Final Results

Volex Group PLC 11 June 2007 11 June 2007 VOLEX GROUP plc Preliminary Announcement of the Group Results for the Financial Year ended 1 April 2007 Volex Group plc, the global electrical and electronic cable assemblies group, today announces its preliminary results for the financial year ended 1 April 2007. Financial highlights: • Operating profit (before major restructuring programme charge of £2.0m) increased by 75% to £9.3m (2006: £5.3m). (1) • Sales decreased by 0.7% to £248.7m (2006: £250.4m), although in local currency terms, sales increased by 3.3%. • Cash generated by operations: Before major restructuring programme was £10.7m (2006: £13.2m) After major restructuring programme was £6.6m (2006: £11.7m). • Earnings per share before major restructuring programme and write-off of unamortised debt issue costs was 7.7p (2006: loss per share 1.0p). • Basic earnings per share was 1.5p (2006: loss per share 18.5p). • Net borrowings at 1 April 2007 were £9.6m (2006: £13.3m) reducing gearing to 37% (2006: 51%). • Entered into a three-year US$76 million multicurrency revolving credit facility with Lloyds TSB Bank on improved terms that provide greater operational flexibility. (1) The operating profit after major restructuring programme charge of £2.0m (2006: £8.6m) was £7.3m (2006: loss £3.3m). Operational highlights: • Closed three manufacturing facilities and significantly downsized two. We have reduced our manufacturing footprint from twenty five facilities at the end of FY2005 to fifteen facilities (including two downsized sites). • 96% of direct labour is located in low cost areas. • Consolidated engineering and administrative support for Interconnect in North America into a single location. • Focused on high growth and margin businesses that are technology based. • Expanded engineering and sales resources in advanced interconnect technologies. The Chairman of Volex, Richard Arkle, commented: 'I am confident that the Group's comprehensive restructuring programme is ahead of plan. The benefits from the cost reductions will be further realised in the coming year as the productivity and efficiency increases in the new facilities and the full year impact is reflected in the results. I believe that the Group is on track in the execution of its strategy to deliver growth through new technologies and products. The Group is positive on the outlook for the next financial year for each of its businesses. Growth in Power Products continues to be driven by new and innovative applications such as the Apple iPhone and Nintendo Wii. Interconnect is leveraging its global position to gain market share and further expand into higher margin products. In particular, the Company is excited about Interconnect's growth in India driven by the investment in wireless infrastructure. Wiring Harness looks encouraging due to the strong growth prospects of the UK Defence Market and having recently secured a long-term contract with Rolls-Royce.' Ends Volex will host an analysts' meeting today at 9.30 am at the offices of Evolution Securities Limited, 100 Wood Street, London EC2V 7AN. For further information, please contact: Volex Group plc Today: 020 7067 0700 Thereafter: 01925 830101 Richard Arkle, Chairman Heejae Chae, Group Chief Executive Ian Degnan, Group Finance Director Weber Shandwick Financial 020 7067 0700 Chris Lynch / Nick Dibden VOLEX GROUP plc Preliminary Announcement of the Group Results for the Financial Year ended 1 April 2007 CHAIRMAN'S STATEMENT I am pleased to report another significant year for the Group. During the financial year ended 2007, Volex completed the financial phase of the restructuring programme and it is now in the final stage of its operational turnaround. We have made significant progress to date and are excited at the direction that the Group is moving. Specifically, we have accomplished the following: Financial • Entered into a three-year US$76 million multicurrency revolving credit facility with Lloyds TSB Bank on improved terms that provide greater operational flexibility. • Generated positive cash flow while funding the operational restructuring. • Continued to drive down the net debt from £13.3m to £9.6m. • Reduced our gearing to 37% and reduced our cost of borrowing. Operational • Closed three manufacturing facilities and significantly downsized two. We have reduced our manufacturing footprint from twenty-five facilities at the end of FY2005 to fifteen facilities (including two downsized sites). • 96% of direct labour is located in low cost areas. • Consolidated engineering and administrative support for Interconnect in North America into a single location. Strategic • Focused on high growth and margin businesses that are technology based. • Expanded engineering and sales resources with significant experience in advanced interconnect technologies. • Forged alliances and licensed technologies to expand our product offerings. Results The revenues for the financial year ended 1 April 2007 were down slightly by 0.7% at £248.7m although, in local currency terms, the revenue grew by 3.3%. The operating profit increased to £9.3m before the major restructuring programme charge (2006: £5.3m). In addition, net borrowings were reduced by £3.7m to £9.6m. The Group took a one off charge of £3.2m in respect of the accelerated restructuring programme relating to the Wiring Harness division; however, we generated profit of £1.2m from fixed asset disposals (principally, the sale of Butts Mill, Leigh). We consider the footprint of the business now to be appropriate for the current business level and do not anticipate any further new major restructuring activities in the coming fiscal year. People During the year we have further strengthened the Executive Team. Ian Degnan joined us as Group Finance Director in December 2006 from Exel where he served as Chief Financial Officer Europe. Additionally, Tom Aubin joined us as Director of Global Technology. He is responsible for developing and leading the implementation of the Group's Technology Roadmap and has oversight of the Group's engineering activities. Tom has over 30 years of experience in advanced interconnect technology and product development. Prior to Volex, Tom held senior management roles at Amphenol Corporation and ADC. Since joining the Group, Tom has established engineering competencies in North America and China to further our efforts in High Speed and Radio Frequency technologies. We continue to invest in new people across all regions of the Group as it continues to grow. As a global organisation, we recognise that our people are diverse in background, language and beliefs. Nevertheless, it is imperative that we are defined by a set of core values that bind us together. The Board has adopted a set of corporate values, which has been incorporated into our Social, Ethical and Environmental Policy. These values outline the fundamental expectation we hold of everyone in Volex. I wish to thank everyone in the organisation for their contribution and effort. We have an impressive and talented workforce across all disciplines, levels and regions that have demonstrated not only dedication and hard work but also an ongoing passion for the business. Outlook I am confident that the Group's comprehensive restructuring programme is ahead of plan. The benefits from the cost reductions will be further realised in the coming year as the productivity and efficiency increases in the new facilities and the full year impact is reflected in the results. The Group is on course in executing its strategy to deliver growth through new technologies and products. We have a clear understanding of our markets and have made significant progress with our key global customers. By continuing to enhance and leverage our competencies we are able to respond quickly to our customers' cable assembly needs by offering a Total Solution in terms of engineering, supply chain, assembly and components. The Group is positive on the outlook for the next financial year for each of its businesses. Growth in Power Products continues to be driven by new and innovative applications such as the Apple iPhone and Nintendo Wii. Interconnect is leveraging its global position to gain market share and further expand into higher margin products. In particular, the Company is excited about Interconnect's growth in India driven by the investment in wireless infrastructure. Wiring Harness looks encouraging due to the strong growth prospects of the UK Defence Market and having recently secured a long-term contract with Rolls-Royce. The early indications for trading in Q1 for all of our divisions are positive with order levels remaining sound. The Board of Directors and senior management collectively have a significant interest in the issued share capital of the Company. These holdings align our interests with those of our other shareholders and we remain confident that we are well placed to make further progress towards profitability and enhancing shareholder value. Richard Arkle Chairman BUSINESS REVIEW BUSINESS OVERVIEW As we complete our financial and operational restructuring, we now turn our focus to growth. The markets we serve and our customer base provide excellent opportunities for growth. Our customers are leaders in the markets they serve and are growing faster than their respective markets. Our challenge is not only to keep up with their growth but also to gain market share on the accounts. We aim to gain market share not only with the current product lines but also by expanding our product portfolio to address the full interconnect needs of our customers. Our Markets Our largest market segment is the consumer product sector, which accounts for 45% of our revenue. We participate in the sector mostly through our powercord products. Volex revenue in the consumer market grew 12.2% despite the slowdown in the US economy and the US housing market. Our focus on application specific products with leading edge customers allowed us to outperform the sector and offset declines in personal computers and the DIY tool market. We expect our growth to continue as our customers develop latest 'must have' products such as Apple iPhone and Nintendo Wii. The importance of time to market and high quality requirements of these products provide Volex with a competitive advantage as we leverage our global scale and engineering excellence. The Group's second largest market is Data and Telecommunications. The sector covers a wide range of technology areas, which continue to broaden as multimedia constantly redefines means of communication. The current trend is driven by 'Triple Play', the convergence of voice, video and data through a single network. The landscape shifts constantly as the OEMs try to position themselves in the new dynamics through mergers and acquisitions. These companies view consolidation of the supply chain as a major source of cost saving, and with our global footprint, low cost, and technology scope, we meet the criteria as they seek to leverage their economies of scale. The Triple Play also impacts the technology requirement for interconnect product with higher speed capability. The High Speed interconnect technology is nascent and evolving. Through alliances and technology licences, we have positioned ourselves as the leader in the field. Another market that will contribute to our growth is India, specifically with respect to the wireless sector. India is currently adding six million mobile phone subscribers per month. The wireless networks are running at 97% capacity and every operator has announced plans for investment. Bharat Sanchar Nigam Ltd, known as BSNL, the public sector telecommunications provider in India, recently awarded a US$5 billion contract to Ericsson and Nokia. As the tender process mandates that 30% of the products must be produced in India, the need for localised suppliers is urgent. Volex has been in India since 1997 and is a global supplier to both Ericsson and Nokia. The global medical equipment market increased by 5% last year and continues to offer a strong growth market for Volex. Our customers have market leading positions and our Preferred Supplier status with them places us in a strong position to benefit from their growth. Our capability in the medical sector was recognised by Royal Philips who awarded Volex 'Breakthrough Supplier' of the year for our engineering involvement in early stages of development. Volex participates in the industrial and defence/aerospace sectors through the Wiring Harness division. The defence/aerospace sector is growing rapidly given the current geopolitical environment. Nevertheless, the barrier to entry into the defence market is high given the approval and accreditation process of the OEMs and Ministry of Defence ('MOD'). We are currently working towards upgrading our classification from DEFCON 659 for MOD works to 'List X', which will expand our opportunities in the defence market. We define the industrial sector to include off highway equipment, speciality vehicles, automation and factory equipment. The industrial sector offers attractive opportunities due to the industrial growth in developing countries such as China and India. As a result of the complexity of the harnesses and platform cycles of the equipment and vehicles, the revenue horizon is longer and more stable than other parts of the Group. Strategy We believe that the current market dynamics dictate that we must drive towards becoming a Total Interconnect Solution Provider, providing a one stop solution to our customers. We are ideally positioned to achieve this due to our 'Preferred Supplier' status with leading OEMs and our global footprint. Our product portfolio currently accounts for only a small percentage of the interconnect and cable assembly spend for most of our customers. Our strategy is to engage our customers on all four levels of the value proposition: engineering; supply chain; manufacturing; and components. Significant efforts have already been made to expand our competencies beyond the current level of assembly. We are engaging and controlling the engineering and supply chain levels as the component definition and the assembly process are determined at those levels of engagement. Our involvement in component definition at the engineering level will allow us to control our material content towards Volex suppliers. We are leveraging Volex's own preferred vendor network in low cost areas to offer our customers alternatives to their current component suppliers. Through the Volex brand, we assure the customers that the components meet the world-class quality and service that they have come to expect from us for the past century. Furthermore, we will influence the interconnect component decisions beyond our product portfolio and thus expand the addressable market. Our challenge and opportunity is to expand our product portfolio in order to leverage through our channel to market through development, acquisitions and alliances. Power Products: Volex Power Products is the global market leader in powercords, growing at an average of 8% per year for the last three years. Despite its growth, it has been challenged with aggressive competitors who compete against us solely on price. While the value proposition of quality, reliability and service of Volex is recognised by the market, there are certain segments such as personal computers where price is the main differentiator. Our strategy is to address broad market segments on a global basis and to drive our supply chain to achieve the lowest cost without compromising quality, reliability and service. We recognise that we must face our competition at all levels and we believe that we have the scale and the purchasing power that will enable us to offer the lowest competitive cost. Furthermore, Power Product's leadership and eminence in the market and with its customers provide a valuable entry to other interconnect and cable assembly products. Interconnect: Our strategy in Interconnect has been to reposition into higher growth and margin businesses that are technology based. We are leveraging our strong positions at cutting edge technology customers to enter the High Speed, Radio Frequency and Fibre segment of Interconnect. Our recent expansion of engineering resources with significant experience in advanced interconnect technologies gives us the appropriate competence to address the customers' development needs. We are also forging alliances and licensing technologies to provide the full range of product needs of our customers. We recently entered into an agreement with Leoni Special Cables, the world's leading cable manufacturer, for collaboration on High Speed products, specifically on newly developed Serial Attached SCSI (SAS 1.1) and Serial ATA (SATA) cable and connector systems. We have also acquired licensed rights from Molex Inc. to use the patented SAS/SATA High Speed connector technology and Volex will be producing these products under the Volex brand. In addition, we have launched Volex Radio Frequency (RF) Connectors to address the fast growing RF connector market and expand our product offering beyond cable assemblies. As the market evolves and customer dynamics shift, we will continue to evaluate all options to better service our customers including additional alliances or acquisitions. Wiring Harness: Our strategy in Wiring Harness is to accelerate and complete the operational restructuring. We have made significant progress to date and continue to streamline our operation and consolidate our manufacturing footprint. We will exit the restructuring with a competitive cost basis and an operation that is efficient and agile, but most importantly, we will have positioned the division to attain the Group's margin goal. Our reputation, experience and customer base provide us with ample opportunities for growth. We are already approved and accredited with our defence, aerospace and automotive customers to participate beyond the current platforms. We are not faced with barriers to entry which a new supplier would need to overcome and we have achieved great success when we have engaged the customer at all four levels of value propositions. Recently, we secured a long-term contract with Rolls-Royce that significantly increases our market share. We believe similar opportunities exist with defence customers. We also see significant opportunity to leverage from our reputation in the European market to global opportunities. Although the harness opportunities are more local due to logistic and operational constraints, global customers are looking for suppliers that can service them across the world. Our global brand positions us well and we recently launched an Industrial Cable Assembly (ICA) sub-division to address the growing opportunities in Asia. Divisional Performance Power Products: Revenue increased 4.2%. The growth in sales was driven by both volume increases as well as higher average selling prices reflecting the copper price increases passed on to our customers. We continue to derive our growth from our successes with the latest innovative applications and at premium segments of the consumer market. We have grown faster than the market by focusing on new 'must have' applications and premium brand products that are less impacted by market slowdown. We did experience slowdown in more general consumer segments such as personal computers and DIY tools. During FY2007 the price of copper was particularly volatile and ranged from $5,500/t to $8,200/t with an overall increase of 27% at the year-end. Our challenge during the last year was to mitigate the volatility and speed of the copper price changes. Although copper prices declined toward the end of the year, the reduction was not sufficient to fully offset the negative impact during the year. We have continued to reduce our labour and operating costs through moving to lower labour cost areas and by improving manufacturing processes to gain efficiency. Interconnect: The revenue from Interconnect decreased 8.2% as we continued to reposition the division in higher growth and margin opportunities that are technology based. We are very excited at the current pipeline of new opportunities, and although we have begun to see the benefit during the year, the ramp-ups of new business were not sufficient to offset the continuing rationalisation of the legacy business. Furthermore, we were adversely impacted by the decline of revenue from a customer in North America who is undergoing a major restructuring. Operating margins showed a significant improvement despite lower revenue, increasing from a loss of 3.0% to a profit of 5.1%. This improvement reflects the benefits of the cost reductions we implemented over the last two years as well as rationalisation of the lower margin business and was achieved against a background of higher commodity prices. We expect that we will continue to see further benefit as the full impact of the effort during FY2007 will not be reflected until FY2008 when we expect to benefit from the growth in revenue from higher margin business. Wiring Harness: Much of the focus and resources in FY2007 were dedicated to addressing the operational challenges of the division. We restructured facilities in the UK and are in the process of transferring manufacturing to lower cost regions. We took a very selective approach to new business development in order to prioritise our resources and efforts. Revenue increased 4.4% compared to FY2006. We began to drive our sales effort towards the end of the year and have developed many exciting opportunities that will contribute as we complete our restructuring. We recently signed a long-term contract with Rolls-Royce, which significantly increases our market share with them. We commenced the final stage of our operations restructuring programme and took a charge of £3.2m related to the restructuring of the division. We also generated proceeds of £1.1m from the sale of Butts Mill, Leigh facility. FINANCIAL REVIEW Trading for the year Turnover for the 52 weeks ended 1 April 2007 was £248.7m, a decline of 0.7% over FY2006. Adverse movements in foreign currency exchange rates, particularly the US Dollar, had a negative impact of £10m. At constant exchange rates, Group turnover increased 3.3%. Sales by destination in Asia and South America grew by 18.7% to £91.4m. Sales in Other Europe declined 1.6% to £63.8m, in the UK by 2.5% to £33.7m and in North America by 19.1% to £59.8m. Sales of Power Products increased 4.2% to £123.3m and of Wiring Harnesses 4.4% to £34.1m. Sales of Interconnect products declined 8.2% to £91.3m impacted by the weak US dollar and the full year effect of the low margin business rationalisation we highlighted in FY2006. A comparison of Group sales by source of manufacturing shows a further consolidation of our manufacturing output into Asia. £122.7m or 49.4% (2006: £98.8m, 39.4%) of the Group's revenue now originates from manufacturing in Asia. Sales manufactured in North America reduced to £49.2m, representing 19.8% of total Group output (2006: £75.6m, 30.2%). Gross profit declined by 2.2% to £38.2m. Gross margins remained stable at 15% despite the impact of commodity price increases. Benefits from the restructuring programme helped to mitigate the increase in copper prices during the year, which could not be immediately passed onto customers. We estimate that the sharp increase in copper prices, which was experienced in April 2006, had a detrimental impact on the Group's results of approximately £3m, before we were able to pass the increase onto our customers. Operating profit for the period was £9.3m (2006: £5.3m) (before the major restructuring programme charge of £2.0m, (2006: £8.6m)), an increase over FY2006 of 75%. The cost of the Long-term Incentive Plan ('LTIP') introduced during the year was £0.3m. The adverse impact of foreign currency movements in the year on the results was limited to £0.2m. The return on sales for FY2007 was 3.7% (before the major restructuring programme charge), an improvement from 2.1% in FY2006. This increase demonstrates the benefit to profitability of the restructuring programme on operations. Major restructuring programme As indicated in the Chairman's statement in the interim report, an extensive restructuring programme to improve the performance of the Wiring Harness division commenced in the second half of the year. This resulted in a restructuring charge of £3.2m following the £1.1m profit on disposal of Butts Mill, Leigh realised in the first half. The operating profit after the major restructuring programme charge was £7.3m compared to a loss of £3.3m in FY2006. New banking arrangement and interest During the year, the Group entered a new three year Revolving Credit Facility for $76m with Lloyds TSB Bank plc. This enables the Group to borrow at a rate of interest based on LIBOR plus a base margin of 1% rising to a maximum margin of 2.75%. The margin at the end of FY2007 was 2.25% and the current margin has further reduced to 1.5%. Total costs incurred in the new banking facilities exercise were £1.3m and these are being amortised over 3 years. Net finance charges for the year were £4.5m including a £1.5m write-off of unamortised refinancing costs. Net bank interest for the year was £1.7m, a reduction from £2.3m for the previous year. Tax The tax charge for the year reduced to £2.0m from £2.4m in FY2006. This represents an effective rate of 69.2%, which is distorted by the charges for the major restructuring programme (£2.0m) and rebanking (£1.5m). Adjusting for these items the effective rate becomes 31.1%. In the future we expect this rate to reduce further as the Group benefits from the utilisation of tax losses from prior years. Earnings per share Basic earnings per share increased to 1.5p from a loss per share of 18.5p in FY2006. Adjusted earnings per share (after adjusting for the major restructuring programme charge of £2.0m and the refinancing charge of £1.5m) was 7.7p (2006: loss per share 1.0p). The weighted average number of shares in issue during the year was 55,941,189 (2006: 49,247,645). Balance sheet Net assets remained unchanged compared to 2 April 2006 at £26.1m. Shares issued in the year increased equity by £1.3m, mainly as a result of the contribution made by senior management as a consequence of the LTIP introduction. The translation of the Group's foreign operations resulted in a negative exchange difference of £2.8m that was taken to the translation reserve. Provisions for FY2007 reduced by £1.0m to £7.9m. The provisions were increased by the charge for the major restructuring programme of £3.2m (excluding the sale of Butts Mill, Leigh) and were reduced by cash payments and exchange movements. Cashflow Cash generated by operations was £10.7m (2006: £13.2m) before restructuring payments of £4.1m (2006: £1.5m). The reduced inflow was a result of a higher working capital requirement in trade debtors and inventory, that was partly derived from the increases in copper prices over the year which impacted selling prices to customers and inventory valuation. Net interest payments reduced to £1.8m from £2.5m in the previous year, as a result of reduced Group borrowings. Capital expenditure on fixed assets was £2.3m (2006: £2.3m). Shares issued in the year raised a further £1.3m compared with £17.6m in FY2006 from the rights issue in June 2005. During FY2007 the Group's net debt reduced to £9.6m from £13.3m at the start of the year. Apart from the cash generated in the year, there was a favourable foreign exchange impact on net debt of £1.0m and a net reduction in debt issue costs held on the balance sheet of £0.9m. The year-end gearing ratio of net debt to shareholders' funds was 37% (2006: 51%). Defined benefit pension schemes The Group's net pension liability under IAS 19 at 1 April 2007 reduced to £2.8m (2006: £3.5m) largely as a result of actuarial gains (£0.3m) on the schemes' obligations and cash contributions (£0.4m) into the schemes. Heejae Chae Ian Degnan Group Chief Executive Group Finance Director Consolidated Income Statement For the 52 weeks ended 1 April 2007 (2 April 2006) Continuing operations Note 2007 2006 £'000 £'000 ______________________________________________________________________________ Revenue 2 248,725 250,378 ______________________________________________________________________________ Operating profit/(loss) 2 7,269 (3,269) Analysed as: _______________ Operating profit before major restructuring programme 9,263 5,329 Major restructuring programme charge 3 (1,994) (8,598) _______________ Operating profit/(loss) 7,269 (3,269) Investment income 193 111 Finance costs _______________ - interest (2,287) (2,761) - amortisation of debt issue costs (896) (739) - write-off of unamortised debt issue costs 8 (1,463) - _______________ (4,646) (3,500) ______________________________________________________________________________ Profit/(loss) on ordinary activities before taxation 2,816 (6,658) Taxation 5 (1,950) (2,448) ______________________________________________________________________________ Profit/(loss) on ordinary activities after taxation, being retained profit/(loss) for the year 9 866 (9,106) _______________________________________________________________________________ Earnings/(loss) per share (pence)* Basic and diluted 6 1.5 (18.5) _______________________________________________________________________________ * The earnings/(loss) per share before the costs of the major restructuring programme and the write-off of unamortised debt issue costs for each period is shown in note 6. Consolidated statement of recognised income and expense For the 52 weeks ended 1 April 2007 (2 April 2006) 2007 2006 £'000 £'000 Exchange differences on translation of foreign operations (2,841) 1,555 Actuarial gains on defined benefit pension schemes 335 379 ______________________________________________________________________________ Net (expense)/income recognised directly in equity (2,506) 1,934 Profit/(loss) for the year 866 (9,106) ______________________________________________________________________________ Total recognised net expense for the year (1,640) (7,172) ______________________________________________________________________________ Consolidated Balance Sheet As at 1 April 2007 (2 April 2006) Note 2007 2006 £'000 £'000 Non-current assets Goodwill 1,930 1,930 Other intangible assets 82 148 Property, plant and equipment 9,191 11,515 Deferred tax asset 347 244 ______________________________________________________________________________ 11,550 13,837 ______________________________________________________________________________ Current assets Inventories 32,107 30,274 Trade and other receivables 50,866 52,825 Current tax assets 968 1,087 Cash and cash equivalents 12,235 11,646 ______________________________________________________________________________ 96,176 95,832 ______________________________________________________________________________ Total assets 107,726 109,669 ______________________________________________________________________________ Current liabilities Obligations under finance leases 56 124 Trade and other payables 44,593 42,685 Current tax liabilities 3,817 2,580 Retirement benefit obligation 378 357 Provisions 3,914 3,996 Liability for share based payments 129 95 ______________________________________________________________________________ 52,887 49,837 ______________________________________________________________________________ Net current assets 43,289 45,995 ______________________________________________________________________________ Non-current liabilities Bank overdrafts and loans 21,722 24,690 Obligations under finance leases 40 106 Deferred tax liabilities 209 537 Retirement benefit obligation 2,458 3,154 Long-term provisions 4,013 4,983 Non-equity preference shares 80 80 Liability for share based payments 258 187 _____________________________________________________________________________ 28,780 33,737 _____________________________________________________________________________ Total liabilities 81,667 83,574 _____________________________________________________________________________ Net assets 26,059 26,095 _____________________________________________________________________________ Equity attributable to equity holders of the parent Share capital 9 14,158 13,888 Share premium account 9 1,219 168 Translation reserve 9 (1,020) 1,821 Retained earnings 9 11,702 10,218 _____________________________________________________________________________ Total equity 9 26,059 26,095 _____________________________________________________________________________ Consolidated Cashflow Statement As at 1 April 2007 (2 April 2006) Note 2007 2006 £'000 £'000 _____________________________________________________________________________ Operating profit/(loss) from continuing operations 7,269 (3,269) Adjustments for: Depreciation of property, plant and equipment 2,822 3,842 Impairment of property, plant and equipment - 1,523 Amortisation of intangible assets 122 79 (Gain)/loss on disposal of property, plant and equipment (1,198) 133 Share option expense 283 350 (Decrease)/Increase in provisions (1,130) 4,411 _____________________________________________________________________________ Operating cash flows before movements in working capital 8,168 7,069 _________________ Increase in inventories (4,431) (46) (Increase)/decrease in receivables (2,318) 1,469 Increase in payables 5,219 3,216 _________________ (Increase)/decrease in working capital (1,530) 4,639 _____________________________________________________________________________ Cash generated by operations 6,638 11,708 Analysed as: __________________ Generated before major restructuring programme 10,715 13,249 Utilised by major restructuring programme (4,077) (1,541) _________________ Cash generated by operations 6,638 11,708 Income taxes paid (797) (4,359) Interest received 193 111 Interest paid (1,984) (2,639) _____________________________________________________________________________ Net cash inflow from operating activities 4,050 4,821 Cash flows from investing activities ________________ Proceeds on disposal of property, plant and equipment 1,933 29 Purchases of property, plant and equipment (2,198) (2,252) Purchases of intangible assets (70) (100) ________________ Net cash used in investing activities (335) (2,323) _____________________________________________________________________________ Net cash inflow before financing activities 3,715 2,498 Analysed as: ________________ Generated before major restructuring programme 5,893 4,039 Utilised by major restructuring programme (2,178) (1,541) ________________ Net cash inflow before financing activities 3,715 2,498 ________________ Cash flows from financing activities Proceeds on issue of shares 9 1,321 17,645 Repayment of borrowings 10 (25,519) (43,263) New bank loans 10 23,322 25,793 Debt issue costs paid 10 (1,399) (2,486) Increase/(decrease) in bank 10 30 (4,193) overdrafts Repayments of obligations under finance 10 (114) (144) leases _________________ Net cash used in financing activities (2,359) (6,648) ______________________________________________________________________________ Net increase/(decrease) in cash and cash equivalents 10 1,356 (4,150) Cash and cash equivalents at beginning of year 10 11,646 14,962 Effect of foreign exchange rate changes (767) 834 ______________________________________________________________________________ Cash and cash equivalents at end of year 10 12,235 11,646 ______________________________________________________________________________ 1. Basis of preparation The financial information has been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted for use in the EU and in accordance with those accounting policies disclosed in the Group's last published financial statements for the 52 weeks ended 2 April 2006. The information contained in this preliminary announcement for the 52 weeks ended 1 April 2007 does not constitute the statutory accounts within the meaning of section 240 of the Companies Act 1985 but has been extracted from those accounts. The statutory financial statements for the 52 weeks ended 2 April 2006 have been delivered to the Registrar of Companies for England and Wales and those for the 52 weeks ended 1 April 2007 will be delivered following the Company's Annual General Meeting. The auditors' report on those accounts was unqualified and did not contain any statements under Section 237(2) or (3) of the Companies Act 1985. Whilst the information included in this preliminary announcement has been computed in accordance with IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRS later this month. This preliminary announcement was approved by the Board of Directors on 8 June 2007. 2. Segments Business segments For management purposes, the Group is organised into three operating divisions - Power Products, Interconnect and Wiring Harness. These classifications are based upon the nature of the products that they supply. These divisions are the basis on which the Group reports its primary segment information. Revenue Operating profit/(loss) 2007 2006 2007 2006 £'000 £'000 £'000 £'000 ________________________________________________________________________________ Power Products 123,299 118,275 6,157 3,597 Interconnect 91,285 99,398 4,642 (2,966) Wiring Harness 34,141 32,705 (3,530) (3,900) ________________________________________________________________________________ Consolidated 248,725 250,378 7,269 (3,269) ________________________________________________________________________________ Investment income 193 111 Finance costs (4,646) (3,500) _____________________ Profit/(loss) before tax 2,816 (6,658) Tax (1,950) (2,448) _____________________ Profit/(loss) from continuing operations 866 (9,106) ________________________________________________________________________________ External revenue by market sector 2007 2006 £'000 £'000 ________________________________________________________________________________ Consumer Products 112,745 100,525 Data and Telecommunications 72,863 87,986 Industrial and Medical 28,233 27,845 Vehicle and Aerospace 34,884 34,022 ________________________________________________________________________________ 248,725 250,378 ________________________________________________________________________________ The 2006 comparative segmental operating loss information has been restated to reflect a more appropriate allocation of costs. Accordingly the 2006 operating profit of the Power Products division has increased by £785,000 and the operating losses of the Interconnect and Wiring Harness divisions have increased by £770,000 and £15,000 respectively. 2. Segments (continued) Geographical segments External External revenue by revenue by source destination ________________________________________________________________________________ 2007 2006 2007 2006 £'000 £'000 £'000 £'000 ________________________________________________________________________________ Asia and South America 122,772 98,761 91,417 77,033 North America 49,234 75,591 59,853 73,986 United Kingdom 34,141 32,705 33,690 34,560 Other Europe 42,578 43,321 63,765 64,799 ________________________________________________________________________________ 248,725 250,378 248,725 250,378 ________________________________________________________________________________ 3. Major restructuring programme charge ________________________________________________________________________________ 2007 2006 £'000 £'000 ________________________________________________________________________________ Global management restructuring - 1,535 Property provisions 202 3,149 Closure of manufacturing facilities 3,007 2,720 Impairment of property, plant and equipment - 1,523 Insurance claim - (329) Profit on sale of property, plant and equipment (1,215) - ________________________________________________________________________________ 1,994 8,598 ________________________________________________________________________________ During financial year 2007, restructuring of the Wiring Harness division has been announced and the movement of certain production from the United Kingdom to lower cost areas has commenced. The Group's Butts Mill site in Leigh, United Kingdom and production assets from the closed facility in Clinton, United States of America have been sold during the year. Additional onerous lease provision has been recorded against a property vacated as part of the major restructuring programme. 4. Exchange rates The principal exchange rates used in the preparation of the financial statements are: Average % change Year end % change 2007 2006 vs. £ 2007 2006 vs. £ ________________________________________________________________________________ United States dollar 1.89 1.80 (4.8) 1.96 1.75 (10.7) Euro 1.48 1.46 (1.4) 1.47 1.44 (2.0) Canadian dollar 2.15 2.15 - 2.27 2.03 (10.6) Brazilian real 4.07 4.23 3.9 4.04 3.82 (5.5) ________________________________________________________________________________ 5. Taxation 2007 2006 £'000 £'000 ________________________________________________________________________________ Current tax - charge for the year 2,240 1,865 Current tax - adjustment in respect of previous years 83 584 Deferred tax (373) (1) ________________________________________________________________________________ 1,950 2,448 ________________________________________________________________________________ 6. Earnings/(loss) per ordinary share The calculations of the earnings/(loss) per ordinary share are based on the following data: ________________________________________________________________________________ Earnings/(loss) 2007 2006 £'000 £'000 ________________________________________________________________________________ Basic earnings/(loss) 866 (9,106) Adjustments for: Major restructuring programme charge (note 3) 1,994 8,598 Write-off of unamortised debt costs (note 8) 1,463 - ________________________________________________________________________________ Adjusted earnings/(loss) 4,323 (508) ________________________________________________________________________________ Weighted average number of ordinary shares No. shares No. shares ________________________________________________________________________________ For the purpose of basic EPS 55,941,189 49,247,645 Effect of dilutive potential ordinary shares - share options and warrants 96,093 - ________________________________________________________________________________ For the purpose of diluted EPS 56,037,282 49,247,645 ________________________________________________________________________________ Basic earnings/(loss) per share Pence Pence ________________________________________________________________________________ Basic earnings/(loss) per share 1.5 (18.5) Adjustments for: Major restructuring programme charge (note 3) 3.6 17.5 Write-off of unamortised debt costs (note 8) 2.6 - ________________________________________________________________________________ Adjusted basic earnings/(loss) per share 7.7 (1.0) ________________________________________________________________________________ Diluted earnings/(loss) per share Pence Pence ________________________________________________________________________________ Diluted earnings/(loss) per share 1.5 (18.5) Adjustments for: Major restructuring programme charge (note 3) 3.6 17.5 Write-off of unamortised debt costs (note 8) 2.6 - ________________________________________________________________________________ Adjusted diluted earnings/(loss) per share 7.7 (1.0) ________________________________________________________________________________ Basic earnings/(loss) per share represents net profit/(loss) attributable to equity holders of the Company. The adjusted earnings/(loss) per share has been calculated on the basis of continuing activities before major restructuring costs and write-off of unamortised debt issue costs, net of tax. The Directors consider that this earnings/(loss) per share calculation gives a better understanding of the Group's earnings/(loss) per share in the current and prior year. As the Group recorded a loss per share in 2006, the share options were anti-dilutive and therefore there was no difference between the basic and diluted loss per share in that period. 7. Dividends The Directors do not recommend a dividend on the ordinary shares for the year (2006: £nil). 8. Bank facilities On 8 December 2006, the Group entered into a new three-year US$76 million multicurrency combined revolving, overdraft and guarantee facility. At that date, the unamortised debt issue costs of £1,463,000 associated with the previous facility were written-off in the income statement as finance costs. 9. Movements in shareholders' equity Share Share Translation Retained capital premium reserve earnings Total £'000 £'000 £'000 £'000 £'000 ________________________________________________________________________________ Balance at 3 April 2006 13,888 168 1,821 10,218 26,095 Net proceeds from issue of equity shares 270 1,051 - - 1,321 Net profit for the year - - - 866 866 Reserve entry for share option charge - - - 283 283 Actuarial gains on defined benefit pension schemes - - - 335 335 Exchange differences on translation of foreign operations - - (2,841) - (2,841) ________________________________________________________________________________ Balance at 1 April 2007 14,158 1,219 (1,020) 11,702 26,059 ________________________________________________________________________________ 10. Analysis of net debt Other 3 April Exchange non-cash 1 April 2006 Cash flow movement changes 2007 £'000 £'000 £'000 £'000 £'000 ________________________________________________________________________________ Cash at bank and in hand 11,646 1,356 (767) - 12,235 Overdraft - (30) - - (30) Debt due after one year (26,751) 2,197 1,735 - (22,819) Finance leases (230) 114 20 - (96) Debt issue costs 2,061 1,399 - (2,333) 1,127 ________________________________________________________________________________ Net debt (13,274) 5,036 988 (2,333) (9,583) ________________________________________________________________________________ Non-cash changes include amortisation and write-off of debt issue costs totalling £2,359,000 offset by a movement in debt issue costs accrual of £26,000. This information is provided by RNS The company news service from the London Stock Exchange

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