Volex Regulatory News (VLX)

11 Jun 2007 07:00

Volex Group PLC11 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 April2007. 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 aheadof plan. The benefits from the cost reductions will be further realised in thecoming year as the productivity and efficiency increases in the new facilitiesand the full year impact is reflected in the results. I believe that the Groupis on track in the execution of its strategy to deliver growth through newtechnologies and products. The Group is positive on the outlook for the next financial year for each of itsbusinesses. Growth in Power Products continues to be driven by new andinnovative applications such as the Apple iPhone and Nintendo Wii. Interconnectis leveraging its global position to gain market share and further expand intohigher margin products. In particular, the Company is excited aboutInterconnect's growth in India driven by the investment in wirelessinfrastructure. Wiring Harness looks encouraging due to the strong growthprospects of the UK Defence Market and having recently secured a long-termcontract with Rolls-Royce.' Ends Volex will host an analysts' meeting today at 9.30 am at the offices ofEvolution 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, ChairmanHeejae Chae, Group Chief ExecutiveIan Degnan, Group Finance Director Weber Shandwick Financial 020 7067 0700Chris 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 thefinancial year ended 2007, Volex completed the financial phase of therestructuring programme and it is now in the final stage of its operationalturnaround. We have made significant progress to date and are excited at thedirection that the Group is moving. Specifically, we have accomplished thefollowing: 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. ResultsThe revenues for the financial year ended 1 April 2007 were down slightly by0.7% at £248.7m although, in local currency terms, the revenue grew by 3.3%. Theoperating profit increased to £9.3m before the major restructuring programmecharge (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 acceleratedrestructuring programme relating to the Wiring Harness division; however, wegenerated profit of £1.2m from fixed asset disposals (principally, the sale ofButts Mill, Leigh). We consider the footprint of the business now to beappropriate for the current business level and do not anticipate any further newmajor restructuring activities in the coming fiscal year. PeopleDuring the year we have further strengthened the Executive Team. Ian Degnanjoined us as Group Finance Director in December 2006 from Exel where he servedas Chief Financial Officer Europe. Additionally, Tom Aubin joined us as Directorof Global Technology. He is responsible for developing and leading theimplementation of the Group's Technology Roadmap and has oversight of theGroup's engineering activities. Tom has over 30 years of experience in advancedinterconnect technology and product development. Prior to Volex, Tom held seniormanagement roles at Amphenol Corporation and ADC. Since joining the Group, Tomhas established engineering competencies in North America and China to furtherour efforts in High Speed and Radio Frequency technologies. We continue to invest in new people across all regions of the Group as itcontinues to grow. As a global organisation, we recognise that our people arediverse in background, language and beliefs. Nevertheless, it is imperative thatwe are defined by a set of core values that bind us together. The Board hasadopted a set of corporate values, which has been incorporated into our Social,Ethical and Environmental Policy. These values outline the fundamentalexpectation 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 andregions that have demonstrated not only dedication and hard work but also anongoing passion for the business. OutlookI am confident that the Group's comprehensive restructuring programme is aheadof plan. The benefits from the cost reductions will be further realised in thecoming year as the productivity and efficiency increases in the new facilitiesand the full year impact is reflected in the results. The Group is on course inexecuting its strategy to deliver growth through new technologies and products.We have a clear understanding of our markets and have made significant progresswith our key global customers. By continuing to enhance and leverage ourcompetencies we are able to respond quickly to our customers' cable assemblyneeds 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 itsbusinesses. Growth in Power Products continues to be driven by new andinnovative applications such as the Apple iPhone and Nintendo Wii. Interconnectis leveraging its global position to gain market share and further expand intohigher margin products. In particular, the Company is excited aboutInterconnect's growth in India driven by the investment in wirelessinfrastructure. Wiring Harness looks encouraging due to the strong growthprospects of the UK Defence Market and having recently secured a long-termcontract with Rolls-Royce. The early indications for trading in Q1 for all of our divisions are positivewith order levels remaining sound. The Board of Directors and senior management collectively have a significantinterest in the issued share capital of the Company. These holdings align ourinterests with those of our other shareholders and we remain confident that weare well placed to make further progress towards profitability and enhancingshareholder value. Richard ArkleChairman BUSINESS REVIEW BUSINESS OVERVIEWAs we complete our financial and operational restructuring, we now turn ourfocus to growth. The markets we serve and our customer base provide excellentopportunities for growth. Our customers are leaders in the markets they serveand are growing faster than their respective markets. Our challenge is not onlyto keep up with their growth but also to gain market share on the accounts. Weaim to gain market share not only with the current product lines but also byexpanding our product portfolio to address the full interconnect needs of ourcustomers. Our MarketsOur largest market segment is the consumer product sector, which accounts for45% of our revenue. We participate in the sector mostly through our powercordproducts. Volex revenue in the consumer market grew 12.2% despite the slowdownin the US economy and the US housing market. Our focus on application specificproducts with leading edge customers allowed us to outperform the sector andoffset declines in personal computers and the DIY tool market. We expect ourgrowth to continue as our customers develop latest "must have" products such asApple iPhone and Nintendo Wii. The importance of time to market and high qualityrequirements of these products provide Volex with a competitive advantage as weleverage our global scale and engineering excellence. The Group's second largest market is Data and Telecommunications. The sectorcovers a wide range of technology areas, which continue to broaden as multimediaconstantly redefines means of communication. The current trend is driven by"Triple Play", the convergence of voice, video and data through a singlenetwork. The landscape shifts constantly as the OEMs try to position themselvesin the new dynamics through mergers and acquisitions. These companies viewconsolidation of the supply chain as a major source of cost saving, and with ourglobal footprint, low cost, and technology scope, we meet the criteria as theyseek to leverage their economies of scale. The Triple Play also impacts thetechnology requirement for interconnect product with higher speed capability.The High Speed interconnect technology is nascent and evolving. Throughalliances and technology licences, we have positioned ourselves as the leader inthe field. Another market that will contribute to our growth is India, specifically withrespect to the wireless sector. India is currently adding six million mobilephone subscribers per month. The wireless networks are running at 97% capacityand every operator has announced plans for investment. Bharat Sanchar Nigam Ltd,known as BSNL, the public sector telecommunications provider in India, recentlyawarded a US$5 billion contract to Ericsson and Nokia. As the tender processmandates that 30% of the products must be produced in India, the need forlocalised suppliers is urgent. Volex has been in India since 1997 and is aglobal supplier to both Ericsson and Nokia. The global medical equipment market increased by 5% last year and continues tooffer a strong growth market for Volex. Our customers have market leadingpositions and our Preferred Supplier status with them places us in a strongposition to benefit from their growth. Our capability in the medical sector wasrecognised by Royal Philips who awarded Volex "Breakthrough Supplier" of theyear for our engineering involvement in early stages of development. Volex participates in the industrial and defence/aerospace sectors through theWiring Harness division. The defence/aerospace sector is growing rapidly giventhe current geopolitical environment. Nevertheless, the barrier to entry intothe defence market is high given the approval and accreditation process of theOEMs and Ministry of Defence ('MOD'). We are currently working towards upgradingour classification from DEFCON 659 for MOD works to "List X", which will expandour opportunities in the defence market. We define the industrial sector toinclude off highway equipment, speciality vehicles, automation and factoryequipment. The industrial sector offers attractive opportunities due to theindustrial growth in developing countries such as China and India. As a resultof the complexity of the harnesses and platform cycles of the equipment andvehicles, the revenue horizon is longer and more stable than other parts of theGroup. StrategyWe believe that the current market dynamics dictate that we must drive towardsbecoming a Total Interconnect Solution Provider, providing a one stop solutionto our customers. We are ideally positioned to achieve this due to our"Preferred Supplier" status with leading OEMs and our global footprint. Ourproduct portfolio currently accounts for only a small percentage of theinterconnect and cable assembly spend for most of our customers. Our strategy isto 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 thecurrent level of assembly. We are engaging and controlling the engineering andsupply chain levels as the component definition and the assembly process aredetermined at those levels of engagement. Our involvement in componentdefinition at the engineering level will allow us to control our materialcontent towards Volex suppliers. We are leveraging Volex's own preferred vendornetwork in low cost areas to offer our customers alternatives to their currentcomponent suppliers. Through the Volex brand, we assure the customers that thecomponents meet the world-class quality and service that they have come toexpect from us for the past century. Furthermore, we will influence the interconnect component decisions beyond ourproduct portfolio and thus expand the addressable market. Our challenge andopportunity is to expand our product portfolio in order to leverage through ourchannel to market through development, acquisitions and alliances. Power Products:Volex Power Products is the global market leader in powercords, growing at anaverage of 8% per year for the last three years. Despite its growth, it has beenchallenged with aggressive competitors who compete against us solely on price.While the value proposition of quality, reliability and service of Volex isrecognised by the market, there are certain segments such as personal computerswhere price is the main differentiator. Our strategy is to address broad marketsegments on a global basis and to drive our supply chain to achieve the lowestcost without compromising quality, reliability and service. We recognise that wemust face our competition at all levels and we believe that we have the scaleand the purchasing power that will enable us to offer the lowest competitivecost. Furthermore, Power Product's leadership and eminence in the market andwith its customers provide a valuable entry to other interconnect and cableassembly products. Interconnect:Our strategy in Interconnect has been to reposition into higher growth andmargin businesses that are technology based. We are leveraging our strongpositions at cutting edge technology customers to enter the High Speed, RadioFrequency and Fibre segment of Interconnect. Our recent expansion of engineering resources with significant experience inadvanced interconnect technologies gives us the appropriate competence toaddress the customers' development needs. We are also forging alliances andlicensing technologies to provide the full range of product needs of ourcustomers. We recently entered into an agreement with Leoni Special Cables, theworld'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 fromMolex Inc. to use the patented SAS/SATA High Speed connector technology andVolex will be producing these products under the Volex brand. In addition, wehave launched Volex Radio Frequency (RF) Connectors to address the fast growingRF connector market and expand our product offering beyond cable assemblies. Asthe market evolves and customer dynamics shift, we will continue to evaluate alloptions to better service our customers including additional alliances oracquisitions. Wiring Harness:Our strategy in Wiring Harness is to accelerate and complete the operationalrestructuring. We have made significant progress to date and continue tostreamline our operation and consolidate our manufacturing footprint. We willexit the restructuring with a competitive cost basis and an operation that isefficient and agile, but most importantly, we will have positioned the divisionto attain the Group's margin goal. Our reputation, experience and customer baseprovide us with ample opportunities for growth. We are already approved andaccredited with our defence, aerospace and automotive customers to participatebeyond the current platforms. We are not faced with barriers to entry which anew supplier would need to overcome and we have achieved great success when wehave engaged the customer at all four levels of value propositions. Recently, wesecured a long-term contract with Rolls-Royce that significantly increases ourmarket share. We believe similar opportunities exist with defence customers. Wealso see significant opportunity to leverage from our reputation in the Europeanmarket to global opportunities. Although the harness opportunities are morelocal due to logistic and operational constraints, global customers are lookingfor suppliers that can service them across the world. Our global brand positionsus well and we recently launched an Industrial Cable Assembly (ICA) sub-divisionto address the growing opportunities in Asia. Divisional Performance Power Products:Revenue increased 4.2%. The growth in sales was driven by both volume increasesas well as higher average selling prices reflecting the copper price increasespassed on to our customers. We continue to derive our growth from our successeswith the latest innovative applications and at premium segments of the consumermarket. We have grown faster than the market by focusing on new "must have"applications and premium brand products that are less impacted by marketslowdown. We did experience slowdown in more general consumer segments such aspersonal 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. Ourchallenge during the last year was to mitigate the volatility and speed of thecopper price changes. Although copper prices declined toward the end of theyear, the reduction was not sufficient to fully offset the negative impactduring the year. We have continued to reduce our labour and operating coststhrough moving to lower labour cost areas and by improving manufacturingprocesses to gain efficiency. Interconnect:The revenue from Interconnect decreased 8.2% as we continued to reposition thedivision in higher growth and margin opportunities that are technology based. Weare very excited at the current pipeline of new opportunities, and although wehave begun to see the benefit during the year, the ramp-ups of new business werenot sufficient to offset the continuing rationalisation of the legacy business.Furthermore, we were adversely impacted by the decline of revenue from acustomer 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 reflectsthe benefits of the cost reductions we implemented over the last two years aswell as rationalisation of the lower margin business and was achieved against abackground of higher commodity prices. We expect that we will continue to seefurther benefit as the full impact of the effort during FY2007 will not bereflected until FY2008 when we expect to benefit from the growth in revenue fromhigher margin business. Wiring Harness:Much of the focus and resources in FY2007 were dedicated to addressing theoperational challenges of the division. We restructured facilities in the UK andare in the process of transferring manufacturing to lower cost regions. We tooka very selective approach to new business development in order to prioritise ourresources and efforts. Revenue increased 4.4% compared to FY2006. We began todrive our sales effort towards the end of the year and have developed manyexciting opportunities that will contribute as we complete our restructuring. Werecently signed a long-term contract with Rolls-Royce, which significantlyincreases our market share with them. We commenced the final stage of our operations restructuring programme and tooka charge of £3.2m related to the restructuring of the division. We alsogenerated proceeds of £1.1m from the sale of Butts Mill, Leigh facility. FINANCIAL REVIEW Trading for the yearTurnover for the 52 weeks ended 1 April 2007 was £248.7m, a decline of 0.7% overFY2006. Adverse movements in foreign currency exchange rates, particularly theUS Dollar, had a negative impact of £10m. At constant exchange rates, Groupturnover increased 3.3%. Sales by destination in Asia and South America grew by 18.7% to £91.4m. Sales inOther Europe declined 1.6% to £63.8m, in the UK by 2.5% to £33.7m and in NorthAmerica 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 bythe weak US dollar and the full year effect of the low margin businessrationalisation we highlighted in FY2006. A comparison of Group sales by source of manufacturing shows a furtherconsolidation 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% oftotal 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 restructuringprogramme helped to mitigate the increase in copper prices during the year,which could not be immediately passed onto customers. We estimate that the sharpincrease in copper prices, which was experienced in April 2006, had adetrimental impact on the Group's results of approximately £3m, before we wereable to pass the increase onto our customers. Operating profit for the period was £9.3m (2006: £5.3m) (before the majorrestructuring programme charge of £2.0m, (2006: £8.6m)), an increase over FY2006of 75%. The cost of the Long-term Incentive Plan ('LTIP') introduced during theyear was £0.3m. The adverse impact of foreign currency movements in the year onthe results was limited to £0.2m. The return on sales for FY2007 was 3.7% (before the major restructuringprogramme charge), an improvement from 2.1% in FY2006. This increasedemonstrates the benefit to profitability of the restructuring programme onoperations. Major restructuring programmeAs indicated in the Chairman's statement in the interim report, an extensiverestructuring programme to improve the performance of the Wiring Harnessdivision commenced in the second half of the year. This resulted in arestructuring charge of £3.2m following the £1.1m profit on disposal of ButtsMill, Leigh realised in the first half. The operating profit after the major restructuring programme charge was £7.3mcompared to a loss of £3.3m in FY2006. New banking arrangement and interestDuring the year, the Group entered a new three year Revolving Credit Facilityfor $76m with Lloyds TSB Bank plc. This enables the Group to borrow at a rate ofinterest based on LIBOR plus a base margin of 1% rising to a maximum margin of2.75%. The margin at the end of FY2007 was 2.25% and the current margin hasfurther reduced to 1.5%. Total costs incurred in the new banking facilities exercise were £1.3m and theseare being amortised over 3 years. Net finance charges for the year were £4.5m including a £1.5m write-off ofunamortised refinancing costs. Net bank interest for the year was £1.7m, areduction from £2.3m for the previous year. TaxThe tax charge for the year reduced to £2.0m from £2.4m in FY2006. Thisrepresents an effective rate of 69.2%, which is distorted by the charges for themajor restructuring programme (£2.0m) and rebanking (£1.5m). Adjusting for theseitems the effective rate becomes 31.1%. In the future we expect this rate toreduce further as the Group benefits from the utilisation of tax losses fromprior years. Earnings per shareBasic earnings per share increased to 1.5p from a loss per share of 18.5p inFY2006. Adjusted earnings per share (after adjusting for the major restructuringprogramme 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 sheetNet assets remained unchanged compared to 2 April 2006 at £26.1m. Shares issuedin the year increased equity by £1.3m, mainly as a result of the contributionmade by senior management as a consequence of the LTIP introduction. Thetranslation of the Group's foreign operations resulted in a negative exchangedifference of £2.8m that was taken to the translation reserve. Provisions for FY2007 reduced by £1.0m to £7.9m. The provisions were increasedby the charge for the major restructuring programme of £3.2m (excluding the saleof Butts Mill, Leigh) and were reduced by cash payments and exchange movements. CashflowCash generated by operations was £10.7m (2006: £13.2m) before restructuringpayments of £4.1m (2006: £1.5m). The reduced inflow was a result of a higherworking capital requirement in trade debtors and inventory, that was partlyderived from the increases in copper prices over the year which impacted sellingprices to customers and inventory valuation. Net interest payments reduced to £1.8m from £2.5m in the previous year, as aresult 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 FY2006from the rights issue in June 2005. During FY2007 the Group's net debt reduced to £9.6m from £13.3m at the start ofthe year. Apart from the cash generated in the year, there was a favourableforeign exchange impact on net debt of £1.0m and a net reduction in debt issuecosts 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 schemesThe 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 DegnanGroup Chief Executive Group Finance Director Consolidated Income StatementFor 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 aftertaxation, being retained profit/(loss) forthe 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 restructuringprogramme and the write-off of unamortised debt issue costs for each period isshown in note 6. Consolidated statement of recognised income and expenseFor the 52 weeks ended 1 April 2007 (2 April 2006) 2007 2006 £'000 £'000 Exchange differences on translation of foreignoperations (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 SheetAs at 1 April 2007 (2 April 2006) Note 2007 2006 £'000 £'000Non-current assetsGoodwill 1,930 1,930Other intangible assets 82 148Property, plant and equipment 9,191 11,515Deferred tax asset 347 244______________________________________________________________________________ 11,550 13,837______________________________________________________________________________ Current assetsInventories 32,107 30,274Trade and other receivables 50,866 52,825Current tax assets 968 1,087Cash and cash equivalents 12,235 11,646______________________________________________________________________________ 96,176 95,832______________________________________________________________________________Total assets 107,726 109,669______________________________________________________________________________Current liabilitiesObligations under finance leases 56 124Trade and other payables 44,593 42,685Current tax liabilities 3,817 2,580Retirement benefit obligation 378 357Provisions 3,914 3,996Liability for share based payments 129 95______________________________________________________________________________ 52,887 49,837______________________________________________________________________________Net current assets 43,289 45,995______________________________________________________________________________Non-current liabilitiesBank overdrafts and loans 21,722 24,690Obligations under finance leases 40 106Deferred tax liabilities 209 537Retirement benefit obligation 2,458 3,154Long-term provisions 4,013 4,983Non-equity preference shares 80 80Liability 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 parentShare capital 9 14,158 13,888Share premium account 9 1,219 168Translation reserve 9 (1,020) 1,821Retained earnings 9 11,702 10,218_____________________________________________________________________________Total equity 9 26,059 26,095_____________________________________________________________________________ Consolidated Cashflow StatementAs 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 3,842Impairment of property, plant and equipment - 1,523Amortisation of intangible assets 122 79(Gain)/loss on disposal of property, plant and equipment (1,198) 133Share 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) 1,469Increase 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 13,249Utilised 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 111Interest paid (1,984) (2,639)_____________________________________________________________________________Net cash inflow from operating activities 4,050 4,821 Cash flows from investingactivities ________________ Proceeds on disposal of property, plant and equipment 1,933 29Purchases 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 4,039Utilised 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 17,645Repayment of borrowings 10 (25,519) (43,263)New bank loans 10 23,322 25,793Debt issue costs paid 10 (1,399) (2,486)Increase/(decrease) in bank 10 30 (4,193)overdraftsRepayments 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 14,962Effect 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 InternationalFinancial Reporting Standards ('IFRSs') as adopted for use in the EU and inaccordance with those accounting policies disclosed in the Group's lastpublished financial statements for the 52 weeks ended 2 April 2006. The information contained in this preliminary announcement for the 52 weeksended 1 April 2007 does not constitute the statutory accounts within the meaningof section 240 of the Companies Act 1985 but has been extracted from thoseaccounts. The statutory financial statements for the 52 weeks ended 2 April 2006have been delivered to the Registrar of Companies for England and Wales andthose for the 52 weeks ended 1 April 2007 will be delivered following theCompany's Annual General Meeting. The auditors' report on those accounts wasunqualified and did not contain any statements under Section 237(2) or (3) ofthe Companies Act 1985. Whilst the information included in this preliminary announcement has beencomputed in accordance with IFRSs, this announcement does not itself containsufficient information to comply with IFRSs. The Company expects to publish fullfinancial statements that comply with IFRS later this month. This preliminary announcement was approved by the Board of Directors on 8 June2007. 2. Segments Business segmentsFor management purposes, the Group is organised into three operating divisions -Power Products, Interconnect and Wiring Harness. These classifications are basedupon the nature of the products that they supply. These divisions are the basison 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 3,597Interconnect 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 111Finance 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 112,745 100,525Data and Telecommunications 72,863 87,986Industrial and Medical 28,233 27,845Vehicle and Aerospace 34,884 34,022________________________________________________________________________________ 248,725 250,378________________________________________________________________________________ The 2006 comparative segmental operating loss information has been restated toreflect a more appropriate allocation of costs. Accordingly the 2006 operatingprofit of the Power Products division has increased by £785,000 and theoperating losses of the Interconnect and Wiring Harness divisions have increasedby £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 SouthAmerica 122,772 98,761 91,417 77,033North America 49,234 75,591 59,853 73,986United Kingdom 34,141 32,705 33,690 34,560Other 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 - 1,535Property provisions 202 3,149Closure of manufacturing facilities 3,007 2,720Impairment of property, plant and equipment - 1,523Insurance 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 hasbeen announced and the movement of certain production from the United Kingdom tolower cost areas has commenced. The Group's Butts Mill site in Leigh, UnitedKingdom and production assets from the closed facility in Clinton, United Statesof America have been sold during the year. Additional onerous lease provisionhas been recorded against a property vacated as part of the major restructuringprogramme. 4. Exchange rates The principal exchange rates used in the preparation of the financial statementsare: 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 1,865Current tax - adjustment in respect of previous years 83 584Deferred 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 thefollowing data: ________________________________________________________________________________Earnings/(loss) 2007 2006 £'000 £'000________________________________________________________________________________ Basic earnings/(loss) 866 (9,106)Adjustments for:Major restructuring programme charge (note 3) 1,994 8,598Write-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 49,247,645Effect 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 17.5Write-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 17.5Write-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 toequity holders of the Company. The adjusted earnings/(loss) per share has been calculated on the basis ofcontinuing activities before major restructuring costs and write-off ofunamortised debt issue costs, net of tax. The Directors consider that thisearnings/(loss) per share calculation gives a better understanding of theGroup's earnings/(loss) per share in the current and prior year. As the Grouprecorded a loss per share in 2006, the share options were anti-dilutive andtherefore there was no difference between the basic and diluted loss per sharein 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 millionmulticurrency combined revolving, overdraft and guarantee facility. At thatdate, the unamortised debt issue costs of £1,463,000 associated with theprevious 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 26,095Net proceeds from issue of equity shares 270 1,051 - - 1,321Net profit for the year - - - 866 866Reserve entry for share option charge - - - 283 283Actuarial gains on defined benefit pension schemes - - - 335 335Exchange 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) - 12,235Overdraft - (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 coststotalling £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