30048-Volex-AR21 18 June 2021 10:12 am V4Volex plc Annual Report and Accounts 2021Stock Code: VLXAnnual Report and Accounts 2021Strengthening capabilities30048-Volex-AR21.indd 330048-Volex-AR21.indd 318/06/2021 15:09:1118/06/2021 15:09:11 30048-Volex-AR21 18 June 2021 10:12 am V4 Read more about our Business Model on pages 16 and 17 Read more about our Performance on pages 26 to 31 Read more about our Strategy on pages 18 and 19Welcome to Volex's 2021 Annual Report WHO WE AREVolex is a global leader in integrated manufacturing for performance-critical applications and a supplier of power products. We serve a diverse range of markets and customers, with particular expertise in cable assemblies, higher-level assemblies, data centre power and connectivity, electric vehicles and consumer electricals. We are headquartered in the UK and operate from 17 manufacturing locations with a global workforce of over 6,300 employees across 21 countries. Our products are sold through our own locally based sales teams and through authorised distributor partners to Original Equipment Manufacturers (‘OEMs’) and Electronic Manufacturing Services (‘EMS’) companies worldwide. All of the products and services that we offer are integral to the increasingly complex digital world in which we live, providing power and connectivity from the most common household items to the most complex medical equipment.30048-Volex-AR21.indd 330048-Volex-AR21.indd 318/06/2021 15:09:1318/06/2021 15:09:13 30048-Volex-AR21 18 June 2021 10:12 am V4Underlying operating profit ($M)1Revenue ($M)OUR STORY SO FARWith a focus on efficient manufacturing we have continued to grow our business and expand our reach across market sectors using strategic acquisitions to strengthen our capabilities.Our growth is supported by the commitment of our employees worldwide, and their ability to exceed customer expectations even during the challenging circumstances we have experienced due to Covid-19. Global trends, such as the move to home working, changes in consumer demand and the increasing popularity of electric vehicles, created opportunities. We were able to respond to these requirements due to our global manufacturing footprint and the capability enhancements implemented over the past few years. With this year’s acquisition of DE-KA Elektroteknik in Turkey, we are now the leading manufacturer of power cords and cables in the world, further strengthening our market presence and customer reach. 20212020201920182017$42.9m$31.6m$21.6m$11.5m$9.1m20212020201920182017$443.3m$391.4m$372.1m$322.4m$319.6mProfit before tax ($M)Net assets ($M)20212020201920182017$29.4m$15.9m$11.6m$7.0m$(8.5)m20212020201920182017$183.9m$130.5m$115.6m$48.1m$46.3mFree cash flow ($M)2Underlying basic earnings per share3 (cents)20212020201920182017$31.3m$47.4m$(10.9)m$1.7m$13.6m2021202020192018201732.1c18.2c13.1c9.2c9.5cCONTENTSBusiness overviewHighlights01Our Investment Proposition02Our Culture03At a Glance04Our Diversified Portfolio06Executive Chairman’s Statement08Strategic reportMarkets12Business Model16Strategy18Key Performance Indicators22Operational Review24Performance and Financial Review26Group Risk Management36Covid-19: Volex Response41Section 172 Statement42Sustainability44GovernanceBoard of Directors52Executive Chairman’s Introduction54Corporate Governance Report56Audit Committee Report62Nominations Committee Report66Safety, Environmental and Sustainability Committee68Remuneration Committee Report70Directors’ Report86Statement of Directors’ Responsibilities89Independent Auditors’ Report90FinancialsConsolidated Income Statement98Consolidated Statement of Comprehensive Income99Consolidated Statement of Financial Position100Consolidated Statement of Changes in Equity101Consolidated Statement of Cash Flows102Notes to the Financial Statements103Company Statement of Financial Position147Company Statement of Changes in Equity148Notes to the Company Financial Statements149Five Year Summary163Shareholder Information1641. Operating profit before adjusting items and share-based payment charges — see note 7 on page 114.2. Free cash flow is net cash flow before financing activities and the acquisition of businesses, net of cash acquired.3. Based on profit before adjusting items and share-based payments, net of tax — see note 11 on page 117.BUSINESS OVERVIEWwww.volex.comVolex plcAnnual Report and Accounts 20210130048-Volex-AR21.indd 130048-Volex-AR21.indd 118/06/2021 15:09:1418/06/2021 15:09:14 BUSINESS OVERVIEW
Our Investment Proposition
Our customers require flexibility and responsiveness, and we meet these challenges
through our global model of integrated manufacturing, tariff-free locations, advanced
engineering, local support, and an ever-expanding portfolio of products and capabilities.
And through our complementary acquisition strategy, we will be there to support their
future needs as markets and technologies continue to expand and innovate.
Quality and Reliability
Quality is at the heart of everything we
produce. We adhere to stringent safety
standards and deliver rigorous factory
testing and certification to ensure
exceptional performance and reliability.
Scale
No matter the requirement, partnering
with us allows our customers to benefit
from global economies of scale and
significant purchasing power across all
of our businesses.
Global Presence
With 17 manufacturing sites, and sales
and technical support teams across
three continents and 21 countries, we
are available when, and where, our
customers need us.
Acquisition Approach
With six acquisitions and successful
integrations completed since 2018, we
are committed to a continuous search
for complementary businesses that
strengthen our vertical integration and
global supply strategy.
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Our Culture
BUSINESS OVERVIEW
We are proud of our culture – it underpins
everything that we do. Our people are passionate
about our customers and, through collaboration
and hard work, commit to delivering products
that are right the first time, every time.
The culture at Volex
Increased efficiency and continuous improvement come
from working together. With manufacturing specialists
around the world, we work across all time zones to deliver
innovative, defect-free solutions. With experts in design,
development, manufacturing, procurement, logistics,
export and distribution, we react quickly to support our
customers’ requirements. In 2021 we supported critical
demand for medical-related cables and harnesses to
support both the construction of temporary hospitals
in Wuhan, China and to the ventilator construction
programmes that were active in Europe and North America.
Read more about our culture on pages 44 to 48
Engaging with our stakeholders
Ensuring open and effective dialogue with all of our
stakeholders is important to us. Find out more about how
we have done this over the past year on pages 42 to 43.
OUR PURPOSE AND CORE VALUES
At Volex our passion is our customers. All of our
employees work tirelessly to support the delivery
of quality products on time, and in full, each time
and every time. We know that our products allow
a wide range of technologies to operate efficiently
and safely. With customers all over the globe, and
complex global supply chains, the effectiveness
of how our multicultural and multilingual teams
work together is critical to our success. It’s all about
people!
Our purpose
At Volex we help to power life.
Our vision
To become a leading global supplier of power and
connectivity-related solutions to our customers in
our chosen markets.
Our mission
To deliver safe and sustainable power and
connectivity-related solutions to our customers,
enabling them to succeed in an era of rapid
technological acceleration.
Supported by our values
1
2
3
4
5
Be trusted
We put our customers first. We work to
understand them deeply and to exceed
their expectations. Our customers trust
us to deliver their critical projects.
Be tenacious
We get things done, we drive for
results, we never give up. Continuous
improvement means the whole
team working together to seize every
opportunity to be better.
Be challenging
We speak up, are direct and honest with
each other. By working together and
challenging constructively we develop
the best solutions.
Be respected
A belief in quality runs through our
organisation. We keep our promises and
take accountability for our commitments.
We take pride in what we do.
Be focused
We establish clear goals, objectives
and performance standards for our
people, products and processes. We
communicate these exceptionally well
and we play to our strengths by focusing
on distinct solutions for our customers.
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BUSINESS OVERVIEW
At a Glance
Acquisition
strategy
Acquisitions are a key part of our growth strategy as we
operate in a highly fragmented market. We have successfully
acquired and integrated six businesses in the last three
years. This has delivered new capabilities and customers,
contributing to the diverse and resilient organisation we have
today.
6
Number of acquisitions
since 2018
1,100
New colleagues from
acquisitions since 2018
FY2019
MC Electronics
Based in Juárez, Mexico
with customer support in
California, US.
How did this add to our
capabilities?
Expertise in complex
customised harnesses which
are available with short lead
times.
Silcotec Europe
Based in Komárno, Slovakia
with a sales team in UK and
Ireland.
How did this add to our
capabilities?
Expertise in complex
assemblies and electro-
mechanical sub-assemblies
for major medical customers.
GTK
Based in Hampshire, UK with
operations in Romania and
an international sales force.
How did this add to our
capabilities?
Customised electronic
solutions including cable
assemblies, displays and
connectors for over 300
European customers.
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BUSINESS OVERVIEW
What we look for in an acquisition
Acquisitions are a significant element of our growth plans and identifying the right acquisitions is critical to our success. We
have developed a consistent acquisition approach that concentrates on businesses we understand well to ensure that every
target will be a great fit. There are four key elements that we look for which are set out below.
Customers
It can take a long time
to develop customer
relationships in our industry.
By acquiring a business
with a strong customer
base, we drive growth in
existing accounts as well
as realise revenue synergy
opportunities.
Capabilities
Many of our customers
are looking for a single
solution provider who can
reliably deliver against their
complex manufacturing
requirements. We are able
to expand our capabilities
by buying businesses who
are already specialists in
advanced manufacturing
processes.
Location
Our international network of
manufacturing sites allows
us to serve global customers.
We consider how any
acquisition will fit with our
current facilities, where we
have senior management
to oversee the integration
activity and where we need
to be located to serve our
customers.
Culture
We identify businesses that
are owned and managed
by people who share our
values. These are customer-
centric organisations who
are committed to delivering
quality and demonstrate an
entrepreneurial spirit.
FY2020 FY2021
Servatron
Based in Spokane,
Washington, US.
How did this add to our
capabilities?
PCB assembly with defence
and aerospace capabilities
and complex electro-
mechanical assemblies.
Ta Hsing
Manufacturing facility in
Southern China.
How did this add to our
capabilities?
Cable extrusion capabilities
allowing vertical integration
for our power cords business.
DE-KA
Factories in Turkey and
Romania.
How did this add to our
capabilities?
Highly automated production
of power cords for the
domestic appliance market.
Read more about DE-KA on
page 23
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30048-Volex-AR21 18 June 2021 10:12 am V4Power cordsWe make high-quality power cords to meet international safety standards and fit with the demanding requirements of our customersHigh-speed data cablesWe deliver market-leading high-speed data cables which undergo end-to-end testing to ensure they surpass our customers’ quality requirementsOur Diversified PortfolioAt Volex we are dedicated to improving the quality of life around the world by bringing connectivity and power to high-tech equipment that is changing how we live, work and communicate. We invest in developing our production sites to meet our customers’ evolving requirements. We have assembled a compelling and diverse range of capabilities to provide our customers with an integrated solution to their manufacturing challenges.Volex plcAnnual Report and Accounts 2021Stock code: VLX06BUSINESS OVERVIEW30048-Volex-AR21.indd 630048-Volex-AR21.indd 618/06/2021 15:09:1918/06/2021 15:09:19 30048-Volex-AR21 18 June 2021 10:12 am V4Cable assembliesOur complex cable assemblies are used in performance-critical industries, including aerospace and medicalBox buildsWe can take a customer’s complete design and build the entire product, including PCB assembly and box buildElectric vehiclesWe have unrivalled expertise in the manufacture of a range of electric vehicle components and we are proud to work with the biggest names in the industryBUSINESS OVERVIEWwww.volex.comVolex plcAnnual Report and Accounts 20210730048-Volex-AR21.indd 730048-Volex-AR21.indd 718/06/2021 15:09:2118/06/2021 15:09:21 30048-Volex-AR21 18 June 2021 10:12 am V4Executive Chairman’s Statement‘Volex’s strategy over the past five years to diversify our customer base and geographic footprint has resulted in a resilient business with a renewed reputation for quality and reliability.’Nathaniel RothschildExecutive ChairmanIn 2016, I wrote in my first Annual Report as Executive Chairman, ‘from now on, the Volex team will act as owners, in every decision that we make’. Five years on, our goal remains to work as one team and to think like owners. By continuously developing and retaining the best people within our organisation, we can look forward to the future with great confidence.We are a customer-driven organisation, and we are responsive to their evolving requirements, providing a range of products and services that meet their needs. We have developed and nurtured deep and long-lasting relationships with our customers and this year has shown the importance of good communication as component supplies have been disrupted and customer demand has been volatile. Our customers choose Volex because they know we can be trusted and relied upon to deliver, even in difficult circumstances.We have shown our ability to invest wisely with the completion of two major infrastructure projects this year. We relocated our operations in Suzhou to an advanced manufacturing facility, giving us scope for further expansion. We also doubled the footprint of our facility in Batam, one of our most versatile locations. Despite the backdrop of Covid-19, this activity completed on time and on budget thanks to our talented project teams.Divisional performanceFrom a standing start in 2017, we have developed an industry-wide reputation for charging solutions for electric vehicles, and we are now a key supplier to a number of global brands. We have broadened our customer base and expanded our product set with revenues up 193% in FY2021. As the adoption of this technology continues at pace, we continue our investment in people and automation to deliver a market-leading, low-cost manufacturing solution.The consumer electricals sector has also delivered robust demand across FY2021 after a sporadic start as some of our customers reduced their capacity and we have worked closely with them to support their changing demand and complex logistical requirements.Demand from medical customers has varied depending on the application of the product. Hospitals slowed the installation of major equipment as they prioritised Covid-19 efforts. We are seeing encouraging signs of recovery and believe the roll-out of advanced therapeutic and imaging solutions will allow healthcare providers to tackle expected high levels of patient demand.For our Complex Industrial Technology customers, the pandemic has delayed new projects. We expect conditions to improve as confidence returns to the sector. We are very proud of the growth in high-speed data centre products with revenue up by 38%. We have an excellent product and competitive pricing and our global manufacturing footprint ensures our products are supplied to the US market with low tariffs. The forthcoming adoption of new data transfer rates offers us scope to make further progress.Impact of Covid-19Throughout the pandemic we have put the safety of our people first. Following the initial challenges posed by Covid-19 in China, we implemented additional comprehensive safety measures to protect our global workforce. We are maintaining these measures and continue to support our employees with the challenges that Covid-19 has imposed on them and their families. Volex has delivered an excellent set of results this last year, overcoming the very significant challenges posed by the Covid-19 pandemic and demonstrating once again that we are able to deliver a significant step up in our performance. Our strategy, formulated and refined over recent years, has delivered a robust, diversified business with excellent growth and margins.Stock code: VLXBUSINESS OVERVIEW30048-Volex-AR21.indd 830048-Volex-AR21.indd 818/06/2021 15:09:2718/06/2021 15:09:27 30048-Volex-AR21 18 June 2021 10:12 am V4We have communicated to our customers and worked collaboratively to adapt to their business requirements. Our customer-facing teams are attuned to our customers’ rapidly changing requirements and our managers are empowered to make decisions to resolve issues as they arise.AcquisitionsOur targeted approach to acquisitions continues to be a central pillar of our growth strategy. Having completed six acquisitions in three years and invested in excess of $100m, we have a well-developed approach and significant experience in execution. We have a rich and diverse acquisition funnel containing attractive targets that we are actively pursuing, all of which fit within the core competency of our senior operations team. In a buoyant M&A market, discipline in negotiations and not overpaying is critical and we qualify every acquisition extensively and use our deep industry knowledge to find the best opportunities. We firmly believe that our strength in this area will be a significant value driver.In November we were delighted to announce the acquisition of DE-KA, the largest manufacturer of power cords in the European market. This is our biggest transaction to date and significantly enhances our global footprint in the consumer electricals sector as well as providing immediate scale in the important white goods market. DE-KA has demonstrated outstanding performance since the acquisition completed in February, benefiting from strong consumer demand, and we are investing in DE-KA to increase capacity.Our Board and our peopleThere have been some changes to the Board this year. We welcomed Jon Boaden to the Board in the position of Chief Financial Officer in November. Jon joined Volex two years ago as the deputy CFO as part of a carefully orchestrated long-term succession plan and, since his arrival in 2019, he has been significantly upgrading Volex’s finance function. He works very closely with our Chief Operating Officer, John Molloy, to align our financial and operational objectives.We welcomed two new Non-Executive Directors during the year. Sir Peter Westmacott is an expert in managing complex global relationships, having spent 40 years in diplomacy including 14 years as the British Ambassador to Turkey, France and the US. Amelia Murillo has extensive knowledge of manufacturing, having undertaken a number of leadership roles in the industry including her current position as Vice President of FP&A and Treasurer at Carlisle Companies Incorporated. Both Peter and Amelia bring a wealth of experience to the Board.As we deliver on our ambitious growth targets, it is important for us to have the right talent in our organisation. We have recruited a number of senior roles in FY2021 to ensure we continue to deliver on operational improvements, business optimisation, targeted investment and the execution of our acquisition programme while barely increasing our central overhead. We have also expanded our North American sales team with a particular focus on high-growth areas such as data centre products.Our employees have shown tremendous resolve and indomitable spirit in overcoming a multitude of challenges and changes in the way that we work. The Board are tremendously grateful to everyone for their contribution this year.Investment caseWe have grown underlying operating profit significantly and consistently since 2016. We have a very strong and united operational team who have been able to optimise our performance as we have grown our capabilities and capacity. The margins we deliver are attractive and underpinned by continuous operational performance and exceptional customer service. This in turn delivers strong operating cash flow.We have a strong record of acquiring excellent businesses at compelling valuations, allowing us to expand our business and customer base. We have significant debt capacity to execute on further acquisitions and a healthy and exciting pipeline of opportunities. The quality of the businesses we acquire is absolutely critical and every deal must meet our stringent investment criteria.Our entrepreneurial culture and focus on distinct market sectors where we have deep industry knowledge has allowed us to identify exciting growth opportunities. We enter FY2022 in a strong financial position with excellent investment opportunities ahead of us and a motivated management team who are focused on delivering long-term shareholder value.Sustainability and communitiesWe pay very close attention to the impact of our operations on the environment and the communities in which we operate. During the year, we expanded the scope of our Health & Safety Committee to provide governance and oversight on environmental and sustainability matters. This creates greater visibility around our progress in these areas and will drive further improvement.Our designs for the new facilities we have opened during the year have considered energy efficiency and environmental impact. We are identifying further opportunities to reduce our annual CO2 emissions. Our teams around the world continue to be active in supporting local communities through project work and fundraising.OutlookWe delivered strong revenue and underlying operating profit growth in FY2021, demonstrating the resilience of our business in a challenging environment. While all manufacturers are likely to experience inflationary effects in FY2022 as economies recover from the pandemic and supply and demand factors rebalance, our industry model generally enables us to pass these additional costs on to our customers while working closely with them to manage these pressures and drive efficiencies in our manufacturing processes.Our plans for FY2022 include targeted investment in equipment and people in areas where we have identified growth opportunities. This will enhance our ability to deliver to new and existing customers and continue our journey to be the leading low-cost manufacturer in our chosen markets. It is this focus that will enable us to drive growth and generate further value for all of our stakeholders.Trading during the first two months of FY2022 has been very encouraging with continued healthy demand from our diverse customer base and enquiries from new customers. Longer term, we remain committed to our five-year plan laid out in October 2019 to deliver revenues of $650 million and $65 million of operating income by 2024.Nathaniel RothschildExecutive Chairman17 June 2021BUSINESS OVERVIEWwww.volex.comVolex plcAnnual Report and Accounts 20210930048-Volex-AR21.indd 930048-Volex-AR21.indd 918/06/2021 15:09:2718/06/2021 15:09:27 30048-Volex-AR21.indd 10
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01Strategic
report
Markets
Business Model
Strategy
Key Performance Indicators
Operational Review
Performance and Financial Review
Group Risk Management
Covid-19: Volex Response
Section 172 Statement
Sustainability Report
12
16
18
22
24
26
36
41
42
44
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STRATEGIC REPORT
Markets
Many of our customers are leaders in their field, recognised as innovators. It is vital that
we understand the latest developments in the industries that we support to maintain our
position as the first choice manufacturing partner to our customers.
Macroeconomic trends
ECONOMIC
TREND DATA
EVs as a percentage
of new car sales
MEDICAL
Trends
▶ Governments need to address the backlog in treatments and diagnosis for non Covid-19
care which will require investment in equipment
▶ Further deployment in medical technology is required globally to realise the benefits of
innovative treatment approaches such as robotic surgery
2040
2030
2025
73%
39%
15%
▶ Growth in medical screening and treatment will improve patient outcomes
How we are responding
▶ We work with the most advanced medical equipment manufacturers in the world and
have the flexibility to support increasing demand
Source: HSBC Research
Growth in global cloud
related spend
2024
2020
14.2%
9.1%
Source: HSBC Research
▶ We are continually expanding our capabilities and accreditations to allow us to support
the latest technologies
COMPLEX INDUSTRIAL TECHNOLOGY
Trends
▶ The migration of data and applications to the cloud continues, particularly as companies
adopt hybrid models of working both in and outside of the office
▶ Customers are looking for tariff-free manufacturing options and geo-political
considerations are forcing a rethink in existing supply chains
▶ Increased demand and investment incentives will accelerate industrial automation
How we are responding
▶ We are developing the next generation of high-speed data centre cables
▶ Our global manufacturing footprint gives our customers options
▶ Our range of capabilities and sector-specific expertise mean we can address the most
complex customer requirements
ELECTRIC VEHICLES (EV)
Trends
▶ Automotive model launches are focused on EV as consumer adoption increases, creating
significant additional year-on-year demand
▶ Government incentives are encouraging EV sales in many markets
▶ Covid-19 is forcing automotive manufacturers to review their supply chains and how they
sell to consumers
How we are responding
▶ We continue to expand our relationships with manufacturers at the design stage
▶ The market is growing quickly and we are there to supply their needs for quick and
convenient charging
▶ We have exceptional credentials and a world-class engineering team which means we
are the supplier of choice for customers developing their EV product sets
CONSUMER ELECTRICALS
Trends
▶ Consumers are spending more on home improvement which includes replacing
domestic appliances, resulting in demand exceeding supply in much of FY2021
▶ A move to home working has created demand for notebooks, printers and monitors
▶ Home entertainment products such as media streaming boxes have proved popular
How we are responding
▶ We have worked closely with our customers to meet their increased demand
▶ Investment in automated production will increase our output and improve efficiency
▶ Customers value suppliers who can produce in multiple locations to reduce supply chain
risk and minimise logistical challenges
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STRATEGIC REPORT
Our global markets
NORTH AMERICA
Overview
North America is an important market
and home to some of our high-growth
customers in the electric vehicle and
data-centre sectors. We have a variety
of manufacturing options within and
outside the region.
Outlook
There are signs of a significant recovery
in the US economy as the effects of
pandemic economic support drive
consumption and support growth. We
expect further demand for consumer
electricals and electric vehicles.
46%
Revenue from
North America
EUROPE
Overview
With the acquisition of DE-KA in FY2021
we have significantly expanded our
power cord customer base in Europe,
particularly for domestic appliances.
We also have a number of important
medical and industrial customers.
Outlook
We expect demand for domestic
appliances to remain at high levels
as consumers invest in home
improvements. Demand from our
medical customers will improve as
installation schedules normalise.
24%
Revenue from Europe
ASIA
Overview
This is a major market for consumer
electricals and the centre of
manufacturing for many of the
household name customers we
support in this sector.
Outlook
Demand from customers remains
strong for both suppliers into this
region and exports. Shortages of some
components are creating challenges
for some customers but this should
normalise later in the year.
30%
Revenue from Asia
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STRATEGIC REPORT
Markets
Responding to customer requirements is incredibly important. We develop our
capabilities and manufacturing footprint in response to our customers’ developing
demands and other industry trends.
MEDICAL
COMPLEX INDUSTRIAL
TECHNOLOGY
ELECTRIC VEHICLES
CONSUMER ELECTRICALS
Customer developments
▶ Our medical customers continue
to operate at the forefront of
technology, delivering innovation to
improve patient outcomes
▶ Diagnostic and treatment
equipment is becoming more
complex to allow innovations such as
image-guided therapy and precision
diagnosis resulting in additional
digital data capture from a range of
sensors
▶ There is an increased focus on
supply chains with the pandemic
highlighting dependencies on
particular countries or delivery
corridors
▶ Additional investment will be
required to address the backlog in
screening and treatment caused by
Covid-19
Customer developments
▶ Our data centre customers have
experienced significant growth
as business applications and
entertainment has moved into the
cloud as a result of the pandemic
▶ The trend for data to move into
the cloud is likely to continue as it
simplifies the provision of enterprise
systems in a world where an
increasing amount of work is done
away from the office
▶ Challenges associated with the
pandemic slowed the roll-out of new
technology projects which impacted
some of our Complex Industrial
Technology customers
▶ The requirement for solutions such
as industrial automation is expected
to increase in response to high
levels of demand for manufacturing
capacity and a continuing
requirement to deliver efficiencies in
production
Customer developments
▶ Sales of electric vehicles are
growing significantly as consumer
acceptance of the technology and
environmental awareness drives
demand
▶ Public charging infrastructure has
grown, leading to increased driver
confidence and simplifying the
ownership proposition
Customer developments
▶ The shift to home working in FY2021
is likely to continue creating demand
for home office equipment
▶ During the pandemic, spending
diverted from services and travel to
electronics and home renovation
▶ Sales of domestic appliances
have been very strong with some
shortages in certain markets
▶ Further increases in the availability
of charging outside the home and
advances in battery technology
will reduce barriers to adoption
as will reductions in the cost
differential between EV and internal
combustion engine (ICE) vehicles
▶ Governments are encouraging a
move to EV through policies which
can include incentives for vehicle
purchases, higher taxes on fossil fuel
technology and the introduction of
targets to end sales of ICE vehicles
▶ Challenges in logistics and supply
chains have forced manufacturers to
look at their procurement strategies
▶ Customers are holding higher levels
of inventory to reduce the impact
to production schedules from
shortages or delivery delays
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How we are responding
▶ We are investing in technology and
infrastructure so we can continue
to deliver the manufacturing
capabilities that our customers
require
▶ Our significant experience in the
medical market and our ability to
cope with customisation allows us
to support the new generation of
medical devices that rely upon a
greater number of sensors
How we are responding
▶ Our new generation of high-speed
data centre products will allow
our customers to keep pace with
the expansion in data and cloud
requirements
▶ The capacity in our factories is
scalable to meet customer demand
as this returns
▶ We have facilities around the world
that are accredited to stringent
medical manufacturing standards,
meaning we can manufacture in
multiple locations to meet customer
requirements
▶ Our investment in automation and
process efficiency allows us to flex
our output to meet the demand
requirements of our medical
customers
7.0%
Increase in global
healthcare spending1
6.6yrs
Increase in life
expectancy 2000–20192
▶ Our skilled production operatives
possess significant knowledge on
how to manufacture the complex
products that our customers depend
on us for - we have retained these
skills and are ready for an increase in
orders
▶ We are able to offer customers a
variety of manufacturing locations
which help them manage the supply
chain and reduces the impact from
tariffs
8.9%
Annual growth in
industrial automation3
6.0%
Data centre
infrastructure growth4
How we are responding
▶ We have increased our EV
production capability during FY2021
to allow us to meet customer
demand
▶ As the adoption of EV becomes
more widespread, we are expanding
our customer base and working
with our customers to meet their
individual challenges
▶ We have expanded our range of
products to take account of how
the EV market is developing and to
offer a range of solutions that meet
customer requirements and play to
our strengths
▶ We are investing in product
specialists and engineers to ensure
we stay at the forefront of this
technology
10.0%
New cars sales in Europe
that are EVs5
3.2 million
EVs on the road in
Europe5
How we are responding
▶ We have worked very closely with
our customers throughout FY2021
to help them manage changes in
demand
▶ Our investment in automation and
creating an efficient manufacturing
environment means we can respond
effectively to customer requirements
▶ We have a variety of options to
support our customers’ logistical
requirements, which include
manufacturing in a variety of
locations and the ability to hold
inventory locally to support just-in-
time processing and fulfilment
▶ The vertical integration we have
implemented in respect of power
cord production allows us to be one
of the lowest cost manufacturers
5.3%
Annual growth in consumer
electronics market6
1 in 5
Days expected to be
worked from home in the US7
1. Industries in 2021 Economist Intelligence Unit
2. WHO Global Health Observatory
3. Fortune Business Insights, annualised growth 2019-2027
4. Gartner Research
5. IEA Global EV Outlook 2021
6. Fortune Business Insights, annualised growth 2020-2027
7. University of Chicago research
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STRATEGIC REPORT
Business Model
Introduction
Volex’s business model is based on adding value to customers, delivered through our expertise in design and development
of our own products to meet their needs, and in providing vertical manufacturing, engineering and testing services for their
products. We aim for ‘trusted partner’ status with our customers, where we engage with their product development cycles
at an early stage to provide solutions that meet their specific requirements for product performance and quality, greater
efficiency and timely delivery. Through these activities, we create sustainable value for Volex and its shareholders.
KEY RESOURCES
KEY ACTIVITIES
Experienced management
Our management team has a deep
understanding of our business
and how we can best support our
customers. This helps us define
the optimal strategy for our
organisation.
Strong capital structure
We have a strong balance sheet
and we generate free cash flow,
allowing us to invest in our business.
Capital expenditure goes through
a rigorous review process to ensure
that we generate an excellent
return where we deploy funds.
Global reach
Our global manufacturing base and
international sales team allows us
to run manufacturing on a cost-
efficient basis with local support
for our customers. We are able
to leverage our global scale to
secure favourable pricing for the
components we need.
Engineering knowledge
We have world-class product
and process engineers with
many years of experience in our
markets. We are able to deploy
this to streamline the new product
development process and optimise
manufacturing.
1DESIGN AND ENGINEERING
Customers choose to work with
us because we have significant
expertise in our specialist areas.
Delivery channels:
Product design
We design solutions that meet
the power and connectivity
needs of our customers while also
addressing the challenges our
customers face with their next-
generation products.
We are particularly strong in the
area of power cords where we have
significant experience in delivering
power in a range of challenging
scenarios. This knowledge is crucial
given the safety-critical nature of
the product.
New product introduction
We work closely with our customers’
engineering teams at an early
stage of the development cycle to
help optimise the approach and
achieve their design objectives. This
partnership approach allows us to
identify cost-saving opportunities.
2BUILD
Our belief in quality runs through
the organisation and touches
every aspect of the manufacturing
process. This goes hand in hand
with our continuous improvement
philosophy to ensure we maximise
efficiency and deliver cost
competitiveness.
Delivery channels:
Supply chain management
We manage, on behalf of our
customers, the sourcing of all
required components for their
cable assembly solutions. We seek
to own the bill of materials for
all our products, allowing for the
selection of components that offer
the best all-round performance
after considering cost, quality and
delivery response times.
Manufacturing
We construct and test integrated
manufacturing solutions according
to customer requirements for
volume, quality, lead-time and price.
Our global manufacturing footprint
and distribution hubs enable cost-
efficient localised production and
effective inventory control.
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KEY RESOURCES
KEY ACTIVITIES
OUR CUSTOMERS
VALUE GENERATED
Experienced management
Our management team has a deep
understanding of our business
and how we can best support our
customers. This helps us define
the optimal strategy for our
organisation.
Strong capital structure
We have a strong balance sheet
and we generate free cash flow,
allowing us to invest in our business.
Capital expenditure goes through
a rigorous review process to ensure
that we generate an excellent
return where we deploy funds.
Global reach
Our global manufacturing base and
international sales team allows us
to run manufacturing on a cost-
efficient basis with local support
for our customers. We are able
to leverage our global scale to
secure favourable pricing for the
components we need.
Engineering knowledge
We have world-class product
and process engineers with
many years of experience in our
markets. We are able to deploy
this to streamline the new product
development process and optimise
manufacturing.
1DESIGN AND ENGINEERING
Customers choose to work with
us because we have significant
expertise in our specialist areas.
Delivery channels:
Product design
We design solutions that meet
the power and connectivity
needs of our customers while also
addressing the challenges our
customers face with their next-
generation products.
We are particularly strong in the
area of power cords where we have
significant experience in delivering
power in a range of challenging
scenarios. This knowledge is crucial
given the safety-critical nature of
the product.
New product introduction
We work closely with our customers’
engineering teams at an early
stage of the development cycle to
help optimise the approach and
achieve their design objectives. This
partnership approach allows us to
identify cost-saving opportunities.
2BUILD
Our belief in quality runs through
the organisation and touches
every aspect of the manufacturing
process. This goes hand in hand
with our continuous improvement
philosophy to ensure we maximise
efficiency and deliver cost
competitiveness.
Delivery channels:
Supply chain management
We manage, on behalf of our
customers, the sourcing of all
required components for their
cable assembly solutions. We seek
to own the bill of materials for
all our products, allowing for the
selection of components that offer
the best all-round performance
after considering cost, quality and
delivery response times.
Manufacturing
We construct and test integrated
manufacturing solutions according
to customer requirements for
volume, quality, lead-time and price.
Our global manufacturing footprint
and distribution hubs enable cost-
efficient localised production and
effective inventory control.
3SERVICE
The long-standing relationships we
have with our global customers are
a testament to our high levels of
customer service. In a world where
just-in-time processing is critical to
production, our ability to manage
lead times and achieve challenging
delivery targets is a major part of
what we do.
Delivery channels:
Global logistics
We maintain facilities over three
continents in order to be a ‘local’
supplier to customers and better
support their own production and
speed-to-market objectives.
Our customer hubs enable us to
support fully our customers’ just-in-
time manufacturing.
Electric Vehicles
We work with leading electric
vehicle manufacturers and
automotive technology customers.
What Volex provides:
With safety approvals in every major
market we deliver mains-voltage
AC and high voltage DC charging
solutions using our deep experience
in delivering high quality power
cords.
Consumer Electricals
We work with the biggest global
brands supporting products found
in many homes and offices around
the world.
What Volex provides:
We provide a wide variety of safety-
approved power cords tailored
to our customers’ individual
requirements.
Medical
We work with some of the largest
medical companies in the world
who are at the forefront of
technology.
What Volex provides:
We deliver complex cable
assemblies and full assemblies that
pass stringent medical regulatory
requirements.
Complex Industrial
Technology
Our customers use advanced
technology in a variety of
applications, including data centres
and industrial automation.
What Volex provides:
We offer highly competitive high-
speed data cables and complex
assemblies, including full box builds.
Shareholders
Short-term: We generate returns to
our shareholders through regular
dividends.
Long-term: We have ambitious
plans to deliver growth organically
and through acquisition to increase
the enterprise value.
Employees
Short-term: We offer employees
challenging and exciting roles
with competitive remuneration
and reward differentiated to their
performance.
Long-term: We invest in our people
and their development, we actively
promote from within and many
of our managers have progressed
through the organisation.
Customers
Short-term: Quality products
delivered on time.
Long-term: We build long-term
relationships with our customers
and support their growth.
Local communities
Short-term: We regularly contribute
through fundraising and charity
events.
Long-term: We partner with local
businesses and organisations to
support the local community.
www.volex.com
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Strategy
Our strategic aim
Volex is a diverse and resilient business that has delivered significant improvements in underlying operating margins and is
demonstrating revenue growth. We are committed to delivering continuous improvements to maximise profitability and cash
generation. This will enable us to re-invest in expanding our capabilities as well as pursuing our strategy of acquiring excellent
businesses and delivering increased shareholder value.
1
Where we are now
In FY2021 we delivered higher
revenues and improved our
underlying operating margins by
concentrating on our four main
markets of Consumer Electricals,
Electric Vehicles, Medical and
Complex Industrial Technology.
We have deep and long-standing
customer relationships, forged
through our commitment to quality
and customer service. We have an
excellent reputation in our chosen
markets.
We have delivered six successful
acquisitions, proving our credentials
as acquisition experts.
2
What we are doing
We have a deep understanding of our
markets and where we can deliver value. We
are making targeted investments in people
and infrastructure where we know that we
can generate growth.
We never stop identifying where we can
make improvements in our systems and
processes. In FY2022 we are starting
a Group-wide change programme
which will deliver a unified ERP
solution and efficiencies in our
processes.
We are managing an exciting
pipeline of acquisition
opportunities that represent
an exceptional fit with our
existing operations.
1.8%
Capital expenditure
as a proportion of
revenue
13.3%
Year-on-year revenue
growth
Our new facility in Suzhou, China
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3
Where we are heading
Our strategy is designed to deliver
consistent growth and to maximise
margins. This will give us the
opportunity to deliver strong free
cash flows which will fund further
investment and acquisitions.
We have a strong team who are
passionate about delivering long-
term growth for our shareholders.
Volex has made tremendous
progress in recent years and there is
much more to come.
ORGANIC GROWTH
We are investing in:
Capability
We are targeting investment in areas where we can
deliver growth and deliver higher value solutions to
customers.
Digital
A unified ERP solution to standardise processes and
help us focus on driving profitability.
People
Strengthening our sales and engineering teams and
improving performance and recognition systems.
Leadership team
We have changed our Board composition to bring
new perspectives as well as expanding our team
with some additional key management roles.
Marketing
We have a new roadmap for marketing which will
help us convert new customer opportunities.
INORGANIC GROWTH
Acquisitions
We have an agile approach to acquisitions with an
earnout-based model that differentiates us from
traditional acquirers.
We have a pipeline of high-quality acquisition
targets which allows us to be very selective about
the opportunities that we take forward to due
diligence. Our ideal acquisition targets are well run
businesses that we understand extremely well. They
bring us either new customers or new capabilities
and they enhance our margins.
We strive to achieve the highest standards of cleanliness
in our operations to ensure defect-free production
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STRATEGIC REPORT
Strategy
Introduction
Our strategy is focused on five areas that we believe will position us for growth and improve profitability and cash generation.
This is part of our plan to build a world-class manufacturing business.
PRODUCT
DEVELOPMENT
CUSTOMER
FOCUS
OPERATIONAL
EXCELLENCE
What this means
We work with our customers
to understand their particular
requirements which can be complex
and varied. We know that everything
we produce has to enhance our great
reputation for quality. We are alert to
how technological developments are
shaping the evolution of products and
we work with our customers to innovate
our product set and capabilities. This
means offering customers solutions for
the technical challenges they are facing.
Strategy in action
We have been working on the next
generation of high-speed copper data
cables that will deliver improvements
in cloud computing infrastructure.
We have also been moving customers
across to power cords based on our own
extrusion technology.
The acquisition of DE-KA augments
our expertise in relation to power
products and will help us optimise our
manufacturing processes for power
cords.
Future priorities
We have a research and development
team who are concentrating on future
developments in electric vehicle
charging to ensure that we continue to
have a market-leading product set.
We expect the high-speed data centre
market to develop rapidly and we are
developing technical partnerships
to enhance the range of solutions
available.
What this means
We put the customer at the heart
of everything that we do. Strong,
regular and transparent customer
communications have been
fundamental to maintaining excellent
service and responsiveness during the
pandemic.
We aim to show a comprehensive
understanding of our customers’
operations. We recognise the
importance of being responsive at every
stage of the customer journey, from
the initial engagement and quotation
process through to order fulfilment.
Strategy in action
Throughout the year we kept our
customers updated on the status
of our manufacturing facilities and
the availability of key components.
We also communicated regularly to
understand how our customers’ needs
were changing as they responded to the
challenges of Covid-19.
All of our operations teams are
measured on customer satisfaction.
Future priorities
We will continue to develop and
enhance our sales team to ensure
we have a deep understanding of
our customers and we can identify
opportunities where we can support
them. We are investing in marketing
and customer communications
programmes to showcase our
expanding capabilities.
What this means
We never stop in our pursuit of
efficiency savings and process
improvements. Our focus is on creating
a best-in-class organisation that is
capable of leveraging its global footprint
and scale to optimise production.
Continuous improvement has to take
place at all levels of the organisation on
both the production floor and within the
support functions. Local managers are
supported by senior leaders to deliver
positive change in the organisation.
Strategy in action
We delivered a number of important
operational improvement projects
during the year. The two that really
stand out are the move of our factory in
Suzhou to a new state-of-the-art facility
allowing us to redesign key process
flows to improve efficiency. The second
project was the completion of the
construction of the factory expansion in
Batam to create a vertically integrated
manufacturing capability for our
consumer electricals customers.
Underpinning these transformational
projects is a culture of continuous
improvement with hundreds of
improvement ideas implemented
during the year.
Future priorities
We have worked at a site level to
identify numerous optimisation
opportunities which can improve our
cost of manufacturing and enhance our
standards of quality and safety. These
will form a central pillar of our capital
expenditure in FY2022.
Link to KPIs
1
3
4
Link to KPIs
1
2
Link to KPIs
2
4
5
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Key for KPIs
1
2
3
4
5
6
Annual
Revenue Change
Underlying
Operating Profit
Return on
Capital Employed
Underlying
Free Cash Flow
Underlying
Basic EPS
Employee
Safety
INVESTMENT AND
ACQUISITION
PEOPLE
What this means
Acquisitions are a key element of
our overall growth strategy. The
combination of a strong balance sheet
and the availability of funding from
our refinancing in FY2021 provides an
opportunity to increase scale, customer
reach and capability. Our agile approach
to acquisitions, strong network amongst
Volex senior management and earnout-
based model differentiates us from
traditional acquirers.
We have significant investment
opportunities in our existing business
that will deliver good cash returns.
Strategy in action
Our acquisition of DE-KA during
FY2021 was the largest transaction
we have undertaken to date. It gives
us a significantly enhanced scale in
the European power cord market and
presents us with a number of exciting
cross-selling opportunities in the
domestic appliance market.
We have also deployed capital
expenditure during the year, particularly
in growth areas, such as to support our
progress in electric vehicles.
Future priorities
We have a varied and interesting
pipeline of opportunities which are at
various stages in the acquisition process.
We have undertaken a comprehensive
review of our future requirements to
create a capital investment plan for
FY2022 which will support our growth.
What this means
As an organisation we are always
moving forwards. We have emerged
from a turnaround story as a strong and
ambitious organisation determined to
deliver growth. This requires our senior
management to be aligned around a
clear set of goals with a clarity of focus
and a shared purpose.
Strategy in action
We have been able to deliver further
significant improvements in our
internal communications. Again, we
have advanced the health and safety
agenda, with a particular focus on
keeping Covid-19 out of our factories.
Our strengthened performance
management processes are improving
the alignment of objectives and
ensuring better calibration of
expectations. Combined, these
support our teams to deliver ambitious
transformation activity throughout the
organisation.
We introduced a site excellence award
programme during the year which has
been well received and will encourage
strong performance by recognising and
celebrating excellence across the Group.
Future priorities
The roll-out of a global ERP system will
give us an organisation-wide catalyst for
process change.
We have a number of plans to invest
in our strong performers as well as
supporting a series of local initiatives to
improve our facilities and ensuring we
deliver a competitive reward structure.
Link to KPIs
3
6
www.volex.com
Link to KPIs
3
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STRATEGIC REPORT
Key Performance Indicators
1
Annual Revenue
Change (%)
2
Underlying operating
profit ($m)
3
Return on Capital
Employed (%)
2021
2020
2019
2018
2017
13%
5%
15%
1%
(13)%
2021
2020
2019
2018
2017
$42.9m
$31.6m
$21.6m
$11.5m
$9.1m
2021
2020
2019
2018
2017
31.5%
29.9%
26.7%
31.3%
20.3%
Definition
Change in reported revenue compared
to the previous year.
Definition
Operating profit before adjusting items
and share-based payment expense.
Relevance
Through consistent customer service
and the right sales mix we aim to drive
higher revenue.
Performance
Revenue growth in the period was
strong, particularly in relation to electric
vehicle customers.
Link to Strategy
Product Development
Customer Focus
Relevance
Optimising profitability is central to
our strategy. This is realised through a
robust pricing strategy and efficiency
programmes.
Performance
Profit increased significantly due to
revenue growth and improvements in
efficiencies, as well as acquisitions.
Link to Strategy
Customer Focus
Operational Excellence
Link to Remuneration
Annual bonus
LTIP
Definition
Underlying operating profit as a
percentage of net assets excluding
net cash/debt.
Relevance
This measures return on the equity asset
base as the Group continues to grow.
Performance
This measure has improved due to
higher profitability and the success
of the acquisition strategy.
Link to Strategy
Product Development
People
Investment and Acquisition
4 Underlying Free
Cash Flow ($m)
5
Underlying Basic EPS
(cents)
6 Employee Safety
(LTA per million hours worked)
2021
2020
2019
2018
2017
$31.7m
$48.8m
$(7.6)m
$2.7m
$19.3m
2021
2020
2019
2018
2017
2021
2020
2019
32.1c
18.2c
13.1c
9.2c
9.5c
2.00
1.07
2.25
Definition
Underlying free cash flow excludes costs
of acquisitions, adjusting items and
share-based payments.
Definition
Earnings per share adjusted for the
impacts of adjusting items and share-
based payment expense.
Relevance
This measures the growth and
profitability of the Group and is a
measure used by investors when
assessing the business.
Performance
The growth of the business through
acquisition, improvements in profit and
the recognition of deferred tax assets
have improved EPS.
Link to Strategy
Operational Excellence
Relevance
We aim to maximise cash generation
to fund further acquisitions and support
the growth of the business.
Performance
Cash flow has benefited from the
underlying profitability of the business
and favourable working capital
movements.
Link to Strategy
Product Development
Operational Excellence
Link to Remuneration
Annual bonus
22
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Annual Report and Accounts 2021
Definition
The number of lost time accidents per
million hours worked.
Relevance
We want to ensure that we offer a safe
environment for our employees and
that all of our sites take safety seriously.
Performance
We continue to improve year on year.
With each new acquisition we add
in two years of historical data. This
explains the increase in our year-on-
year performance. If we exclude our
most recent acquisition then we have
achieved a 59% reduction in accidents
since FY2019.
Link to Strategy
People
Investment and Acquisition
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STRATEGIC REPORT
‘With a strong management
team and an impressive
customer list, DE-KA is
a perfect fit with our
business model.’
Nat Rothschild
Executive Chairman
STRATEGY IN ACTION
Acquisition of DE-KA
DE-KA is the leading manufacturer of power cords in
Europe specialising in the European white goods market.
It has a highly automated flagship production site near
Istanbul with satellite plants in Western Turkey and
Romania. This acquisition brings us access to major new
customers.
Overview
The acquisition of DE-KA will create a
great platform for us to further expand
sales of power cords in Europe. DE-KA
has best-in-class manufacturing sites
and processes. There is an opportunity
to share knowledge between our sites
to optimise the production process.
How will this benefit Volex?
▶ DE-KA has relationships with global
domestic appliance manufacturers,
providing cross-sell opportunities
▶ Organic growth potential with
existing customers and facilities
▶ Diversification of customers and end
markets
▶ Increased scale offers procurement
savings opportunities
▶ Strong management team that will
remain in the business
▶ Enhances footprint in Europe
DE-KA has shown resilient performance
through the period of the Covid-19
pandemic and has experienced high
levels of customer demand. We have
approved additional investment to
deliver extra capacity in FY2022.
The business is run extremely well with
an experienced management team
who has a deep understanding of the
customers and the products.
The acquisition of DE-KA is an
exceptional opportunity for Volex. It
accelerates our strategy of creating the
most efficient and lowest-cost producer
in the industry. The business has an
excellent track record and is positioned
well in high structural growth end-
segments such as white goods to
deliver exciting growth in the future.
$60.7m
Annual revenues based on
12 months to March 2021
$12.2m
Annual operating profit based
on 12 months to March 2021
28 years
Experience of manufacturing
power cords
Link to Strategy
People
Investment and Acquisition
www.volex.com
Volex plc
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30048-Volex-AR21 18 June 2021 10:12 am V4Operational ReviewQ&A‘I am extremely grateful to all of our employees who have worked incredibly hard to address the challenges of Covid-19.’John MolloyChief Operating Officer What are the investment priorities for FY2022?To deliver sustainable growth, we need the right capabilities, the correct expertise and highly efficient manufacturing so we are the lowest cost producer. We have to invest in people and infrastructure. We have a solid business but investment has been low in the past as we focused on process improvement and transformation. We have a clear view of where we can deliver value from our investments. Everything we do is supported by a strong investment case and many projects pay back within two years. There are some important investment projects for FY2022 that will improve our manufacturing efficiency and enhance our capabilities. We are implementing a new ERP system which will be a catalyst for business process change across the organisation and will support collaboration between our facilities. Vertical integration is important for power products and DE-KA illustrates this perfectly. By bringing together all of the manufacturing steps in one location, with a streamlined and efficient process, DE-KA are the lowest cost producer with an efficient operating model. This shows the benefits of consolidating operations and creating flexible and versatile manufacturing sites that excel at integrating the end-to-end manufacturing processes. How will you maintain margins in the face of inflationary pressures and competition?We have a great track record of working with our customers to help them identify alternative components that meet their stringent quality requirements but at a lower price. This can help offset some of the impact of inflation, but ultimately increased costs in raw materials will be passed through to our customers. Pricing is always complicated in a competitive environment. We have a tremendous amount of knowledge about our production process and where we add value to the customer. We work within established parameters to define our pricing strategy, but we also recognise where we need to be flexible for strategic opportunities.Volex plcAnnual Report and Accounts 2021Stock code: VLXSTRATEGIC REPORT24We made a lot of progress on our underlying operating margin through a combination of activities. We support a diverse range of customers with a complex collection of manufacturing processes and we have delivered profitability improvements through continuous improvement and targeted automation. Our supply chain team have also been very successful in negotiating cost reductions for bought-in parts, delivering savings that we are able to share with our customers. We expect to see inflationary pressure in raw materials, including copper and other components, in FY2022. These increases will be passed on to our customers, but this is not instantaneous. Our competitors are facing the same pressures and our focus will continue to be on manufacturing efficiency, customer satisfaction and quality.In October 2019, we set out an ambitious five-year plan to achieve underlying operating margins of 10%. Based on our current customer mix and our focus on low-volume, high-mix manufacturing services, that represents the optimal level of margin where we can balance profitability and price competitiveness. We are heading towards this margin target at the same time as investing in growth areas. Underlying operating margin for the Group has increased to 9.7%, what sort of improvement do you expect going forward?30048-Volex-AR21.indd 2430048-Volex-AR21.indd 2418/06/2021 15:09:4918/06/2021 15:09:49 STRATEGIC REPORT
How do you approach the
integration of acquired
businesses?
Every business is different so the
integration plan is unique. We
have bought businesses that are
well run with engaged and capable
management teams. There is an initial
alignment process where we look to
synchronise reporting, key internal
controls and critical areas such as safety
standards. Then we identify where we
can share the skills and experience we
have in the Group to benefit the
acquired operations. We have a lot of
expertise in the organisation and
transferring knowledge is important.
We encourage local decision-making.
Every site is led by an experienced
manager who takes ownership of
operational and financial performance.
This decentralised structure helps us
make quick decisions and put the
customer first. When we make an
acquisition, we can slot them into this
structure. A shared understanding of
our corporate culture and expectations
around performance is important. In
fact, ensuring we have alignment in
our values and ways of working is an
important part of the decision process
before we commit to an acquisition.
What acquisitions do you
need to make to close out
gaps in your capabilities?
We acquire businesses to gain
new customers or deliver
additional services based on our
customers’ requirements. Our current
manufacturing footprint works for us
today, but we keep this under review as
manufacturing trends evolve.
Our acquisition of DE-KA has rounded
out our worldwide reach in the
production of power cords for consumer
electricals. There are some very
interesting opportunities in respect of
integrated manufacturing services. It is
an extremely fragmented market and
customers are recognising that there is
a significant risk in buying from smaller,
standalone businesses operating from a
single site. These present opportunities
for acquisitions where we can leverage
the scale of Volex to deliver resilience for
the customer.
Identifying the right market sectors is a
crucial part of the acquisition approach.
We have a very compelling proposition
www.volex.com
where we can balance low volumes, a
complex product and stringent quality
requirements. This is why we have
such great traction in areas such as
the medical segment. What is really
important to the success of acquisitions
is having a really clear view of where
we can add value and deliver good
returns. This knowledge is central to our
planning around the identification and
execution of acquisitions.
How does the Volex
strategy support growth?
The level of innovation required
to deliver revenue growth varies
by customer. In areas where the
market is growing and the technology is
developing, the sales activity is very
solution driven. In areas like electric
vehicle charging solutions and power
and high-speed transmission solutions
for data centres, we are using our
expertise to solve the challenges that
customers face and win new projects.
In other areas, the challenge is about
having efficient manufacturing
processes and quality assurance. This
provides cost competitiveness and
allows us to exceed our customers’ high
expectations. We have manufacturing
engineers in all our plants who help
us optimise our processes. We also
share knowledge between our sites to
enhance best practice.
Did Covid-19 highlight
any weaknesses in your
organisation?
The disruption from Covid-19 has
presented some operational
challenges, and I am extremely
grateful to all of our employees who
have worked incredibly hard to address
these challenges. Throughout the year
we have put the safety of our colleagues
first. This has been a demanding period
for our customers and I am proud of
how we have supported them.
Rather than highlight any particular
weaknesses, I think we have shown
what a strong and resilient organisation
we have built in the last few years.
We kept our factories open during
FY2021 because we acted quickly
and decisively to roll out workforce
protection programmes in all of our
sites, meaning our teams were familiar
and comfortable with the new protocols
while levels of local cases were low.
Having experienced management in
each of our facilities who can exercise
judgement in the context of their
own production environment and
the situation in their locality definitely
helped.
Our global footprint, with
manufacturing in 10 different countries,
has given us flexibility. Not just in terms
of production capability but having
supply chain and logistics colleagues
around the world has been crucial as we
have supported our customers in a fast-
moving environment.
How do you think the EV
market will develop?
Electric vehicles is an exciting
growth area with an
understandably high profile at
the moment. Consumers are embracing
the technology and the environmental
benefits. As a company with over 100
years’ experience of delivering
innovative solutions to electrical
engineering challenges, it isn’t
surprising that we have had a leading
part to play in charging the new
generation of passenger vehicles.
We are no stranger to operating in
competitive markets where price,
quality and customer service are critical
differentiators. It is important for us to
be one of the lowest cost producers.
We are continuing to invest in our
facilities and processes to maintain our
competitive position.
What have you learnt
about DE-KA post
acquisition?
DE-KA is a very well run business
with a great customer base. They
have secured their position as
the leading supplier of power cords for
the European domestic appliance
market through outstanding delivery. I
think there will be opportunities to
introduce their customers to capabilities
in other regions.
In the six weeks that they have been
part of the Group, DE-KA have been
incredibly busy and they have a strong
order book going into FY2022. In fact,
performance is so strong we have
agreed to expand their production
capacity with the introduction of
additional automated production lines.
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Performance and Financial Review
Performance Review
Overview
Our FY2021 performance underlines
the progress that Volex has made in
recent years. In what was undoubtedly
one of the most challenging years for
manufacturing in recent memory,
the business delivered a great result
with strong improvements to both
underlying operating margin and
revenue. This demonstrates the benefits
we have secured from broadening
the customer base, expanding the
manufacturing footprint and the
relentless focus on driving optimisation
and efficiency in processes.
Demand for power cords for the
consumer electricals market was strong
and we were able to take advantage
of the efficiencies and capacity we
have delivered in this area. A notable
highlight during FY2021 was the
acceleration in our electric vehicle
business. This is a demanding area
that showcases our expertise and
engineering capability. It was a mixed
year for our medical customers with
strong demand for portable patient
monitoring devices and respiratory care
appliances offsetting a slowdown in
the deployment of larger therapeutic
and diagnostic machines. Our Complex
Industrial Technology customers saw
variability in demand as companies
delayed investment decisions while
waiting for a better understanding of
the economic impact of the pandemic.
Data centre products grew strongly,
helped by the rapid uptake of cloud
services and streaming as work and
leisure trends changed.
Amongst a number of important
investment projects in the year,
the most significant were the site
relocation in Suzhou, China and the
facility expansion in Batam, Indonesia.
Both of these projects were delivered
on time and on budget despite the
challenging circumstances. Relocating
our production site in Suzhou presented
us with the opportunity to create a
manufacturing centre of excellence
in East China, where we will locate
a number of our engineering and
manufacturing specialists. Batam has
proven to be one of our most profitable
and versatile manufacturing sites.
Doubling our factory footprint there
provides a platform for growth.
We completed the acquisition of DE-KA,
the leading producer of power cords
for the European consumer electricals
market, in February 2021. This is an
exceptionally well run business with
industry-leading margins and an
impressive blue-chip customer list.
We have a strong acquisition funnel
with opportunities at various stages
of qualification. Acquisitions are a
crucial part of our strategy and a
significant focus.
The success of our operations is down
to the talent and hard work of our
workforce, which now numbers over
6,300 individuals across 21 different
countries. We have continued to
invest in developing talent within
the organisation and supporting
the growth and development of our
colleagues at all levels. We have put a
significant emphasis on improving our
performance management approach
to support the achievement of our
strategic objectives and this is evident in
the progress we have achieved this year.
The impact of Covid-19
It has been an incredibly challenging
year for our employees, our customers
and our suppliers. Creating and
maintaining a safe environment for
We have continued to upgrade our
working environment, including in our offices
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our colleagues has been the foremost
priority throughout the year. We
rolled out a set of stringent health
and safety requirements across all our
manufacturing sites to reduce the risk of
the spread of infection at our locations.
As a result of these measures we did not
experience any significant downtime at
our sites in FY2021.
The pandemic has seen changes in
the operation of global supply chains.
There was an excellent response from
our procurement teams who have
done an outstanding job securing the
components required for customer
projects. Changes in supply and
demand and the availability of air
freight, much of which was carried on
passenger aircraft, has had an impact
on the sea freight lanes that transport
our Asian output to Europe and North
America. This has resulted in higher
shipping costs and longer transit
times. We have worked closely with our
customers to manage these impacts.
Covid-19 has had an impact on the cost
of some of our raw materials. In the
first half of FY2021, the price of copper
dropped as there was uncertainty
about global requirements. As demand
improved in the second half of the year,
copper prices increased. Our contracts
with our power cord customers, where
copper is a significant percentage of the
bill of materials, allow us to pass these
costs through to the customer, although
there can be a short delay to allow the
pricing changes to be implemented.
Acquisitions
DE-KA is the sixth acquisition we have
completed in the last three years and
also the largest. It achieved revenues of
$60.9 million for the year to 4 April 2021
and has contributed revenues of $9.2
million in the six weeks since it became
part of the Group. We identified DE-KA
as a target on the strength of their
reputation in Europe as a leading power
cord manufacturer with a significant
share of the domestic appliance market.
At the time of the initial approach, the
owners had not considered selling. Our
track record on previous transactions
and our approach to integration, where
we ensure we retain the entrepreneurial
elements that have made the target
a success, convinced them to join
the Group.
Having completed the acquisition,
we are actively pursuing revenue
synergies by leveraging strong
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customer relationships on both sides
to drive additional sales. We have
also conducted an initial analysis
of their supply contracts to identify
combined procurement savings. The
manufacturing engineers at DE-KA have
a significant knowledge of the end-to-
end power cord production process,
allowing us to share best practice across
the Group.
The successful acquisition and
integration of quality businesses is a
major part of our strategy. Our typical
acquisition target is a well performing
business in a sector where we have a
deep understanding. We are attracted
to businesses with excellent customer
lists and good capabilities that drive
long-term customer relationships.
Targets that require significant
integration or restructuring effort are
only feasible where we can identify
the right management resources to
lead this activity. We want to maximise
the value we can create from every
acquisition and we only take forward
opportunities that meet the strict
value criteria that we tailor for each
transaction based on the specific
characteristics of the target.
To select the right opportunities, we
identify potential acquisitions through
a variety of methods, seeking out
businesses that are not on the market
as well as those already in an active
process. All of these opportunities
are qualified and discussed by
an investment committee before
we progress to negotiation. In an
environment where Covid-19 has
impacted profitability at potential
targets, both positively and negatively,
valuation can be complex, and we have
taken a prudent approach in this regard.
We only proceed to due diligence
where we have an alignment in the
commercial terms.
Acquisitions remain a high priority and
we are actively pursuing a number of
opportunities which are at different
stages of qualification. We have
good access to funding to allow us to
complete on this strategy, with low
levels of net debt at the end of the
year and significant undrawn facilities.
The completion of any acquisition is
dependent on the business meeting
our stringent requirements following
appropriate due diligence and
negotiations.
STRATEGY IN ACTION
An extraordinary and
dedicated Covid-19 operations
challenge
The sudden onset of the Covid-19 pandemic in early
2020 represented an extraordinary challenge to the
entire Volex team to respond to the global rush to
manufacture ventilator cords, wire looms and other
highly needed hospital equipment components.
Ventilator manufacturing demands
across Europe and North America
spiked as both areas of the world
were experiencing increased
pressure to domestically engineer
and manufacture new ventilator
designs in an environment where
manufacturing shutdowns were
occurring and supply chains
evaporating. Government sponsored
programmes were in full swing
to support the manufacture of
this desperately needed medical
equipment.
Tremendous support, dedication and
extraordinary effort was provided by
the Volex Tijuana, Poland, Zhongshan
and Shenzhen teams, as well as
our GTK subsidiary in the UK, for
the delivery of critical components
and assemblies to a wide variety of
medical equipment manufacturing
customers.
Volex Tijuana supported the internal
assemblies for ventilators supplied to
one major US OEM and its nationwide
manufacturing facilities. In addition,
our Tijuana and Poland facilities also
supported the increased demands
for multiparameter monitors used
in ICUs across Europe and North
America. Our Zhongshan and
Shenzhen locations responded to the
power cord requirements for these
same multiparameter monitors.
The overall mobilisation effort
included our global and local
operations teams supporting each
other on a total project management
programme that included daily
material order management, and
expediting manufacturing and
shipment. Sometimes this involved
working directly with the customers,
local governments and authorities
to reopen the factories of critical
supplier partners. The challenges that
our global teams overcame included
ramping up production schedules,
the introduction of additional
work cells and shifts, and overtime
management to manufacture and
deliver product as fast as possible.
All of these efforts were successfully
organised, achieved and delivered
despite the challenging and difficult
manufacturing and supply chain
environments we experienced.
Link to Strategy
People
Investment and Acquisition
www.volex.com
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Performance and Financial Review
Performance Review
193%
Year-on-year growth in
Electric Vehicle revenue
11.8%
of Group revenue
from Electric Vehicles
Revenue by customer sector
Consumer Electricals
Consumer electricals demand has been
robust in the period, despite a slow start
to the year due to supply chain and
shipping restrictions. Revenue grew to
$164.0 million (FY2020: $156.8 million).
As many consumers spent more
time at home during the pandemic,
demand for entertainment and home-
office equipment was high. Consumer
electricals are well suited to the shift to
online buying that has occurred over
the last year.
Sales in the first two months of
FY2021 were lower than expected as
our customers’ manufacturing sites
returned to production following the
closures at the end of FY2020. At this
point in the year we saw strong demand
for power cords to support the move to
the home office, particularly printers,
monitors and notebooks. As the year
progressed, our customers returned
to full capacity with many of them
increasing order quantities in response
to pent-up demand. Towards the
middle of the year, our customers who
were involved in home entertainment,
including consoles and streaming
devices, and small appliances, such
as coffee machines, were particularly
active. These trends continued right
up to the end of the year with the final
quarter stronger than usual. These
figures also include the contribution
made from the acquisition of DE-KA for
We have prioritised investment in automation to increase
our efficiency and capacity.
the six weeks since we completed the
transaction on 18 February 2021.
Electric Vehicles
The automotive industry is experiencing
a period of rapid change. The launch
of new models, government incentives
and stricter emissions legislation are
driving growth in the sales of electric
vehicles. As leaders in the development
and manufacture of power cords, Volex
is able to bring significant experience to
the technology associated with electric
vehicle charging. Our customers are
looking for a robust product, designed
with reliability and safety as a priority.
Our skill in these areas has allowed
us to broaden our customer base and
expand the range of products that we
sell to each customer. As sales of electric
vehicles increase, we expect the sector
to become more competitive. We are
investing in optimising our production
processes to ensure we remain one of
the lowest cost producers.
Revenue from our electric vehicle
customers grew to $53.1 million
(FY2020: $18.1 million), a year-on-year
increase of 193%. Demand in the first
quarter of the year was subdued as our
customers identified ways to re-open
their automotive plants in a Covid-
secure way. From the second quarter
of the year demand began to pick up,
with run-rates improving further in
the second half of the year. Over this
period of time, we have been increasing
our capacity to support production
for our electric vehicle customers with
additional capacity becoming available
in the first half of FY2022.
Medical
Covid-19 placed a tremendous amount
of pressure on healthcare systems
around the world in FY2021, resulting
in changes in the profile of spend on
medical technology. Overall, medical
revenues were down slightly at
$112.7 million (FY2020: $116.0 million),
reflecting the variability in demand
seen across customers in different
segments of the medical market.
Orders for components used in smaller
medical devices for patient treatment
and monitoring were strong, as were
orders related to respiratory care.
We took part in projects to develop
ventilators at an accelerated pace and
we were able to use our global supply
chain expertise and flexible approach to
manufacturing to support delivery in a
short time frame. Our customers who
build larger medical equipment, such
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STRATEGIC REPORT
as patient imaging and robotic surgery
devices, experienced lower demand.
This was due to many healthcare
settings restricting access and deferring
investment projects as they dealt with
the pandemic.
We believe that the outlook for large
medical equipment will be positive as
the impact of Covid-19 on healthcare
systems reduces. Governments and
healthcare providers will need to
prioritise investment in technologies
to support screening procedures and
routine operations that were delayed
during the pandemic. In addition,
spending on screening and treatment
around the world is expected to grow, as
is the provision of universal healthcare in
some significant markets. Volex is well
positioned, with established production
facilities in the major healthcare
markets, to take advantage of moves to
simplify and de-risk the supply chain for
the production of medical devices.
Complex Industrial Technology
Revenue for Complex Industrial
Technology customers was up by
13.0% to $113.5 million (FY2020: $100.4
million). The majority of this increase
was in respect of products used in data
centres. Data centre customers made
up 36.9% (FY2020: 30.3%) of revenue
in this sector. As the world moved to
remote working, relying upon cloud-
based services and video conferencing,
there was an increase in the utilisation
of data centres. This demand was
particularly strong in the first half of the
year as our customers looked to stock
up on critical components to prevent
any shortages caused by supply chain
disruption.
Our other Complex Industrial
Technology customers produce a wide
range of equipment and customer
solutions, including building control
smart metering, laser technology,
vehicle telematics, telecommunications,
industrial automation and robotics.
Demand held up well in FY2021
considering the challenging
environment for these customers, with
Covid-19 creating uncertainty over
investment programmes and creating
supply issues for other components that
are used in their products.
Revenue by market
As our business has grown it has
become more interconnected. We
are seeing increasing demand from
our customers to manufacture in
STRATEGY IN ACTION
Batam plant
expansion
During the year, we completed the construction phase
of our Batam site expansion on schedule and on budget
Our Batam manufacturing site is the
largest of our manufacturing facilities,
employing close to 1,700 workers on
the island of Batam in Indonesia.
Throughout the Covid-19 pandemic,
and with its borders closed, we were
able to successfully complete a major
factory expansion project, multiple
customer line transfers and set up a
completely new wire manufacturing
process. The project has added 7,344
sqm of manufacturing space, greatly
increasing our ability to scale up
production and offer customers tariff-
free supply options. The increased
space also allows for the vertical
integration of Batam-based PVC and
cable production.
This new Volex centre of excellence
project was critical and allows us
to globally compete and grow for
the future with expansion into new
businesses through enhanced
manufacturing and automation
capabilities. The immediate result
of this expansion effort is greater
diversification options and the
reduction of competitive pressures to
help fuel our projected growth in the
EV, data centre, power cord, and wire
and cable businesses. This will also
enable faster sample and pilot run
turnaround time to quickly support
new business opportunities.
It is especially notable that
throughout the expansion process
there were no shutdowns due to
the Covid-19 pandemic. This was a
remarkable achievement based on
the planning, strength and dedication
of our Steering Committee, project
team and all of the internal and
external stakeholders involved in the
project.
We look forward to the contributions
the newly expanded Batam site will
add throughout FY2022 and beyond.
Link to Strategy
People
Investment and Acquisition
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Performance and Financial Review
Performance Review
All of our products are checked to rigorous
quality and performance requirements
13,200 sqm
Floor space in our
expanded Batam facility
13.8%
Operating costs as a
percentage of revenue
160bps
Improvement in underlying
operating margin
multiple locations to reduce the risk of
supply chain disruption if a particular
country introduces restrictions. We
are responding to this by developing
versatility in our sites so we can meet
a variety of customer requirements. At
the same time, the way we manage the
business is evolving as we introduce
a regional focus to continue our drive
to offer exceptional customer service.
As part of these changes, we have
revised the way that we analyse our
customer revenue, with categorisation
by customer and geographically by
region. The regional allocation is based
on where the customer relationship is
held, reflecting the fact that we are a
customer-centric organisation.
North America
North America is our largest customer
segment and we work with some of
the largest technology companies and
global innovators. North America makes
up 45.8% of overall revenue (FY2020:
46.2%). Revenue grew by 19.5% to $203.1
million (FY2020: $169.9 million). This
includes some of the strong growth that
we experienced with our electric vehicle
customers.
Europe
Revenues in Europe grew by 19.1% to
$106.5 million (FY2020: $89.5 million).
with higher sales of data centre products
and respiratory care medical devices.
Europe also benefited from increased
demand in electric vehicles as well as
$9.2 million of revenue from DE-KA.
Asia
Asia revenues were $133.7 million
(FY2020 $132.0 million). The majority
of sales in this region are in consumer
electricals. Demand in the first half
of the year was impacted by our
customers who closed their factories for
short periods due to Covid-19. Demand
recovered in the second half of the year.
Operating costs
Underlying operating costs increased
by $2.0 million to $61.0 million (FY2020:
$59.0 million). The increase reflects
an investment in strengthening our
team to support growth opportunities,
with new appointments in sales and
marketing roles. We were able to make
savings in travel costs of over $1m. It is
likely that travel will remain at low levels
in FY2022. As part of the expansion of
our facility in Batam and the relocation
of our facility in Suzhou, we incurred
some certification and start-up costs.
There will be further costs of a similar
nature in FY2022 as we expand the
capabilities and capacity of these sites.
We also increased our spending on
research and development, focused
on areas where we have a strong
opportunity to deliver revenue growth
in future periods. Our investment in
development activities in previous
years has resulted in a small number of
patents which are now responsible for
incremental sales opportunities.
We were able to achieve this result
without making use of the UK
Government funded Coronavirus Job
Retention Scheme. Although we have
seen reductions in demand at some
of our sites, particularly those with
predominantly medical customers, we
have avoided making any redundancies
as a result of Covid-19. We have developed
and trained a skilled workforce in our
factories and it was important for us
to retain key people even where order
volumes have slowed. This gives us the
ability to respond rapidly to customer
requirements as demand returns.
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STRATEGIC REPORT
Delivering our strategy
Our approach continues to be the
development of the right products and
capabilities to be the manufacturing
partner of choice for our customers.
We have to demonstrate that we
are delivering value and providing
exceptional quality and excellent
customer service. To meet these high
standards, we keep our manufacturing
facilities under review, identifying ways
to improve processes which will increase
efficiency and improve quality. This can
involve looking at the configuration of
a production line or introducing new
equipment. Where it makes sense, we
pursue vertical integration, giving us
greater control over the supply chain
and increasing margins. As well as the
major projects in Batam and Suzhou,
we have introduced new equipment
and processes into our other factories to
improve our cycle times.
Delivering excellent customer
service takes great people. We have
successfully brought new people into
the organisation in addition to creating
development opportunities for our
existing employees. We have rolled out
a global performance management
framework to ensure our managers
have meaningful objectives and
receive regular feedback. Effective
communication is important and
we use a variety of channels to drive
employee engagement. We also
introduced a site excellence award this
year as a way of recognising exceptional
performance and teamwork at our sites.
As well as delivering a significant
acquisition with the completion of
the purchase of DE-KA, we have been
working on opportunities within our
acquisition pipeline. This activity can
involve assessing businesses that
are going through a sales process,
or building relationships with
organisations that show strategic
alignment but are not ready for sale at
this time.
Sustainability
Carrying out our business in a
sustainable way is important to us. It
is also important to our customers,
employees, the communities we
operate in and our shareholders. When
designing our new buildings in Suzhou
and Batam, we took environmental
issues into consideration to deliver
energy efficient working spaces. This
year we have introduced sustainability
as a specific area of focus for one of our
Board Committees, ensuring that the
topic gets appropriate attention. We are
putting in place new systems to capture
data across our sites so we can identify
and prioritise areas of improvement and
set targets for each location to manage
our environmental impact.
Operating margins
Underlying operating margins increased
to 9.7% from 8.1% the previous year.
There were a number of factors that
supported the improvement. We
continue to focus on efficiency and
optimising production at our sites.
There were significant movements in
foreign exchange rates and commodity
prices during the year as markets
reacted to changing assumptions
around the impact of Covid-19 and the
effect on demand. Robust controls over
operating expenditure and temporary
employment tax reductions in Asia have
also improved operating margins.
Investing in our business
Our manufacturing site in Batam,
Indonesia is one of the most versatile
in the Group and it is an important
element of our presence in Asia. With
ongoing tariffs for goods manufactured
in China entering the US, Batam
offers an extremely competitive
manufacturing location. In addition
to the impact of tariffs, many of our
customers are asking for their products
to be produced in multiple locations to
enhance the security and continuity of
their supply chain. In FY2020 we created
additional capacity in Batam to produce
high-speed data centre cables for US
customers. With revenues continuing to
grow, we completed the construction of
a factory extension in FY2021, delivering
significant additional capacity. This will
give us further flexibility and allow us to
meet increased customer demand and
maintain our cost competitiveness.
We also relocated our operations
in Suzhou, China to a new facility
in FY2021. As the Suzhou site had
developed, the existing building was
no longer meeting our needs. Local
enterprise incentives were available
to fund the move and provide a very
competitive lease on the new building.
Our team at Suzhou contains a number
of specialist roles that support our
operations in the rest of the Group,
including engineers, product design
experts and procurement specialists.
The new building creates a better
environment suited to collaboration
and cross-functional working. In FY2022
we plan to increase our research and
development activities at this site,
recruiting additional specialists to drive
our product development programmes.
Our specialists in our quality laboratories are
experts in quality assurance
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30048-Volex-AR21 18 June 2021 10:12 am V4Financial Highlights52 weeks to 4 April 2021Year-on-year change53 weeks to 5 April 2020Revenue$443.3m13.3%$391.4mUnderlying* operating profit$42.9m35.8%$31.6mStatutory operating profit$30.7m79.5%$17.1mUnderlying* profit before tax$41.6m36.8%$30.4mStatutory profit before tax$29.4m84.9%$15.9mStatutory profit after tax$38.9m164.6%$14.7mBasic earnings per share25.5c157.6%9.9cUnderlying* diluted earnings per share30.0c73.4%17.3cNet debt/(cash) (note 26)$27.3m($21.2m)Net debt/(cash)(excluding lease liabilities)$7.2m($31.6m)* Before adjusting items and share-based payment charge (see note 4 for more details)Statutory resultsRevenue grew 13.3% to $443.3 million (FY2020: $391.4 million). Statutory operating profit increased by $13.6 million to $30.7 million (FY2020: $17.1 million) which is an increase of 79.5% compared to the prior year. Net finance costs were $2.1 million (FY2020: $1.2 million), resulting in a profit before tax of $29.4 million (FY2020: $15.9 million) representing a year-on-year increase of 84.9%. Due to the recognition of deferred tax assets, there was a tax credit for the year of $9.5 million (FY2020: a tax charge of $1.2 million). Basic earnings per share were 25.5 cents (FY2020: 9.9 cents), an increase of 157.6%. The recognition of deferred tax assets accounted for 8.9 cents (FY2020: 5.8 cents) of the total basic earnings per share.Alternative performance measuresThe Group makes use of underlying and other alternative performance measures in addition to the measures set out in International Financial Reporting Standards (‘IFRS’). Underlying earnings measures exclude the impact of adjusting items and share-based payments, with further detail regarding the adjustments shown in note 4 in the notes to the financial statements. The Board and management team make use of alternative performance measures because they believe they provide additional information on the underlying performance of the business and help to make meaningful year-on-year comparisons.Group revenueThe improvement in revenue was driven by growth in sales to electric vehicle customers as well as strong performance from Complex Industrial Technology customers, particularly those customers who are involved in data centres. Revenue from medical customers fell slightly due to the challenges some of our customers had deploying new equipment in hospitals during the Covid-19 pandemic. From a regional perspective, North America demonstrated the highest growth with an increase of 19.5% to $203.1 million (FY2020: $169.9 million). The majority of the increase came from electric vehicle customers. European revenues increased by 19.1% to $106.5 million (FY2020: $89.5 million). This included the revenue for our first six weeks of ownership of DE-KA which contributed $9.2 million of revenue). Performance and Financial ReviewFinancial Review‘We have delivered revenue growth and improved profitability in what has been a challenging year in manufacturing. I am delighted by the strong performance we have delivered as a team.’Jon BoadenChief Financial OfficerStock code: VLXSTRATEGIC REPORT3230048-Volex-AR21.indd 3230048-Volex-AR21.indd 3218/06/2021 15:10:0218/06/2021 15:10:02 STRATEGIC REPORT
In Asia, revenue was broadly flat at
$133.7 million (FY2020: $132.0 million)
with some variations across several
consumer electronics customers.
Gross margin
Gross margin increased very slightly to
23.4% (FY2020: 23.1%). Margin gains due
to efficiency savings and production
improvement programmes were offset
by a change in product mix due to
higher volumes of sales for lower margin
products in the consumer electricals
and electric vehicles sectors. The
majority of contracts with customers
who buy power cords, where copper
is a significant component, contain
provisions to pass on changes in the
copper commodity cost. For some
contracts, this mechanism is not
immediate and there is a delay between
the change in the commodity price and
the change in the customer pricing.
There was a benefit to margin from this
in the first half of the year which was
offset as copper prices increased in the
second half of the year.
Underlying operating expenses
Underlying operating expenses
increased slightly to $61.0 million
(FY2020: $59.0 million). The increase
reflects the additional investment we
made in specialist sales and marketing
roles and costs associated with the site
move in Suzhou and the new facility in
Batam. There were some savings during
the year from lower travel expenses as
well as lower employment taxes in some
of the Asian countries we operate in.
As a percentage of revenue, underlying
operating expenses improved to
13.8%, from 15.1% in the previous year,
demonstrating our ability to grow our
business without significant increases in
operating expenditure.
Underlying operating margin
Our underlying operating margin
improved to 9.7% from 8.1% in the
previous year. There are a number of
factors behind the improvement. We
continue to see the benefits from
the targeted automation and vertical
integration in our China factories.
With the global impact of Covid-19
apparent at the beginning of the year,
we implemented strict controls over
discretionary expenditure and any
incremental recruitment. This meant
that some development projects were
delayed until the second half of the year,
resulting in savings in operating costs.
Adjusting items and
share-based payments
The Group presents some significant
items separately to provide clarity on the
underlying performance of the business.
This includes significant one-off costs
such as restructuring and acquisition
related costs, the non-cash amortisation
of intangible assets acquired as
part of business combinations, and
share-based payments, as well as the
associated tax.
Costs of $0.4 million (FY2020: $0.2
million) were incurred in connection
with the acquisition of DE-KA. As well as
undertaking third-party due diligence,
the Group uses its own experts and
in-depth understanding of the sector
to conduct a robust assessment of all
acquisition targets.
Amortisation of acquired intangibles
has decreased to $5.2 million (FY2020:
$5.7 million) including the impact
of the acquisition of DE-KA which
completed in February. The Group has
recognised two classes of separately
identifiable intangible assets, which
are customer relationships and
the acquired open order book. The
open order book is amortised over
a period of less than one year, so
the level of amortisation is higher in
the first year following acquisition
in comparison to subsequent years.
Customer relationship intangible
assets are generally amortised over a
longer period, reflecting the long-term
relationships we gain through our
acquisitions.
Share-based payments include awards
made to incentivise senior management
as well as awards granted to the senior
management of acquired companies.
These awards form an important part
of the negotiation of consideration in
an acquisition situation and are used
to reduce the cash consideration and
as an incentivisation and retention tool.
In accordance with IFRS, where these
awards include ongoing performance
features, they are recognised in the
income statement rather than as part of
the cost of acquisition.
The charge recognised through the
income statement for share-based
payment awards comprises $2.4 million
(FY2020: $2.4 million) in respect of senior
management, $2.6 million (FY2020: $5.6
million) in respect of acquisitions and
$1.6 million (FY2020: $0.7 million) for
associated payroll taxes.
Net finance costs
For much of the period, the Group
has been in a net cash position and
the revolving credit facility has been
undrawn until February when $32.7
million was utilised to support the
acquisition of DE-KA. Finance costs
include a commitment fee in respect
of the revolving credit facility and the
amortisation of the arrangement fees.
The financing element for leases for
the year was $0.7 million (FY2020: $0.6
million). The Group recognises interest
income in relation to accrued interest
receivable on the 10% preference shares
issued by Kepler SignalTek, which is
accounted for as an associate. Overall
net financing costs have increased to
$2.1 million (FY2020: $1.2 million).
Foreign exchange
Most sales are in US dollars, with limited
sales in other currencies, including
euros and British pounds sterling.
Most purchases of raw materials are
denominated in US dollars but costs
such as rent, utilities and salaries are
paid in local currencies. This creates
some exposure to movements in foreign
exchange, some of which is hedged.
Foreign exchange losses recognised in
the income statement for the period were
$1.3 million (FY2020: gains of $0.4 million).
Tax
The Group incurred a tax credit of $9.5
million (FY2020: tax charge $1.2 million),
representing an effective tax rate (ETR)
of -32.4% (FY2020: 7.2%). The underlying
tax credit of $7.2 million (FY2020: tax
charge $3.5 million) represents an ETR of
-17.5% (FY2020: 11.4%).
The underlying tax credit of $7.2 million
(FY2020: tax charge $3.5 million)
comprises an underlying current tax
charge of $3.7 million (FY2020: $7.7
million) and an underlying deferred tax
credit of $10.9 million (FY2020: credit of
$4.2 million).
The underlying current tax charge is
calculated by reference to the taxable
profits in each individual entity and
the local statutory tax rates. Where tax
losses are available, these have been
used to the fullest extent possible to
extinguish the taxable profit.
The Group operates in a number of
different tax jurisdictions and is subject
to periodic tax audits by local authorities
in the normal course of business on
a range of tax matters in relation to
corporate tax and transfer pricing. As at
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STRATEGIC REPORT
Performance and Financial Review
Financial Review
$31.3m
Free cash flow
$42.2m
Cash expenditure on
acquisitions
3.3 pence
Full year dividends
per share
34
Volex plc
Annual Report and Accounts 2021
4 April 2021, the Group has net current
tax liabilities of $6.7 million (FY2020:
$6.2 million) which include $7.9 million
(FY2020: $7.9 million) of provisions for
tax uncertainties.
A deferred tax credit of $10.8 million
(FY2020: $5.1 million) arose due to
an increase in deferred tax asset
recognised on trading losses and short-
term timing differences due to the
utilisation based on the future forecast
taxable profits in certain regions. At
the reporting date, the Group has
recognised a deferred tax asset of $22.0
million (FY2020: $9.0 million) of which
$8.6 million (FY2020: $4.5 million) relates
to tax losses, $7.2 million (FY2020: $2.7
million) to short term timing differences,
$5.6 million to share based payments
(FY2020: $1.2 million), and $0.6 million
(FY2020: $0.6 million) to accelerated tax
depreciation.
Cash flow
Cash flow in FY2021 has been robust,
supported by the strong operating
profit and tight control over working
capital. Operating cash flow before
movements in working capital has
increased by $12.4 million to $50.1 million
(FY2020: $37.7 million). There was an
adverse working capital movement
of $7.6 million, which compares to a
favourable movement of $19.6 million in
FY2020. The inflow comprises:
▶ An increase in inventory leading
to a cash outflow of $12.2 million
(FY2020: outflow of $2.9 million).
Towards the end of the year, we
experienced the effect of global
restrictions in sea freight capacity
which meant shipments from Asia
to Europe and North America are
taking significantly longer, leading
to higher levels of goods in transit.
In addition, some of our customers
are asking us to hold more inventory
in customer hubs in response to the
extended shipping times;
▶ An increase in receivables leading
to a cash outflow of $17.0 million
(FY2020: inflow of $20.5 million). The
increase in receivables is partially
due to a very strong final quarter for
consumer electricals customers who
generally have longer credit terms
than other customers; and
▶ An inflow related to payables of
$21.6 million (FY2020: inflow of $2.0
million). This was a result of the level
of trading in the final quarter of the
year.
Net financing inflows were $14.5 million
(FY2020: outflows $10.5 million). This
included the FY2021 interim and FY2020
final dividend payments of $6.0 million
(FY2020: $2.0 million) and the drawing
of the RCF to fund the acquisition
of DE-KA. As part of the extension
and enhancement of the Group’s
revolving credit facility, legal costs and
arrangement fees of $1.1 million (FY2020:
$0.7 million) were incurred during the
year. These amounts will be spread over
the three years of the RCF in the income
statement.
Capital expenditure increased to $7.8
million from $5.0 million in FY2020.
During the year, the Group has
continued to invest in automation to
deliver efficiency in our higher volume
factories. The construction for the site
expansion in Batam represented $3.4
million of investment during the year.
Free cash flow decreased by $16.1 million
to $31.3 million (FY2020: $47.4 million).
Free cash flow represents net cash flows
before financing activities excluding
the net outflow from the acquisition
of subsidiaries. In FY2020 there was a
significant improvement of $19.6 million
in working capital relating to the trading
conditions at the end of the year and
the timing of the year end. In FY2021
there was a working capital outflow of
$7.6 million. The impact of the change
in the movements in working capital
is partially offset by higher operating
profit in FY2021.
Total cash expenditure on acquisitions
(net of cash acquired) was $42.2 million
(FY2020: $25.6 million), including
$1.3 million (FY2020: $2.9 million) in
respect of contingent consideration.
The Group is expecting to make
payments of $19.7 million in FY2022 in
relation to contingent consideration
for acquisitions made in FY2021 and
previous years.
The cash outflow associated with the
settlement of awards under share-based
payment arrangements was $9.0 million
(FY2020: $4.6 million), including the
purchase of shares to be held in trust to
fulfil exercises in future periods.
Net debt and dividends
The Group was in a net cash position
for much of the year, drawing down on
the revolving credit facility in February
to fund the acquisition of DE-KA. At the
end of FY2021 the debt position was $7.2
million before lease liabilities and $27.3
million including lease liabilities. At the
Stock code: VLX
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30048-Volex-AR21 18 June 2021 10:12 am V4end of FY2020, net cash stood at $31.6 million excluding lease liabilities and $21.2 million including lease liabilities.The Group paid an interim dividend of 1.1 pence per share in December 2020. A final dividend of 2.2 pence per share will be recommended to shareholders at the Annual General Meeting, which reflects the robust financial position of the Group.Banking facilities, going concern and covenantsThe Group entered into a new $100 million multi-currency revolving credit facility in FY2021, replacing a $30 million credit facility. The new facility has a three-year term with the option of a one-year extension. The facility consists of a $70 million committed facility with a $30 million accordion feature and was effective from 12 November 2020. It is provided by three relationship banks and was oversubscribed.The new facility has a more relaxed net debt to EBITDA covenant as compared to the previous credit facility which provides greater flexibility to undertake future acquisitions. This facility provides additional headroom and further scope to make value-accretive investments to grow our business.This facility is provided by a syndicate of three banks. A total of $21.5 million and €9.5 million were drawn at the end of the period.The key terms of the facility are: ▶Available until 12 November 2023 with the option to extend for a further year; ▶No scheduled amortisation; and ▶Interest cover and total debt to EBITDA leverage covenants.As at 4 April 2020, drawings under the facility were $32.7 million (FY2020: undrawn) with $nil drawn under the cash pool (FY2020: $nil). After accounting for guarantees and letters of credit and before taking into account the accordion facility, which was not activated at the year end, debt available for draw down at 4 April 2021 was $37.3 million (FY2020: $29.7 million). Under the terms of the facility, the two covenant tests above must be performed at each quarter-end date. Throughout FY2021 all covenants were met. The Group’s financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. When assessing the going concern status of the Group the Directors have considered in particular its financial position, including its significant balance of cash and cash equivalents and the borrowing facility in place, including its terms, remaining duration and covenants.The Directors have prepared a Group cash flow forecast for the period to 30 September 2022, which is based on the FY2022 Board-approved budget. The Directors have sensitised the cash flow forecast using scenarios that take into account the principal risks and uncertainties set out on pages 36 to 40 of the Annual Report and the potential future impact from Covid-19. This sensitivity analysis includes a severe but plausible downside scenario which models a 10% reduction in revenue on the Group’s base case.Based on their assessment and these sensitivity scenarios, the Directors are satisfied that that there are no material uncertainties that cast doubt on the Group’s going concern status and that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.Financial instruments and cash flow hedge accountingFor most products we sell to consumer electricals customers, the price of copper has an impact on the cost of key raw materials. This risk is minimised by passing the variability in cost through to the end customer in the majority of cases. Where the customer contract does not provide for the pass-through of risk, the Group enters into forward contracts to mitigate the Group’s exposure to copper price volatility (see page 40 where rising commodity prices have been identified as a key risk).The forward contracts act as an economic hedge against the impact of copper price movements. They meet the hedge accounting requirements of IFRS 9 and therefore are accounted for as cash flow hedges of forecast future purchases of copper. As at 4 April 2021, a financial asset of $0.1 million (FY2020: financial liability of $0.3 million) has been recognised in respect of the fair value of open copper contracts with a corresponding $0.1 million credit recognised in reserves. This credit is retained in reserves until such time as the forecast copper consumption takes place, at which point it will be recycled through the income statement.A credit of $0.1 million has been recognised in cost of sales for FY2021 (FY2020: credit of $0.1 million) in respect of copper hedging contracts that closed out during the period. This credit has arisen since the average London Metal Exchange copper price in the period has been above the contracted price. Defined benefit pension schemes The Group’s net pension deficit under IAS 19 as at 4 April 2021 was $5.2 million (FY2020: $3.5 million). The largest element of the pension obligation relates to a defined benefit scheme in the United Kingdom which has been closed to new entrants for some years. The scheme’s assets and liabilities are recorded in British pounds sterling and the majority of the increase at the year end is due to the movement in the respective exchange rates. The retirement benefit obligation also increased by $1.2m as a result of the acquisition of DE-KA where there is an unfunded scheme where a lump sum is payable on retirement.Jon BoadenChief Financial Officer17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202135STRATEGIC REPORT30048-Volex-AR21.indd 3530048-Volex-AR21.indd 3518/06/2021 15:10:0318/06/2021 15:10:03 STRATEGIC REPORT
Group Risk Management
Risk governance
Under the QCA Code, the Board is
expected ‘to ensure that the company’s
risk management framework identifies
and assesses all relevant risks in order to
execute and deliver strategy’, including
the need to determine ‘the extent
of exposure to the identified risks
that the company is able to bear and
willing to take’. The Board has overall
responsibility for the management of
risk within the Group as part of its role
in providing strategic oversight, with
specific responsibility for reviewing the
effectiveness of the Group’s system of
internal controls and risk management
being delegated to the Audit Committee.
Given the risks and uncertainties
involved in operating in a complex,
competitive and fast-changing global
environment, identifying, understanding
and managing those risks is essential
to the Group’s long-term success and
sustainability. One area that received
significant attention during the year
was the management of the impact of
Covid-19 on our operations. This involved
managing the potential impacts of the
pandemic on production operations
and staff, on supply chains and on the
Group’s customers. By recognising
the challenges on our business from
Covid-19 early, and responding to
these proactively before the virus had
reached many of our global locations,
we were able to avoid any significant
lost production time. With a diverse
and resilient business with a strong
balance sheet, the Group is in a good
position both to manage and mitigate
the continuing disruption caused by
the virus. The accompanying case study
on page 49 sets out how Volex has
managed its immediate response to the
outbreak and consequent government-
imposed restrictions to protect both
its staff and its business, as well as the
efforts the Group has made to assist in
the fight against Covid-19.
Risk management process
The risk management process gives the
Board assurance that risk management
and related control systems in place are
effective. During the year this comprised
two key elements which are supported
by other activities within our risk
management framework:
▶ An ongoing process of assessment
and review of individual Volex sites
and/or entities undertaken by a
combination of our Internal Audit
function, the Group Finance team
and the operations teams; and
▶ The annual risk survey conducted
centrally across the entire senior
management team and Group-
wide functions. Potential risks are
assessed to reflect the likelihood of
occurrence and the potential impact
on the business were they to occur,
as well as the extent to which they
are being addressed and mitigated.
The Board
Overall
responsibility
for risk
management
Volex
Top Down
Strategic risk assessment
at Executive and
Board level
Audit
Committee
Supports the
Board
Principal Risks
These are risks that could have a
material adverse impact on the
Group’s future results or reputation
Strategic
Operational
Compliance
Financial
Risk Heat Map
The diagram below illustrates the relative positioning of our risks
in terms of impact and likelihood, and the level of management
focus on each.
h
g
H
i
y
t
i
r
e
v
e
S
w
o
L
1
5
11
7
3
10
12
9
4
8
13
6
2
Risks assessed
at operational and
functional level
Bottom Up
Low
Likelihood
High
1
Global Economic
Conditions
2
3
4
Acquisition Integration
Market Competition
Customer Concentration
5
6
7
8
9
Supply Chain
Staffing and HR
IT & Cybersecurity
Product Quality
Technological Change
10
11
12
13
Access to Finance
Commodity Prices
& FX Rates
Regulatory Compliance
Financial Controls
36
Volex plc
Annual Report and Accounts 2021
Stock code: VLX
Key:
Strategic
Operational
Financial
Compliance
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STRATEGIC REPORT
Emerging risks
As part of the overall risk assessment
process, a review is conducted to
identify areas of uncertainty that do not
currently present a significant risk but
which have the potential to adversely
impact the Group in the future. These
emerging risks will be monitored
so that any potential impact can be
understood and managed.
This process identified an emerging
risk related to the increased scrutiny
of environmental considerations,
including use of energy, natural
resources and the environmental
impact of our products and packaging.
This risk will be monitored by the
Board’s Safety, Environmental and
Sustainability Committee.
Principal risks
Principal risks are those that the Board
believes may materially affect the future
prospects or reputation of the Group,
including those that could threaten its
business model, future performance,
solvency or liquidity. Identifying these
potential risks assists in ensuring risk
management procedures and internal
controls exist to prevent them from
occurring, or to at least mitigate their
impact should they occur. Principal
risks are categorised into four broad
areas.
Strategic
Operational
Risks that potentially may affect the Group in delivering
its strategy or achieving its strategic objectives. This
would include macroeconomic risks as well as risks
associated with the execution of key elements of the
Group’s strategy. The Group considers potential risks
and mitigation strategies when developing its strategy.
It is not always possible to foresee the eventual risks at
the time that the strategy is defined which may require
measures to be introduced to control the risks.
Risks arising out of operational activities in areas
such as sales and operations planning, procurement,
warehousing, logistics and product development. These
risks may need to be mitigated by various levels of
management who will be required to take ownership of
risk management in their area of the business.
Financial
Compliance
Risks relating to the financing or financial position of
the Group that may arise externally, such as financial
market risk, or internally from the perspective of internal
controls and processes. Financial risks can arise as a
result of changes that affect the financial landscape as
a whole, such as changes in the availability of funding
for the business or foreign exchange movements. They
can also arise from decisions taken at a Group level that
can either expose the Group to financial risk or fail to
adequately mitigate financial risk.
Risks relating to compliance with applicable laws and
regulations. These risks could arise as a result of a failure
to follow a particular procedure or from a change in
the regulatory or compliance landscape that has a
material impact on the Group and its existing operations
or structure. Compliance risks could have a financial
implication in the form of a fine or penalty, a significant
cost of compliance or the risk of reputational damage.
Access to Finance
Commodity Prices
& FX Rates
Regulatory Compliance
Financial Controls
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Group Risk Management
Strategic risks
Risk and Possible Impact
Risk Mitigation Activities
1 Strategic – Global Economic Conditions
The global economy is emerging from a
pandemic-induced recession. There is a
range of potential medium and long-term
outcomes from this recovery and there
remains a great deal of uncertainty about
the prevailing economic conditions.
Covid-19 has had a limited financial impact on FY2021 due to
the Group’s diverse customer base and the effective action
taken to safeguard colleagues and operations when the
pandemic began. There is an ongoing risk of government-
imposed shutdowns as variants emerge and countries
overcome the challenges of Covid-19 at different rates.
Trend
Link to
Strategy
2 Strategic – Acquisition Integration
Although the Group’s recent acquisitions
have been of companies that
complement or expand the Group’s
existing business, there is a risk that the
synergies envisaged pre-acquisition do
not materialise and that the Group’s
activities become too unfocused.
3 Strategic – Market Competition
The Group operates in highly competitive
markets and faces competition from rivals
operating with lower costs and overheads,
especially in the power cords market.
The Group has carried out a robust assessment of its
financial position and even if revenues fall, the Group has
sufficient liquidity to operate as a going concern.
The Group continues to focus on sequential acquisitions
that add value and cash generation from day one, with an
effective earn-out model to encourage success and senior
staff retention in the acquired businesses.
Where acquisitions are intended to realise synergies or
specific cost optimisation objectives, programmes are put in
place to ensure that the benefits are achieved. Consideration
may need to be given to a broader series of integration
activities encompassing changes to internal structures and
procedures, where this is expected to deliver benefits.
Volex has created a successful differentiation strategy that
mitigates this risk. The Group continues to focus on markets
and customers where it can differentiate on factors other
than price, including engineering know-how and quality.
The Group has looked to increase the use of automation
for standard, lower-margin mass production, while seeking
greater vertical integration to stay competitive.
More complex Volex products often not only require specialised
engineering knowledge but are subject to stringent regulatory
approval, making supplier churn for customers more difficult.
Volex is continually looking to keep its high-speed product
offering up to date.
4 Strategic – Customer Concentration
A proportion of the Group’s revenue
continues to be derived from a small
number of large customer accounts,
leading to potentially disproportionate
impact if a key customer account is
reduced or lost.
Previously reliant on a smaller number of large customers,
Volex has in recent years pursued a successful diversification
strategy and seen the growth of smaller accounts that
have lessened this risk. Individual production sites and
other entities may be susceptible to reliance on individual
customers.
Key:
Up Trend
Down Trend
No Change
Customer Focus
Product Development
People
Investment and Acquisition
Operational Excellence
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Operational risks
Risk and Possible Impact
Risk Mitigation Activities
Trend
Link to
Strategy
5 Operational – Supply Chain
The Group is in some cases dependent on
single external suppliers for components
and is not as vertically integrated as
some competitors. In addition, there
are challenges with the supply of some
key electronic components that our
customers may use and global logistics
routes are experiencing some disruption.
6 Operational – Staffing and People
The retention of staff in key executive roles
as well as in on-the-ground operations is
important to any business. The departure
of senior managers as well as any increase
in turnover of production staff may have a
negative impact on the Group.
7 Operational – IT and Cybersecurity
Volex will need to continue pursuing its current strategy of
increased vertical integration and supplier diversification. The
likelihood of disruption caused by component shortages and
limitations from global transport capacity has increased. As a
contract manufacturer, we are tied to customers’ Approved
Vendor Lists, in many cases, for raw materials and components,
while for some specialist products, supplier options can be limited.
Especially in light of the on-going disruption caused by Covid-19,
individual sites and entities are taking steps to secure sufficient
stock, including from alternative sources, where possible.
A new long-term incentive plan for key senior executives was
put in place in FY2020 to encourage retention. Turnover rates
in other roles vary considerably between Volex sites, with high
churn rates of staff in some production sites. The global HR
team is focusing on staff engagement and improving employee
satisfaction across the Group as well as into succession planning
for more senior positions.
With a computer usage base of an
estimated 1,500–2,000 employees and a high
number of evolving cyberattacks daily, the
Group faces a constant challenge to keep
staff aware of and alert to the threat from
data breaches. In addition, the obsolescence
of infrastructure will need to be managed.
The Group has continued to provide mandatory cybersecurity
awareness training, and internal phishing tests were conducted
to measure levels of awareness. Volex IT is investigating other
security technologies to improve overall security as well as
enhanced data classification and management. Investment
will continue to maintain up-to-date and effective servers
and hardware.
8 Operational – Product Quality
The impact on the Group of product
defects or product failure not only carries
immediate financial risk in terms of repair
or recall costs, but longer-term damage to
its reputation for quality and reliability.
9 Operational – Technological Change
Developments in technology and resulting
changes in demand for specific products
represent not only an opportunity but
also a threat. The Group’s products risk
becoming obsolete, while it also risks
failing to take advantage of the new
sectors opening up.
Volex has high quality standards and has developed an
ability to mitigate technical setbacks through close customer
relationships. Volex sites and entities are subject to regular
customer audit and third-party review, and all are ISO 9001
certified. Sites focused on medical equipment have ISO 13485
accreditation and those focused on the aerospace sector have
AS9100D accreditation. Closer control of supplier-provided
components by the procurement function and increased
automation in manufacturing, as well as regular continuous
improvement activity and recruitment of experienced Quality
and Engineering staff, will enable further improvements in
Volex’s overall reputation for quality.
As a contract manufacturer, Volex is driven by customer
needs and designs but is also addressing this risk through
increased R&D investment, acquisitions and an improved
strategic marketing function. The Group’s design team
continues to develop innovative, patentable products, and
Volex remains a strong player in the expanding high-speed
data and EV markets. Volex is seeking to diversify products
and enter a wider range of markets. Changes in charging
technology have affected the power cords business, and there
is also a risk from increasing wireless transmission of data, but
having a well-diversified customer portfolio and broadening
our service offering should help secure a longer-term future.
www.volex.com
Annual Report and Accounts 2021 39
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Group Risk Management
Financial risks
Risk and Possible Impact
Risk Mitigation Activities
Trend
Link to
Strategy
10 Financial – Access to Finance
If the Group cannot access sufficient
cash, bank borrowing or equity finance,
investment and acquisition plans may be
adversely affected.
The Company currently has a strong balance sheet and a $70
million revolving credit facility. The Group ended the year with
low levels of leverage. The Group considers the impact of any
significant transactions when undertaking short-term and
long-term cash flow forecasting.
11 Financial – Commodity Prices and FX Rates
As a global manufacturer producing and
selling around the world, the Group’s
supply chain can be adversely affected
by movements in commodity prices and
other supplier inputs. The Group is also
exposed to fluctuations and changes in
currency exchange rates.
Volex has demonstrated an ability to manage commodity
price risk, for example, through effective hedging and copper
clauses in contracts with customers. In the near to medium
term, due to the continuing impact of Covid-19 and shortages
of key components and commodities, the risk of higher prices
is increased. The mitigation activity remains the same with
additional costs being passed on to customers.
Compliance risks
Risk and Possible Impact
Risk Mitigation Activities
Trend
Link to
Strategy
12 Compliance – Regulatory Compliance
The Group operates in many jurisdictions
around the world, all with different
standards, ethics and rules for corporate
governance, taxation, employment
law, environmental law and product
compliance and quality. Failure to adhere
to local or international rules can result
in severe fines, or even restrictions on
the right of the Group to operate in those
jurisdictions.
13 Compliance – Financial Controls
With global operations and considerable
autonomy often afforded to local regional
centres and entities, the risk of control
breaches opens up the risk of loss through
fraud or through prosecution for breach
of financial regulations.
Compliance across the Group is overseen centrally by
head office HR, Tax and Legal/Compliance functions, and
managed locally in Volex regional centres, with assistance
from professional advisers. Regular internal assessments
are made, for example, of employment practices, health and
safety conditions, corporate compliance, et cetera. For Volex
products, safety and compliance staff are involved in the
early stages of product design, liaising with customers and
regulatory agencies.
A dedicated trade compliance team is in place to ensure
export control compliance. At the supplier level, since
2018, a number of standard agreements are in place,
including an NDA, a Code of Conduct and a Purchase
Agreement containing product warranty/liability provisions.
Environmental/quality agreements are required before any
non-AVL supplier can be selected and qualified as a Volex
supplier.
The Group has reviewed its arrangements in relation to
internal audit during the year with the support of specialist
consultants. A roadmap to further develop internal audit has
been agreed with the Audit Committee and is in the process
of being implemented. Central and regional head offices
exercise ongoing review and assessment of individual Volex
operations.
Annual participation in the Volex Group Anti-Bribery
e-learning course is mandatory for all relevant staff. Internal
authorisation processes are reviewed periodically to ensure
that they remain relevant and effective.
Key:
Up Trend
Down Trend
No Change
Customer Focus
Product Development
People
Investment and Acquisition
Operational Excellence
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STRATEGIC REPORT
‘Our strategy from the
beginning was to prevent
workplace transmission
of this virus and all sites
worked to common
standards.’
Alan Taylor
Group HR Director
STRATEGY IN ACTION
Covid-19:
Volex Response
Introduction
As we commenced our financial year,
the effects of the Covid-19 pandemic
were already being felt across our
business. The disruption had started
in China after the Chinese New Year
holiday in 2020 and our management
teams responded quickly to stabilise
production and manage labour
shortages, and were looking at ways to
secure our plants and the safety and
health of our workforce.
With a global business, and with the
signs that the virus was spreading
across the world, we chose to apply
the same health prevention standards
at all sites worldwide. Although local
governments moved at very different
speeds, our decision to adopt these
global standards enabled all of our
sites to remain open throughout as
the pandemic spread and the global
economy was increasingly impacted.
With our global supply chain expertise
we were able to ensure the supply of
masks and other protective equipment,
where it was needed, to all of our plants
around the world.
The human impact
It is with great sadness we confirm
the loss of one of our employees, Ján
Chovstik, who passed away in early
March 2021 having contracted Covid-19.
Ján was part of our Komárno team
in Slovakia. His loss deeply shook the
whole Company as until that point we
had not suffered any fatalities across
www.volex.com
our global workforce. A number of our
colleagues across the Group have lost
family and friends to the virus and
there have also been several cases
of colleagues who have been unable
to travel home because of the travel
restrictions to attend funerals and to
support their families in their time of
need. To date we have had 163 positive
cases reported across our 17 factories.
The greatest rates of infection have
been in Turkey, Poland and Mexico.
supply
of critical
cable
assemblies
and other
products to
meet the urgent
medical needs
in many countries
around the world,
including parts for
ventilator production.
Not only have we had to deal with the
loss of life from this pandemic, our
employees have also had to endure
sustained disruption to their working
conditions, repeated testing and
health screenings, workplace cleaning
and disinfectant regimes and regular
periods of self-isolation or quarantine
when colleagues have tested positive.
For colleagues in office areas, they have
also had to endure a range of disruptive
measures from the isolation of home
working to the disruption of different
working rotas deployed to reduce office
population density. For employees
with young children, they have had the
additional challenge of sustaining home
schooling while also continuing with
their daily duties. We consider ourselves
fortunate to have been able to sustain
employment for all of our workforce
throughout the pandemic.
Manufacturing expertise and
community assistance
As a business with many customers
in the medical sector we have been
working extremely closely with those
customers to arrange rapid turnaround
of the development, manufacture and
Our teams have also been
proactive in supporting
health services in their
communities – for example, our
production site in Poland used
its 3D printers to create face visors
for use by staff in the local hospital,
while our UK subsidiary GTK donated
hundreds of high grade masks from its
stocks to a UK home care provider in
southeast England which was running
short for its own staff.
Looking to the future
As we start a new financial year, the
effects of this pandemic are still being
felt across the business. Fortunately, we
see vaccination programmes gaining
traction in all of those countries where
we have operations and the numbers of
fully vaccinated colleagues across the
workforce is starting to rise. However,
with the emergence of new variants
we recognise that this is not yet over
and we will maintain our caution and
diligence on our health prevention
measures across all of our factories
until such time that we have the
majority of our workforce and the local
communities vaccinated.
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Section 172 Statement
Workforce briefings on Covid safety
Batam, Indonesia
The Companies (Miscellaneous
Reporting) Regulations 2018 require
Directors to include a statement in
the Strategic Report describing how
they have had regard to the matters
set out in sections 172(1)(a) to (f) of the
Companies Act 2006. This section 172
statement explains how the Company’s
Directors have, as well as the interests
of shareholders, also taken into account
the following issues.
The likely consequences of any
decision in the long term
As a global business working in the high-
technology sector, the Board is always
conscious of the longer-term impact
of decisions and the changing context
in which the Company operates. The
Board met on multiple occasions across
the year to ensure a close alignment
around our strategy. Further details of
the Company’s strategy and longer-term
objectives can be found in the Executive
Chairman’s Statement on pages 08 and
09, in the Strategy section on pages 18
to 21 and in the Chief Operating Officer’s
Q&A on pages 24 and 25.
The interests of the
Company’s employees
The Board has shown its commitment
to supporting and managing the
development of its staff through
its continuous focus on developing
the culture and capability of the
business. Over the year, the Board
has stayed close to the business as it
has dealt with the effects of a global
pandemic. Discussions with executive
management have focused on growth,
talent, succession planning and a
strategic investment in key skills and
capabilities to underpin the delivery of
the strategy. Employee safety remains
a priority and is one of the Company’s
KPIs, while ‘People’ is one of the five key
strategy areas. The activities recently
undertaken to improve employee
engagement and welfare are set out in
the Executive Chairman’s Statement on
pages 08 and 09, and in more detail in
the ‘People’ section of the Sustainability
Report on pages 44 and 48. The Safety,
Environmental and Sustainability
Committee Report can be found on
pages 68 and 69.
The need to foster the
Company’s business
relationships with suppliers,
customers and others
The Company maintains long-term
relationships with many customers,
suppliers and other business partners,
including its professional advisers.
The nature of its business, with many
products requiring safety and other
technical certifications, ensures close
co-operation with partners and the
development of strong business
relationships. Further information on
the Company’s business relationships
can be found in the Strategy section
on pages 18 and 21, the Chief Operating
Officer’s Q&A on pages 24 and 25, and
the Performance and Financial Review
on pages 26 to 35.
The impact of the Company’s
operations on the community
and the environment
The Company continues to examine
ways in which its impact on the
community and environment, whether
local or global, can be managed and
mitigated, as set out in the Sustainability
Report on pages 44 to 48. The Company
maintained regular monitoring and
reporting of its energy use and carbon
emissions even when that was not
compulsory for AIM listed companies.
This year, the Board has expanded
the scope of the Health & Safety
Committee to also cover sustainability.
The Board is providing oversight to the
Executive team’s focus on sustainability
to ensure the development of an
evidence-based long-term roadmap
to drive performance in all areas of
environmental, social and governance-
related indicators in the years ahead.
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STRATEGIC REPORT
Details of the Company’s commitment
to engagement with the local
community can be found in the
Sustainability report on pages 44 to 48,
and in the account of its response to
Covid-19 on page 41.
The desirability of the
Company maintaining a
reputation for high standards
of business conduct
The Volex Group has a clear Code of
Conduct regarding its ethical and
business standards, formally approved
by the Board, and numerous more
specific Company policies which
support and feed into that code, relating
to financial matters, health and safety
issues, environmental standards,
employment practices, modern
slavery, conflict minerals and other
matters. Company policies are hosted
on the company intranet site and are
communicated to new staff on entering
employment. Suppliers are required to
sign an equivalent document which
confirms their commitment to abide
by similar standards. Every year, senior
management for individual production
sites and cross-company areas of
responsibility in all the subsidiary
companies are required to sign a
Certificate of Compliance with the
main code and with other key policies,
confirming their adherence to them.
More details on the Company’s ethical
values and standards can be found in
the Sustainability Report on pages 44
to 48 and in the Corporate Governance
Report on pages 56 to 61.
The need to act fairly
as between members
of the Company
All Volex shares are publicly traded
on AIM and each carries equal value
and an equal vote for any members’
resolutions. The Board does not
make any distinction between the
Company’s shareholders and currently
does not issue different types of
shares. The Executive Chairman is
a major shareholder, which helps
align his interests with those of other
shareholders. All of the Company’s
Directors, including the Non-Executives,
are usually available to speak to
shareholders and answer questions
at the Company’s AGM. Smaller
shareholders are often the most regular
attendees and active in questioning the
Board at the AGM.
Working to get our workforce vaccinated
Henggang, China
www.volex.com
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30048-Volex-AR21 18 June 2021 10:12 am V4Sustainability‘Our primary focus in the past year has been on ensuring that all of our workers are safe while at work and preventing any Covid infections from happening in the workplace.’Alan TaylorGroup HR DirectorThe Volex Board is committed to the Group having a positive impact on the environment and society and to taking seriously the needs of all stakeholders and not just its shareholders. The Board is responsible for developing and managing the Group’s strategy on matters including health and safety, diversity, compliance with ethical trading practices, conflict minerals, and modern slavery and human trafficking. The Group’s Code of Business Conduct and the range of more detailed internal policies that sit under it set out clear ethical values, which the Board expects all Group companies and all staff to adhere to. All senior staff are expected each year, on behalf of their business units or areas of responsibility, to sign a certificate confirming their compliance with key internal Volex policies.Our people The commitment, enthusiasm and skill of the people who work for Volex are critical if the Group is to continue its successful transformation. During this past year our prime focus has been on ensuring the safety and health of all employees during the Covid-19 pandemic. Given the nature of our business, all of our factories have remained open throughout and this has created many challenges for our teams. While many of our non-factory based colleagues are home-based and did not experience a significant disruption from the global ‘shift to home working’ that emerged as a response to the pandemic, we did still have to introduce working from home protocols and reduce employee density in many of our offices at both factory and regional locations. As the pandemic has continued, these challenges have continued to persist and fluctuate. For more on our commitment to our people, please see pages 48 and 49. Equality and human rightsVolex is committed to generating benefits for all its stakeholders while ensuring that it does not infringe the human rights of others. We recognise that our employees are crucial to the ongoing success of the business and to how the Company is regarded by the wider market, and believe that all employees should be treated equally, fairly and with respect. One of the great strengths of Volex is our decentralised leadership and management organisation which ensures that we have senior leadership in every region with the majority of management located at a plant.Modern slavery Modern slavery is a fundamental violation of human rights. It takes various forms, all of which seek to deprive a person of their liberty for another’s commercial or personal gain. Volex has a zero-tolerance approach to any form of modern slavery and is committed to ensuring there is no modern slavery or human trafficking in any part of its supply chains, or its own business. As required by UK law, we also publish a Modern Slavery Transparency Statement, which is made available on our website. We expect the same high standards from all of our contractors, suppliers and other business partners. Stock code: VLXSTRATEGIC REPORT4430048-Volex-AR21.indd 4430048-Volex-AR21.indd 4418/06/2021 15:10:0818/06/2021 15:10:08 STRATEGIC REPORT
Diversity
Volex’s success is reflected in our diverse
global workforce and we currently have
employees in 21 countries. To maintain
our competitive edge, we believe it
is important to maintain diversity in
gender, ethnicity, age, thinking and
background. Our leadership and
management team is distributed
across the world; however, of our top
50 leaders, only 26% are female (28%
in FY2020). With the appointment of
Amelia Murillo to our Board during
FY2021 this has raised our Board’s
gender diversity to 16%. We recognise
that both the diversity of our executive
management team and our Board
remains imbalanced when it comes to
gender and this is something we remain
committed to improving.
Health and safety
Volex maintains stringent safety
practices and implements industry
best practice across the Group.
Each manufacturing site conducts a
programme of training, emergency
evacuation drills and simulations, risk
assessments and regular management
reviews to identify safety risks and
ensure compliance with industry
best practice. All sites comply with
local laws and regulations relating
to health and safety, and 25% of our
sites have ISO 45001 or an equivalent
accreditation. Many of our sites were
able to continue to deliver medicals
and health checks for their employees
despite the restrictions arising from
the pandemic. Although social
distancing requirements prevented
mass gatherings during the year at our
sites around the world, we continued
to celebrate their local holidays and
festivals and key world events such as
International Women’s Day.
TCFD Reporting
The Company is listed on the Alternative Investment Market and therefore is using the TCFD framework to inform our activities
as we work to develop a long term strategy for environmental, social and governance related performance indicators. It is
important that our stakeholders understand how climate related risks impact on our business and we anticipate providing
enhanced sustainability related disclosures in next year’s annual report.
GOVERNANCE
STRATEGY
The Board has established a Safety, Environment and
Sustainability Committee to guide the business’s
governance on climate-related risks and opportunities.
a. The Board receives quarterly updates on a range of
sustainability performance indicators.
b. The management team conducts an annual review
of material risks and going forward this will include
environmental and climate related factors.
The Board has approved the management’s proposals
to develop an evidence-based long term roadmap for
sustainability during the coming year. This will include
conducting a materiality analysis and the Group-wide
implementation of a sustainability data management
system to enable consistent and timely reporting of
sustainability data from all of the Group’s operating
locations.
As a Company with operations located globally the
potential impact from climate-related risks is significant.
a. The rapid decarbonisation of the automotive industry
creates significant opportunities for our customers.
b. The increasing use of electrical energy by both
consumers and industry creates strategic opportunities
for our products and capabilities.
c. The potential for organisational and supply chain
disruption caused by climate-related events remains a
concern; however, with operational capabilities around
the world and a decentralised leadership team we
consider ourselves to have some resilience in this area.
Our strategy remains to expand our global manufacturing
footprint to provide resilient support to our customers. By
ensuring continuity of operations and flexible production
facilities we can respond in case of any disruptive events.
RISK MANAGEMENT
METRICS AND TARGETS
The Company conducts an annual review of material risks
by engaging a significant number of key managers in a
formal risk assessment activity.
Our primary sustainability indicators focus on our
greenhouse gas emissions.
a. We analyse our energy consumption data across Scope
a. An annual dialogue with key managers from across the
1, Scope 2 and Scope 3 indicators
Group to conduct a formal review of material risks.
b. We disclose our Scope 1, Scope 2, and, if appropriate,
b. Risks are quantified and reported into the Board via the
Scope 3 greenhouse gas (GHG) emissions, see page 47.
Audit Committee.
c. Significant environmental and sustainability related
risks will be included in this formal risk assessment
process.
Sustainability and environmental, social and governance
related indicators are an important source of information
for the Board and the management team.
c. We are developing a long term data-based roadmap for
our sustainability performance and this will include a
broader range of metrics and improvement targets.
d. Other indicators include safety and accident rates as
well as monitoring levels of absence and employee
turnover.
www.volex.com
Annual Report and Accounts 2021 45
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STRATEGIC REPORT
Sustainability
NAVIGATING THE
UNCERTAINTY OF COVID-19
The Covid-19 pandemic has caused
immense disruption and hardship to
our colleagues, friends and families
all over the world.
Our response has been multifaceted
- we have focused on maintaining
our operations and keeping our
employees in work throughout
the period. This has provided our
employees with stability of earnings
and a clear focus. Given the products
we make, our customers have been
at times desperate for support as
the world has responded to the
urgent need for specialist medical
equipment.
As the year continued every
employee has become familiar with
limited social interaction, wearing
face masks, having temperature
checks and seeing regular
disinfection activities as we have
worked tirelessly to prevent in-
workplace transmission.
Read more about our response to
Covid-19 on page 41
During this year our primary focus was
on the containment of the risks from
the Covid-19 pandemic and there is
more detail on our experiences from the
pandemic on page 41.
The Board has agreed in principle
to make more regular payments to
charities when financial performance
allows. No such donations were made
during the year.
We have prioritised our safety
improvement efforts to improve the
safety of our machinery. ‘Contact
with moving machinery’ is historically
the primary cause (39%) of lost time
accidents across the business. We have
worked alongside safety specialists
TUV to conduct a workshop-based
diagnostic audit of critical machinery in
our Zhongshan and Henggang plants.
These workshops have helped us to
identify a number of improvement
ideas and the lessons learned have been
cascaded across the Group. During
the year we have checked every site to
identify a specific type of machinery
that had been involved in two very
similar lost time accidents in the first
half of the year. This audit resulted in
a substantial number of machines
needing corrective actions. These have
now been completed by the local sites.
We were able to complete two major
projects during the year without injury
or incident. The first was the successful
relocation of our Suzhou facility to a
new location within the city. The second
project was the successful construction
of a 3,000 square metre extension to our
Batam plant in Indonesia.
Community involvement
and charity
Volex strives to become involved in
local events and activities in the areas
where it has sites. For example, in
Tijuana, Mexico, each year staff collect
presents and food which they deliver
to local care home residents over
Christmas. During the year, our teams
focused on supporting ventilator
projects, using 3D printers to produce
PPE for local hospitals and providing
other pandemic-related support
within our communities. Our Poland
team continued their long established
tradition of blood donation and also
were able to provide blood plasma
containing antibodies to the Covid-19
virus. Our Silcotec team in Komárno,
Slovakia donated €3,000 to a local
orphanage in the town of Komárno. In
our Suzhou site in China the local team
raised money for a charity supporting
children in remote areas with colleagues
donating winter clothes and boots and
Volex branded school bags.
Customers and suppliers
Just as Volex’s customers around the
world demand strict adherence to high
environmental and ethical standards,
we demand the same of our suppliers,
requiring them to sign up to a Supplier
Code of Conduct that mirrors the
standards we set for ourselves. All
of the traditional Volex sites and our
recently acquired sites are ISO 9001
certified. Eight sites which are focused
on medical equipment have ISO 13485
accreditation and the two sites focused
on the aerospace sector have AS9100D
accreditation. All of the certificates
are displayed on our website. We aim
to meet any additional requirements
explicitly requested by our customers.
Conflict minerals
Volex has a dedicated policy addressing
the issue of conflict minerals. We are
committed to avoiding the use of
conflict minerals in our products, and
we ask our suppliers to ensure that
materials used in components and
products they supply to us, including
tin, tantalum, tungsten and gold, are
conflict-free.
Our impact on the
environment
We comply with all relevant statutory
and regulatory requirements in the
jurisdictions in which we operate. We
monitor the environmental impact of
our business activities and encourage
employee awareness of waste
reduction, recycling and responsible
disposal. One of our sites has already
achieved zero landfill status and nine
of our manufacturing sites are ISO
14001 certified. These sites have local
waste-reduction and/or pollution-
prevention programmes. As we develop
our roadmap for sustainability for the
years ahead we have established three
regional working groups covering all of
our operations through which we can
share best practice and contribute to
the development of our sustainability
ambitions. We are compliant with the
provisions of EU RoHS and EU REACH,
and implement stringent controls
to eliminate the use of hazardous
substances. Our products are free from
MCCP, phthalates, lead and DINP. We
also offer a range of halogen-free cables.
46
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Annual Report and Accounts 2021
Stock code: VLX
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30048-Volex-AR21 18 June 2021 10:12 am V4Streamlined Energy & Carbon Reporting (SECR) As part of the Streamlined Energy & Carbon Reporting (SECR), Volex is required to report its energy and greenhouse gas emissions within its annual Directors’ Report. Energy and Greenhouse Gas Report Volex appointed Carbon Footprint Ltd, a leading carbon and energy management company, to independently assess its Greenhouse Gas (GHG) emissions in accordance with the UK Government’s ‘Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance’. The GHG emissions have been assessed following the ISO 14064-1:2018 standard and has used the 2020 emission conversion factors published by the Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy & Industrial Strategy (BEIS). The assessment follows the location-based approach for assessing Scope 2 emissions from electricity usage. The financial approach has been used. The tables below summarise the GHG emissions for reporting year 1 April 2020 to 31 March 2021 for both Volex’s global energy consumption, as well as UK only consumption.As a business we have been assessing our GHG emissions since 2014/15, and have provided last year’s assessment results for comparison.Global emissions and energy consumptionElement2019/20 (tCO2e) 2020/21 (tCO2e) Global Direct emissions (Scope 1) – Natural gas, LPG, diesel, company car travel, vehicle fuel consumption, lorry and van travel*. 7831,512Global Indirect emissions from purchased electricity and district heating generation (Scope 2)14,08516,511Global Scope 3: Hire car travel and grey fleet travel589Total Global tCO2e (Scope 1, 2 and 3)14,92618,032Intensity metric: Scope 1 and 2 GHG emissions per $M turnover37.8740.70Total energy consumption (kWh) (Scope 1 and 2 only)26,244,54338,260,235Total energy consumption (kWh) Scope 3: Hire car travel & grey fleet travel234,70438,182Overall Gross Total kWh (Scope 1, 2 and 3)26,479,24738,298,458*Excludes refrigerant top-up emissions.UK only emissions and energy consumptionElement2019/20 (tCO2e) 2020/21 (tCO2e) Direct emissions (Scope 1) – Natural gas,and company car travel 17.9218.58Indirect emissions from purchased electricity generation (Scope 2)37.3630.18Scope 3: Hire car travel and grey fleet travel7.300.46Total tCO2e (Scope 1, 2 and 3) 62.5849.22Intensity metric: Scope 1 and 2 GHG emissions per $M turnover (UK energy use only)0.160.11Total energy consumption (kWh) (Scope 1 and 2 only)228,583229,244Total energy consumption (kWh) Scope 3: Hire car travel, cash opt out and grey fleet travel 35,6941,780Overall Gross Total kWh (Scope 1, 2 and 3)264,277231,024Volex’s UK operations in 2020/21 accounted for 0.6% of Volex’s global energy consumption and 0.27% of Volex’s total associated global GHG emissions.Total energy consumption and emissions have increased since the previous year due to both increased production and further acquisitions. Energy Efficiency ActionsDuring the year a number of our sites have implemented energy efficiency measures. These include the adoption of LED lighting for our outdoor high-intensity lights on our Slovakian plant and the implementation of a structured energy audit programme in our Henggang facility in China. All sites have a continuous focus on kaizen activities which lead to investments in production and process improvements, many of these small, incremental kaizen lead to greater production efficiencies and contribute to improvements in our energy consumption per part produced.We have upgraded our dormitory accommodation to better support colleagues who work away from home Zhongshan, Chinawww.volex.comVolex plcAnnual Report and Accounts 202147STRATEGIC REPORT30048-Volex-AR21.indd 4730048-Volex-AR21.indd 4718/06/2021 15:10:0918/06/2021 15:10:09 30048-Volex-AR21 18 June 2021 10:12 am V4SustainabilityIn FY2021 we: ▶Prioritised the containment and prevention of Covid-19. We had no site closures during the pandemic. None of our sites have reported any cases of on-site transmission with all of the positive cases that we have experienced coming from infections that have happened outside of work. ▶Achieved two major transformation projects in Suzhou and Batam without injury or incident. ▶Audited 100% of our machinery against the three main issues that contributed to two of our more serious lost time accidents. ▶Achieved a 16% reduction in lost time accidents compared to the previous year, with seven of our sites achieving 12 months without any accidents. ▶Introduced a Safety Site Excellence Award as part of our new Group awards programme and the 2021 award was awarded to the Suzhou team. ▶Completed 16 on-site safety video walks to assess and guide safety improvements at key sites.In FY2022 we will: ▶Continue our preventative measures to contain Covid-19 and take every opportunity to accelerate the adoption of vaccines within our workforce. ▶Continue to strengthen health and safety and create a special focus on the broader topic of sustainability. ▶Work to embed a new Group-wide performance management process for our top 210 leaders. ▶Continue to expand the scope of the site management team development programme across the remaining sites. ▶Review and relaunch our code of conduct and implement an enhanced whistleblowing framework across the Company.Ensuring workforce stability Ensuring workforce stability in some of our key sites remains a key challenge for us. In our South China locations our workforce remains less stable than we want it to be. Our focus has been to improve working conditions, including canteens and dormitories, and ensure that our pay and employee benefits remains competitive. We have strengthened induction and on-boarding for new colleagues and are working to ensure that team leaders and managers are equipped with the right skills and behaviours to lead, develop and motivate their teams.Ensuring we create a place where people are proud to work and give their best Our people are committed, hard-working and keen to contribute to the success of the Company. We want to empower our employees to realise their potential and work to ensure that we have the talent to meet, and exceed, our organisational ambitions for future growth. We can do this in many different ways, from celebrating success with improvements to internal communications, recognising service and contributions and from engaging them in kaizen continuous improvement activities within each of their plants, and just simply listening to their ideas and any concerns. Diversity Our commitment to realising the potential of our people extends to all employees. For us, it’s all about merit. Anyone can, and should be able to, realise their full potential in Volex without experiencing inequality or unfairness on any grounds. The advantage of being a global business means that we naturally accept contributions from every part of the world irrespective of a person’s nationality, beliefs, gender or age. Our leadership team is distributed internationally, which creates a truly global and collaborative culture within our leadership. Despite this, our track record for gender diversity within our Board, executive team and across our top 50 leaders remains imbalanced. As we work to increase our bench strength by attracting external talent and promoting internally we will pay real attention to ensuring fairness, inclusion and equity in these core people processes. Employee voice We are continuously working to improve communications across the business. This workstream takes many different forms, from updating and reconfiguring our intranet site, enhancing the quality and content of information shared on Yammer (accessible to 1,367 of our employees) to producing a bi-weekly management email bulletin ensuring that all of our top 80 managers are kept regularly updated with a consistent briefing on business performance, achievements and changes. We are working hard to ensure there are more effective channels for employees to speak up, whether through elected or unelected representatives. A number of sites have effective employee forums or committees that provide a structured and efficient way to engage with our shopfloor-based colleagues. We also taking steps to improve the effectiveness of our internal whistleblowing process which is called Right to Speak!. Alan TaylorGroup HR Director17 June 2021The Strategic Report on pages 12 to 49 was approved by the board and signed on its behalf byNathaniel RothschildExecutive ChairmanJon BoadenChief Financial Officer17 June 2021We are committed to providingcompetitive canteen facilities atall of our larger factoriesBatam, IndonesiaVolex plcAnnual Report and Accounts 2021Stock code: VLX48STRATEGIC REPORT30048-Volex-AR21.indd 4830048-Volex-AR21.indd 4818/06/2021 15:10:1018/06/2021 15:10:10 STRATEGIC REPORT
‘Ensuring the health, safety
and well-being of our
employees is of critical
importance at all of
our manufacturing
locations.’
Alan Taylor
Group HR Director
STRATEGY IN ACTION
Ensuring the health, safety and
well-being of our workforce
All of our sites have worked hard to ensure the continuous
health and well-being of our workforce. This has been
especially important during the pandemic as our
colleagues have had to deal with increased pressures.
Despite the challenges of a global
pandemic it has been heartening to
see the efforts of each of our sites to
maintain the health, safety and well-
being of our workforce.
Activities completed during the year
include health and well-being checks
where specialist medical resources
come to our sites to carry out a range of
medical tests and checks to ensure our
employees’ health. In Batam they also
distribute vitamins to support employee
health. Some sites have identified
a wide range of simple, ergonomic
improvements to improve the posture
of our workers doing repetitive tasks.
We have continued with the health and
safety training, including fire fighting
practice, and have conducted a series
of fire and emergency procedure
simulations and these are often done
in collaboration with local community
emergency resources. These activities
have inevitably had to be adapted to
comply with social distancing measures
and other Covid-related restrictions that
have been mandated either by local or
national government policy or through
our own internal standards.
7.0%
Average total monthly
employee turnover
(7 largest sites)
4.4%
Average monthly absence
(7 largest sites)
0.67%
Percentage of workforce with
long term sickness absence
(7 largest sites)
Despite the limitations on social
gatherings and travel we have worked
hard to ensure key religious festivals,
national holidays and other global
events have been marked locally.
We have continued to upgrade our
dormitory accommodation in our south
China sites and have worked to improve
canteen and other basic facilities at
key sites in order to enhance employee
engagement and employee retention.
Ensuring that our workplaces are
safe and healthy is our primary
focus and there have been countless
improvements made across the
business, ranging from improved
ventilation and local extraction units
to the deployment of ergonomic and
simple automations to improve the
working positions of our colleagues. In
our offices we have focused on Covid
safety while delivering modern and
competitive working environments.
www.volex.com
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02
Governance
Board of Directors
Executive Chairman’s Introduction
Corporate Governance Report
Audit Committee Report
Nominations Committee Report
Safety, Environmental and
Sustainability Committee Report
Remuneration Committee Report
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report
52
54
56
62
66
68
70
86
89
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30048-Volex-AR21 18 June 2021 10:12 am V4Board of DirectorsNathaniel RothschildExecutive ChairmanJon BoadenChief Financial OfficerDean MooreSenior Non-Executive DirectorNathaniel Rothschild joined Volex in 2015 as a Non-Executive Director and quickly became Executive Chairman. Nathaniel has extensive experience in principal investing and corporate finance and has held a significant number of directorships over the years. Through his investment company NR Holdings Ltd, Nathaniel is the largest shareholder in Volex plc. Nathaniel holds a degree in History from Oxford University and an MSc in Addiction Studies from King’s College London. Nathaniel was appointed as a Foundation Fellow of Wadham College, Oxford, in 2018. Key areas of expertise: Sales and marketing, strategic planning and business development in developed and emerging markets.Jon Boaden joined Volex in 2019 as deputy Chief Financial Officer. In November 2020 Jon was promoted to the role of Chief Financial Officer and was also appointed to the Board of Directors. Jon’s early career saw him hold a variety of positions within Cable and Wireless and also Vodafone. Prior to joining Volex Jon held the roles of Group Financial Controller and Interim Chief Financial Officer for Williams Racing. Jon has a degree in Politics from Manchester University and qualified as a Chartered Accountant with Ernst & Young in 2004. Key areas of expertise: Managerial finance experience with leading technology-focused organisations.Dean Moore was appointed to the Board of Directors as a Non-Executive Director on 18 April 2017. Dean is a chartered accountant with extensive public company experience and was previously Chief Financial Officer at Cineworld plc, N Brown Group plc, T&S Stores plc and Graham Group plc and formerly a non-executive Chairman of Tuxedo Money Solutions Limited.He is currently an independent non-executive director and Chairman of the Audit Committee at Cineworld plc and at Dignity plc. He is also acting Chairman of the Remuneration Committee at Cineworld plc.Key areas of expertise: Governance, risk management, mergers and acquisitions, managerial finance, strategy.Jeffrey Jackson was appointed as a Non-Executive Director on 30 July 2019.Jeffrey holds a BA in Cultural Anthropology from Michigan State University and undertook post-graduate business studies at the University of Phoenix. He is professionally credentialled in Supply Chain, Quality and Project Management and has over 30 years’ practical experience in sourcing, manufacturing and distribution operations. Jeffrey is currently working with aerospace manufacturer Meggitt plc as a Program Director, consolidating their global manufacturing facilities, reducing cost and implementing the global manufacturing strategy.Key areas of expertise: Operations and supply chain management, planning, sourcing, manufacturing and distribution operations in several market segments, including automotive, electronics, aerospace and medical devices.Sir Peter Westmacott was appointed as a Non-Executive Director on 12 November 2020.Peter retired from the Foreign and Commonwealth Office in 2016. Over a 43-year diplomatic career Peter held a number of high profile positions including being the British Ambassador to Turkey, France and the USA. On retiring from diplomatic service Peter has taken on a number of roles, including as an independent non-executive director at Ernst & Young, We.Soda Ltd and Glasswall Holdings. Peter is a Distinguished Ambassadorial Fellow at the Atlantic Council, a Senior Advisor to Chatham House, Chair of the International Advisory Board of Tikehau Capital and an Advisory Director of Campbell Lutyens Ltd.Peter has a master’s degree in European History and French from New College, Oxford.Key areas of expertise: Extensive diplomatic experience in countries and regions of strategic relevance. Amelia Murillo was appointed as a Non-Executive Director on 26 January 2021.Amelia holds a BSc in Accounting from the University of Southern California and undertook an Executive MBA from the University of California in Los Angeles. Amelia is a Certified Public Accountant and has over 20 years’ practical experience in finance, administration and management consulting. Amelia’s most recent experience has been with Carlisle Companies Inc., where she is currently Vice President of FP&A and Treasurer.Key areas of expertise: Managerial finance and HR experience within the interconnect industry.Volex plcAnnual Report and Accounts 2021Stock code: VLX52GOVERNANCENHRA30048-Volex-AR21.indd 5230048-Volex-AR21.indd 5218/06/2021 15:10:2118/06/2021 15:10:21 30048-Volex-AR21 18 June 2021 10:12 am V4Jeffrey JacksonNon-Executive DirectorSir Peter WestmacottNon-Executive DirectorAmelia MurilloNon-Executive DirectorHCommittee Membership: A Audit Committee N Nominations Committee R Remuneration Committee H Safety, Environmental and Sustainability Committee Chair of Committee THE BOARD IN NUMBERSBoard TenureExecutive Split231114n Less than 1 year n 1-3 years n More than 4 yearsn Executive Chairman n Executive Director n Non-Executive DirectorNathaniel Rothschild joined Volex in 2015 as a Non-Executive Director and quickly became Executive Chairman. Nathaniel has extensive experience in principal investing and corporate finance and has held a significant number of directorships over the years. Through his investment company NR Holdings Ltd, Nathaniel is the largest shareholder in Volex plc. Nathaniel holds a degree in History from Oxford University and an MSc in Addiction Studies from King’s College London. Nathaniel was appointed as a Foundation Fellow of Wadham College, Oxford, in 2018. Key areas of expertise: Sales and marketing, strategic planning and business development in developed and emerging markets.Jon Boaden joined Volex in 2019 as deputy Chief Financial Officer. In November 2020 Jon was promoted to the role of Chief Financial Officer and was also appointed to the Board of Directors. Jon’s early career saw him hold a variety of positions within Cable and Wireless and also Vodafone. Prior to joining Volex Jon held the roles of Group Financial Controller and Interim Chief Financial Officer for Williams Racing. Jon has a degree in Politics from Manchester University and qualified as a Chartered Accountant with Ernst & Young in 2004. Key areas of expertise: Managerial finance experience with leading technology-focused organisations.Dean Moore was appointed to the Board of Directors as a Non-Executive Director on 18 April 2017. Dean is a chartered accountant with extensive public company experience and was previously Chief Financial Officer at Cineworld plc, N Brown Group plc, T&S Stores plc and Graham Group plc and formerly a non-executive Chairman of Tuxedo Money Solutions Limited.He is currently an independent non-executive director and Chairman of the Audit Committee at Cineworld plc and at Dignity plc. He is also acting Chairman of the Remuneration Committee at Cineworld plc.Key areas of expertise: Governance, risk management, mergers and acquisitions, managerial finance, strategy.Jeffrey Jackson was appointed as a Non-Executive Director on 30 July 2019.Jeffrey holds a BA in Cultural Anthropology from Michigan State University and undertook post-graduate business studies at the University of Phoenix. He is professionally credentialled in Supply Chain, Quality and Project Management and has over 30 years’ practical experience in sourcing, manufacturing and distribution operations. Jeffrey is currently working with aerospace manufacturer Meggitt plc as a Program Director, consolidating their global manufacturing facilities, reducing cost and implementing the global manufacturing strategy.Key areas of expertise: Operations and supply chain management, planning, sourcing, manufacturing and distribution operations in several market segments, including automotive, electronics, aerospace and medical devices.Sir Peter Westmacott was appointed as a Non-Executive Director on 12 November 2020.Peter retired from the Foreign and Commonwealth Office in 2016. Over a 43-year diplomatic career Peter held a number of high profile positions including being the British Ambassador to Turkey, France and the USA. On retiring from diplomatic service Peter has taken on a number of roles, including as an independent non-executive director at Ernst & Young, We.Soda Ltd and Glasswall Holdings. Peter is a Distinguished Ambassadorial Fellow at the Atlantic Council, a Senior Advisor to Chatham House, Chair of the International Advisory Board of Tikehau Capital and an Advisory Director of Campbell Lutyens Ltd.Peter has a master’s degree in European History and French from New College, Oxford.Key areas of expertise: Extensive diplomatic experience in countries and regions of strategic relevance. Amelia Murillo was appointed as a Non-Executive Director on 26 January 2021.Amelia holds a BSc in Accounting from the University of Southern California and undertook an Executive MBA from the University of California in Los Angeles. Amelia is a Certified Public Accountant and has over 20 years’ practical experience in finance, administration and management consulting. Amelia’s most recent experience has been with Carlisle Companies Inc., where she is currently Vice President of FP&A and Treasurer.Key areas of expertise: Managerial finance and HR experience within the interconnect industry.NAs a result of the changes to the Board, the Nominations Committee reviewed the membership of each Committee during March 2021 and the updated Committee membership shown above reflects the position at year end.www.volex.comVolex plcAnnual Report and Accounts 202153GOVERNANCERAR30048-Volex-AR21.indd 5330048-Volex-AR21.indd 5318/06/2021 15:10:2418/06/2021 15:10:24 30048-Volex-AR21 18 June 2021 10:12 am V4Executive Chairman’s Introduction‘With the challenges of Covid-19, the Board has met by video conference. This has been highly effective and has not prevented robust discussions and effective decision-making.’Nathaniel RothschildExecutive ChairmanThis corporate governance section of the Annual Report sets out the governance framework that we have followed during the year and provides our stakeholders with an understanding of how the Board has operated and how our corporate governance structures and processes have been applied.The role of the Board is to promote the long-term success of the Group, taking into account the interests of our stakeholders. As Executive Chairman, I take responsibility for ensuring that Board members are clear about their responsibilities and are able to contribute fully their views and opinions in our discussions. Maintaining our high standards of corporate governance remains a key objective for the entire leadership team, and we continue to follow the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). We remain committed to those standards and continue to comply with the provisions of the QCA Code, with some exceptions. We have retained the Company’s executive leadership structure, including my Executive Chairman role. We acknowledge that this is one respect in which we do not fully comply with the requirements of the QCA Code, which recommend a division between the role of Chairman and Chief Executive. However, given the ongoing progress we have made under the current leadership arrangement, the Board believes that it is in the best interests of the Company for it to continue, while at the same time taking steps to broaden the composition of our Board.Our Corporate Governance Report is set out on pages 56 to 61 and explains how we manage the Group in order to follow the provisions of the QCA Code, as well as corporate and business standards and best practice more generally. It also sets out further details about the activity of the Board and its various Committees during the year.We have a clear Code of Conduct and all Group employees are expected to maintain these standards in all of their activities, and the Directors seek to set the tone for such behaviour through their own actions. We are proud of our culture and we promote this through the organisation by defining our purpose, vision and values. Our culture, purpose and core values are set out on page 03.During FY2021, the Group has had to deal with significant challenges that have arisen from the Covid-19 pandemic. The Board has continued with its scheduled Board and Committee meetings which have been held remotely via video conference. This has proved to be highly effective and productive, and the use of this technology has not in any way prevented robust discussion and effective decision-making.We have made some changes to the Board this year, allowing us to demonstrate effective succession planning and also to expand the composition of the Board so we now have four Non-Executive Directors. As announced in November 2020, Jon Boaden has replaced Daren Morris as the Chief Financial Officer as part of a succession planning process that began in 2018. Jon has already made a significant impact on our finance function since joining as Deputy CFO in April 2019 and I am sure he will make an excellent contribution to driving change Volex plcAnnual Report and Accounts 2021Stock code: VLXGOVERNANCE30048-Volex-AR21.indd 5430048-Volex-AR21.indd 5418/06/2021 15:10:2918/06/2021 15:10:29 30048-Volex-AR21 18 June 2021 10:12 am V4GOVERNANCE IN ACTIONStrengthening our ability to respond to customer needs and market trendsThroughout FY2021, we have made an investment in our sales teams and strengthened our marketing and communications capabilities to increase Volex market presence and provide our customers with the optimal product solutions. By engaging our customers in an early and collaborative design process, making available our vast technical expertise, providing easy access to support resources, and having a local presence to their product design teams and manufacturing facilities, we have seen new projects increase in frequency and move more smoothly throughout the manufacturing and supply process. This was, in part, due to the implementation of new support programmes that better enable our existing and prospective customers to locate us, and our sales and support teams to ask the right questions and provide the technical expertise and technology solutions that customers expect from a world-class manufacturing partner. New marketing tools and communications platforms have allowed us to be more forward facing to our globally diverse customer base. We have implemented consistent branding across the Group, created a global prospecting, inbound lead collection and follow-up process, and increased knowledge sharing, training opportunities and support partnerships across our acquisitions.As we continue to grow our marketing and communications capabilities and activities throughout FY2022 and beyond, Volex customers will experience greater opportunities to engage with us across a wider variety of digital platforms and channels, including: an improved Volex.com website, consistent social media presence, enhanced training and presentation tools, and more frequent, customer-direct communications programmes highlighting our products and capabilities. Link to Strategy People Investment and Acquisitionand growth within Volex as a member of the Board.In November, we also announced the appointment of Sir Peter Westmacott to the Board. This increases the Board to six members, with two Executive Directors and four independent Non-Executive Directors. In January 2021, we appointed Amelia Murillo to the Board as a Non-Executive Director, as Adrian Chamberlain stepped down having been a Director since June 2016. I am grateful to Adrian for his involvement with the Group over this period and wish him well for the future. Both Peter and Amelia have made valuable contributions to the Board discussions during their time with us so far.During the year, we separated the responsibility for company secretarial matters from the role of the Chef Financial Officer. We have appointed an experienced Group General Counsel and Company Secretary who will help us enhance our corporate governance in line with developing best practice. In the year ahead, the Board will continue to take an active role in enriching our strategy as we consider further investment and acquisition opportunities. This will support our growth ambitions and allow us to make further progress against the stretching targets we have set out as an organisation.Nathaniel RothschildExecutive Chairman17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202155GOVERNANCE30048-Volex-AR21.indd 5530048-Volex-AR21.indd 5518/06/2021 15:10:3118/06/2021 15:10:31 30048-Volex-AR21 18 June 2021 10:12 am V4Corporate Governance Report‘Good corporate governance supports a culture of integrity and responsibility, providing assurance to stakeholders that management is acting in their best interests.’Jon BoadenChief Financial OfficerCombining the leadership of the Company with the running of the Board is not the preferred approach in the QCA Code, Volex continues to believe this more focused and streamlined structure is appropriate given the size of the Company, the Board’s proven success in growing the business and the oversight and support available. The Executive Chairman, Chief Financial Officer and Chief Operating Officer are, together, responsible for the day-to-day management of the business, developing corporate strategy, advising the Board and then implementing Board decisions.During the year, we took steps to separate the role of Company Secretary from the position of Chief Financial Officer. Our Company Secretary subsequently left the business and so, as at the end of the financial year, the duties of Company Secretary were once again being performed by the Chief Financial Officer albeit on an interim basis. This situation has now been resolved by the appointment of a Group General Counsel who took over the duties of Company Secretary from 19 May 2021. The role of the Company Secretary is to report to the Executive Chairman and Senior Independent Director on governance matters. With support from the Company’s Nominated Adviser the Company Secretary is responsible for keeping the Board up to date on all legislative, regulatory and governance issues, managing the timetable of Board and Committee meetings, advising on Directors’ duties and facilitating appropriate information flows between the business and the Board.During the year, we appointed an additional Non-Executive Director, increasing the number of Non-Executive Directors to four. With this expanded group of highly experienced Directors, we have established a strong foundation that supports our future growth. Each Non-Executive Director appointment is reviewed every three years and they are responsible for exercising independent and objective judgement to constructively challenge the decisions of executive management and satisfy themselves that the systems of business risk management and internal financial controls are robust. They are expected to spend as much time as is necessary to perform their duties.Stock code: VLXGOVERNANCE56The Corporate Governance Report sets out how the Group’s main corporate governance principles have been applied across all its companies. Volex plc has taken the provisions of the QCA Corporate Governance Code as its main benchmark for good corporate practice for the year ended 4 April 2021, and from that date up to the date of publication of this Annual Report and Accounts. It has adhered to those provisions other than in the highlighted instances.The Board seeks not only to ensure that the Company can generate sustainable growth and deliver long-term value for shareholders and other stakeholders but to establish the governance standards, values and strategic aims of the Company. The names, biographical details and dates of appointment of the members of the Board are set out on pages 52 and 53.The Board provides leadership on these issues and maintains a framework of controls for risk assessment and management. Specific matters are formally reserved for decision-making by the Board and its Committees to ensure a sound system of internal control and risk management.The Executive Chairman, Nathaniel Rothschild, is responsible for the leadership of the Company and the Board. He is jointly responsible with the Senior Independent Director for creating the right Board dynamics and for ensuring that all important matters, including strategic decisions, receive adequate time and attention at Board meetings. 30048-Volex-AR21.indd 5630048-Volex-AR21.indd 5618/06/2021 15:10:3518/06/2021 15:10:35 GOVERNANCE
Aligning with the QCA code
The QCA code provides a practical framework for corporate governance tailored for companies of our size.
QCA principle
How we comply
Establish a strategy and business model
which promote long-term value for
shareholder
The Board holds sessions that are focused on corporate strategy, looking at the
plans for the Group in the short, medium and long-term.
Read more about our Strategy on pages 18 to 21
Seek to understand and meet shareholder
needs and expectations
Directors make themselves available to answer shareholder questions and
have regular dialogue with investors to understand their expectations.
Read more about our Board of Directors on pages 52 and 53
Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
The Board considers the Company’s stakeholders, and their needs, interests
and expectations, as part of the decision-making process.
Read more about our approach to Section 172 on pages 42 and 43
Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
Risk management is very important and is considered when establishing and
reviewing corporate strategy and when making key decisions.
Read more about Risk Management on pages 36 to 40
Maintain the board as a well-functioning,
balanced team led by the chair
The Board works together effectively to deliver a range of perspectives as well
as to form consensus in relation to important decisions.
Read more about our Corporate Governance on pages 56 to 61
Ensure that between them the directors
have the necessary up-to-date experience,
skills and capabilities
There is a broad range of skills and experience available on the Board which
supports constructive debates around important matters.
Read more about our Board of Directors on pages 52 and 53
Evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement
This year the Board undertook a review of the terms of reference for its
committees and considered how the committees support the activities of the
Board.
Read more about our Nominations Committee on pages 66 and 67
Promote a corporate culture that is based
on ethical values and behaviours
The Board and management advocate integrity and ethical behaviour through
their words and actions.
Read more about our Culture on page 03
Maintain governance structures and
processes that are fit for purpose and
support good decision-making by the
board
The Company establishes appropriate governance structures and these are
reviewed periodically by the Board.
Read more about our Corporate Governance on pages 56 to 61
Communicate how the company is
governed and is performing by maintaining
a dialogue with shareholders and other
relevant stakeholders
The Company promotes communication of governance policies.
Read more about our Corporate Governance on pages 56 to 61
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Governance structure
THE BOARD
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATIONS
COMMITTEE
Key responsibilities
▶ accounting policies
and audit reports
▶ assessing the
adequacy and
effectiveness of
internal financial
controls
▶ monitoring anti-
money laundering
Key responsibilities
▶ reviewing the pay and
employment terms for
the Company and the
Board
Key responsibilities
▶ reviewing the size and
composition of the
Board
▶ succession planning
▶ approving targets and
for the Board
performance-related
pay schemes and all
share incentive plans
and pensions
▶ oversight of the
appointments process
SAFETY,
ENVIRONMENTAL
AND SUSTAINABILITY
COMMITTEE
Key responsibilities
▶ monitor and evaluate
the Company’s
management systems
governing health,
safety, environmental
and other labour-
related risks
Read more about this
on pages 62 to 64
Read more about this
on pages 70 and 71
Read more about this
on pages 66 and 67
Read more about this
on pages 68 and 69
Operation of the Board
The Board is responsible for setting
the Company’s business objectives,
oversight of risk, strategic development
and effective corporate governance.
It holds regular, scheduled meetings
throughout the year to review the
Company’s financial and operational
performance and to consider any other
matters as appropriate, including
potential merger and acquisition
opportunities, risk management and
shareholder feedback. When issues
requiring the attention of the Board
arise outside the regular schedule, the
Directors will action agreement via
minuted ad hoc Board calls or written
resolutions.
All the Directors receive comprehensive
briefing packs in advance of Board and
Committee meetings. They have access
to the services of external advisers and
can take independent professional
advice at the Company’s expense if
needed.
Matters reserved for the Board
The Board delegates day-to-day
management of the Company to the
Executive Directors who, as appropriate,
delegate to executive management.
However, certain matters are formally
reserved for decision by the Board,
including:
58
Volex plc
Annual Report and Accounts 2021
▶ Approval of the annual budget;
▶ Approval of the Company’s
objectives and setting its long-term
strategy;
▶ Approval of material capital
expenditure projects;
▶ Approval of acquisitions;
▶ Approval of half-yearly reports,
trading updates, the preliminary
announcement of year-end
results and the Annual Report and
Accounts;
▶ Internal control and risk
management; and
▶ Material contracts, expenditure and
Group borrowings.
Board focus in FY2021
The major focus this year was to
maintain the progress made by
the business in recent years while
navigating the unpredictable impacts
of a global pandemic. The Board has
focused on ensuring the financial
position of the Company is secured
while also looking forward to the longer-
term strategic options for the Group,
including identifying potential further
acquisitions that could bring additional
value. In particular, this year the Board:
▶ Monitored the effects on the
business from the Covid-19
pandemic and closely tracked
infection rates within our workforce;
▶ Approved the refinancing of the
Company and the implementation
of an expanded credit facility;
▶ Approved the acquisition of De-
Ka Elektroteknik Sanayi ve Ticaret
Anonim Şirketi (‘DE-KA’);
▶ Approved the appointments of
Sir Peter Westmacott and Amelia
Murillo to the positions of Non-
Executive Directors and approved
their appointments to committees
of the Board;
▶ Approved the appointment of
Jon Boaden to the Board and to
the role of Chief Financial Officer
in accordance with our Board’s
succession planning process, taking
over from Daren Morris; and
▶ Approved updated and revised
Terms of Reference for all of
the Board’s committees and
the inclusion of sustainability
to the scope of the Health &
Safety Committee which was
subsequently renamed as the Safety,
Environmental and Sustainability
Committee.
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Attendance at meetings
The Board met for scheduled discussions eight times during the year, following a timetable set at the start of the year and
based around the calendar of key upcoming events for the Company. The four Board Committees met 14 times in total. The
size of the Board allows it flexibility to meet at short notice on a more ad hoc basis in response to the needs of the business, and
Non-Executive Directors are also encouraged to communicate directly with Executive Directors and executive management
between Board meetings.
Directors attended all meetings of the Board and of those Committees of which they are members. Directors’ attendance at
the Board and Committee meetings during the financial year:
Number of
meetings
Executive Directors
Nathaniel Rothschild
Daren Morris
- director until 12 November 2020
Jon Boaden
- director from 12 November 2020
Non-Executive Directors
Dean Moore
Adrian Chamberlain
- director until 26 January 2021
Jeffrey Jackson
Sir Peter Westmacott
- director from 12 November 2020
Amelia Murillo
- director from 26 January 2021
Full Board
(8 meetings)
Audit
Committee
(4 meetings)
Remuneration
Committee
(5 meetings)
Nominations
Committee
(2 meeting)
Safety, Environmental
and Sustainability
Committee
(3 meetings)
8/8
5/5
3/3
8/8
6/7
8/8
3/3
1/1
-
-
-
4/4
3/3
-
-
1/1
-
-
-
5/5
4/4
-
-
1/1
2/2
-
-
2/2
1/1
-
1/1
-
3/3
-
-
-
-
3/3
-
-
Jon Boaden attended all the Full Board meetings and Audit Committee meetings prior to his appointment to the Board by invitation in his
capacity as the Deputy CFO as part of the Board’s succession planning process. Representatives from the Internal Audit function and from the
Company’s auditors, PwC, usually attend meetings of the Audit Committee.
Committees of the Board
The Board has delegated certain
responsibilities to the following
Committees:
▶ the Nominations Committee;
▶ the Audit Committee;
▶ the Remuneration Committee; and
▶ the Safety, Environmental and
Sustainability Committee.
Each of the above Committees operates
under defined terms of reference,
which are available on the Company’s
website. During the year, we conducted
a comprehensive review of all of the
terms of references to ensure that they
met best practice standards. To ensure
independent oversight of the audit
and remuneration functions, only the
Company’s independent Non-Executive
Directors serve on those Committees.
During the year, the Board also reviewed
the membership of each of the Board’s
Committees and a number of changes
were made. Nathaniel Rothschild sits
on both the Nominations Committee
and the Safety, Environmental and
Sustainability Committee but both are
chaired by a Non-Executive Director. The
Company Secretary acts as secretary
to each Committee, other than the
Safety, Environmental and Sustainability
Committee, where the Group HR
Director, Alan Taylor, acts as secretary.
Nominations Committee
During the year, the Board approved a
number of changes to the composition
of members within each of the Board’s
Committees. As a result of this review, the
members of the Nominations Committee
are Peter Westmacott (Chairman),
Nathaniel Rothschild and Dean Moore.
The Committee met twice during the year.
The Committee is responsible for
reviewing the size and composition of the
Board – including whether the balance
of Executive Directors and Non-Executive
Directors continues to be appropriate –
succession planning and recommending
suitable candidates for membership of
the Board when such posts arise.
In appointing a new Board member,
the Committee evaluates the balance of
skills, knowledge and experience of the
Board and prepares a clear description
of the role and the capabilities and
strengths required to fulfil a particular
appointment.
Audit Committee
During the year, the Board approved a
number of changes to the composition
of members within each of the Board’s
Committees. As a result of this review,
the members of the Audit Committee
are Dean Moore (Chairman) and Amelia
Murillo.
The Committee met four times during
the year.
The Committee is responsible for
monitoring the integrity of the
Company’s financial statements,
including its annual and half-yearly
results, as well as for keeping the
Company’s internal controls under
review and overseeing the relationship
with the external auditors. Details of the
Committee’s activities are contained in
the Audit Committee Report on pages
62 to 64.
www.volex.com
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Annual Report and Accounts 2021
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Corporate Governance Report
Remuneration Committee
During the year, the Board approved a
number of changes to the composition
of members within each of the Board’s
Committees. As a result of this review,
the members of the Remuneration
Committee are Amelia Murillo (Chair),
Dean Moore and Jeffrey Jackson.
The Committee met five times during
the year.
The Committee is charged with
determining and agreeing the
remuneration of the Executive
Directors as well as recommending
and monitoring the structure of
remuneration for senior management
and approving grants under the
Company’s share incentive scheme.
Details of the Committee’s activities
are contained in the Remuneration
Committee Report on pages 70 to 71.
Safety, Environmental and
Sustainability Committee
The members of the Safety,
Environmental and Sustainability
Committee are Jeffrey Jackson
(Chairman), Nathaniel Rothschild and
Alan Taylor (Secretary).
The Committee met three times during
the year.
The Committee aims to ensure
appropriate governance is applied
to the management of health and
safety within the Group. It monitors
the effectiveness of controls relating to
health, safety and environmental risks,
and monitors the overall compliance
around labour-related risks within the
business. With its expanded scope the
Committee will also ensure oversight
to the development of a sustainability
roadmap for the business.
Details of the Committee’s activities are
contained in the Safety, Environmental
and Sustainability Committee Report on
pages 68 to 69.
Board effectiveness
Composition, independence and
diversity on the Board
The Board comprises the Executive
Chairman, the Chief Financial Officer
and four Non-Executive Directors, such
that the QCA Corporate Governance
Code requirement for at least two
independent Non-Executive Directors
has been met. Jeffrey Jackson,
Dean Moore, Amelia Murillo and
Peter Westmacott are considered
by the Board to be independent of
management and free from any
business or other relationship that could
materially interfere with the exercise of
their judgement.
Our Board comprises an executive
leadership team with extensive
commercial knowledge, supported by
experienced non-executive directors
who bring strong governance
disciplines and a valuable external
perspective to our business.
The Board recognises the importance
of gender diversity in the Company
and is committed to promoting gender
diversity throughout the organisation
at all levels. Further information
on the total female representation
in our workforce is provided in our
Sustainability Report on page 45.
Details of the time commitment
expected of each non-Executive
Director are included in their letters of
appointment.
Re-election of Directors
Directors are elected by shareholders at
the first Annual General Meeting after
any appointment by the Board and,
thereafter, may offer themselves up for
re-election by shareholders at regular
intervals and in any event at least once
every three years. Jon Boaden, Peter
Westmacott and Amelia Murillo will be
offered for election since this will be the
first AGM since they were appointed to
the Board.
Conflicts of interest
Under the Companies Act 2006, a
Director must avoid a situation where
a direct or indirect conflict of interest
may occur and procedures are in
place to manage any circumstance
where a conflict may be perceived.
The Company’s Articles of Association
prevent Directors from voting on issues
where they have, or may have, a conflict
of interest, other than in exceptional and
specific circumstances.
Performance evaluation
The Non-Executive Directors met
separately with the Executive Chairman
and the Chief Financial Officer at
numerous points during the year. Board
member performance was discussed at
these meetings and any performance
concerns subsequently addressed.
The Board recognises that a robust
performance evaluation is important to
maximise Board effectiveness.
Development
All new Directors receive an induction
programme tailored to their
background and experience, organised
by the Company Secretary and the
Company’s Nominated Adviser. This
was reviewed and enhanced during
the year by the Chief Financial Officer
and the Group HR Director. In addition,
all Directors are informed of changes
to relevant legislation or regulations
and receive updates and briefings on
areas such as Directors’ duties and
corporate governance guidelines and
best practice.
Individual Directors, with the support
of the Company Secretary, are also
expected to take responsibility for
identifying their own training needs
and to ensure that they are adequately
informed about the Group and their
responsibilities as a Director.
Accountability for financial
reporting
The Board is responsible for presenting
a fair, balanced and understandable
assessment of the Company. The
Company has a comprehensive annual
budgeting process, to which all its
global subsidiary entities contribute
directly and which culminates in formal
approval of the annual budget by the
Board. Regular forecasts and updates on
financial performance are presented to
the Board during the year. The reasons
why the Directors continue to adopt the
going concern basis for preparing the
financial statements are given in the
Directors’ Report on page 88.
Internal controls and risk
management
The Board has overall responsibility
for the Group’s system of internal
control and risk management, which
is designed to identify, evaluate and
control the significant risks associated
with delivering the Group’s strategy with
a view to safeguarding shareholders’
investments and the Group’s assets.
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30048-Volex-AR21 18 June 2021 10:12 am V4The Group conducted a review of the Internal Audit function during the year using external specialists. As a result of this exercise, some changes to the operation of the Internal Audit function were recommended to, and agreed by, the Audit Committee. The Group now has a clear roadmap to enhance the role of Internal Audit within the organisation.An ongoing process for identifying, evaluating and managing the significant risks faced by the Group has been in place for the year up to and including the date of approval of this report, based on a combination of site-by-site risk reporting to create individual risk registers and an annual risk survey of all senior management across the Group. Read more about Volex’s risk management processes and outcomes on pages 36 to 40.Key features of the Company’s system of internal controlsKey elements of the Company’s system of internal controls which have operated throughout the year are: ▶A system of regular reports from management setting out key performance and risk indicators; ▶Rigorous short-term management and forecasting of cash flow; ▶A schedule of specific, key matters reserved for decision by the Board; ▶A framework for reporting and escalating matters of significance; ▶Group-wide procedures, policies and standards which incorporate statements of required behaviour; ▶Continuous review of operating performance and monitoring of monthly results against annual budgets, and periodic forecasts; ▶Risk-based reviews of sites and/or business processes, with observations and recommendations to improve controls being reported to management to ensure timely action, with oversight provided by the Audit Committee; and ▶A process and policy for employees to raise concerns and regular reports to the Audit Committee of all material disclosures made, the results of investigations and actions taken.Through its risk-management process and the review of effectiveness of the system of internal controls, the Board believes the control environment is adequate for a group the size of Volex.Relations with shareholdersThe Board is responsible for effectively engaging with shareholders. The Board achieves this through regular dialogue with brokers, analysts and shareholders themselves, with the Executive Chairman and Chief Financial Officer taking a lead in those relationships.The Board takes steps to understand the views of major shareholders of the Company, including through receiving feedback from any shareholder meetings and through analyst/broker briefings. The Board takes account of the corporate governance guidelines of institutional shareholders and their representative bodies such as the Investment Association and the Pensions and Lifetime Savings Association. The Executive Chairman and Chief Financial Officer are available to meet with major and prospective shareholders. The Non-Executive Directors are available to attend shareholder meetings as necessary.Annual General Meeting (‘AGM’)The Notice of AGM will be dispatched to shareholders, together with explanatory notes or a circular on items of special business, at least 21 clear days before the meeting. Separate resolutions will be proposed on each substantive issue, including a resolution relating to the Annual Report and Accounts. Given the ongoing situation in relation to Covid-19, remote participation will be encouraged in preference to in-person attendance.The Non-Executive Directors will, with the other Directors, be available to answer shareholders’ questions. The Board welcomes questions from shareholders, and they will have the opportunity to raise issues before or after the meeting if circumstances prevent active attendance.For each resolution, the proxy appointment forms provide shareholders with the option to direct their proxy vote either for or against the resolution, or to withhold their vote. As with last year, we will be encouraging shareholders to switch to paperless voting.The Company will ensure that the proxy form and any announcement of the results of a vote will make it clear that a ‘vote withheld’ is not a vote in law and will not be counted in the calculation of the proportion of the votes for and against the resolution.All valid proxy appointments are properly recorded and counted. For each resolution, after the vote has been taken, information on the number of proxy votes for and against the resolution, and the number of shares in respect of which the vote was withheld, are given at the meeting and are made available on the Company’s website at www.volex.com.Jon BoadenChief Financial Officer17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202161GOVERNANCE30048-Volex-AR21.indd 6130048-Volex-AR21.indd 6118/06/2021 15:10:3618/06/2021 15:10:36 30048-Volex-AR21 18 June 2021 10:12 am V4Audit Committee Report‘The Audit Committee plays an important role in overseeing the Group’s systems of internal control and risk management.’Dean MooreChairman of the Audit CommitteeI am pleased to present this year’s report on the activity of the Volex Audit Committee during the course of another successful year for the Company. During the year, the Committee has undertaken its regular work of reviewing the Group’s financial systems and controls and its published financial statements, assessing the accounting judgements being made, and liaising with the external auditors, PricewaterhouseCoopers (‘PwC’). The Committee has received and discussed the usual regular updates from the head office finance team and PwC representatives, as well as reviewing the activity of the Internal Audit function during the year. The review of the function was carried out by specialists from a global accountancy firm and made a number of recommendations on how the internal audit process could be improved. These changes will be implemented in FY2022.During FY2021, the Group Finance and Legal functions have reviewed and updated a number of Company policies and procedures to ensure they remain up to date and fit for purpose. The Committee will continue to oversee and coordinate that work, and to report and make any necessary recommendations on matters within its area of responsibility to the full Board.Key objectivesThe Committee establishes and oversees the Group’s systems of internal control and risk management, monitors the integrity of financial information published externally for use by shareholders, and ensures the integrity of the financial statements is supported by an effective external audit.Composition of the Audit CommitteeDuring the year, the Board approved a number of changes to the composition of members within each of the Board’s Committees. As a result of this review, the members of the Audit Committee are Dean Moore (Chairman) and Amelia Murillo.Dean Moore has served on the Audit Committee since his appointment on 18 April 2017. Adrian Chamberlain served on the Audit Committee from his appointment on 16 June 2016 until he stepped down from the Board on 26 January 2021. Amelia Murillo was appointed to the Audit Committee on 26 January 2021.Appointments are for a period of three years and are extendable by no more than two additional three-year terms. The Committee must consist of at least two members, all of whom should be independent Non-Executive Directors. The current Committee members have the appropriate range of financial, commercial and risk-management experience to fulfil its duties. The Audit Committee Chairman has recent and relevant financial experience, in line with the QCA Corporate Governance Code and Committee terms of reference. Biographical details are set out on pages 52 and 53.MeetingsThe Audit Committee met four times in the year, with those meetings and their agendas timed to link to events in the Group’s financial calendar. The Audit Committee invites the Group Chief Financial Officer, the Head of Internal Audit, senior representatives of the external auditors and other staff to attend its meetings as required, although it reserves the right to request any of these individuals to withdraw for specific items of discussion.GovernanceThe Audit Committee’s terms of reference can be found on the Volex website.Volex plcAnnual Report and Accounts 2021Stock code: VLXGOVERNANCE6230048-Volex-AR21.indd 6230048-Volex-AR21.indd 6218/06/2021 15:10:4318/06/2021 15:10:43 GOVERNANCE
also considered. In light of this, the
Committee believes the provision is
reasonable.
Accounting for business
combinations
The Committee reviewed the principal
assumptions and judgements applied in
accounting for the acquisition of DE-KA
that completed during the year.
Internal control, risk and
compliance
The Audit Committee is required
to assist the Board in its annual
assessment of the effectiveness of the
Volex risk management and internal
control systems. To fulfil these duties,
the Committee reviewed:
▶ The results of the annual Certificate
of Compliance exercise and survey,
involving all senior personnel in the
organisation;
▶ The reports issued during the year
by Internal Audit following their risk-
based review of sites and processes;
▶ The annual risk survey conducted
among the executive team and
other senior management; and
▶ Investigations performed on all
whistleblowing, control breakdowns
and fraud issues.
Details of our internal controls and
risk management systems including
controls over the financial reporting
process can be found on page 60 in the
Corporate Governance Report with our
risk factors in full in the Strategic report
on pages 36 to 40.
The Committee is responsible for:
▶ The quality and acceptability of
▶ Monitoring the integrity of the
Group’s financial statements and
any other formal announcements
relating to the Group’s financial
performance, and reviewing
significant financial reporting
judgements contained in them;
▶ Reporting to the Board on the
processes in place to confirm that
the Annual Report and Accounts,
when taken as a whole, are fair,
balanced and understandable and
contain the information necessary
to allow shareholders to assess the
Group’s performance, business
model and strategy;
▶ Reviewing and challenging where
necessary the appropriateness of
accounting policies and the manner
in which they are applied across the
Group;
▶ Reviewing the Group’s internal
financial controls and the Group’s
internal risk-management systems;
▶ Monitoring and reviewing the
effectiveness of the Group’s Internal
Audit function in the context of the
Group’s overall risk-management
system;
▶ Reviewing the Group’s procedures
for detecting and responding to
fraud and bribery and for handling
allegations made by employees with
respect to financial malpractice or
other forms of whistleblowing, and
oversight of any and all reports on
such incidents; and
▶ Oversight of the relationship
with the external auditors,
including, where appropriate, the
recommendation of appointment
or reappointment of the external
auditors.
The Audit Committee reports its
findings to the Board, identifying any
matters on which it considers that
action or improvement is needed, and
makes recommendations on the steps
to be taken.
Main activities of the
Committee during the year
Financial reporting
The primary role of the Audit
Committee in relation to financial
reporting is to review with both
management and the external auditors,
PwC, the appropriateness of the half-
year and annual financial statements,
concentrating on, among other matters:
accounting policies and practices;
▶ The clarity of the disclosures and
compliance with financial reporting
standards and relevant governance
reporting requirements;
▶ Material areas in which significant
judgements or estimates have been
applied or there has been discussion
with PwC; and
▶ The processes to ensure that the
Annual Report and Accounts,
taken as a whole, are fair, balanced
and understandable and provide
the information necessary for
shareholders.
To aid its review, the Committee
considers reports from the Chief
Financial Officer, from the Internal Audit
function and from the external auditors.
Following its review of the Annual
Report and Accounts, the Committee
challenges management on the content
to ensure that the report as a whole is
fair, balanced and understandable.
The Committee has reviewed the
paper on the critical judgements and
estimates outlined in note 2 to the
financial statements on pages 110 to
111. The primary areas of judgement
considered and discussed by the
Committee in relation to the FY2021
financial statements and how these
have been addressed are listed below.
Going concern – Having reviewed the
Group’s budget and trading position,
the potential impact of Covid-19 and
considered its compliance with banking
facility covenants, the Committee has
concluded that the financial statements
should continue to be prepared on a
going concern basis.
Adjusting items – Management has
presented a breakdown of adjusting
items, and explanations as to why
they should be categorised as such.
The Audit Committee has reviewed
and discussed this analysis with
management. Details are shown in note
4 on page 113. Adjusting items during
the year amounted to $5.6 million
(FY2020: $5.8 million).
Inventory provisions – The Committee
reviewed the level of provision held
against inventory in light of the Group’s
provisioning policy, the ageing of the
stock and forecast future demand.
Specific items one-off in nature
or material due to their size were
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The Audit Committee, having
considered the length of PwC’s audit
tenure and the results of the above,
continues to consider PwC to be
independent and therefore has provided
the Board with its recommendation that
PwC be reappointed as external auditors
for the 52 weeks ending 3 April 2022.
This will continue to be assessed on an
annual basis in light of any guidance on
external audit tendering.
Summary
As a result of its work during the year,
the Audit Committee has concluded
that it has acted in accordance with its
terms of reference and has ensured the
independence and objectivity of the
external auditors.
We would welcome feedback from
shareholders on this report.
On behalf of the Audit Committee.
Dean Moore
Chairman of the Audit Committee
17 June 2021
GOVERNANCE
Audit Committee Report
Internal audit
The Audit Committee is responsible for
ensuring the adequacy of resourcing
and plans for the Internal Audit function.
To fulfil these duties, the Committee:
▶ Establishes the function’s terms of
reference, reporting lines and access
to the Audit Committee;
▶ Approves the appointment and
removal of the Internal Auditor;
▶ Reviews and assesses the annual
internal audit plan in the context of
the Group’s overall risk management
system; and
▶ Reviews promptly the internal
audit reports produced from the
site/process reviews and monitors
management’s responsiveness to
the findings and recommendations
included therein.
A comprehensive review of the Internal
Audit function and approach was
undertaken during the year. This involved
external consultants who are specialists
in this area. The review resulted in a
number of recommendations and
the creation of a plan to develop and
enhance the role of internal audit in
future years. This plan has been agreed
by the Audit Committee and is in the
process of being implemented.
During the year, the Head of Internal
Audit ensured that minor control
improvement recommendations that
had been identified in the previous
year were implemented by local
management. Due to flight restrictions
as a result of the Covid-19 outbreak, no
in-person audit visits were undertaken
during the year. A programme of
internal audit reviews is scheduled to
take place in FY2022 and these reviews
have been designed so that they can go
ahead even if travel is not possible.
The Group’s Whistleblowing Policy
contains arrangements for the Audit
Committee to review all complaints in
confidence.
External audit
The Audit Committee is responsible for
the monitoring of the independence,
objectivity and compliance with
ethical and regulatory requirements
of the external auditors. Details of the
total remuneration for the auditors
for the year can be found in note 8 on
page 115 of the consolidated financial
statements.
The auditors’ independence and
objectivity are safeguarded by limiting
the value and nature of external services
provided by the auditors. The Group
also has a policy of not recruiting
employees of the external auditors who
have worked on the audit in the last two
years to senior positions in the Group.
There is a rotation policy for the lead
engagement partner.
Non-audit services provided by
the auditors
The Audit Committee maintains a
non-audit services policy which sets
out the categories of non-audit services
that the external auditors will and will
not be allowed to provide to the Group,
including those that are pre-approved
by the Audit Committee and those that
require specific approval before they are
contracted for, subject to de minimis
levels.
Non-audit fees for the year were
$171,000 (FY2020: $2,000).
Audit tender
The Audit Committee considers the
reappointment of the external auditors
each year. PwC have been the Group’s
auditors since their appointment on 4
April 2010 following a tender process.
There are no contractual obligations
that restrict the Committee’s choice of
external auditors.
To fulfil its responsibility regarding the
independence and effectiveness of the
external auditors, the Audit Committee:
▶ Reviewed the external auditors’
plan for the current year and agreed
the scope of the audit work to be
performed;
▶ Agreed the fees to be paid to PwC
for their audit of the 2021 financial
statements and other non-audit
fees;
▶ Reviewed a report from PwC
describing their arrangements to
identify, report and manage any
conflicts of interest and confirming
the basis of their independence;
▶ Assessed PwC’s fulfilment of the
agreed audit plan and any variations
from that plan; and
▶ Assessed the robustness and
perceptiveness of PwC in their
handling of the key accounting and
audit judgements.
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30048-Volex-AR21 18 June 2021 10:12 am V4Board induction processStep 1Every new Non-Executive Director gets comprehensively briefed on the business. This introduction include an overview of the structure, history, strategy, acquisition history, Board procedures, delegation of authorities and other essential corporate policies, listing requirements and governance.Step 2Every new Non-Executive Director conducts a series of introductory meetings with key members of the leadership team to get a personal insight into the roles and responsibilities of our senior managers. This provides an ideal opportunity for each of our Non-Executive Directors to form a view of the leadership talent, our organisational and strategic alignment, culture, strategic narrative and the depth of organisational resilience within the Company.Each Non-Executive Director also has individual meetings with external brokers and specialist advisers as appropriate.Step 3Under normal times, each new Non-Executive Director would be encouraged to visit a number of our operational sites to deepen their knowledge of our business, to experience first hand our culture and get an insight into our local teams. At least one Board meeting each year is held at one of our sites.Step 1The induction path for a new Executive Director requires a modified induction path compared to the typical Non-Executive Director. The development needs of each new Executive Director are assessed as part of either their hiring process or their promotion process.Step 2Each Executive Director receives a personalised programme of support appropriate to their needs, given their professional qualifications and experience. Each Executive Director also has individual meetings with our lawyers, nominated adviser, external brokers and other specialist advisers as appropriate.Step 3For newly appointed Executive Directors who are also new to Volex, in their first 90 days they would conduct a series of introductory meetings with key members of the leadership team to get a personal insight into the roles and responsibilities of our senior managers and their functional and geographic areas of responsibility.Under normal times, a new Executive Director would also expect to conduct a series of site visits to gain first-hand experience of our organisation. For internally promoted individuals, induction principles are modified according to individual needs.Amelia MurilloNon-Executive DirectorJon BoadenChief Financial Officerwww.volex.comVolex plcAnnual Report and Accounts 202165GOVERNANCE30048-Volex-AR21.indd 6530048-Volex-AR21.indd 6518/06/2021 15:10:4618/06/2021 15:10:46 30048-Volex-AR21 18 June 2021 10:12 am V4Nominations Committee Report‘Succession planning has been high on the Committee’s agenda and this year, the Committee implemented the succession plan for the role of Chief Financial Officer.’Sir Peter WestmacottChairman of the Nominations CommitteeI am pleased to present the Nominations Committee report for the year ended 4 April 2021.During the year, the Nominations Committee has successfully carried out its primary purpose of reviewing the size and composition of the Board, including: ▶Reviewing whether the balance of Executive Directors and Non-Executive Directors continues to be appropriate; ▶Giving full consideration to succession planning and recommending suitable candidates for membership.Succession planning has been high on the Committee’s agenda and this year, the Committee implemented the succession plan for the role of Chief Financial Officer, with Jon Boaden taking on this role and joining the Board.The Committee also appointed onto the Board two new independent Non-Executive Directors, namely Amelia Murillo and myself.Composition of the Nominations CommitteeDuring the year, the Board approved a number of changes to the composition of each of the Board’s committees. As a result of this review, the members of the Nominations Committee myself (as Chair), Dean Moore, and Nathaniel Rothschild.Adrian Chamberlain served on the Nominations Committee until he stepped down from the Board on 26 January 2021. I joined the Board on 12 November 2020 and was appointed Chair of the Nominations Committee on 18 March 2021.Appointments are for a period of three years. On expiry of the term, the director may have his or her term extended for an additional period in circumstances where the director meets the relevant membership criteria. The Committee shall consist of at least three members, including two independent Non-Executive Directors of the Board. MeetingsThe Nominations Committee met twice in the year. The Nominations Committee invites other staff to attend its meetings as required, although it reserves the right to request any of these individuals to withdraw for specific items of discussion.GovernanceThe Nominations Committee’s terms of reference can be found on the Volex website.The Committee’s responsibilities include: ▶Reviewing the Board structure, size and composition (including the skills, knowledge, experience and diversity of the Board) and making recommendations to the Board with regard to any adjustments that are deemed necessary; ▶Giving full consideration to succession planning for Directors and other senior executives, taking into account the challenges and opportunities facing the Company, and what skills and expertise are needed on the Board in the future and ensuring plans are in place for orderly succession; ▶Keeping under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete in the marketplace; Volex plcAnnual Report and Accounts 2021Stock code: VLXGOVERNANCE6630048-Volex-AR21.indd 6630048-Volex-AR21.indd 6618/06/2021 15:10:4818/06/2021 15:10:48 30048-Volex-AR21 18 June 2021 10:12 am V4 ▶Identifying and nominating for approval of the Board candidates to fill Board vacancies (as necessary); ▶Before making a Board appointment, evaluating the balance of skills, knowledge, experience and diversity on the Board and, in light of this evaluation, preparing a description of the role and capabilities required for a particular appointment and the time commitment required; ▶Prior to the appointment of a director, requiring the proposed appointee to disclose (i) any other business interests that may result in a conflict of interest and to report any future business interests that could result in a conflict of interest and (ii) any significant commitments, with an indication of the time involved; ▶Reviewing the time commitment of Non-Executive Directors and, where necessary, assessing (through performance evaluation) fulfilment of their duties; ▶Reviewing the results of the Board performance evaluation process that relate to the composition of the Board and succession planning; ▶Keeping under regular review any authorisations granted by the Board in connection with a Director’s conflict of interest.The Nominations Committee reports its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and makes recommendations on the steps to be taken.Main activities of the Nominations Committee during the yearIn line with the Committee’s long-term succession planning, on 12 November 2020 Jon Boaden, who joined the business in April 2019 as Deputy Chief Financial Officer, was welcomed to the Board and promoted to the role of Chief Financial Officer. Daren Morris, who initially joined the business in June 2014 as a Non-Executive Director before becoming Chief Financial Officer in September 2014, left the Board on 12 November 2020. Jon Boaden emerged as the leading candidate for succession to the role of Chief Financial Officer following a rigorous profiling and search process, including the full evaluation of potential internal and external candidates using specialist consultants. He has played a key role in the significant growth and development of the Group’s business since joining and has quickly established himself as a well-respected leader within the organisation.On 12 November 2020, I was delighted to be appointed to the Board as an independent Non- Executive Director, increasing the Company’s number of Non-Executive Directors from three to four. On 18 March 2021, I was appointed as Chair of the Nominations Committee. I already serve on a number of other boards and hope that my experience in these roles, and as a British diplomat for more than forty years, will bring to the board greater understanding of international relations, complex negotiations and global business issues.On 26 January 2021, we welcomed Amelia Murillo to the Board as an Independent Non-Executive Director. Amelia is currently Vice President of FP&A and Treasurer at global manufacturer Carlisle Companies Incorporated (NYSE: CSL). Prior to this, over a 16-year period, Amelia has held other notable senior financial and management roles at Carlisle Interconnect Technologies, a subsidiary of CSL, in addition to leading CSL’s management and development initiatives as Vice President of Human Resources. Separately, Adrian Chamberlain, who joined Volex as a Non-Executive Director in June 2016, stepped down from the Board on 26 January 2021 as part of an orderly transition process.These changes maintain Volex’s approach to strong independent governance and oversight. Following the implementation of these changes, the Company’s Board continues to consist of four Non-Executive Directors and two Executive Directors.One of the other key activities of the Committee during the last year has been to make recommendations to the Board in respect of changes to the membership of the Audit Committee, Remuneration Committee and Safety, Environmental and Sustainability Committee and to recommend new updated terms of reference for the Nominations Committee. I am pleased to report these recommendations were approved and successfully implemented.On behalf of the Nominations CommitteeSir Peter WestmacottChairman of the Nominations Committee17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202167GOVERNANCE30048-Volex-AR21.indd 6730048-Volex-AR21.indd 6718/06/2021 15:10:4918/06/2021 15:10:49 30048-Volex-AR21 18 June 2021 10:12 am V4Safety, Environmental and Sustainability Committee Report‘I am delighted to confirm that we have now expanded the scope of this Committee to include environmental and other sustainability-related performance indicators.’Jeffrey JacksonChairman of the Safety, Environmental and Sustainability CommitteeThe health and safety of employees is of primary importance to the Board.I am pleased to report on the work of the Volex Safety, Environmental and Sustainability Committee which was established in 2019 to improve the Board’s oversight of issues relating to health and safety and the wider environmental performance of the Group. The Board is now able to broaden its focus beyond simply the health and safety of the Volex workforce as we have made great progress in the last couple of years in reducing our accident rates. As a Board we can now look to a broader range of labour and environmental performance indicators. To prepare for this, during the year, we have expanded the scope of this Committee to provide oversight to the broad topic of sustainability and the Committee has been renamed accordingly to be the Safety, Environmental and Sustainability Committee.As a Committee our aim is to sharpen the Group’s focus on these important issues and to provide an effective channel for relevant information to feed into the Board. Not only does Volex want to ensure it adheres to best practice wherever possible but we also want to provide a safe and productive working environment for our employees whilst minimising the impact of our operations on the natural environment. Increasingly, our customers want verifiable assurances from their suppliers and business partners on a broad range of environmental, social and governance related matters. During the year, we have taken steps to start the development of a long term roadmap for sustainability for the business. This workstream will run throughout the coming year and we will be able to report on our progress in next year’s Annual Report.Details of the actions taken by the Group to protect employees amid the Covid-19 pandemic can be found on page 49 of the Annual Report. Key ResponsibilitiesOur responsibility is to ensure that the Company’s management systems are effective in reducing levels of risk associated with health and safety, environmental and sustainability related factors.The Committee reviews performance and trend information provided to us by the management team on a range of performance indicators, including accident statistics and, in the past year, Covid-19 cases.During the year, we have expanded our scope to include sustainability. This reflects the growing importance of sustainability amongst all of our stakeholders.Through challenging and questioning the Company’s management we can assess the rigour and resilience of their actions.As we start to develop our sustainability roadmap we will be engaging with our stakeholders over the coming months..ObjectivesThe key aims of the Committee are to ensure that: ▶The Volex management team operates an effective system to control health, safety and environmental risks as well as ensuring that we control other labour-related risks relevant to the industry’s Responsible Business Alliance standards and their Code of Conduct.Volex plcAnnual Report and Accounts 2021Stock code: VLXGOVERNANCE6830048-Volex-AR21.indd 6830048-Volex-AR21.indd 6818/06/2021 15:10:5118/06/2021 15:10:51 ▶ The Volex Board has a view
of current performance and
trend information for health,
safety, environmental and other
sustainability related performance
indicators across the Group and all
of its subsidiaries; and
▶ The Group establishes and maintains
an effective management system to
control health, safety, environmental
and labour-related risks. As with the
other Board Committees, the Safety,
Environmental and Sustainability
Committee reports its findings
to the full Board, identifying any
matters on which it considers that
action or improvement is needed,
and makes recommendations on
the steps to be taken.
The members of the Safety,
Environmental and Sustainability
Committee were:
Date of Appointment
15 October 2019
15 October 2019
15 October 2019
Jeffrey Jackson
(Chairman)
Nathaniel
Rothschild
Alan Taylor
(Secretary)
Meetings and Activities
The Committee met formally three
times (July, November and March)
during the financial year and received
regular updates on the impact of
Covid-19 on the workforce and received
quarterly updates on the Group’s health
and safety performance from the Group
HR Director. This is in line with our
intention that the Committee will meet
at least annually.
The main activities undertaken by the
Committee during the year were:
▶ Oversight of the Company’s Covid-19
response (please refer
to pages 41)
▶ Review of the approach being taken
by the Group to improve Group-wide
performance in the areas of health,
safety, environment and labour-
related risk.
Key Initiatives
During the year, the Company was
able to continue to conduct plant safety
reviews. These reviews involve both
our Group HR Director and key local
management conducting a structured
safety walk around the facility. These
reviews take place at the majority of
production sites around the world and
are prioritised according to known
risks or incident rates. These reviews
successfully moved onto a virtual
platform as a result of the restrictions
to travel imposed by the pandemic and
each video safety walk enabled each
site to be assessed against specific
categories that are linked to our Group’s
safety standards.
After completing a pilot project on
machinery safety at our Zhongshan
manufacturing facility in China with the
support of external safety specialists
TUV, we completed a global audit of
all machinery to identify all pieces of
machinery which failed to meet our
enhanced basic standards.
All sites have implemented corrective
action plans to bring these machines
back to standard.
This year, we launched a Group-wide
site excellence award programme
– one of the categories is safety. In
FY2021, the site recognised for the best
performance for Safety was our Suzhou
site given their successful project to
relocate their factory. A project achieved
without accident or injury. The Suzhou
team also have one of the lowest
accident frequency rates in the Group
with 1.4 lost time accidents per million
hours worked.
Our second transformational project
was the expansion of our Batam facility
and I am delighted to report that this
construction project was also completed
without injury or incident.
Both our Suzhou and Batam plants
have taken on new Health and Safety
specialists during the year as we
continuously upgrade our capabilities
to reflect the challenges present in the
workplace.
Several of our sites have achieved zero
accident or 100% ‘safe production days’
year after year and these plants set the
performance standard for all of other
sites to achieve.
Our accident frequency rate increased
compared to the previous year due to
the inclusion of a significant number
of historical accidents from our most
recent acquisition DE-KA. We have a
adopted a policy of include two years
of historical data from any business
that we acquire. This enables us to
establish trend data and to deepen
our knowledge of accident and injuries
in the acquired business. In absolute
GOVERNANCE
terms we can report a 15% reduction
year on year in the number of lost-time
accidents in the Group and this includes
the last two years of accident numbers
for DE-KA.
Our improvement programme for health
and safety commenced in April 2019.
If we exclude the historical accidents
from DE-KA, we have achieved a 59%
reduction in our lost time accidents. Our
adjusted accident frequency rate if we
exclude DE-KA would be 0.88 compared
to 1.07 lost time accidents per million
hours worked in the prior year.
For the coming year, I look forward
to ensuring the Group maintains and
further improves on its record in this
regard. Our new focus on Sustainability
will be at the centre of our work in the
year ahead as we seek to develop a
clear roadmap for sustainability for the
Company over the years ahead.
On behalf of the Safety, Environmental
and Sustainability Committee.
Jeffrey Jackson
Chairman of the Safety,
Environmental and Sustainability
Committee
17 June 2021
16
No of plant safety reviews
(physical 1) (virtual 15)
15.6%
Reduction in lost time
accidents year on year
59% on 2 years ago with DE-KA excluded
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30048-Volex-AR21 18 June 2021 10:12 am V4Remuneration Committee Report‘We are continuously striving for fair and competitive remuneration policy and practice that is aligned to our shareholder’s interests.’ Amelia MurilloChair of the Remuneration CommitteeAnnual Statement Overview from the Chair of the Remuneration CommitteeI am pleased to introduce the Remuneration Report for the year ended 4 April 2021, which includes my first statement as Remuneration Committee Chair, the Directors’ Remuneration Policy and the Annual Report on Remuneration for the year.I am delighted to have assumed this role of Remuneration Committee Chair, having joined the Board and this Committee on 26 January 2021. I would like to take this opportunity to thank Adrian Chamberlain on behalf of my fellow Board and Committee colleagues for his stewardship of the Committee over the last few years.FY2021 was a year in which the Company demonstrated extraordinary resilience as the effects of a global pandemic were felt around the world. Despite the pandemic, the business has performed well and we are pleased to report that the Company has exceeded the bonus targets that we set out in last year’s Annual Report. The Company has exceeded its underlying operating profit and free cash flow targets. The Remuneration Committee has applied the bonus deferral policy (whereby two-thirds of any bonus above 25% of annual salary is deferred into Volex shares) and therefore 50% of the Executive Directors’ bonuses have been deferred into Volex shares, and will vest after one year. The targets were challenging, and this result reflects the achievements of the Group over the year.In FY2022, Executive Directors will continue to have the opportunity to earn up to 100% of annual salary under the annual bonus plan. We have maintained the emphasis on the quantitative financial targets of operating profit and cash generation. The purpose of this is to incentivise the Executive Directors to focus on generating cash and therefore value for shareholders. We want Volex to be a sustainable and cash-generative company that aims to pay regular dividends. Focusing the Executive Directors on cash generation helps align the interests of management with shareholders. Financial measures will make up 80% of the total opportunity for Executive Directors. On 18 December 2020, Nathaniel Rothschild and Jon Boaden were issued with awards under the LTIP of 225% and 169% of base salary respectively, in line with the policy. Base salaries of the Executive Directors for FY2021 were reviewed and increased by 1.1%, in line with other UK employee salary increases.The Remuneration Committee is continually aware and mindful of any potential risks associated with our remuneration arrangements.We seek to provide a structure that encourages an acceptable level of risk-taking through key performance measures and an optimal remuneration mix. The Committee undertakes annual third-party evaluations to ensure our reward programmes achieve the correct balance and do not encourage excessive risk-taking. The Company’s legacy Performance Share Plan expired in March 2019, the Committee, with the support of specialist external advisors, Volex plcAnnual Report and Accounts 2021Stock code: VLXGOVERNANCE70Volex plcAnnual Report and Accounts 202130048-Volex-AR21.indd 7030048-Volex-AR21.indd 7018/06/2021 15:10:5218/06/2021 15:10:52 30048-Volex-AR21 18 June 2021 10:12 am V4reviewed and created a replacement Plan which was presented and approved by shareholders at the AGM that year. This plan is called the Volex Long Term Incentive Plan (LTIP) and has different award limits than the legacy Performance Share Plan. Awards remain in flight for some Executives under the 2009 Performance Share Plan (PSP).The Committee has considered the risk involved in the short and long-term incentive schemes and is satisfied that the governance procedures mitigate these risks appropriately.During the year, the Committee reviewed the Remuneration Policy and considered that it continues to be appropriate. The Committee also conducted an independent review of our terms of reference to ensure they remained sound and in line with best practice.To further strengthen our Committee’s oversight we appointed Jeffrey Jackson to the Remuneration Committee to bring additional Non-Executive experience to this forum.The Committee continues to welcome feedback from shareholders, and I hope that we can continue to receive your support in future on the remuneration-related votes at our AGM.On behalf of the Remuneration Committee.Amelia MurilloChair of the Remuneration Committee17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202171GOVERNANCE30048-Volex-AR21.indd 7130048-Volex-AR21.indd 7118/06/2021 15:10:5218/06/2021 15:10:52 GOVERNANCE
Remuneration Committee Report
Compliance statement
The Company is listed on the Alternative Investment Market and therefore provides these remuneration disclosures on a
voluntary basis. As such, the charts and tables included here are unaudited. We have incorporated some additional information
based on the remuneration reporting regulations for main market listed companies where we believe it provides additional
relevant information for the users of the financial statements. The Board is committed to maintaining high standards of
corporate governance and the Directors intend, so far as is practicable given the Company’s size and constitution of the Board,
to comply with the provisions of the Quoted Companies Alliance Corporate Governance Code (the ‘QCA code’).
Introduction
The Company’s Remuneration Policy (‘Policy’) is designed to reinforce the Company’s goals, providing effective incentives for
exceptional Group and individual performance. The Committee regularly reviews the remuneration structure in place at Volex
to ensure it remains aligned with our business strategy and reinforces our success, and aligns reward with the creation of
shareholder value. The Committee strives to ensure that shareholders’ interests are served, by creating an appropriate balance
between fixed and performance-related pay. A considerable part of the reward package is linked to share-price performance
and is delivered in shares.
Policy report
Volex’s Remuneration Policy for Executive Directors
The Policy Table below sets out the Remuneration Policy which was approved by shareholders at the 2020 AGM with 98.95%
voting in support.
Purpose and
link to strategy
Base salary
To reflect market
value of the role and
individual’s performance
and contribution.
Operation
Opportunity
Performance
metrics
Reviewed on an annual basis, with
any adjustments taking effect
from 1 April.
The Committee reviews base
salaries with reference to:
▶ The individual’s performance,
responsibility, skills and
experience;
▶ Company performance and
market conditions;
▶ Salary levels for similar roles
at relevant comparators,
including companies of similar
market capitalisation to Volex
and companies in a similar
sector; and
▶ Wider pay levels and salary
increases across the Group.
Payable in cash.
Base salary increases are applied
in line with the outcome of the
review, as part of which the
Committee also considers average
salary increases across the Group.
Company and individual
performance are
considerations in setting
Executive Director base
salaries.
In respect of existing Executive
Directors, it is anticipated that
salary increases will generally
be in line with those of salaried
employees as a whole. In
exceptional circumstances
(including, but not limited to, a
material increase in job size or
complexity) the Committee has
discretion to make appropriate
adjustments to salary levels
to ensure they remain market
competitive.
Pension
To provide a market
competitive pension.
Executives participate in a money
purchase scheme or other
scheme as may be appropriate
from time to time (e.g. taking into
account location).
Executive Directors receive a
contribution of up to 10% of
salary. This may be exceeded in
exceptional circumstances (e.g.
recruitment).
Not performance-related.
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Purpose and
link to strategy
Benefits
To provide market
competitive benefits.
Operation
Opportunity
Benefits may include fuel costs,
travel allowances, private medical
insurance, critical life and death-
in-service cover. Other benefits
may be awarded as appropriate
and include relocation and other
expatriate benefits.
Benefits may vary by role and
individual circumstances and are
reviewed periodically.
Benefits are not anticipated to
exceed 10% of salary over three
financial years.
Performance
metrics
Not performance-related.
Annual bonus
To incentivise delivery
of the Group’s annual
financial and strategic
goals.
The Committee retains the
discretion to approve a higher cost
in exceptional circumstances (e.g.
relocation) or in circumstances
where factors outside of the
Company’s control have materially
changed (e.g. increases in medical
insurance premiums).
Performance is measured on an
annual basis for each financial
year.
The maximum bonus for
Executive Directors is 100% of
salary p.a.
For threshold performance, 20%
of the bonus is payable. Threshold
performance is set just below our
budgeted level for each financial
indicator.
For performance between
threshold and maximum, the
bonus pay-out will increase on a
straight-line basis.
KPIs are established at the start of
the year that are directly related
to and reinforce the business
strategy. Stretch targets are set
for each KPI; at the end of the
year the Committee determines
the extent to which these were
achieved.
The Remuneration Committee
policy requires a proportion of
any annual bonus award to be
deferred into shares for at least
one year, subject to continued
employment. Two-thirds of any
bonus above 25% of annual salary
shall be deferred into Volex shares.
Annual bonus amounts paid and
vested deferred bonus awards are
subject to clawback. Malus may be
applied to the in-year bonus (i.e.
the bonus opportunity for the year
may be reduced) and to unvested
deferred bonus awards.
The KPIs selected and their
respective weightings
may vary from year to year
depending on strategic
priorities. Measures may
include financial and non-
financial metrics.
Corporate measures will
be weighted each year
according to business
priorities. Measures will
include a measure of
operating profit and
cash flow. The range of
performance required
under each measure is
calibrated with reference
to Volex’s internal budgets.
Financial measures will
make up at least 80% of
the total opportunity.
The Committee has
discretion to adjust
the formulaic bonus
outcome both upwards
and downwards to ensure
alignment of pay with the
underlying performance
of the business over the
financial year, and to take
into account personal
performance over the
course of the year.
Further details of
performance conditions
are provided in the Annual
Report on Remuneration
on page 78.
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Remuneration Committee Report
Purpose and
link to strategy
LTIP
To drive performance,
aid retention and
align the interests of
Executive Directors with
shareholders.
Operation
Opportunity
The LTIP provides for annual
awards of performance shares
of up to 680,000 shares for the
Executive Directors, or up to
750,000 shares in exceptional
circumstances. The normal annual
grant will be up to 200% of salary.
Under each measure, threshold
performance will result in 30%
of maximum vesting for that
element, rising on a straight-line
basis to full vesting.
The Committee may grant annual
awards in the form of shares or
nominal value options which vest
after at least three years, subject
to performance conditions. The
award levels and performance
conditions are reviewed in
advance of grant to ensure they
remain appropriate.
Unvested awards under the
LTIP are subject to malus and
vested awards are subject to
clawback. LTIP awards will have
a performance period of at least
three years and a minimum
vesting period of three years.
If no entitlement has been
earned at the end of the relevant
performance period, the awards
will lapse.
Performance
metrics
Awards vest subject to
continued employment
and Company
performance. The
performance measures
are currently relative
Total Shareholder Return
(‘TSR’) and cumulative
adjusted operating profit
but the Committee may
also include additional
measures. The weighting
on TSR for any LTIP award
will be at least 50%. The
Committee reviews the
comparator group against
which TSR performance
is measured from time
to time to ensure it
remains aligned with
shareholder interests. As
under the annual bonus,
the Committee has
discretion to adjust the
formulaic LTIP outcomes
to ensure alignment of
pay with performance, i.e.
to ensure the outcome
is a true reflection of
the performance of the
Company. Further details
of performance conditions
are provided in the Annual
Report on Remuneration
on page 82.
Notes to the Policy Table
Performance measurement selection
The aim of the annual bonus plan is to reward key executives over and above base salary for the achievement of business
objectives. The bonus criteria are selected annually to reflect the Group’s main KPIs for the year and are designed to encourage
continuous performance improvement for the Group. Group financial performance targets relating to the annual bonus plan
are set from the Company’s annual budget, which is reviewed and signed off by the Board prior to the start of each financial
year. Underlying operating profit is used as a key performance indicator for the annual bonus plan because it is a clear measure
of the underlying financial performance of the Group.
Long-term share-based incentives (‘LTI’) are designed to align the interests of key executives with the longer-term interests of
the Company’s shareholders, by rewarding them for delivering sustained increases in shareholder value. The Company’s current
LTIP was approved at the 2019 AGM and then implemented in 2019 after the expiry of the Company’s 2009 PSP. The vesting
of LTIP share awards is linked to performance conditions, in particular to the Company’s relative total shareholder return and
cumulative operating profit. Relative TSR has been selected as it is directly aligned with shareholder interests. The comparator
group is tailored and proposed by our external specialist advisers and approved at the start of the cycle by the Committee.
Cumulative operating profit has been selected as it is a key measure of long-term performance for Volex and is closely aligned
with the Company’s strategic plans. The Committee believes that the minimum three-year performance period is in line with
the market and therefore aids the recruitment of senior hires. For the LTIP, performance measures and targets are reviewed by
the Committee ahead of each grant and must be considered by the Committee to be challenging but achievable.
Targets applying to the bonus and LTIP are reviewed annually, based on a number of internal and external reference points.
Performance targets are set to be stretching but achievable, with regard to the particular strategic priorities and economic
environment in a given year.
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Remuneration policy for other employees
Volex’s approach to annual salary reviews is consistent across the Group, with consideration given to the levels of experience
and responsibility, to individual performance and to salary levels in comparable companies. The majority of our employees
(excluding those who are shopfloor-based within our manufacturing facilities) are eligible to participate in an annual bonus
scheme. Opportunities and specific performance conditions vary by organisational level, with business area-specific metrics
incorporated where appropriate. Performance conditions are consistent for all participants, while award sizes vary by
organisational level. Specific cash incentives are also in place to motivate, reward and retain staff below Board level.
Shareholding guidelines
The Committee continues to recognise the importance of Executive Directors aligning their interests with shareholders
through building up a significant shareholding in the Company. Shareholding guidelines are in place that require Executive
Directors to acquire, over time, a holding equivalent to 100% of base salary. Other executive management are required to
acquire a holding over time equivalent to 50% of base salary. Executives are expected to retain at least 50% of any LTI shares
acquired on vesting (net of tax) until the guideline level is achieved.
Volex’s Remuneration Policy for Non-Executive Directors
The Board determines the Remuneration Policy and level of fees for the Non-Executive Directors within the limits set out in the
Articles of Association. The Remuneration Committee recommends the Remuneration Policy and level of fees for the Non-
Executive Directors. Non-Executive Directors are not eligible to participate in the annual bonus, LTIP or pension schemes. The
current Policy is:
Purpose and link to
strategy
Operation
Fees
To reflect market
competitive rates for
the role, as well as
individual performance
and contribution.
Non-Executive Directors receive a
basic fee for their respective roles.
Additional fees are paid to Non-
Executive Directors for additional
services, e.g. chairing a Board
Committee, supporting the Board on
matters that require significant time
commitment over and above that
expected to fulfil their normal duties,
etc.
Fees are reviewed annually with
reference to: information provided
by remuneration surveys; the extent
of the duties performed; and the
size and complexity of the Company.
Fee levels are benchmarked against
sector comparators and FTSE-
listed companies of similar size and
complexity. Fees are payable in cash.
Performance
metrics
Not applicable.
Opportunity
Fee increases are applied in line with
the outcome of the annual review.
There is no prescribed maximum fee.
It is expected that increases to Non-
Executive Director fee levels will be in
line with salaried employees over the
life of the policy. However, in the event
that there is a material misalignment
with the market or a change in the
complexity, responsibility or time
commitment required to fulfil a Non-
Executive Director role, the Board has
discretion to make an appropriate
adjustment to the fee level.
Pay scenario charts
The charts below provide estimates of the potential future reward opportunity for the current Executive Directors, and the
potential split between the different elements of remuneration under three different performance scenarios: ‘Minimum’, ‘On
Target/Threshold’ and ‘Maximum’.
Potential reward opportunities illustrated below are based on the Remuneration Policy, applied to the base salary as at 1 April
2021. For the annual bonus, the amounts illustrated are those potentially receivable in respect of performance for FY2022. For
the LTIP, the award opportunities are based on those LTIP awards which are expected to be granted in FY2022. It should be
noted that LTIP awards granted in a year normally vest on the third anniversary of the date of grant, and the projected value of
LTIP amounts excludes the impact of share price movement over the vesting period.
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In illustrating potential reward opportunities, the following assumptions have been made:
Component
Minimum
On-target
Stretch Target Absolute TSR Multiplier
Fixed
Base salary
Latest known salary
Pension
Other benefits
Contribution rate applied to latest known
salary
Benefits as provided in the single figure
table (excluding relocation allowances)
Annual bonus No bonus payable
20%
LTIP
No LTIP vesting
30% vesting
100%
100%
Up to 2x award
Executive Chairman – Nathaniel Rothschild
Maximum + 50% share
price appreciation
Maximum
On-Target/
Threshold
Minimum
CFO – Jon Boaden
Maximum + 50% share
price appreciation
Maximum
On-Target/
Threshold
Minimum
£ 000s
0
300
600
900
1,200
1,500
1,800
£ 000s
0
200
400
600
800
1,000
1,200
Fixed
Annual Bonus
LTIP
Approach to recruitment remuneration
External appointment
In the cases of hiring or appointing a new Executive Director from outside the Company, the Committee may make use of any
or all of the existing components of remuneration, as follows:
Component
Approach
Base salary
The base salaries of new appointees will be determined by reference to the individual’s
role and responsibilities, experience and skills, relevant market data, internal
relativities and their current basic salary. Where new appointees have initial basic
salaries set below market, any shortfall may be managed with phased increases over a
period of one to two years, subject to their development in the role.
Pension
New appointees will be eligible to participate in the Group’s defined contribution
pension plan or to receive a cash allowance.
Benefits
New appointees will be eligible to receive benefits in line with the Policy.
Maximum value
Not applicable.
Annual bonus The annual bonus described in the Policy Table will apply to new appointees with the
relevant maximum being prorated to reflect the proportion of employment over the
year. Targets for the individual element will be tailored to the Executive.
Up to 100% of salary p.a.
LTIP
New appointees will be eligible for awards under the LTIP which will normally be on
the same terms as other Executive Directors, as described in the Policy Table.
Up to 200% of salary p.a.
In determining an appropriate remuneration package, the Remuneration Committee will take into consideration all relevant
factors (including quantum, nature of remuneration and the jurisdiction from which the candidate was recruited) to
ensure that arrangements are in the best interests of both Volex and its shareholders. In addition to the above elements of
remuneration, the Committee may consider it appropriate to grant an award under a different structure in order to facilitate
the recruitment of an individual, exercising the discretion available to replace incentive arrangements forfeited on leaving a
previous employer. Such ‘buyout awards’ would have a fair value no higher than that of the awards forfeited. In doing so, the
Committee will consider relevant factors including any performance conditions attached to these awards, the likelihood of
those conditions being met and the proportion of the vesting period remaining.
Internal promotion
In cases of appointing a new Executive Director by way of internal promotion, the Remuneration Committee will be consistent
with the policy for external appointees detailed above. Where an individual has contractual commitments made prior to their
promotion to Executive Director level, the Company will continue to honour these arrangements.
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Non-Executive Directors
In the case of hiring or appointing a new Non-Executive Director, the Committee will follow the Policy as set out in the table
on page 81. A base fee in line with the prevailing fee schedule would be payable for Board membership, with additional fees
payable for additional services, such as chairing a Board Committee or acting as a Senior Independent Director.
Service contracts
The QCA Code and guidelines issued by institutional investors recommend that notice periods of no more than one year be set
for Executive Directors and that any payments to a departing Executive Director should be determined having full regard to the
duty of mitigation. It is the Company’s intention to meet these guidelines, and the Company policy is that Executive Directors’
service contracts may be terminated by either party on not more than 12 months’ notice.
The Executive Directors are employed under contracts of employment with Volex plc. The principal terms of the Executive
Directors’ service contracts are as follows:
Executive Director
Position
Effective date of contract
From Company
From Director
Nathaniel Rothschild
Executive Chairman
1 December 2015
Daren Morris1
Jon Boaden2
Chief Financial Officer
8 June 2015
Chief Financial Officer
12 November 2020
6 months
6 months
3 months
6 months
6 months
3 months
Notice period
1. Daren Morris left the Board effective 12 November 2020
2. Jon Boaden was promoted to the Board effective 12 November 2020
Letters of appointment are provided to the Non-Executive Directors. Non-Executive Directors have letters of appointment
effective for a period of three years. Non-Executive Directors’ letters of appointment are available to view at the Company’s
registered office.
Directors’ letters of appointment and the unexpired period of their appointments (where appropriate, after extension by re-
election) are set out below:
Non-Executive Director Date of letter
Unexpired term as at 4 April 2021
Date of appointment Notice period
Adrian Chamberlain1
16 June 2019
N/a
Dean Moore
Jeffrey Jackson
18 April 2017
30 July 2019
25 months
16 months
Peter Westmacott
12 November 2020
31 months
Amelia Murillo
26 January 2021
34 months
16 June 2019
19 April 2020
30 July 2019
12 November 2020
26 January 2021
3 months
3 months
3 months
3 months
3 months
1. Adrian Chamberlain stepped down from the Board effective 25 January 2021
Payment policy on exit and/or change of control
The Company’s policy is to limit any payment made to a departing Director to contractual arrangements and to honour any
pre-established commitments. As part of this process, the Committee will take into consideration the Executive Director’s duty
to mitigate their loss.
If employment is terminated by the Company, the departing Executive Director may have a legal entitlement (under statute or
otherwise) to certain payments, which would be met. In addition, the Committee retains discretion to settle any other amounts
reasonably due to the Executive Director, for example to meet the legal fees incurred by the Executive Director in connection
with the termination of employment, where the Company wishes to enter into a settlement agreement (as provided for below)
and the individual must seek independent legal advice.
In certain circumstances, the Committee may approve new contractual arrangements with departing Executive Directors
including (but not limited to) settlement, confidentiality, restrictive covenants and/or consultancy arrangements. These will
be used sparingly and only entered into where the Committee believes that it is in the best interests of the Company and its
shareholders to do so.
In addition to the contractual provisions regarding payment on termination set out above, the table below summarises how
the awards under the annual and deferred bonus and PSP/LTIP are typically treated in different leaver scenarios and a change
of control. Although the Committee retains overall discretion on determining ‘good leaver’ status, it typically defines a ‘good
leaver’ in circumstances such as injury or disability, death, redundancy, retirement with the consent of the Company or any
other reason as the Committee decides. Final treatment is subject to the Committee’s discretion.
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Event
Timing of vesting/award
Calculation of vesting/payment
Annual bonus
‘Good leaver’
Paid at the same time as continuing employees.
Eligible for an award to the extent that
performance targets are satisfied and the award
is prorated for the proportion of the financial year
served.
‘Bad leaver’
No annual bonus payable.
Not applicable.
Change of control
Generally paid immediately on the effective date
of change of control, with the Committee’s
discretion to treat otherwise.
Eligible for an award to the extent that
performance targets are satisfied up to the change
of control, subject to Remuneration Committee
discretion, and the award is prorated for the
proportion of the financial year served to the
effective date of change of control.
Deferred bonus
‘Good leaver’
Continue until the normal vesting date or earlier,
at the discretion of the Committee. In the event
of death of a participant, the award would vest
immediately.
Outstanding awards vest in full.
‘Bad leaver’
Outstanding awards are forfeited.
Not applicable.
Change of control
Vest immediately on the effective date of change
of control.
Outstanding awards vest in full.
PSP/LTIP
‘Good leaver’
Continue until the normal vesting date or earlier,
at the discretion of the Committee. In the event
of death of a participant, the award would vest
immediately.
Outstanding awards vest to the extent the
performance conditions are satisfied and the
awards are prorated to reflect the length of the
vesting period served unless the Board decides
otherwise. In the event of the death of a participant
during the performance period, the award would
vest in full.
‘Bad leaver’
Outstanding awards are forfeited.
Not applicable.
Change of control
Vest immediately on the effective date of change
of control.
Outstanding awards vest subject to the satisfaction
of performance conditions as at the effective date
of change of control, subject to Remuneration
Committee discretion, and the award is prorated
for the proportion of the vesting period served to
the effective date of change of control unless the
Board decides otherwise.
External appointments
With the approval of the Board in each case, and subject to the overriding requirements of the Group, Executive Directors may
act as Non-Executive Directors to other companies and retain any fees received.
Annual Report on Remuneration
The following section provides details of how the Remuneration Policy was implemented during the year.
Remuneration Committee membership in FY2021
The Committee met five times during the year under review. Attendance by individual Committee members at meetings is
detailed below.
Committee member
Member throughout 2020/2021
Number of meetings attended
Adrian Chamberlain
Dean Moore
Amelia Murillo
No
Yes
No
4/4
5/5
1/1
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During the year, the Committee sought internal support from the Executive Chairman and Chief Financial Officer, who
attended Committee meetings by invitation from the Chairman to advise on specific questions raised by the Committee and
on matters relating to the performance and remuneration of senior managers. No individuals are involved in decisions relating
to their own remuneration. The Company Secretary attended each meeting as Secretary to the Committee.
Agenda during FY2021
The agenda during FY2021 included:
▶ Approval of the FY2020 Remuneration Committee Report;
▶ Evaluation of share award proposals for Executive Directors and senior managers for FY2021;
▶ Review of Executive Directors’ shareholdings;
▶ Review and approval of the vesting in full for the PSP FY2018 vesting;
▶ Consideration of and the exercise of discretion in relation to the compensation payments paid to Daren Morris on
termination;
▶ Consideration and approval of the remuneration package for the appointment and promotion of Jon Boaden to the
position of Chief Financial Officer and Executive Director;
▶ Consideration and approval of the remuneration package for the appointment of Mark Kray as Chief Operating Officer for
North America;
▶ Consideration of advisory bodies’ and institutional investors’ current guidelines on executive compensation;
▶ Review and ratification of the Remuneration Policy and remuneration packages for Executive Directors and the fees
payable to our Non Executive Directors for FY2022, incorporating institutional investor feedback;
▶ Evaluation of the proposal for the annual bonus plan;
▶ Review of the succession planning status for the top 20 management positions;
▶ Review and approval of updated Terms of Reference for the Remuneration Committee produced as part of a wide-ranging
independent review of the terms of references for each of the Board’s Committees that was conducted during the year.
Advisers
In undertaking its responsibilities, the Committee seeks independent external advice as necessary. To this end, for the year
under review, the Committee continued to retain the services of Mercer Kepler (‘Kepler’) as the principal external advisers to
the Committee. The Committee evaluates the support provided by its advisers annually and is comfortable that the Kepler
team provides independent remuneration advice to the Committee and does not have any connections that may impair
independence.
Fees of £29,600 (FY2020: £17,200) were paid to advisers in respect of work carried out for the year under review.
Summary of shareholder voting at the FY2020 AGM
It is the Remuneration Committee’s policy to consult with major shareholders prior to any major changes to its Executive
Directors’ remuneration structure. The table below shows the results of the vote on the FY2020 Remuneration Report at the
AGM on 30 July 2020.
For (including discretionary)
Against
Total votes cast (excluding withheld votes)1
Votes withheld
Total votes cast (including withheld votes)
FY2020 Remuneration
Report
Total
number of
votes
% of votes
cast
105,277,900
98.95%
1,116,348
105,394,248
8,710
105,402,958
1.05%
100%
1. A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.
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Single figure of Executive Director remuneration
The table below sets out a single figure for the total remuneration received by each Executive Director for the year ended
4 April 2021 and the prior year:
Name
Year
Salary
(£)
Benefits1
(£)
Pension2
(£)
Cash
annual
bonus3
(£)
LTI4
(£)
Nathaniel Rothschild
2021 £329,844
£2,582
£32,984
£162,283
£910,000
2020 £323,377
£2,420
–
£159,300
£1,014,736
Deferred
annual
bonus
(restricted
shares)3
(£)
Other
(Sever-
ance)6
(£)
Total
(£)
–
–
£159,645 £1,597,338
£157,300
£1,657,133
Daren Morris
2021
£220,112
–
£43,764
–
£272,750 £1,456,214
– £1,992,840
2020 £323,377
£343
£64,675
£159,300
£957,804
Jon Boaden5
2021
£72,241
£4,817
£7,790
£39,356
2020
–
–
–
–
–
–
–
–
–
£157,300 £1,662,799
£37,716
£161,920
–
–
1.
Taxable value of benefits received in the year by Executives includes healthcare and life assurance.
2. Pension: Up until 12 November 2020 Daren Morris participated in a money purchase scheme into which the Company contributed 20% of
salary. Jon Boaden participates in a money purchase scheme into which the Company contributed 6% of salary.
3. Annual bonus: The FY2021 targets were substantially met and 94-98% of maximum bonuses were awarded. In accordance with the bonus
deferral policy, two-thirds of any bonus above 25% of annual salary is deferred into Volex shares. Therefore, a significant proportion of the
Executive Directors’ bonuses (approximately 49%) were deferred into Volex shares for a period of one year. Details can be found on page 73 of
this report.
4. During the year, Nathaniel Rothschild exercised awards in respect of 350,000 shares received under the PSP with a valuation (net of exercise
price and fees) of £910,000. During the year, Daren Morris exercised awards in respect of 250,000 shares received under the PSP with a
valuation (net of exercise price and fees) of £272,750.
5. Jon Boaden’s appointment to the Board was effective 12 November 2020 and therefore his remuneration reflects that received since his
appointment to 4 April 2021.
6. Daren Morris left the Board on 12 November 2020 and a settlement agreement was agreed. The severance was split and includes £1,456,214
payable in FY2021 and an amount of £404,699 that becomes payable in FY2022.
Single figure of Non-Executive Director remuneration and Non-Executive Director fees
The table below sets out a single figure for the total remuneration received by each Non-Executive Director for the year ended
4 April 2021 and the prior year:
Non-Executive Director
Dean Moore
Adrian Chamberlain1
Jeffrey Jackson
Peter Westmacott2
Amelia Murillo2
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Base
fee (£)
Committee
fee (£)
Additional
fee (£)
Benefits
in kind (£)
£50,000
£50,000
£51,034
£50,000
£50,000
£33,333
£21,073
–
£20,000
£20,000
£10,000
£10,000
£10,000
£4,167
–
–
£10,220
£1,858
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£70,000
£70,000
£61,034
£60,000
£60,000
£37,500
£21,073
–
£12,078
–
1. Adrian Chamberlain’s remuneration was adjusted to reflect a leave date of 25 January 2021 and his notice period.
2. Both Peter Westmacott and Amelia Murillo were appointed to the Board part way through the year and so the fees earned have been
prorated accordingly.
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The Non-Executive Directors are not eligible for bonuses, retirement benefits and cannot participate in any share scheme
operated by the Company. The base fees during the year and for FY2022 are:
Non-Executive Director base fee
Senior Independent Director fee
Chair of Committee additional fee
Fee1
FY2022
FY2021
£55,0002
£50,000
£10,000
£10,000
£10,000
£10,000
1. Remuneration comprises an annual fee for acting as a Non-Executive Director of the Company. Additional fees are paid to Non-Executive
Directors in respect of their service as Chair of a Board Committee.
2. During the year, the Company conducted a review of Non-Executive Director compensation. As a result of this review the base fee was
increased by 10%. This was the first increase since July 2017.
Incentive outcomes for the year ended 4 April 2021
Annual bonus in respect of FY2021 performance
For FY2021, the maximum bonus potential for the Executive Directors was set at 100% of basic annual salary with 40% based on
achieving an operating profit target, 40% on achieving a cash generation from operations before adjusting items target and
20% based on achieving personal objectives.
The performance against the criteria, as defined, determined that bonuses would be earned under the annual bonus plan
at the level of 97.6% for Nathaniel Rothschild and 94% for Jon Boaden. The Remuneration Committee has applied the bonus
deferral policy (whereby two-thirds of any bonus above 25% of annual salary is deferred into Volex shares) and therefore a
significant proportion of the Executive Directors’ bonuses (approximately 50%) has been deferred into Volex shares, and will
vest after one year.
Annual bonus target for FY2022 performance
Corporate targets set by the Committee require Executive Directors to deliver significant stretch performance. The Committee
has taken the decision to publish performance targets prospectively. For FY2022 targets see page 84.
PSP Schemes
PSP awards held by Nathaniel Rothschild of 350,000 shares vested on 1 December 2020 based on the TSR target being 100%
met and the cumulative profit target being 100% met.
Scheme interests awarded in FY2021
The following awards were granted during the year under the LTIP:
Date of grant
Number of shares
LTIP award
Market price
at date of award
Executive Chairman
18 December 20201
Chief Financial Officer
18 December 20201
240,000
115,000
309.0p
309.0p
Face value
£742,000
£355,000
1.
The awards will vest on the third anniversary of the grant date. The performance condition is 50% based on TSR outperformance of the
constituents of the Comparator Group of companies (which is defined and approved by the Committee) and 50% based on cumulative
operating profit. The three-year performance period over which operating profit performance will be measured began on 6 April 2020 and
will end on 2 April 2023. The awards are also subject to a potential multiplier based on absolute TSR performance, whereby 100% growth in
TSR over the three years could see the awards double.
The FY2021 awards to the Executive Chairman and to the Chief Financial Officer amounted to 225% and 169% of base salary
respectively for each.
There is no retest provision. In addition, for any shares to vest on TSR, the Committee must satisfy itself that the recorded TSR is
a genuine reflection of the underlying business performance of Volex.
PSP
Awards held but as yet unvested under the old PSP scheme vest as nominal-cost options with an exercise price of 25 pence per
share after three years based on a relative TSR target and a cumulative operating profit target, as follows:
Performance condition
Weighting
Award vesting
TSR (share price growth plus reinvested dividends) relative
to companies in the FTSE ASX Index
Cumulative operating profit
50%
50%
Target (Index) – 30%
Stretch (Index + 15% pa) – 100%
Target – 30% Stretch – 100%
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Remuneration Committee Report
LTIP
The maximum base award available under the new scheme is 680,000 shares per recipient, or 750,000 in exceptional
circumstances. Final vesting of any grant, as nil-cost options, will depend on the achievement of three-year relative TSR
outperformance against a defined comparator group and cumulative operating profit, as follows:
Performance condition
Weighting
Award vesting
TSR (share price growth plus reinvested dividends)
relative to defined Comparator Group
Cumulative Operating Profit
50%
50%
Target (group median) – 30%
Stretch (upper quartile of group) – 100%
Target – 30%
Stretch – 100%
For the top executive team, including Executive Directors, a potential multiplier of the normal award in the event of exceptional
performance can also be applied at the point of award at the discretion of the Remuneration Committee, as measured against
an absolute TSR target.
Performance condition
Level of performance
Below target
Target
Stretch
Absolute TSR (share price growth plus reinvested dividends)
Below 50%
50%
100% or above
Multiplier1
n/a
15
25
1.
The awards are also subject to a potential multiplier based on absolute TSR performance, whereby 100% growth in TSR over the three years
could see the awards double.
Specific targets for future operating profit are deemed to be commercially sensitive and will not be published until such time
that the Committee is confident there will be no adverse impact on the Company of such disclosure. Further details of the
grant date and number of interests for FY2022 will be disclosed in the 2022 Annual Report on Remuneration.
Non-Executive Director fees
The Board determined that Non-Executive remuneration should be increased by 10% to better reflect market rates. This is the
first increase to this fee since July 2017. Fee levels will continue to be reviewed on an annual basis.
Payments for loss of office
On 12 November 2020, Daren Morris left the Board and a settlement package was agreed. The package included payment in
lieu of notice and a payment for loss of office. These payments included a discretionary payment which was approved by the
Remuneration Committee in relation to the outstanding share awards that had not vested and which lapsed on termination.
The total severance package was £1,456,214. A portion of this has been withheld and will become payable as a post-termination
payment during FY2022 as long as the terms of the settlement agreement are complied with. All remaining shares awarded
under the PSP, DBS and LTIP lapsed in full on termination of his employment.
In line with the terms of his letter of appointment, Adrian Chamberlain received a payment of fees for the unworked element of
his notice period.
Payments to past Directors
No payments were made to past Directors during the year.
Six-year TSR performance review and CEO single figure
The following graph charts the TSR of the Company and the FTSE All Share, FTSE All Share Electronic and Electrical Equipment
and FTSE AIM All Share indices over the six-year period from March 2015 to March 2021. In the opinion of the Directors, these
indices are the most appropriate against which the total shareholder return of Volex should be measured.
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600
500
400
300
200
100
0
a r-15
M
n -15
J u
S e p -15
e c-15
D
a r-16
M
n -16
J u
S e p -16
e c-16
D
a r-17
M
n -17
J u
S e p -17
e c-17
D
a r-1 8
M
n -1 8
J u
S e p -1 8
e c-1 8
D
a r-19
M
n -19
J u
S e p -19
e c-19
D
a r-2 0
M
n -2 0
J u
S e p -2 0
e c-2 0
D
a r-21
M
Volex
FTSE All Share
FTSE All Share Electronic & Electrical Equipment
FTSE AIM All Share Index
Source: Bloomberg
Note: TSR is calculated on a common currency basis.
The table below details the single figure remuneration for the CEO and Executive Chairman over the same period.
20161
2017
2018
2019
2020
2021
CEO / Executive Chairman single figure of
remuneration (£’000)
Annual bonus pay-out (% of maximum)
PSP vesting (% of maximum)
547
0%
0%
392
50%
0%
534
74%
0%
620
97%
88%
1,657
98%
100%
1,597
98%
100%
1.
The comparison of CEO remuneration is made complex by the change in CEO during the year. Christoph Eisenhardt resigned in September 2015
and the position was temporarily filled by Geraint Anderson as interim CEO before the position of CEO was replaced by an Executive Chairman,
Nathaniel Rothschild. The single figure above is an aggregate of the amounts due to each individual during their time in the relevant role.
Implementation of Executive Director Remuneration Policy for FY2022
Base salary
Market positioning of base salary is approached on an individual basis, taking account of advice received from the Committee’s
independent advisers on the rates of salary for similar roles in selected groups of comparable companies, and the individual
performance and experience of each Executive. The aim is for base salary to be set with reference to the market median,
dependent on the Committee’s view of individual and Group performance.
The Committee reviewed salaries during the year and agreed that there would be an increase approximately in line with UK
inflation of 1.1%.
Executive Director
Nathaniel Rothschild
Jon Boaden
Base salary in place
prior to review
Base salary effective
from 1 April 2020
Percentage increase
from 4 April 2021
£329,844
£210,000
£333,844
£212,310
1.1%
1.1%
A salary increase averaging 1.1% across the UK employee population was awarded at the annual pay review.
Pension
During FY2021, with the change of incumbent in our Chief Financial Officer, the Committee made the decision to bring the
pension contribution for the Chief Financial Officer back in line with wider practice for other UK-based employees. The Chief
Financial Officer receives a pension contribution of 6% of salary through a salary sacrifice arrangement and, in addition, the NI
savings for both the employee and the employer are reinvested into the employee’s monthly contribution. This is a standard
arrangement for our UK-based employees. The Executive Chairman receives a pension contribution of 10% of salary.
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Remuneration Committee Report
Annual bonus
The annual bonus for FY2022 will operate on the criteria set out in the Policy. The Committee has approved a maximum annual
bonus opportunity of 100% of salary for the Executive Directors.
As outlined above, going forward, the Committee has committed to disclosing targets on a prospective basis. For FY2020, the
maximum bonus potential for the Executive Directors was set at 100% of basic annual salary with 40% based on achieving an
operating profit target, 40% on achieving a cash generation from operations before adjusting items target and 20% based on
achieving personal objectives. Proposed target levels have been set to be challenging relative to the FY2022 business plan,
and are as follows:
Group operating profit
Group cash generation from operations before adjusting items
Personal objectives
Threshold
(20%)
Maximum
(100%)
$45.6m
$23.5m
n/a
$51.2m
$26.0m
n/a
LTIP
The Executive Directors could receive an award of up to 200% of salary. Final vesting of any grant will depend on the
achievement of three-year relative TSR outperformance vs. the comparator group of companies and cumulative operating
profit, as follows:
Performance condition
TSR (share price growth plus reinvested dividends)
relative to companies in the comparator group of companies Cumulative operating profit
Weighting
50%
50%
Level of performance
Company’s TSR
outperformance of the index
% of award vesting1
% of award vesting1
Threshold
Maximum
Index
Index + 15% p.a.
30%
100%
30%
100%
1.
There is straight-line vesting between the ‘threshold’ and ‘maximum’ performance levels.
Specific targets for future operating profit are deemed to be commercially sensitive and will not be published until such
time that the Committee is confident there will be no adverse impact on the Company of such disclosure. At this time, the
Committee believes that disclosure of targets within three years of the determination of vesting, i.e. not later than the 2023
Remuneration Committee Report, is appropriate.
Awards will vest three years from the grant date. Further details of the grant date and number of interests awarded will be
disclosed in the 2022 Annual Report on Remuneration.
Non-Executive Director fees
The Board determined that the base Non-Executive Director remuneration should be increased by 10% for FY2022. This fee level
was last increased in July 2017 and fee levels will continue to be reviewed on an annual basis.
Base fees
Chairman
Non-Executive Director
Additional fees
Audit Committee Chair
Remuneration Committee Chair
Nominations Committee Chair
Safety, Environmental and Sustainability Committee Chair
Senior Independent Director
FY2021 fees FY2022 fees
n/a
n/a
£50,000
£55,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
n/a
£10,000
£10,000
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30048-Volex-AR21 18 June 2021 10:12 am V4Directors’ interests The table below shows the Directors’ interests in shares and the extent to which Volex’s shareholding guidelines are achieved. Number of shares held as at 4 April 2021 (or date of resignation)Current shareholding (% salary/fees)Shareholding1 guideline (as % of salary) Guideline metNathaniel Rothschild238,415,59540,122%100%YesJon Boaden–n/a100%NoDaren Morris914,799n/an/an/aAdrian Chamberlain24,986n/an/an/aDean Moore15,000n/an/an/aJeffrey Jackson10,000n/an/an/aPeter Westmacott5,900n/an/an/aAmelia Murillo–n/an/an/a1. The shareholding guidelines were approved by the Remuneration Committee in March 2014. The guidelines require the Chief Executive Officer and Chief Financial Officer to acquire over time (to the extent they have not already done so) and maintain an ownership level of holdings of shares in Volex plc equal to gross basic salary. There is no time limit defined for achieving the target level. Senior Executives, as defined by the Remuneration Committee, must (unless a waiver is obtained from the Committee) retain a minimum of 50% of net shares (i.e. after statutory deductions) acquired under the relevant Employee Equity Plans until the relevant ownership level is met.2. Nathaniel Rothschild’s shareholding is held directly and through NR Holdings Limited. The table below shows the Executive and Non-Executive Directors’ interests in shares which includes all shares owned beneficially together with those interests in shares which have vested and are no longer subject to deferral or performance conditions and may be included as an interest in shares under Volex’s shareholding guidelines plus those shares and options over which future performance conditions remain.Not subject to performanceSubject to performanceTotalShares heldVested but unexercisedDeferred bonus shares (FY2020)1PSP/LTIPDeferred SharesNathaniel Rothschild38,415,595–113,986920,000–39,449,581Jon Boaden–––340,000–340,000Dean Moore15,000––––15,000Jeffrey Jackson10,000––––10,000Peter Westmacott5,900––––5,900Amelia Murillo––––––1. Under the FY2021 deferred share bonus plan, Nathaniel Rothschild will be awarded deferred bonus shares equal to a value of £159,645 and Jon Boaden will be awarded deferred bonus shares equal to a value of £96,600 to be made in accordance with the terms of the deferred share bonus plan. Directors’ interests in shares and options under Volex PSP and LTIPDetails of the Directors’ interests in long-term incentive schemes are set out below. Details, including explanation of movements during FY2021, are set out on page 81 of this Remuneration Report.Directors’ interest in shares and options under the old Volex PSP and the new Long Term Incentive Plan (LTIP)Number of shares subject to options held at 5 April 2020Number of shares subject to LTIP options granted during FY2021Number of shares subject to PSP options exercised during FY2021Number of shares subject to PSP options lapsed during FY2021Number of shares subject to option held at 4 April 2021Exercise price of shares subject to PSP options (£)Nathaniel Rothschild1,030,000240,000(350,000)–920,0000 - 0.25Daren Morris1,970,000–(250,000)(1,720,000)–n/aJon Boaden225,000115,000––340,0000 - 0.25The Remuneration Committee Report was approved by the Board of Directors on 17 June 2021 and signed on its behalf by:Amelia MurilloChair of the Remuneration Committeewww.volex.comVolex plcAnnual Report and Accounts 202185GOVERNANCE30048-Volex-AR21.indd 8530048-Volex-AR21.indd 8518/06/2021 15:10:5418/06/2021 15:10:54 GOVERNANCE
Directors’ Report
The Directors of the Company present their Annual Report for the year ended 4 April 2021.
Results and dividend
Results for the year ended 4 April 2021 are set out in the consolidated income statement on page 98.
The Board is recommending payment of a final dividend of 2.2 pence per share for the 52 weeks ended 4 April 2021 (FY2020: 2.0
pence). Together with the interim dividend of 1.1 pence per share paid on 15 December 2020 (FY2020: 1.0 pence), this makes a
total for the year of 3.3 pence (FY2020: 3.0 pence).
Important events since the end of the financial year
The Group’s North American operations received notification on the 28 May 2021 and 11 June 2021 that $2,584,000 of PPP loans
provided during the pandemic were forgiven. No other important events have taken place in the period between 5 April 2021
and 17 June 2021.
Directors
The Directors who were in office during the year and up to the date the financial statements were signed are as follows:
Executive Directors
Nathaniel Rothschild
Daren Morris
Jon Boaden
Non-Executive Directors
Dean Moore
Adrian Chamberlain
Jeffrey Jackson
Peter Westmacott
Amelia Murillo
Notes
Until 12 November 2020
From 12 November 2020
Until 26 January 2021
From 12 November 2020
From 26 January 2021
Biographical details of the Directors currently serving on the Board and their dates of appointment are set out on pages 52 and 53.
Powers of Directors
The Directors may exercise all the
powers of the Company, subject to any
restrictions in the Company’s Articles of
Association, any relevant legislation and
any directions given by the Company, by
passing a special resolution at a general
meeting.
In particular, the Directors may exercise
all the powers of the Company to
borrow money, subject to the limitation
that the aggregate amount of all money
borrowed by the Group and owing to
persons outside the Group shall not,
without the sanction of an ordinary
resolution of the Company, exceed
an amount equal to three times the
aggregate of the Group’s capital and
reserves calculated in the manner
prescribed by the Company’s Articles of
Association.
Appointment and replacement
of Directors
The Company’s approach to the
appointment and replacement of
Directors is governed by its Articles of
Association (together with relevant
legislation).
The number of Directors should be no
fewer than three and no more than
15. Directors may be appointed by the
Company by ordinary resolution or by
the Board of Directors.
At each Annual General Meeting, all
Directors who (i) were appointed by the
Board since the last Annual General
Meeting, (ii) held office at the time of
the two preceding Annual General
Meetings and who did not retire at
either of them, or (iii) have held office
(other than employment or executive
office) for a continuous period of nine
years or more, shall automatically retire.
At the meeting at which the Director
retires, the members may pass an
ordinary resolution to fill the office
being vacated by electing the retiring
Director or some other person eligible
for appointment to that office. In
default, the retiring Director shall be
deemed to have been elected or re-
elected (as the case may be) unless (i) it
is expressly resolved at the meeting not
to fill the vacated office or the resolution
of such election or re-election is put
to the meeting and lost, or (ii) such
Director has given notice that he or she
is unwilling to be elected or re-elected,
or (iii) the procedural requirements
set out in the Company’s Articles of
Association are contravened.
The Company may, by ordinary
resolution, remove any Director before
the expiration of his or her term of
office.
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As set out in the Company’s Articles
of Association, there are also
circumstances where a Director will
immediately cease to hold office. These
circumstances include where he or
she is prohibited by law from being or
acting as a Director or where he or she
has been made bankrupt.
Directors’ indemnities and
insurance
In accordance with the Companies
Act 2006 and the Company’s Articles
of Association, the Company has
purchased Directors’ and Officers’
Liability Insurance. The indemnity was
in force throughout the last financial
year and is currently in force at the date
of this report. The Company reviews its
insurance policies on an annual basis
in order to satisfy itself that its level of
cover remains adequate.
beneficially interested at 4 April 2021 is
set out in the Remuneration Committee
Report on page 85.
Articles of Association
Any amendments to the Articles of
Association of the Company may be
made by special resolution of the
shareholders.
Share capital
Details of the Company’s share capital
are set out in note 23 to the financial
statements. The Company’s share
capital consists of one class of ordinary
shares which do not carry rights to fixed
income. As at 4 April 2021, there were
157,052,041 ordinary shares of 25p each
in issue.
A new authority to allot shares will be
sought at the forthcoming Annual
General Meeting.
Directors’ share interests
The number of ordinary shares of the
Company in which the Directors are
Voting rights
Ordinary shareholders are entitled
to receive notice of, and in normal
circumstances to attend and speak at,
general meetings. Each shareholder
present in person or by proxy (or by duly
authorised corporate representative)
shall, on a show of hands, have one vote.
On a poll, each shareholder present in
person or by proxy shall have one vote
for each share held.
Restrictions on transfer of
shares
Other than the general provisions of the
Articles of Association (and prevailing
legislation) there are no specific
restrictions on the size of a holding or on
the transfer of the ordinary shares.
The Directors are not aware of any
agreements between the Company’s
shareholders that may result in the
restriction of the transfer of securities or
on voting rights. No shareholder holds
securities carrying any special rights
or control over the Company’s share
capital.
Significant shareholders
The Company had been advised of the following notifiable direct and indirect interests in 3% or more of its issued share capital
as at 28 May 2021.
Shareholder
NR Holdings Limited1
Ruffer LLP
Hargreaves Lansdown Asset Management
Canaccord Genuity Wealth Management
Investec Wealth and Investment
Herald Investment Management
Number of ordinary shares of
25p each
Percentage of total voting
rights
38,415,595
14,200,000
8,348,489
6,725,000
6,324,429
5,738,020
24.46
9.04
5.32
4.28
4.03
3.65
1.
The Executive Chairman, Nathaniel Rothschild, is a beneficiary of NR Holdings. The number of shares noted here also includes those he holds
directly.
Authority to purchase own shares
The Company was authorised by shareholder resolution at the 2020 Annual General Meeting to purchase up to 10% of its issued
share capital. No shares were purchased pursuant to this authority during the year. A resolution to renew this authority will
be proposed at the forthcoming Annual General Meeting. Under this authority, any shares purchased will either be cancelled,
resulting in a reduction of the Company’s issued share capital, or held in treasury.
Employee share schemes
The Company does not have any employee share schemes with shares which have rights with regard to the control of the
Company that are not exercisable directly by the employees.
Significant agreements/change of control
The Company is a party to a revolving credit facility in which the counterparties can determine whether or not to cancel the
agreement where there has been a change of control of the Company.
Details of the Directors’ service contracts can be found in the Remuneration Committee Report on page 77.
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30048-Volex-AR21 18 June 2021 10:12 am V4Directors’ ReportFuture developmentsThe development of the business is detailed in the Strategic Report on pages 12 to 49.Research and developmentThe Company’s research and development activities are focused on driving innovation throughout the product portfolio, to enable it to deliver new or enhanced customer-specific connection solutions. We have continued to recruit design and development expertise and pursue the development of patents where relevant.EmployeesThe Company’s disclosures on employee policies and involvement can be found in the Sustainability Report on pages 44 to 48.Relationships with suppliers, customers and other business partnersInformation on the Company’s management of its business relationships can be found in the Strategic Report on pages 42 and 43.Corporate governanceThe Company follows and complies with, subject to some exceptions, the provisions of the Quoted Companies Alliance’s Corporate Governance Code. The Company’s corporate governance practice is outlined in the Corporate Governance Report on pages 56 to 61.Political and charitable donationsThe Company did not make any charitable donations during the year. The Company did not make any political donations.Energy use and emissionsThe disclosures on energy use and greenhouse gas emissions are made within the Sustainability Report on page 47.Financial risk managementThe Company’s objectives and policies on financial risk management, including information on the exposure of the Company to strategic, operational, financial and compliance risks, are set out in note 30 to the financial statements and in the Group Risk Management section on pages 36 to 40.Overseas branchesDuring the year, no new or additional overseas branches were established. The Company currently maintains one overseas branch, in Sweden.Going concern statementThe considerations made by the Directors with regards to going concern are set out in the Performance and Financial Review on page 35.Having taken these into account, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the date of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.Auditors and disclosure ofinformation to auditorsEach of the persons who is a Director at the date of approval of this Annual Report confirms that: ▶So far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and ▶The Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.The above confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.PricewaterhouseCoopers LLP have expressed their willingness to continue in office as auditors and a resolution seeking to reappoint them will be proposed at the forthcoming Annual General Meeting.Annual General MeetingThe Company’s Annual General Meeting will be held on 29 July 2021. Details of the arrangements and the resolutions to be proposed are set out in a separate Notice of Annual General Meeting. Shareholders will be encouraged to participate remotely in view of the ongoing situation with Covid-19 and details of how this will be arranged will be released in due course.This report was approved by the Board of Directors of Volex plc and signed on its order by:Jon BoadenChief Financial Officer17 June 2021Volex plcAnnual Report and Accounts 2021Stock code: VLX88GOVERNANCE30048-Volex-AR21.indd 8830048-Volex-AR21.indd 8818/06/2021 15:10:5418/06/2021 15:10:54 30048-Volex-AR21 18 June 2021 10:12 am V4Statement of Directors’ Responsibilitiesin respect of the financial statementsThe directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the group for that period. In preparing the financial statements, the directors are required to: ▶select suitable accounting policies and then apply them consistently; ▶state whether applicable international accounting standards in conformity with the requirements of the Companies Act 2006 have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements; ▶make judgements and accounting estimates that are reasonable and prudent; and ▶prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.The directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006.The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.By order of the BoardNathaniel RothschildExecutive ChairmanJon BoadenChief Financial Officer17 June 2021www.volex.comVolex plcAnnual Report and Accounts 202189GOVERNANCE30048-Volex-AR21.indd 8930048-Volex-AR21.indd 8918/06/2021 15:10:5518/06/2021 15:10:55 GOVERNANCE
Independent Auditors’ Report
to the Members of Volex Plc
Report on the audit of
the financial statements
Opinion
In our opinion:
▶ Volex plc’s Group financial
statements and Company
financial statements (the “financial
statements”) give a true and fair
view of the state of the Group’s and
of the Company’s affairs as at
4 April 2021 and of the Group’s
profit and the Group’s cash flows
for the 52 week period then ended;
▶ the Group financial statements
have been properly prepared in
accordance with international
accounting standards in conformity
with the requirements of the
Companies Act 2006;
▶ the Company financial statements
have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting
Practice (United Kingdom
Accounting Standards, comprising
FRS 101 “Reduced Disclosure
Framework”, and applicable law);
and
Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities
under ISAs (UK) are further described
in the Auditors’ responsibilities for the
audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the
Group in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, which includes the FRC’s Ethical
Standard, as applicable to listed entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements.
Our audit approach
Overview
Audit scope
▶ We conducted a full scope audit of
10 components which were selected
due to their size and
risk characteristics.
▶ the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
▶ Specified audit procedures were
performed on certain financial
statement line items at a further
4 components.
We have audited the financial
statements, included within the
Annual Report and Accounts 2021 (the
“Annual Report”), which comprise: the
Consolidated and Company Statements
of Financial Position as at 4 April 2021;
the Consolidated Income Statement
and Consolidated Statement of
Comprehensive Income, the Consolidated
and Company Statements of Changes in
Equity, and the Consolidated Statement
of Cash Flows for the period then ended;
and the notes to the financial statements,
which include a description of the
significant accounting policies.
▶ This enabled us to obtain 87%
coverage of revenue, 80% of profit
before tax, interest and adjusting
items and share based payments,
100% of adjusting items, 81% of
interest payable and over 71% of net
assets of the Group. Desktop review
procedures were performed on a
further 10 components.
▶ To ensure sufficient oversight of
our component audit teams, the
Group team performed a number
of procedures throughout the
audit which included directing the
audit approach and procedures,
conducting remote file reviews and
conducting remote face to face
meetings with local management
and the component teams.
Key audit matters
▶ Adjusting Items (Group)
▶ Business combinations (Group)
▶ Recognition of deferred tax assets
(Group and Company)
▶ Impact of Covid-19 (Group and
Company)
Materiality
▶ Overall Group materiality: $1,750,000
(2020: $1,500,000) based on
approximately 4% of profit before
tax, interest, adjusting items and
share-based payments.
▶ Overall Company materiality:
£500,000 (2020: £489,000) based
on 1% of total assets and capped at
Group component materiality.
▶ Performance materiality: $1,312,500
(Group) and £375,000 (Company).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters
that, in the auditors’ professional
judgement, were of most significance
in the audit of the financial statements
of the current period and include
the most significant assessed risks
of material misstatement (whether
or not due to fraud) identified by the
auditors, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in
the audit; and directing the efforts of
the engagement team. These matters,
and any comments we make on the
results of our procedures thereon, were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
This is not a complete list of all risks
identified by our audit.
Recognition of deferred tax assets
(Group and Company) is a new key audit
matter this year. Otherwise, the key
audit matters below are consistent with
last year.
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Key audit matter
How our audit addressed the key audit matter
Adjusting Items (Group)
The Directors have classified $5.6m (2020: $5.8m)
of pre-tax expenses and the associated tax impact
as adjusting items in the Consolidated Income
Statement, disclosure of which they believe helps
to understand the underlying performance of the
business.
Adjusting items are disclosed in note 4 and in the
Financial Review.
The Directors have assessed the adjusting items
included in note 4 to be both one-off in nature
and significant in size; these also include the non-
cash amortisation charges in respect of intangible
assets which have arisen under IFRS 3 Business
Combinations. These have been classified as
adjusting items in line with their accounting policy
in note 2. These items principally relate to costs
associated with the acquisitions made during the
year, and the amortisation of acquired intangibles.
We focused on this area because of the
magnitude of these items, and the impact that
they have on the presentation of underlying profit
in comparison to the statutory measure of profit.
Business combinations (Group)
As disclosed in note 34 to the financial statements,
during the year the Group acquired 100% of the
issued share capital of De-Ka Elektroteknik Sanayi
ve Ticaret Anonim Şirketi (‘DE-KA’).
The transaction is considered to be a business
combination under IFRS 3. Accounting for
business combinations is complex and involves
judgement around identifying the date of
acquisition, determination of the fair value of
consideration paid and payable, and assessment
of the fair value of assets and liabilities acquired.
Management made further fair value adjustments
to working capital balances as required. The fair
value exercise resulted in a $39.1m increase in
goodwill and a $29.3m increase in intangible
assets.
Management utilised the services of third parties
to help them determine the fair value of the
assets and liabilities acquired and the translation
of the opening balances from Turkish Financial
Reporting Standards to IFRS.
Given the significance of the transaction and the
complexity around the associated judgements
and estimates, there is a risk that the accounting
treatment may be incorrect and as such this is a
key audit matter.
We obtained management’s detailed listing of adjusting items and our
procedures included the following:
▶
Testing that they met the Group’s accounting policy for adjusting items,
as described in note 2, and applying professional scepticism as to the
appropriateness of the classification of these items as adjusting items
considering their nature and value and ensuring they were not given
greater prominence than the statutory results;
▶ For acquisition costs, we assessed whether the costs were related to the
acquisitions and had been incurred pre year end, and were one-off in
nature; we agreed a sample of costs to invoices;
▶ For the amortisation of acquired intangibles, we performed a high-level
analytic and substantiated differences above a threshold lower than
materiality;
▶ We tested that the reconciliation of operating profit to statutory
measures as shown in note 7 is accurate; and
▶ We assessed that the appropriateness and completeness of disclosures
included in the Group financial statements reflected the output of
management’s positions in respect of these adjusting items, noting no
significant deviations.
Overall, we consider the position taken by management to be appropriate.
We obtained management’s fair value calculations and evaluated the key
judgements and estimates made by management in determining the fair
value of net assets acquired; this included the identification of intangible
assets related to customer relationships and the associated useful life. We
focused on this area due to the significance of the transaction and the
complexity around judgements and estimates made in accounting for the
acquisition. We undertook the following procedures:
▶ We have reviewed management’s fair value assessment and translation
of balances from Turkish Financial Reporting Standards to IFRS, which
included understanding and reviewing the work of the third-party
experts engaged by management. We assessed the competency,
independence and objectivity of the experts engaged by management.
▶ We used our valuation experts to evaluate the key assumptions,
including customer values and discount rates used by management. We
benchmarked these to external data and challenged the assumptions
based on our knowledge of the Group and the industry within which it
operates.
▶ We obtained and reviewed the sale and purchase agreement.
▶ We obtained management’s fair value calculations of the consideration,
including of the contingent consideration and deferred consideration
elements, and assessed the appropriateness of the calculations.
▶ For the assets and liabilities acquired, we tested a selection to
supporting documentation and recalculated estimates to gain comfort
over the fair value on acquisition. There were no material differences.
▶
In respect of the fair value of the intangibles, we obtained
management’s discounted cash flow calculations and assessed
the reasonableness of the assumptions. Key assumptions made by
management included discount rate, forecast sales, gross profit
margins, operating profit margins and the estimated economic life of
the acquired intangibles.
Based on our procedures, we found no exceptions and overall considered
management’s key assumptions to be within an acceptable range. We also
reviewed the related disclosures in the notes to the financial statements for
compliance with accounting standards and consistency with the results of
our work, with no matters arising.
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Key audit matter
How our audit addressed the key audit matter
We undertook the following procedures:
▶ We assessed the availability of estimated future taxable income to
utilise the recognised carry forward losses and the reversal of temporary
deferred tax differences by comparing the estimated cash flows to the
latest Board approved budgets and the cash flows used in determining
the annual goodwill impairment test for the Group.
▶ We verified the mathematical accuracy of the calculations and that the
methodology used was in line with the requirements of IAS 12.
▶ We obtained and evaluated corroborative evidence supporting the
future cash flow forecasts which included the short and long term
growth rates. The growth rates used were consistent with the goodwill
impairment assessment.
We consider the recognition of the deferred tax assets appropriate taking
into account the expected use of the losses against future taxable profits.
Due to the continued trading improvement of the Group and improved
future outlook despite Covid-19, deferred tax assets have been recognised
appropriately.
We obtained management’s detailed Covid-19 impact assessment and
evaluated the key judgements and estimates made by management in
determining potential outcomes for the Group. We undertook the following
procedures:
▶ We considered the potential impact on the balance sheet, specifically
around investments, goodwill, trade receivables and inventory and do
not consider there to be any indicators of material impairment as at the
balance sheet date or subsequently (for disclosure only).
▶ We reviewed management’s disclosures relating to the potential
impact of Covid-19 and found them to be consistent with the downside
scenarios performed.
The procedures we performed to evaluate the Directors’ going concern
assessment, and our conclusions, are set out in the “Conclusions relating to
going concern” section below.
Overall, we consider the position taken by management to be appropriate.
Recognition of deferred tax assets (Group and
Company)
Group - refer to note 10 Taxation, note 21 Deferred
tax and note 2 to the financial statements – critical
accounting judgements and key sources of
estimation uncertainty.
Company - refer to note 12 Deferred tax and note
2.15 to the financial statements.
The Group and Company have gross deferred
tax asset balances of $22.0m (2020: $8.9m) and
£6m (2020: £nil) respectively. This includes $8.6m
(2020: $4.5m) in relation to trading losses which
can be offset against future taxable profits in
various jurisdictions in which the Group operates
and £3.9m (2020: £nil) for the Company. It further
includes $13.4m (2020: $4.4m) relating to short-
term timing differences, accelerated depreciation
and share-based payments.
We focused on this area because of the
magnitude of the balance and the judgement
involved in estimating the timing and quantum of
future tax cash flows supporting the recoverability
of the deferred tax assets.
Impact of Covid-19 (Group and Company)
Disclosure of the risk to the Group and Company of
Covid-19 and management’s conclusions on going
concern has been included within the Strategic
Report and note 2 of the financial statements.
Covid-19 was declared a pandemic by the World
Health Organisation on 11 March 2020 and the
ongoing response is having an unprecedented
impact on the global economy.
Management have set out in the Annual Report
the impact that Covid-19 has had on the Group
and the Company and the actions that they
have taken, and continue to take, to address the
pandemic and its effect on the operations. The
extent of the negative impact of the pandemic
on future trading performance is unclear and
measurement of the impact as it relates to the
financial statements entails a significant degree of
estimation uncertainty.
The Directors considered the impact of the
pandemic on the Group’s operations, cash flows
and the carrying amount of long-term assets
and receivables, as well as a need to recognise
additional liabilities. As part of this assessment, the
Directors modelled various downside scenarios to
their base case budgets taking into account the
possible effects of Covid-19 on the operations and
their going concern assessment.
Having taken into account these scenarios and
a robust assessment of planned and possible
mitigating actions, the Directors concluded that
the Group remains a going concern and that
there is no material uncertainty in respect of this
conclusion.
We determined the Directors’ consideration of the
impact of Covid-19 to be a key audit matter.
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due to their size or risk characteristics.
This included the operating subsidiaries
in England, Turkey, China, Republic of
Ireland, Indonesia, Mexico and Poland.
Specified audit procedures on certain
financial statement line items were also
performed on a further 4 components.
The above gave us coverage of 87%
of revenue, 80% of profit before tax,
interest and adjusting items and share
based payments, 100% of adjusting
items, 81% of interest payable and over
71% of net assets of the Group. Desktop
review procedures were performed on
a further 10 components. As a whole,
these procedures gave us the evidence
we needed for our opinion on the Group
financial statements.
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work
to be able to give an opinion on the
financial statements as a whole, taking
into account the structure of the Group
and the Company, the accounting
processes and controls, and the industry
in which they operate.
In establishing the overall approach
to the Group audit, we determined
the type of work that needed to be
performed at the statutory reporting
unit level by us, as the Group audit
team, or through involvement of
our component auditors. The Group
operates across multiple countries in
Asia, Europe and North America. Our
approach gives us sufficient coverage
on all segments.
Where work was performed by
component auditors, we determined
the level of involvement we needed
to have in the audit work for each
reporting unit to be able to conclude
whether sufficient appropriate audit
evidence had been obtained as a basis
for our opinion on the Group financial
statements as a whole. As Covid-19
prevented travel to any countries where
our component auditors are based,
we were unable to make site visits as
planned; we instead conducted our
oversight of the component teams
through conference calls, video
conferencing and remote working
paper reviews as well as remote face to
face meetings with local management
and our component teams and other
forms of communication as considered
necessary to satisfy ourselves as to
the appropriateness of audit work
performed by our component teams.
The Group audit team performed the
work over Servatron, G.T.K. (U.K.) and
the head office branch of the Company,
with our component auditors in Poland
performing the work in respect of the
significant branches of the Company
for which the books and records are
located in that territory. The Group
audit team performed the audit of the
consolidation.
We identified 10 components which,
in our view, required an audit of their
complete financial information, either
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - Group
Financial statements - Company
Overall materiality
$1,750,000 (2020: $1,500,000).
£500,000 (2020: £489,000).
How we determined it
Approximately 4% of profit before tax, interest,
adjusting items and share-based payments
1% of total assets and capped at Group
component materiality
Rationale for benchmark
applied
We consider profit before tax, interest,
adjusting items and share-based payments
to provide an accurate depiction of the
underlying profitability of the business and to
be the primary measure used by shareholders
in assessing the performance of the Group.
1% of total assets was considered an
appropriate benchmark to use due to the
Company’s status primarily as an investment
holding company. However, this would
have given a materiality level in excess of
the materiality allocated to the component
determined through our Group scoping
exercise. Accordingly, Company materiality
was capped at the Group component
materiality allocation.
For each component in the scope of our
Group audit, we allocated a materiality
that is less than our overall Group
materiality. The range of materiality
allocated across components was
between $300,000 and $1,000,000.
Certain components were audited to
a local statutory audit materiality that
was also less than our overall Group
materiality.
We use performance materiality to
reduce to an appropriately low level
the probability that the aggregate
of uncorrected and undetected
misstatements exceeds overall
materiality. Specifically, we use
performance materiality in determining
the scope of our audit and the nature
and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining
sample sizes. Our performance
materiality was 75% of overall materiality,
amounting to $1,312,500 for the Group
financial statements and £375,000 for
the Company financial statements.
In determining the performance
materiality, we considered a number of
factors - the history of misstatements,
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risk assessment and aggregation risk
and the effectiveness of controls - and
concluded that an amount in the
upper end of our normal range was
appropriate.
However, because not all future events
or conditions can be predicted, this
conclusion is not a guarantee as to the
Group’s and the Company’s ability to
continue as a going concern.
We agreed with those charged with
governance that we would report to
them misstatements identified during
our audit above $87,500 (Group audit)
(2020: $75,000) and £25,000 (Company
audit) (2020: £24,000) as well as
misstatements below those amounts
that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating
to going concern
Our evaluation of the Directors’
assessment of the Group’s and the
Company’s ability to continue to adopt
the going concern basis of accounting
included:
▶ Obtaining and reviewing the Group’s
cash flow forecasts for the going
concern period, challenging the
Directors’ assumptions used and
verifying that these were consistent
with our existing knowledge and
understanding of the business, as
well as with the Board-approved
budget;
▶ Reviewing the Group’s cash flow
forecasts under various downside
scenarios, including a severe but
plausible downside scenario,
evaluating the assumptions used,
and verifying that the Group is able
to maintain liquidity within the
going concern period under these
scenarios;
▶ Testing the model for mathematical
accuracy; and
▶ Assessing the adequacy of the
disclosure provided in note 2 ‘Basis
of Accounting ‘ of the financial
statements.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the Group’s and the Company’s
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements are
authorised for issue.
In auditing the financial statements,
we have concluded that the Directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.
Our responsibilities and the
responsibilities of the Directors with
respect to going concern are described
in the relevant sections of this report.
Reporting on other information
The other information comprises all of
the information in the Annual Report
other than the financial statements
and our auditors’ report thereon.
The Directors are responsible for the
other information. Our opinion on the
financial statements does not cover
the other information and, accordingly,
we do not express an audit opinion or,
except to the extent otherwise explicitly
stated in this report, any form of
assurance thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent
with the financial statements or
our knowledge obtained in the
audit, or otherwise appears to be
materially misstated. If we identify
an apparent material inconsistency
or material misstatement, we are
required to perform procedures to
conclude whether there is a material
misstatement of the financial
statements or a material misstatement
of the other information. If, based on the
work we have performed, we conclude
that there is a material misstatement of
this other information, we are required
to report that fact. We have nothing to
report based on these responsibilities.
With respect to the Strategic Report
and Directors’ Report, we also
considered whether the disclosures
required by the UK Companies Act 2006
have been included.
Based on our work undertaken in the
course of the audit, the Companies Act
2006 requires us also to report certain
opinions and matters as described
below.
Strategic Report and Directors’
Report
In our opinion, based on the work
undertaken in the course of the audit,
the information given in the Strategic
Report and Directors’ Report for the
52 week period ended 4 April 2021 is
consistent with the financial statements
and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and
understanding of the Group and
Company and their environment
obtained in the course of the audit,
we did not identify any material
misstatements in the Strategic Report
and Directors’ Report.
Responsibilities for the
financial statements and
the audit
Responsibilities of the Directors
for the financial statements
As explained more fully in the
Statement of Directors’ Responsibilities
in respect of the financial statements,
the Directors are responsible for the
preparation of the financial statements
in accordance with the applicable
framework and for being satisfied
that they give a true and fair view. The
Directors are also responsible for such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements,
the Directors are responsible for
assessing the Group’s and the
Company’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern
and using the going concern basis of
accounting unless the Directors either
intend to liquidate the Group or the
Company or to cease operations, or have
no realistic alternative but to do so.
Auditors’ responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditors’
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.
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accounting judgements and
estimates; and
▶ Review of related work performed
by the component audit teams,
including their responses to risks
related to management override of
controls and to the risk of fraud in
revenue recognition.
There are inherent limitations in the
audit procedures described above.
We are less likely to become aware of
instances of non-compliance with laws
and regulations that are not closely
related to events and transactions
reflected in the financial statements.
Also, the risk of not detecting a material
misstatement due to fraud is higher
than the risk of not detecting one
resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery or intentional
misrepresentations, or through
collusion.
Our audit testing might include testing
complete populations of certain
transactions and balances, possibly
using data auditing techniques.
However, it typically involves selecting
a limited number of items for
testing, rather than testing complete
populations. We will often seek to target
particular items for testing based on
their size or risk characteristics. In other
cases, we will use audit sampling to
enable us to draw a conclusion about
the population from which the sample
is selected.
A further description of our
responsibilities for the audit of the
financial statements is located on
the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions,
has been prepared for and only for
the Company’s members as a body in
accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no
other purpose. We do not, in giving
these opinions, accept or assume
responsibility for any other purpose or to
any other person to whom this report is
shown or into whose hands it may come
save where expressly agreed by our prior
consent in writing.
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including
fraud. The extent to which our
procedures are capable of detecting
irregularities, including fraud, is
detailed below.
Based on our understanding of the
Group and industry, we identified that
the principal risks of non-compliance
with laws and regulations related to
compliance with tax legislation and
employment law, state and federal
laws and regulations in jurisdictions
in which the Group operates, and we
considered the extent to which non-
compliance might have a material
effect on the financial statements.
We also considered those laws and
regulations that have a direct impact
on the financial statements such
as the Companies Act 2006. We
evaluated management’s incentives
and opportunities for fraudulent
manipulation of the financial
statements (including the risk of
override of controls) and determined
that the principal risks were related
to posting inappropriate journal
entries to manipulate financial results
and potential management bias in
accounting estimates. The Group
engagement team shared this risk
assessment with the component
auditors so that they could include
appropriate audit procedures in
response to such risks in their work.
Audit procedures performed by the
Group engagement team and/or
component auditors included:
▶ Enquiry of Directors, management
and the Company’s in-house legal
and compliance team around actual
and potential non-compliance with
laws and regulations and fraud;
▶ Inspection of supporting
documentation, where appropriate;
▶ Evaluation of management’s
controls designed to prevent and
detect irregularities;
▶ Reviewing minutes of meetings of
the Board of Directors;
▶ Identifying and testing journal
entries, in particular any journal
entries posted with unusual account
combinations;
▶ Challenging assumptions and
judgements made by management
in relation to their significant
www.volex.com
GOVERNANCE
Other required reporting
Companies Act 2006 exception
reporting
Under the Companies Act 2006 we
are required to report to you if, in our
opinion:
▶ We have not obtained all the
information and explanations we
require for our audit; or
▶ Adequate accounting records have
not been kept by the Company, or
returns adequate for our audit have
not been received from branches
not visited by us; or
▶ Certain disclosures of Directors’
remuneration specified by law are
not made; or
▶ The Company financial statements
are not in agreement with the
accounting records and returns.
We have no exceptions to report arising
from this responsibility.
Timothy McAllister
Senior Statutory Auditor
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
London
17 June 2021
Annual Report and Accounts 2021 95
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03
Financials
Consolidated Income Statement
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Financial Statements
Company Statement
of Financial Position
Company Statement
of Changes in Equity
Notes to the Company
Financial Statements
Five Year Summary
Shareholder Information
Registered Office and Advisers
98
99
100
101
102
103
147
148
149
163
164
164
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FINANCIALS
Consolidated Income Statement
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
Before
adjusting
items and
share-
based
payments
$’000
2021
Adjusting
items and
share-
based
payments
(Note 4)
$’000
Notes
2020
Before
adjusting
items and
share-based
payments
$’000
Adjusting
items and
share-based
payments
(Note 4)
$’000
Total
$’000
Revenue
Cost of sales
Gross profit
Operating expenses
Operating profit
Share of net profit from
associates and joint
ventures
Finance income
Finance costs
Profit on ordinary activities
before taxation
Taxation
Profit for the period
attributable to the owners
of the parent
Earnings per share (cents)
Basic
Diluted
3
443,313
(339,437)
103,876
(60,980)
42,896
827
310
(2,485)
41,548
7,267
16
5
6
10
7
11
11
–
–
–
(12,179)
(12,179)
443,313
391,354
(339,437)
(300,693)
103,876
(73,159)
30,717
90,661
(59,031)
31,630
–
–
–
827
310
–
328
(2,485)
(1,552)
–
–
–
(14,545)
(14,545)
–
–
–
(12,179)
2,251
29,369
9,518
30,406
(3,504)
(14,545)
2,339
Total
$’000
391,354
(300,693)
90,661
(73,576)
17,085
–
328
(1,552)
15,861
(1,165)
48,815
(9,928)
38,887
26,902
(12,206)
14,696
32.1
30.0
25.5
23.9
18.2
17.3
9.9
9.5
The notes on pages 103 to 146 are an integral part of these financial statements.
98
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Consolidated Statement of Comprehensive Income
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
FINANCIALS
Profit for the period
Items that will not be reclassified subsequently to profit or loss
Actuarial loss on defined benefit pension schemes
Tax relating to items that will not be reclassified
Items that may be reclassified subsequently to profit or loss
Gain/(loss) arising on cash flow hedges during the period
Share of other comprehensive income of associates and joint ventures accounted
for using the equity method
Exchange gain on translation of foreign operations
Tax relating to items that may be reclassified
Other comprehensive income/(expense) for the period
Total comprehensive income for the period attributable to the owners of the
parent
The notes on pages 103 to 146 are an integral part of these financial statements.
Notes
29
2021
$’000
2020
$’000
38,887
14,696
(1,121)
544
(577)
(1,343)
–
(1,343)
1,895
(2,266)
37
3,128
316
5,376
4,799
–
151
–
(2,115)
(3,458)
43,686
11,238
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Job number 18 June 2021 10:18 am rolloverConsolidated Statement of Financial PositionAs at 4 April 2021 (5 April 2020)Notes2021$’000 2020$’000 Non-current assetsGoodwill1265,55825,760Other intangible assets1339,57015,537Property, plant and equipment1432,39421,565Right of use asset1517,9618,345Interests in associates and joint ventures16866–Other receivables184,4514,488Deferred tax assets2121,9678,955182,76784,650Current assetsInventories1776,88657,995Trade receivables18100,30556,382Other receivables1810,3137,987Current tax assets2,8172,154Derivative financial instruments30411–Cash and bank balances2736,55132,305227,283156,823Total assets410,050241,473Current liabilitiesBorrowings199,556225Lease liabilities194,5673,498Trade payables2072,13739,653Other payables2056,39338,453Current tax liabilities9,5208,384Retirement benefit obligations291,110982Provisions221,801834Derivative financial instruments30381,819155,12293,848Net current assets72,16162,975Non-current liabilitiesBorrowings34,238–Non-current lease liabilities1915,4547,385Other payables209,084570Deferred tax liabilities217,8456,130Retirement benefit obligations294,0992,492Provisions2228851671,00817,093Total liabilities226,130110,941Net assets183,920130,532Equity attributable to owners of the parentShare capital2361,96960,189Share premium account2360,85646,414Non-distributable reserve242,4552,455Hedging and translation reserve(4,130)(9,506)Own shares24(3,257)(1,024)Retained earnings66,02732,004Total equity183,920130,532The notes on pages 103 to 146 are an integral part of these financial statements. The consolidated financial statements on pages 98 to 146 of Volex plc (company number: 158956) were approved by the Board of Directors and authorised for issue on 17 June 2021 and signed on its behalf by:Nathaniel Rothschild Executive ChairmanJon Boaden Chief Financial Officer 27309 18 June 2021 10:18 am Proof 8Volex plcAnnual Report and Accounts 2021Stock code: VLX100FINANCIALS30048-Volex-AR21-Financials.indd 10030048-Volex-AR21-Financials.indd 10018/06/2021 15:09:4418/06/2021 15:09:44 Consolidated Statement of Changes in Equity
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
FINANCIALS
Share
capital
$’000
Share
premium
account
$’000
Non-
distributable
reserves
$’000
Hedging
and
translation
reserve
$’000
Own
shares
$’000
Retained
earnings
$’000
Total
equity
$’000
Balance at 31 March 2019
58,792
44,532
2,455
(7,391)
(1,890)
19,150
115,648
Balance at 5 April 2020
60,189
46,414
2,455
(9,506)
(1,024)
Profit for the period attributable
to the owners of the parent
Other comprehensive expense
for the period
Total comprehensive (expense)/
income for the period
–
–
–
–
–
–
Share issue
1,315
1,882
Exercise of deferred bonus
shares
Own shares sold/(utilised) in the
period
Own shares purchased in the
period
Dividend
Credit to equity for equity-settled
share-based payments
82
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,115)
(2,115)
–
–
–
–
–
–
Profit for the period attributable
to the owners of the parent
Other comprehensive income/
(expense) for the period
Total comprehensive income for
the period
–
–
–
–
–
–
Share issue
1,647
14,442
Exercise of deferred bonus
shares
Own shares sold/(utilised) in the
period
Own shares purchased in the
period
Dividend
Credit to equity for equity-settled
share-based payments
Tax effect of share options
133
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,376
5,376
–
–
–
–
–
–
–
–
–
–
–
–
14,696
14,696
(1,343)
(3,458)
13,353
–
11,238
3,197
(82)
–
2,630
(6,514)
(3,884)
(1,764)
–
–
–
–
–
–
–
–
(1,956)
(1,764)
(1,956)
8,053
32,004
8,053
130,532
38,887
38,887
(577)
4,799
38,310
–
43,686
16,089
(133)
–
1,726
(3,076)
(1,350)
(3,959)
–
–
–
–
(6,016)
77
4,861
(3,959)
(6,016)
77
4,861
Balance at 4 April 2021
61,969
60,856
2,455
(4,130)
(3,257)
66,027
183,920
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FINANCIALS
Consolidated Statement of Cash Flows
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
Net cash generated from/(used in) operating activities
Cash flow generated from/(used in) investing activities
Interest received
Acquisition of businesses, net of cash acquired
Contingent consideration for businesses acquired
Proceeds on disposal of intangible assets, property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from the repayment of preference shares
Net cash used in investing activities
Cash flows before financing activities
Cash generated/(used) before adjusting items
Cash utilised in respect of adjusting items
Cash flow (used in)/generated from financing activities
Dividend paid
Net purchase of shares for share schemes
Refinancing costs paid
New bank loans raised
Repayment of borrowings
Inflow from factoring
Interest element of lease payments
Receipt from lease debtor
Capital element of lease payments
Net cash generated from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
The notes on pages 103 to 146 are an integral part of these financial statements.
Notes
27
5
34
34
16
25
26
26
26
26
26
26
27
26
27
2021
$’000
38,695
30
(40,927)
(1,281)
378
(7,685)
(132)
50
2020
$’000
51,735
22
(22,701)
(2,850)
564
(4,910)
(40)
25
(49,567)
(29,890)
(10,872)
(10,505)
(367)
(6,016)
(9,046)
(1,143)
37,219
(3,143)
469
(684)
538
(3,681)
14,513
3,641
31,649
1,261
36,551
21,845
23,251
(1,406)
(1,956)
(4,634)
(659)
7,000
(7,056)
–
(553)
499
(3,150)
(10,509)
11,336
20,593
(280)
31,649
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
FINANCIALS
1. Presentation of financial statements
Volex plc (‘the Company’ and together with its subsidiaries ‘the Group’) is a public company limited by shares incorporated
under the Companies Act 2006 and domiciled in the United Kingdom. Its shares are listed on AIM, a market on the London
Stock Exchange. The address of the registered office is given on page 164. The nature of the Group’s operations and its principal
activities are set out in the Strategic Report on pages 12 to 49.
Financial statements are prepared for the period ending on the Sunday following the Friday that falls closest to the accounting
reference date of 31 March each year.
These financial statements are presented in US dollars (‘USD’). The individual financial results of each Group subsidiary are
maintained in its functional currency, which is determined by reference to the primary economic environment in which the
subsidiary operates.
2. Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of accounting
The financial statements have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost convention except for the revaluation of financial
instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Going concern
The Group’s financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. When
assessing the going concern status of the Group the Directors have considered in particular its financial position, including its
significant balance of cash and cash equivalents and the borrowing facility in place, including its terms, remaining duration
and covenants.
The Directors have prepared a Group cash flow forecast for the period to 30 September 2022, which is based on the FY2022
Board-approved budget. The Directors have sensitised the cash flow forecast using scenarios that take into account the
principal risks and uncertainties set out on pages 36 to 40 of the Annual Report and the potential future impact from Covid-19.
This sensitivity analysis includes a severe but plausible downside scenario which models a 10% reduction in revenue on the
Group’s base case.
Based on their assessment and these sensitivity scenarios, the Directors are satisfied that that there are no material
uncertainties that cast doubt on the Group’s going concern status and that there is a reasonable expectation that the
Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of
the financial statements. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Adoption of new and revised International Financial Reporting Standards (‘IFRSs’)
No new standards and interpretations issued by the IASB had a significant impact on the Consolidated Financial Statements.
New standards, amendments and interpretations issued but not yet effective for the financial year beginning 5
April 2021 and not early adopted
The Group does not consider that any standard, amendment or interpretation issued by the IASB, but not yet applicable, will
have a significant impact on the financial statements. Standards and interpretations issued by the IASB are only applicable if
endorsed by the UK Endorsement Board.
Basis of consolidation
The consolidated financial statements of Volex plc incorporate the financial statements of the Company and entities which it
controls (its subsidiaries) (together the ‘Group’), and are drawn up to the relevant period end date. Control is achieved where
the Company has the power to govern the financial and operating policies so as to be able to obtain benefits from its activities.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into
line with those used by the Group. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between the members of the Group are eliminated in full on consolidation.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by
the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred and the amount of any non-controlling interests
in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed.
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
Where the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, it is measured at its acquisition date fair value and included as part of the consideration transferred. Subsequent
changes in the fair value of contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise
from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition
date) about facts and circumstances that existed at the acquisition date. Any adjustments outside of the measurement period
are taken to the income statement.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is tested annually for impairment. For the purpose of impairment testing, goodwill is allocated
to cash-generating units. The allocation is made to those cash-generating units or groups of cash-generating units that
are expected to benefit from the business combination in which the goodwill arose. If the recoverable amount of the cash-
generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying
amount of each asset in the unit. The impairment loss is recognised immediately in profit and loss and is not reversed in
subsequent periods.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts.
Goodwill arising on acquisitions prior to 31 March 1998 has been written off to reserves and has not been reinstated in the
statement of financial position and will not be included in determining any subsequent profit or loss on disposal.
Interests in associates and joint ventures
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the change in net assets of the investee after the date of acquisition.
The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition
movements in other comprehensive income is recognised in other comprehensive income, with a corresponding adjustment
to the carrying amount of the investment. Where the Group’s share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal
or constructive obligations or made payments on behalf of the associate. Distributions received from an associate reduce the
carrying amount of the investment.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is
impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount
of the associate and its carrying value, and it recognises the amount adjacent to ‘share of profit/(loss) of associates’ in the
income statement.
Foreign currencies
The individual financial statements of each Group company are prepared in the currency of the primary economic environment
in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial
position of each Group company are expressed in USD, which is the presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated
at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in
which they arise except for:
▷ Exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial
instruments/hedge accounting); and
▷ Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation),
which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or
partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average
exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income
and accumulated in equity.
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FINANCIALS
2. Significant accounting policies continued
Revenue recognition
Revenue is recognised in accordance with the satisfaction of performance obligations of contracts. The majority of the Group’s
contracts have just one performance obligation which is the delivery of goods, which under IFRS 15 Revenue is recognised
as a single point, on delivery or pick-up depending on the agreed terms with the customer. This is normally when control
of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods or services. The Group has concluded that it is the principal in its revenue
arrangements.
Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal
course of business, net of discounts, VAT and other sales-related taxes.
The Group considers whether there are additional commitments in contracts that have separate performance obligations to
which a portion of the transaction price needs to be allocated. In addition, most customer contracts include a warranty clause
for general repairs of defects that existed at the time of sale. Warranties cannot be purchased separately. These assurance-type
warranties are accounted for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
In determining the transaction price for the sale of equipment, the Group also considers the effects of the following:
▷ The existence of significant financing components. There are contracts where the Group receives short-term advances from
its customers. Using the practical expedient in IFRS 15, the Group does not adjust the promised amount of consideration for
the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of
the promised goods or services to the customer and when the customer pays for those goods or services will be one year or
less. The normal credit term is 60 to 90 days upon delivery;
▷ Consideration payable to the customer – in certain instances the Group purchases raw materials from the customer. This
consideration is not treated as a reduction to revenue since the payments made are in exchange for a distinct good (the raw
material) that the customer transfers to the Group; and
▷ Variable consideration and non-cash consideration – both of these are deemed to be immaterial for the Group.
The Group also generates incidental revenue from the provision of engineering services which is recognised by reference to the
stage of completion of the contracted services. No separate disclosures have been provided for this given it is immaterial to the
financial statements.
Interest income is accrued on a timely basis by reference to the principal outstanding and the effective interest rate applicable.
Dividend income from investments is recognised when the shareholder’s right to receive payment has been established.
Finance Costs
Finance costs comprise lease interest payable, amortised debt issue costs, interest expense on borrowings which are not
capitalised and the interest expense on the defined benefit obligation. Finance costs are split between operating and financing
activities in the statement of cash flows based upon the nature of the transaction.
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised
in other comprehensive income or directly in equity, respectively.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is
accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences
arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax rates and laws that have been enacted or substantively enacted by the reporting date. Deferred tax is
charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Cost
includes the original purchase price of the asset and any further costs attributable to bringing the asset to its working condition
for its intended use.
Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land which is not depreciated)
less their residual values over their useful lives, using the straight-line method, on the following basis:
Freehold buildings and leasehold
improvements
up to 50 years or period of lease, if shorter
Plant and machinery
3 to 15 years
Assets under construction
Depreciation commences once an asset is ready for its intended use
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference
between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.
Intangible assets – computer software and licences
Computer software is stated at cost less accumulated depreciation and any recognised impairment loss. Acquired computer
software licences are capitalised on the basis of the costs incurred to acquire and use the specific software. These costs are
included in the statement of financial position within intangible assets and are amortised straight-line over their estimated
useful lives, not exceeding five years. Costs associated with maintaining computer software are recognised as an expense as
incurred.
Intangible assets – patents and customer contracts and relationships
Separately acquired patents are stated at cost less accumulated amortisation. Customer contracts and relationships acquired
in a business combination are recognised at fair value at the acquisition date. These intangible assets are amortised on a
straight-line basis over their estimated useful lives as follows:
Customer contracts
Customer relationship
less than 1 year
5 – 15 years
Intangible assets – internally generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
The Group is engaged in development activities which include both general product development and specific customer
development projects. An internally generated intangible asset arising from these development activities is recognised only if
all of the following conditions are met:
▷ An asset is created that can be identified;
▷ It is probable that the asset created will generate future economic benefits; and
▷ The development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally
generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it
is incurred.
Impairment of property, plant and equipment and intangible assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit (‘CGU’) to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
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2. Significant accounting policies continued
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the
asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or CGU) in prior periods. A reversal of
an impairment loss is recognised as a credit to the income statement immediately, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Leases
The Group leases various offices, buildings, vehicles and other equipment. Rental contracts are typically made for a period of up
to five years, but may have extension options.
Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to
the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which
the Company is a lessee and for which it has major leases, it has elected not to separate lease and non-lease components and
instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present-value basis. Lease liabilities include the net present
value of the following lease payments:
▷ Fixed payments less any lease incentive receivable;
▷ Variable lease payments that are based on an index or a rate;
▷ Amounts expected to be payable by the Group under residual value guarantees;
▷ The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
▷ Payments of penalties for termination of the lease, if the lease term reflects the Group exercising that option.
The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect,
the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
▷ The amount of the initial measurement of the lease liability or a revaluation of the liability;
▷ Any lease payments made at or before the commencement date less any lease incentives received;
▷ Any initial direct costs; and
▷ Restoration costs.
Each right-of-use asset is depreciated over the shorter of its useful economic life and the lease term on a straight-line basis
unless the lease is expected to transfer ownership of the underlying asset to the Group, in which case the asset is depreciated
to the end of the useful life of the asset. Payments associated with the short-term leases are recognised on a straight-line basis
as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less.
Where a vacant office is sub-leased for the remainder of the lease, the head lease and sublease are recorded as two separate
contracts, applying both the lessee and lessor accounting requirements.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using a standard cost methodology and
adjusted for material variances such that the adjusted figure represents direct materials, direct labour and an attributable
proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated selling
price, less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for
obsolete, slow-moving or defective items where appropriate.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value less bank
overdrafts.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
Borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
including premiums on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the
consolidated income statement using the effective interest rate method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying value is the present value of those cash flows (when
the effect of the time value of money is material).
Present obligations arising under onerous lease contracts are recognised and measured as provisions. An onerous contract is
considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it.
A restructuring provision is recognised when the Group has developed a detailed formal plan for restructuring and has raised
a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing
its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures
arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not
associated with ongoing activities of the entity.
Provisions for the expected cost of warranty obligations under local sales of goods legislation are recognised at the date of sale
of the relevant products, at the Directors’ best estimate of the expenditure required to settle the Group’s obligation.
Retirement benefits
The Group has both defined benefit and defined contribution retirement benefit schemes, including a defined benefit scheme
in the UK which is now closed to new entrants and an unfunded defined benefit scheme in Indonesia which provides a lump
sump payment to individuals on retirement. The retirement benefit obligations recognised in the consolidated statement of
financial position represents the deficit or surplus in the Group’s defined benefit scheme.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with
actuarial valuations carried out at the end of each reporting period.
Defined benefit costs are split into three categories: Remeasurement; Net interest expense or income; and Past service cost
and gains and losses on curtailments and settlements.
Remeasurement comprises actuarial gains and losses, the effect of the asset ceiling (where applicable) and the return on
scheme assets (excluding interest). These costs are recognised immediately in the statement of financial position with a
charge or credit to the statement of comprehensive income in the period in which they occur. Remeasurement recorded in the
statement of comprehensive income is not recycled. Net interest is calculated by applying a discount rate to the net defined
benefit liability or asset and is recognised within finance costs (see note 6). As the defined benefit scheme is now closed, no
service cost is incurred.
Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have
rendered service entitling them to the contributions. Payments to state-managed schemes are treated as payments to
defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined
contribution scheme.
Share-based payments
Certain senior employees (including executives) receive remuneration in the form of share-based payment transactions where
the individuals are compensated for services they provide with consideration in the form of equity instruments.
The cost of equity-settled transactions with employees is measured with reference to the fair value of the equity instrument at
the date they are granted and is recognised as an expense over the period in which the performance and/or service conditions
are fulfilled, ending on the date on which the employee becomes fully entitled to the award.
No expense is recognised for awards that do not ultimately vest as a result of not meeting performance or service conditions.
Where all service and performance vesting conditions have been met, the awards are treated as vesting, irrespective of whether
or not the market condition is satisfied, as market conditions have been reflected in the fair value of the equity instruments.
The fair value determined at the date of grant of the equity-settled share-based payments is expensed to the income
statement on a straight-line basis over the vesting period, based on the estimate of the number of options that will eventually
vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result
of the effect of non-market-based vesting conditions. The movement in cumulative expense since the previous balance sheet
date is recognised in the income statement, with a corresponding entry in equity.
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FINANCIALS
2. Significant accounting policies continued
Adjusting items
Adjusting items include costs and income that are one-off in nature and significant (such as restructuring costs, impairment
charges or acquisition-related costs) but also include the non-cash amortisation charge of intangible assets which have arisen
under IFRS 3 Business Combinations. Only those restructuring costs that result in a permanent reduction in capabilities, either
to a particular geography or line of business, are treated as adjusting items.
Adjusting items are included under the statutory classification appropriate to their nature but are separately disclosed on the
face of the income statement within adjusting items to assist in understanding the underlying performance of the Group.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction from the proceeds, net of tax.
Investments and other financial assets – classification
Financial assets within the scope of IFRS 9 Financial Instruments are classified as financial assets at fair value through profit or
loss (FVTPL), financial assets at fair value through other comprehensive income (FVOCI) and financial assets at amortised cost.
The classification of financial assets is determined on initial recognition. This takes account of the nature of the financial asset
and the purpose for which it was acquired. Where an asset is classified as fair value through profit or loss (FVTPL) it is measured
at fair value. Any net gains and losses, including dividend income or interest, are recognised in finance revenue or finance cost
in the income statement.
Financial assets classified as at fair value through other comprehensive income (FVOCI) are measured at fair value. For
investments in equity instruments, dividends are recognised when the entity’s right to receive payment is established, the
amount can be measured reliably and it is probable that the economic benefits will flow to the entity. Dividends are recognised
in the income statement unless they represent the recovery of part of the cost of the investment, in which case they are
included in other comprehensive income.
Changes in the fair value of the financial asset are recognised in other comprehensive income and are not recycled to the
income statement.
Financial assets that are held with the objective of collecting contractual cash flows and where the contractual terms of the
financial asset give rise to cash flows on specified dates that represent the repayment of principal and interest are measured
subsequently at amortised cost.
Investments and other financial assets – recognition and measurement
Where an entity holds an investment in an equity instrument that is actively traded in an organised financial market, the fair
value is determined with reference to quoted closing market bid prices at the balance sheet date. Where there is no such active
market, fair value is determined using valuation techniques and models appropriate to the instrument.
Loans and receivables are measured at amortised cost using the effective interest method and taking into consideration any
allowance for impairment. The calculation includes any premium or discount on acquisition and includes transaction costs and
fees that are an integral part of the effective interest rate.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method less any provision for impairment.
At each balance sheet date the Group undertakes an assessment as to whether a financial asset or group of financial assets is
impaired.
Trade and other receivables
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, resulting in trade receivables recognised
and carried at original invoice amount less an allowance for any uncollectable amounts based on expected credit losses. The
Group assesses on a forward-looking basis the expected credit losses associated with its receivables carried at amortised cost.
The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangement.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
Derivative financial instruments
The Group’s activities expose it to the financial risks of changes in foreign exchange rates, interest rates and commodity prices.
The Group enters into a variety of derivative financial instruments to manage its exposure to these risks. The use of financial
derivatives is governed by a Group policy approved by the Board of Directors which provides written principles on the use of
financial derivatives to hedge certain risk exposures. The Group does not use derivative financial instruments for speculative
purposes. Further details of derivative financial instruments are disclosed in note 30 to the financial statements.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless
the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. The Group designates certain derivatives as either fair value hedges, cash flow
hedges or hedges of net investments in foreign operations.
A derivative is classified as a non-current asset or a non-current liability if the remaining maturity of the instrument is more
than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current
assets or current liabilities.
Hedge accounting
The Group designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign
currency and commodity risk, as either cash flow hedges or hedges of net investments in foreign operations.
At the inception of the hedge relationship the entity documents the relationship between the hedging instrument and hedged
item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at
the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments that are used in
hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Cash flow hedge
Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. Similarly, commodity derivative
contracts which are entered into to mitigate commodity price fluctuations on firm purchasing commitments are accounted for
as cash flow hedges.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in
profit or loss.
Hedges of net investments in foreign operations
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated in the hedging and translation reserve. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.
Gains and losses deferred in the hedging and translation reserve are recognised immediately in profit or loss when the foreign
operation is disposed of.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The Directors
consider the following to be the key judgements and estimates that have the most significant effect on the amounts
recognised in the financial statements.
Critical judgements in applying the Group’s accounting policies
In applying the Group’s accounting policies, management has made the following judgements, which have the most
significant effect on the consolidated financial statements.
Business combinations
Acquisitions are accounted for using the acquisition method as described in the business combinations accounting policy.
Management exercises judgement in the determination fair values for assets and liabilities acquired, including the separate
identification of intangible assets, which use assumptions and estimates. The Group has developed a process to meet the
requirements of IFRS 3, including the separate identification of customer relationship intangible assets based on estimated
future performance and customer attrition rates. External valuation specialists are used where appropriate.
Adjusting items
The Directors believe that presenting adjusting items separately provides a clearer understanding of the business performance
and facilitates comparison of trading performance year-on-year. In determining the classification of items, management
exercises significant judgement. During the period under review, the adjusting operating items identified total $5,550,000
(2020: $5,808,000). These primarily comprise acquisition-related costs and amortisation of intangibles arising from business
combinations. See note 4 for further details. Management sees this as a key judgement as a decision has to be made as to
which income statement items fall within the criteria and therefore should be shown separately.
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2. Significant accounting policies continued
Taxation
The Group operates in a large number of different tax jurisdictions. The Directors are required to exercise significant judgement
in determining the Group’s provision for taxes. Amounts provided are based on management’s interpretation of country-
specific tax law. Tax benefits are not recognised unless the tax positions are capable of being sustained. In arriving at this
position, management reviews each material tax benefit to assess whether a provision should be taken against full recognition
of the benefit.
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular,
significant judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration
given to the timing and level of future taxable income, time limits on the availability of taxable losses for carry-forward and any
future tax planning strategies.
Key sources of estimation uncertainty
The key areas where estimates and assumptions are significant to the financial statements are described below.
Inventory provisions
Inventories are carried at the lower of cost and net realisable value, which is calculated as the estimated sales proceeds
less costs of sale. Factors considered in the determination of net realisable value are the ageing, category and condition of
inventories, recent inventory utilisation and forecasts of projected inventory utilisation. Reviews of provisions held against
damaged, obsolete and slow-moving inventory are carried out at least quarterly by management and these reviews require the
application of judgement and estimates. Changes to these estimates could result in changes to the net valuation of inventory.
At 4 April 2021, the Group had net inventories of $76,886,000 (2020: $57,995,000).
Goodwill
The carrying amount of goodwill has been tested for impairment by estimating the value in use of the cash-generating units
to which it has been allocated. Note 12 outlines the significant assumptions made in performing the impairment tests.
Lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not utilise a break clause. Extension options (or periods after break clauses) are only included
in the lease term if the lease is reasonably certain to be extended (or break clause not utilised).
Uncertain tax provisions
The Group operates in many countries and is subject to taxes in numerous jurisdictions. The Group is subject to periodic tax audits
by local authorities on a range of tax matters in relation to corporate tax and transfer pricing. Management applies judgement in
estimating the provision to cover the economic outflow associated with any potential tax audits.
Equity-settled share-based payments
As explained in note 28, the Group operates four equity-settled shared-based payments arrangement. The Group settled
certain awards in cash during the period due to specific circumstances deemed appropriate by the remuneration committee.
The group’s intention is that all share-based payment awards will be equity settled going forward. The nature of the awards has
not changed in the period.
3. Segment information
During the year, the Group changed its reporting format to focus on the regional performance of Asia, Europe and North
America. Following acquisitions over the past few years, senior management’s responsibility has become more aligned to
geographic lines. Increased investment in our production facilities and capabilities has seen diversification of products in a
number of our sites. Segment information is based on the information provided to the chief operating decision maker the
Executive members of the Company’s Board and the Chief Operating Officer. This is the basis on which the Group reports its
primary segmental information for the period ended 4 April 2021. These segments are discussed in the Performance Review
on pages 28 to 31. The change in reporting structure has not resulted in a change to the Group’s previously reported cash
generating units (‘CGUs’).
The accounting policies of the operating segments are the same as those described in the summary of significant accounting
policies on pages 103 to 111. The Group evaluates segmental information on the basis of profit or loss from operations before
adjusting items, interest and income tax expense. The segmental results that are reported to the Executive members of the
Company’s Board and Chief Operating Officer include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
The internal reporting provided to the Executive members of the Company’s Board and the Chief Operating Officer for the
purpose of resource allocation and assessment of Group performance is based upon the regional performance of where the
customer is based and the products are delivered to. In addition to the operating divisions, a Central division exists to capture
all of the corporate costs incurred in supporting the operations.
Unallocated central costs represent corporate costs that are not directly attributable to the manufacture and sale of the Group’s
products but which support the Group in its operations. Included within this division are the costs incurred by the executive
management team and the corporate head office.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
3. Segment information continued
The following is an analysis of the Group’s revenues and results by reportable segment.
52 weeks to 4 April 2021
53 weeks to 5 April 2020
Revenue
$’000
Profit/(loss)
$’000
RESTATED1
Revenue
$’000
RESTATED1
Profit/(loss)
$’000
North America
Asia
Europe
Unallocated Central costs
203,102
133,750
106,461
–
Divisional results before share-based payments and adjusting items
443,313
Adjusting operating items
Share-based payment charge (see note 28)
Operating profit
Share of net profit from associates and joint ventures
Finance income
Finance costs
Profit before taxation
Taxation
Profit after taxation
169,901
132,029
89,424
–
391,354
19,808
14,128
15,432
(6,472)
42,896
(5,550)
(6,629)
30,717
827
310
(2,485)
29,369
9,518
38,887
18,861
8,937
9,596
(5,764)
31,630
(5,808)
(8,737)
17,085
–
328
(1,552)
15,861
(1,165)
14,696
1. Restatement: the prior year amounts have been restated to be consistent with the current year presentation and segments
The accounting policies of the reportable segments are in accordance with the Group’s accounting policies. The adjusting
operating items charge of $5,550,000 (2020: $5,808,000) was split $2,277,000 (2020: $2,950,000) to North America, $3,431,000
(2020: $2,800,000) to Europe, a credit $158,000 in Asia (2020: $58,000) and $nil (2020: nil) to Central.
Regional profit represents the profit earned from customers based in each region before the allocation of central operating
expenses, adjusting items, share-based payments, finance income, finance costs and income tax expense. This is the measure
reported to the Executive members of the Company’s Board and the Chief Operating Officer for the purpose of resource
allocation and assessment of performance. The divisional profits above are shown after the following charges for depreciation
and amortisation:
Depreciation and amortisation
North America
Asia
Europe
Central
2021
$’000
3,571
2,352
1,872
90
7,885
2020
$’000
2,747
2,135
1,446
191
6,519
Information about major customers
One (2020: one) of the Group’s customers individually accounts for more than 10% of total Group revenue. This customer
operates in the medical sector and accounts for 15% (2020: 17%) of total Group revenue.
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FINANCIALS
3. Segment information continued
Geographical information
The Group’s revenue from external customers and information about its non-current assets (excluding deferred tax assets) by
geographical location are provided below:
North America
Asia
Europe
Revenue
Non-current assets
2021
$’000
203,102
133,750
106,461
443,313
RESTATED
2020
$’000
169,901
132,029
89,424
391,354
2021
$’000
23,130
25,710
111,960
160,800
2020
$’000
25,826
21,469
28,400
75,695
Revenue is attributed to countries on the basis of the geographical location of the customer and delivery of the product.
Revenue derived from the United Kingdom was $89,198,000 (2020: $79,447,000).
4. Adjusting items and share-based payments
Acquisition costs
Adjustment to fair value of contingent consideration
Amortisation of acquired intangibles
Pension past service costs
Total adjusting operating items
Share-based payments (see note 28)
Total adjusting items and share-based payments before tax
Tax effect of adjusting items and share-based payments (see note 10)
Total adjusting items and share-based payments after tax
2021
$’000
367
(158)
5,204
137
5,550
6,629
12,179
(2,251)
9,928
2020
$’000
156
–
5,652
–
5,808
8,737
14,545
(2,339)
12,206
Adjusting items include costs that are one-off in nature and significant (such as restructuring costs, impairment charges
or acquisition-related costs) as well as the non-cash amortisation of intangible assets. The adjusting items and share-based
payments are included under the statutory classification appropriate to their nature but are separately disclosed on the face
of the income statement to assist in understanding the underlying financial performance of the Group.
During the current year, the Group has not incurred any restructuring costs (2020: nil).
Acquisition-related costs of $367,000 (2020: $156,000) relate to the acquisition of De-Ka Elektroteknik Sanayi ve Ticaret
Anonim Şirketi (2020: $98,000 Servatron Inc and $58,000 Ta Hsing Industries Limited). These costs are in respect of legal and
professional fees associated with the transaction.
The adjustment to the fair value of contingent consideration is in respect of the acquisition of Ta Hsing Industries Limited. A
lower amount was paid to the vendors than initial measurement due to certain holdback adjustments.
Associated with the acquisitions, the Group has recognised certain intangible assets, including customer relationships and
customer order backlogs. The amortisation of these intangibles is non-cash and totals $5,204,000 (2020: $5,652,000) for the
period, split $695,000 for De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi, $2,222,000 (2020: $2,747,000) for Servatron Inc,
$1,130,000 (2020: $1,357,000) for Silcotec Europe Limited, $55,000 (2020: $106,000) for MC Electronics LLC and $1,102,000 (2020:
$1,442,000) for GTK (Holdco) Limited.
In 2019, the Group recognised a pension past service cost of $480,000 in adjusting items as a result of Guaranteed Minimum
Pension (GMP) equalisation following a legal judgement requiring all pension schemes to conduct an equalisation of male
and female members’ benefits for the effect of unequal GMPs. The additional cost of $137,000 in 2021 arises as a result of a
further legal judgement which confirmed there was also an obligation to pay additional amounts where certain past transfer
payments had not been equalised for the effects of GMPs.
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
5. Finance income
Interest on bank deposits
Lease interest income
Interest on preference shares
2021
$’000
2020
$’000
16
99
195
310
16
116
196
328
Finance income earned on financial assets was derived from loans and receivables (including cash and bank balances) only.
No other gains or losses have been recognised in respect of loans and receivables other than those disclosed above and
impairment losses recognised in respect of trade receivables (see note 18).
6. Finance costs
Interest on bank overdrafts and loans
Lease interest payable
Net interest expense on defined benefit obligations
Unwinding of deferred consideration
Total interest costs
Amortisation of debt issue costs
Total finance costs
Notes
29
26
2021
$’000
608
684
138
374
1,804
681
2,485
2020
$’000
559
553
47
154
1,313
239
1,552
No gains or losses have been recognised on financial liabilities measured at amortised cost (including bank overdrafts and
loans) other than those disclosed above.
On 12 November 2020 the Group entered into a new banking facility. Included within the amortisation of debt issue costs is a
$413,000 write-off of capitalised costs related to the previous facility. See note 30 for further details of the new facility.
7. Profit for the period
Profit for the period has been arrived at after charging/(crediting):
Net foreign exchange loss/(gain)
Research and development costs
Depreciation of property, plant and equipment
Depreciation and impairment of right-of-use assets
Amortisation of intangible assets
Cost of inventories recognised as an expense
Write-down of inventories recognised as an expense
Reversal of write-downs of inventories recognised in the period
Staff costs
Impairment loss recognised on trade receivables
Reversal of impairment losses recognised on trade receivables
Loss on disposal of property, plant and equipment
Notes
14
15
13
9
18
18
2021
$’000
1,288
3,156
4,613
3,172
5,304
2020
$’000
(431)
2,574
3,643
2,714
5,749
250,318
220,587
1,115
(389)
2,317
(756)
95,826
90,247
73
(129)
135
938
(64)
839
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7. Profit for the period continued
Research and development costs disclosed above comprise the following:
Employment costs
Raw materials and consultancy
Other
FINANCIALS
2021
$’000
2,167
904
85
3,156
2020
$’000
2,308
513
60
2,881
In the current year, no development costs were capitalised (2020: nil).
Reconciliation of operating profit to underlying EBITDA (earnings before interest, tax, depreciation and amortisation, adjusting
items and share-based payment charge):
Operating profit
Add back:
Adjusting operating items
Share-based payment charge
Underlying operating profit
Depreciation of property, plant and equipment (note 14)
Depreciation of right-of-use assets (note 15)
Impairment of right-of-use assets (note 15)
Amortisation of intangible assets not acquired in a business combination (note 13)
2021
$’000
2020
$’000
30,717
17,085
5,550
6,629
42,896
4,613
3,172
–
100
5,808
8,737
31,630
3,643
2,714
65
97
Underlying EBITDA
50,781
38,149
8. Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Fees payable to the Company’s auditors for the audit of the Company’s annual financial statements
Fees payable to the Company’s auditors and their associates for other audit services to the Group
– the audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Other services
Total non-audit fees
Other services include due diligence services performed in relation to the acquisition of DE-KA.
2021
$’000
2020
$’000
351
496
847
171
171
325
403
728
2
2
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
9. Staff costs
The average monthly number of employees (including Executive Directors) was:
Production
Sales and distribution
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Share-based payment charge (note 28)
Other pension costs (note 29)
2021
No.
5,482
386
485
6,353
2021
$’000
80,557
8,189
6,629
451
2020
No.
5,340
369
449
6,158
2020
$’000
72,323
8,697
8,737
490
95,826
90,247
Remuneration of key management – Directors of the parent Company
Short-term employee benefits
Post-employment benefits
Compensation for loss of office
Share-based payment charge
10. Taxation
2021
Adjusting
items and
share-
based
payments
$’000
Before
adjusting
items
$’000
Current tax – expense for the period
(3,911)
Current tax – adjustment in respect of
previous periods
Current tax – impact of S965 on deferred
foreign income
Total current tax
Deferred tax – credit for the period
Deferred tax – adjustment in respect of
previous periods
Total deferred tax (note 21)
Income tax credit/(expense)
231
–
(3,680)
10,801
146
10,947
7,267
41
–
–
41
2,147
63
2,210
2,251
2021
$’000
1,394
110
910
516
2,930
2020
Before
adjusting
items
$’000
Adjusting
items and
share-based
payments
$’000
Total
$’000
(3,870)
(9,525)
907
231
–
(3,639)
12,948
209
13,157
9,518
663
1,134
(7,728)
5,061
(837)
4,224
(3,504)
–
–
907
1,432
–
1,432
2,339
2020
$’000
1,447
82
–
940
2,469
Total
$’000
(8,618)
663
1,134
(6,821)
6,493
(837)
5,656
(1,165)
UK corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the period. Taxation for other
jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
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FINANCIALS
Total
$’000
15,861
(3,014)
(6,341)
960
(15)
10. Taxation continued
The credit/(expense) for the period can be reconciled to the profit per the income statement as follows:
2021
Adjusting
items and
share-
based
payments
$’000
Before
adjusting
items
$’000
Profit before tax
Tax at the UK corporation tax rate
41,548
(7,894)
(12,179)
2,314
2020
Before
adjusting
items
$’000
Adjusting
items and
share-based
payments
$’000
30,406
(5,777)
(14,545)
2,763
Total
$’000
29,369
(5,580)
Tax effect of:
Expenses that are not deductible and
income that is not taxable in determining
taxable profit
Adjustment in respect of previous periods
Overseas tax rate differences
Current year tax losses and other items
not recognised
Recognition of previously unrecognised
deferred tax assets
Income tax credit/(expense)
2,362
377
(409)
(859)
63
112
1,503
440
(297)
(6,092)
960
(349)
(249)
–
334
(94)
(24)
(118)
(791)
(617)
(1,408)
12,925
7,267
645
2,251
13,570
9,518
8,545
(3,504)
108
2,339
8,653
(1,165)
The table above has been reconfigured from that in the prior year to provide improvements to the disclosure and consistency
of the columns and signage to the rest of the note.
Included in the non-deductible tax items is an increase to uncertain tax provisions of $391,000 (2020: $5,776,000). The Group
recognises provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and
management judges that it is probable that there will be a future outflow within the Group to settle the obligation. Uncertain
tax positions are assessed and measured within the jurisdictions that we operate in using the best estimate of the most likely
outcome. It is inevitable that the Group will be subject to routine tax audits or be in ongoing disputes with tax authorities in the
multiple jurisdictions it operates within.
The income tax credit reported directly in equity of $4,861,000 (2020: nil) relates to share-based payments and consists of
current tax of $885,000 (2020: nil) and deferred tax of $3,976,000 (2020: nil).
11. Earnings per Ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
Profit for the purpose of basic and diluted earnings per share being net profit
attributable to equity holders of the parent
Adjustments for:
Adjusting items
Share-based payment charge
Tax effect of adjusting items and share-based payments
Underlying earnings
Notes
2021
$’000
2020
$’000
38,887
14,696
4
28
5,550
6,629
(2,251)
48,815
5,808
8,737
(2,339)
26,902
2021
No. shares
2020
No. shares
Weighted average number of Ordinary shares for the purpose of basic earnings per share
152,230,980
148,057,993
Effect of dilutive potential Ordinary shares/share options
10,288,152
7,339,875
Weighted average number of Ordinary shares for the purpose of diluted earnings per share
162,519,132
155,397,868
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
11. Earnings per Ordinary share continued
Basic earnings per share
Basic earnings per share
Adjustments for:
Adjusting items
Share-based payment charge
Tax effect of adjusting items and share-based payments
Underlying basic earnings per share
Diluted earnings per share
Diluted earnings per share
Adjustments for:
Adjusting items
Share-based payment charge
Tax effect of adjusting items and share-based payments
Underlying diluted earnings per share
2021
cents
25.5
3.7
4.4
(1.5)
32.1
2021
cents
23.9
3.4
4.1
(1.4)
30.0
2020
cents
9.9
3.9
6.0
(1.6)
18.2
2020
cents
9.5
3.7
5.6
(1.5)
17.3
The underlying earnings per share has been calculated on the basis of profit before adjusting items and share-based payments,
net of tax. The Directors consider that this calculation gives a better understanding of the Group’s earnings per share in the
current and prior period.
12. Goodwill
Cost
At the beginning of the period
Business combinations (note 34)
Exchange differences
At the end of the period
Accumulated impairment losses
At the beginning of the period
Impairment
Exchange differences
At the end of the period
Carrying amount at the end of the period
Carrying amount at the beginning of the period
2021
$’000
2020
$’000
28,108
39,079
1,026
68,213
2,348
–
307
2,655
65,558
25,760
20,028
9,131
(1,051)
28,108
2,497
–
(149)
2,348
25,760
17,531
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FINANCIALS
12. Goodwill continued
Goodwill acquired in a business combination is allocated, at acquisition, to the business units that are expected to benefit from
that business combination. After recognition of impairment losses, the carrying amount of goodwill has been allocated as
follows:
DE-KA
Servatron
Ta Hsing
GTK
Silcotec
MC Electronics
Volex North America
Volex Europe
2021
$’000
37,909
7,563
1,568
10,628
4,343
953
1,980
614
2020
$’000
–
7,563
1,568
9,402
3,979
953
1,752
543
65,558
25,760
Goodwill is not amortised and is retranslated each year at the prevailing rate. The Group annually tests goodwill for impairment,
or more frequently if there are indications that goodwill might be impaired. The recoverable amount of goodwill is determined
from value in use calculations. The key assumptions used in the value in use calculations are those regarding the discount
rates, revenue and costs growth. Management estimates discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to the business unit. The growth rates are based upon industry
growth forecasts.
The Group prepared a cash flow forecast derived from the most recently approved annual budget which has been extrapolated
over a five-year period. This assumes levels of revenue and profits based on both past performance and expectations for future
market development and takes into account the cyclicality of the business in which the CGU operates. Cash flows beyond the
five-year period are extrapolated in perpetuity using a growth rate in line with long-term market expectations.
The rate used to discount the forecast cash flows is a pre-tax discount rate of 10.9% (2020: 13.6%), which reflects the Group’s
estimated cost of capital.
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
13. Other intangible assets
Group
Cost
At 1 April 2019
Business combinations
Additions
Disposals
Exchange differences
At 5 April 2020
Business combinations
Additions
Disposals
Exchange differences
At 4 April 2021
Accumulated amortisation and impairment
At 1 April 2019
Amortisation charge for the period
Disposals
Exchange differences
At 5 April 2020
Amortisation charge for the period
Disposals
Exchange differences
At 4 April 2021
Carrying amount
At 4 April 2021
At 5 April 2020
At 31 March 2019
Acquired
patents
$’000
Capitalised
development
costs
$’000
Software
and
licences
$’000
Customer
contracts
and
relationships
$000
1,243
3,128
4,108
4,470
52,502
1,243
3,128
3,922
–
–
–
(74)
1,169
–
–
–
153
1,322
–
–
–
(128)
3,000
–
–
–
262
3,262
–
–
(74)
1,169
–
–
153
1,322
–
–
–
–
–
(128)
3,000
–
–
262
3,262
–
–
–
49
40
–
(196)
4,001
28
150
(77)
368
97
–
(190)
3,829
100
(77)
366
12,891
10,500
–
–
(602)
22,789
29,294
–
–
419
1,962
5,652
–
(190)
7,424
5,204
–
556
4,218
13,184
252
172
186
39,318
15,365
10,929
Total
$’000
21,370
10,549
40
–
(1,000)
30,959
29,322
150
(77)
1,202
61,556
10,255
5,749
–
(582)
15,422
5,304
(77)
1,337
21,986
39,570
15,537
11,115
Computer software is amortised over the estimated useful life, not exceeding five years. The amortisation charge for the period
is fully expensed within operating expenses.
Customer contracts and relationships relate to customer-related intangible assets acquired as part of a business combination.
They are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line basis on
the timing of projected cash flows of the contracts and relationships over their estimated useful lives. More details on business
combinations are included in note 34.
Customer contracts and relationships include two businesses with individually significant customer-related assets, DE-KA
acquired in February 2021 and based in Europe and Servatron acquired in July 2019 and based in North America. The net book
value of customer relationships in DE-KA as at 4 April 2021 was $24,439,000 with a remaining useful economic life of 14.9 years,
and the order backlog was $3,300,000 with a remaining useful economic life of 0.9 years. The net book value of customer
relationships in Servatron as at 4 April 2021 was $5,531,000 (2020: $7,753,000) with a remaining useful economic life of 2.6 years
(2019: 3.6 years).
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FINANCIALS
Total
$’000
73,148
4,995
1,473
(16,265)
(824)
62,527
7,678
8,203
(2,660)
112
–
1,298
–
–
–
1,298
3,879
–
–
–
5,177
75,860
–
–
–
–
–
–
–
–
–
5,177
1,298
–
52,728
3,643
(14,862)
(547)
40,962
4,613
(2,146)
37
43,466
32,394
21,565
20,420
Freehold
land and
buildings
$’000
Leasehold
improvements
$’000
Plant and
machinery
$’000
Assets
under
construction
$’000
3,106
142
–
–
(122)
3,126
3
–
–
289
3,418
174
253
–
(14)
413
262
–
40
715
2,703
2,713
2,932
12,742
57,300
943
156
(3,890)
(113)
9,838
20
–
–
126
9,984
7,573
515
(3,431)
(90)
4,567
554
–
105
5,226
4,758
5,271
5,169
2,612
1,317
(12,375)
(589)
48,265
3,776
8,203
(2,660)
(303)
57,281
44,981
2,875
(11,431)
(443)
35,982
3,797
(2,146)
(108)
37,525
19,756
12,283
12,319
14. Property, plant and equipment
Group
Cost
At 31 March 2019
Additions
Business combination
Disposals
Exchange differences
At 5 April 2020
Additions
Business combination
Disposals
Exchange differences
At 4 April 2021
Accumulated depreciation and impairment
At 31 March 2019
Depreciation charge for the period
Disposals
Exchange differences
At 5 April 2020
Depreciation charge for the period
Disposals
Exchange differences
At 4 April 2021
Carrying amount
At 4 April 2021
At 5 April 2020
At 31 March 2019
At 4 April 2021, the Group had $1,593,000 (2020: $621,000) contractual commitments for the acquisition of property, plant and
equipment.
Of the $4,613,000 (2020: $3,643,000) depreciation charge for the period, $3,901,000 (2020: $2,889,000) was expensed through
cost of sales and $712,000 (2020: $754,000) was expensed through operating expenses.
The Group recognised a fair value uplift of $5,102,000 in relation to plant and machinery acquired with DE-KA (see note 34 for
further details).
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
15. Right-of-use assets
Cost
At 31 March 2019
Impact of adoption of IFRS 16
Adjusted balance at 1 April 2019
Additions
Business combination
Disposals
Exchange differences
At 5 April 2020
Additions
Business combination
Disposals
Exchange differences
At 4 April 2021
Accumulated depreciation and impairment
At 31 March 2019
Depreciation charge for the period
Impairment
Disposals
Exchange differences
At 5 April 2020
Depreciation charge for the period
Impairment
Disposals
Exchange differences
At 4 April 2021
Carrying amount
At 4 April 2021
At 5 April 2020
Buildings
$’000
Vehicles
$’000
Other
$’000
Total
$’000
–
2,890
2,890
4,348
2,799
(8)
(639)
9,390
3,151
9,261
(667)
54
21,189
–
2,192
65
(8)
(128)
2,121
2,572
–
(667)
165
4,191
16,998
7,269
–
385
385
27
–
–
(65)
347
316
–
(150)
89
602
–
196
–
–
(4)
192
259
–
(150)
15
316
286
155
–
172
172
69
1,044
–
(38)
1,247
20
–
(13)
75
–
3,447
3,447
4,444
3,843
(8)
(742)
10,984
3,487
9,261
(830)
218
1,329
23,120
–
326
–
–
–
326
341
–
(13)
(2)
652
677
921
–
2,714
65
(8)
(132)
2,639
3,172
–
(830)
178
5,159
17,961
8,345
The Group recognised right-of-use assets of $9,261,000 related to the acquisition of DE-KA and its three production sites.
Included within the lease agreements for the two Turkish sites are the options to purchase these sites within the next three
years at a pre-agreed market value.
During the prior period the Group impaired the remaining right-of-use asset associated with a production site in North
America which was closed during the period.
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FINANCIALS
16. Interests in associates and joint ventures
Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity,
it is classified as an associate or joint venture. The Group uses the equity method, where the Group’s share of post-acquisition
profits and losses are recognised in the Consolidated Statement of Comprehensive Income (except for losses in excess of the
Group’s investment in the associate or joint venture unless there is an obligation to make good those losses).
Investment in associates:
– Kepler SignalTek Limited
– Volex-Jem Co. Ltd
2021
$’000
2020
$’000
866
–
866
–
–
–
Kepler SignalTek Limited
On 12 April 2017, the Group acquired 26.09% of the voting shares in Kepler SignalTek Limited (a company incorporated in Hong
Kong) for consideration of $300,000. The company is focused on developing interconnect and finished device solutions for
medical OEM customers and also provides high performance data transmission and industrial cable assemblies from their
facility in China. As part of the shareholder agreement, Volex is entitled to appoint one of the three directors to the company.
Summarised financial information in respect of Kepler SignalTek Limited is set out below. The summarised information below
represents amounts before intra-group eliminations.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets / (liabilities)
Revenue
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
As at
4 April
2021
$’000
6,827
997
(2,887)
(1,625)
3,312
As at
5 April
2020
$’000
3,277
764
(2,744)
(1,675)
(378)
Period to
4 April
2021
$’000
Period to
5 April
2020
$’000
16,013
3,481
208
3,689
7,313
293
(44)
249
A reconciliation of the above summarised financial information to the carrying amount of the interests in the consolidated
financial statements is set out below:
Net assets/(liabilities) of the associate
Proportion of the Group
Carrying amount of the Group’s interest in Kepler SignalTek Limited
As at
4 April
2021
$’000
3,312
26%
866
As at
5 April
2020
$’000
(378)
26%
–
During the period, Kepler SignalTek redeemed $50,000 of the preference shares owned by Volex (see note 18).
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
16. Interests in associates and joint ventures continued
Volex-Jem Co. Ltd
On 12 September 2017, the Group completed its 43% investment in Volex-Jem Co. Ltd, a Taiwanese holding company. Volex’s
investment took the form of cable certification with sufficient customer cables certified in order that a minimum cable
production volume would pass through the joint arrangement. The costs associated with the certification process were
$100,000. The Taiwanese holding company has a 70% shareholding in a Chinese manufacturing company. Under the joint
agreement, Volex has the right to appoint one of three directors to the Board of the Taiwanese holding company.
The Group has announced its intentions to exit the venture.
17. Inventories
Raw materials
Work in progress
Finished goods
18. Trade and other receivables
Trade receivables
Amounts receivable for the sale of goods
Allowance for doubtful debts
Other receivables
Other debtors
Investment in finance lease
Preference shares due from related parties
Prepayments
Due for settlement within 12 months
Due for settlement after 12 months
2021
$’000
35,013
2,632
39,241
76,886
2021
$’000
102,198
(1,893)
100,305
7,768
1,408
2,121
3,467
14,764
10,313
4,451
14,764
2020
$’000
31,070
2,480
24,445
57,995
2020
$’000
57,822
(1,440)
56,382
6,238
1,702
1,990
2,545
12,475
7,987
4,488
12,475
The carrying amounts of the trade receivables include certain receivables which are subject to a factoring arrangement. Under
this arrangement, Volex has transferred the relevant receivables to the factor in exchange for cash and is prevented from
selling or pledging the receivables. However, Volex has retained late payment and credit risk. The Group therefore continues
to recognise the transferred assets in their entirety in its balance sheet. The amount repayable under the factoring agreement
is presented as secured borrowing. The Group considers that the held to collect business model remains appropriate for these
receivables and hence continues measuring them at amortised cost.
During the current period $50,000 (2020: $25,000) of preference shares in Kepler SignalTek Limited were redeemed, with an
additional repayment of $14,000 (2020: nil) accrued interest received. The remaining preference shares are expected to be
redeemed by April 2022. As at the balance sheet date the Group has no further commitments (2020: nil).
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
In the prior period, upon adoption of IFRS 16 ‘Leases’ an investment in finance lease asset was recognised in relation to the
sublease of a vacant property in North America. The sublease payments match the payments under the head lease. Interest
income of $99,000 (2020: $116,000) (note 5) and interest expense of $99,000 (2020: $116,000) (included within note 6) have been
recognised in relation to the movement during the period. A corresponding lease liability was recognised in relation to the
payments due under the head lease.
One (2020: one) of the Group’s customers individually accounts for more than 10% of total Group revenue. The largest customer
operates in the medical sector and accounts for 15% (2020: 17%) of total Group revenue. Other than this customer, the Group has
no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
At 4 April 2021, the largest customer represented 7% of the net trade receivables (2020: 14%).
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FINANCIALS
18. Trade and other receivables continued
The average credit period taken on sales of goods is 75 days (2020: 58 days). An allowance has been made for estimated
irrecoverable amounts from the sale of goods. This allowance has been determined by reference to the expected credit loss
which includes consideration of past default experience, an analysis of the counterparty’s current financial position, the current
economic environment and potential losses.
Included in trade receivables are receivables with a carrying value of $8,714,000 (2020: $6,638,000) for the Group which are past
due at the reporting date for which no provision has been made as there has not been a significant change in credit quality
and the amounts are still considered recoverable. The Group does not hold any collateral over these balances.
Ageing of past due but not impaired receivables
0–60 days
60–90 days
90–120 days
120+ days
Movement in the allowance for doubtful debts
Balance at the beginning of the period
Amounts acquired on business combination
Amounts written off during the period
Amounts recovered during the period
Increase/(decrease) in allowance recognised in profit or loss
Exchange differences
Balance at the end of the period
2021
$’000
8,095
392
119
108
2020
$’000
6,215
301
101
21
8,714
6,638
2021
$’000
1,440
549
(31)
–
(56)
(9)
2020
$’000
654
–
(25)
1
874
(64)
1,893
1,440
In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. With the exception of the one customer noted
above (2020: one customer), the concentration of credit risk is limited due to the customer base being large and unrelated.
Given the economic uncertainty associated with Covid-19, the Directors have considered the impact upon IFRS 9 and the
Group’s provision matrix. After consideration of historical loss rates, the movement in credit scores observed for a range of
customers and the receivables acquired with DE-KA, the expected credit loss provision has been increased to $1,007,000 (2020:
$841,000).
Ageing of impaired trade receivables
Current
0–60 days
60–90 days
90–120 days
120+ days
2021
$’000
2020
$’000
762
647
74
132
278
646
249
29
85
431
1,893
1,440
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
19. Borrowings and lease liabilities
Unsecured borrowings at amortised cost
Bank overdrafts
Secured borrowings at amortised cost
Bank loans
Lease liabilities
Total borrowings at amortised cost
Amount due for settlement within 12 months
Amount due for settlement after 12 months
2021
$’000
2020
$’000
–
146
43,794
20,021
63,815
14,123
49,692
63,815
79
10,883
11,108
3,723
7,385
11,108
Of the bank loans, $6,736,000 relate to factored receivables (see note 18) and $2,864,000 of loans acquired as part of the
acquisition of DE-KA. Due to Covid-19 uncertainty in the period, the Group’s North American operations applied for PPP
(‘Paycheck Protection Program’) support loans in North America which totalled $2,584,000. The remaining bank loans and
overdrafts are secured by a floating charge over the assets of key subsidiaries of Volex Plc. Subsequent to the year end, the PPP
loans were forgiven (see note 33 for further details).
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements (see note 15)
revert to the lessor in the event of default.
At 4 April 2021 debt issue costs of $1,073,000 are included within bank loans. At 5 April 2020 debt issue costs of $510,000 were
included within the bank overdraft balance shown above.
The total cash outflow for leases is $4,365,000 (2020: $3,703,000) comprising lease repayments of $3,681,000 (2020: $3,150,000)
and $684,000 (2020: $553,000) of interest on lease. Interest on leases liabilities is shown in note 6 and the maturity of lease
liabilities is shown in note 30.
The Group has outstanding commitments under short-term and low-value leases which fall due as follows:
In less than one year
The weighted average interest rates paid on the Group’s borrowings during the period were as follows:
Bank loans and overdrafts
2021
USD
457
2021
%
1.6
2020
USD
105
2020
%
4.6
The Group started the period with a $30,000,000 multi-currency combined revolving overdraft and guarantee facility. The
syndicate comprised Lloyds Bank plc and HSBC UK Bank plc. The facility included an additional $10,000,000 uncommitted
‘accordion’ feature to provide further capacity for potential future acquisitions. The facility was secured by fixed and floating
charges over the assets of certain Group companies. At the prior period end the amount available under the facility was
$30,000,000.
On 12 November 2020 the Group signed a new, three-year $70,000,000 multi-currency revolving credit facility to replace the
existing $30,000,000 credit facility. The facility consists of a $70,000,000 committed facility with a $30,000,000 accordion
feature. The syndicate comprised HSBC UK Bank plc, J.P. Morgan Securities PLC and Citibank, N.A. London branch. As part of
the Group’s new banking facility there are floating charges over certain subsidiaries and their assets. As at the year end these
totalled $192,269,000.
The terms of the facility require the Group to perform quarterly financial covenant calculations with respect to leverage
(adjusted total debt to adjusted rolling 12-month EBITDA) and interest cover (adjusted rolling 12-month EBITDA to adjusted
rolling 12-month interest). Breach of these covenants could result in cancellation of the facility. The Group was compliant with
these covenants during the period and remains compliant in the period subsequent to the period end.
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FINANCIALS
19. Borrowings and lease liabilities continued
During the period, professional fees of $1,143,000 were incurred in relation to the new banking facility. Of this, $525,000 was paid
to the syndicate. The $1,143,000 was capitalised and is being charged to the income statement on a straight-line basis over the
facility term. Capitalised fees related to the previous facility were written off.
During the prior period, professional fees of $659,000 were incurred in relation to the three-year extension of the facility. Of
this, $225,000 was paid to the syndicate to agree to the extension. The $659,000 was capitalised and was being charged to the
income statement on a straight-line basis over the facility term. Due to the refinancing that occurred in November 2020 the
remaining debt issue costs associated to this facility were written off during the current period (see note 6).
At 4 April 2021, the facility incurred interest at a margin of 2.3% (2020: 2.3%) above LIBOR.
The Group has guarantees and letters of credit amounting to $286,000 (2020: $270,000) which are not included above. These
are currently in the process of being transferred to the Group’s new banking facility from the previous lenders.
Drawings under the facilities were made in various currencies. Total borrowings for the Group at 4 April 2021 can be analysed by
currency as follows:
USD
Euro
Pound sterling
Less: debt issue costs (note 26)
2021
$’000
24,084
20,783
–
44,867
(1,073)
43,794
2020
$’000
735
–
–
735
(510)
225
Undrawn borrowing facilities
At 4 April 2021, the Group had undrawn committed borrowing facilities available of $37,317,000 (2020: $29,730,000).
20. Trade and other payables
Trade payables
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
Due for settlement within 12 months
Due for settlement after 12 months
2021
$’000
2020
$’000
72,137
39,653
4,035
61,442
65,477
56,393
9,084
65,477
3,934
35,089
39,023
38,453
570
39,023
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Directors
consider that the carrying amount of trade and other payables approximates to their fair value.
Included in accruals and deferred income is $21,970,000 (2020: $3,617,000) relating to deferred and contingent consideration for
acquisitions.
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
21. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the
current and prior reporting periods.
Unremitted
earnings
$’000
Intangible
assets
$’000
Trading
losses
$’000
Accelerated
tax
depreciation
$’000
Other short
term timing
differences
$’000
Share-
based
payments
$’000
At 31 March 2019
Acquisitions
(Charge)/credit to income
statement
Exchange differences
At 5 April 2020
Acquisitions
Credit to income statement
Credit to other
comprehensive income
Credit directly to equity
Exchange differences
(2,762)
–
(100)
–
(2,862)
–
1,729
–
–
8
(1,024)
(2,205)
634
243
(2,352)
(5,858)
824
–
–
56
At 4 April 2021
(1,125)
(7,330)
3,403
–
1,130
–
4,533
–
3,963
–
–
108
8,604
194
(455)
(83)
(5)
(349)
(1,393)
2,316
–
–
27
601
13
50
2,919
(273)
2,709
534
3,957
516
–
90
7,806
–
–
1,156
(10)
1,146
–
368
–
3,976
76
5,566
Total
$’000
(176)
(2,610)
5,655
(45)
2,825
(6,717)
13,157
516
3,976
365
14,122
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for financial reporting purposes:
Deferred tax assets
Deferred tax liabilities
2021
$’000
21,967
(7,845)
14,122
2020
$’000
8,955
(6,130)
2,825
At the balance sheet date, the Group had unused tax losses of $120,772,000 (2020: $126,303,000) available for offset against
future profits. No deferred tax asset has been recognised in respect of $80,143,000 (2020: $107,239,000) of these losses.
Included in the unrecognised tax losses are losses of $10,865,000 (2020: $14,262,000) that cannot be carried forward indefinitely.
Of this amount, $1,072,000 (2020: $9,286,000) expires during the next five accounting periods. Other losses may be carried
forward to future periods.
The carrying amount of deferred tax assets is reviewed at each reporting date and recognised to the extent that it is probable
that there are sufficient taxable profits to allow all or part to be recovered. Deferred tax assets have been recognised based on
future forecast taxable profits.
The recognised deferred tax asset of $21,967,000 (2020: $8,955,000) consists of $8,604,000 (2020: $4,533,000) tax losses,
$5,565,000 (2020: $1,139,000) share options, $2,357,000 (2020: nil) fixed assets, $7,231,000 (2020: $2,658,000) short term timing
items, and ($1,781,000) (2020: $625,000) intangible assets. The Group expects $6,155,000 (2020: $2,787,000) of the deferred tax
assets and $1,096,000 (2020: $1,391,000) of the deferred tax liabilities (after offset) to be recovered within the next 12 months.
At the reporting date, a deferred tax liability of $1,125,000 (2020: $2,862,000) has been recognised relating to the unremitted
earnings of overseas subsidiaries. No deferred tax liability is recognised on temporary differences of $42,571,000 (2020:
$7,168,000) on unremitted earnings of subsidiaries as the Group is able to control the reversal of these temporary differences
and it is probable that they will not reverse in the foreseeable future. The temporary differences represent only the unremitted
earnings of those overseas subsidiaries where remittance to the UK of those earnings may still result in a tax liability, principally
as a result of dividend withholding taxes levied by the overseas tax jurisdictions in which those subsidiaries operate.
On 3 March 2021 the UK Government announced changes to the UK corporate tax system and an increase in tax rate from
the fiscal year 2023 to 25% from the currently enacted rate of 19%. The change in tax rate will result in an estimated increase of
$1,720,000 to the deferred tax asset held in respect of the Group’s UK operations and may impact the Group’s effective tax rate
in future years.
As at 4 April 2021, the 19% UK corporate tax rate has been applied in the measurement of the Group’s UK deferred tax assets
and liabilities.
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FINANCIALS
Property
$’000
Corporate
restructuring
$’000
Other
$’000
Total
$’000
487
(248)
239
63
–
(5)
297
(100)
–
–
8
205
50
155
63
–
63
–
–
(7)
56
–
–
–
6
62
62
–
889
–
889
405
(276)
(21)
997
847
(132)
12
98
1,822
1,689
133
1,439
(248)
1,191
468
(276)
(33)
1,350
747
(132)
12
112
2,089
1,801
288
22. Provisions
At 1 April 2019
Reclassification for lease liabilities (IFRS 16)
Adjusted balance at 1 April 2019
Charge in the period
Utilisation of provision
Exchange differences
At 5 April 2020
Charge in the period
Utilisation of provision
Amounts acquired on business combination
Exchange differences
At 4 April 2021
Current liabilities
Non-current liabilities
Property provisions
In the prior year, upon the adoption of IFRS 16 (‘Leases’), the Group used the practical expedient to allow the closing of onerous
lease provision identified on acquisition of MC Electronics LLC of $248,000 to be offset against the right-of-use asset on
transition.
Other
Other provisions include the Directors’ best estimate, based upon past experience, of the Group’s liability under specific
product warranties and legal claims. The timing of the cash outflows with respect to these claims is uncertain. During the
period the Group recognised a provision of $650,000 to cover potential costs of recall or warranty claims for products which are
in the field but where a specific issue has not been reported.
Included within this provision is a $359,000 liability associated with a pending legal case which was recognised upon
acquisition of MC Electronics LLC. This liability represents the Directors’ best estimate to settle the claim which had been
identified prior to acquisition. An indemnity in respect of this matter was obtained from the seller of MC Electronics LLC as part
of the sale and purchase agreement.
Also included is $300,000 for the expected legal costs associated with a pending legal case in Canada. The case is in the early
stages and based on the evidence available, in the view of the Directors it is not probable that the case will result in the material
outflow of economic benefits for the Group, therefore no further provision has been recognised beyond the legal costs.
23. Share capital
At 31 March 2019
Acquisition of Servatron
Issue of deferred bonus shares
Acquisition of Servatron – contingent consideration
Options exercised
At 5 April 2020
Issue of deferred bonus shares
Acquisition of DE-KA
Acquisition of Servatron – contingent consideration
At 4 April 2021
Number of
shares
Par
value
$’000
Share
premium
$’000
147,367,933
58,792
2,233,712
266,794
1,481,239
469,084
692
82
473
150
44,532
1,882
–
–
–
Total
$’000
103,324
2,574
82
473
150
151,818,762
60,189
46,414
106,603
432,040
3,320,000
1,481,239
133
1,139
508
–
14,442
–
133
15,581
508
157,052,041
61,969
60,856
122,825
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
23. Share capital continued
During the current and prior year the Group issued shares to satisfy the requirement of share awards, deferred bonus awards
and fund acquisitions. During the current year the movements were as follows:
▷ Issued 432,040 shares under the 2019 deferred share bonus plan.
▷ Issued 3,320,000 shares as part of the initial consideration for the acquisition of DE-KA.
▷ Issued 1,481,239 shares to the former owners of Servatron as the business met the required operating profit targets set out
in the acquisition agreement.
The prior year movements were:
▷ Issued 2,233,712 shares as part of the initial consideration for the acquisition of Servatron.
▷ Issued 266,794 shares under the 2018 deferred share bonus plan.
▷ Issued 1,481,239 shares to the former owners of Servatron as the business met the required operating profit targets set out
in the acquisition agreement.
▷ Issued 469,084 shares under the share incentive scheme agreed as part of the acquisition of Servatron.
Under the terms of the Group’s various share schemes, the following rights to subscribe for Ordinary shares are outstanding:
Date of grant
Performance Share Plan
31 March 2016
1 December 2016
1 December 2017
11 December 2018
24 March 2019
Long Term incentive Plan
10 September 2019
1 December 2019
11 December 2020
Acquisition Retention Awards
11 December 2018
31 July 2019
31 July 2019
Deferred Bonus Plan
11 June 2019
16 June 2020
25
25
25
25
25
–
–
–
–
–
–
–
–
Option price
(p)
Exercise period
March 2019 – March 2026
December 2019 – December 2026
December 2020 – December 2027
December 2021 – December 2028
March 2022 – March 2029
Number of shares
2021
2020
227,461
503,921
271,626
903,155
995,000
2,525,000
1,840,000
2,230,000
300,000
300,000
September 2022 – September 2029
2,370,000
3,050,000
December 2022 – December 2029
December 2023 – December 2030
457,500
961,000
482,500
–
June 2019 – June 2022
March 2020 – March 2027
March 2021
June 2020
June 2021
2,666,667
3,333,333
2,000,000
2,000,000
–
–
202,097
1,481,239
432,040
–
12,523,646
17,008,893
For further details of the Group’s share option schemes, see note 28.
Under the FY2021 deferred share bonus plan, shares will be awarded to the executive management team in lieu of a cash
bonus. These will be issued in accordance with the terms of the deferred share bonus plan.
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24. Own shares and non-distributable reserves
Own shares
At the beginning of the period
Sale of shares
Purchase of shares
At end of the period
FINANCIALS
2021
$’000
1,024
(1,726)
3,959
3,257
2020
$’000
1,890
(2,630)
1,764
1,024
The own shares reserve represents both the cost of shares in the Company purchased in the market and the nominal share
capital of shares in the Company issued to the Volex Group plc Employee Share Trust to satisfy future share option exercises
under the Group’s share option schemes (see note 28).
The number of Ordinary shares held by the Volex Group plc Employee Share Trust at 4 April 2021 was 931,577 (2020: 456,576).
The market value of the shares as at 4 April 2021 was $4,437,000 (2020: $592,000).
Unless and until the Company notifies a trustee of the Volex Group plc Employee Share Trust, in respect to shares held in the
Trust in which a beneficial interest has not vested, rights to dividends in respect to the shares held in the Trust are waived.
During the year, 625,000 (2020: 2,652,701) shares were utilised on the exercise of share awards. During the year, the Company
purchased 1,100,001 shares (2020: 950,000) at a cost of $3,959,000 ($1,764,000).
In December 2013, the Volex Group plc Employee Share Trust sold 3,378,582 shares at £1.16 per share to the open market. The
average price of shares held by the Trust at the time was £0.70 with a number of the shares having been issued by Volex plc to
the Trust at nominal value. In accordance with the Accounting Standards, the difference between the sales price of £1.16 and
the average share price of £0.70 was recorded as a non-distributable reserve, giving rise to the $2,455,000 non-distributable
reserve balance.
25. Dividends
Dividends
Declared during the financial period:
Final dividend for the period ended 5 April 2020: 2p per share
Interim dividend for the period ended 4 April 2021: 1.1p per share (2020: 1p per share)
2021
$’000
2020
$’000
3,791
2,225
6,016
–
1,956
1,956
Proposed after the end of the year and not recognised as a liability
Final dividend for the period ended 4 April 2021: 2.2p per share (2020: 2p per share)
4,754
3,702
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
26. Analysis of net (debt)/funds
At 31 March 2019
Business combination
Cash flow
New leases entered into during the year
Lease interest
Exchange differences
Amortisation of debt issue costs
At 5 April 2020
Business combination
Cash flow
New leases entered into during the year
Lease interest
Exchange differences
Amortisation of debt issue costs
Cash
and cash
equivalents
$’000
20,593
(5,771)
17,107
–
–
(280)
–
31,649
6,401
Bank
loans
$’000
–
(135)
56
–
–
–
–
(79)
(4,411)
(2,760)
(34,076)
–
–
1,261
–
–
–
435
–
Factoring
$’000
Lease
liability
$’000
Debt issue
costs
$’000
–
–
–
–
–
–
–
–
(6,476)
(469)
–
–
209
–
(5,777)
(4,380)
3,703
(4,445)
(553)
569
–
(10,883)
(9,261)
4,365
(3,487)
(684)
(71)
–
97
–
659
–
–
(8)
(238)
510
–
1,143
–
–
101
(681)
Total
$’000
14,913
(10,286)
21,525
(4,445)
(553)
281
(238)
21,197
(13,747)
(31,797)
(3,487)
(684)
1,935
(681)
At 4 April 2021
36,551
(38,131)
(6,736)
(20,021)
1,073
(27,264)
Debt issue costs relate to bank facility arrangement fees. During the year, $1,143,000 of professional fees were capitalised in
relation to the new banking facility. The resulting debt issue cost of the new facility are being amortised over the life of the
facility. During the prior year, $659,000 was capitalised related to the extension of the previous facility. This resulted in a write-off
of $413,000 during the current period (see note 6).
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27. Notes to the statement of cash flows
Profit for the period
Adjustments for:
Finance income
Finance costs
Income tax (credit)/expense
Share of net profit from associates
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment of right-of-use assets
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Share-based payment charge
Fair value adjustment to derivatives
Decrease in provisions
Effects of foreign exchange rate changes
Operating cash flow before movement in working capital
Increase in inventories
(Increase)/decrease in receivables
Increase in payables
Movement in working capital
Cash generated from operations
Cash generated from operations before adjusting operating items
Cash utilised by adjusting operating items
Taxation paid
Interest paid
Net cash generated from operating activities
Cash and cash equivalents
Cash and bank balances
Bank overdrafts
FINANCIALS
2021
$’000
2020
$’000
38,887
14,696
(310)
2,485
(9,518)
(827)
4,613
3,172
–
5,304
135
6,629
(225)
(293)
–
50,052
(12,240)
(16,996)
21,626
(7,610)
42,442
42,809
(367)
(3,116)
(631)
38,695
2021
$’000
36,551
–
36,551
(328)
1,552
1,165
–
3,643
2,714
65
5,749
838
8,737
–
(1,090)
5
37,746
(2,943)
20,499
2,041
19,597
57,343
58,749
(1,406)
(5,135)
(473)
51,735
2020
$’000
32,305
(656)
31,649
Cash and cash equivalents comprise cash held by the Group, short-term bank deposits with an original maturity of three
months or less and bank overdrafts. The carrying amount of these assets approximates their fair value. Included within cash
and cash equivalents is $2,000 (2020: $1,071,000) held in trust which can only be used for Volex employees.
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
28. Share-based payments
The Group has four equity-settled share-based payment arrangements in operation.
Long Term Incentive Plan (‘LTIP’)
The LTIP is a discretionary long-term incentive scheme for Executive Directors and senior managers introduced during the prior
year. It provides for the award of nominal value options which vest after at least three years, subject to performance conditions.
Options issued under the LTIP are exercisable between three and ten years from the date of grant, subject to the continued
employment of the participant and achievement of performance targets. All awards under the LTIP are nil cost. Full details of
how the scheme operates are explained on page 82 of the Remuneration Committee Report.
Performance Share Plan (‘PSP’)
The PSP scheme expired during the prior year and was replaced with the Long Term Incentive Plan (‘LTIP’). The PSP is a
discretionary long-term incentive scheme for Executive Directors and senior managers. It provides for the award of nominal
value options which vest after at least three years, subject to performance conditions. Options issued under the PSP are
exercisable between three and ten years from the date of grant, subject to the continued employment of the participant and
achievement of performance targets. All awards under the PSP have an exercise price of 25p, which is equivalent to the nominal
value of the underlying Ordinary shares. Details of how the scheme operates are explained on page 81 of the Remuneration
Committee Report.
Deferred Bonus Plan (‘DBP’)
The DBP is for the executive management team. A percentage of any cash bonus is deferred to shares and held in trust for
a period which is determined by the Remuneration Committee. The percentage of any cash bonus to be deferred is at the
discretion of the Remuneration Committee. The only vesting condition is continuing employment.
Acquisition Retention Awards (‘ARA’)
The ARA are used to incentivise and retain key employees in acquired businesses who are deemed to deliver a significant
contribution to the integration of the acquired business into the Group and have an important role in the continuing success of
the acquired business. These awards have vesting periods that are determined by the specific circumstances of the acquisition
and vest based on continued employment as well as performance measures that relate to the performance of the Group or the
acquired business. Awards consist of shares or the right to acquire shares for a nominal value.
Details of the share awards outstanding and the weighted average exercise price of those awards are as follows:
Outstanding at 1 April 2019
Granted during the period
Exercised during the period
Lapsed during the period
PSP
Number
LTIP
Number
DBP
Number
ARA
Number
Total
Number
10,112,658
–
266,794
4,000,000
14,379,452
300,000
3,532,500
432,040
5,962,478
10,227,018
(3,878,781)
(304,096)
–
–
(266,794)
(3,147,906)
(7,293,481)
–
–
(304,096)
Outstanding at 5 April 2020
6,229,781
3,532,500
432,040
6,814,572
17,008,893
Exercisable at the 5 April 2020
1,174,781
–
–
–
1,174,781
Outstanding at 6 April 2020
6,229,781
3,532,500
432,040
6,814,572
17,008,893
Granted during the period
–
976,000
316,083
–
1,292,083
Exercised during the period
(1,740,066)
–
(432,040)
(2,147,905)
(4,320,011)
Lapsed during the period
(623,333)
(720,000)
(113,986)
–
(1,457,319)
Outstanding at 4 April 2021
3,866,382
3,788,500
202,097
4,666,667
12,523,646
Exercisable at the 4 April 2021
1,726,382
–
–
–
1,726,382
Weighted
average
exercise
price (p)
18
0
(9)
(25)
14
25
14
0
(10)
(11)
7
25
Included within the LTIP awards are 3,010,000 options awarded to Directors and senior leadership which are subject to an
additional multiplier effect whereby the awards can double depending upon the performance of the Volex share price relative
to peers. Full details of how the scheme operates are explained on page 74 of the Remuneration Committee Report. Of the
share awards that lapsed during the period, 1,457,319 (2020: 25,000) lapsed in respect of leavers and nil (2020: 279,096) lapsed
due to failure to meet performance conditions.
The awards outstanding at 4 April 2021 had a weighted average remaining contractual life of eight years (2020: nine years).
Of the 12,523,646 awards outstanding at 4 April 2021, 3,866,382 had an exercise price of £0.25 and 8,657,264 had an exercise price
of £nil.
Of the 17,008,893 awards outstanding at 5 April 2020, 6,229,781 had an exercise price of £0.25 and 10,779,112 had an exercise price
of £nil.
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FINANCIALS
28. Share-based payments continued
The aggregate of the estimated fair values of the options granted during the period was $5,538,000 (2020: $11,282,000).
Of the awards granted during the period, 316,083 were deferred bonus plan awards with an exercise price of £nil, a service
period of one year and no performance conditions. The remaining 976,000 awards were performance share plan awards
with a nil exercise price, a service period of three years and performance conditions based on the business performance and
shareholder return.
The Group settled certain awards in cash during the period due to specific circumstances deemed appropriate by the
remuneration committee. The group’s intention is that all share-based payment awards will be equity settled going forward.
The nature of the awards has not changed in the period.
The fair value of awards granted in the period was calculated at the date of grant using a Monte Carlo binomial model or a
Black–Scholes model, depending on the vesting criteria of each award. Market-based performance conditions are taken into
account in the calculation of the fair values. Valuation model inputs were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life (years)
Risk-free rate
Expected dividends
2021
LTIP
£3.09
£nil
50%
3
-0.08%
1%
2020
LTIP
£0.95
£nil
33%
3.5
0.5%
2.7%
Expected volatility was determined with reference to historical volatility of the Group’s share price over the previous three
years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
During the prior year, the ARA awards on 31 July 2019 were valued at their market price on the day of grant, adjusted for the
expected dividend yield. The DBP awards were valued at their market price on the day of grant, being £0.80 on 5 June 2018.
During the period, the total expense recognised for share-based payment arrangements was as follows:
PSP
LTIP
DBP
ARA
Share-based payment charge
Employers’ tax charge in relation to share awards
2021
$’000
646
1,331
412
2,609
4,998
1,631
6,629
2020
$’000
1,424
607
445
5,577
8,053
684
8,737
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
29. Retirement benefit obligations
Defined contribution schemes
The Group operates a number of defined contribution pension schemes. Contributions to the defined contribution schemes
are charged to the income statement as they fall due. The Group has no further obligations once the contributions have been
made.
The total cost charged to the Group’s income statement in the period was $451,000 (2020: $317,000).
Defined benefit schemes
The Group operates three defined benefit plans.
Volex Executive Pension Scheme
Volex plc (the Company) operates a defined benefit pension arrangement called the Volex Executive Pension Scheme (the
Scheme). The Scheme provides benefits based on final salary and length of service on retirement, leaving service or death.
The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried
out at least once every three years to determine whether the Statutory Funding Objective is met. As part of the process the
Company must agree with the Trustees of the Scheme the contributions to be paid to meet the Statutory Funding Objective.
The future contributions required to meet the Statutory Funding Objective do not currently affect the balance sheet of the
Scheme in these financial statements.
The most recent comprehensive actuarial valuation of the Scheme was carried out as at 31 July 2019 and the next valuation of
the Scheme is due as at 31 July 2022. In the event that the valuation reveals a larger deficit than expected, the Company may
be required to increase contributions above those set out in the existing Schedule of Contributions. Conversely, if the position is
better than expected, it’s possible that contributions may be reduced.
In accordance with the Schedule of Contributions dated September 2020 the Company has agreed to pay contributions of
£803,300 p.a. (payable in quarterly instalments) over the period to 3 April 2022.
The Scheme is managed by a Trustee Company, the board of which is appointed in part by the Company and in part from
elections by members of the Scheme. The Trustees have responsibility for obtaining valuations of the fund, administering
benefit payments and investing the Scheme’s assets. The Trustee delegates some of these functions to their professional
advisers where appropriate.
The Scheme exposes the Company to a number of risks:
▷ Investment risk. The Scheme holds investments in asset classes, such as equities, which have volatile market values and
while these assets are expected to provide the real returns over the long-term, the short-term volatility can cause additional
funding to be required if the deficit increases.
▷ Interest rate risk. The Scheme’s liabilities are assessed using market yields on high quality corporate bonds to discount the
liabilities. As the Scheme holds assets such as equities, the value of the assets and liabilities may not move in the same way.
▷ Inflation risk. A significant proportion of the benefits under the Scheme are linked to inflation. Although the Scheme’s
assets are expected to provide a good hedge against inflation over the long term, movements over the short term could
lead to deficits emerging.
There were no plan amendments, curtailments or settlements during the period. A prior service cost has been recognised in
respect of uplifts to historic transfer values in respect of GMP equalisation.
The key assumptions utilised are:
Discount rate
Future pension increases
Inflation assumption (RPI)
Inflation assumption (CPI)
Valuation at
2021
1.9%
3.0%
3.6%
3.1%
2020
2.1%
2.2%
3.0%
2.2%
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29. Retirement benefit obligations continued
The following mortality assumptions have been made:
Future life expectancy for a pensioner currently aged 65
– Male
– Female
Future life expectancy at age 65 for a non-pensioner currently aged 55
– Male
– Female
FINANCIALS
2021
Years
2020
Years
22.5
24.1
23.1
24.8
22.5
24.0
23.0
24.7
Significant actuarial assumptions for the determination of the defined benefit obligations are the discount rate, inflation and
life expectancy. The sensitivity analysis below has been determined based on reasonably possible changes of the assumptions
occurring at the end of the reporting period, assuming that all other assumptions are held constant:
Assumption
Discount rate
Inflation
Life expectancy
Change in assumption
Impact on scheme liabilities
Increase/decrease by 0.5%
Increase/decrease by 0.5%
Increase/decrease by 1 year
($1,487,000)/$1,659,000
$1,092,000/($1,095,000)
$1,118,000/($1,150,000)
In reality one might expect interrelationships between the assumptions, especially between discount rate and inflation. The
above analysis does not take the effect of these interrelationships into account.
Amounts recognised in income statement
Interest cost
Expected return on scheme assets
Finance costs (note 6)
Past service costs (note 4)
Total charge to the Income statement
2021
$’000
2020
$’000
(361)
315
(46)
(137)
(183)
(476)
429
(47)
–
(47)
In 2019 the Group recognised a pension past service cost of $480,000 in adjusting items as a result of Guaranteed Minimum
Pension (GMP) equalisation following a legal judgement requiring all pension schemes conduct an equalisation of male
and female members’ benefits for the effect of unequal GMPs. The additional cost of $137,000 in 2021 arises as a result of a
further legal judgement which confirmed there was also an obligation to pay additional amounts where certain past transfer
payments had not been equalised for the effects of GMPs.
No other amounts have been recognised in the income statement in the current or prior year.
An actuarial loss of $1,052,000 (2020: $1,343,000) has been reported in the statement of comprehensive income.
Cumulative actuarial losses recognised in equity
At the beginning of the period
Net actuarial losses recognised in the period
At the end of the period
2021
$’000
(3,876)
(1,052)
(4,928)
2020
$’000
(2,533)
(1,343)
(3,876)
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FINANCIALS
Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
29. Retirement benefit obligations continued
Amounts recognised in the statement of financial position
Fair value of scheme assets
Present value of defined benefit obligations
Deficit in scheme recognised in the statement of financial position
Current liabilities
Non-current liabilities
2021
$’000
18,819
(21,996)
(3,177)
(1,110)
(2,067)
(3,177)
2020
$’000
15,887
(18,585)
(2,698)
(982)
(1,716)
(2,698)
The Group has contributed $1,030,000 to the defined benefit pension plan in the period ended 4 April 2021 (2020: $994,000).
Movements in the present value of defined benefit obligations
At the beginning of the period
Interest cost
Past service costs
Loss from changes to demographic assumptions
Experience loss on liabilities
Remeasurement loss
Benefits paid
Foreign exchange
At the end of the period
Movements in the fair value of scheme assets
At the beginning of the period
Interest on assets
Actuarial gains/(losses)
Contributions from the sponsoring company
Benefits paid
Foreign exchange
At the end of the period
Assets
Asset category
Target return assets1
Corporate Bonds2
Liability Driven Investments1
Cash
Total
2021
$’000
(18,585)
(361)
(137)
–
(170)
(2,627)
2,221
(2,337)
(21,996)
2021
$’000
15,887
315
1,746
1,030
(2,221)
2,062
18,819
2021
$’000
10,415
5,492
2,171
741
18,819
2020
$’000
(20,413)
(476)
–
(428)
(469)
(201)
2,213
1,189
(18,585)
2020
$’000
17,978
429
(245)
994
(2,213)
(1,056)
15,887
2020
$’000
7,793
4,544
2,386
1,164
15,887
1.
Targeted return and LDI - Dynamic Diversified Growth Fund and the Liability Driven Investment fund are pooled investment vehicles whereby
the Scheme purchases units in that fund. The funds invest in a variety of assets including quoted/listed stocks and shares and bonds, which
are valued by the investment manager using the latest available prices. The Scheme itself is not directly the owner of these underlying assets.
2. Corporate bonds - This is also a pooled investment vehicle whereby the Scheme purchases units of the fund. The fund invests in UK investment
grade corporate bonds with maturities in excess of 10 years. The fund is valued by the investment manager using the latest available prices and
is benchmarked against the iBoxx Sterling Non-Gilts Over 10 Year Index. The Scheme itself is not directly the owner of these underlying assets.
None of the fair values of the assets shown above include any of the Company’s own financial instruments or any property
occupied or other assets used by the Company (2020: nil).
The actual return on scheme assets for the period was a gain of $2,061,000 (2020: a gain of $184,000).
The estimated amount of contributions expected to be paid to the Scheme during the 52 weeks to 3 April 2022 is $1,110,000
(2021: $982,000).
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29. Retirement benefit obligations continued
Overseas schemes
In Indonesia, the Group operates an unfunded defined benefit scheme. The scheme requires continuous employment with a
lump sum payable upon retirement. The actuarial liability as at 4 April 2021 has been calculated as $837,000 (2020: $776,000) by
an external actuary.
De-Ka Elektroteknik Sanayi ve Ticaret A.Ş. also operates an unfunded defined benefit scheme. The scheme requires continuous
employment with a lump sum payable upon retirement. The actuarial liability as at 4 April 2021 has been calculated as
$1,196,000 (2020: nil) by an external actuary.
30. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising
the return to shareholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash
equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as
contained in the statement of changes in equity.
The Board reviews the capital structure on a regular basis, including facility headroom, forecast working capital and capital
expenditure requirements.
Following the refinancing in November 2020, the Group has a multi-currency revolving credit facility (‘RCF’), which had an
available limit of $70,000,000 as at 4 April 2021 (2020: $30,000,000). At this date, term loans of $32,684,000 were drawn down
under this facility (2020: nil). As part of the new RCF, the Group is currently in the process of setting up a new cash pool facility
which is denominated in a variety of currencies. At 4 April 2021, there was no operational cashpool (2020: net overdraft position
of $10,065,000). The average combined utilisation of the cashpool during the period was $nil (2020: $2,734,000). The RCF expires
on 12 November 2023.
Included in note 19 is a description of undrawn facilities as at the reporting date.
The terms of the RCF require the Group to perform quarterly financial covenant calculations with respect to leverage (adjusted
total debt to adjusted rolling 12-month EBITDA) and interest cover (adjusted rolling 12-month EBITDA to adjusted rolling
12-month interest). Breach of these covenants could result in cancellation of the facility. The Group was compliant with these
covenants during the year and has continued to operate within these covenants in the period from 4 April 2021 to the date of
issue of these financial statements.
The Board is therefore confident that the combination of the above facility and the cash on hand at the end of the year
provides adequate liquidity headroom for the successful execution of the Group’s operations.
The Group is not subject to externally imposed capital requirements.
Financial instruments
The Group’s principal financial instruments comprise bank borrowings and overdrafts, cash and short-term deposits, trade and
other receivables and trade and other payables. The Group also enters into derivative transactions, principally forward copper
contracts to manage the commodity price risk arising from its operations and forward currency contracts to manage the
currency risks arising from its operations.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
30. Financial instruments continued
Set out below is a comparison by category of carrying amounts and fair values of all the Group’s financial instruments that are
carried in the financial statements. Except as detailed below, the Directors consider that the carrying amounts of the financial
assets and financial liabilities recorded at amortised cost approximate their fair values.
Financial assets – loans and receivables
Cash
Trade and other receivables
Financial liabilities – amortised cost
Interest-bearing loans and borrowings
Lease liabilities
Trade and other payables
Book value
2021
$’000
Book value
2020
$’000
Fair value
2021
$’000
Fair value
2020
$’000
36,551
104,167
32,305
59,656
36,551
104,167
32,305
59,656
(43,794)
(20,021)
(225)
(44,867)
(10,883)
(20,021)
(129,872)
(66,824)
(129,872)
(735)
(10,883)
(66,824)
Financial derivatives for which hedge accounting has been applied
Derivative financial instruments
169
(1,819)
169
(1,819)
Financial derivatives for which hedge accounting has
not been applied
Derivative financial instruments
204
–
204
–
The fair values of the financial derivatives above are categorised within Level 2 of the fair value hierarchy on the basis that their
fair value has been calculated by management using inputs that are observable in active markets which are related to the
individual asset or liability. Included within trade and other payables is contingent consideration which is categorised as Level 3
using inputs that are not based on observable market data.
Financial risk management
Activities related to financing, monitoring and managing the financial risks relating to the operations of the Group are co-
ordinated centrally. These risks include market risk (interest rate risk, currency risk and commodity price risk), credit risk and
liquidity risk.
The Group seeks to minimise these risks by using derivative financial instruments to hedge these risk exposures and external
borrowings denominated in currencies that match the net asset currency profile of the Group. The Board reviews and agrees
policies for managing these risks and they are summarised below. The Group also monitors the market price risk arising from
all financial instruments. It is, and has been throughout the periods under review, the Group’s policy that no trading in financial
instruments shall be undertaken.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in interest rates, foreign currency exchange rates and
copper commodity prices.
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30. Financial instruments continued
Interest rate risk
The Group’s interest rate risk arises principally from borrowings issued at variable rates which expose the Group to cash flow
interest rate risk. During the prior year, the Group invested in 10% cumulative preference shares with its associate, Kepler
SignalTek Limited. The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are
exposed to interest rate risk:
2021
Fixed rate
Within
1 year
$’000
Trade and other receivables
–
Bank loans and borrowings
(2,069)
Floating rate
Cash assets
Bank loans and borrowings
2020
Fixed rate
Trade and other receivables
Bank loans and borrowings
Floating rate
Cash assets
Bank loans and borrowings
36,551
(7,488)
Within
1 year
$’000
–
(79)
32,305
(656)
1–2
years
$’000
2,121
(2,627)
–
–
1–2
years
$’000
1,990
–
–
–
2–3
years
$’000
3–4
years
$’000
4–5
years
$’000
More than
5 years
$’000
–
–
–
(32,683)
2–3
years
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3–4
years
$’000
4–5
years
$’000
More than
5 years
$’000
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’000
2,121
(4,696)
36,551
(40,171)
Total
$’000
1,990
(79)
32,305
(656)
Interest rate and sensitivity
The Group manages its exposure to interest rate risk by maintaining an appropriate mix between fixed and floating rate
borrowings. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the
most cost-effective hedging strategies are applied.
Management regularly reviews the interest rate risk exposure and is currently of the view that the Group should not fix its
interest rate. At 4 April 2021, the Group is exposed to floating rate interest on its RCF borrowings at a margin of 2.3% (31 March
2020: 2.3%) above LIBOR.
Had interest rates been 0.5% higher/0.25% lower in the period, and all other variables were held constant, Group profit before tax
would have been $36,000 lower/$18,000 higher (2020: $12,000 lower/$6,000 higher). A 0.5% increase/0.25% decrease interest rate
sensitivity test has been performed since this represents the Directors’ assessment of a reasonably possible change in interest
rates.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the euro, Chinese renminbi and pound sterling. Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments in foreign operations.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The
Group’s policy is to hedge its related translation exposures through the designation of certain amounts of its foreign currency
denominated debt as a hedging instrument.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
30. Financial instruments continued
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting
date are as follows:
USD
Euro
Chinese renminbi
Pound sterling*
Indian rupee
Other
Liabilities
Assets
2021
$’000
75,934
54,285
24,876
10,934
889
6,513
2020
$’000
34,183
3,662
14,377
9,132
768
6,214
2021
$’000
84,553
40,790
7,474
2,649
249
4,124
2020
$’000
75,885
8,289
3,675
(1,160)
274
3,085
* In 2020, under the RCF, a cash pool facility existed over two entities, denominated in a variety of currencies. At 4 April 2021, there was no
operational cashpool (2020: net cash overdraft position of $10,065,000).
Foreign currency sensitivity
The following table details the Group’s sensitivity to a 10% increase and decrease in US dollar against the relevant foreign
currencies. The 10% rate used represents management’s assessment of the reasonably possible change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes both external loans and
loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of
the lender or the borrower. A 10% change in foreign exchange rate sensitivity test has been performed since this represents the
Directors’ assessment of a reasonably possible change in foreign exchange rates.
Pounds sterling impact
Euro impact
Chinese renminbi impact
2021
$’000
2020
$’000
2021
$’000
2020
$’000
2021
$’000
2020
$’000
10% depreciation of US dollar against
foreign currency
(i) Profit before tax
(ii) Equity*
10% appreciation of US dollar against
foreign currency
(i) Profit before tax
(ii) Equity*
(1,480)
(3,574)
(1,860)
(8,922)
1,335
(3,238)
(668)
2,049
(2,018)
(1,338)
–
–
1,211
2,924
1,522
7,300
(1,093)
2,649
547
(1,676)
1,651
–
1,095
–
iii. The main exposure impacting profit before tax is on Chinese renminbi monetary liabilities in the Group at the reporting date.
iv. This is mainly attributable to changes in the carrying value of intercompany loans for which settlement is not planned and external borrowing
designated as a hedging instrument.
*
Excludes any deferred tax impact.
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30. Financial instruments continued
Copper commodity price risk
Copper price volatility is the single largest commodity price exposure facing the Group. Many of the Group’s products, in
particular power cords used to manufacture the Group’s power products, are manufactured from components that contain
significant amounts of copper. Where possible, the Group will pass on copper price movements to its customers. In order to
mitigate the remaining volatility associated with copper, the Group has entered into arrangements with its key suppliers to
purchase copper. Coupled with these purchases, the Group has entered into a number of contracts with financial institutions
which are linked to the average copper price as published by the London Metal Exchange (‘LME’). These contracts have been
deemed cash flow hedges of forecast future copper purchases. At the reporting date, the open copper contracts are as follows:
Copper cash flow hedges
Contracted copper price
$5,500–$6,000
$6,000–$6,500
$6,500–$7,000
$7,000–$7,500
$7,500–$8,000
$8,000–$8,500
$8,500–$9,000
2021
2020
Contracted
volume
(MT)
Fair value
$’000
Contracted
volume
(MT)
30
85
–
–
–
–
–
200
230
–
–
–
–
–
12
97
Fair value
$’000
(141)
(106)
–
–
–
–
–
240
85
–
–
–
–
–
325
(247)
All contracts expire within 12 months of 4 April 2021.
Liquidity risk
The Group manages liquidity risk by maintaining adequate banking facilities, regular monitoring of forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities. Included in note 19 is a description of undrawn
facilities as at the reporting date.
In addition to the banking facilities available to the Group, the Group has access to a non-recourse invoice discounting facility.
Under the terms of the arrangement, the Group can sell up to $15 million of trade receivables associated with a specific
customer. As at 4 April 2021, the Group had utilised $0.6 million (2020: $0.1 million) of this facility.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
30. Financial instruments continued
The following table analyses the Group’s financial liabilities into relevant maturity groupings to show the timing of cash
flows associated with the financial liabilities from the reporting date to the contracted maturity date. The amounts disclosed
represent the contracted undiscounted cash flows (based on the earliest date on which the Group may be required to pay).
2021
Non-derivative financial liabilities
Trade and other payables
Bank overdrafts and loans
Lease liabilities
Derivative financial liabilities
Copper commodity contracts
Derivative financial instruments
2020
Non-derivative financial liabilities
Trade and other payables
Bank overdrafts and loans
Lease liabilities
Derivative financial liabilities
Copper commodity contracts
Derivative financial instruments
Carrying
amount
$’000
Contractual
cash flows
$’000
Within
1 year
$’000
(129,976)
(131,751)
(121,631)
(43,794)
(44,867)
(20,021)
(23,455)
(9,556)
(4,567)
–
(38)
–
(38)
–
(38)
Carrying
amount
$’000
Contractual
cash flows
$’000
Within
1 year
$’000
1–2
years
$’000
(6,553)
(2,627)
(3,795)
–
–
1–2
years
$’000
2–5
years
$’000
More than
5 years
$’000
(3,567)
(32,684)
(13,119)
–
–
–
–
(1,974)
–
–
2–5
years
$’000
More than
5 years
$’000
(66,824)
(66,824)
(66,570)
(225)
(10,883)
(247)
(1,572)
(734)
(12,910)
(247)
(1,572)
(734)
(3,590)
(247)
(1,572)
(25)
–
(178)
–
(51)
–
(2,633)
(4,740)
(1,947)
–
–
–
–
–
–
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables. Credit risk refers to the risk that
a counterparty will default on its contractual obligations resulting in financial loss to the Group.
Bank and cash balances comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. The carrying amount of these assets approximates to their fair value. The credit risk on these assets is limited
because the counterparties are predominantly financial institutions with investment-grade credit ratings assigned by
international credit rating agencies.
The Group’s credit risk is therefore primarily attributable to its trade receivables. The Group’s customers are predominantly
large blue chip OEMs, contract equipment manufacturers and distributors. The Group regularly reviews the creditworthiness
of significant customers and credit references are sought for major new customers where relevant. The Board recognises that
credit risk is a feature of all businesses, especially international businesses. However, it believes that all reasonable steps to
mitigate any loss are taken.
The net amount of trade receivables reflects the maximum credit exposure to the Group. No other guarantees or security have
been given. For further information on the credit risk associated with trade and other receivables, see note 18.
31. Contingent liabilities
As a global Group, subsidiary companies, in the normal course of business, engage in significant levels of cross-border
trading. The customs, duties and sales tax regulations associated with these transactions are complex and often subject to
interpretation. While the Group places considerable emphasis on compliance with such regulations, including appropriate use
of external legal advisers, full compliance with all customs, duty and sales tax regulations cannot be guaranteed.
Through the normal course of business, the Group provides manufacturing warranties to its customers and assurances
that its products meet the required safety and testing standards. When the Group is notified that there is a fault with one
of its products, the Group will provide a rigorous review of the defective product and its associated manufacturing process
and, if found at fault and contractually liable, will provide for costs associated with recall and repair as well as rectify the
manufacturing process or seek recompense from its supplier. The Group holds a provision to cover potential costs of recall or
warranty claims for products which are in the field but where a specific issue has not been reported.
The Company enters into financial guarantee contracts to guarantee the indebtedness of other Group companies. The
Company considers these to be insurance arrangements and treats the guarantee contract as a contingent liability until such
time as it becomes probable that the Company will be required to make a payment under the guarantee.
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32. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not disclosed in this section of the note.
The Group’s other related party transactions were the remuneration of key management personnel (refer to note 9). Details of
Directors’ remuneration for the period are provided in the Remuneration Committee Report on page 80.
As explained in note 16, the Group has a 26.09% interest in Kepler SignalTek Limited, which is accounted for as an associate. The
Group has invested $2,000,000 ($1,700,000 preference shares and $300,000 equity investment). During the period, $50,000
of preference shares were redeemed (2020: $25,000). During the period, the Group accrued financial income of $195,000 on
the preference shares (2020: $196,000). The balance due from the associate as at the period end date was $2,121,000 (2020:
$1,990,000).
The Group also has a 43% interest in Volex-Jem Co. Ltd. During the period, the Group purchased $nil (2020: $115,000) of
materials from Volex-Jem Cable Precision (Dongguan) Co., Limited, an entity controlled by Volex-Jem Co. Ltd. The balance due
to the associate as at the period end date was $81,000 (2020: $81,000).
33. Events after the balance sheet date
The Group’s North American operations received notification on 28 May 2021 and 11 June 2021 that $2,584,000 of PPP loans
provided during the pandemic were forgiven.
34. Business combinations
DE-KA
On 18 February 2021 Volex plc completed the acquisition of De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi (‘DE-KA’), a
leading power cord manufacturer for the European white goods market headquartered in Turkey.
DE-KA is vertically integrated with the manufacture of PVC granule, single and multi-core cable extrusion. The acquisition
is a complementary fit with Volex’s existing power cords business with opportunities to build and maintain market share in
attractive end market segments.
The purchase has been accounted for as a business combination. Details of the purchase consideration, the net assets acquired
and goodwill are as follows:
Fair value of consideration transferred
Cash paid
Ordinary shares issued
Deferred consideration
Contingent consideration
Total purchase consideration
$’000
47,328
15,581
2,159
17,863
82,931
Cash paid includes the initial consideration and the estimated working capital adjustment. The fair value of the 3,320,000
shares issued as part of the consideration was based on the published closing share price on the last trading date preceding
the share issue of £3.42.
The contingent consideration is dependent upon certain EBITDA targets being met post-acquisition during the 2020, 2021
and 2022 calendar years. The fair value above has been based on the probable outcome of each based upon the information
available at 4 April 2021.
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Notes to the Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
34. Business combinations continued
The provisional fair value amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out
in the table below:
Identifiable intangible assets
Other intangibles
Property, plant and equipment
Right of use asset
Inventories
Trade receivables
Trade payables
Other debtors and creditors
Cash
Bank loan
Deferred taxes
Retirement benefit obligation
Lease liabilities
Total identifiable assets
Goodwill
Consideration
Fair value
$’000
29,294
28
8,203
9,261
4,826
25,993
(12,309)
254
6,401
(10,887)
(6,717)
(1,234)
(9,261)
43,852
39,079
82,931
An exercise has been conducted to assess the provisional fair value of assets and liabilities assumed. This exercise identified a
customer relationships and order backlog intangible asset.
The fair value adjustments are provisional and will be finalised within 12 months of the acquisition date. Any resulting changes
in the fair values will have an impact on the acquisition accounting and will result in a reallocation between the assets and
goodwill and a possible adjustment to the amortisation charge shown in the income statement. None of the goodwill
recognised is expected to be deductible for income tax purposes.
The provisional goodwill balance recognised above includes certain intangible assets that cannot be separately identifiable
and measured due to their nature. This includes control over the acquired business, the skills and experience of the assembled
workforce and the anticipated synergies arising on integration.
In FY2021, DE-KA contributed $9,166,000 to Group revenue, $1,752,000 to adjusted operating profit and $1,057,000 to statutory
operating profit. Associated acquisition costs of $367,000 and intangible asset amortisation of $695,000 have both been
expensed as adjusting items in the period. If DE-KA had been acquired at the beginning of the year, it would have contributed
estimated revenues of $60,690,000 and estimated EBITDA of $13,018,000 and operating profit of $12,164,000 to the results of the
Group.
Net cash outflow on acquisitions
Cash consideration
– DE-KA
Total cash consideration
Less: cash and cash equivalents acquired
– DE-KA
Net cash outflow
Payment of contingent consideration
– Ta Hsing
– MC Electronics
Net cash outflow
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$’000
47,328
47,328
(6,401)
40,927
1,142
139
1,281
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Job number 18 June 2021 10:18 am rolloverCompanyNotes2021£’000 2020£’000 Non-current assetsOther intangible assets4315Property, plant and equipment5184Right of use assets61916Investments7147,698109,824Other receivables9–16Deferred tax asset126,037–153,775109,875Current assetsInventories83,8842,259Trade receivables97,1305,807Other receivables917,8558,508Current tax assets–192Derivative financial instruments149–Cash and bank balances5,4497,98534,46724,751Total assets188,242134,626Current liabilitiesTrade payables11562254Other payables1128,55722,780Lease liability61717Provisions11392406Derivative financial instruments171,270Retirement benefit obligation1380380330,34825,530Net current assets/(liabilities)4,119(779)Non-current liabilitiesBorrowings1022,866–Lease liability620–Other payables117,1791,246Retirement benefit obligation131,4951,40231,5602,648Total liabilities61,90828,178Net assets126,334106,448Equity attributable to owners of the parentShare capital1539,26337,955Share premium account1544,27033,746Non-distributable reserve17––Hedging and translation reserve(3,244)(3,350)Merger reserve8,2248,224Retained earnings37,82129,873Total equity126,334106,448The notes on pages 149 to 162 are an integral part of these financial statements. The profit after tax for the period of the Company amounted to £9,608,000 (2020: profit of £22,933,000). The financial statements on pages 147 to 162 of Volex plc (company number: 158956) were approved by the Board of Directors and authorised for issue on 17 June 2021. They were signed on its behalf by:Nathaniel Rothschild Executive ChairmanJon Boaden Chief Financial Officer Company Statement of Financial PositionAs at 4 April 2021 (5 April 2020)www.volex.comVolex plcAnnual Report and Accounts 2021147FINANCIALS30048-Volex-AR21-Financials.indd 14730048-Volex-AR21-Financials.indd 14718/06/2021 15:09:5118/06/2021 15:09:51 FINANCIALS
Company Statement of Changes in Equity
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
Share
capital
£’000
Share
premium
account
£’000
Non-
distributable
reserves
£’000
Hedging
and
translation
reserve
£’000
Retained
earnings/
accumulated
losses
£’000
Merger
reserve
£’000
Total
equity
£’000
Balance at 31 March 2019
36,842
32,227
781
(3,216)
8,224
2,976
77,834
Profit for the period attributable
to the owners of the parent
Other comprehensive expense
for the period
Total comprehensive (expense)/
income for the period
–
–
–
–
–
–
Shares issued
1,046
1,519
Exercise of deferred bonus
shares
Issue of shares by employment
benefit trust
Dividend paid
Credit to equity for equity-settled
share-based payments
67
–
–
–
–
–
–
–
Balance at 5 April 2020
37,955
33,746
Profit for the period attributable
to the owners of the parent
Other comprehensive income/
(expense) for the period
Total comprehensive income for
the period
–
–
–
–
–
–
Shares issued
1,200
10,524
Exercise of deferred bonus
shares
Dividend paid
Credit to equity for equity-settled
share-based payments
Tax effect of share options
108
–
–
–
–
–
–
–
Balance at 5 April 2021
39,263
44,270
–
–
–
–
–
(781)
–
–
–
–
–
–
–
–
–
–
–
–
–
(134)
(134)
–
–
–
–
–
–
–
–
–
–
–
–
–
22,933
22,933
(1,068)
(1,202)
21,865
–
(67)
781
(1,497)
21,731
2,565
–
–
(1,497)
5,815
5,815
(3,350)
8,224
29,873
106,448
–
106
106
–
–
–
–
–
–
–
–
–
–
–
–
–
(3,244)
8,224
9,608
9,608
(367)
(261)
9,241
–
(108)
(4,713)
2,426
1,102
37,821
9,347
11,724
–
(4,713)
2,426
1,102
126,334
148
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Annual Report and Accounts 2021
Stock code: VLX
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30048-Volex-AR21-Financials.indd 148
Job number
27309
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Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
FINANCIALS
1. General Information
Volex plc (the Company) is a public company limited by shares incorporated in the United Kingdom under the Companies Act
and is registered in England and Wales. Its shares are listed on AIM, a market on the London Stock Exchange. The address of
the registered office is given on page 164.
The principal activities of the Company are the manufacture and sale of power and data cables, and to act as the ultimate
holding company of the Volex Group.
2. Significant accounting policies
2.1 Basis of preparation
The parent company financial statements are presented in pounds sterling which is also the functional currency of the
Company.
The separate financial statements of the Company are drawn up in accordance with the Companies Act 2006 and Financial
Reporting Standard 101 ‘Reduced disclosure framework’, (FRS 101). The Company will continue to prepare its financial
statements in accordance with FRS 101 on an ongoing basis until such time as it notifies shareholders of any change to its
chosen accounting framework.
The Company financial statements have been prepared using the historical cost convention, as modified by the revaluation of
certain financial assets and financial liabilities and in accordance with the UK Companies Act 2006.
The following exemptions available under FRS 101 have been applied:
▷ Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based Payment’ (details of the number and weighted-average exercise
prices of share options, and how the fair value of goods or services received was determined);
▷ IFRS 7 ‘Financial Instruments: Disclosures’;
▷ Paragraph 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities);
▷ Paragraph 38 of IAS 1 ‘Presentation of financial statements’ comparative information requirements in respect of paragraph
79(a)(iv) of IAS 1;
▷ Paragraph 118(e) of IAS 38, ‘Intangible assets’ (reconciliations between the carrying amount at the beginning and end of the
period).
▷ The following paragraphs of IAS 1 ‘Presentation of financial statements’:
− 10(d) (statement of cash flows);
− 16 (statement of compliance with all IFRS);
− 38A (requirement for minimum of two primary statements, including cash flow statements);
− 38B-D (additional comparative information);
− 111 (cash flow statement information); and
− 134-136 (capital management disclosures).
▷ IAS 7 ‘Statement of cash flows’;
▷ Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the
disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective);
▷ The requirements in IAS 24 ‘Related party disclosures’ to disclose related party transactions entered into between two or
more members of a group.
▷ Paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the parent
Company statement of comprehensive income (and separate income statement). The profit for the parent Company for the
period was £9,608,000 (2020: profit of £22,933,000).
There have been no new or amended accounting standards or interpretations adopted during the year that have a significant
impact on the financial statements.
2.2 Going concern
The Company’s financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. Refer to
note 2 of the Group financial statements on page 103 for further information on the going concern assessment.
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
2.3 Revenue recognition
Revenue is recognised in accordance with the satisfaction of performance obligations of contracts. The majority of the
Company’s contracts have just one performance obligation which is the delivery of goods, which under IFRS 15 is recognised at
a single point, on delivery or pick-up depending on the agreed terms with the customer.
This is normally when control of the goods or services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company has concluded that it is the principal in its revenue arrangements. Revenue is measured at the fair value of the
consideration received or receivable for goods and services provided in the normal course of business, net of discounts, VAT and
other sales-related taxes. The Company’s revenues are derived from Europe.
2.4 Business combinations
Acquisitions are accounted for using the acquisition method as described in the business combinations accounting policy. This
includes the determination of fair values for assets and liabilities acquired, including the separate identification of intangible
assets, which use assumptions and estimates and are therefore subjective. The Group has developed a process to meet the
requirements of IFRS 3, including the separate identification of customer relationship intangible assets based on estimated
future performance and customer attrition rates. External valuation specialists are used where appropriate.
2.5 Investments
Investments are stated at cost and reviewed for impairment if there are indicators that the carrying value may not be
recoverable. An impairment loss is recognised to the extent that the carrying amount cannot be recovered either by selling the
asset or by continuing to hold the asset and benefiting from the net present value of the future cash flows of the investment.
Where subsidiary undertakings incur charges for share-based payments in respect of share options and awards granted by
the Company, a capital contribution in the same amount is recognised as an investment in subsidiary undertakings with a
corresponding credit to shareholders’ equity.
2.6 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Cost
includes the original purchase price of the asset and any further costs attributable to bringing the asset to its working condition
for its intended use.
Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land which is not depreciated)
less their residual values over their useful lives, using the straight-line method, on the following basis:
Freehold and long leasehold buildings
up to 50 years or period of lease, if shorter
Plant and machinery
3 to 15 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in income.
2.7 Intangible assets – computer software and licences
Computer software is stated at cost less accumulated depreciation and any recognised impairment loss. Acquired computer
software licences are capitalised on the basis of the costs incurred to acquire and use the specific software. These costs are
included in the statement of financial position within intangible assets and are amortised straight-line over their estimated
useful lives of between three and five years. Costs associated with maintaining computer software are recognised as an
expense as incurred.
2.8 Leases
Upon commencement of a lease, a right-of-use asset and corresponding liability are recognised. The liability is initially
measured at the present value of the future lease payments for the lease term. The depreciation of the right-of-use asset and
interest on the lease liability will be recognised in the income statement over the lease term. Leases with terms less than 12
months or deemed low value are not capitalised.
2.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using a standard cost methodology and
adjusted for material variances such that the adjusted figure represents direct materials, direct labour and an attributable
proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated selling
price, less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for
obsolete, slow moving or defective items where appropriate.
2.10 Trade and other receivables
For trade receivables, the Company applies the simplified approach permitted by IFRS 9, resulting in trade receivables
recognised and carried at original invoice amount less an allowance for any uncollectible amounts based on expected credit
losses. The Company assesses on a forward-looking basis the expected credit losses associated with its receivables carried at
amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
150
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FINANCIALS
2. Significant accounting policies continued
2.11 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks with original maturities of three months or
less, and bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.
2.12 Borrowings
Interest-bearing loans and overdrafts are recognised initially at fair value, net of transaction costs incurred. Subsequent to initial
recognition, borrowings are measured at amortised cost, using the effective interest rate method.
2.13 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they
are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
2.14 Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately.
A derivative is classified as a non-current asset or a non-current liability if the remaining maturity of the instrument is more
than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current
assets or current liabilities.
Further details of derivative financial instruments are disclosed in note 30 to the consolidated financial statements.
2.15 Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised
in other comprehensive income or directly in equity, respectively.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates and laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is
accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates
and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets
is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax rates and laws that have been enacted or substantively enacted by the reporting date. Deferred tax is
charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis.
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
2. Significant accounting policies continued
2.16 Share-based payment transactions
Certain senior employees within the Group (including executives) receive remuneration in the form of share-based payment
transactions where the individuals are compensated for services they provide with consideration in the form of equity
instruments. The parent Company settles the award by delivering its own equity instruments to the employees of the
subsidiary.
The cost of equity-settled transactions with employees is measured with reference to the fair value of the equity instrument at
the date they are granted and is recognised as an expense over the period in which the performance and/or service conditions
are fulfilled, ending on the date on which the employee becomes fully entitled to the award.
No expense is recognised for awards that do not ultimately vest as a result of not meeting performance or service conditions.
Where all service and performance vesting conditions have been met, the awards are treated as vesting, irrespective of whether
or not the market condition is satisfied, as market conditions have been reflected in the fair value of the equity instruments.
The fair value determined at the date of grant of the equity-settled share-based payments is expensed to the income
statement on a straight-line basis over the vesting period, based on the estimate of the number of options that will eventually
vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result
of the effect of non-market-based vesting conditions. The movement in cumulative expense since the previous balance sheet
date is recognised in the income statement, with a corresponding entry in equity.
The fair value of the Company’s employee services received in exchange for the grant of the options is recognised as an
expense. A credit is recognised directly in shareholders’ funds.
2.17 Retirement benefits
The Company has both defined benefit and defined contribution retirement benefit schemes, the former of which is
now closed to new entrants. The retirement benefit obligation recognised in the Company statement of financial position
represents the deficit or surplus in the Company’s defined benefit scheme. For defined benefit schemes, the cost of providing
benefits is determined using the Projected Unit Credit Method, with actuarial valuations carried out at the end of each
reporting period.
Defined benefit costs are split into three categories:
▷ Remeasurement;
▷ Net interest expense or income; and
▷ Past service cost and gains and losses on curtailments and settlements.
Remeasurement comprises actuarial gains and losses, the effect of the asset ceiling (where applicable) and the return on
scheme assets (excluding interest). These costs are recognised immediately in the statement of financial position with a
charge or credit to the statement of comprehensive income in the period in which they occur. Remeasurement recorded in the
statement of comprehensive income is not recycled. Net interest is calculated by applying a discount rate to the net defined
benefit liability or asset and is recognised within finance costs. As the defined benefit scheme is now closed, no service cost is
incurred.
Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered
service entitling them to the contributions.
2.18 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction from the proceeds, net of tax.
2.19 Merger reserve
The merger reserve was derived from acquisitions made under old UK GAAP prior to the transition to IFRS.
2.20 Dividend distribution
Dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s financial statements in the
period in which the dividends are approved by the Company’s shareholders.
2.21 Critical accounting judgements and key sources of estimation uncertainty
The preparation of Company financial statements in conformity with FRS 101 requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the Company financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future periods. The key area
of judgement that has the most significant effect on the amounts recognised in the financial statements is the review for
impairment of the carrying amount of investments in the Company’s subsidiaries.
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3. Staff costs
The average monthly number of employees (including Executive Directors) was:
Sales and distribution
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (note 13)
FINANCIALS
2021
Number
2020
Number
2
12
14
2021
£’000
2,427
260
213
2,900
2
11
13
2020
£’000
2,237
206
128
2,571
Directors’ remuneration for the year totalled £2,251,000 (2020: 1,939,000). The remuneration of the highest paid Director is
£1,045,000 (2020: £996,000). Employer contributions of £85,000 (2020: £65,000) were made to defined contribution personal
pension schemes in respect of the Directors. Further details of Directors’ remuneration, share options, pension contributions,
pension entitlements, fees for consulting services and interests for the period are provided in the Remuneration Committee
Report on pages 70 to 85 and form part of the financial statements.
4. Other intangible assets
Cost
At the beginning and end of the period
Accumulated amortisation
At the beginning of the period
Amortisation charge for the period
At the end of the period
Carrying amount at the end of the period
Carrying amount at the beginning of the period
5. Property, plant and equipment
Cost
At the beginning of the period
Additions
Disposals
At the end of the period
Accumulated depreciation and impairment
At the beginning of the period
Depreciation charge for the period
Disposals
At the end of the period
Carrying amount at the end of the period
Carrying amount at the beginning of the period
Software and licences
2021
£’000
2020
£’000
2,388
2,388
2,373
12
2,385
3
15
2,342
31
2,373
15
46
2021
£’000
2020
£’000
322
20
(4)
338
318
6
(4)
320
18
4
319
3
–
322
317
1
–
318
4
2
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
6. Right-of-use asset
This note provides information for leases where the Company is a lessee.
a) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Buildings
Vehicles
Lease liability
Current
Non-current
Additions during the period to the right-of-use assets were £53,000 (2020: nil).
b) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Buildings
Vehicles
Interest expense (included in finance cost)
4 April
2021
£’000
5 April
2020
£’000
–
19
19
17
20
–
16
16
17
–
4 April
2021
£’000
5 April
2020
£’000
–
50
50
2
101
18
119
3
154
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Job number
27309
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FINANCIALS
7. Investments
The Company’s fixed asset investments comprise investments in wholly-owned subsidiary undertakings and permanent loans
as follows:
Cost
At 31 March 2019
Additions
Repayment
Exchange differences
At 5 April 2020
Additions
Contribution
Disposals
Repayment
Exchange differences
At 4 April 2021
Accumulated depreciation and impairment
At 31 March 2019
Impairment
Exchange differences
At 5 April 2020
Impairment
Exchange differences
At 4 April 2021
Carrying amount
At 4 April 2021
At 5 April 2020
At 31 March 2019
Shares
£’000
Loans
£’000
Total
£’000
51,524
15,572
–
–
67,096
112,472
14,979
(57,701)
–
–
136,846
57,752
11,309
109,276
26,881
(10,806)
(10,806)
2,823
61,078
2,301
(14,979)
–
(16,130)
(4,092)
28,178
2,823
128,174
114,773
–
(57,701)
(16,130)
(4,092)
165,024
5,190
12,578
17,768
–
–
5,190
7,306
–
12,496
124,350
61,906
46,334
–
582
13,160
(7,306)
(1,024)
4,830
–
582
18,350
–
(1,024)
17,326
23,348
47,918
45,174
147,698
109,824
91,508
In the United Kingdom, the Company includes three operational branches, Volex Powercords Europe, Volex Europe Cable
Assemblies and Volex Sweden. Details of the Company’s subsidiary undertakings are set out in note 20 ‘Related undertakings’.
Investments in subsidiaries are all stated at cost less provision for impairment.
On 8 October 2020, Volex France Sarl was dissolved without liquidation with the remaining assets and liabilities being assumed
by Volex plc. Following the dissolution the investment of £39,000 was disposed of.
On 18 February 2021, the Company acquired De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi (‘DE-KA’) for consideration of
£57,662,000. Following this acquisition the Company decided to transfer ownership to Volex (Asia) Pte Ltd (‘VAPL’) which owns
a number of the Group’s power businesses. As part of the transfer process, the Company also recapitalised Volex Holdings Inc
(VHI) and Volex Pte Ltd to allow a number of inter-company balances to be settled. As part of this process, on 26 March 2021
Volex plc subscribed to £49,618,000 of preferred stock in Volex Holdings Inc which included the contribution of an existing
£14,979,000 receivable. DE-KA was then sold to VAPL at book value, in return for a new inter-company note receivable. A loss of
£916,000 has been recognised on the remeasurement of the fair value of the transaction. The note receivable was subsequently
eliminated through Volex plc subscribing to £20,171,000 of additional share capital in Volex Pte Ltd.
During the prior year on 31 July 2019, the Company acquired Servatron Inc for consideration of £15,075,000. Following this
acquisition the Company decided to consolidate the Group’s North American subsidiaries under a common holding company.
On 23 August 2019, MC Electronics was contributed to Volex Holdings Inc in exchange for additional shares in Volex Holdings
Inc. A gain of £302,000 was recognised on the remeasurement of the fair value of the transaction.
On 31 August 2019, Servatron was contributed to Volex Holdings Inc in exchange for additional share capital in Volex Holdings
Inc. The fair value consideration of £15,075,000 was satisfied by way of additional shares in Volex Holdings Inc. On
1 April 2020, the Company also acquired Volex Europe (No.1) Limited for £196,000.
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Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
7. Investments continued
All loans are carried at amortised cost. Interest is charged at either a fixed rate or linked to a public indices. In the 52 weeks to
4 April 2021, the Company’s loans receivable accrued interest of between 0% - 3%. Repayments were received from Volex Inc,
Silcotec Europe Limited, Servatron Inc, Volex (Asia) Pte Ltd and Volex Poland SP z.o.o during the period.
During the period, the Company received two dividends (2020: four) totalling £3,844,000 (2020: £27,546,000) from its
subsidiaries Volex Group Holdings Limited and Volex France Sarl.
8. Inventories
Finished goods
9. Trade and other receivables
Trade receivables
Amounts receivable for the sale of goods
Allowance for doubtful debts
Other receivables
Amounts due from Group undertakings
Other debtors
Prepayments
Due for settlement within 12 months
Due for settlement after 12 months
2021
£’000
3,884
3,884
2021
£’000
7,151
(21)
7,130
17,065
482
308
17,855
17,855
–
17,855
2020
£’000
2,259
2,259
2020
£’000
5,894
(87)
5,807
7,448
799
277
8,524
8,508
16
8,524
Amounts due from Group undertakings included within other receivables are unsecured and non-interest bearing.
10. Borrowings and lease liability
Secured borrowings at amortised cost
Bank loans
Lease liability
Total borrowings at amortised cost
Amount due for settlement within 12 months
Amount due for settlement after 12 months
2021
£’000
2020
£’000
22,866
37
22,903
17
22,886
22,903
–
17
17
17
–
17
At 4 April 2021, debt issue costs of £776,000 were included within the total bank loan balance shown above. During the prior
year, debt issue costs of £417,000 were included in other debtors because the bank loan balance was nil.
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11. Trade and other payables
Trade payables
Other payables
Amounts owed to Group undertakings
Other taxes and social security
Accruals and deferred income
Due for settlement within 12 months
Due for settlement after 12 months
FINANCIALS
2021
£’000
562
2020
£’000
254
14,966
18,780
–
20,770
35,736
28,557
7,179
35,736
84
5,162
24,026
22,780
1,246
24,026
Amounts owed to Group undertakings are unsecured and non-interest bearing. The Directors consider that the carrying
amount of trade and other payables approximates to their fair value.
The Company has a provision of £392,000 (2020: £406,000) related to a specific product warranty claim. The amount represents
the Directors’ best estimate, based upon past experience, of the Group’s liability. The timing of the cash outflow with respect to
these claims is uncertain. The movement in the provision during the year reflects foreign exchange movements.
Included in accruals and deferred income is £15,446,000 (2020: £1,430,000) relating to deferred and contingent consideration
for acquisitions.
12. Deferred tax
The following are the major deferred tax assets recognised by the Company and movements thereon during the reporting
period.
At 5 April 2020
Credit to income statement
Credit to other comprehensive income
Credit directly to equity
Exchange differences
At 4 April 2021
Trading
losses
£’000
Accelerated
tax
depreciation
£’000
Other short
term timing
differences
£’000
Share-
based
payments
£’000
–
3,934
–
–
–
–
602
–
–
–
3,934
602
–
151
392
–
(3)
540
–
311
–
650
–
961
Total
£’000
–
4,998
392
650
(3)
6,037
At the reporting date, the Company had unused tax losses of £42,934,000 (2020: £63,708,000) available for offset against future
profits. Of this amount, £10,624,000 (2020: £15,446,000) are post-31 March 2017. The losses may be carried forward indefinitely.
The carrying amount of deferred tax assets is reviewed at each reporting date and recognised to the extent that it is probable
that there are sufficient taxable profits to allow all or part to be recovered. Deferred tax assets have been recognised based on
future forecast taxable profits.
On 3 March 2021, the UK Government announced changes to the UK corporate tax system and an increase in tax rate from
the fiscal year 2023 to 25% from the currently enacted rate of 19%. The change in tax rate will result in an estimated increase of
£1,302,000 to the deferred tax asset held in respect of the Company’s operations and may impact the Company’s effective tax
rate in future years.
As at 4 April 2021, the 19% UK corporate tax rate has been applied in the measurement of the Company’s deferred tax assets.
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
13. Retirement benefit obligation
Defined benefit scheme
The Company operates a defined benefit pension arrangement called the Volex Executive Pension Scheme (the ‘Scheme’). The
Scheme provides benefits based on final salary and length of service upon retirement, leaving service or death.
The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried
out at least once every three years to determine whether the Statutory Funding Objective is met. As part of the process the
Company must agree with the Trustees of the Scheme the contributions to be paid to meet the Statutory Funding Objective.
The future contributions required to meet the Statutory Funding Objective do not currently affect the balance sheet of the
Scheme in these financial statements.
The most recent comprehensive actuarial valuation of the Scheme was carried out as at 31 July 2019 and the next valuation of
the Scheme is due as at 31 July 2022. In the event that the valuation reveals a larger deficit than expected the Company may be
required to increase contributions above those set out in the existing Schedule of Contributions. Conversely, if the position is
better than expected, it’s possible that contributions may be reduced.
In accordance with the Schedule of Contributions dated September 2020 the Company have agreed to pay contributions of
£803,300 p.a. (payable in quarterly instalments) over the period to 3 April 2022.
In 2019 the Group recognised a pension past service cost of £368,000 in adjusting items as a result of Guaranteed Minimum
Pension (GMP) equalisation following a legal judgement requiring all pension schemes conduct an equalisation of male and
female members’ benefits for the effect of unequal GMPs. During the current period, an addition charge of £98,000 has arisen
as a result of a further legal judgement which confirmed there was also an obligation to pay additional amounts where certain
past transfer payments had not been equalised for the effects of GMPs.
Further details of the scheme and assumptions associated with the actuarial valuation are provided in note 29 to the Group
financial statements.
Defined contribution scheme
The Company operates a Group personal pension plan for employees and pays contributions to administered pension
insurance plans. Contributions to the defined contribution schemes are charged to the income statement as they fall due. The
Group has no further obligations once the contributions have been made. The total cost charged to the Company’s income
statement in the period was £115,000 (2020: £128,000).
14. Share-based payments
The Company currently uses a number of equity-settled share plans to grant options and shares to the Directors and
employees of its subsidiaries. Full details of share-based payments, share option schemes and share plans are disclosed in note
28 ‘Share-based payments’ to the consolidated financial statements.
15. Share capital
At 5 April 2020
Issue of deferred bonus shares
Acquisition of DE-KA
Acquisition of Servatron – contingent consideration
Number of
shares
Par value
£’000
Share
premium
£’000
151,818,762
37,955
33,746
432,040
3,320,000
1,481,239
108
830
370
–
10,524
–
Total
£’000
71,701
108
11,354
370
At 4 April 2021
157,052,041
39,263
44,270
83,533
During the current and prior period, the Group issued shares to satisfy the requirement of share awards, deferred bonus awards
and fund acquisitions. During the current period the movements were as follows:
▷ Issued 432,040 shares under the 2019 deferred share bonus plan.
▷ Issued 3,320,000 shares as part of the initial consideration for the acquisition of DE-KA.
▷ Issued 1,481,239 shares to the former owners of Servatron as the business met the required operating profit targets set out
in the acquisition agreement.
Under the FY2021 deferred share bonus plan, shares will be awarded to the executive management team in lieu of a cash
bonus. These will be issued in accordance with the terms of the deferred share bonus plan.
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FINANCIALS
16. Equity dividend
Dividends paid and received are included in the Company financial statements in the period in which the related dividends are
actually paid or received or, in respect of the Company’s final dividend for the period, approved by shareholders.
Declared during the period
Final dividend for the year ended 5 April 2020: 2p per share
Interim dividend for the period ended 4 April 2021: 1.1p per share (2020: 1p per share)
Proposed after the balance sheet date and not recognised as a liability:
2021
£’000
2020
£’000
3,041
1,672
–
1,497
Final dividend for the period ended 4 April 2021: 2.2p per share (2020: 2.0p per share)
3,439
3,027
The Group’s consolidated reserves set out on page 101 do not reflect the profits available for distribution in the Group.
17. Non-distributable reserves
Between March 2014 and July 2014 the Company sold 1,005,000 shares which were held by the Volex Group Guernsey Purpose
Trust to the Volex Group plc Employee Share Trust. A gain of £781,000 was recognised as a result of this transaction having been
classified as a non-distributable reserve until such time that the shares are issued by the Volex Group plc Employee Share Trust.
During the prior period these original shares were issued to employees to fulfil vested share awards. Therefore, the reserve has
been reduced to zero during the current financial period.
18. Other matters
The auditors’ remuneration for the current period in respect of audit services was £270,000 (2020: £255,000) and £131,000 for
non-audit services performed (2020: none).
19. Related party transactions
For full details of transactions and arrangements with key management personnel (Directors of the Company), see note 9 of
the consolidated financial statements.
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
20. Related undertakings
Volex Powercords Europe, Volex Europe Cable Assemblies and Volex PLC Sweden Filial are all trading divisions of Volex plc.
In accordance with Section 409 of the Companies Act 2006, the subsidiaries owned at 4 April 2021 are disclosed below. The
following subsidiary entities are either wholly or partly owned directly by the plc and/or through other Group companies.
For the two joint ventures, ownership is shared between a local Volex subsidiary and the relevant JV partner. The percentage
holdings have not changed compared to prior year.
Footnote
Country of
incorporation Address
Percentage
owned by
plc
Name of entity
Directly held
Volex Pte Ltd
Volex Holdings Inc
Volex Canada Inc
Volex Group Holdings Ltd
GTK (Holdco) Ltd
Volex Poland Sp z.o.o.
Volex Germany GmbH
Volex Sweden AB
1
2
3
2
2
1
3
3
Singapore
37A Tampines Street 92, #08–01, Singapore 528886
USA
84 State Street, Boston MA 02109
Canada
1565 Carling Avenue, Fourth floor, Ottawa On K1Z 8R1
UK
UK
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C2 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Poland
Podłuzna 11–13, 85–790, Bydgoszcz, Kuyavian–
Pomeranian Voivodeship, Poland
Germany
Zu den Mühlen 19, 35390 Gießen, Deutschland
Sweden
C/O Servando Bolag AB, Johan Fredrik Stahl, Box 5814,
102 48 Stockholm
Volex International Korea LLC 3
South Korea
Volex do Brasil Ltda
Volex (No.4) Ltd
Volex (No.3) Ltd
Volex (No.2) Ltd
Volex (No.1) Ltd
Cable Products Ltd
Pencon Ltd
Volex Executive Pension
Scheme Trustee Ltd
3
3
3
3
3
3
3
3
Volex Electrical Products Ltd 3
Volex Group Pension Scheme
Trustee Ltd
Ward and Goldstone Ltd
Volex Interconnect Products
Ltd
Volex Electronics Ltd
Ionix Development Company
Ltd
Pendle Connectors Ltd
Mayor (UK) Ltd
3
3
3
3
3
3
3
Brazil
Rod. Geraldo Scavone 2.080, Unidade 13 A 16, Jacarei,
12305–490, Brazil
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
100%
100%
100%
100%
100%
99%
100%
100%
100%
99%
99%
50%
50%
99%
50%
50%
67%
90%
99%
99%
99%
99%
99%
99%
99%
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FINANCIALS
Percentage
owned by
plc
99%
100%
Percentage
owned
by Group
companies
20. Related undertakings continued
Name of entity
Directly held continued
Volex Interconnect
Systems Ltd
Volex Europe (No.1) Ltd
Name of entity
Indirectly held
G.T.K. (U.K.) Ltd
GTK Ltd
De-Ka Elektroteknik Sanayi
ve Ticaret Anonim Şirketi
DEKA Electrotechnic RM
S.R.L.
Volex (No.5) Ltd
GTK Electronics GmbH
GTK RO S.r.l
Silcotec Europe (SK) s.r.o
Silcotec Europe (UK) Ltd
Silcotec Europe Ltd
Volex Inc
MC Electronics LLC
Servatron Inc.
Volex (Asia) Pte Ltd
PT Volex Indonesia
PT Volex Cable Assembly
Volex Cable Assemblies
(Phils) Inc
Volex Japan KK
Volex (Taiwan) Co. Ltd
Volex (Thailand) Co. Ltd
Volex Cable Assembly
(Vietnam) Co Ltd
Volex Cable Assemblies Sdn
Bhd
Volex Interconnect (India)
Pvt Ltd
www.volex.com
Footnote
Country of
incorporation Address
3
3
UK
Ireland
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Carraroe Industrial Estate, Carraroe, Co Galway,
H91WR82
Footnote
Country of
incorporation Address
1
3
1
1
3
1
1
1
3
1
1
1
1
1
1
3
1
1
1
1
1
1
1
UK
UK
Unit C2 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Unit C2 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
100%
100%
Turkey
Akse Mah. Fevzi Çakmak Cad. No: 140 Çayırova, Kocaeli
100%
Romania
UK
Germany
Romania
London Street 7, Aricestii Rahtivani, Prahova, Romania,
107025
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Romberg 25b, 51381 Leverkusen
Str. Fantana Popova, Nr. 36, Et.1, Cod Postal, 200319,
Craiova, Dolj, Romania
Slovakia
Družstevná 14, Komárno, 945 05, Slovakia
UK
Ireland
USA
USA
USA
Unit C1 Antura, Bond Close, Basingstoke, Hampshire,
England, RG24 8PZ
Carraroe Industrial Estate, Carraroe, Co Galway,
H91WR82
84 State Street, Boston MA 02109
9571 Pan American Drive, El Paso, TX 79927
12825 Mirabeau Parkway, Suite 104, Spokane Valley, WA
99216–1617
Singapore
37A Tampines Street 92, #08–01, Singapore 528886
Indonesia
Indonesia
Philippines
Japan
Taiwan
Thailand
Vietnam
Malaysia
India
JL. Ir. Sutami Kawasan Industri Sekupang, Batam,
Indonesia 29422, Indonesia
Galaxy Building km 60.7 Maharlika Highway, Sto
Thomas Batangas
9th floor Kannai Tosei Building II, Sumiyoshi–cho 4–45–1,
Naka–Ku, Yokohama–shi, Kangawa
4F, No 1223, Zhongzheng Road, Taoyuan District,
Taoyuan City 330, Taiwan
No. 99/349, Chaengwattana Road,
Thungsong–Hong, Laksi, Bangkok 10210, Thailand
Plot D–5B, Thanglong Industrial Park, Vong La
Commune, Dong Anh District, Hanoi, Vietnam
B–03–13A, Empire Soho, Empire Subang, Jalan SS16/1,
SS16, 47500, Subang Jaya, Selangor, Malaysia
Level 9, Olympia Teknos Park, No. 28 Sidco Industrial
Estate, Guindy, Chennai, Tamil Nadu, IN 600 032
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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FINANCIALS
Notes to the Company Financial Statements
For the 52 weeks ended 4 April 2021 (53 weeks ended 5 April 2020)
20. Related undertakings continued
Name of entity
Indirectly held continued
Volex Cables (HK) Ltd
Ta Hsing Industries Ltd
Shenzhen Ta Hsing Wire and
Cable Ltd
Volex Interconnect Systems
(Suzhou) Co. Ltd
Volex Cable Assembly
(Shenzhen) Co. Ltd
Volex Cable Assembly
(Zhongshan) Co. Ltd
Volex Hermosillo SA de CV
Volex de Mexico SA de CV
Volex Group plc Employees’
Share Trust
Interests in associates/joint
ventures
Kepler SignalTek Ltd
Volex-Jem Co Ltd
Volex-Jem Cable Precision
(Dongguan) Co., Limited
Footnote
Country of
incorporation Address
Percentage
owned
by Group
companies
1
1
1
1
1
1
3
1
1
2
1
Hong Kong
Hong Kong
China
China
China
China
Mexico
Mexico
Unit 1001, 10/F, Infinitus Plaza, 199 Des Voeux Road
Central, Hong Kong
Unit 5805, 58/F., Two International Finance Centre, 8
Finance Street, Central, Hong Kong
5 Horizontal Lane, Yuan Hu Road, Zhang Bei
Community, Long Cheng Street, Long Gang District,
Shenzhen City, Guang Dong
Building 3, Fumin Phase 3, No.818 Wushong Road,
Guoxiang Street, Wuzhong Economic Development
Zone, Suzhou, Jiangsu Province 215124
No. 6279, Henggang Section, Longgang Avenue, Bao’an
Village, Henggang Sub–district, Longgang District,
Shenzhen City
2 Xingda Street, Torch High–tech Ind Dvpt Zone,
Zhongshan, 528437, China
Palo Verde, 1085 Palo Verde, Solidaridad, CP 83280
Av 32 Sur, No 8950 Interior G/1,D,E,F, Parque Industrial
La Mesa, Fraccionamiento Rubio, Tijuana; Baja
California Mexico, CP 22116
Guernsey
St. Peter’s House, Le Bordage, St. Peter Port, Guernsey,
GY1 1BR
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Unit 912 9/F Two Harbourfront 22 Tak Fung Street
Hunghom KL, Hong Kong
Taiwan
19F, No.79, Sec 1. Singtai 5th Road, Sijhih City, Taipei,
Country 221, Taiwan
China
406 Qingfeng Road, Qingxi Town, Dongguan
1. Manufacture and/or sale of power and data cables
2. Holding company
3. Dormant company
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Five Year Summary
FINANCIALS
Results
Revenue – total Group
Gross profit – total Group
Operating expenses – total Group
Normalised operating profit(i) – total Group
Adjusting operating items
Share-based payment charge
Profit/(loss) on ordinary activities before taxation
Depreciation and amortisation (excluding intangible
assets acquired in a business combination)
Unaudited
IFRS
2021
$’000
Unaudited
IFRS
2020
$’000
Unaudited
IFRS
2019
$’000
Unaudited
IFRS
2018
$’000
Unaudited
IFRS
2017
$’000
443,313
103,876
(73,159)
42,896
(5,550)
(6,629)
29,369
391,354
90,661
372,104
73,518
322,377
55,843
319,584
42,347
(73,576)
(60,526)
(47,070)
(48,968)
31,630
(5,808)
(8,737)
15,861
21,606
(6,226)
(2,388)
11,635
11,457
(1,552)
(1,132)
6,995
9,079
(15,232)
(468)
(8,500)
7,885
6,519
3,786
3,210
5,368
Cents
Cents
Cents
Cents
Cents
Basic underlying earnings per share – total Group(ii)
Basic earnings/(loss) per share – total Group
32.1
25.5
18.2
9.9
13.1
6.9
Statement of financial position
$’000
$’000
$’000
Non-current assets
Net cash/(debt)(iii)
Other assets and liabilities
Net assets
Gearing
182,767
84,650
(7,243)
8,396
31,570
14,312
56,041
20,593
39,014
183,920
130,532
115,648
4%
–
–
9.2
4.4
$’000
24,606
9,948
13,590
48,144
–
9.5
(7.9)
$’000
24,905
11,335
10,067
46,307
–
i. Defined as operating profit before adjusting items and share-based payments.
ii. Defined as earnings/(loss) per share before share-based payments and adjusting items, net of tax.
iii. Following the adoption of IFRS 16 on 1 April 2019 this calculation excludes the lease liability.
www.volex.com
Volex plc
Annual Report and Accounts 2021
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Job number
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FINANCIALS
Shareholder Information
Provisional Financial Calendar
FY2022
Interim Results Announced w/c 8 November 2021
Period End 3 April 2022
Final Results Announced w/c 13 June 2022
Registered Office and Advisers
Registered Office
Unit C1 Antura Bond Close
Basingstoke, Hampshire
RG24 8PZ
www.volex.com
Registered number
158956 (Registered in England and Wales)
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
www.linkgroup.eu
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers
HSBC Bank plc
J.P. Morgan Securities PLC
Citibank, N.A. London branch
Nominated Adviser & Joint Broker
Nplus1 Singer Advisory LLP
Joint Broker
HSBC Bank plc
Solicitors
Travers Smith LLP
164
Volex plc
Annual Report and Accounts 2021
Stock code: VLX
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Job number
27309
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30048-Volex-AR21 18 June 2021 10:12 am V4Volex plc Annual Report and Accounts 2021Stock Code: VLXVolex plcUnit C1 AnturaBond CloseBasingstokeHampshireRG24 8PZUnited Kingdomwww.volex.com30048-Volex-AR21.indd 330048-Volex-AR21.indd 318/06/2021 15:08:5918/06/2021 15:08:59