6th Jun 2005 07:01
Volex Group PLC06 June 2005 Embargoed until 07.00, 6 June 2005 VOLEX GROUP plc Preliminary Announcement of the Unaudited Group Results for the Financial Year Ended 3 April 2005 Volex Group plc, the international electrical and electronic cable assembliesgroup, today announces its preliminary results for the financial year ended 3April 2005. Financial Highlights: • Sales increased by 2.6% (8% excluding foreign currency impact) to £244.6m • Operating profit of £1.5m (before goodwill amortisation and exceptional operating items) (1) • Cash generation from operating activities: - Pre exceptional cashflows £2.0m - Post exceptional cashflows £1.6m • Basic loss per ordinary share (47.2)p (2004 - (39.1)p) (1) The operating loss after charging goodwill amortisation (£0.3m) and exceptional operating items (£8.5m) was £7.3m (2004 - loss of £4.5m). The Chairman of Volex, Dom Molloy, commented: "The Group has benefited from the general improvement in the demand across mostof the markets that we service but has also made significant strides indeveloping new business opportunities in targeted markets such as the medicalsector. However, while the market demand profile supported the revenue ambitionsof the Group the translation of those revenues to operating profit wasdisappointing and was impacted by unanticipated events, some of which wereone-off in nature. The Group is well positioned in the marketplace to continue to drive forimprovements in market share and revenues above market growth but it is clearthat further equity investment is required to accelerate the cost reductionactivity, to invest for growth, to re-structure the finances of the Group and tonormalise the servicing of the debt." Ends Volex will host an analysts meeting today at 12 noon at the offices of: Allen &Overy, One New Change, London, EC4M 9QQ For further information, please contact: Volex Group plc Today: 020 7067 0700 Thereafter: 01925 830101Dom Molloy, ChairmanJohn Corcoran, Group Chief ExecutiveDerek Walter, Group Finance Director Weber Shandwick Square Mile 020 7067 0700Chris Lynch / Nick Dibden VOLEX GROUP plc Preliminary Announcement of the Unaudited Group Results for the Financial YearEnded 3 April 2005 CHAIRMAN'S STATEMENT After the downturn experienced through late 2001, Volex Group has takensignificant actions to reduce debt and return to profitability. Having achieveda revenue peak of £418m in FY2001, the Group experienced a dramatic decline to£230m in FY2003 and has improved from that low point to close the last financialyear (FY2005) at a revenue level of £245m. Despite the limited access to funds,a number of key actions have been undertaken over this period: • Gross borrowings have been reduced from £72m to £45m;• Gross margins have recovered from a low of 11.6% to FY'05 levels of 14.5% through reductions in material costs and labour cost reductions by moving to lower cost areas;• Facilities have been closed and manufacturing transferred to low cost locations and under-utilised assets have been disposed of;• A strong global purchasing function has been established;• The global account team was enhanced and has delivered momentum to the emerging medical and industrial business which has grown to 10% of Group revenue; and• New management and systems have been introduced to the harness businesses (Wiring Systems and Ionix). The financial year 2005 had been expected to improve further on theseachievements and the Group delivered revenues in 2005 at a level of £245m which,when the effects of currency translation are removed was a growth year on yearof 8%. The Group has benefited from the general improvement in the demand acrossmost of the markets that we service but has also made significant strides indeveloping new business opportunities in targeted markets. The broadening of thecustomer base in existing and new markets remains a key focus for the Group andreduces the impact of cyclical demand patterns in any one sector. However, while the market demand profile supported the revenue ambitions of theGroup the translation of those revenues to operating profit was disappointingand was impacted by unanticipated events, some of which were one-off in nature. • The escalation of commodity prices, particularly copper and petroleum, impacted the Group by circa £6m in profit. While the sales teams have been successful in passing some of these effects through to the customer base, there was a lag between the supply base increases and the successful conclusion of negotiations with those same customers. • The turnaround of North America division was adversely impacted by an unsuccessful change in management, resulting in a failure to achieve the product transfer and margin improvement targets for the business, and by a fire in one of two buildings in Tijuana, Mexico that created loss of sales in the period. On a positive note the Group has already addressed many of these areas and thebetter performing divisions achieved operating margins of 6%+ in the year.Operationally, we recovered the Tijuana fire impact successfully and the speedand effectiveness of that recovery bears testament to the ability of the Groupto manage significant events without impacting the supply line to the customerbase. We have changed the leadership of North America (October 2004) andpositioned one of the non-executive directors back into the regional leadershipposition. We have built a new team and strengthened sales, engineering andoperations. We have developed a strong global purchasing function that hasmitigated the full effect of rising commodity prices by materials savingssecured elsewhere in the supply chain. Despite the limited access to funds the Group continued to focus on costreduction, re-profiling the manufacturing footprint and the level of debt withinwhich the Company had to operate. In the year three further facilities wereannounced for closure: Conover (US), Malaysia and Philippines. The Groupstrengthened its focus and resource allocation in global account management topenetrate new markets, new accounts and the existing accounts for incrementalrevenues, some of which were already realised in the reported year. Global markets The dynamics of the cable assembly market continue to be challenging. However,it is increasingly providing opportunity for the Group as global customerscontinue to consolidate their supply base in favour of global suppliers such asVolex. The Group continues to use its global presence and the breadth of itsproduct portfolio in combination with strong account management to secure astrong position in this consolidation process. The demand environment across all our sectors remains relatively stable.However, there are some indications of weakness in some sectors through thesecond half of this calendar year 2005. Energy prices continue to weigh heavilyon most sectors; however, the Group has assumed some level of caution in theforward forecasts of revenue that is anticipated for the full financial year.The organisation is firmly committed to achieving growth, which is anticipatedto come largely from increased market share driven by the consolidation of thesupply base and also from our ability to further penetrate existing or emergingmarkets. In addition the Group was very focused in the second half of thefinancial year 2005 on improving the quality of revenue and eliminatingnon-profitable or low margin business from its revenue stream. This is expectedto continue and while it may depress revenues in some areas it will remove thedilutive effect of this low margin business from the performance of the Groupoverall. Regional operations As outlined sales improved over the prior year by 3%, however, the currencyeffect of £13m masks the growth achieved in specific areas of our globaloperation. In the Americas the revenue by destination increased by 3.5% but weresomewhat impacted by the fire in the Tijuana facility. This event had a morepronounced effect on the cost base reduction programme which when combined withthe change of leadership in the region, caused a significant under-performanceto budget expectations. The Board now believe that the progress made in the lastnumber of months has brought this programme back on track albeit 6 months behindschedule. The market environment in North America continues to be relativelystable with some suggestion of weakness in the computer electronics sector forthe forthcoming calendar year. Sales in and into Asia improved by approximately 5.5% over the previous year inlocal currency terms. As in prior years, the strong drive for the performancewas attributable to the powercord element of our business; however, the dynamicof copper price increases at the commodity level impacted the translation ofthis performance into growth in operating profits. At the end of the financialyear the Group announced two site closures in Asia as we continue to strive forreduction in our global footprint and a rationalisation of our facilities intolarger manufacturing centres, particularly in China and India. Sales in Volex Europe (Data/telco) increased by 12% over the prior year helpedby an improved telecommunications market in the region and also the assembly ofOEM systems for deployment in Asia meant that the sub-assembly portfolio wassupported out of Europe. Additionally the team in Europe secured improvedrevenue streams into the medical sector. In the UK the demand environment forour specialist harness businesses remained relatively stable year on year. Arecovering environment for the aerospace and defence harness industrycompensated somewhat for some weakness at the customer level in the automotiveharness area. The smaller units experienced operational and execution issuesthat adversely affected the operating profit level. These have been largelycorrected with the deployment of new management and existing Group resourcesdiverted to securing sustainable process improvement there. Dividends The directors are not proposing to declare a dividend in respect of the reportedfinancial year. Future The Group strategy continues to be focused on exploiting its key differentiatorsto position the Group as the leading global provider of cable assembly solutionsin the global market. We offer breadth of the product portfolio across theentire range of power and signal products. Our independence of specifictechnology allows the Group to leverage the most cost effective yet technicallycompetent solution available in the marketplace to meet our customers'requirements. Increasingly, the capabilities of the Group at the supply chainlevel and product development level enable us to provide a range of servicesaround and beyond the cable assembly from design to distribution. The Group iswell positioned in the marketplace to continue to drive for improvements inmarket share and revenues above market growth. Despite the constraints on cash much has been achieved but a lot has still to beachieved. As the funding required to correct the residual issues within thebusiness cannot be supported by the existing lending profile, it is clear thatfurther equity investment is required to accelerate the cost reduction activity,to invest for growth, to re-structure the finances of the Group and to normalisethe servicing of the debt. Specifically, the Group needs to: • continue to reduce the manufacturing footprint and move to lower cost locations;• develop markets and products that enrich the margin potential for the Group;• strengthen the competencies in the Group by enhancing key skills (e.g. development and sourcing) and re-aligning management structure and reporting in selected areas; and• build alliances to expand the product set and technology offering. All of the above, when delivered, should return this Group back towardshistorically achieved levels of profitability and provide a platform for marginenhancement. To that end the Group is seeking to raise £15.8m (net of costs) and listingparticulars together with a related announcement will be issued immediatelyfollowing this preliminary results' announcement. D.J. MolloyChairman FINANCIAL REVIEW Turnover for the 52 weeks ended 3 April 2005 at £244.6m was 2.6% up over the2004 financial year, (which included an extra week), despite a £13m negativecurrency effect. Year on year the average exchange rate for the US dollar fell9% against the £, the Singapore dollar and the Brazilian real both weakened by6% and the Euro by 2%. A geographical review of sales by destination showed sales in Europe (excludingUK) in sterling terms increase by 11.7% to £63.1m and in the Americas increaseby 3.5% to £77.3m. Sales in Asia were very slightly lower by £0.3m at £65.6m andsales in the UK were down by 7% to £38.5m. A comparison of Group sales by source or manufacturing location, based on grosssales including intra-group trading showed a year on year improvement in Asia of£6.7m, 7%, to £99.6m gross sales accounting for 39% of the Group's output (2004- 37%). America's gross output declined by £1.3m, 2%, in sterling terms to£77.2m over the previous year and represented 30% of Group's total gross output(2004 - 31%). Sales sourced from Europe (excluding UK) improved by £3.1m, 6%, to£51.5m and accounted for 20% of the Group's gross output (2004 - 19%). UK salesdecreased by £1.8m, 6%, to £29.8m, 11% of the Group's gross output (2004 - 13%).Intra group sales remained relatively unchanged at £13.6m. Additional analysesof sales by product category and market sector are given in note 1 to theresults. Gross profit was 14.5% compared with 14.4% in the previous year. The impact ofraw material prices affected the Group considerably with copper costs aloneestimated to have increased by some £6m year on year but ongoing cost reductionprogrammes including procurement and value added engineering programmes helpedmitigate those cost increases and the effect of the fire at Tijuana in September2004. The Group recorded an operating profit (pre goodwill amortisation andexceptional operating items) for the year of £1.5m (2004 - £2.5m). Thetranslation of foreign currency operating profits into Sterling had an adverseimpact of £0.2m. The fire at Tijuana Mexico in September also impactedproduction and excluding the under-recovery on the insurance claim is estimatedto have cost the Group in total at the operating profit line at least anadditional £0.6m of costs. Profits in Asia were lower in 2005 compared with 2004, as Asia experienced alower second half in 2005 than the first half. Losses in North America in 2005were reduced as the second half showed improvement but the fire at Tijuana heldback its recovery. Europe (excluding the UK) continued its profitable recoveryfrom the restructuring in 2004 and reported a better second half than the firsthalf in 2005. UK harness operations as a whole had a disappointing year in 2005with increased losses in the second half. Exceptional costs for FY05 of £8.5m relate to the provisions for three propertyleases of £3.3m, a write off of an automated manufacturing line and costs ofclosure relating to one site in Poland, the factories in Malaysia and thePhilippines and the Conover North America site. The exceptional costs alsoinclude £0.9m under-recovery of the insurance claim relating to the Tijuana firein September 2004 pending negotiations. The goodwill remaining on the investmentin Brazil of £1.7m has been written off following the initial write off in 2002. The operating loss after charging goodwill amortisation and exceptionaloperating items was a loss of £7.3m (2004 - loss of £4.5m). During 2005 fiveproperties were sold and realised a profit of £1.9m. These sales included thesales of the head offices of the Volex Europe and the Volex Asia divisions withthe latter head office being leased back. In the case of the Volex Europe headoffice this was the culmination of the programme begun in the 2002 financialyear to move production from Ireland to lower cost European sites in Poland andCroatia. Finance charges (net) included interest costs of £3.2m similar to last year plusamortisation costs of £0.2m (2004 - £0.7m) relating to the bank facilitiesobtained through to June 2004 and a further £0.7m relating to the one yearfacilities' extension negotiated at the end of the 2004 financial year. TaxationDespite an overall group loss before tax, there was a tax charge of £4.4m (2004- £2.9m). This charge related to taxes paid in countries where taxable profitswere made and also included a provision of £1.1m in respect of tax relating toan overseas subsidiary in respect of prior periods. Deferred tax assetstotalling £0.8m have been written off. The result for the financial year after tax was a loss of £13.9m (2004 - loss of£11.2m). Earnings Per ShareBasic loss per share this year of (47.2)p compares with (39.1)p in the prioryear. The adjusted loss per share (arrived at after adding back exceptionaloperating items, profit on sale of fixed assets and goodwill amortisation) showsa deterioration from (14.7)p in 2004 to (23.8)p per share. The earnings pershare figures are distorted by the higher than normal tax charge as referred toabove and adding back £1.1m in respect of the overseas prior years' tax chargeand the deferred tax assets written off of £0.8m in total, the adjusted losswould have been reduced to (17.2)p per share. Funds FlowDuring the year there was a net inflow of funds before financing of £0.6m,comprising inflows of £1.6m from operations, £7.8m from the disposal of fixedassets, in part offset by outgoings of £2.1m on capital expenditure (excludingnew finance leases), £4.5m on interest/financing costs and £2.2m of taxationpayments. Currency translation of £0.7m impacted favourably on the debt positionduring the year. Fixed asset additions in the Group totalled £2.2m (2004 -£2.5m) including new finance leases during the year, less than half thedepreciation charge. BorrowingsThe Group's net borrowings at the end of the year were £30.5m (2004 - £31.6m).These borrowings resulted in a year-end gearing ratio of net borrowings toshareholders' funds of 162% (2004 - 97%). The Company's present bank facilities remain available until 30 June 2005 andare currently the subject of negotiation. Conditional upon new equity beingraised, the Group will enter into new banking facilities for 3 years. The totalcosts incurred in the renegotiation of the Group's facilities for future yearswill have amounted to approximately £1.5m and will be amortised over the life ofthe facilities as a charge. Going concernAs stated in the Company's trading update in February 2005, the Company has beenin discussions with the Banks to replace the Company's Existing Bank Facilitieswith a new facility or facilities. The Company today announces that it has todayentered into new longer term bank facilities on more favourable terms to theCompany (the "New Bank Facilities"), conditional on completion of the issue ofnew shares to the market (the "Issue"). Shareholders should be aware that if the Resolutions relating to the Issue arenot approved at the EGM and Admission to the London Stock Exchange does not takeplace on 30 June 2005, the net proceeds of the Issue will not be received by theCompany and the Company will not be able to draw on the New Bank Facilities. TheExisting Bank Facilities expire on 30 June 2005 and the Company would no longerhave banking facilities and would not have adequate working capital to continuetrading from that date. The directors consider that in the scenario outlined above, the withdrawal ofthe Existing Bank Facilities would not be in the best interests of either theBanks or the Company and believe that the Existing Banking Facilities would beextended for a short period beyond 30 June 2005 whilst they were renegotiatedfor a longer period to enable the Company to continue trading. The directorsbelieve, however, that such renegotiated facilities would be on substantiallyworse terms than both the Existing Bank Facilities and the New Bank Facilities,in particular in regard to interest rate, use of free cash and repaymentscheduling. Having considered the above, the directors consider that it is appropriate toadopt the going concern basis for the preparation of the preliminary financialinformation. As a result, the preliminary financial information does not containany adjustments that would arise if the preliminary financial statements werenot drawn up on a going concern basis. International Financial Reporting StandardsIn 2006 Volex Group plc will be required to produce its financial statements inaccordance with IFRS. The process regarding the endorsement of IFRS by the EUcommission is ongoing and there may therefore be changes prior to IFRS beingadopted by the Company. The first numbers to be reported in this format will bein respect of the six month period ending 2 October 2005. This will includeappropriate comparatives for FY 2005. The areas considered to have the mostsignificant impact for Volex Group plc are in respect of defined benefit pensionschemes and hedge accounting. The Group will be required to reflect the deficit of £4.1m, on its two closed UKdefined benefit pension schemes in the Group's balance sheet. The impact of thenew foreign exchange hedging rules is not clear. The directors believe that these are the major adjustments to the Group'sfinancial statements which will arise on transition to IFRS. As there is stillwork to do to finalise a range of minor adjustments and to review thecompleteness of the adjustments it is therefore possible that other adjustmentsmay come to light which will impact the Group in the preparation of the firstfull set of IFRS financial statements for the year ending 2 April 2006. Consolidated Profit and Loss AccountFor the financial year ended 3 April 2005 (4 April 2004) Unaudited Audited 52 weeks 53 weeks 2005 2004 Notes £'000 £'000_________________________________________________________________________________Turnover Continuing operations 1 244,551 238,353 Cost of sales (209,062) (204,108) ------------ -----------Gross profit 35,489 34,245 Other operating expenses (net) (42,795) (38,767) ___________________________Operating profit before goodwill amortisation and exceptional operating items 1,528 2,486 Exceptional operating items 2 (8,532) (6,680) Amortisation of goodwill (302) (328) ___________________________ ------------ -----------Operating loss - continuing operations (7,306) (4,522) Profit on sale of properties 1,918 - ------------ -----------Loss on ordinary activities before finance charges (5,388) (4,522) ___________________________Finance charges - interest (net) (3,184) (3,140) - refinancing costs and amortisation of debt issue costs 4 (932) (683) ___________________________ (4,116) (3,823) ------------ -----------Loss on ordinary activities before tax (9,504) (8,345) Tax on loss on ordinary activities 5 (4,424) (2,861) ------------ -----------Loss for the financial year (13,928) (11,206) Other finance costs of non-equity shares (6) (6) ------------ -----------Loss for the financial year transferred from reserves (13,934) (11,212) ------------ -----------Adjusted loss per ordinary share 6 (23.8)p (14.7)p Basic and diluted loss per ordinary share 6 (47.2)p (39.1)p Consolidated Statement of Total Recognised Gains and LossesFor the financial year ended 3 April 2005 (4 April 2004)_________________________________________________________________________________ Loss for the financial year (13,928) (11,206) Currency variations 266 (2,335)_________________________________________________________________________________Total recognised losses relating to the financial year (13,662) (13,541) Group Balance SheetAt 3 April 2005 (4 April 2004) Unaudited Audited 2005 2004 £'000 £'000_________________________________________________________________________________Fixed assets Goodwill 1,760 3,798Tangible assets 13,568 23,872 ------------ ----------- 15,328 27,670 ------------ ----------- Current assetsStocks 28,030 29,345Debtors 50,381 50,358Cash at bank and in hand 14,962 11,919 ------------ ----------- 93,373 91,622Creditors: amounts falling due within one year:Borrowings and finance liabilities (45,453) (3,883)Other (40,180) (43,292) ------------ ----------- (85,633) (47,175) ------------ -----------Net current assets 7,740 44,447 ------------ -----------Total assets less current liabilities 23,068 72,117 Creditors:Amounts falling due after more than one year:Borrowings and finance liabilities (43) (39,586)Other (8) - ------------ ----------- (51) (39,586) Provisions for liabilities and charges (4,148) -_________________________________________________________________________________ Net assets 18,869 32,531_________________________________________________________________________________ Capital and reservesCalled-up share capital 7,465 7,465Share premium account 20,986 20,986Other reserves (3,766) (4,032)Profit and loss account (5,816) 8,112_________________________________________________________________________________ 18,869 32,531_________________________________________________________________________________ Consolidated Cash Flow StatementFor the financial year ended 3 April 2005 (4 April 2004) Unaudited Audited 2005 2004 Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 8a 1,583 5,614 Return on investments and servicing of finance _______ _______Interest received 59 218Interest paid (3,859) (3,348)Refinancing costs (743) (1,000) _______ _______ Net cash outflow from returns on investments and servicing of finance (4,543) (4,130) Taxation _______ _______UK corporation tax received - 240Overseas tax paid (2,159) (36) _______ _______Tax (paid)/recovered (2,159) 204 Capital expenditure _______ _______Purchase of tangible fixed assets (2,061) (2,243)Sale of tangible fixed assets 7,826 470Disposal of assets held for resale - 1,189 _______ _______Net cash inflow/(outflow) from capital expenditure 5,765 (584)_________________________________________________________________________________Cash inflow before financing 646 1,104 Financing _______ _______Issue of ordinary share capital - 939Net increase in borrowings 1,536 -Net repayment of loans - (3,136)Capital element of finance lease rentals (136) (25) _______ _______Net cash inflow/(outflow) from financing 1,400 (2,222)_________________________________________________________________________________Increase/(decrease) in cash in the financial year 8c 2,046 (1,118)_________________________________________________________________________________ Movement in Shareholders' Funds 2005 2004 £'000 £'000 Loss for financial year (13,928) (11,206)Dividends paid - -Other finance costs of non-equity shares (6) (6) ---------- --------- (13,934) (11,212)Currency variations 266 (2,335)New share capital subscribed - 939Other finance costs of non-equity shares 6 6 ---------- ---------Net decrease in shareholders' funds (13,662) (12,602)Opening shareholders' funds 32,531 45,133 ---------- ---------Closing shareholders' funds 18,869 32,531 ---------- --------- 1 Segment information External sales Total salesTurnover by geographical area by destination by source restated 2005 2004 2005 2004 £'000 £'000 £'000 £'000_________________________________________________________________________________United Kingdom 38,542 41,343 29,810 31,590Other Europe 63,075 56,457 51,500 48,414 -------- -------- -------- --------Total Europe 101,617 97,800 81,310 80,004The Americas 77,325 74,695 77,165 78,456Asia 65,609 65,858 99,648 92,917 -------- -------- 258,123 251,377Less: Intra-group (13,572) (13,024)_________________________________________________________________________________ 244,551 238,353 244,551 238,353_________________________________________________________________________________Turnover by product category 2005 2004 £'000 £'000_________________________________________________________________________________Data/telecommunications 104,409 109,503Powercords 110,882 98,056Harnesses 29,260 30,794_________________________________________________________________________________ 244,551 238,353_________________________________________________________________________________Turnover by market sector 2005 2004 £'000 £'000_________________________________________________________________________________Data/telecommunications 94,296 101,715Consumer appliances 47,836 44,413Consumer electronics 47,821 40,392Industrial and medical 25,588 21,354Vehicle and aerospace 29,010 30,479_________________________________________________________________________________ 244,551 238,353_________________________________________________________________________________ Sales by source have been restated in 2004 to take account of the transfer ofthe business of Volex Powercords Europe to the Group's Asian operations. Operating profit, profit before tax and net assets by geographical area and byclass of business are not given as such disclosure is considered by theDirectors to be seriously prejudicial to the interests of the Group. Allactivity has arisen from continuing operations. 2 Exceptional operating items 2005 2004 £'000 £'000_________________________________________________________________________________Closure of manufacturing facilities 1,399 2,991Impairment of goodwill 1,736 -Impairment of tangible fixed assets 1,223 3,396Lease provisions 3,298 -Under-recovery of insurance claim 876 -Loss on disposal of current asset investment - 293_________________________________________________________________________________ 8,532 6,680_________________________________________________________________________________ In 2005, costs of closure relate to one site in Poland and facilities inMalaysia, Philippines and Conover, North America and include £0.3 million offixed asset write-offs. The remaining goodwill relating to the Brazilianoperations has been written off as have tangible fixed assets relating to anautomated manufacturing line. Provisions have been recorded with respect tothree property leases. The expected under-recovery of the insurance claimrelating to the Tijuana fire has also been recorded. The taxation effect of these exceptional items was £nil. 3 Exchange rates The principal exchange rates used in the preparation of the accounts are: Average % Year End % 2005 2004 Change 2005 2004 Change_________________________________________________________________________________ vs £ vs £United States dollar 1.84 1.68 (8.7) 1.89 1.83 (3.2)Singapore dollar 3.09 2.91 (5.8) 3.12 3.07 (1.6)Euro 1.47 1.44 (2.0) 1.45 1.51 4.1Canadian dollar 2.36 2.29 (3.0) 2.29 2.41 5.2Brazilian real 5.28 4.99 (5.5) 5.02 5.29 5.4Swedish krona 13.35 13.17 (1.3) 13.31 13.92 4.6_________________________________________________________________________________4 Finance charges Finance charges include £743,000 incurred during the year on the negotiation ofthe extension of the Group's bank facilities through to June 2005 andamortisation costs of £189,000 (2004 - £683,000) representing the amortisationof the debt issue costs capitalised in 2003 on renegotiating the Group's bankfacilities for the period through to June 2004. 5 Tax on loss on ordinary activities 2005 2004 The tax charge is based on the loss for the financial year and comprises: £'000 £'000_________________________________________________________________________________Current TaxUK corporation tax - - Foreign tax 2,629 1,840 Adjustments in respect of previous yearsUK corporation tax - 735Foreign tax 930 (134)_________________________________________________________________________________Total current tax 3,559 2,441 Deferred taxationOrigination and reversal of timing differences 52 (208)Decrease in estimate of recoverable deferred tax assets 813 628_________________________________________________________________________________Total deferred tax 865 420_________________________________________________________________________________Total tax on loss on ordinary activities 4,424 2,861_________________________________________________________________________________ 6 Loss per ordinary share The calculations of loss per share are based on the following losses and numbers of shares: 2005 Per Share 2004 Per Share £'000 p £'000 p_________________________________________________________________________________Loss for the financial year (13,928) (47.1) (11,206) (39.1)Other finance costs of non-equity shares (6) (0.1) (6) -_________________________________________________________________________________Basic loss (13,934) (47.2) (11,212) (39.1)Goodwill amortisation 302 1.0 328 1.1Exceptional operating items (note 2) 8,532 28.9 6,680 23.3Exceptional item - profit on disposal of properties (1,918) (6.5) - -_________________________________________________________________________________Adjusted loss (7,018) (23.8) (4,204) (14.7)_________________________________________________________________________________ No. of Shares No. of Shares_________________________________________________________________________________Weighted average number of shares: 29,540,692 28,650,462_________________________________________________________________________________Adjusted loss per share (23.8)p (14.7)pBasic loss per share (47.2)p (39.1)p Adjusted loss per share has been calculated on the basis of continuingactivities before goodwill amortisation, operating exceptional items and profiton disposal of properties, in each case net of tax. The directors consider thatthis loss per share calculation gives a better understanding of the Group's lossper share in the year and the prior year. As the Group recorded a loss pershare, the share options are anti dilutive and therefore there is no differencebetween the basic and dilutive loss per share._________________________________________________________________________________7 Dividend on equity shares The directors do not recommend a dividend for the year ended 3 April 2005 (2004- £nil). 8 Consolidated cash flow statement a. Reconciliation of operating loss to net cash inflow 2005 2004 from operating activities £'000 £'000_________________________________________________________________________________Operating loss (7,306) (4,522)Depreciation charges and impairment 5,943 9,766Goodwill amortised and impaired 2,038 328Government grants (19) (150)Loss on sale of tangible fixed assets and asset held for resale - 293Decrease/(increase) in stocks 1,264 (1,376)Increase in debtors (297) (2,788)(Decrease)/increase in creditors (3,800) 4,063Increase in provisions 3,760 -_________________________________________________________________________________Net cash inflow from operating activities 1,583 5,614_________________________________________________________________________________Net cash inflow from operating activities pre cash outflows from exceptional operating items 1,975 8,067 Cash outflows from exceptional operating items (392) (2,453)_________________________________________________________________________________Net cash inflow from operating activities 1,583 5,614_________________________________________________________________________________b. Analysis of net debt: 4 April Other Non-cash Exchange 3 April 2004 Cash Flow Changes Movement 2005 £'000 £'000 £'000 £'000 £'000_________________________________________________________________________________ ________Cash at bank and in hand 11,919 3,096 - (53) 14,962Overdraft (2,971) (1,050) - (5) (4,026) ________ 2,046 ________Debt due after one year (39,652) 619 39,689 (656) -Debt due within one year (819) (2,155) (39,689) 1,374 (41,289)Finance leases (216) 136 (101) - (181) ________ (1,400)Issue costs 189 (189) - -_______________________________________________________________________________________Net debt (31,550) 646 (290) 660 (30,534)_______________________________________________________________________________________ Non-cash changes relate to new finance leases entered into during the year, amortisation of issue costs and reclassifications of banking facilities to be due within one year. 2005 2004c. Reconciliation of net cash flow to movement in net debt: £'000 £'000_________________________________________________________________________________Increase/(decrease) in cash in the financial year 2,046 (1,118)Cash (inflow)/outflow from (increase)/decrease in debt & lease financing (1,400) 3,161_________________________________________________________________________________Change in net debt resulting from cash flows 646 2,043 New finance leases (101) (216)Amortisation of debt issue costs (189) (683)Translation difference 660 5,238_________________________________________________________________________________Movement in net debt in the financial year 1,016 6,382 Net debt - beginning of financial year (31,550) (37,932)_________________________________________________________________________________Net debt - end of financial year (30,534) (31,550)_________________________________________________________________________________ 9 Miscellaneous (i) The current and prior year results set out in this announcement are non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. (ii) The results for the financial year ended 3 April 2005 are unaudited. The accounts for this financial year will be filed in due course once they have been completed and audited. The auditors have not made a statement under Section 235 of the Companies Act 1985 in respect of these accounts. (iii) The results for the financial year ended 4 April 2004 are extracts from the 2004 Group statutory accounts, which have been reported upon without qualification by the auditors and did not contain a statement under Section 237 (2) and (3) of the Companies Act 1985. The accounts have been delivered to the Registrar of Companies for England and Wales. (iv) The preliminary announcement has been prepared using the accounting policies stated in the Annual Report and Accounts for the financial year ended 4 April 2004. There have been no changes to the accounting policies in the financial year ended 3 April 2005. (v) The preliminary announcement was approved by the Board of Directors on 3 June 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Volex