Slide 1: Preliminary results for the financial year ended 31 March 2013
Preliminary results for the financial year ended 31 March 2013 28 May 2013
Slide 2: Agenda
Agenda 1 2 3 Introduction Overview & Financial Review Highlights Mike McTighe, Ray Walsh, Daniel Abrams, Chairman Chief Executive Officer Chief Financial Officer 4 5 6 Summary & Questions Appendix Outlook and Answers Mike McTighe, All Chairman © 2013 Volex plc 2
Slide 3: Disclaimer
Disclaimer THIS PRESENTATION CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE GENERAL ECONOMIC CONDITIONS, CURRENCY FLUCTUATIONS, COMPETITIVE FACTORS, THE LOS
Slide 4: Introduction
Introduction Mike McTighe, Chairman 1 © 2013 Volex plc 4
Slide 5: Rebuilding Value
Rebuilding Value 1 Stringent cost control Improving operational efficiency across 2 the organisation Strengthen senior sales leadership & 3 improve effectiveness of sales team Acceleration of move to higher margin 4 business © 2013 Volex plc 5
Slide 6: Overview & Highlights
Overview & Highlights Ray Walsh, CEO 2 © 2013 Volex plc 6
Slide 7: Review of the Year
Review of the Year $m FY2013 FY2012 Revenue 473.2 517.8 Normalised Gross Margin(i) % 18.0% 19.8% Normalised Operating Profit(i) 12.3 32.0 (i) Before non-recurring items and share-based payments charge Tough year with revenue down 8.6% and gross margin down 1.8% Normalised gross margin > 20% in all t
Slide 8: Stringent cost control
Stringent cost control Group-wide restructuring initiative proceeding to plan Cost reduction program aligned our cost base with revenue – significant reduction in opex achieved Cost of the program in FY2013 was $7.2m with a cash cost of $5.7m Estimated annual savings from the program are approximate
Slide 9: Improving operational efficiency across the organisation
Improving operational efficiency across the organisation Significant improvement in production efficiency in second half of year Scrap rates fell to 2.1% by year end from 3.6% at half year Labour efficiencies have helped offset minimum wage inflationary pressure $12.8m investment in our Shenzhen man
Slide 10: Strengthen senior sales leadership & improve effectiveness of sales team
Strengthen senior sales leadership & improve effectiveness of sales team Roger Wendelken appointed Senior Vice President of Sales and Marketing in January 2013 Delivered significant improvements to the sales function: • Transition towards a key account structure • Strengthened sales force with furth
Slide 11: Acceleration of move to higher margin business
Acceleration of move to higher margin business Acquisition of Applied Micro AOC technology platform in December 2012 for $1.8 million Improves our product offerring for high speed data applications in data centres and telecoms Samples of first Volex product (QSFP+ / AOC cables) will be ready June 20
Slide 12: Financial Review
Financial Review Daniel Abrams, CFO 3 © 2013 Volex plc 12
Slide 13: Financial Highlights
Financial Highlights $m FY2013 FY2012 Revenue 473.2 517.8 Normalised Gross Margin % 18.0% 19.8% Normalised Operating Profit 12.3 32.0 Profit before tax 1.9 19.2 Normalised Diluted EPS 11.2c 42.4c Free Cash flow (20.7) 18.3 Net debt (19.5) 3.6 © 2013 Volex plc 13
Slide 14: Income Statement
Income Statement $m FY2013 FY2012 Revenue 473.2 517.8 Normalised Gross Profit(i) 85.3 102.5 Normalised Gross Margin(i) 18.0% 19.8% Normalised Operating Profit(i) 12.3 32.0 Non-recurring items (7.9) (5.0) Share based payments (0.2) (4.0) Operating Profit 4.2 23.0 Net finance costs (2.3) (3.8) Profit
Slide 15: Revenue Bridge
Revenue Bridge Revenue with our largest customer increased during the year by 35% During Q1 a further $53.2m of revenue was anticipated for FY2013 which did not materialise During H2 Volex experienced softening demand for our products due to customer project delays and generally weaker macroeconomic
Slide 16: Normalised Operating Profit Bridge
Normalised Operating Profit Bridge © 2013 Volex plc 16
Slide 17: Restructuring Programme
Restructuring Programme Group-wide staffing levels reduced from H1 peak of 9,750 to 7,300 by y/e $7.2 million restructuring charge with a cash cost of $5.7m From the peak cost position in H1 FY2013, annualised cost savings of approximately $17.5m Further consideration in FY2014 of manufacturing and
Slide 18: Net cash / debt bridge
Net cash / debt bridge Move from net cash to net debt largely due to the $27.1m of net capex spend Working capital % of sales kept consistently at 6.1% throughout the year Guidance for FY2014 capital expenditure circa $13m (1.5 x depreciation) © 2013 Volex plc 18
Slide 19: Dividend
Dividend Proposed final dividend of 3.0 cents per share (FY2012: 3.0 cents) Payment due in October 2013 Scrip dividend alternative to be offered Total dividend for the year of 5.0 cents per share (FY2012: 4.5 cents) © 2013 Volex plc 19
Slide 20: Sector Performance
Sector Performance Normalised Sales $m Gross Margin % FY2013 FY2012 FY2013 FY2012 Consumer 311.0 330.4 14.7% 17.9% Telecoms/Datacoms 82.2 99.4 23.7% 21.2% Healthcare 46.9 51.7 27.3% 27.5% Industrial 33.0 36.3 21.5% 22.6% Total 473.2 517.8 18.0% 19.8% Strong normalised gross margins seen in all three
Slide 21: Consumer
Consumer Normalised Sales $m Gross Margin % FY2013 FY2012 FY2013 FY2012 Consumer 311.0 330.4 14.7% 17.9% 35% increase in revenue with our largest customer off- set by decline in our remaining customer base Gross margin decline due to ramp up in direct and indirect manufacturing headcount in H1 FY201
Slide 22: Telecoms/Datacoms
Telecoms/Datacoms Normalised Sales $m Gross Margin % FY2013 FY2012 FY2013 FY2012 Telecoms/Datacoms 82.2 99.4 23.7% 21.2% Lower revenue due to decreased network spend from teleco operators Observed in all regions other than North America where revenues grew by 16% due to mobile broadband investment G
Slide 23: Healthcare
Healthcare Normalised Sales $m Gross Margin % FY2013 FY2012 FY2013 FY2012 Healthcare 46.9 51.7 27.3% 27.5% Fall in revenue due to a combination of : design release delays destocking at major customer Gross margins remained strong FY2014 challenging, however, healthy pipeline of new business (non-ima
Slide 24: Industrial
Industrial Normalised Sales $m Gross Margin % FY2013 FY2012 FY2013 FY2012 Industrial 33.0 36.3 21.5% 22.6% Revenue down as customers reduced their capital expenditure and their programmes were delayed Gross margins decreased marginally During FY2014 we expect to integrate AOC technology into a numbe
Slide 25: Summary and Outlook
Summary and Outlook Mike McTighe, Chairman 4 © 2013 Volex plc 25
Slide 26: Summary and Outlook
Summary and Outlook FY2013 Summary Tough year of trading Restructuring to ‘right-size’ the business and realign our sales function Investment in our ongoing manufacturing capabilities Acquisition of AOC technology accelerates our Volex content product portfolio FY2014 Outlook Trading environment exp
Slide 27: Q&A
Q&A All 5 © 2013 Volex plc 27
Slide 28: Appendix
Appendix 6 © 2013 Volex plc 28
Slide 29: Balance Sheet
Balance Sheet $m FY2013 FY2012 Goodwill 2.9 3.1 Property, plant and equipment and intangible assets 43.8 22.9 Other non-current assets 5.4 5.6 Total Non-current Assets 52.1 31.6 Inventories 43.0 49.8 Receivables 85.3 107.8 Cash and cash equivalents 25.0 43.6 Total Current Assets 153.3 201.2 Payables
Slide 30: Cash flow
Cash flow $m FY2013 FY2012 Operating cash flow before working capital 8.8 27.5 movements Movement in working capital 3.2 8.8 Cash generated by operations 12.0 36.3 Cash generated by operations before non-recurring items 18.9 41.0 Cash utilised by non-recurring items (6.9) (4.7) Tax and interest paym
Slide 31: Capital expenditure
Capital expenditure FY2013 Project $m Shenzhen Factory Upgrade 12.8 Batam Factory Expansion 6.0 Brazil Factory 0.5 IT projects 0.5 AOC acquisition 1.8 Other 5.5 Net capex 27.1 Significant increase in FY2013 capital expenditure – primarily in relation to the upgrade of our two main manufacturing faci