlook for FY2014.

 

  Risks and uncertainties

Risks to Volex are  anticipated and regularly  assessed and internal  controls 
are enhanced  where necessary  to  ensure that  such risks  are  appropriately 
mitigated. The  principal risks  and  uncertainties facing  the Group  in  the 
second half of the year remain those detailed in the FY2012 Annual Report  and 
Accounts on pages 41  to 44, a copy  of which is available  on the website  at 
www.volex.com.

 

The principal risks and uncertainties are summarised as:

·     Non-compliance with legislation and regulation;

·     Loss of or reduced trade with key customers;

·     Failure to maintain an effective system of internal control;

·     Exchange rate fluctuations;

·     Increased competition;

·     Failure to attract, develop and retain key personnel;

·     Rising commodity prices;

·     Adverse trading conditions; and

·     Production challenges and risks.

 

 

Ray
Walsh                                                                         
Andrew Cherry

Group Chief  Executive                                                   Group 
Finance Director

31 October  2012                                                               
31 October 2012

  

  Unaudited                       consolidated                        income 
  statement                                        

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

 

                      26 weeks ended 30 September 2012      26 weeks ended 2 October 2011
                                                                             Non-

                                                                 Before recurring
                           Before
                                                          non-recurring items and
                    non-recurring Non-recurring               items and
                        items and     items and                             share
                      share based   share based             share based     based
                         payments      payments     Total      payments  payments     Total
              Notes         $'000         $'000     $'000         $'000     $'000     $'000
Revenue           2       249,251             -   249,251       270,654         -   270,654
Cost of sales           (204,908)          (63) (204,971)     (218,796)         - (218,796)
Gross profit               44,343          (63)    44,280        51,858         -    51,858
Operating                                                      (36,973)            (39,032)
expenses                 (39,011)       (1,859)  (40,870)                 (2,059)
Operating                                                        14,885              12,826
profit/(loss)     2         5,332       (1,922)     3,410                 (2,059)
Finance                                                              27                  27
income                         85             -        85                       -
Finance costs             (1,256)             -   (1,256)       (2,488)         -   (2,488)
Profit/(loss)               4,161       (1,922)     2,239        12,424   (2,059)    10,365
on ordinary
activities
before
taxation
Taxation          5         (796)           322     (474)       (2,031)       160   (1,871)
Profit/(loss)               3,365       (1,600)     1,765        10,393   (1,899)     8,494
for the
period
attributable
to the owners
of the parent
Earnings per
share (cents)
Basic             6           5.9                     3.1          18.3                15.0
Diluted           6           5.8                     3.0          17.6                14.4

 

                                               52 weeks ended 1 April 2012
                                                                Non-
                                                  Before
                                                           recurring
                                           non-recurring
                                               items and   items and

                                             share based share based
                                                payments    payments     Total
                                  Notes            $'000       $'000     $'000
Revenue                               2          517,769           -   517,769
Cost of sales                                  (415,250)     (4,990) (420,240)
Gross profit                                     102,519     (4,990)    97,529
Operating expenses                              (70,515)     (3,976)  (74,491)
Operating profit/(loss)               2           32,004     (8,966)    23,038
Finance income                                        73           -        73
Finance costs                                    (3,900)           -   (3,900)
Profit/(loss) on ordinary
activities before taxation                        28,177     (8,966)    19,211
Taxation                              5          (3,445)       1,416   (2,029)
Profit/(loss) for the period
attributable to the owners of the
parent                                            24,732     (7,550)    17,182
Earnings per share (cents)
Basic                                 6             43.7                  30.4
Diluted                               6             42.4                  29.4

 

 

  Unaudited consolidated statement of comprehensive income  

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

 

                                                                     (Audited)

                                           26 weeks to 26 weeks to 52 weeks to

                                          30 September   2 October     1 April

                                                  2012        2011        2012
                                                 $'000       $'000       $'000
Profit for the period                            1,765       8,494      17,182
Other comprehensive income:
Gain/(loss) on hedge  of net  investment          (70)     (1,061)       (479)
taken to equity
Cash flow hedges:
Gain/(loss) arising during the period          (1,204)     (2,131)       1,295
Exchange gain/(loss)  on translation  of         (553)        (35)       (886)
foreign operations
Actuarial gain/(loss) on defined benefit            77     (2,868)     (1,828)
pension schemes
Other comprehensive income/(loss)              (1,750)     (6,095)     (1,898)
 

Tax  relating  to  components  of  other 
comprehensive income/(loss)                          -           -           -
Other  comprehensive  income/(loss)  for 
the period                                     (1,750)     (6,095)     (1,898)
 

Total  comprehensive  income/(loss)  for 
the period                                          15       2,399      15,284

 

  Unaudited        consolidated        statement        of         financial 
  position                              

As at 30 September 2012 (2 October 2011)

 

                                                                     (Audited)

                                              30 September 2 October   1 April

                                         Note         2012      2011      2012

                                                     $'000     $'000     $'000
Non-current assets
Goodwill                                             3,116     3,006     3,085
Other intangible assets                              2,398     3,228     2,897
Property, plant and equipment                       31,849    13,763    20,022
Other receivables                                      546       311       543
Deferred tax asset                                   5,515     2,550     5,098
                                                    43,424    22,858    31,645
Current assets
Inventories                                         59,714    52,852    49,790
Trade receivables                                   91,436   115,433    90,612
Other receivables                                   17,207    11,782    15,092
Current tax assets                                     413       680       703
Derivative financial instruments                       254         -     1,453
Cash and bank balances                    8         21,142    25,777    43,578
                                                   190,166   206,524   201,228
Total assets                                       233,590   229,382   232,873
Current liabilities
Borrowings                                8          2,646         -     2,398
Obligations under finance leases          8             52       179       117
Trade payables                                     101,358    91,584    88,551
Other payables                                      39,023    41,208    34,574
Current tax liabilities                              4,744     4,083     5,938
Retirement benefit obligation                          602       573       596
Provisions                                           1,059     2,773     1,078
Derivative financial instruments                         -     2,374        54
                                                   149,484   142,774   133,306
Net current assets                                  40,682    63,750    67,922
Non-current liabilities
Borrowings                                8         23,060    37,497    37,420
Obligations under finance leases                         -        45         -
Trade and other payables                               709         -       706
Deferred tax liabilities                             2,428     2,556     2,563
Retirement benefit obligation                        2,651     4,211     2,976
Provisions                                           4,230     4,921     4,590
                                                    33,078    49,230    48,255
Total liabilities                                  182,562   192,004   181,561
Net assets                                          51,028    37,378    51,312
Equity attributable  to  owners  of  the 
parent
Share capital                                       28,180    28,180    28,180
Share premium account                                2,586     2,586     2,586
Hedging and translation reserve                    (6,079)   (7,409)   (4,252)
Own shares                                         (5,249)   (5,442)   (5,271)
Retained gains/(losses)                             31,590    19,463    30,069
Total equity                                        51,028    37,378    51,312

 

  Unaudited Consolidated Statement of Changes in Equity

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

 

                                Share Hedging and Treasury               Total
                        Share premium translation    share Accumulated
                      capital account     reserve  reserve     profits  equity
                        $'000   $'000       $'000    $'000       $'000   $'000
Balance  at  3  April  28,180   2,586     (4,182)  (2,240)      13,942  38,286
2011
Profit for the period       -       -           -        -       8,494   8,494
attributable  to  the 
owners of the parent
Other   comprehensive       -       -     (3,227)        -     (2,868) (6,095)
income /  (loss)  for 
the period
Total   comprehensive       -       -     (3,227)        -       5,626   2,399
income /  (loss)  for 
the period
Dividends                   -       -           -        -     (1,850) (1,850)
Own  shares  acquired       -       -           -  (3,202)           - (3,202)
in the period
Reserve   entry   for       -       -           -        -       1,745   1,745
share option charges
Balance at 2  October  28,180   2,586     (7,409)  (5,442)      19,463  37,378
2011
Balance  at  1  April  28,180   2,586     (4,252)  (5,271)      30,069  51,312
2012
Profit for the period       -       -           -        -       1,765   1,765
attributable  to  the 
owners of the parent
Other   comprehensive       -       -     (1,827)        -          77 (1,750)
income /  (loss)  for 
the period
Total   comprehensive       -       -     (1,827)        -       1,842      15
income /  (loss)  for 
the period
Dividends                   -       -           -        -     (1,690) (1,690)
Own  shares  utilised       -       -           -       22           -      22
in the period
Reserve   entry   for       -       -           -        -       1,369   1,369
share option charges
Balance     at     30  28,180   2,586     (6,079)  (5,249)      31,590  51,028
September 2012

 

   

  Unaudited consolidated statement of cash flows

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

                                                                     (Audited)

                                           26 weeks to 26 weeks to 52 weeks to

                                          30 September   2 October     1 April

                                   Notes          2012        2011        2012
                                                 $'000       $'000       $'000
Profit for the period                            1,765       8,494      17,182
Adjustments for:
Finance income                                    (85)        (27)        (73)
Finance costs                                    1,256       2,488       3,900
Income tax expense                                 474       1,871       2,029
Depreciation  of  property,  plant               2,253       1,737       2,448
and equipment
Amortisation of intangible assets                  532         347       1,155
Loss  on  disposal  of   property,                  74          18          48
plant and equipment
Share option charge                              1,195       2,059       3,976
Decrease in provisions                           (868)     (1,058)     (3,122)
Operating   cash    flow    before               6,596      15,929      27,543
movements in working capital
(Increase)    /    decrease     in            (10,278)     (1,902)
inventories                                                                968
(Increase)    /    decrease     in             (3,970)    (12,102)
receivables                                                              9,161
Increase / (decrease) in payables               13,013       7,591     (1,340)
Movement in working capital                    (1,235)     (6,413)       8,789
Cash generated by operations                     5,361       9,516      36,332
Taxation paid                                  (1,928)     (2,190)     (3,199)
Interest paid                                    (868)     (1,227)     (2,780)
Net cash  generated from  /  (used               2,565       6,099      30,353
in) operating activities
Cash    flow    from     investing 
activities
Interest received                                   85          27          73
Proceeds on disposal of intangible                   8          29          79
assets,   property,   plant    and 
equipment
Purchases of  property, plant  and             (8,945)     (3,152)    (10,263)
equipment              
Purchases of intangible assets                    (33)     (1,650)     (1,986)
Acquisition /  Utilisation of  own                  22     (3,202)     (3,031)
shares (net of  funds received  on 
option exercise)
Net cash  generated from  /  (used             (8,863)     (7,948)    (15,128)
in)                      investing 
activities             
Cash   flow    before    financing             (6,298)     (1,849)      15,225
activities
Cash  generated  /  (used)  before             (5,571)     (1,849)      19,932
non-recurring items
Cash  utilised   in   respect   of               (727)           -     (4,707)
non-recurring items
Cash    flow    from     financing 
activities
Dividends paid                                 (1,690)     (1,850)     (2,712)
Repayment of borrowings              8        (14,000)    (26,377)    (26,377)
Repayment of preference shares                       -       (130)       (130)
Refinancing costs paid               8             (5)     (1,386)     (1,655)
New bank loans raised                8               -      39,544      39,544
Repayments  of  obligations  under   8            (66)        (73)
finance leases                                                           (181)
Net cash  generated from  /  (used            (15,761)       9,728       8,489
in) financing activities
Net increase / (decrease) in  cash            (22,059)       7,879      23,714
and cash equivalents
Cash  and   cash  equivalents   at   8          41,180      18,525      18,525
beginning of period
Effect of  foreign  exchange  rate               (625)       (627)     (1,059)
changes
Cash and cash  equivalents at  end   8          18,496      25,777      41,180
of period

   

   

  Notes to the Interim Statements

    1.  Basis of preparation

These interim financial statements have  been prepared in accordance with  IAS 
34, 'Interim  Financial  Reporting' as  adopted  by the  European  Union.  The 
condensed  consolidated  interim  financial  information  should  be  read  in 
conjunction with the  annual financial  statements for  the 52  weeks ended  1 
April 2012, which have  been prepared in accordance  with IFRSs as adopted  by 
the European Union.

This condensed consolidated  interim financial information  does not  comprise 
statutory accounts within  the meaning  of section  434 of  the Companies  Act 
2006.  The financial information presented for the 26 weeks ended 30 September
2012 and  the 26  weeks ended  2 October  2011 has  not been  reviewed by  the 
auditors. The financial  information for the  52 weeks ended  1 April 2012  is 
extracted and  abridged from  the Group's  full accounts  for that  year.  The 
statutory accounts for the 52  weeks ended 1 April  2012 have been filed  with 
the Registrar of Companies for England and Wales and have been reported on  by 
the Group's auditors. The Report of the Auditors was not qualified and did not
contain a statement under Section 498 of the Companies Act 2006. 

The interim report was approved by the Board of Directors on 31 October 2012.

This interim report  can be downloaded  or viewed via  the Group's website  at 
www.volex.com. Copies of  the annual  report for  the financial  year ended  1 
April 2012 are available at the  Company's registered office at 10  Eastbourne 
Terrace, London, W2  6LG, UK  and can  also be  downloaded or  viewed via  the 
Group's website.

The directors  are  satisfied  that  the Group  has  sufficient  resources  to 
continue in operation for the foreseeable future, a period of not less than 12
months from the date of this report.  Accordingly, they continue to adopt  the 
going concern basis in preparing these condensed financial statements.

The same  presentation  and  methods  of computation  are  followed  in  these 
condensed financial  statements  as  applied  in  the  Group's  latest  annual 
financial statements.   These condensed  financial statements  have also  been 
prepared using  accounting policies  consistent with  International  Financial 
Reporting Standards as  adopted for  use in  the European  Union ('IFRS')  and 
which are consistent with  those disclosed in the  annual report and  accounts 
for the 52 weeks ended 1 April 2012, except as described below.

    Adoption  of  new  and   revised  International  Financial   Reporting 
    Standards (IFRSs)

The following new and revised standards and interpretations have been  adopted 
in the current period.

    New and amended standards adopted by the Group

·     IFRS 7 (amendment) 'Financial Instruments'

    Standards and interpretations adopted with no effect on the  financial 
    statements

·     IAS 12 (amendment) 'Income Taxes'

    Standards and interpretations that are not yet effective and have  not 
    been early adopted by the Group

·     IAS 1  (amendment) 'Financial  Statement Presentation'  - effective  for 
year ended 30 March 2014;

·     IAS 27 (amendment) 'Separate Financial Statements' - effective for  year 
ended 30 March 2014;

·     IAS 28 (amendment) ' Associates  and Joint Ventures' effective for  year 
ended 30 March 2014;

·     IAS 19  (amendment) 'Employee Benefits'  - effective for  year ended  30 
March 2014;

·     IFRS 7 (amendment) 'Financial Instruments' (off-setting financial assets
and liabilities) - effective for year ended 30 March 2014;

·     IFRS 10 'Consolidated Financial  Statements' - effective for year  ended 
30 March 2014;

·     IFRS 11 ' Joint Arrangements' - effective for year ended 30 March 2014;

·     IFRS 12  ' Disclosure of  Interests in Other  Entities' - effective  for 
year ended 30 March 2014;

·     IFRS 13  'Fair Value Measurement'  - effective for  year ended 30  March 
2014;

 

    1.  Basis of preparation (continued)

    Standards and interpretations that are not yet effective and have  not 
    been early adopted by the Group (continued)

·     IAS 32 (amendment) 'Financial Instruments: Presentation' - effective for
year ended 29 March 2015; and

·     IFRS 9 'Financial Instruments' - effective for year ended 3 April 2016

 

The  directors  anticipate  that  the  future  adoption  of  those  standards, 
interpretations and amendments listed above will not have a material impact on
the Group's financial statements.

 

    2.  Business and geographical segments

 

    Business segments

The market sectors below are the basis on which the group reports its  segment 
information and are  based on the  end markets that  the group's products  are 
supplied into.

 

                                             (Audited)

                   26 weeks to 26 weeks to 52 weeks to

                  30 September   2 October     1 April

                          2012        2011        2012

                         $'000       $'000       $'000
Revenue
Consumer               164,663     169,890     330,372
Telecoms/Datacoms       45,192      56,246      99,440
Healthcare              22,024      24,193      51,663
Industrial              17,372      20,325      36,294
                       249,251     270,654     517,769

          

                                            Non-recurring                     
                                                items and
                                     Before   share-based 26 weeks to 26 weeks
                              non-recurring      payments                   to
                                      items                        30
                                                    $'000   September        2
                                      $'000                            October
                                                                 2012
                                                                          2011
                                                                $'000
                                                                         $'000
Gross profit
Consumer                             24,439             -      24,439   29,261
Telecoms/Datacoms                    10,412          (10)      10,402   11,528
Healthcare                            5,939          (23)       5,916    6,143
Industrial                            3,553          (30)       3,523    4,926
                                     44,343          (63)      44,280   51,858
Unallocated         operating      (39,011)         (664)    (39,675) (36,973)
expenses

(excluding        share-based 
payments)
Operating    profit    before         5,332         (727)       4,605   14,885
share-based payments
Share-based payments                      -       (1,195)     (1,195)  (2,059)
Operating profit                      5,332       (1,922)       3,410   12,826
Finance income                                                     85       27
Finance costs                                                 (1,256)  (2,488)
Profit before tax                                               2,239   10,365
Tax                                                             (474)  (1,871)
Profit after tax                                                1,765    8,494

 

     

    2.  Business and geographical segments (continued)

                                               Non-recurring items   (Audited)
                                                   and share-based
                                        Before            payments 52 weeks to
                                 non-recurring
                                         items               $'000     1 April

                                         $'000                            2012

                                                                         $'000
Gross profit
Consumer                                59,113             (4,990)      54,123
Telecoms/Datacoms                       21,034                   -      21,034
Healthcare                              14,186                   -      14,186
Industrial                               8,186                   -       8,186
                                       102,519             (4,990)      97,529
Unallocated operating  expenses       (70,515)                   -    (70,515)
(excluding          share-based 
payments)
Operating     profit     before         32,004             (4,990)      27,014
share-based payments
Share-based payments                         -             (3,976)     (3,976)
Operating profit                        32,004             (8,966)      23,038
Finance income                                                              73
Finance costs                                                          (3,900)
Profit before tax                                                       19,211
Tax                                                                    (2,029)
Profit after tax                                                        17,182

 

    Other segmental information

                         External revenue              Non-current assets

                                                    (excluding deferred tax
                                                            assets)
                                        (Audited)                    (Audited)

                 26 weeks to 26 weeks 52 weeks to  26 weeks 26 weeks  52 weeks
                                   to                    to       to        to
                          30              1 April
                   September        2                    30        2   1 April
                        2012  October        2012 September  October
                                 2011                  2012     2011      2012
                       $'000                $'000
                                $'000                 $'000    $'000     $'000
Geographical segments
Asia  (excluding     156,957  149,830     299,205    30,370   12,510    18,594
India)
North America         43,293   53,849     100,446       697      689       742
Europe                36,848   49,628      89,723       432      246       420
(excluding UK)
India                  4,292    6,318      11,371       502      684       574
South America          7,861   11,029      17,024       443      286       430
UK                         -        -           -     5,465    5,893     5,787
                     249,251  270,654     517,769    37,909   20,308    26,547

     

    3.  Non-recurring items

                                                            (Audited)

                                  26 weeks to 26 weeks to 52 weeks to

                            30 September 2012   2 October     1 April

                                        $'000        2011        2012

                                                    $'000       $'000
New product start-up costs                  -           -       4,990
Restructuring charge                      727           -           -
                                          727           -       4,990

     

In the 26  weeks to  30 September 2012,  the Group  initiated a  restructuring 
programme to  realign the  Group's  resources to  its latest  forecasts.   The 
$727,000  represents   redundancy   costs   incurred.    We   expect   further 
restructuring charges to  be incurred in  the second  half of the  year to  31 
March 2013. Of the $727,000, $63,000 was charged to cost of sales and $664,000
to operating expenses.

 

In the 52 weeks to 1 April 2012, exceptional start-up costs of $4,990,000 were
incurred in relation to new product introductions; specifically the  migration 
from PVC to Halogen  Free power cords.  These  new products necessitated  wide 
ranging improvements to our manufacturing processes and investments in  higher 
grade tooling  and precision  moulding  technologies.  The  exceptional  costs 
include the materials  scrap costs and  labour inefficiencies associated  with 
the new product lines.

 

    4.  Dividends

                                                                     (Audited)

                                           26 weeks to 26 weeks to 52 weeks to

                                     30 September 2012   2 October     1 April

                                                 $'000        2011        2012
Amounts recognised as distributions
to equity holders in the period:                             $'000       $'000
Final dividend for the year ended 1              1,690       1,850       1,850
April 2012 of  3.0 cents per  share 
(2011: 2 pence per share)
Interim dividend for the year ended                  -           -         862
31 March  2013  of  2.0  cents  per 
share (2012: 1.5 cents per share)
                                                 1,690       1,850       2,712
Proposed interim  dividend for  the              1,134         851           -
26 weeks  to 30  September 2012  of 
2.0  cents  per  share  (2011:  1.5 
cents per share)
Proposed  final  dividend  for  the                  -           -       1,699
year ended  1  April  2012  of  3.0 
cents per share (2011: 2 pence  per 
share)

 

The final dividend of 3.0 cents per share in respect of the year ended 1 April
2012 (2011: 2 pence per share) was paid to shareholders on 24 August 2012.

 

The interim dividend of 2.0 cents per  share was announced on 31 October  2012 
in USD.  Shareholders will have the option to receive this dividend in  either 
USD or GBP.  The total amount payable in USD may vary, depending on  movements 
in exchange rates between  October 2012 and February  2013, when the  dividend 
will be paid.

 

    5.  Tax charge

The Group tax charge for  the period is based on  the forecast tax charge  for 
the year as a whole and has been influenced by the differing tax rates in  the 
UK and the various overseas countries in which the Group operates.

  

    6.  Earnings per ordinary share

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

                                                                     (Audited)

                                     26 weeks to     26 weeks to 52 weeks to 1
                                                                         April
                                    30 September  2 October 2011
                                            2012                          2012
                                                           $'000
                                           $'000                         $'000
Earnings
Earnings for the purpose of  basic         1,765           8,494
earnings per share                                                      17,182
Adjustments for:
Non-recurring items                          727               -         4,990
Share based payments charge                1,195           2,059         3,976
Tax effect of above adjustments            (322)           (160)       (1,416)
Normalised earnings                        3,365          10,393        24,732
Weighted   average    number    of    No. shares      No. shares    No. shares
ordinary shares
Weighted   average    number    of 
ordinary shares for the purpose of
basic earnings per share              56,623,144      56,736,404    56,582,380
Effect   of   dilutive   potential 
ordinary shares - share options        1,653,245       2,302,547     1,777,754
Weighted   average    number    of 
ordinary shares for the purpose of
diluted earnings per share            58,276,389      59,038,951    58,360,134

 

Basic earnings per share                            Cents Cents Cents
Basic earnings per share from continuing operations   3.1  15.0  30.4
Adjustments for:       
Non-recurring items                                   1.3     -   8.8
Share based payments charge                           2.1   3.6   7.0
Tax effect of above adjustments                     (0.6) (0.3) (2.5)
Normalised basic earnings per share                   5.9  18.3  43.7
Diluted earnings per share
Diluted earnings per share                            3.0  14.4  29.4
Adjustments for:
Non-recurring items                                   1.3     -   8.6
Share based payments charge                           2.1   3.5   6.8
Tax effect of above adjustments                     (0.6) (0.3) (2.4)
Normalised diluted earnings per share                 5.8  17.6  42.4

 

The normalised  earnings  per  share  has been  calculated  on  the  basis  of 
continuing activities before non-recurring items and the share-based  payments 
charge, 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.

    7. Own shares

                                                                     (Audited)

                                     26 weeks to     26 weeks to 52 weeks to 1
                                                                         April
                               30 September 2012  2 October 2011
                                                                          2012
                                           $'000           $'000
                                                                         $'000
 
At the start of the period                 5,271           2,240         2,240
Acquired in the period                         -           3,256         3,256
Disposed of in the period  on               (22)            (54)         (225)
exercise of options
At the end of the period                   5,249           5,442         5,271

     

The own shares reserve represents  the cost of shares  in the Company held  by 
the Volex Group plc Employee Share Trust and the Volex Group Guernsey  Purpose 
Trust to satisfy future share option exercises under the Group's share  option 
schemes.

 

The number of ordinary shares held by the Volex Group plc Employee Share Trust
at 30 September 2012 was 4,811,815  (1 April 2012: 4,866,815; 2 October  2011: 
5,306,815) and the Volex Group Guernsey  Purpose Trust was 1,005,000 (1  April 
2012: 1,005,000; 2 October 2011: 230,000). 

 

    8.  Analysis of net debt

                                                            Other             

                         1 April     Cash       Exchange non-cash 30 September
                                          movement $'000  changes         2012
                            2012     flow
                                                            $'000        $'000
                           $'000    $'000
Cash      and      cash   41,180 (22,059)          (625)        -       18,496
equivalents
Bank loans              (38,663)   14,000            540        -     (24,123)
Finance leases             (117)       66            (1)        -         (52)
Debt issue costs           1,243        5              9    (194)        1,063
Net debt                   3,643  (7,988)           (77)    (194)      (4,616)

 

    9. Related parties

Transactions between  the  Company and  its  subsidiaries, which  are  related 
parties, have been eliminated on consolidation  and are not disclosed in  this 
note.

 

Key management  compensation is  in line  with the  amounts disclosed  in  the 
annual report for the year ended 1 April 2012.

 

    10. Contingent Liabilities

As a global  group, subsidiary companies,  in the normal  course of  business, 
engage in significant levels of cross-border trading. The customs, duties  and 
sales tax regulations associated with these transactions are complex and often
subject to interpretation.  While the  Group places  considerable emphasis  on 
compliance with such regulations, including appropriate use of external  legal 
advisors, full compliance  with all  customs, duty and  sales tax  regulations 
cannot be guaranteed.

Volex plc  (the  'Company')  enters  into  financial  guarantee  contracts  to 
guarantee the indebtedness  of other  group companies.  The Company  considers 
these to be  insurance arrangements  and treats  the guarantee  contract as  a 
contingent liability until such time as  it becomes probable that the  Company 
will be required to make a payment under the guarantee.

 

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IR BIBDGUGXBGDG -0- Oct/31/2012 07:00 GMT
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement