REG - Volex PLC - Half Yearly Report <Origin Href="QuoteRef">VLX.L</Origin> - Part 2
12/11/2015 08:05
- Part 2: For the preceding part double click ID:nRSL3929Fa
non-recurring items charge within operating profit of $1,256,000 (H1
FY2015: $8,030,000, FY2015: $12,528,000) was split $422,000 (H1 FY2015:
$826,000, FY2015: $2,450,000) to Power, $320,000 (H1 FY2015: $6,245,000,
FY2015: $7,603,000) to Data and $514,000 (H1 FY2015: $959,000, FY2015:
$2,475,000) to Central.
Other segmental information
External revenue Non-current assets (excluding deferred tax assets)
26 weeks to 4 October 2015$'000 27 weeks to 5 October 2014$'000 (Audited)Year to 5 April 2015 $'000 26 weeks to 4 October 2015$'000 27 weeks to 5 October 2014$'000 (Audited)53 weeks to 5 April 2015 $'000
Geographical segments
Asia (excluding India) 114,978 133,176 259,940 34,943 34,535 33,709
North America 42,444 45,438 86,676 1,372 1,395 1,390
Europe 25,769 32,448 59,690 3,885 4,645 4,229
India 3,702 3,728 8,370 713 617 584
South America 2,536 6,084 8,733 923 716 624
189,429 220,874 423,409 41,836 41,908 40,536
3. Non-recurring items and share-based payments
26 weeks to 4 October 2015$'000 27 weeks to 5 October 2014$'000 (Audited)53 weeks to 5 April 2015 $'000
Restructuring costs 1,155 1,985 5,223
Movement in onerous lease provision 101 - 1,110
Product portfolio realignment - 5,843 5,825
Financing - 61 72
Provision for historic sales tax claims - 102 102
Other - 39 196
Total non-recurring items 1,256 8,030 12,528
Share-based payments (credit) / charge (927) (466) 857
Non-recurring items and share-based payments 329 7,564 13,385
During H1 FY2016, the Group has incurred $1,155,000 of restructuring cost.
$282,000 of this has been in respect of the departure of the Chief Executive
Officer with the remainder covering management changes in the Power division,
restructuring of our Brazil operations given the significant decline in trade
and other targeted long term cost savings.
In the prior year the Volex Transformation Plan ('VTP'), a Group-wide
restructuring programme initiated in FY2014, concluded. This restructuring
impacted all functions and all regions and sought to align the Group's
manufacturing and support facilities with the expected future performance of
the business. The $5,223,000 cost of this programme was split:
· An executive and senior management change element of $711,000 relating
to the departure of the Group Chief Financial Officer and the build-up of the
Data division's senior management team.
· An operational element of $3,556,000 reflecting significant investment
in the sales function with sales offices established in three new territories,
the up-skilling of certain factory managers, the removal of certain middle
management roles throughout the organisation and costs associated with
down-sizing certain operations
· A business process review element of $956,000 which documented the
Group's operating cycles and their reliance on the current IT systems. The
cost of external consultants and internal staff hired directly to work on this
project were expensed as non-recurring. Based upon this review, the current
ERP system was scored against alternatives in the market-place and it was
concluded that the most cost-effective long term solution for the Group was to
upgrade the existing system. Further, a small potential acquisition was
investigated in the current period but was not pursued following due
diligence. Directly attributable travel expenditure and external consultancy
costs were treated as non-recurring.
At H1 FY2015 $1,985,000 had been incurred in respect of the above.
The Group has incurred a non-recurring charge in the period of $101,000
(FY2015: $1,110,000) in relation to onerous leases. The current period charge
relates to the repair of non-forecast property damage. The FY2015 charge was
split between an increase on a pre-existing provision following a change in
the underlying assumptions of the provision calculation and the recognition of
a new onerous lease following the departure of sub-tenants.
The Group has a share based credit in H1 FY2016 of $927,000 (H1 FY2015: credit
of $466,000, FY2015: charge of $857,000) due to the reversal of the cumulative
charge associated with lapsed options following the departure of certain
employees.
3. Non-recurring items (continued)
In the prior year, the Group reviewed its product portfolio including ongoing
product development projects. The Board, along with the Divisional Management
teams, concluded that the resources required to complete the Active Optical
Cables ('AOC') development project were better allocated elsewhere. Under the
requirements of IAS 36 'Impairment of Assets' the recoverable amount of the
AOC development asset was assessed and it was determined to be lower than the
carrying value. As a result an impairment charge of $4,308,000 was booked.
Similarly all tangible fixed assets which were deemed specific to the AOC
project were reviewed for impairment and a further charge of $789,000 was
processed. Future contracted costs associated with AOC (including specific
employee redundancies, purchase commitments and an onerous lease on the AOC
development facility) were also provided for totalling $746,000 at H1 FY2015,
subsequently adjusted to $728,000 for year end.
4. Tax charge
The Group tax charge for the period is based on the forecast tax charge for
the year as a whole and has been influenced by the differing tax rates in the
UK and the various overseas countries in which the Group operates.
5. Earnings per ordinary share
The calculations of the earnings per share are based on the following data:
Earnings/(loss) 26 weeks to 4 October 2015$'000 26 weeks to 5 October 2014$'000 53 weeks to 5 April2015$'000
Earnings/(loss) for the purpose of basic earnings per share 994 (6,744) (10,708)
Adjustments for:
Non-recurring items 1,256 8,030 12,528
Share based payments charge/(credit) (927) (466) 857
Tax effect of above adjustments - (72) (308)
Underlying earnings 1,323 748 2,369
Weighted average number of ordinary shares No. shares No. shares No. shares
Weighted average number of ordinary shares for the purpose of basic earnings per share 88,956,531 78,111,849 83,585,697
Effect of dilutive potential ordinary shares - share options 48,995 440,864 184,697
Weighted average number of ordinary shares for the purpose of diluted earnings per share 89,005,526 78,552,713 83,770,394
Basic earnings/(loss) per share Cents Cents Cents
Basic earnings/(loss) per share from continuing operations 1.1 (8.6) (12.8)
Adjustments for:
Non-recurring items 1.4 10.3 15.0
Share based payments charge/(credit) (1.0) (0.6) 1.0
Tax effect of above adjustments - (0.1) (0.4)
Underlying basic earnings per share 1.5 1.0 2.8
Diluted earnings/(loss) per share
Diluted earnings/(loss) per share 1.1 (8.6) (12.8)
Adjustments for:
Non-recurring items 1.4 10.3 15.0
Share based payments charge/(credit) (1.0) (0.6) 1.0
Tax effect of above adjustments - (0.1) (0.4)
Underlying diluted earnings per share 1.5 1.0 2.8
5. Earnings per ordinary share (continued)
The underlying earnings per share has been calculated on the basis of
continuing activities before non-recurring items and the share-based payments
charge, net of tax. The Directors consider that this earnings per share
calculation gives a better understanding of the Group's earnings per share in
the current and prior period.
6. Share issue
In July 2014, Volex plc issued 24,067,171 ordinary shares in the Company at a
price of 75 pence per share. Net of issue costs this generated $27,906,000.
The issue was effected by way of a cashbox placing.
7. Own shares
26 weeks to 4 October 2015$'000 26 weeks to 5 October 2014$'000 (Audited)53 weeks to 5 April2015 $'000
At the start of the period 867 1,103 1,103
Disposed of in the period on exercise of options - (245) (236)
Sale of shares - - -
At the end of the period 867 858 867
The own shares reserve represents the cost of shares in the Company held by
the Volex Group plc Employee Share Trust and the Volex Group Guernsey Purpose
Trust to satisfy future share option exercises under the Group's share option
schemes.
The number of ordinary shares held by the Volex Group plc Employee Share Trust
at 4 October 2015 was 1,295,361 (5 April 2015: 1,295,361; 5 October 2014:
1,249,399) and the Volex Group Guernsey Purpose Trust was nil (5 April 2015:
nil; 5 October 2014: 38,711).
On 22 May 2015 the Volex Group Guernsey Purpose Trust was terminated. The
$1,182,000 of cash held by the trust was transferred to Volex plc and the
intercompany balance of $39,000 repaid. Since the cash held by the trust had
been generated from the sale of new issue shares donated by Volex plc, the
transfer of the above gain has been accounted for within Volex plc's
non-distributable reserves.
8. Analysis of net debt
5 April 2015 $'000 Cash flow $'000 Exchange movement $'000 Other non-cash changes $'000 4 October 2015$'000
Cash and cash equivalents 26,203 (2,895) (355) - 22,953
Bank loans (25,159) (3,372) (515) - (29,046)
Debt issue costs 836 - 18 (191) 663
Net debt 1,880 (6,267) (852) (191) (5,430)
4 October 2015$'000 5 October 2014$'000 (Audited)5 April 2015 $'000
Cash and bank balances 30,022 23,572 33,736
Overdrafts (included in short term borrowings) (7,069) (6,371) (7,533)
Cash and cash equivalents 22,953 17,201 26,203
9. Related parties
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
Included within the restructuring charge shown in Note 3 is $282,000 (H1
FY2015: $nil, FY2015: $369,000) for severance payments made to directors.
This information is provided by RNS
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