Half-year Report for Volex plc

9 November 2018

VOLEX plc

Half year results for the 26 weeks ended 30 September 2018

'Solid half year performance underpinned by underlying operating profit organic growth of 48% '

Volex plc ('Volex'), the global provider of cable assemblies, today announces its interim results for the 26 weeks to 30 September 2018 ('H1 FY2019').

Financial Summary	26 weeks to 30 September 2018	26 weeks to 1 October 2017	% Change
Revenue	$182.4m	$161.4m	13.0
Underlying* operating profit	$9.9m	$5.5m	80.9
Statutory operating profit	$5.7m	$5.1m	12.8
Underlying* profit before tax	$9.0m	$4.5m	98.2
Statutory profit before tax	$4.9m	$4.2m	16.7
Basic earnings per share	2.7c	3.9c	(30.8)
Underlying diluted earnings per share	5.8c	4.3c	34.9
Net cash	$24.9m	$5.8m	430.4

* Before adjusting items (non-recurring items and amortisation of acquired intangibles) and share-based payments

 

Operational highlights

·     Completed the acquisitions of MC Electronics LLC and Silcotec Europe Limited during the half year.  Both businesses are performing well and expand Volex's customer base and manufacturing footprint in complex cable assemblies.

·     Significant profit margin improvement in our Power division as a result of management actions to reduce excess capacity in Shenzhen, consolidate PVC production in Zhongshan, exit low margin business and successfully manage input cost inflation.

·     We expect to continue to reduce our production costs over the next 12 months through a focus on automation and product standardisation. 

Financial highlights

·     Underlying operating profit of $9.9 million is up 80.9% on the prior year.  Stripping out the contributions from the newly acquired entities, organic growth was 48.4% reflecting improvements in both the Power and Cable Assembly divisions.

·     Organic revenue growth of 3.5% in the period despite a 32.5% reduction in revenue with our largest Power customer.  Growth was seen in virtually all other key accounts such that with the largest Power customer stripped out, organic revenue growth was 10%.

·     Placing of 48 million new shares generated net cash proceeds of $46.7 million.  $11.3 million was utilised in the acquisition of Silcotec with the balance being used to fund investment, working capital and future accretive acquisitions.  Net cash at the period end was $24.9 million.

 

Nat Rothschild, Executive Chairman, said:

"I am pleased to report that the actions we have taken over the past two years are reflected in the solid financial results announced today.  This progress has been made possible by a rejuvenated management team with a clear strategy focused on driving shareholder returns.  As part of our future plans we intend to further enhance our senior management team through selective recruitment whilst further developing our factory teams with training and development programmes aligned to our growth objectives.  Through careful planning, we believe we will return value to our shareholders.   

Thanks to the support of those shareholders, we were able to raise $46.7 million of cash in the first half of the year through a placing of shares.  This cash has been used to

·     deleverage the balance sheet, leaving Volex in a strong financial position;

·     fund the acquisition of Silcotec Europe Limited and provide funds for future accretive acquisitions;

·     enable investment in factory rationalisation and automation; and

·     increase our capabilities in new product development, especially in the fast growing electric vehicle space.

The acquisition of Silcotec, following the acquisition earlier in the year of MC Electronics LLC, was part of Volex's strategy to grow the Cable Assemblies division both organically and through targeted acquisitions in this highly fragmented marketplace.   It is our aim to build a well-diversified, global Cable Assemblies business, providing the highest standard of quality and service to customers in the medical and industrial equipment markets.

Both acquisitions are trading in line with plan and to date have contributed $15.3 million to Group revenue and $1.8 million to underlying operating profit.  During the second half of the year we plan to step up the level of integration in both businesses so that we may maximise the benefits arising from an enlarged Cable Assemblies division.

The acquisitions have not detracted from the performance of the 'traditional' Volex business where we continue to drive efficiency, process and supply chain improvements across our facilities through a renewed commitment to lean manufacturing.  This approach coupled with organic revenue growth of 3.5% has resulted in an underlying operating profit growth of 48.4%.  And this despite a further managed reduction of 32.5% in the revenues derived from our largest Power customer.  To counter this decline we are in the early stages of assessing our options regarding the relocation of our manufacturing operations in Shenzhen where approximately 50% of our site is owned with the remaining 50% on a lease expiring in 2021.

The revenue growth away from our largest Power customer can largely be attributed to our core customers in the healthcare, high-speed cabling solutions and electric vehicle charging sectors who value our product and service offering and our reputation for quality.  The profit improvement flows from the additional volumes passing through our factories, ongoing tight cost control (which includes the reduced cost base from previous restructuring activities undertaken) and improved manufacturing processes.  With the setting up of a dedicated PVC power cords factory in the prior year, we have introduced our first two automated production lines with further automation planned for the second half of the year.

Outlook

Volex's core markets are expected to remain highly competitive and the US trade tariffs imposed on China imports has created uncertainty in the marketplace.  However, the Board believes that the increase in tariffs from 10% to 25% in January 2019 provides the Group with a competitive opportunity.  Few of Volex's China based competitors have an international factory footprint and we are already engaging with customers about the possibility of transferring production from China to one of our alternate factories.    

Going forward, we are seeing the cost price pressure ease with the copper price dropping back and the US Dollar strengthening against our key manufacturing currencies. 

With a continuing strong sales pipeline, the Board is optimistic about the future outlook and expects full year trading performance slightly ahead of market expectations. 

Further we are in discussion with several potential acquisition targets and we expect to make further announcements in this regard in the second half of the year".

 

For further information please contact:

Volex plc

Nat Rothschild, Group Executive Chairman                                              +65 6788 7833

Daren Morris, Group Chief Financial Officer                                             +44 7909 995887

Liberum

Nominated adviser and broker                                                                      +44 203 100 2000

Steve Pearce & Euan Brown

 

 

RESULTS FOR THE 26 WEEKS ENDED 30 September 2018

Overview

The Board is pleased to report its results for the half year to 30 September 2018 which has seen the Group continue on its path to recovery, improving upon the prior first half year's profit performance, which itself was the best first half performance in five years. 

$'000	Traditional	Acquisitions	26 weeks ended 30 September 2018 Total	26 weeks ended 1 October 2017 Total
Revenue	167,086	15,341	182,427	161,449
Cost of Sales	(136,688)	(11,716)	(148,404)	(132,578)
Underlying gross profit*	30,398	3,625	34,023	28,871
Underlying gross margin	18.2%	23.6%	18.7%	17.9%
Operating costs	(22,289)	(1,849)	(24,138)	(23,407)
Underlying operating profit*	8,109	1,776	9,885	5,464
Underlying operating margin	4.9%	11.6%	5.4%	3.4%

                   * Before adjusting items (non-recurring items and amortisation of acquired intangibles) and share-based payments

During the half year, the Group completed the acquisitions of MC Electronics LLC ('MC') and Silcotec Europe Limited ('Silcotec').  Both acquisitions are to be included within the Cable Assemblies division and are currently trading in line with their acquisition plan.  Full operational integration will occur in the second half of the year primarily in respect of IT, procurement and sales so that Volex maximises the benefits arising from an enlarged Cable Assemblies division.

MC and Silcotec have contributed $15.3 million to the half year revenue with 88% of that revenue derived from customers that Volex had little or no relationship with prior to acquisition.  This has made a significant contribution to the Group's strategy of diversifying the customer base.   The underlying gross margin achieved by the two entities is ahead of the rest of the group partly due to their product mix (higher margin healthcare cable assemblies as opposed to commoditised power cords) and partly due to better factory utilisation and productivity.  The underlying operating profit margin is ahead of the rest of the group due to the lower corporate costs carried by both businesses.

Excluding the acquisitions (the 'traditional' Group), revenue increased by 3.5% with this growth split across the two divisions and across numerous accounts.  In particular, our healthcare, high-speed cabling solutions and electric vehicle charging sectors performed well.  This growth came despite a 32.5% fall in the revenues derived from our largest Power customer.  We expect revenues from this customer to continue to decline as they look to go 'cordless' in the next few years, however, as this half year has shown we are now well equipped to manage this scenario.

Part of the revenue increase was due to the sharing of input cost inflation with our customers.  Of those input costs, copper (a key component of our power cables) was on average 20.3% more expensive in H1 FY2019 compared to H1 FY2018.  Similarly the US Dollar has been weaker in H1 FY2019 versus H1 FY2018 against our key manufacturing currencies of the Chinese Renminbi (average 3.8% weaker) and the Polish Zloty (average 3.6% weaker), pushing up local manufacturing costs such as direct labour and utility costs. 

Whilst targeted price increases partially mitigated the impact of input cost inflation, an improvement in underlying gross margin was observed in the traditional business due to the leveraging effect of passing higher volumes through our factories which help absorb the fixed overheads.  Further improvements in productivity and scrap rates following the roll-out of Kaizen manufacturing initiatives helped push the underlying gross margin up to 18.2%.  In the second half of the year, we expect the new automated production lines to further drive productivity improvements.

The underlying operating profit from the traditional Volex business at $8.1m was up 48.4% on prior year.  Despite the increased activity, the Group's continued tight cost control has ensured that operating costs did not grow accordingly.  The actual recorded decline was in part due to a reduced number of new product development projects with our largest Power customer and in part due to a foreign exchange gain made from the US Dollar strengthening against all currencies at the end of the half year.

During the period, the Group announced the closure of its Indian manufacturing facility.  Several of the key accounts previously served by the Indian factory have been retained and will be serviced from either our Poland or China factories.  As part of the India factory closure, Volex has incurred non-recurring closure costs of $0.7 million, of which $0.4 million were cash costs primarily in relation to redundancies and retention bonuses (several key personnel were paid bonuses to help close the factory in an orderly manner).  During the review of the balance sheet, certain accounting irregularities were identified that have been fully provided for and appropriate action taken.  This gave rise to an additional net $0.3 million charge.

During the half year, the US administration implemented a 10% trade tariff on certain products imported from China.  These tariffs were effective as of 24 September 2018 with an expectation that the tariff will rise to 25% in January 2019.  Volex views these tariffs as a competitive opportunity since very few of Volex's Chinese rivals have a global factory footprint to rival Volex.  We are currently seeing interest from several of our customers in exploring the opportunity to move production from our China sites to an alternate Volex factory.

Further detailed analysis of the trading divisions is given on the subsequent pages.

 

Trading performance

Power Cords Division

$'000	26 weeks ended 30 September 2018	26 weeks ended 1 October 2017 (Restated*)	52 weeks ended 1 April 2018 (Restated*)
Revenue	104,235	100,536	203,569
Underlying gross profit	18,799	16,131	33,877
Underlying gross margin	18.0%	16.0%	16.6%
Operating costs	(10,735)	(11,206)	(21,765)
Underlying operating profit	8,064	4,925	12,112
Underlying operating margin	7.7%	4.9%	6.0%

* Certain revenues and costs associated with specific customers were transferred between

   the Power Cords and Cable Assemblies division in order that each factory could be wholly

   identifiable as a Power Cords or Cable Assemblies contributor.

Volex designs and manufactures power cords, duck heads and related products that are sold to the manufacturers of a broad range of electrical and electronic devices and appliances.  Volex products are used in laptops, PCs, tablets, printers, TVs, games consoles, power tools, kitchen appliances, vacuum cleaners and electric vehicles. 

The Power division revenue for H1 FY2019 was $104.2 million, up 3.7% on the prior period.  This performance was despite the division's largest customer continuing its decline with revenue down 31.7% on the prior year.  As previously highlighted, this customer's laptop range is now being sold with a USB-C charger rather than a traditional power cord with other Volex legacy products also being designed out.  Further end-consumer demand for new products manufactured by this customer, that we supply power cords for, has been weak resulting in disappointing sales.  We now believe that business with this customer will continue its decline as this customer looks to go cordless over the next few years and duck head products reach end of life.   As the above numbers show, however, loss of this business does not have a significant detrimental impact on the division due to the low margins achieved.  Divisional management has begun assessing the future options for the Shenzhen facility where all of this customer's manufacturing takes place, including the possible relocation of our manufacturing operations since only c.50% of the site is owned with the remainder held on a lease expiring in 2021.

Off-setting the decline with the division's largest customer, Volex saw significant growth across many other key accounts with sales to one of the world's leading electric vehicle manufacturers up by 82%.  Given that commercial production with this customer began only last year, its rise to being a top ten account has been rapid. Other accounts showing strong growth cover diverse sectors including home power tools, commercial refrigeration, coffee makers and data centres.  Even the accounts relating to laptops, PCs and printers showed modest growth, reversing a downward trend observed over the past few years.  

In addition to increased volumes, divisional management and the sales team had success in sharing some of the input cost price inflation the division was experiencing with our customers.  The cost of copper, a key conducting element of our power cords, was on average 20.3% more expensive in H1 FY2019 compared to H1 FY2018.  At the end of the period the copper price had dropped back with an approximate 12% decline but this will not impact Volex until the second half of the year.  Similarly with the key Power manufacturing sites based in China, an average 3.8% weakening in the US Dollar against the Renminbi pushed up the cost of the China direct labour force and local costs.  By the period end, however, the US Dollar had strengthened so the labour cost pressure is expected to ease in the second half. 

With targeted price increases helping negate some of the cost price inflation, the gross margin has been further enhanced by the ongoing programme of removing negative margin products from our portfolio and improvements in productivity and scrap rates following the roll-out of Kaizen manufacturing initiatives.  In the past, products were often priced in batches with the return on an overall batch analysed rather than the individual products.  However, over time our customers became more sophisticated and would buy from us just those products on which we had a lower price and therefore a negative margin.  For the past few years, Volex has worked to eliminate these negative margin products with over 100 part numbers re-priced in the past half year.  Going forward, Volex hopes to eliminate all negative margin products in the second half of the year.

As noted in the FY2018 year-end accounts, in the prior year a strategic decision was taken to transfer all PVC production from Shenzhen to Zhongshan since with all PVC production under one roof, better asset utilisation, better management of factory floor space and overhead savings could all be achieved.  Further the greater production volumes would provide better conditions for automation.  To this end, 5 PVC lines were transferred in FY2018 with a further 6 lines transferred in H1 FY2019.  In August 2018, Zhongshan introduced its first two fully automated production lines, one for EU power cord production and one for the US.  Productivity gains are already being observed as a result of this change.

To further enhance the level of automation within Volex, Volex needs to standardise the Power product offering, reducing the number of variants of essentially the same product.  As a result, a new range of products was developed in the half year.  The engineering team is currently working to secure safety approvals on these new products and once certified all new sales will be made using the new range with Volex also looking to transition existing customers across. 

Thanks to the leveraging effect of increased volumes, the negotiated price increases arising from the higher input costs, the removal of negative margin products and the improved manufacturing processes, the gross margin within the division increased to 18.0%. 

Operating costs have been closely monitored throughout the period and the rigorous cost control policies implemented over the past few years remain in place.  The reduction in cost since the prior half year is primarily due to the reduced level of new product development with the division's largest customer.

As a consequence of the above, underlying operating profit has increased by 63.8% to $8.1 million.

 

Cable Assemblies Division

$'000	26 weeks ended 30 September 2018	26 weeks ended 1 October 2017 (Restated*)	52 weeks ended 1 April 2018 (Restated*)
Traditional Acquisitions	62,851 15,341	60,913 -	118,808 -
Revenue	78,192	60,913	118,808
Underlying gross profit	15,224	12,740	22,112
Underlying gross margin	19.5%	20.9%	18.6%
Operating costs	(9,976)	(9,717)	(18,590)
Underlying operating profit	5,248	3,023	3,522
Underlying operating margin	6.7%	5.0%	3.0%

* Certain revenues and costs associated with specific customers were transferred between

   the Power Cords and Cable Assemblies division in order that each factory could be wholly

   identifiable as a Power Cords or Cable Assemblies contributor.

Volex designs and manufactures a broad range of cables and connectors (ranging from high speed copper and fiber-optic cables to complex customised optical cable assemblies) that transfer electronic, radio-frequency and optical data. Volex products are used in a variety of applications including data networking equipment, data centres, wireless base stations and cell site installations, mobile computing devices, medical equipment, factory automation, vehicle telematics, agricultural equipment and alternative energy generation.

Revenue for H1 FY2019 was $78.2 million, up 28.4% on the prior period.  Stripping out the revenue contribution from the acquired MC and Silcotec entities, the revenue increase is reduced to 3.2%.  This increase arose principally from the high-speed interconnect solutions and healthcare sectors with a large online retailer providing significant growth in the period.  This growth has been partially off-set by the decline seen from a key US transportation and telematics customer.  As we have noted previously, demand from this customer is cyclical and after a year of high demand, this year Volex is seeing reduced activity. 

The underlying gross profit has increased to $15.2 million from $12.7 million, representing a gross margin of 19.5% (H1 FY2018: 20.9%).  The reduction in margin is due to price downs given to two key customers whilst at the same time Volex suffered from cost price inflation.  Divisional management is optimistic that with a renewed operational focus, we can reverse much of this decline.

Operating costs have increased by $0.3 million to $10.0 million, however, of this $1.8 million related to the two new acquisitions. The traditional Volex business saw a decline in costs of $1.5m with a $0.8 million reduction due to foreign exchange (US Dollar strengthened significantly against the Renminbi and the Polish Zloty) and a $0.5 million saving on legal fees associated with the closure of Volex Brazil.    

As a result of the above, underlying divisional operating profit for the period increased from $3.0 million in H1 FY2018 to $5.2 million in H1 FY2019.

 

Adjusting items and share-based payments

Adjusting items and share-based payments totalled $4.1 million in the period (H1 FY2018: $0.4 million).

Adjusting items replace the previously disclosed non-recurring items. The new description expands on the previous disclosure to not only include costs that are one-off in nature and significant (such as restructuring costs, impairment charges or acquisition related costs) but to also include the non-cash amortisation of intangible assets.

Included within the $4.1 million is $1.9 million of restructuring costs.  Restructuring of the Shenzhen factory continued as Volex responded to the declining business from the Power division's largest customer resulting in $1.5 million of severance payments.  A further $0.7 million charge has been incurred through the closure of the Volex factory in India comprising severance payments ($0.3 million), retention payments made to certain key staff ($0.1 million) and a net $0.3 million charge to impair non-recoverable assets.  Off-setting these two charges is a credit of $0.3 million in relation to the release of certain provisions booked a number of years ago for which settlement has now become time-barred. 

$0.8 million of costs have been incurred in the period in relation to legal fees on the acquisitions of MC Electronics and Silcotec plus post-acquisition retention payments due. 

Associated with the acquisitions, Volex has recognised certain intangible assets including non-compete agreements, customer relationships and order backlogs.  As at 30 September 2018, these intangibles are provisional and subject to change during the annual subsequent measurement period following each acquisition.  The amortisation of these intangibles is non-cash and totals $0.6 million for the period, split $0.4 million for Silcotec and $0.2 million for MC Electronics.  

The share-based payments expense of $0.8 million is higher than the prior half year due to the fact that H1 FY2018 benefitted from a significant credit arising on the lapse of certain share options.

Tax

The Group incurred a tax charge of $1.5 million (H1 FY2018: $0.7 million) representing an underlying effective tax rate of 18.1% (H1 FY2018: 14.8%), consistent with our expectation of the underlying ETR for the full year.  The increase in the ETR reflects tax charges due on recent acquisitions and additional withholding tax on undistributed reserves.

 

Half year position and cash flows

Balance sheet and refinancing

Net assets as at H1 FY2019 are $106.2 million, up $58.0 million from the prior year end.  The principal reason for the increase is the $46.7 million raised through the placing of 45 million shares and the $6.7 million of equity issued in consideration for the acquisitions of MC Electronics and Silcotec.

The table below summarises the impact of the two acquisitions made:

 

$'000	Traditional	Acquisitions	30 September 2018 Total	1 April 2018 Total
Non-current assets
Goodwill	2,451	5,136	7,587	2,633
Other intangible assets	591	5,540	6,131	498
Property, plant and equipment	16,777	3,806	20,583	17,406
Other long term assets	6,319	313	6,632	4,069
	26,138	14,482	40,933	24,606
Net current assets (excluding cash and overdraft)
Inventories	43,143	8,393	51,536	40,686
Trade receivables	64,510	7,596	72,106	56,199
Trade payables	(44,100)	(2,250)	(46,350)	(54,181)
Other Working capital	(28,651)	(2,512)	(31,163)	(22,329)
	34,902	11,227	46,129	20,375
Long term liabilities	(5,511)	(295)	(5,806)	(6,785)
Net funds	22,429	2,507	24,936	9,948
Net assets	77,958	28,234	106,192	48,144

  

Goodwill and other intangibles (non-compete agreements, customer relationships and order backlogs) have been recognised on the acquisition of both MC Electronics and Silcotec. 

Inventory in the traditional Volex business has increased on year end by $2.5 million, partly due to the increased level of trade but also due to buffer stock having been built up in advance of the transfer of the PVC lines from Shenzhen to Zhongshan.  Additionally the lead time on raw materials used in our Electric Vehicle chargers is longer than the raw material for standard power cords and therefore Volex holds a higher level of raw material in order to meet customer demand.

Trade receivables in the traditional business has increased by $8.3 million on year end due to the higher level of business activity whilst trade payables has decreased by $10.1 million since with net funds following the equity raise, Volex is taking advantage of prompt payment discounts.

At 30 September 2018, the Group had net funds of $24.9 million.  The Group's senior credit facility runs to June 2019 with no elements (other than the letter of credit facility) drawn at half year.  At present the net funds are sufficient for the Group to continue in operations for the foreseeable future with no requirement for a credit facility.  Volex is currently considering its financing options for the period post June 2019.

 Cash flows

Net cash increased from $9.9 million at 1 April 2018 to $24.9 million at 30 September 2018.  This increase was primarily due to the $46.7 million raised through the equity issue in June 2018 (48 million shares issued at £0.75 each) less the net $9.4 million consideration paid on the acquisition of MC Electronics and Silcotec, a $2.3 million payment post Silcotec acquisition to release it from a loan obligation and a $18.8 million cash outflow from operations (H1 FY2018: $0.4 million).

The cash outflow from operations has arisen due to the large movement in working capital since the prior year end, including:

·     an increase in inventory leading to a cash outflow of $2.8 million (H1 FY2018 outflow of $5.3 million).  This increase is due to the increased level of trade, the seasonality of the Power business (stock tends to be higher in September than March due to pre-Christmas activity) and a build of buffer stock in advance of the transition of further PVC lines to Zhongshan.  

·     an increase in receivables leading to a cash outflow of $12.9 million (H1 FY2018 outflow of $6.1 million).  This increase is due to the increased level of trade plus the fact that the Silcotec business was acquired without any trade receivables.  The cash collection of invoices raised prior to the acquisition date was left with the seller, with Volex responsible only for cash collection on sales post-acquisition.  At half year-end, Silcotec trade debtors totalled $5.1 million and the entirety of this increase is within the $12.9 million movement.

·     a decrease in payables of $11.5 million.  Due to the surplus cash, the Group decided to take advantage of prompt payment discounts offered by several key suppliers in order to improve margins. 

Impact of Brexit

At the time of writing, the exact nature of the UK's future trading relationship with the EU is still unclear.  At present our Power sales into Europe are manufactured in Asia and then shipped to Tilbury docks in Essex before onward shipment to the end customer.  Annual European sales from our Power division is approx. $14 million with roughly half of these sales remaining in the UK for a UK end customer. We have already begun looking for an alternate dock on mainland Europe to take delivery of the half of sales destined for EU end customers.  For our Cable Assembly sales, the level of sales to UK customers is small.  Therefore we believe the impact upon the business will be minimal. 

 

Risks and uncertainties

Risks to Volex are anticipated and regularly assessed and internal controls are enhanced where necessary to ensure that such risks are appropriately mitigated. The principal risks and uncertainties facing the Group in the second half of the year remain those detailed in the FY2018 Annual Report and Accounts on pages 25 to 29, a copy of which is available on the website at www.volex.com.

The principal risks and uncertainties are summarised as:

·     Competitor risk;

·     Customer concentration;

·     Key personnel retention;

·     Quality and product failure;

·     Product development;

·     Supplier dependency;

·     Investment valuation and integration;

·     Breach of financial covenants and liquidity;

·     Copper price volatility;

·     Foreign exchange rate movements;

·     Compliance with legislation and regulations; and

·     Corporate Governance.

 

Responsibility statement

We confirm that to the best of our knowledge:

·     the condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU.

·     the interim management report includes a fair review of the information required by DTR 4.2.7R:

o  an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements, and

o  a description of the principal risks and uncertainties for the remaining six months of the year.

·     the interim management report includes a fair review of the information required by DTR 4.2.8R:

o  related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group in that period, and

o  any changes in the related party transactions described in the Annual Report 2018 that could have a material effect on the financial position or performance of the Group in the current period.

 

Nat Rothschild                                                                                    Daren Morris

Executive Chairman                                                                         Group Chief Financial Officer

9 November 2018                                                                              9 November 2018

 

 

Unaudited consolidated income statement                                        

For the 26 weeks ended 30 September 2018 (26 weeks ended 1 October 2017)

 

		26 weeks ended 30 September 2018			26 weeks ended 1 October 2017
		Before Adjusting items	Adjusting Items and share-based payments	Total	Before Adjusting items	Adjusting Items and share-based payments	Total
	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Revenue	2	182,427	-	182,427	161,449	-	161,449
Cost of sales		(148,404)	(1,666)	(150,070)	(132,578)	-	(132,578)
Gross profit		34,023	(1,666)	32,357	28,871	-	28,871
Operating expenses		(24,138)	(2,495)	(26,633)	(23,407)	(388)	(23,795)
Operating profit/(loss)	2	9,885	(4,161)	5,724	5,464	(388)	5,076
Share of net profit/(loss) from associates		(210)	-	(210)	(52)	-	(52)
Finance income		42	-	42	8	-	8
Finance costs		(703)	-	(703)	(873)	-	(873)
Profit/(loss) on ordinary activities before taxation		9,014	(4,161)	4,853	4,547	(388)	4,159
Taxation	4	(1,628)	88	(1,540)	(674)	-	(674)
Profit/(loss) for the period attributable to the owners of the parent		7,386	(4,073)	3,313	3,873	(388)	3,485
Earnings/(loss) per share (cents)
Basic	5	6.0		2.7	4.4		3.9
Diluted	5	5.8		2.6	4.3		3.8

 

					52 weeks ended 1 April 2018
					Before Adjusting items	Adjusting Items and share-based payments	Total
	Notes				$'000	$'000	$'000
Revenue	2				322,377	-	322,377
Cost of sales					(266,388)	(146)	(266,534)
Gross profit					55,989	(146)	55,843
Operating expenses					(44,532)	(2,538)	(47,070)
Operating profit/(loss)	2				11,457	(2,684)	8,773
					(192)	-	(192)
Finance income					20	-	20
Finance costs					(1,606)	-	(1,606)
Profit/(loss) on ordinary activities before taxation					9,679	(2,684)	6,995
Taxation	4				(1,519)	(1,551)	(3,070)
Profit/(loss) for the period attributable to the owners of the parent					8,160	(4,235)	3,925
Earnings/(loss) per share (cents)
Basic	5				9.2		4.4
Diluted	5				8.9		4.3

 

 

 

Unaudited consolidated statement of comprehensive income  

For the 26 weeks ended 30 September 2018 (26 weeks ended 1 October 2017)

 

	26 weeks to  30 September 2018	26 weeks to  1 October 2017	(Audited) 52 weeks to  1 April 2018
	$'000	$'000	$'000
Profit/(loss) for the period	3,313	3,485	3,925
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes	331	617	870
Tax relating to items that will not be reclassified	-	-	-
	331	617	870
Items that may be reclassified subsequently to profit or loss:
Gain/(loss) on hedge of net investment taken to equity	-	-	-
Gain/(loss) arising on cash flow hedges during the period	(626)	253	(265)
Exchange gain/(loss) on translation of foreign operations	437	(2,485)	(3,631)
Tax relating to items that may be reclassified	-	-	-
	(189)	(2,232)	(3,896)
Other comprehensive income/(loss) for the period	142	(1,615)	(3,026)
Total comprehensive income/(loss) for the period	3,455	1,870	899

 

 

Unaudited consolidated statement of financial position                              

As at 30 September 2018 (1 October 2017)

	Note	30 September 2018 $'000	1 October  2017 $'000	(Audited) 1 April 2018 $'000
Non-current assets
Goodwill		7,587	2,584	2,633
Other intangible assets		6,131	544	498
Property, plant and equipment		20,583	17,709	17,406
Investments in associates		-	248	226
Other receivables		2,321	759	1,560
Deferred tax asset		4,311	2,955	2,283
		40,933	24,799	24,606
Current assets
Inventories		51,536	41,628	40,686
Trade receivables		72,106	60,030	56,199
Other receivables		6,917	8,091	7,376
Current tax assets		713	178	948
Derivative financial instruments		46	688	192
Cash and bank balances	8	24,647	23,464	24,830
		155,965	134,079	130,231
Total assets		196,898	158,878	154,837
Current liabilities
Borrowings	8	-	1,003	1,849
Trade payables		46,350	54,953	54,181
Other payables		30,074	27,211	25,576
Current tax liabilities		6,416	4,579	4,030
Retirement benefit obligation		881	770	947
Provisions		703	362	292
Derivatives financial instruments		476	-	-
		84,900	88,878	86,875
Net current assets		71,065	45,201	43,356
Non-current liabilities
Borrowings	8	-	16,667	13,033
Other payables		1,419	463	1,080
Non current tax liabilities		-	-	1,242
Deferred tax liabilities		2,568	1,326	2,008
Retirement benefit obligation		1,466	2,971	2,370
Derivative financial instruments		10	-	-
Provisions		343	85	85
		5,806	21,512	19,818
Total liabilities		90,706	110,390	106,693
Net assets		106,192	48,488	48,144
Equity attributable to owners of the parent
Share capital	6	58,111	39,755	39,755
Share premium account		42,807	7,122	7,122
Non-distributable reserve		2,455	2,455	2,455
Hedging and translation reserve		(8,339)	(6,486)	(8,150)
Own shares	7	(792)	(867)	(867)
Retained earnings		11,950	6,509	7,829
Total equity		106,192	48,488	48,144

 

Unaudited Consolidated Statement of Changes in Equity

For the 26 weeks ended 30 September 2018 (26 weeks ended 1 October 2017)

 

	Share capital	Share premium account	Non-distributable reserves	Hedging and translation reserve	Own shares	Retained earnings/ (losses)	Total equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance 2 April 2017	39,755	7,122	2,455	(4,254)	(867)	2,096	46,307
Profit for the period attributable to the owners of the parent	-	-	-	-	-	3,485	3,485
Other comprehensive income/ (loss) for the period	-	-	-	(2,232)	-	617	(1,615)
Total comprehensive income/ (loss) for the period	-	-	-	(2,232)	-	4,102	1,870
Reserve entry for share option charges/(credit)	-	-	-	-	-	311	311
Balance at 1 October 2017	39,755	7,122	2,455	(6,486)	(867)	6,509	48,488
Balance 1 April 2018	39,755	7,122	2,455	(8,150)	(867)	7,829	48,144
Profit for the period attributable to the owners of the parent	-	-	-	-	-	3,313	3,313
Other comprehensive income/ (loss) for the period	-	-	-	(189)	-	331	142
Total comprehensive income/ (loss) for the period	-	-	-	(189)	-	3,644	3,455
Shares issued	18,205	35,685	-	-	-	-	53,890
Exercise of deferred bonus shares	151	-	-	-	-	(151)	-
Own shares sold/(utilised) in the period	-	-	-	-	75	(31)	44
Reserve entry for share option charges/(credit)	-	-	-	-	-	659	659
Balance at 30 September 2018	58,111	42,807	2,455	(8,339)	(792)	11,950	106,192