TIDMVLX
RNS Number : 0148S
Volex PLC
11 November 2021
11 November 2021
VOLEX plc
Half year results for the 26 weeks ended 3 October 2021
Strong trading and strategic progress with investment in
growth
Volex plc ("Volex"), the global supplier of integrated
manufacturing services and power products, today announces its half
year results for the 26 weeks ended 3 October 2021 ("H1
FY2022").
26 weeks to 26 weeks to
3 October 4 October %
Financial Summary 2021 2020 Change
--------------------------------- ------------ ----------- -------------
Revenue $292.7m $202.5m 44.5%
Underlying* operating profit $27.3m $20.8m 31.3%
Statutory operating profit $21.2m $14.3m 48.3%
Underlying* profit before tax $25.4m $20.9m 21.5%
Statutory profit before tax $19.4m $14.4m 34.7%
Basic earnings per share 11.0c 10.2c 7.8%
Interim dividend per share 1.2p 1.1p 9.1%
Net debt / (cash) (before lease
liabilities) ** $21.8m ($32.0m)
* Before adjusting items (non-recurring items and amortisation
of acquired intangibles) and share-based payments
** Net debt / (cash) is presented before lease liabilities of
$18.3m (4 October 2020: $11.7m)
Financial and Operational Highlights
-- Strong reported revenue growth of 44.5% to $292.7m reflecting
high levels of customer demand in all sectors
-- Underlying operating profit increased by 31.3% to $27.3m
supported by robust management of inflationary cost pressures and a
proactive approach to successfully manage extended lead times in
global supply chains
-- Announced three North American acquisitions, two of which
were announced post period-end, focused on defence, military
aerospace, off-highway automotive and consumer electricals
-- Delivered further investment with vertical integration in the
high-growth and strategically significant markets of electric
vehicles and high-speed data centre cables
-- Interim dividend increased by 9.1% to 1.2 pence per share
reflecting confidence in ongoing prospects of the business
Market Highlights
-- Electric Vehicles - continued excellent sales growth of 210%
year-on-year in electric vehicles market reflecting strong position
in grid-cords as well as expansion into other products
-- Consumer Electricals - demand for consumer electricals
buoyant with sales up 74% year-on-year, including positive impact
from the acquisition of DE-KA
-- Medical - sales to medical customers increased 15% as sector
begins its recovery from Covid-19 with access to hospitals starting
to improve
-- Complex Industrial Technology - demand for complex assemblies
returned, although slight reduction in year-on-year revenue
following high levels of demand for data centre products in the
first half of FY2021
Outlook
-- Robust first half of the year coupled with a strong forward
order book, means Volex is on course to deliver on its full-year
consensus market expectations
-- Mindful of potential for disruptions caused by global
component shortages and shipping issues however, at present,
continuing to successfully manage these risks
-- The acquisition of Irvine completed on 29 October 2021 and
the acquisitions of Prodamex and TC are expected to complete in
quarter three of FY2022 with a growing pipeline of opportunities
and a track record of acquiring and integrating businesses which
support strategic objectives
-- The longer-term prospects for the business are excellent and
investment continued to increase capacity and strengthen
capabilities with a focus on growth markets
Nat Rothschild, Volex's Executive Chairman said:
"By delivering on our strategy to create a diverse, resilient
and flexible global manufacturing business, we have successfully
managed the well-documented global supply chain challenges and
Covid-19 restrictions and continue to achieve high rates of
utilisation across all of our facilities.
We continue to invest in new capacity and capability in our
manufacturing facilities to support expanding customer demand and
deliver on our long-term growth prospects while executing against
our M&A plans. The agreed acquisitions of Irvine and TC are in
line with our strategy to diversify into defence markets whilst
Prodamex complements the recent DE-KA acquisition and expands our
domestic appliances presence into North America.
With excellent long-term prospects from organic growth and
acquisitions, we are confident in our strategy, our operating model
and our ability to create further shareholder value. Therefore,
while we remain mindful of the challenges faced by all
manufacturing businesses from continued extended lead times in the
global supply chain, we are today reaffirming our outlook for the
remainder of the year."
For further information please contact:
+44 (0)7747 488
Volex plc 785
Nat Rothschild, Executive Chairman
Jon Boaden, Chief Financial Officer
Julian Wais, Head of Investor Relations
Singer Capital Markets (Nominated Adviser and Joint
Broker) +44 (0)20 7496 3000
Shaun Dobson / George Tzimas
HSBC Bank plc (Joint Broker) +44 (0)20 7991 8888
Simon Alexander / Joe Weaving
Powerscourt +44 (0)20 7250 1446
James White / Ollie Head
About Volex plc
Volex plc (AIM:VLX) is a global leader in integrated
manufacturing for performance-critical applications and a designer
and manufacturer of power products. We serve a diverse range of
markets and customers, with particular expertise in cable
assemblies, higher-level assemblies, data centre power and
connectivity, electric vehicles, medical applications, consumer
electricals and complex industrial technology. We are headquartered
in the UK and operate from 18 manufacturing locations with a global
workforce of over 6,400 employees across 21 countries. Our products
are sold through our own locally based sales teams and through
authorised distributor partners to Original Equipment Manufacturers
('OEMs') and Electronic Manufacturing Services ('EMS') companies
worldwide.
All of the products and services that we offer are integral to
the increasingly complex digital world in which we live, providing
power and connectivity from the most common household items to the
most complex medical equipment. For more information, please visit
www.volex.com
Definitions
The Group presents some significant items separately to provide
clarity on the underlying performance of the business. This
includes significant one-off costs and income such as acquisition
related costs, the non-cash amortisation of intangible assets
acquired as part of business combinations, and share-based
payments. Further detail on adjusting items is provided in Note
3.
Underlying operating profit is operating profit before adjusting
items and share-based payments. Underlying free cash flow is net
cash flow before financing activities excluding cash flows
associated with the acquisitions of businesses and cash utilised in
respect of adjusting items. Net debt (before lease liabilities)
represents cash and cash equivalents, less bank loans and debt
issue costs, but excluding lease liabilities.
Forward looking statements
This announcement contains certain forward-looking statements
which have been made by the Directors in good faith using
information available up until the date they approved the
announcement. Forward-looking statements should be regarded with
caution as by their nature such statements involve risk and
uncertainties relating to events and circumstances that may occur
in the future. Actual results may differ from those expressed in
such statements, depending on the outcome of these uncertain future
events.
RESULTS FOR THE 26 WEEKSED 3 OCTOBER 2021
Group overview
Volex is a global leader in integrated manufacturing for
performance-critical applications and a designer and manufacturer
of power products. We serve a diverse range of markets and
customers, with particular expertise in cable assemblies,
higher-level assemblies, data centre power and connectivity,
electric vehicles and consumer electricals.
Although some of our customers have been affected by extended
component lead times, we continue to experience robust demand
across all markets. Our diverse customer base and niche positions
in high-mix, low-volume manufacturing reduces our reliance on any
particular individual component.
We have seen extended lead times and increased costs for some
raw materials. We are able to pass through component cost increases
to our customers, being an established practice for our
organisation. We are working closely with our customers to manage
lead times and meet their expectations. Indeed, we believe that our
customer relationships have strengthened due to our support in
navigating the current supply chain complexities.
We continue to invest in our existing operations to support high
growth areas of the business and to further optimise our
manufacturing processes.
During the period, we have once again demonstrated our ability
to identify attractive acquisition opportunities that align with
our strategy and complement our existing offering. These
acquisitions provide us with the capability to manufacture complete
electro-mechanical and electronic sub-assemblies, and advanced
niche printed circuit board (PCB) assembly products, to provide
additional value for our customers.
We continue to have an exciting pipeline of potential
acquisitions as part of our strategy for growth. We have strict
criteria and set methodology to identify businesses that can
enhance our capabilities, broaden customer relationships and access
attractive markets consistent with our operating model.
We have announced an interim dividend of 1.2 pence per share
which will be paid on 14 December 2021 to those shareholders on the
register on 19 November 2021. The Ex-dividend date will be 18
November 2021.
Trading performance overview
The half year to 3 October 2021 has seen the Group continue to
grow, with revenues and underlying operating profit well ahead of
last year, despite multiple market-related challenges such as
supply chain disruption, commodity inflation and the US dollar
remaining weak against the Renminbi. This provides us with
confidence in our business model and our ability to continue to
manage future headwinds.
$'000 26 weeks ended 26 weeks ended
3 October 4 October
2021 2020
Total Total
Revenue 292,748 202,465
Cost of Sales (230,339) (151,706)
---------------- ---------------
Underlying gross profit* 62,409 50,759
Underlying gross margin 21.3% 25.1%
Underlying operating
costs* (35,159) (29,951)
---------------- ---------------
Underlying operating
profit* 27,250 20,808
================ ===============
Underlying operating
margin 9.3% 10.3%
================ ===============
Underlying EBITDA* 31,785 24,258
---------------- ---------------
* Before adjusting items and share-based payment charges
Revenue for the first half of the year increased by 44.5%
compared to H1 FY2021, including the impact of the acquisition of
DE-KA. Customer demand has been strong across our markets
throughout the period.
The demand from Electric Vehicles customers was particularly
strong with revenues more than trebling year-on-year.
Consumer Electricals demand was positive with revenue growing
74% from H1 FY2021 aided by higher copper prices and the
acquisition of DE-KA.
There has been a strong return of demand in the period within
the Medical sector for assemblies used in large medical devices,
with major customers reporting increased order books.
The demand from Complex Industrial Technologies customers also
held up well, although overall revenue is slightly lower than the
first half of FY2021. Last year, there was increased demand from
some data centre customers as they sought to reduce the potential
impact of Covid-19 related disruption on their supply of high-speed
cables. The demand for these cables has normalised.
We look to pass on higher component and commodity costs to our
customers through contractual mechanisms and regular repricing. We
have experienced increased freight and copper costs during the
period. These have been passed on to customers, increasing revenue
but not the absolute margins on individual products. This results
in slightly lower gross margins as a percentage of revenue. There
is also a small time lag in passing through such cost increases,
which has an adverse impact on margins when prices are rising. This
becomes a positive impact when prices are falling. There was an
adverse impact on gross margin from these effects of 1.5%.
There is an adverse impact of 0.8% on gross margin from a higher
mix of more simple products, including 0.4% from our acquisition of
DE-KA. In addition, margins were reduced by 0.8% due to foreign
exchange movements and 0.7% due to employment tax savings that were
available in the prior year that did not repeat in H1 FY2022. In
addition to these movements, at an operating profit level, there
was a 1.2% improvement in margins from careful cost control and a
1.6% benefit following the acquisition of DE-KA.
Underlying operating costs increased by $5.2 million to $35.2
million (H1 FY2021: $30.0 million), as the business has grown,
partly attributable to the acquisition of DE-KA. However,
underlying operating costs as a percentage of revenue have reduced
in the period from 14.8% in H1 FY2021 to 12.0% reflecting
management's continued tight control over operating expenditure.
The increased costs reflect the investment costs in strengthening
our capabilities and capacity across the Group in addition to the
impact of incremental expenditure within our sales and marketing
team. We also increased our spending on research and development,
focusing on areas where we believe there is a strong opportunity to
deliver revenue growth in future periods. Our investment in
development activities in previous years has resulted in patents
which are delivering incremental sales opportunities.
This has been a dynamic period, including the integration of a
new acquisition, a return of customer demand in the Medical and
Complex Industrial Technology markets and challenges due to
extended lead times in global supply chains. We also announced the
acquisition of Irvine during the period and the acquisitions of
Prodamex and TC after the period end. Volex has a diverse and
resilient operating model, with a focus on agile decision making
and achieving continued operational efficiencies. This has resulted
in revenue growth and strong operating profits with margins in line
with our long-term objectives.
Revenue by customer sector
Electric Vehicles
The automotive industry is experiencing a period of rapid
change. The launch of new models, government incentives and
stricter emissions legislation are driving growth in the sales of
electric vehicles. As leaders in the development and manufacture of
power cords, Volex is able to bring significant and relevant
technology to electric vehicle charging. Our customers are looking
for a robust product, designed with reliability and having safety
as the priority. Our expertise has enabled us to broaden our
customer base and expand the range of products we sell to
individual customers. As sales of electric vehicles increase, we
expect the sector to become more competitive. We are therefore
investing in our manufacturing capabilities to ensure we remain one
of the lowest cost producers.
Revenue from our electric vehicle customers grew to $45.3
million (H1 FY2021: $14.6 million), a year-on-year increase of
210%. Demand in the first quarter of the year was very strong,
slightly tapering in the second quarter as component shortages
impacted our customers' production.
Consumer Electricals
Volex designs and manufactures power cords and related products
that are sold to the manufacturers of a broad range of electrical
and electronic devices and appliances. Our products are used in
home entertainment and home computing devices, domestic and
personal healthcare appliances and power tools. Many of our
customers are global household names operating in premium segments
of the market.
With many consumers spending more time at home during the
Covid-19 pandemic, demand for entertainment, home-office equipment
and home renovation products were elevated. The consumer
electricals market has remained buoyant throughout the period, with
continued high levels of demand. Revenue grew to $127.4 million (H1
FY2021: $73.2 million), also benefitting from the acquisition of
DE-KA at the end of the last financial year. DE-KA has traded very
strongly since acquisition, beating our stretching acquisition
targets. We have passed on higher copper costs to our customers
which has increased revenue by approximately $8 million. We
anticipate normalisation in this sector in the second half of the
year.
Medical
We are very proud of our capabilities in the medical devices
supply chain. We operate across multiple segments within medical
markets, with our complex assemblies utilised in smaller medical
devices for patient treatment and monitoring, as well as larger
medical devices.
Covid-19 placed a tremendous amount of pressure on healthcare
systems around the world in the prior year, resulting in changes in
the profile of spend on medical technology as access to hospitals
was restricted and spending focused on Covid-19 treatment. We have
seen a strong return of demand for assemblies used in large,
non-Covid related medical devices, such as patient imaging and
robotic surgery devices. Medical revenue increased to $62.0 million
(H1 FY2021: $54.0 million), reflecting this recovery during H1
FY2022. Production levels in the period were above our
expectations, although we have seen some increased lead times for
certain components.
We believe that the outlook for large medical equipment is
positive as the impact of Covid-19 on healthcare systems continues
to diminish. Governments and healthcare providers will need to
prioritise investment in technologies to support screening
procedures and routine operations that have been delayed. In
addition, spending on screening and treatment around the world is
expected to grow, as is the provision of universal healthcare in
some significant markets. Volex is well positioned, with
established production facilities in the major healthcare markets,
to take advantage of moves to simplify and de-risk the supply chain
for the production of medical devices. This supports our view that
there is significant pent-up demand for medical equipment to
accelerate patient screening and therapy following the deferment of
treatment during the pandemic.
Complex Industrial Technology
Our Complex Industrial Technology customers produce a wide range
of equipment and customer solutions, including building control,
smart metering, laser technology, vehicle telematics,
telecommunications, industrial automation and robotics. With a
customer-centric approach and experienced production engineers who
maintain rigorous quality standards, Volex is a manufacturing
partner for some of the biggest technology names.
Revenue for Complex Industrial Technology customers was slightly
lower at $58.1 million (H1 FY2021: $60.7 million) as the prior
period included particularly strong demand for high-speed data
centre products as customers built up inventory to mitigate against
potential disruption in the supply chain. Despite this, there has
been strong demand from customers requiring complex assemblies for
industrial technology applications throughout the period.
We have successfully developed a 400Gbps product for the high
speed data centre sector for which we anticipate strong demand in
FY2023. In the second half of the year, we expect to see a
transitional period with a reduction in demand for 100Gbps cables
before the industry begins the rollout and adoption of 400Gbps
cables. We have a customer qualified 400Gbps product and expect
revenues to increase in FY2023.
Revenue by market
We operate a global, interconnected and integrated business.
This allows us to serve blue-chip customers around the world.
Customers often require manufacturing in multiple locations to
reduce risk in their supply chains. We respond by developing
flexibility at our sites so we can meet a variety of customer
requirements within one facility. We also have a regional focus in
our business to ensure that we offer exceptional customer service.
We analyse our revenue geographically by region, with the regional
allocation based on where the customer relationship is held. This
reflects the fact that we are a customer-centric organisation.
North America
North America is our largest customer region and we work with
some of the largest technology companies and global innovators.
North America is 41.4% of overall revenue (H1 FY2021: 45.9%).
Revenue grew by 30.5% in the period to $121.2 million (H1 FY2021:
$92.9 million). This includes some of the strong growth that we
experienced from electric vehicle customers.
Europe
Revenues in Europe grew by 124.7% to $100.9 million (H1 FY2021:
$44.9 million) primarily due to the impact of DE-KA which was
acquired in February 2021. The Group has also seen growth across
its key customer markets in this region including medical,
industrial and electric vehicles.
Asia
Asia revenue was $70.7 million (H1 FY2021 $64.6 million). The
majority of revenue in this region is in consumer electricals.
Demand in the first half remained strong.
Group adjusting items and share-based payments
Adjusting items and share-based payments totalled $6.1 million
in the period (H1 FY2021: $6.5 million). These costs are made up of
$5.0 million (H1 FY2021: $2.3 million) of amortisation of
acquisition-related intangible assets, $2.5 million (H1 FY2021:
$4.0 million) of share-based payments expense and $1.1 million (H1
FY2021: $0.2 million) of acquisition costs mainly related to the
acquisitions of Irvine, Prodamex and TC. Partially offsetting these
items was a gain of $2.6 million recognised on the forgiveness of
Paycheck Protection Program (PPP) loans provided to parts of the
Group's North America operations. Share-based payments include
awards made to incentivise senior management, as well as awards
granted to the management teams within acquired companies.
Group taxation
The Group incurred a tax charge of $2.2 million (H1 FY2021: tax
credit of $1.1 million), representing an effective tax rate of
11.2% (H1 FY2021: -7.4%). The underlying tax charge of $3.7 million
(H1 FY2021: $nil) represents an effective tax rate of 14.7% (H1
FY2021: 0.2%). The underlying current tax charge is calculated by
reference to the taxable profits in each individual entity and the
local statutory tax rates. An underlying deferred tax credit of
$1.4 million (H1 FY2021: tax credit of $2.9 million) arose due to
an increase in the net deferred tax asset recognised.
The Group operates in a number of different tax jurisdictions
and is subject to periodic tax audits by local authorities in the
normal course of business on a range of tax matters in relation to
corporate tax. As at 3 October 2021, the Group has net current tax
liabilities of $7.6 million (FY2021: $6.7 million) which include
$7.3 million (FY2021: $7.9 million) of provisions for tax
uncertainties.
The carrying amount of deferred tax assets is reviewed at each
reporting date and recognised to the extent that it is probable
that there are sufficient taxable profits to allow all or part to
be recovered. Deferred tax assets have been recognised based on
future forecast taxable profits. As at the reporting date the Group
has recognised deferred tax assets of $23.7 million (FY2021: $22.0
million) and deferred tax liabilities of $7.5 million (FY2021: $7.8
million).
Group net debt and cash flows
During the first half of the year, inventory has increased
significantly to support the growth of the business and as a direct
result of increases in lead times in the global supply chain, as
well as longer shipping times between production facilities and
customers. This has partially offset cash generated by our
underlying business operations.
Net debt (before lease liabilities) increased from the year end
to $21.8 million ($7.2 million at 4 April 2021) largely due to the
inventory increase described above. The Group generated underlying
free cash flow after capital expenditure and tax, but before the
cost of acquisitions, of $3.0 million. This included an operating
cash inflow of $30.0 million and an adverse working capital
movement of $18.7 million, as well as capital expenditure of $4.9
million and tax paid of $3.0 million. The adverse working capital
movement is due to the significant growth in the business along
with extended shipping times for sea freight and increased lead
times on components leading to an increase in inventory levels.
Compared with H1 FY2021 there were an extra 6 days of inventory
held by the business at the end of the period. Inventory levels are
expected to normalise, but this may not occur in the second half of
the year. Accounts receivable and accounts payable balances also
increased as a result of the growth in the business . The Group
also had lease liabilities of $18.3 million ($20.0 million at 4
April 2021). This produces a statutory net debt position of $40.1
million.
When the Irvine, Prodamex and TC acquisitions are completed, net
debt is expected to increase by approximately $35 million.
Acquisition strategy
The successful acquisition and integration of quality businesses
is a significant part of our strategy. Our typical acquisition
target is a well performing business in a sector where we already
have deep understanding and experience. We are attracted to
businesses with excellent customer lists and good capabilities
which drive long-term customer relationships. Our acquisition
pipeline is focused on businesses which have additional value-add
capabilities and access to existing or adjacent markets. The
geographic location of the target is also a strategic
consideration, including low-cost markets in which our current
customers operate.
Targets that require significant integration or restructuring
effort are only considered where we can identify the management
resources to lead this activity. We look to optimise the value
created from each acquisition, and only progress opportunities that
meet strict value criteria which are tailored to each transaction
based on the specific characteristics of the target. Our aim is to
grow the Group's run-rate revenue by approximately ten percent each
year by acquiring attractive, cash generative businesses.
To select the right opportunities, we identify potential
acquisitions through a variety of methods, seeking out businesses
that are not on the market as well as those already in an active
process. All these opportunities are qualified and approved by an
investment committee before we progress to negotiation. We only
proceed to due diligence where there is alignment on the commercial
terms.
Having completed six acquisitions in three years from investment
of some $140 million, we have a well-developed approach and a
significant track record in execution. With the announcement of
three further acquisitions, Irvine, Prodamex and TC, since the
beginning of the year, we have again demonstrated our proven
ability to identify quality businesses in attractive markets.
We have a growing acquisition pipeline containing highly
attractive targets that we are actively pursuing, all of which fit
within the core competency of our senior operations team. In a
buoyant M&A market, discipline in negotiations is critical and
we qualify every acquisition extensively using our deep industry
knowledge to find the best opportunities. We firmly believe that
our strength in this area will be a significant value driver.
Investing in our business
Over the past eighteen months we have invested significantly in
our business with a factory extension in Batam, Indonesia and a
facility relocation in Suzhou, China completed in FY2021.
During the period we have increased our research and development
activities in Suzhou and recruited additional specialists to drive
our product development programmes. We have also begun to expand
our capabilities through investment in vertical integration, which
will accelerate through the second half of the year. Our investment
programmes are focused on high-growth markets, with the successful
development of a 400Gbps product for our high-speed data centre
customers a prime example. There are further investment
opportunities within our operations that will deliver good cash
returns.
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. There are a number of potential
risks that could have a material impact on the Group's financial
performance. The principal risks and uncertainties include
competitive threats, legal and regulatory issues, dependency on key
suppliers or customers, movements in commodity prices or exchange
rates, and quality issues. These risks and the relevant
risk-mitigation activities are set out in the FY2021 Annual Report
and Accounts on pages 36 to 40, a copy of which is available on the
website at www.volex.com .
Outlook
Having delivered a robust performance in the first half of the
year, coupled with a strong forward order book, the Board remains
confident in delivering on full-year consensus market expectations,
absent any material disruptions to our business from the extended
lead times that are impacting on global supply chains .
The acquisition of Irvine completed on 29 October 2021 and the
acquisitions of Prodamex and TC are expected to complete in quarter
three of FY2022. We have a growing pipeline of acquisition
opportunities and a track record of identifying and integrating
businesses that support our strategic objectives.
The longer-term prospects for our business are excellent and we
continue to invest in increasing capacity and strengthening our
capabilities in our key facilities to meet customer demand with a
particular focus on growth areas.
Nat Rothschild Jon Boaden
Group Executive Chairman Group Chief Financial Officer
11 November 2021 11 November 2021
Unaudited consolidated income statement
For the 26 weeks ended 3 October 2021 (26 weeks ended 4 October
2020)
26 weeks ended 3 October 26 weeks ended 4 October
2021 2020
Adjusting Adjusting
Before items and Before items
Adjusting share-based Adjusting and share-based
items payments Total items payments Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
Revenue 2 292,748 - 292,748 202,465 - 202,465
Cost of sales (230,339) - (230,339) (151,706) - (151,706)
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
Gross profit 62,409 - 62,409 50,759 - 50,759
Operating expenses (35,159) (8,646) (43,805) (29,951) (6,502) (36,453)
Other income 3 - 2,584 2,584 - - -
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
Operating profit 2 27,250 (6,062) 21,188 20,808 (6,502) 14,306
Share of net profit
from associates 84 - 84 637 - 637
Finance income 153 - 153 155 - 155
Finance costs (2,069) - (2,069) (720) - (720)
Profit on ordinary activities
before taxation 25, 418 (6,062) 19, 356 20,880 (6,502) 14,378
( 3,749 ( 2,170
Taxation 4 ) 1, 579 ) (37) 1,096 1,059
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
Profit for the period
attributable to the (4, 483
owners of the parent 21,669 ) 17,186 20,843 (5,406) 15,437
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
Earnings per share (cents)
Basic 5 13. 8 11.0 13.7 10.2
Diluted 5 13.0 10.3 12.9 9.5
------------------------------ ----- ---------- ------------ --------- ---------- ---------------- ---------
52 weeks ended 4 April
2021
Adjusting
Before Items and
Adjusting share-based
items payments Total
Notes $'000 $'000 $'000
------------------------------ ----- ---------- ------------ ---------
Revenue 2 443,313 - 443,313
Cost of sales (339,437) - (339,437)
------------------------------ ----- ---------- ------------ ---------
Gross profit 103,876 - 103,876
Operating expenses (60,980) (12,179) (73,159)
Operating profit 2 42,896 (12,179) 30,717
Share of net profit from
associates 827 - 827
Finance income 310 - 310
Finance costs (2,485) - (2,485)
------------------------------ ----- ---------- ------------ ---------
Profit on ordinary activities
before taxation 41,548 (12,179) 29,369
Taxation 7,267 2,251 9,518
------------------------------ ----- ---------- ------------ ---------
Profit/(loss) for the period
attributable to the owners
of the parent 48,815 (9,928) 38,887
------------------------------ ----- ---------- ------------ ---------
Earnings per share (cents)
Basic 5 32.1 25.5
Diluted 5 30.0 23.9
------------------------------ ----- ---------- ------------ ---------
Unaudited consolidated statement of comprehensive income
For the 26 weeks ended 3 October 2021 (26 weeks ended 4 October
2020)
(Audited)
26 weeks 52 weeks
to to
26 weeks
3 October to 4 April
4 October
2021 2020 2021
$'000 $'000 $'000
-------------------------------------------------- ------------- ------------- ----------
Profit for the period 17,186 15,437 38,887
Items that will not be reclassified subsequently
to profit or loss :
Actuarial gain/(loss) on defined benefit
pension schemes 456 (148) (1,121)
Tax relating to items that will not be
reclassified (33) 359 544
-------------------------------------------------- ------------- ------------- ----------
423 211 (577)
Items that may be reclassified subsequently
to profit or loss :
(Loss)/gain arising on cash flow hedges
during the period (106) 2,067 1,895
Share of other comprehensive income of
associates and joint ventures accounted
for using the equity method 8 - 37
Exchange (loss)/gain on translation of
foreign operations (1,681) 2,705 3,128
Tax relating to items that may be reclassified 25 (65) 316
-------------------------------------------------- ------------- ------------- ----------
(1,754) 4,707 5,376
Other comprehensive (expense)/income for
the period (1,331) 4,918 4,799
Total comprehensive income for the period 15,855 20,355 43,686
-------------------------------------------------- ------------- ------------- ----------
Unaudited consolidated statement of financial position
As at 3 October 2021 (4 October (Audited)
2020)
3 October 4 October 4 April
2020
Note 2021 $'000 2021
$'000 $'000
---------------------------------- ------ ----------- ----------- ----------
Non-current assets
Goodwill 64,560 26,767 65,558
Other intangible assets 35,122 13,842 39,570
Property, plant and equipment 33,547 22,577 32,394
Right of use assets 16,461 9,381 17,961
Investments in associates 959 637 866
Other receivables 1,201 4,590 4,451
Deferred tax assets 23,684 12,158 21,967
---------------------------------- ------ ----------- ----------- ----------
175,534 89,952 182,767
---------------------------------- ------ ----------- ----------- ----------
Current assets
Inventories 96,883 66,878 76,886
Trade receivables 111,312 70,655 100,305
Other receivables 13, 803 9,158 10,313
Current tax assets 2,233 1,908 2,817
Derivative financial instruments 480 379 411
Cash and bank balances 8 21,698 34,229 36,551
---------------------------------- ------ ----------- ----------- ----------
246,409 183,207 227,283
---------------------------------- ------ ----------- ----------- ----------
Total assets 421,943 273,159 410,050
---------------------------------- ------ ----------- ----------- ----------
Current liabilities
Borrowings 8 4,374 2,198 9,556
Lease liabilities 3,796 3,648 4,567
Trade payables 87,179 47,914 72,137
Other payables 49,465 42,211 56,393
Current tax liabilities 9, 813 9,193 9,520
Retirement benefit obligation 1,090 1,038 1,110
Provisions 1,761 929 1,801
Derivative financial instruments 205 170 38
157,683 107,301 155,122
---------------------------------- ------ ----------- ----------- ----------
Net current assets 88,726 75,906 72,161
---------------------------------- ------ ----------- ----------- ----------
Non-current liabilities
Borrowings 8 39,114 - 34,238
Non-current lease liabilities 14,479 8,040 15,454
Other payables 3, 666 1,435 9,084
Deferred tax liabilities 7, 473 3,032 7,845
Retirement benefit obligation 3,030 2,323 4,099
Provisions 154 293 288
67,916 15,123 71,008
---------------------------------- ------ ----------- ----------- ----------
Total liabilities 225,599 122,424 226,130
---------------------------------- ------ ----------- ----------- ----------
Net assets 196,344 150,735 183,920
---------------------------------- ------ ----------- ----------- ----------
Equity attributable to owners of
the parent
Share capital 6 62,544 60,322 61,969
Share premium account 60,856 46,414 60,856
Non-distributable reserve 2,455 2,455 2,455
( 5,884
Hedging and translation reserve ) (4,799) (4,130)
Own shares 7 (1,836) (590) (3,257)
Retained earnings 78,209 46,933 66,027
---------------------------------- ------ ----------- ----------- ----------
Total equity 196,344 150,735 183,920
---------------------------------- ------ ----------- ----------- ----------
Unaudited Consolidated Statement of Changes in Equity
For the 26 weeks ended 3 October 2021 (26 weeks ended 4 October
2020)
Non-distribut-able Hedging
reserves and Retained
Share premium translation earnings/ Total
Share capital account reserve Own shares (losses) equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------------- ------------- ------------- ------------------ ------------ ---------- ---------- -------
Balance 5 April 2020 60,189 46,414 2,455 (9,506) (1,024) 32,004 130,532
Profit for the period
attributable to the
owners of the parent - - - - - 15,437 15,437
Other comprehensive
income for the
period - - - 4,707 - 211 4,918
--------------------- ------------- ------------- ------------------ ------------ ---------- ---------- -------
Total comprehensive
income for the
period - - - 4,707 - 15,648 20,355
Exercise of deferred
bonus shares 133 - - - - (133) -
Own shares
sold/(utilised)
in the period - - - - 434 (1,912) (1,478)
Dividend - - - - - (3,791) (3,791)
Reserve entry for
share option charges - - - - - 2,911 2,911
Tax effect of share
options - - - - - 2,206 2,206
Balance at 4 October
2020 60,322 46,414 2,455 (4,799) (590) 46,933 150,735
--------------------- ------------- ------------- ------------------ ------------ ---------- ---------- -------
Balance 4 April 2021 61,969 60,856 2,455 (4,130) (3,257) 66,027 183,920
Profit for the period
attributable to the
owners of the parent - - - - - 17,186 17,186
Other comprehensive
(expense)/ income
for the period - - - (1,754) - 423 (1,331)
--------------------- ------------- ------------- ------------------ ------------ ---------- ---------- -------
Total comprehensive
(expense)/ income
for the period - - - (1,754) - 17,609 15,855
Shares issued 575 - - - - - 575
Own shares
sold/(utilised) ( 3,381
in the period - - - - 3,381 ) -
Own shares purchased (1, 960
in the period - - - - (1,960) - )
Dividend - - - - - (4,728) (4,728)
Reserve entry for
share option charges - - - - - 2, 245 2, 245
Tax effect of share
options - - - - - 437 437
Balance at 3 October ( 5,884
2021 62,544 60,856 2,455 ) (1,836) 78,209 196,344
--------------------- ------------- ------------- ------------------ ------------ ---------- ---------- -------
Unaudited consolidated statement of cash flows
For the 26 weeks ended 3 October 2021 (26 weeks ended 4 October
2020)
(Audited)
26 weeks 52 weeks
to to
26 weeks
3 October to 4 April
Notes 4 October
2021 2020 2021
$'000 $'000 $'000
------------------------------------------- ------- ------------- ------------- ----------
Profit for the period 17,186 15,437 38,887
Adjustments for:
Finance income ( 153 ) (155) (310)
Finance costs 2,069 720 2,485
Income tax expense/(credit) 2,170 (1,059) (9,518)
Share of net profit from associates ( 84 ) (637) (827)
Depreciation of property, plant and
equipment 2,976 1,863 4,613
Depreciation of right-of-use asset 1, 507 1,540 3,172
Amortisation of intangible assets 5,059 2,311 5,304
Loss on disposal of property, plant
and equipment 25 47 135
Share option charge 2,544 4,048 6,629
Forgiveness of PPP loan 3 (2,584) - -
Fair value adjustment to derivatives - - (225)
Decrease in provisions ( 752 ) (643) (293)
------------------------------------------- ------- ------------- ------------- ----------
Operating cash flow before movements
in working capital 29,963 23,472 50,052
( 20,440
Increase in inventories ) (7,506) (12,240)
(13, 421
Increase in receivables ) (13,720) (16,996)
Increase in payables 15,121 10,178 21,626
( 18,740
Movement in working capital ) (11,048) (7,610)
Cash generated by operations 11,223 12,424 42,442
------------- ------------- ----------
Cash generated by operations before
adjusting items 11,812 12,614 42,809
Cash utilised by adjusting items ( 589 ) (190) (367)
------------- ------------- ----------
( 3,039
Taxation paid ) (1,796) (3,116)
Interest paid ( 873 ) (191) (631)
------------------------------------------- ------- ------------- ------------- ----------
Net cash generated from operating
activities 7,311 10,437 38,695
------------------------------------------- ------- ------------- ------------- ----------
Cash flow from investing activities
Interest received 18 12 30
Acquisition of businesses, net of
cash acquired - - (40,927)
Contingent consideration for businesses ( 10,777
acquired ) (1,142) (1,281)
Proceeds on disposal of property,
plant and equipment 28 108 378
Purchases of property, plant and ( 3,918
equipment ) (2,518) (7,685)
( 1,005
Purchases of intangible assets ) (76) (132)
Proceeds from the repayment of preference
shares 20 25 50
( 15,634
Net cash used in investing activities ) (3,591) (49,567)
------------------------------------------- ------- ------------- ------------- ----------
Cash flow before financing activities (8,323) 6,846 (10,872)
------------- ------------- ----------
Cash (used)/generated before adjusting
items ( 7, 734) 7,036 (10,505)
Cash utilised in respect of adjusting
items ( 589 ) (190) (367)
------------- ------------- ----------
Unaudited consolidated statement of cash flows (continued)
For the 26 weeks ended 3 October 2021 (26 weeks ended 4 October
2020)
(Audited)
26 weeks 52 weeks
to to
3 October 26 weeks to 4 April
Notes 4 October
2021 2020 2021
$'000 $'000 $'000
Cash flow before financing activities (8,323) 6,846 (10,872)
Cash flow from financing activities
( 4,728
Dividend paid ) (3,791) (6,016)
Net purchase of shares for share ( 2,039
schemes ) (1,552) (9,046)
New bank loan raised 8,185 - 37,219
Other loans - 2,584 -
( 2,867
Repayment of borrowings ) (43) (3,143)
(Outflow)/inflow from factoring (2,929) - 469
Refinancing costs paid (142) - (1,143)
Interest element of lease payments ( 286 ) (315) (684)
(1, 853
Payment of lease liabilities ) (1,948) (3,681)
Receipt from lease debtor 264 267 538
Net cash (used in)/generated from ( 6,395
financing activities 8 ) (4,798) 14,513
---------------------------------------- ------- ------------- ------------- ----------
Net (decrease)/increase in cash
and cash equivalents (14,718) 2,048 3,641
Cash and cash equivalents at beginning
of period 8 36,551 31,649 31,649
Effect of foreign exchange rate
changes (135) 532 1,261
---------------------------------------- ------- ------------- ------------- ----------
Cash and cash equivalents at end
of period 8 21,698 34,229 36,551
---------------------------------------- ------- ------------- ------------- ----------
Notes to the Interim Statements
1. Basis of preparation
These interim financial statements have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the AIM Rules for Companies'. The
condensed consolidated interim financial information should be read
in conjunction with the annual financial statements for the 52
weeks ended 4 April 2021, which were prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006.
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 3 October 2021 ('H1 FY2022') and the 26 weeks
ended 4 October 2020 ('H1 FY2021') has not been reviewed by the
auditors. The financial information for the 52 weeks ended 4 April
2021 ('FY 2021' ) is extracted and abridged from the Group's full
accounts for that year. The statutory accounts for FY2021 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 Directors confirm that, to the best of their knowledge, the
interim financial statements have been prepared in accordance with
UK adopted IAS 34 'Interim Financial Reporting' and the AIM Rules
for Companies, and that the interim report includes a fair review
of the information required. The interim report was approved by the
Board of Directors on 10 November 2021.
This interim report can be downloaded or viewed via the Group's
website at www.volex.com . Copies of the annual report for the 52
weeks ended 4 April 2021 are available at the Company's registered
office at Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ, and can also be downloaded or viewed via the
Group's website.
As at 3 October 2021 the Group had net debt of $40.1 million
with undrawn committed borrowing available under its revolving
credit facility of $59.9m (FY2021: $37.3m). In September 2021 the
Group activated the $30m accordion feature on the facility.
The Group's forecast and projections, taking reasonable account
of possible changes in trading performance and the cash outflow
associated with the acquisitions of Irvine Electronics, Inc,
Prodamex SA de CV and Terminal & Cable TC Inc show that the
Group should continue to operate with sufficient headroom under the
revolving credit facility for the foreseeable future. The Directors
believe that the Group is well placed to manage its business within
the available facilities. Accordingly, they continue to adopt the
going concern basis in preparing these condensed financial
statements.
These condensed financial statements have also been prepared
using accounting policies consistent with those disclosed in the
annual report and accounts for the year ended 4 April 2021, which
were prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006.
Impact of standards issued but not yet applied by the Group
There are no new standards, amendments to standards or
interpretations that are expected to have a material impact on the
Group's results.
2. Business and geographical segments
Business segments
The internal reporting provided to the Executive members of the
Company's Board and the Chief Operating Officer for the purpose of
resource allocation and assessment of Group performance is based
upon the regional performance of where the customer is based and
the products are delivered to. In addition to the operating
divisions, a Central division exists to capture all of the
corporate costs incurred in supporting the operations.
Unallocated central costs represent corporate costs that are not
directly attributable to the manufacture and sale of the Group's
products but which support the Group in its operations. Included
within this division are the costs incurred by the executive
management team and the corporate head office.
The following is an analysis of the Group's revenues and results
by reportable segment.
26 weeks to 3 October RESTATED(1)
2021
26 weeks to 4 October
2020
--------------------------------------- ------------------------- -------------------------
Revenue Profit/(loss) Revenue Profit/(loss)
$'000 $'000 $'000 $'000
--------------------------------------- --------- -------------- --------- --------------
North America 121,150 9,893 92,929 9,804
Asia 70,687 5,145 64,627 7,066
Europe 100,911 15, 240 44,909 6,826
Unallocated central costs (excluding ( 3,028 (2, 888
share-based payments) ) )
--------------------------------------- --------- -------------- --------- --------------
Divisional results before share-based
payments and adjusting items 292,748 27,250 202,465 20,808
( 3,518 (2, 454
Adjusting items ) )
( 2,544 ( 4,048
Share-based payments ) )
--------------------------------------- --------- -------------- --------- --------------
Operating profit 21,188 14,306
Share of net profit from associates 84 637
Finance income 153 155
( 2,069
Finance costs ) ( 720 )
--------------------------------------- --------- -------------- --------- --------------
Profit before tax 19,356 14,378
Tax (2,170) 1, 059
--------------------------------------- --------- -------------- --------- --------------
Profit after tax 17,186 15,437
--------------------------------------- --------- -------------- --------- --------------
(1) Restatement: the prior year amounts have been restated to be
consistent with the current year presentation and segments which
were used in the FY2021 Annual report.
2. Business and geographical segments (continued)
52 weeks to 4 April
2021
---------------------------------------------- -------- ------------------------
Revenue Profit/(loss)
$'000 $'000
---------------------------------------------- --- --- -------- --------------
North America 203,102 19,808
Asia 133,750 14, 128
Europe 106,461 15,432
Unallocated central costs (excluding share-based ( 6,472
payments) - )
-------------------------------------------------------- -------- --------------
Divisional results before share-based
payments and Adjusting items 443,313 42,896
(5, 550
Adjusting items )
( 6,629
Share-based payments )
-------------------------------------------------------- -------- --------------
Operating profit 30,717
Share of profit result from
associates 827
Finance income 310
( 2,485
Finance costs )
-------------------------------------------------------- -------- --------------
Profit before tax 29,369
Tax 9,518
-------------------------------------------------------- -------- --------------
Profit after tax 38,887
-------------------------------------------------------- -------- --------------
The accounting policies of the reportable segments are in
accordance with the Group's accounting policies.
The adjusting items charge within operating profit for the
period of $ 3,518,000 (H1 FY2021: $ 2,454,000, FY2021 : $5, 550
,000) was split credit $391,000 (H1 FY2021: $1,179,000, FY2021:
$2,277 ,000) to North America, $3,909,000 (H1 FY2021: $1,275,000,
FY2021: $3,431 ,000) to Europe, $nil (H1 FY2021: $nil, FY2021:
credit $158,000) to Asia. No adjusting items were allocated to
central .
Other segmental information
The Group's revenue from external customers and information
about its non-current assets (excluding deferred tax assets) by
geographical location are provided below:
External revenue Non-current assets
(excluding deferred tax assets)
----------------------------------------- -----------------------------------------
26 weeks RESTATED(1) (Audited) 26 weeks 26 weeks (Audited)
to to
to 26 weeks 52 weeks 3 October 4 October 52 weeks
to to to
3 October 4 October 4 April 2021 2020 4 April
2021 2020 2021 $'000 $'000 2021
$'000 $'000 $'000 $'000
---------- ------------- ------------- ----------- ------------- ------------- -----------
Geographical segments
North
America 121,150 92,929 203,102 20,719 24,715 23,130
Asia 70,687 64,627 133,750 26,412 22,869 25,710
Europe 100,911 44,909 106,461 104,719 30,210 111,960
292,748 202,465 443,313 151,850 77,794 160,800
---------- ------------- ------------- ----------- ------------- ------------- -----------
Revenue is attributed to countries on the basis of the
geographical location of the customer and delivery of the
product.
(1) Restatement: the prior year amounts have been restated to be
consistent with the current year presentation and segments which
were used in the FY2021 Annual report.
3. Adjusting items and share-based payments
(Audited)
26 weeks to 26 weeks to 52 weeks to
3 October 4 October 4 April
2021 2020 2021
$'000 $'000 $'000
----------------------------------------------------------- ------------- ------------- -------------
Amortisation of acquired intangibles 5,007 2,264 5,204
Acquisition costs 1,005 190 367
Adjustments to fair value of contingent consideration 90 - (158)
Pension past service costs - - 137
PPP loan forgiveness (2,584) - -
Total adjusting items 3,518 2,454 5,550
Share-based payments charge 2,544 4,048 6,629
----------------------------------------------------------- ------------- ------------- -------------
Total adjusting items and share-based payments before tax 6,062 6,502 12,179
----------------------------------------------------------- ------------- ------------- -------------
Adjusting items tax credit (1, 579 ) (1,096) (2,251)
----------------------------------------------------------- ------------- ------------- -------------
Adjusting items and share-based payments after tax 4, 483 5,406 9,928
----------------------------------------------------------- ------------- ------------- -------------
Adjusting items include costs and income that are one-off in
nature and significant (such as significant restructuring costs,
impairment charges or acquisition related costs) and the non-cash
amortisation of intangible assets recognised on acquisition.
The adjusting items and share-based payments are included under
the statutory classification appropriate to their nature but are
separately disclosed on the face of the income statement to assist
in understanding the underlying financial performance of the
Group.
Associated with the acquisitions, the Group has recognised
certain intangible assets related to customer relationships and
order backlogs. During H1 FY2022, the amortisation charge on these
intangible assets totalled $5,007,000 (FY2021 H1: $2,264,000,
FY2021: $5,204,000). The amortisation of these intangibles is
non-cash and split between DE-KA ($2,743,000), Servatron
($1,070,000), GTK ($587,000), Silcotec ($579,000) and MC
Electronics ($28,000).
Acquisition-related costs of $1,005,000 (FY2021 H1: $190,000,
FY2021: $367,000) are mainly related to the recently announced
acquisitions of Irvine Electronics, Inc., Prodamex SA de CV and
Terminal & Cable TC Inc. These costs cover legal and
professional fees associated with the transactions. In the prior
year, the Group incurred acquisition related costs of $367,000
relating to the acquisition of De-Ka Elektroteknik Sanayi ve
Ticaret Anonim irketi. These costs represented legal and
professional fees associated with the transaction.
A loss of $90,000 (FY2021 H1: $nil, FY2021: gain of $158,000)
was recognised on the remeasurement of contingent consideration
relating to completed acquisitions.
A gain of $2,584,000 was recognised on the forgiveness of PPP
loans provided to parts of the Group's North America's operations.
These loans were provided at the start of the pandemic and were
previously recognised as a financial liability within current
borrowings in the FY2021 balance sheet. Upon receipt of
notification of forgiveness of the debts during the current period,
a gain on extinguishment of the debt has been recognised as an
adjusting item within other income in accordance with applicable
accounting standards.
In 2019, the Group recognised a pension past service cost of
$480,000 in adjusting items as a result of Guaranteed Minimum
Pension (GMP) equalisation following a legal judgement requiring
all pension schemes to conduct an equalisation of male and female
members' benefits for the effect of unequal GMPs. The additional
cost of $137,000 in FY2021 arose as a result of a further legal
judgement which confirmed there was also an obligation to pay
additional amounts where certain past transfer payments had not
been equalised for the effects of GMPs.
4. Tax charge
The Group incurred a tax charge of $2,170,000 (H1 FY2021: tax
credit of $1,059,000), representing an effective tax rate of 11.2%
(H1 FY2021: -7.4%). The underlying tax charge of $3,749,000 (H1
FY2021: $37,000) represents an effective tax rate of 14.7% (H1
FY2021: 0.2%). The underlying current tax charge is calculated by
reference to the taxable profits in each individual entity and the
local statutory tax rates. An underlying deferred tax credit of
$1,411,000 (H1 FY2021: $2,866,000) arose due to an increase in the
net deferred tax asset recognised.
The Group operates in a number of different tax jurisdictions
and is subject to periodic tax audits by local authorities in the
normal course of business on a range of tax matters in relation to
corporate tax and transfer pricing. As at 3 October 2021, the Group
has net current tax liabilities of $7,580,000 (FY2021: $6,703,000)
which include $7,250,000 (FY2021: $7,855,000) of provisions for tax
uncertainties.
The carrying amount of deferred tax assets is reviewed at each
reporting date and recognised to the extent that it is probable
that there are sufficient taxable profits to allow all or part to
be recovered. Deferred tax assets have been recognised based on
future forecast taxable profits. As at the reporting date the Group
has recognised deferred tax assets of $23,684,000 (FY2021:
$21,967,000) and deferred tax liabilities of $7,473,000 (FY2021:
$7,845,000).
Before offset for financial reporting purposes, a deferred tax
asset of $10,574,000 (FY2021: $8,604,000) is in relation to tax
losses, $8,094,000 (FY2021: $7,806,000) to short term timing
differences, $658,000 to accelerated tax depreciation (FY2021:
$601,000) and $4,664,000 (FY2021: $5,565,000) relates to
share-based payments. A deferred tax liability of $1,328,000
(FY2021: $1,125,000) relates to the unremitted earnings of overseas
subsidiaries and $6,451,000 (FY2021: $7,329,000) relates to
intangible assets.
5. Earnings per ordinary share
The calculations of the earnings per share are based on the
following data:
(Audited)
26 weeks 26 weeks 52 weeks
to to to
3 October 4 October 4 April
Earnings 2021 2020 2021
$'000 $'000 $'000
------------------------------------------- -------------------- -------------------- -----------
Earnings for the purpose of basic earnings
per share 17,186 15,437 38,887
Adjustments for:
Adjusting items 3,518 2,454 5,550
Share-based payments charge 2,544 4,048 6,629
Tax effect of above adjustments and other (1, 579
adjusting item tax movements ) (1,096) (2,251)
------------------------------------------- -------------------- -------------------- -----------
Underlying earnings 21,669 20,843 48,815
------------------------------------------- -------------------- -------------------- -----------
Weighted average number of ordinary shares No. shares No. shares No. shares
------------------------------------------- -------------------- -------------------- -----------
Weighted average number of ordinary shares
for the purpose of basic earnings per
share 156,562,086 151,816,604 152,230,980
Effect of dilutive potential ordinary
shares - share options 9,649,535 10,370,884 10,288,152
------------------------------------------- -------------------- -------------------- -----------
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share 166,211,621 162,187,488 162,519,132
------------------------------------------- -------------------- -------------------- -----------
Basic earnings per share Cents Cents Cents
------------------------------------------- ------ ------ ------
Basic earnings per share from continuing
operations 11.0 10.2 25.5
Adjustments for:
Adjusting items 2.2 1.6 3.7
Share-based payments charge 1.6 2.6 4.4
Tax effect of above adjustments and other
adjusting items tax movements (1.0) (0.7) (1.5)
------------------------------------------- ------ ------ ------
Underlying basic earnings per share 13. 8 13.7 32.1
------------------------------------------- ------ ------ ------
Diluted earnings per share Cents Cents Cents
------------------------------------------- ------ ------ ------
Diluted earnings per share 10.3 9.5 23.9
Adjustments for:
Adjusting items 2.1 1.5 3.4
Share-based payments charge 1.5 2.6 4.1
Tax effect of above adjustments and other
adjusting items tax movements (0.9) (0.7) (1.4)
------------------------------------------- ------ ------ ------
Underlying diluted earnings per share 13.0 12.9 30.0
------------------------------------------- ------ ------ ------
The underlying earnings per share has been calculated on the
basis of continuing activities before adjusting 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.
6. Share capital
(Audited)
26 weeks 26 weeks to 52 weeks
to to
3 October 4 October 4 April
2021 2020
$'000 $'000 2021
$'000
------------------------------------ ------------- ------------- ----------
Issued and fully paid:
158,718,709 (FY2021: 157,052,041)
Ordinary shares of 25p each 62,544 60,322 61,969
------------------------------------ ------------- ------------- ----------
On 16 July 2021, the Group issued 1,666,668 shares to satisfy
the vesting of the share awards granted to the senior employees
and/or former owners of Servatron and GTK.
7. Own shares
(Audited)
26 weeks 52 weeks
to to
3 October 26 weeks to 4 April
2021
$'000 4 October 2021
2020
$'000 $'000
--------------------------------------- ------------- ------------- ----------
At the start of the period 3,257 1,024 1,024
--------------------------------------- ------------- ------------- ----------
Disposed of in the period on exercise ( 3,381
of options ) (434) (1,726)
Purchase of shares 1,960 - 3,959
--------------------------------------- ------------- ------------- ----------
At end of the period 1,836 590 3,257
--------------------------------------- ------------- ------------- ----------
The own shares reserve represents the cost of shares in the
Company held by the Volex Group plc Employee Share Trust ('EBT') to
satisfy future share option exercises under the Group's share
option schemes.
During H1 FY2022 the EBT purchased 300,000 shares at a cost of
$1,350,000 and subscribed to 1,666,668 ordinary shares. During the
period 1,897,407 shares were utilised on the exercise of share
awards. The number of ordinary shares held by the Volex Group plc
Employee Share Trust at 3 October 2021 was 1,000,838 (H1 FY2021:
206,576, FY2021: 931,577).
8. Analysis of net debt
Other
4 April New Cash Exchange movement $'000 non-cash changes 3 October
2021 leases flow $'000 2021
$'000 $'000 $'000 $'000
------------------------- --------- --------- --------- ------------------------- ------------------ -----------
Cash & cash equivalents 36,551 - (14,718) (135) - 21,698
Bank loans (38,131) - (5,318) 180 2,584 (40,685)
Factoring (6,736) - 2, 929 21 - (3,786)
Debt issue costs 1,073 - 142 (18) ( 214 ) 983
Lease liability (20,021) ( 270 ) 2, 139 163 ( 286 ) (18,275)
------------------------- --------- --------- --------- ------------------------- ------------------ -----------
Net debt (27,264) ( 270 ) (14,826) 211 2,084 (40,065)
------------------------- --------- --------- --------- ------------------------- ------------------ -----------
3 October 2021 4 October 2020 4 April
$'000 $'000 2021
$'000
--------------------------- --------------- --------------- --------
Cash and bank balances 21,698 34,229 36,551
Overdrafts - - -
Cash and cash equivalents 21,698 34,229 36,551
--------------------------- --------------- --------------- --------
The carrying amount of the Group's financial assets and
liabilities is considered to be equivalent to their fair value.
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.
The Group has a 26.09% interest in Kepler SignalTek Limited,
which is accounted for as an associate. During the period the Group
accrued financial income of $103,000 on the preference shares (H1
FY2021: $97,000, FY2021: $195,000). The balance due from the
associate as at the period end date was $2,197,000 (H1 FY2021:
$2,055,000, FY2021: $2,121,000).
The Group also has a 43% interest in Volex-Jem Co. Ltd. During
the current and prior period, no transactions have occurred between
the Group and Volex-Jem Co. Ltd or Volex - Jem Cable Precision
(Dongguan) Co. Limited, an entity controlled by Volex-Jem Co. Ltd.
The balance due to the associates as at the period end was $81,000
(H1 FY2021: $81,000, FY2021: $81,000).
A number of share transactions with Directors have occurred
during the period in line with share awards outstanding at the
prior year end and as disclosed in the annual accounts for FY2021
and in line with the Director shareholding notices disclosed on the
Volex website ( www.volex.com ).
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 advisers,
full compliance with all customs, duty and sales tax regulations
cannot be guaranteed.
Through the normal course of business, the Group provides
manufacturing warranties to its customers and assurances that its
products meet the required safety and testing standards. When the
Group is notified that there is a fault with one of its products,
the Group will provide a rigorous review of the defective product
and its associated manufacturing process and, if found at fault and
contractually liable, will provide for costs associated with recall
and repair as well as rectify the manufacturing process or seek
recompense from its supplier. The Group holds a provision to cover
potential costs of recall or warranty claims for products which are
in the field but where a specific issue has not been reported.
11. Events after the balance sheet date
On 26 August 2021 the Company announced the proposed acquisition
of the entire issued share capital of Irvine Electronics, Inc.
("Irvine") for a total consideration of $16.4 million, on a
debt-free basis. The acquisition completed on 29 October 2021
subsequent to the period end.
On 8 October 2021 the Company announced the proposed acquisition
of the entire issued share capital of Prodamex SA de CV
("Prodamex") and Terminal & Cable TC Inc. ("TC") for a total
consideration of CAD$22.5 million, on a debt-free basis. The
acquisition is expected to complete in Q3 FY2022 subject to
customary closing conditions including regulatory approvals in
Canada.
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END
IR EANFEFENFFFA
(END) Dow Jones Newswires
November 11, 2021 02:00 ET (07:00 GMT)
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