REG - Volex PLC - Volex plc - Half year results to 5 October 2014 <Origin Href="QuoteRef">VLX.L</Origin> - Part 2
13/11/2014 08:21
- Part 2: For the preceding part double click ID:nRSM8981Wa
2014$'000 Half year to 29 September 2013$'000 (Audited)Year to 30 March 2014 $'000
Geographical segments
Asia (excluding India) 133,176 117,815 240,168 34,535 37,753 35,391
North America 45,438 40,580 82,762 1,395 1,561 2,257
Europe (excluding UK) 32,448 29,512 60,553 513 490 518
India 3,728 2,536 4,863 617 557 611
South America 6,084 6,093 11,831 716 656 798
UK - - - 4,132 7,787 8,607
220,874 196,536 400,177 41,908 48,804 48,182
3. Non-recurring items
Half year to 5 October 2014$'000 Half year to 29 September 2013$'000 (Audited)Year to 30 March 2014 $'000
Product portfolio realignment 5,843 - -
Restructuring costs 1,985 5,840 8,643
Financing 61 - 1,569
Provision for historic sales tax claims 102 - 835
Movement in onerous lease provision - - 595
Other 39 - -
Non-recurring operating costs 8,030 5,840 11,642
Non-recurring finance costs - - (552)
Total non-recurring items 8,030 5,840 11,090
3. Non-recurring items (continued)
In the half year to 5 October 2014, the Group reviewed its product portfolio
including ongoing product development projects. The Board, along with the new
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) have also been provided for
totalling $746,000.
In FY2014, the Group initiated a Group-wide restructuring programme across all
functions and all regions, referred to as the Volex Transformation Plan, to
align the Group's manufacturing and support facilities with the expected
future performance of the business. This programme has continued on into the
current half year period with $1,985,000 expensed in relation to operational
recruitment and redundancies.
In FY2014, the $8,643,000 cost of the VTP programme was split:
· An executive and senior management change element. This included the
change of Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Company Secretary, certain Non-Executive Directors, the Chief HR
Officer and the recruitment of the new divisional heads. In total, this
generated a non-recurring charge of $4,913,000; and
· An operational element. This included the closure of the North America
administrative centre, further reductions in the direct and indirect
manufacturing headcount, the removal of certain middle management roles
throughout the organisation and costs associated with down-sizing certain
operations. In total, this generated a non-recurring charge of $3,730,000.
$5,840,000 of the above $8,643,000 was charged in the half year to 29
September 2013.
During FY2014 the Group explored a number of alternate financing
opportunities. This cost the Group $1,569,000. A residual $61,000 in relation
to this work was expensed in the half year to 5 October 2014.
The Group has taken a $102,000 charge in H1 FY2015 for penalty claims made
against the Group relating to disputed sales tax payments in the Philippines
from prior periods. In FY2014, a charge of $835,000 was made in relation to
similar penalty claims for India sales tax.
In FY2014, the Group increased its onerous lease provision held against two
properties resulting in an exceptional charge of $595,000 (2013: credit of
$435,000). Assumptions made in the calculation of these two provisions were
refreshed resulting in the change.
4. Dividends
Amounts recognised as distributions to equity holders in the period: Half year to 5 October 2014$'000 Half year to 29 September 2013$'000 (Audited)Year to 30 March 2014 $'000
Final dividend for the year ended 31 March 2013 of 3.0 cents per share (2012: 3.0 cents per share) - 1,723 1,723
- 1,723 1,723
4. Dividends (continued)
The final dividend of 3.0 cents per share in respect of FY 2013 was approved
by the shareholders at the Annual General Meeting on 22 July 2013. At the
same meeting a Scrip Dividend Scheme, which gave shareholders the right to
elect to receive new ordinary shares in the Company (credited as fully paid)
instead of a cash dividend, was also approved.
Payment of the final dividend in respect of FY2013 was made on 17 October
2013. 59.1% of the shareholder base eligible for dividends had elected for
the Scrip Dividend Scheme resulting in a cash payment of $732,000 and 566,467
new shares being issued.
5. Tax charge
The Group tax charge for the period is based on the forecast tax charge for
the year as a whole and has been influenced by the differing tax rates in the
UK and the various overseas countries in which the Group operates.
6. Earnings per ordinary share
The calculations of the earnings per share are based on the following data:
Earnings/(loss) Half year to 5 October 2014$'000 (Restated)Half year to 29 September 2013$'000 (Restated)Year to 30 March 2014 $'000
Earnings/(loss) for the purpose of basic earnings per share (6,744) (4,198) (14,175)
Adjustments for:
Non-recurring items 8,030 5,840 11,090
Share based payments charge/(credit) (466) (1,633) (2,288)
Tax effect of above adjustments (72) 1 -
Underlying earnings 748 10 (5,373)
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 78,111,849 60,495,132 62,828,916
Effect of dilutive potential ordinary shares - share options 440,864 510,495 -
Weighted average number of ordinary shares for the purpose of diluted earnings per share 78,552,713 61,005,627 62,828,916
Basic earnings/(loss) per share Cents Cents Cents
Basic earnings/(loss) per share from continuing operations (8.6) (6.9) (22.6)
Adjustments for:
Non-recurring items 10.3 9.6 17.6
Share based payments charge/(credit) (0.6) (2.7) (3.6)
Tax effect of above adjustments (0.1) 0.0 0.0
Underlying basic earnings per share 1.0 0.0 (8.6)
Diluted earnings/(loss) per share
Diluted earnings/(loss) per share (8.6) (6.9) (22.6)
Adjustments for:
Non-recurring items 10.3 9.6 17.6
Share based payments charge/(credit) (0.6) (2.7) (3.6)
Tax effect of above adjustments (0.1) 0.0 0.0
Underlying diluted earnings per share 1.0 0.0 (8.6)
6. 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.
The denominators for the purposes of calculating both the basic and diluted
earnings per share have been adjusted to reflect the placing and open offer
that completed in July 2014.
7. 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 $27,906,000.
The issue was effected by way of a cashbox placing. Volex plc allotted and
issued the shares on a non-pre-emptive basis to the placees in consideration
for Investec Bank plc transferring its holdings of ordinary shares and
redeemable preference shares in Rendezvous 1 Capital (Jersey) Limited to the
Company.
Accordingly, instead of receiving cash as consideration for the issue of new
shares, at the conclusion of the Placing and Open Offer, the Company owned the
entire issued share capital of Rendezvous 1 Capital (Jersey) Limited whose
only asset was its cash reserves, which represented an amount approximately
equal to the net proceeds of the placing.
8. Own shares
Half year to 5 October 2014$'000 Half year to 29 September 2013$'000 (Audited)Year to 30 March 2014 $'000
At the start of the period 1,103 4,945 4,945
Disposed of in the period on exercise of options (245) - (16)
Sale of shares - - (3,826)
At the end of the period 858 4,945 1,103
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 5 October 2014 was 1,249,399 (30 March 2014: 1,555,000; 29 September 2013:
4,050,598) and the Volex Group Guernsey Purpose Trust was 38,711 (30 March
2014: 80,000; 29 September 2013: 1,005,000).
In December 2013, the Volex Group plc Employee Share Trust sold 3,378,582
shares at £1.16 per share. The average price of shares held by the Trust at
the time was £0.70 with a number of the shares having been issued by Volex plc
to the Trust at nominal value. In accordance with the Accounting Standards,
the difference between the sales price of £1.16 and the average share price of
£0.70 has been recorded as a non-distributable reserve, giving rise to a
$2,455,000 non-distributable reserve.
9. Analysis of net debt
30 March 2014 $'000 Cash flow $'000 Exchange movement $'000 Other non-cash changes $'000 5 October 2014$'000
Cash and cash equivalents 13,675 3,714 (188) - 17,201
Bank loans (46,372) 20,639 1,841 - (23,892)
Debt issue costs 477 691 (51) (24) 1,093
Net debt (32,220) 25,044 1,602 (24) (5,598)
Half year to 5 October 2014$'000 Half year to 29 September 2013$'000 (Audited)Year to 30 March 2014 $'000
Cash and bank balances 23,572 11,847 13,675
Overdrafts (included in short term borrowings) (6,371) (5,047) -
Cash and cash equivalents 17,201 6,800 13,675
10. 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 $nil (H1 FY2014:
$1,059,000, FY2014: $1,524,000) for severance payments made to key
management.
During H1 FY2015, Karen Slatford exercised 80,000 options held under the
Non-Executive Director Long Term Incentive Scheme ('NED LTIS'). During H1
FY2014, Mike McTighe (the former Chairman of Volex plc) exercised 426,667
options held under the NED LTIS. During H2 FY2014, Chris Geoghegan, a former
non-executive director of Volex plc exercised 53,333 options. These options
had a $nil exercise price.
In the July share issue, an aggregate of 10,909 new ordinary shares were
placed with both Karen Slatford and Daren Morris and 9,090 with Christoph
Eisenhardt, all of whom are Directors of the Company. A further 6,137,538
shares were placed with NR Holdings maintaining their shareholding in Volex
plc at 25.5%.
This information is provided by RNS
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