Slide 1: Full Year Results for the 53 Weeks Ended 5 April 2020
FULL YEAR RESULTS FOR THE 53 WEEKS ENDED 5 APRIL 2020
Slide 2: Overview
2 OVERVIEW 46% increase in Underlying operating Revenue of $391m an underlying operating margin up to 8.1% improvement of 5.2% Successfully profit to a record from 5.8% driven by against the previous delivering $32m better sales mix with year a move to higher diversified growth margin sales and exce
Slide 3: Financial Results
3 FINANCIAL RESULTS
Slide 4: Performance Highlights
4 PERFORMANCE HIGHLIGHTS Improved profitability Exceptional cash generation Reinvestment and return • Operating profit margins are • Free cash flow has improved DRAFT • Return to paying a dividend significantly better at 8.1% to $48.8m this year with full year pay- (target is 10%) out of 3.0p per sh
Slide 5: Financial Performance
5 FINANCIAL PERFORMANCE Significantly improved profitability Exceptional cash generation EPS growth and reinstated dividend Underlying Group operating profit margin Underlying free cash flow Underlying basic EPS 8.1% 18.2 cents 5.8% $48.8m 13.1 cents DRAFT 3.6% -$7.6m 2018 2019 2020 2019 2020 2019 2
Slide 6: Financial Performance
6 FINANCIAL PERFORMANCE $m (except where stated) 2020 2019 Change Revenue 391.4 372.1 5.2% • Revenue up 27% in Integrated Manufacturing Underlying operating profit 31.6 21.6 46.3% Services as a result of M&A activity in the last two years Underlying operating margin 8.1% 5.8% 230 bps • Margin improv
Slide 7: Group Revenue
7 GROUP REVENUE • Revenue up 12% in Integrated Manufacturing Services before the acquisition of Servatron • Sales reduction in Power Products has been consistently flagged – we exited low margin business • Electric vehicle products starting to ramp up in Power Products • We estimate that the Covid-1
Slide 8: Integrated Manufacturing Services – Financial Overview
8 INTEGRATED MANUFACTURING SERVICES – FINANCIAL OVERVIEW $m (except where stated) 2020 2019 Change Revenue 220.3 173.2 27.2% • Revenue up 27% in Integrated Manufacturing Services including 15% increase from Servatron Underlying operating profit 23.3 13.5 72.6% • Margin improvement resulting from: Un
Slide 9: Power Products – Financial Overview
9 POWER PRODUCTS – FINANCIAL OVERVIEW $m (except where stated) 2020 2019 Change Revenue 171.0 198.9 -14.0% • Revenue down due to planned withdrawal from lower margin contracts Underlying operating profit 14.1 13.2 6.8% • Focus on profitability paying off with absolute Underlying operating margin 8.2
Slide 10: Group Underlying Operating Profit
10 GROUP UNDERLYING OPERATING PROFIT • Significant improvement in Integrated Manufacturing Services across all sites • Power Products improved on an absolute basis as the sales mix improved • Servatron delivered $2.6m of operating profit in the eight months since the acquisition • Central costs were
Slide 11: Group Cash Flow
11 GROUP CASH FLOW $m 2020 2019 Underlying EBITDA 38.1 25.4 Net capital expenditure (4.4) (2.8) • There was a beneficial impact on working capital this year with lower outstanding receivables at year end Movement in working capital 19.6 (24.7) • 2019 working capital included a revision to our suppli
Slide 12: Group Cash Movements
12 GROUP CASH MOVEMENTS • Exceptional cash generation has supported an increase in net cash during the year • IFRS 16 is a presentational adjustment to classify future lease payments as a liability and does not impact cash flow • Capex has enabled investment in manufacturing capability and automatio
Slide 13: Group Adjusting Items
13 GROUP ADJUSTING ITEMS $m 2020 2019 • No restructuring costs have been recognised as adjusting items this year and normal business reconfiguration costs Acquisition costs 0.2 1.8 are above the line Restructuring costs 0.0 1.9 • Acquisition costs are low due to using our own internal Amortisation o
Slide 14: Financial Strength
14 FINANCIAL STRENGTH Cash and facilities available Successful rebuilding of credit profile Highly cash-generative • Exceptional cash generation in year • Refinanced in July 2019 with new • Diversification strategy since 2015 DRAFT has allowed us to close the year three-year revolving credit facilit
Slide 15: Strategy and Outlook
15 STRATEGY AND OUTLOOK
Slide 16: Customer Concentration
16 CUSTOMER CONCENTRATION Top three customers: 25% of revenue • In 2014 one customer represented 25% of revenue and the second biggest customer was 17% Top three customers: 50% of revenue DRAFT • In 2020 the biggest customer represents 17% of revenue and the next biggest customers are less than 5% o
Slide 17: Focusing on the Right Markets
17 FOCUSING ON THE RIGHT MARKETS We have invested in our higher value-add Market segment Developments Integrated Manufacturing Services Integrated Power division and it represents a higher Manufacturing Products Services Integrated proportion of Group revenues Delivering higher-level assemblies as M
Slide 18: Focus on Integrated Manufacturing Services
18 FOCUS ON INTEGRATED MANUFACTURING SERVICES Customer area Trends How we are responding Over half our Integrated Delivering more higher-level Manufacturing Services revenue is Treatment and diagnostic assemblies to streamline the in the medical market technologies are developing Medical procurement
Slide 19: Focus on Power Products
19 FOCUS ON POWER PRODUCTS Margin has improved significantly as Products Description Our approach we have executed a strategy of moving away from low-margin Delivering to global household We have the ability to deliver in business High-volume names who value quality, every major market and support 8
Slide 20: Delivering Operational Excellence
20 DELIVERING OPERATIONAL EXCELLENCE What have we done? Why does this matter? What happens next? Automation gives us the opportunity to Having proven the effectiveness of the Implemented automation to deliver an lower costs for high volume Power automation approach, this can be efficient manufacturi
Slide 21: Focus on Acquisitions
21 FOCUS ON ACQUISITIONS Servatron – leading US-based EMS business • Delivering annual revenue of approximately $41m and EBIT of $3.7m • Complementary customer base of US medical and industrial manufacturers • Sales synergy opportunities • Brings additional capabilities in higher-level assembly and
Slide 22: Impact of Covid-19
22 IMPACT OF COVID-19 Production capacity by region based on staffing levels Impact on capacity Month Jan-20 Feb-20 Mar-20 Apr-20 May-20 • Our priority continues to be the health and wellbeing of our China employees and we are doing all we can to support them Other Asia • Our Chinese factories were
Slide 23: Outlook
23 OUTLOOK Revenues for the 4 We continue to work Medical equipment We are very months to May 2020 very closely with our installations are optimistic about our were 4% ahead of the customers to delayed due to same period a year understand demand restrictions on access business prospects earlier but
Slide 24: Summary
24 SUMMARY Well positioned with a Compelling range of Strong balance sheet and Ready for further diverse customer base capabilities and assets exceptional cash generation expansion DRAFT • We have long-term • We are moving up the value • Our business is highly cash • Reliable execution of sequential
Slide 25: Appendix: About Volex
25 APPENDIX: ABOUT VOLEX
Slide 26: From Simple to Complex
26 FROM SIMPLE TO COMPLEX
Slide 27: Global Manufacturing Footprint
27 GLOBAL MANUFACTURING FOOTPRINT We have manufacturing sites across three continents and a global supply capability covering all major markets
Slide 28: Our Markets
28 OUR MARKETS Majority of our We work with market Integrated leaders in this fast Manufacturing growing automotive Services revenue is in sector, meeting robust the medical segment technical requirements characterised by long- and achieving high term relationships and levels of quality and high bar