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Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Annual Report and Accounts 2022
Electrifying
our markets
Welcome to Volex's
2022 Annual Report
Volex 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
19 manufacturing locations with a global workforce of
over 7,800 employees across 22 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.
www.volex.com
Our Story So Far…
Following a further four acquisitions in the year, we have
now added 10 high quality businesses to our organisation
in the last four years, enhancing our capabilities and
reaching new customers. This is in addition to strong
organic growth achieved through a relentless focus on
efficiency, quality and service. Our strategic investments
have transformed our Group, delivering a resilient and
capable organisation.
We have a world-class design capability based on
over 100 years’ experience providing power and data
transmission products. Whether we are designing
customer solutions, optimising manufacturing processes
or creating our own innovative products, our technical
and engineering ability adds
significant value.
These attributes have created
a powerful force in global
manufacturing, working with
customers from major
household names to advanced
technology companies.
As businesses around the world
reconfigure supply chains to
enhance their production
processes, we are
perfectly positioned
to deliver the optimal
manufacturing
solution.
Highlights
Underlying operating profit ($M)1
Revenue ($M)
2022
2021
2020
2019
2018
$56.2m
$42.9m
$31.6m
$21.6m
$11.5m
2022
2021
2020
2019
2018
Profit before tax ($M)
Net assets ($M)
2022
2021
2020
2019
2018
$36.2m
$29.4m
$15.9m
$11.6m
$7.0m
2022
2021
2020
2019
2018
$614.6m
$443.3m
$391.4m
$372.1m
$322.4m
$208.5m
$183.9m
$130.5m
$115.6m
$48.1m
Free cash flow
($M)2
Underlying basic earnings
per share (cents)3
2022
2021
2020
2019
2018
$4.1m
$31.3m
$47.4m
($10.9)m
$1.7m
2022
2021
2020
2019
2018
26.9cents
32.1cents
18.2cents
13.1cents
9.2cents
Underlying operating profit, free cash flow and underlying basic earnings per share are alternative
performance measures. More details on alternative performance measures can be found on page 33
1 Underlying operating profit is operating profit before adjusting items and share-based
payment charges – see note 7 on page 119.
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 121.
BUSINESS OVERVIEW
CONTENTS
BUSINESS OVERVIEW
Highlights
Our Investment Proposition
Our Culture
At a Glance
Our Diversified Portfolio
Executive Chairman’s Statement
STRATEGIC REPORT
Our Markets
Business Model
Strategy
Key Performance Indicators
Operational Review
Performance Review
Financial Review
Group Risk Management
Section 172 Statement
Sustainability at Volex
Environmental Sustainability
Streamlined Energy and Carbon
Reporting Statement
Social Impact
Governance and Compliance
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 to the
Members of Volex plc
01
02
03
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08
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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 106
107
Notes to the Financial Statements
Company Statement of
149
Financial Position
Company Statement of
Changes in Equity
Notes to the Company Financial
Statements
Five Year Summary
Shareholder Information
163
164
105
150
151
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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. 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.
Global Presence
With 19 manufacturing
sites, and sales and
technical support
teams across three
continents and 22
countries, we are
available when, and
where, our customers
need us.
Read more about our Quality
and Reliability on page 16
Read more about our Global
Presence on page 12
Purchasing Power
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.
Acquisition Approach
With 10 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.
Read more about our
Purchasing Power on page 26
Read more about our Acquisition
Approach on page 04
New Markets
With High-Growth
Opportunity
We are integrated
into markets with
the opportunity for
exponential growth,
including Electric
Vehicles and Data
Centres.
Read more about our Exciting
Markets on page 12
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Our Culture
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. We employ the Japanese philosophy
of Kaizen, involving all of our people in the continuous
improvement of our operations.
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 be 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.
The culture at Volex
As a global team at Volex, we have
manufacturing specialists working
around the world across all time
zones to deliver innovative, defect-
free solutions for our customers. We
have experts in design, development,
manufacturing, procurement,
logistics, export and distribution so
that we can react quickly to support
our customers’ requirements. In
FY2022 we continued our support
to our customers throughout
the Covid-19 pandemic working
tirelessly to ensure our quality and
on-time delivery, despite significant
challenges within the global
supply chain. As the vaccination
programmes developed, we
supported our employees to get
vaccinated, often organising mass
vaccination programmes at our larger
sites in collaboration with community
and health partners. We believe in
our customers and we work each day
to increase our efficiency and our
performance through a company-
wide implementation of continuous
improvement principles and by
sharing our best practices and our
learnings across our organisation.
Engaging with our
stakeholders
Ensuring open and effective dialogue
with all of our stakeholders is
important to us.
Read more about our Engagement
with Stakeholders
on page 44
03
Supported by our values
1
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.
2
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.
3
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.
4
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.
5
Be challenging – We speak
up and are direct and honest
with each other. By working
together and challenging
constructively we develop
the best solutions.
Volex plc Annual Report and Accounts 2022www.volex.comBUSINESS OVERVIEW At a Glance
Acquisition
Strategy
Acquiring and integrating excellent quality businesses into
Volex has been an important element of our growth strategy.
This approach has enabled us to grow capacity and capability
and establish new customer relationships. Identifying the
right businesses is crucially important, as is developing and
executing an effective integration plan.
Sectors
Electric Vehicles
Consumer Electricals
Medical
Complex Industrial Technology
FY2021
DE-KA is the leading manufacturer of power cords for the
European domestic appliances market, working with household
name customers from its automated facilities in Turkey. It has
seen an increase in demand as extended shipping times and
higher freight costs have impacted Asian competitors.
How did this add to our capabilities?
With best-in-class cable extrusion expertise, DE-KA has formed
a knowledge sharing network with our other extrusion facilities.
This has accelerated the optimisation and development of our
in-house extrusion capability. DE-KA have significant experience
in the deployment of automated production to drive efficiency,
enhancing profitability and meeting demanding customer
timelines.
Link to sector
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FY2022
From its dedicated
manufacturing site in
California, Irvine delivers
complex printed circuit
board assemblies for
mission-critical applications.
Working with significant
names in defence and
aerospace, Irvine has an
exceptional reputation for
quality.
How did this add to
our capabilities?
The acquisition strengthens
Volex’s existing profile in
North America, adding
further capabilities and
capacity in California to
augment the Group’s
existing operations
in Washington State
and Mexico, creating
a compelling value
proposition for customers in
the region.
Link to sector
What we look for in an acquisition
Our acquisition criteria are based on a combination of factors aligned with our strategic goals.
BUSINESS OVERVIEW
Customers
We like businesses
with strong customer
relationships that create
new opportunities and
revenue synergies.
Capabilities
Acquisitions have
allowed us to accelerate
the expansion of our
capabilities, offering
further value-added
services to our customers.
Location
We have enhanced
our global footprint by
acquiring in attractive
markets, creating
globalised operations
that differentiate us from
our peers.
Culture
Well managed,
entrepreneurial businesses
with strong management
teams fit perfectly with
our established business
culture.
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InYantra is a high growth,
entrepreneurial business
based in India. With a
mixture of domestic
and export customers,
it uses its significant
manufacturing expertise
to deliver complex
solutions for customers.
How did this add to
our capabilities?
India is an attractive
market with a skilled
workforce, including
talented engineers,
with a reputation
for cost competitive
manufacturing solutions.
This supports our
ambitions to be a truly
global manufacturing
business with compelling
assets in a combination
of markets that support
our evolving customer
requirements.
With a focus on wire
harnesses for specialist
vehicles, particularly in
the defence sector, TC has
some significant customer
relationships. The business
operates from a single site
in Canada, supporting the
North American defence
market.
How did this add to
our capabilities?
TC works with demanding
customers on complex and
highly technical projects. It
offers cross sell opportunities
in both the defence space
and the specialist vehicles
market, enhancing our reach
and defence credentials.
Link to sector
Link to sector
Prodamex supplies
domestic appliance
manufacturers with wire
harnesses from its well-
managed factory in Central
Mexico. With efficient
processes and strong
customer relationships it
expands our scale in the
domestic appliance market.
How did this add to
our capabilities?
With excellent existing
relationships in Asia and
Europe in the domestic
appliance space, the
acquisition of Prodamex
completes our global
footprint in this sector.
This allows us to be a
manufacturing partner of
choice for global brands.
Link to sector
10
Number of acquisitions
since 2018
12
new production
facilities acquired
Read more
about our Full
Strategy
on page 18
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Our Diversified Portfolio
At 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.
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Power cords
Power cords
We make high-
We make high-
quality power
quality power
cords to meet
cords to meet
international
international
safety standards
safety standards
and fit with the
and fit with the
demanding
demanding
requirements of
requirements of
our customers
our customers
High-speed
High-speed
data cables
data cables
We deliver
We deliver
market-leading
market-leading
high-speed data
high-speed data
cables, which
cables, which
undergo end-
undergo end-
to-end testing
to-end testing
to ensure they
to ensure they
surpass our
surpass our
customers’ quality
customers’ quality
requirements
requirements
BUSINESS OVERVIEW
Electric vehicles
Electric vehicles
We have unrivalled
We have unrivalled
expertise in the
expertise in the
manufacture of a range
manufacture of a range
of electric vehicle
of electric vehicle
components and we
components and we
are proud to work with
are proud to work with
the biggest names in
the biggest names in
the industry
the industry
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Box builds
Box builds
We can take
We can take
a customer’s
a customer’s
complete design
complete design
and build the
and build the
entire product,
entire product,
including
including
Printed Circuit
Printed Circuit
Board ("PCB")
Board ("PCB")
assembly and
assembly and
box build
box build
Cable assemblies
Cable assemblies
Our complex cable
Our complex cable
assemblies are used in
assemblies are used in
performance-critical
performance-critical
industries, including
industries, including
aerospace and medical
aerospace and medical
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Executive Chairman’s Statement
Executive Chairman’s Statement
Our business is robust and resilient, with a
Our business is robust and resilient, with a
range of complementary capabilities, well
range of complementary capabilities, well
suited to the dynamic needs of our global
suited to the dynamic needs of our global
customer base.
customer base.
Nathaniel
Rothschild
Executive
Chairman
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Introduction
In a challenging year for all manufacturing
businesses, our strong performance throughout
the year and delivery of results that are ahead of
consensus market expectations, demonstrates that
our strategy is working. Revenue and underlying
operating profit are significantly higher for FY2022
as a result of strong organic revenue growth and
acquisitions.
Our business is robust and resilient, with a range
of complementary capabilities, well suited to
the dynamic needs of our global customer base.
We operate within a fragmented market where
our reputation for innovation and quality is a key
differentiator. Customers recognise our ability
to deliver increasingly complex manufacturing
services successfully, and the significant value that
we can add to their processes. In particular, our
design skills significantly enhance the customer
relationship, demonstrating innovative solutions
to address the real-life challenges that our
customers face.
Market demand remains strong, with continued
momentum from our Electric Vehicles and
Consumer Electricals customers, as well as a
robust recovery within the Medical and Complex
Industrial Technology sectors following the impact
of Covid-19. We are well attuned to the trends in
our markets and how our customers’ requirements
are evolving. These factors are critical inputs to our
strategic plans, giving us confidence that we are
pursuing the right path.
New five-year plan
Having delivered revenue and underlying profit
growth significantly ahead of the ambitious five-
year plan we set out in 2019, we have developed
a new, stretching plan. Our ambition is to deliver
revenue of $1.2 billion by the end of FY2027,
including at least $200 million of revenue from
new acquisitions. We aim to achieve this while
maintaining our current underlying operating
profit margin within a range of 9-10%.
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Read more
about our
Markets
on pages
12 and 30
Overall approach
We identify areas of manufacturing need
where our capabilities, intellectual property and
manufacturing methodology enable us to be
cost competitive, while generating attractive
commercial returns.
We understand how to operate in a competitive
environment and have invested in vertical
integration to generate suitable margins. We
have significant expertise in high-mix production,
allowing us to be competitive through a range of
lower-volume order quantities. Our manufacturing
facilities are led by experienced general managers,
focused on optimising throughput and mix. Each
of these facilities are underpinned with a regional
leadership team, providing the managers with
expert local support.
The majority of our larger customers are global
companies who are looking for a reliable
international manufacturing partner. This is
becoming increasingly important as customers
look to address supply chain complexity by
identifying suppliers who can provide solutions
closer to their end markets. With customer-facing
teams around the world, we use our knowledge of
our end markets to develop compelling customer
solutions.
Our significant experience in our chosen markets
enables us to develop our own designs, locking in
intellectual property that we protect with patents,
where appropriate.
We have accelerated organic investment in the
business during the year and will build on this
momentum moving forward. Our investment is
directed at areas where we have the capability to
grow significantly and where we can optimise our
manufacturing process. The majority of projects
we identify pay for themselves within two years,
making this investment very attractive. This is
complemented by our established continuous
improvement activity, which generates efficiency
benefits across our organisation.
Market trends
The world is currently a complicated place and
to support customer delivery during a period of
extended lead times, we have invested in additional
inventories to ensure we have availability of
components when required. This has increased
levels of working capital but has, importantly,
also protected revenue and deepened customer
relationships.
Inflation across raw materials has been a feature
of the manufacturing environment over the last
year. However, the arrangements established with
BUSINESS OVERVIEW
our customers allow us to pass through higher
input costs, although there is often a time delay
between the impact of higher input costs on
us and re-pricing. We have followed an efficient
and transparent process to support this activity,
allowing us to minimise the impact on margins.
Investing in growth
Our track record of acquiring strong businesses
at attractive valuations has continued this year
with four further transactions completed, for a
total consideration of $47.1 million. We acquired
Irvine Electronics (“Irvine”) in California, USA, and
Terminal & Cable (“TC”) in Canada, both specialist
integrated manufacturing businesses, with a
strong presence in the North American defence
market. Irvine specialises in printed circuit board
assemblies for deployment in specialist, mission-
critical applications. TC is a specialist in complex
cable assemblies for military vehicles.
The acquisition of Prodamex in Mexico, a
manufacturer of wire harnesses for domestic
appliances, advances our strategy to provide
a unified solution for global white-goods
manufacturers. We will combine its North
American capability together with the significant
strength and experience we already have in Europe
and Asia, to drive economies of scale and maximise
cross sales opportunities.
We also purchased a majority equity stake in
inYantra in India, together with 13.5 acres of
industrial land with potential for future site
expansion, harnessing its expertise in printed
circuit board assembly and box build integrated
solutions. This transaction offers an excellent
strategic opportunity to expand our global
footprint, bringing new and strengthened
capabilities in the key Indian market.
The success of our strategy and the organic growth
we have delivered, combined with attractive
acquisition opportunities to deliver further
growth, has given us the confidence to deploy
further investment. With a strong track record of
delivering compelling returns, we have successfully
completed a number of transformational projects
this year. In particular, we have vertically integrated
our Electric Vehicles power cable production and
created an efficient production capability for the
next generation of high-speed data centre cables.
People and organisation structure
Successfully combining the skills and expertise
of our talented workforce has allowed us to
deliver transformational change, continuous
improvement and exceed customer expectations.
Effective collaboration, encouraging change and
an entrepreneurial spirit, creates an environment in
which innovation can flourish. With talented local
management in our manufacturing facilities, we
are able to respond quickly to changing customer
requirements and disruptions in the supply chain.
To enhance the delivery of growth and integration,
we have formalised a regional leadership structure,
enhancing our ability to lead change programmes
and identify cross-selling opportunities.
On behalf of the Board, I thank all our employees
for achieving so much in what has been a very
challenging manufacturing environment.
Environmental, Social and Governance
("ESG")
Many of our products are aligned to key ESG
objectives, including manufacturing for electric
vehicle charging, medical purposes and for greater
efficiency including robotics and automation.
However, focusing on our own performance,
as well as what we sell to customers, is also
important. This year we have implemented a
sustainability reporting system to help define and
measure progress towards ESG objectives. Going
forward, this will be an increasing area of focus
for our business as we look to embed a culture of
improvement in these areas.
Dividend
Reflecting our confidence and the Group’s
robust financial position, the Board is pleased to
announce it is recommending a final dividend
of 2.4 pence per share. Together with the interim
payment of 1.2 pence, this gives a total dividend
for the year of 3.6 pence, an increase of 9.1% on the
prior year.
Outlook
We have seen a strong start to the new financial year,
with high levels of customer demand. This includes
strong orders for more complex products with longer
lead times.
We have adapted to the significant supply chain and
inflationary challenges which have developed during
FY2022 and continue to monitor developments closely,
taking a proactive approach to addressing issues as they
emerge. We run our operations flexibly and will respond
quickly to changing supply and demand environments.
Having built a dynamic, resilient business with diverse
capabilities and excellent customer relationships in
attractive markets, we are well positioned to deliver
on the tremendous potential of Volex’s business and
capitalise on the growth opportunities in our markets.
With a clear strategy, strong demand and an ambitious
and talented team, we are excited about the opportunity
in FY2023 and beyond.
Nathaniel Rothschild
Executive Chairman
23 June 2022
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10
Strategic
Report
Our Markets
Business Model
Strategy
Key Performance Indicators
Operational Review
Performance Review
Financial Review
Group Risk Management
Section 172 Statement
Sustainability at Volex
Environmental Sustainability
Streamlined Energy and Carbon
Reporting Statement
Social Impact
Governance and Compliance
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16
18
22
24
28
33
38
44
45
48
49
51
54
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Our Markets
Our Locations
We operate in markets in which we have a deep understanding, which allows us to
maintain our position as the manufacturing partner of choice for our customers, many
of whom are leaders in their field and recognised as innovators. It is therefore vital that
we continuously monitor, understand and respond to the latest developments in the
industries that we support.
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Factories / Warehouses
Countries / Territories
2022 Acquisitions
Read more
about our
Regional
Performance
on page 30
North America
Overview
North America is an important market
and home to some of our high-growth
customers in the Electric Vehicles
sector and Data Centre sub-sector.
We have a variety of manufacturing
options within and outside the region.
Outlook
Demand from North American
customers was strong, which is
expected to continue due to the
high level of order backlogs from
the component shortages in FY2022.
The segment will benefit from the
acquisitions of Irvine, Prodamex and TC
in FY2022.
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 exports, although
shortages of some components
are creating challenges for some
customers. Demand is expected
to remain fairly stable from
customers who supply into this
region. The segment will benefit
from the acquisition of inYantra in
FY2022.
Europe
Overview
With the acquisition of DE-KA in
FY2021, we have a significant 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 soften slightly from
the high levels in FY2022. We intend
to broadly offset this with cross sales
opportunities. Demand from our
Medical customers is expected to
remain at similar levels to this year.
44%
23%
33%
Revenue from North America
Revenue from Asia
Revenue from Europe
STRATEGIC REPORT
Macroeconomic Trends
Electric Vehicles ("EV")
Consumer Electricals
Macroeconomic trends
f Governments worldwide are incentivising
Macroeconomic trends
f High consumer spend on home
the sale of Electric Vehicles to meet
emissions targets
f Automotive model launches continue to
be focused on EV as consumer adoption
increases, creating additional year-on-year
demand
f Electric vehicles are becoming a
cost-effective alternative to internal
combustion engine vehicles due to rising
fuel costs
How we are responding
f We continue to expand our relationships
with manufacturers at the design stage
f The market is growing quickly and we are
there to supply the need for quick and
convenient charging
f We are incredibly experienced with a
world-class engineering team, which means
we are the supplier of choice for customers
developing their EV product sets
improvement including replacing domestic
appliances, resulting in strong demand
throughout FY2022
f Increased freight costs are leading major
consumers to regionalise their supply chain
f Global inflation will likely reduce
discretionary spend dampening demand
growth for electronic devices
How we are responding
f We have worked closely with our customers
to meet their increased demand
f Investment in automated production will
increase our output and improve efficiency
f Expanded our domestic appliances
footprint, with the Prodamex acquisition in
North America
Medical
Macroeconomic trends
f Healthcare providers need to address
the backlog in treatments and diagnosis
for non-Covid-19 care, which will require
investment in equipment
f Further deployment in medical technology
is required globally to realise the benefits of
innovative treatment approaches such as
robotic surgery
f Ageing populations are going to increase
the need for medical sector investment
How we are responding
f We work with the most advanced
medical equipment manufacturers in the
world and have the flexibility to support
increasing demand
Complex Industrial Technology
Macroeconomic trends
f 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
f Customers are looking for tariff-free
manufacturing options and geo-political
considerations are forcing a rethink in
existing supply chains
f Increased demand and investment
incentives will accelerate industrial
automation
How we are responding
f We have developed 400Gbps high-speed
data centre cables and are continuing
development for future generations
f We are continually expanding our
f Our global manufacturing footprint gives
capabilities and accreditations to allow
us to support the latest technologies
our customers flexibility
f Expanded the range of products we offer
through acquisitions of Irvine and TC, who
supply to defence customers
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Our Markets
Responding to customer requirements is incredibly
important and a key pillar of our strategy. We develop
our capabilities and manufacturing footprint in response
to our customers’ developing demands and other
industry trends.
14
Electric Vehicles
Consumer Electricals
Customer developments
f Increased environmental awareness is
driving demand for electric vehicles, with the
technology behind them now largely accepted
f Public charging infrastructure continues to
grow, with charging speeds improving, leading
to increased driver confidence and simplifying
the ownership proposition
f Advances in battery technology will reduce
barriers to adoption as will reductions in the
cost differential between EV and internal
combustion engine vehicles
f 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
How we are responding
f We have further increased our EV production
capability during FY2022 to allow us to meet
customer demand
f As the adoption of EV becomes more
widespread, we are expanding our customer
base and working with our customers to meet
their individual challenges
f 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
f We continue to invest in product specialists
and engineers to develop our product range
to ensure we stay at the forefront of this
technology
Customer developments
f Increased levels of home working continued
through FY2022 creating demand for home
office equipment
f Transition to more innovative and energy
efficient domestic appliances will drive
future demand
f Challenges in logistics and supply chains
have forced manufacturers to look at their
procurement strategies, with many major
OEMs regionalising supply chains
f Customers are holding higher levels of
inventory to reduce the impact to production
schedules from shortages or delivery delays
How we are responding
f We have worked very closely with our
customers throughout FY2022 to help them
manage continued high demand
f Our investment in automation and creating
an efficient manufacturing environment
means we can respond effectively to customer
requirements
f 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 fulfilment
f We have developed a fully global domestic
appliances offering through the acquisitions of
DE-KA and Prodamex
f The vertical integration we have implemented
in respect of power cord production allows us
to be one of the lowest cost manufacturers
108.0%
increase in global EV
sales in 20211
Read more
about our
Strategic
Pillars
on pages
20 and 21
19.2%
forecast annual growth
in EV market2
4.3%
Increase in US consumer
electrical spend in 20213
14.1%
annual growth in smart
appliances market4
Volex plc Annual Report and Accounts 2022Stock code: VLX STRATEGIC REPORT
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Complex Industrial Technology
Customer developments
f Our Data Centre customers will begin to
transition from 100Gbps high-speed data
cables to the new generation of 400Gbps
cables, driving future growth
f 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
f 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
f Extended supply chain lead times delayed
some industrial customers projects, although
with demand still high, order backlogs are
growing
How we are responding
f Our next generation of high-speed data centre
products will allow our customers to keep
pace with the expansion in data and cloud
requirements
1 EV Volumes
Global EV sales
2 Globe News
Wire EV forecast
2022-2027
f The capacity in our factories is scalable to meet
3 Statista
customer backlogs
Medical
Customer developments
f Our Medical customers continue to operate
at the forefront of technology, delivering
innovation to improve patient outcomes
f 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
f There is an increased focus on supply chains
with the pandemic highlighting dependencies
on particular countries or delivery corridors
f Additional investment will be required
to address the backlog in screening and
treatment caused by Covid-19
How we are responding
f We are investing in technology and
infrastructure so we can continue to deliver the
manufacturing capabilities that our customers
require
f 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
f 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
f Our skilled production operatives possess
significant knowledge on how to manufacture
the complex products that our customers
depend on us for
f Our investment in automation and process
efficiency allows us to flex our output to meet
the demand requirements of our Medical
customers
f We are able to offer customers flexibility of
manufacturing locations which help them
manage the supply chain and reduces the
impact from tariffs
6.6yrs
Increase in life
expectancy 2000–20195
5.4%
Annual growth in medical
devices market6
60.0%
Corporate data stored
in the cloud7
9.8%
Annual growth in
Industrial automation8
research on
US consumer
electronics
industry
4 Statista smart
appliances
growth
2022-2026
5 WHO Global
Health
Observatory
6 Fortune
Business
Insights,
annualised
growth
2021-2028
7 Statista
research on
cloud storage
8 Fortune
Business
Insights,
annualised
growth
2022-2028
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Business Model
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.
INPUTS
MANUFACTURING PLATFORM
1
2
Advanced manufacturing
assets across three
continents
We have a compelling mix of
complementary capabilities
across our facilities. Our global
sales team enhance the customer
experience. We manage on behalf
of our customers, the sourcing
of all required components for
their complex solutions, using
our global expertise to locate the
right materials and optimise the
cost profile.
Best-in-class processes
and quality assurance
Our commitment to 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.
We conduct end-to-end testing
to guarantee that our customers
receive the exceptional quality
that they expect, every time.
Design capability
We have world-class product
and process engineering with
many years of experience in our
markets. This allows us to partner
with customers to provide
solutions to their manufacturing
challenges.
Intellectual property
Our design teams identify
and develop novel solutions to
engineering challenges allowing
us to register a small number
of patents every year. This
augments our manufacturing
know-how that has been
developed over a number of
years.
Diverse requirements
As a trusted manufacturing
partner to global blue-chip
companies, we have significant
experience in dealing with
complex requirements.
Talented teams
We have incredibly talented
teams, who are focused on
exceeding our customers’
expectations. With decentralised
decision making, local
management deliver plans to
optimise delivery within our
plants.
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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.
MANUFACTURING PLATFORM
OUTCOMES
VALUE GENERATED
Organic revenue growth
Our compelling combination of
production quality, capabilities and
competitive pricing is delivering
revenue growth.
Own product sales
With strong design capability
and investment in research and
development, a greater proportion
of our sales are dependent on Volex
developed designs.
Margin optimisation
The outcome of our continuous
improvement approach allows us
to improve our margins through a
combination of vertical integration,
product optimisation and
automation.
Cash generation
By managing our cost base
effectively and maximising the
utilisation of our manufacturing
facilities, we generate good cash
returns from our assets.
3
Optimised from a cost
and tariff perspective
Our global manufacturing
footprint is optimised to operate
in the most cost-efficient way
to support our customers. We
identify the most appropriate
matrix of skills and capabilities
in our sites to correspond with
customer requirements. By
matching the capabilities in our
sites with the manufacturing
specifications of the relevant
products, we can optimise the
costs of manufacturing. With
operations in multiple countries,
we are able to supply from tariff-
free and lower tariff locations.
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Shareholders
Short-term: We generate returns
to our shareholders through
regular dividends.
Long-term: We have ambitious
plans to deliver growth
organically and through
acquisitions to increase
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.
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Strategy
Our strategic aim
Volex is a diverse and resilient business that delivers value to customers by combining manufacturing capability and
engineering expertise. We operate a continuous improvements culture to deliver efficiency and maintain our competitive
position. We are investing in expanding our capabilities as well as pursuing our strategy of acquiring excellent businesses and
delivering increased shareholder value.
1
What we have
delivered
In FY2022 we achieved revenue growth
of 38.6% and we have expanded our sales
teams to improve customer engagement
and align our sales effort with specific
sectors.
We have maintained underlying
operating margins above 9% in a high
inflation environment while investing in
growing and enhancing our operations.
Our design and development teams
have created new products to meet the
requirements of our Electric Vehicles,
Data Centre and Consumer Electricals
customers.
2
What we are doing
We operate in fragmented markets and
have developed a deep understanding of
where we can deliver value. We continue
to make 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 commenced
a Group-wide change programme to
deliver a unified Enterprise Resource
Planning ("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.
2.4%
Capital expenditure
as a proportion of revenue
38.6%
Year-on-year revenue growth
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Where we are
heading
Our ambition is to achieve revenues of
$1.2 billion in FY2027 with underlying
operating margins in the range of 9-10%.
To deliver this we will continue our
focus on high-growth opportunities,
particularly with Electric Vehicles
and Data Centre customers where
developments in technology are driving
opportunities for expansion.
We have been increasing our investment
in design and engineering capability.
This will allow us to generate a greater
proportion of our revenue from in-
house designed products and design
partnerships.
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ORGANIC GROWTH
We are enhancing our market sectors to
drive growth:
Electric Vehicles
We are investing in product development
to continue to address the evolving
requirements of the EV charging market. Our
technical expertise is helping to expand our
customer base.
Consumer Electricals
Our competitive pricing, low-tariff and freight
efficient locations are helping us to win market
share. Continuous improvement, vertical
integration and automation will create further
opportunities.
Medical
Technology is driving improved patient
outcomes requiring healthcare providers to
invest in infrastructure. We are supporting
customers who are seeking to simplify supply
chains.
Complex Industrial Technology
Our further investment in PCB assembly
capability will increase our competitiveness for
box build projects. We have developed a range
of next generation data centre products.
INORGANIC GROWTH
Acquisitions
We have an agile approach to acquisitions with
flexibility in terms of both deal structure and
our approach to integration.
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.
Strategy
Introduction
Our strategy is focused on five pillars 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
Revenue growth
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 successfully
developed products to support
the next generation of high-
speed copper data cables that
will deliver improvements
in cloud computing
infrastructure. We are moving
customers across to power
cords based on our own
extrusion technology for both
Electric Vehicle and Consumer
Electricals customers.
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.
Link to KPIs
1
3
4
What this means
Our focus on driving customer
value is helping us to grow
existing relationships as well as
secure new customers. 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 in the face
of continuing supply chain
challenges.
We develop a comprehensive
understanding of our
customers’ operations. We
recognise the importance
of being responsive at every
stage of the customer journey,
identifying where we can
deliver further value through
additional solutions.
Strategy in action
We have worked closely with
existing customers and new
customers during the year
to deliver new projects. We
are now building kiosks in
Europe for one of our major
Complex Industrial Technology
customers, demonstrating
our ability to transfer
successful projects between
manufacturing sites.
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.
Link to KPIs
1
2
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
operational improvement
projects during the year. These
included further developments
at our site in Suzhou to
enhance our capabilities and
further our vertical integration.
We also completed our vertical
integration activities in Batam
to optimise production 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 FY2023.
Link to KPIs
2
4
5
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Links to KPIs
1 Annual Revenue Change
2 Underlying Operating Profit
3 Return on Capital Employed
4 Underlying Free Cash Flow
5 Underlying Basic EPS
6 Employee Safety
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Investment and
acquisition
What this means
Investment is delivered
through acquisitions and
capital expenditure to support
our overall growth strategy.
We have a strong balance
sheet and access to funding to
enable us to invest for growth.
We have an agile approach
to acquisitions and a strong
network amongst Volex senior
management.
We have significant investment
opportunities in our existing
business that will deliver
good cash returns, with many
of our capital investment
programmes achieving cash
payback within two years.
Strategy in action
We acquired four businesses
in FY2022, taking us into the
defence sector, globalising our
domestic appliance harness
capabilities and entering a new
and exciting market in India.
We have also deployed capital
expenditure during the year,
particularly in growth areas,
such as to support our progress
in Electric Vehicles and for data
centre products.
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
FY2023 which will support our
growth.
Link to KPIs
1
2
3
People
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.
Our site excellence award
programme is helping our sites
focus on delivering exceptional
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, with the first
site going live in FY2023.
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
1.0
0.8
0.6
0.4
0.2
1.0
0.8
0.6
0.4
0.2
Key Performance Indicators
0.0
0.0
1
Annual revenue
change (%)
2
Underlying operating
profit ($m)1
3
Return on capital
employed (%)1
2022
2021
2020
2019
2018
39%
13%
5%
15%
1%
2022
2021
2020
2019
2018
$56.2m
$42.9m
$31.6m
$21.6m
$11.5m
2022
2021
2020
2019
2018
21.9%
31.5%
29.9%
26.7%
31.5%
Definition
Change in reported revenue compared
to the previous year.
Definition
Operating profit before adjusting items
and share-based payment expense.
Relevance
Through consistent customer service
and the right sales mix, alongside
acquisitions, we aim to drive higher
revenue.
Relevance
Optimising profitability is central to
our strategy. This is realised through a
robust pricing strategy and efficiency
programmes.
Definition
Underlying operating profit as a
percentage of average net assets
excluding net cash/debt.
Relevance
This measures return on the equity
asset base as the Group continues
to grow.
Performance
Revenue growth in the period was
strong, particularly in relation to Electric
Vehicle customers and also benefiting
from acquisitions.
Performance
Profit increased significantly due to
revenue growth and acquisitions.
Against supply chain issues and price
inflation, our operating efficiencies
maintained good operating margins.
Performance
This measure has decreased due to the
high-levels of organic and inorganic
investment in the year. In addition,
acquisitions cause a temporary
reduction in return on capital employed.
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Annual bonus
LTIP
5
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15
20
10
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30
35
0.0
0.5
1.0
1.5
2.0
2.5
3.0
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Underlying free
cash flow ($m)1
5
Underlying basic
EPS (cents)1
6
Employee safety (LTA per
million hours worked)
2022
2021
2020
2019
2018
$6.1m
$31.7m
$48.8m
($7.6)m
$2.7m
2022
2021
2020
2019
2018
26.9cents
32.1cents
18.2cents
13.1cents
9.2cents
2022
2021
2020
2019
3.20
2.00
1.07
2.25
Definition
Underlying free cash flow is the net
cash flow before financing activities
and excluding costs of acquisitions,
adjusting items and share-based
payments.
Relevance
We aim to maximise cash generation
to support the organic and inorganic
growth of the business.
Performance
Cash generated in the year is lower than
FY2021 due to investment in working
capital to support the growth of the
business and extended supply chain lead
times increasing inventory hold-levels.
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
Underlying basic EPS has decreased
due to the large one-off deferred tax
asset recognition increasing the prior
year EPS by 8.5 cents. Excluding this,
EPS increased from FY2021 due to the
growth in operating profit.
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 our underlying
safety performance year-on-year. We
have made four new acquisitions in the
past year, which have increased our
overall lost time accidents, with 50%
of our lost time accidents in the year
from our sites in Turkey. If we exclude
our recent acquisitions, then we have
achieved a 50% reduction in accidents
compared to FY2021.
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Link to Remuneration
Annual bonus
Links to Strategy
Product
Development
Revenue
Growth
Operational
Excellence
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Acquisition
People
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This is an alternative performance measure, see page 33 for more information
STRATEGIC REPORT
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STRATEGY IN ACTION
Investment in vertical integration
We have accelerated our investment in vertical integration for our
Electric Vehicle and Consumer Electricals sectors
This includes power cable extrusion projects and
plastic component production for higher volume
applications. Cables are a significant component of
the bill of materials for our consumer electricals and
electric vehicle products. Bringing this capability
in-house allows us to maintain our position as a
low-cost producer, gain a higher level of control over
the manufacturing process and provide an excellent
product for our customers. These investments are
driven by customer demand and focus on our high-
growth sectors.
Our vertical integration journey began with the
acquisition of Ta Hsing in June 2019, which was
an existing key supplier. We further increased our
capability in this area when we acquired DE-KA
in February 2021, a business with market-leading
extrusion know-how. These acquisitions have
allowed us to share knowledge around the Group.
In FY2022 we deployed cable extrusion and auto-
coiling machines for power cables in China and
Indonesia.
The progress we have made with knowledge
transfer and our investment in machinery, people
and capabilities has given us the opportunity to
relocate the Ta Hsing production to our major site
in Suzhou, China. At the end of the year the transfer
from Ta Hsing to Suzhou was well underway and is
set to be completed in early FY2023.
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Operational Review
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Nathaniel
Rothschild
Executive
Chairman
We have created a diverse and resilient business delivering
growth in attractive markets. It has been a challenging year
in manufacturing with higher material costs and increased
lead times. We have responded to the these challenges to
deliver another set of record results.
John Molloy
Chief
Operating
Officer
Q
Q
What are the key strategic priorities for FY2023?
What has the Group done well in FY2022?
A
A
Our strategy has a strong focus on growth,
including winning more business with our existing
customers and working with new names. We are
particularly excited about the growth opportunities
in Electric Vehicles where we can combine our
world-class design expertise to develop innovative
solutions for our customers. Our high-speed data
centre cables are another focus area where we
have designed a range of next-generation products
to meet the requirements of the most demanding
data centre operators.
With a clear strategy to grow in each of our
markets, our regional teams are delivering
business transformation and investment projects
to allow us to enhance our capabilities, deliver
further integration, capacity and automation to
improve processes.
It has been a challenging year in manufacturing,
with extended lead times and raw material
cost inflation. We have maintained excellent
communications with our customers and with
our suppliers throughout the year. This has helped
us source hard to find components and manage
expectations. We have focused on managing our
cost base, and where necessary, we have passed
through raw material costs to our customers.
We have secured a lot of new business this year. It
demonstrates that the strategy we have developed
and implemented is working. Our growth with our
Electric Vehicles customers is a particular highlight.
This is an area where we bring together our design
expertise, advanced manufacturing techniques,
world-class quality assurance and competitive
pricing. To have grown this business line from
scratch to over $100 million of revenue in just over
five years is extremely satisfying.
We have also delivered a number of important
capital projects, in particular supporting vertical
integration by producing our own cables. We have
achieved this in our facilities in Suzhou, China, and
in Batam, Indonesia. These locations are supplying
their own requirements as well as shipping to other
Volex sites, maximising the benefit of bringing this
capability in-house.
25
Q
Q
How have the Group’s investment plans
developed?
How does Volex respond to the current
inflationary environment?
A
A
We have delivered significant growth through both
acquisition and investment in capital expenditure
in recent years. Our investments are driven by
customer demand, providing us with confidence
that we will deliver excellent returns on capital
expenditure. Most projects deliver cash payback
within two years. As part of our most recent
strategic review, we identified significant growth
opportunities, which we will secure through
targeted investment.
We continue to maintain an interesting acquisition
pipeline with a variety of targets at different stages
in the process. This will remain a central part of our
strategy. In parallel, we will see a greater proportion
of our investment activity focusing on capital
expenditure and development activities to meet
customer demand in growth sectors. This will give
us a compelling balance between organic and
inorganic growth.
We work incredibly hard to manage cost inflation
and provide value to our customers. Where there
are unavoidable increases in the cost of raw
materials, we pass these through to our customers.
We have done this in a fair and transparent way
during the year. We have put a lot of work into
optimising our production processes to ensure
that we deliver excellent service with competitive
pricing. In passing through raw material cost
increases, we are still confident that we are
adding significant value for our customers and
maintaining a competitive position.
We have good channels of communication with
our customers through our customer service and
sales teams. This means we are able to engage
quickly on pricing topics. Although there is always
some delay between higher costs coming in and
those costs being passed through to the customer,
we can usually resolve these issues quickly and
efficiently.
Q
Having acquired four businesses, how is the
integration developing?
A
In total we have acquired 10 businesses in the
last four years, so we have become very skilled at
integrating efficiently and effectively. We work
with each acquisition to understand the individual
strengths of the organisation as well as identifying
any gaps in capability. This allows us to prepare a
tailored integration plan to secure cost and revenue
synergies as well as to align systems and processes
with the Volex ways of working.
Engaging with our new colleagues is important.
We are keen to preserve the entrepreneurial spirit
and maintain the culture that has made these
businesses a success. Although travel restrictions
did not stop us from commencing integration
activities, it has been great to have the opportunity
to go and meet our new teams in person. I have
been impressed with the quality of the people who
have joined and the talent and ambition that drives
their performance.
Q
Are there opportunities to make further progress
on margins?
A
Through a significant, multi-year effort, we have
increased our underlying operating margins to just
over 9%. This was achieved through a number of
different initiatives, including vertical integration,
continuous improvement projects and introducing
targeted automation. While improving the
margins, we have created a highly competitive,
lean business, capable of winning market share
and attracting new customers.
Our current margin profile allows us to maintain
the momentum we have achieved in growing
revenue. It also gives us the ability to invest
in enhancing our business through product
development and investing in revenue generating
roles such as senior sales colleagues. We believe the
current margins represent a good balance between
achieving attractive returns while pursuing exciting
growth opportunities.
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Operational Review
26
Q
Q
What are the key challenges that your
customers are facing?
Are you seeing an impact from customers
looking to reduce supply chain complexity?
A
A
Many of our customers are experiencing challenges
with the availability of components as supply and
demand rebalance as major economies reduce
Covid-19-related restrictions. One of our strengths
is our ability to work very flexibly, which is a massive
help to customers as they respond to frequent
changes in their schedules.
We are also finding that customers are placing
orders further in advance than we are used to. This
helps us manage extended lead times to ensure
on-time delivery. Where there are issues with
particular components, we are happy to work with
our customers to help identify alternatives.
Q
The current challenges, whether it is the availability
of component or extended shipping times, have
certainly caused customers to reassess their
sourcing strategy. In recent years, supply chains
have got longer and more complicated, which
has increased risk in the procurement process. A
number of our customers are looking to reduce
the complexity and looking for a manufacturing
partner who can deliver closer to their home
markets.
With our global footprint, including advanced
manufacturing sites across North America and
Europe, we are well placed to support customers
who are looking to relocate their sources of supply.
This is an opportunity for us given our proven track
record in effectively on-boarding new customers.
How has the Group dealt with supply
chain challenges?
Q
A
The supply chain situation has been incredibly
complicated throughout the year, and it will be
some time before we see a widespread return to
normality. We are fortunate to have a very capable
and experienced supply chain team who have
worked tirelessly to source the components we
need to deliver to our customers on time. With
global operations and procurement professionals
around the world, we have operated as a team to
source effectively.
We have been proactive to ensure that we identify
critical components and secure availability. There
have been some increases in levels of inventory.
While much of this is driven by higher demand,
there is also an element of buying earlier to
have materials on hand. Many of the products
we manufacture contain multiple elements
and a single shortage can hold up the build. By
selectively investing in additional materials, we can
reduce the risk of any delays.
What will you look for in future acquisitions?
A
Our acquisition approach has been about buying
superior quality businesses in markets we
understand well. Acquisitions give us the ability to
secure new customer relationships and to expand
the capabilities of the Group. Our customers really
like working with us and we receive requests
to expand the manufacturing services we offer.
Acquiring businesses with additional capabilities
allows us to add additional value to our existing
customer base.
One of the key considerations for every acquisition
is who will lead the integration process. This
ensures that we maximise the benefits from
the acquired business and identify and deliver
on synergy targets. We have appointed some
incredibly talented Regional Chief Operating
Officers this year, giving us additional confidence in
our ability to acquire and integrate businesses.
Volex plc Annual Report and Accounts 2022Stock code: VLX Q
Why is product development important to Volex?
A
We have been highly successful in identifying
specialist market sectors where we can deploy
our manufacturing expertise to deliver complex
solutions for our customers. Some of our customers
want a traditional contract manufacturing service
where we build to their design. As integrated
solutions become more complex, others are
looking for a manufacturing partnership where we
bring in our experienced design teams to develop a
product together.
We have also been successful with our own
products that we have designed and developed
using our engineering specialists. We have been
manufacturing products that transmit power
and data for over a hundred years, so we have an
incredible depth of experience. This allows us to
create innovative solutions to address the real-
life technical challenges that our customers face,
whether that is in relation to a complex power cord
for an EV application with multiple safety features,
or a high-speed cable for the next generation of
data centres.
Q
What benefits have you achieved from applying
a continuous improvement approach to
manufacturing?
A
Our manufacturing philosophy is built around the
principles of continuous improvement. That is how
we have earned a reputation for exceptional levels
of quality and why we have such a competitive
commercial proposition. We develop talented
production engineers who identify process
changes that deliver significant improvements
on an incremental basis. Sometimes these reduce
cost, at other times this is about ensuring that the
manufacturing process is perfect every single time,
minimising the expense of reworking.
To create the right environment for continuous
improvement, you need to empower individuals at
all levels of the organisation to make a difference.
Sometimes the best ideas come from our
production operatives who spot an opportunity
to improve a process. Continuous improvement
is not just about making positive change within
the manufacturing environment, it is also part of
our approach throughout the business, whether
in support functions or in thinking about ways in
which we run the business. It is so important that
we celebrate our successes in this area as part of
our annual site excellence award programme.
27
STRATEGY IN ACTION
Volex Tijuana received
the first MedAccred
Accreditation for Cable and
Wire Harness in Mexico.
In January 2022, MedAccred announced its recognition of
our Tijuana, Mexico manufacturing facility for the Company’s
commitment to the Medical market by meeting the rigorous
industry requirements established by 10 of the leading medical
device companies and exacting customer requirements.
MedAccred is an industry-managed supply chain oversight
program administered by the not-for-profit Performance Review
Institute ("PRI"), that reduces risk to patient safety, assures
product quality and compliance with requirements as they
apply to critical processes used in the production of medical
devices. OEM subscribers including Bausch Health, Baxter,
Edwards Lifesciences, Becton Dickinson, Boston Scientific,
Johnson & Johnson, Medtronic, Philips Healthcare, Roche
Diagnostics, and Stryker fund and manage the accreditation
program and determine audit criteria, interview, select auditors,
and determine which suppliers are granted accreditation.
MedAccred is unique as the sole industry-managed supply chain
oversight program for key critical manufacturing processes in
the medical device industry.
Following a stringent auditing procedure, the prestigious
MedAccred Cable and Wire Harness Accreditation was awarded
to our Tijuana facility. Volex Tijuana is the first in Mexico to hold
the MedAccred Cable and Wire Harness Accreditation and is
the first Volex manufacturing facility to achieve MedAccred
Accreditation.
Our recent MedAccred Accreditation of the Tijuana, Mexico
facility further supports our Medical sector strategy by
increasing our value-added offering to Medical customers
seeking enhanced global support, and new MedAccred
Accredited manufacturing processes. This Accreditation
provides our customers with the assurance that their products
are built with strict adherence to quality and perform to the
highest of safety-critical standards.
Volex Tijuana is a manufacturing centre of excellence,
specialising in high mix, low to medium volume wire harness
assemblies, power cables, and electro-mechanical assemblies.
They service global customers in the Consumer Electricals,
Medical and Complex Industrial Technology sectors. With a
full array of safety and quality certifications and accreditations,
Volex Tijuana helps its market-leading customers realise the full
potential of their cutting-edge products and designs.
Link to Strategy
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT 28
Performance Review
Overview
Volex delivered strong revenue growth and
record underlying operating profits in FY2022,
in a challenging year for manufacturing
businesses worldwide, demonstrating we have
established a diverse and resilient business able
to perform well within a complex and changing
environment. Whilst the impact of government
restrictions and lockdowns related to Covid-19
reduced in the year, market dislocation has
caused additional supply chain issues, including
increasing prices and lengthening lead times
across multiple components and products.
Demand from customers across the Group was
strong throughout the year. We continued to
experience rapid growth from Electric Vehicles
customers as we consolidated our position as
market leader for grid cords, whilst bringing new
products to market and winning several new
customers.
Our Consumer Electricals business was able
to pass-on price inflation to customers as the
mechanisms within the majority of our contracts
stipulate the pass-through of increased copper
prices.
Our Medical customers saw access to hospitals
steadily improve, leading to increased demand
for medical products, after a slight decline
caused by Covid-19 access-related restrictions.
Demand reduced for our data centre products
due to a very strong comparator period as
customers increased their inventory levels to
mitigate potential supply chain challenges.
The unwind of inventory positions this year as
conditions normalised impacted our revenue. For
other Complex Industrial Technology customers,
order books remained strong through the year.
Overall, we were proactive and maintained
high factory utilisation, despite supply chain
complexities.
We have increased investment in our business
in FY2022, with a number of important capital
expenditure projects. This was focused on our key
high-growth areas, as well as vertical integration
and the first phase of our new global ERP
system. We have recruited specialist research and
development roles in the year to drive product
development programmes, which will deliver
future growth.
As we have continued to grow, our working
capital requirements have increased to
support our expansion. Additional inventory
investment has been required to meet customer
requirements, in the face of extended lead times
and supply chain shortages. Although this ties
up cash, holding key components has allowed us
to meet customer commitments, with particular
relevance for our more complex products.
It has been a busy year in relation to acquisitions
with four businesses joining the Group. Three
of these businesses are based in North America
- Irvine, Prodamex and TC – strengthening our
manufacturing footprint for domestic appliances,
integrated manufacturing services and defence
in this critical region.
The acquisition of inYantra positions us in the
high-growth Indian market, where it is involved
in the manufacture of printed circuit board
assemblies and box builds. Growth through
acquisitions remains a high priority, and a key
strategic pillar.
Our business is built on the talent and hard work
of our employees. The Group now has a global
workforce of over 7,800 employees. During the
year we have implemented a regional structure,
with senior operational management aligned to
each region to optimise our future performance.
We continue to invest in developing talent within
the organisation and supporting the growth and
development of our colleagues at all levels.
Trading performance overview
The Group generated revenue of $614.6 million
(FY2021: $443.3 million). This included organic
revenue growth of 19% and the contribution from
our FY2022 acquisitions and the remainder of
the first 12 months of our FY2021 acquisitions.
Organic revenue growth included 96% growth in
our Electric Vehicles sector, as well as 14% organic
growth from our Consumer Electricals and 13%
from our Medical sectors.
Our Complex Industrial Technology sector also
increased revenue, although organic sales were
down 2% on the prior year primarily due to the
transition to the new 400Gb cables in our data
centre market. This market is expected to show
growth later in FY2023.
19%
Organic revenue growth
96%
Growth in Electric
Vehicles revenue
17%
Of Group revenue from
Electric Vehicles
Volex plc Annual Report and Accounts 2022Stock code: VLX A lot of questions within the copy
$20.9 million (4 April 2021: $20.0 million) of
lease liabilities. The covenant net debt/adjusted
EBITDA ratio was 1.3 times (FY2021: 0.3 times).
Impact of the macroeconomic
backdrop
Volex is well positioned to navigate the
challenges of a dynamic macro-environment.
This is underpinned by our diverse markets,
capabilities and global manufacturing footprint.
These strengths have been central to the
continued strong progress made, despite the
on-going disruption to global supply chains, the
challenges posed by Covid-19 and, more recently,
the Russian invasion of Ukraine.
Copper, freight and other material prices are
going through a period of high inflation. Our
contracts with power cord customers, where
copper is a significant percentage of our costs,
allow us to pass increases through to the
customer, although there can be a short delay in
the implementation of pricing changes.
Other price inflation is passed onto customers
through regular price discussions, which either
happen on a regular basis such as quarterly, or
on an ad hoc basis where required by changes in
the costs.
Working capital has increased due to our sales
growth, as well as investment in higher levels of
inventory to maintain our position as a reliable
partner to customers in an environment with
extended supplier lead times. Our freight costs
have also increased due to demand for global
shipping capacity exceeding supply.
Government restrictions relating to the Covid-19
pandemic have eased in FY2022, although
there have been instances of local and national
lockdowns which have had some limited
and temporary impacts on trade. We did not
experience any significant downtime at our sites
in FY2022 and we continue to adhere to stringent
health and safety measures across the business.
Our direct operational exposure to Russia and
Ukraine is low. We have no facilities or employees
in either country. In the financial year ended
3 April 2022, sales to Russia represented less
than 0.5% of Group revenue, with revenue into
Ukraine being negligible. We have no significant
dependency on direct supplies of components or
materials from either Russia or Ukraine.
29
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about the
Market
Macro-
economic
Factors
on pages
13 and 29
Read more
about our
Acquisitions
on pages
4 and 5
Underlying operating profit increased by 31%
to $56.2 million (FY2021: $42.9 million), driven
by organic revenue growth and acquisitions.
Statutory operating profit was $41.0 million
(FY2021: $30.7 million), including adjusting items
and share-based payments of $15.2 million
(FY2021: $12.2 million).
The underlying operating margin was 9.1%,
slightly down from 9.7% in the prior year, and
broadly flat on H1 FY2022. The margin reflects
the benefits of higher volumes in the year -
albeit with an adverse impact from a higher
sales mix of power products - strong cost
controls and vertical integration benefits. It was
achieved despite the macro-headwinds, most
notably freight and commodity price inflation.
The prior year also included a favourable impact
from the temporary lowering of employment
taxes in some Asian countries, relating to the
Covid-19 outbreak.
After acquisitions, and partially offset by cash
generated, net debt was $74.4 million at 3
April 2022 (4 April 2021: $7.3 million), excluding
19
Production facilities
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Performance Review
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Strategic
Pillars
on pages
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30
Revenue by customer sector
Electric Vehicles
The rapid expansion of the electric vehicle industry
is expected to continue as the technology enters
the mainstream, in part driven by legislation. Volex
has achieved continued strong growth due to our
market leading position and strong reputation
as a grid cord manufacturer. Building on our
significant experience with technology related to
electric vehicle charging, we are expanding our
product set to support faster AC charging and
out-of-home charging solutions. This will help us
to further broaden our customer base. We are
continuing to invest in new products and in our
manufacturing processes to retain our place as one
of the lowest cost producers. This will be important
as competition increases.
Organic revenue from our Electric Vehicles
customers increased year-on-year by 96% to
$104.2 million (FY2021: $53.1 million), with demand
remaining strong. This growth is being driven
by Volex’s continuing position as a low-cost
manufacturer following our vertical integration
activity. We have also successfully onboarded three
new customers as we diversify our customer base.
Consumer Electricals
Consumer Electricals revenue increased in FY2022
by 60% to $262.4 million (FY2021: $164.0 million)
with demand for consumer electrical products
remaining robust through the year. Our revenue
benefited from a full-year of revenues from our
Turkish DE-KA business, which was acquired
in FY2021, and three-months of trading from
Prodamex. On an organic basis, revenue for this
sector increased by 14%, with approximately 4%
of this relating to the pass-through of copper and
other price increases.
Higher freight costs and longer shipping times
favour our global manufacturing footprint, which
give us the flexibility to manufacture for customers
from locations close to where they are. We are
also delivering cross-selling success, following the
acquisition of DE-KA, which has traded strongly. We
will continue to pursue cross-sales opportunities,
using our global domestic appliance presence,
following the acquisition of Prodamex.
Medical
The sector has recovered well from the Covid-19-
related softening in demand we saw in the prior
year, as access to hospitals has now improved,
allowing installation of larger medical equipment.
Consequently, Medical revenues were up 13% on
an organic basis at $128.3 million (FY2021: $112.7
million), and these are now back above pre-
pandemic levels.
There remains a global backlog in healthcare
procedures following the pressures on the
healthcare system created by Covid-19, which
should mean that medium-term demand is
sustainable. The medical products we manufacture
are complex, with specified bills-of-materials.
Extended lead times can delay individual projects
but the high mix of products we manufacture
allows us to maintain efficient production through
dynamic planning.
Complex Industrial Technology
Revenue from Complex Industrial Technology
increased 6% to $119.8 million (FY2021: $113.5 million),
2% lower on an organic basis. This includes five
months of revenue from Irvine and three months
from TC following acquisition. Excluding Data
Centre customers, revenues were 12% higher than
last year on an organic basis. Order books are strong
with key customers placing demand well in advance
of production, due to longer lead times for certain
components. The longer lead times and component
availability have served to constrain growth in
the year.
Data Centre customers are reported within
Complex Industrial Technology and made up 26.2%
(FY2021: 36.9%) of revenue in this sector. This sub-
sector declined year-on-year due to a number of
contributory factors. There was some stocking up
in data centres in the prior year, with destocking
this year in preparation for the transition to the
new 400Gb cables. There were also shortages of
the new network equipment needed to support
the adoption of 400Gb architecture in data centres.
However, we have qualified 400Gb products with
our key customers and expect strong sales when
demand increases later in FY2023.
Revenue by reportable segment
Volex has developed over the years to be a
geographically interconnected business. Customers
want to have manufacturing in multiple locations,
reducing the risk of supply chain disruption from
any particular country. We operate with a regional
focus to meet this need and we analyse our
customer revenue geographically to reflect this. We
allocate geographic revenue based on where the
customer relationship is, reflecting our customer-
centric nature.
North America
North America is our largest customer segment,
and we work with some of its largest technology
companies and global innovators. North America
comprises 44.3% of Group revenue (FY2021: 45.8%).
Revenue grew by 34.0% to $272.1 million (FY2021:
$203.1 million). This reflects some of the strong
organic growth we experienced with our Electric
Vehicles customers, as well as the acquisitions of
Irvine, Prodamex and TC.
Asia
Asia makes up 23.2% of Group revenue (FY2021:
30.2%). Asia revenue increased by 6.7% to $142.7
million (FY2021: $133.7 million) with the majority
of revenue in the Consumer Electricals sector.
Demand was strong throughout the year due to
our competitive pricing and ability to respond
quickly to customer requirements.
Europe
Europe makes up 32.5% of Group revenue (FY2021:
24.0%). Revenue in Europe increased by 87.6% to
$199.8 million (FY2021: $106.5 million) driven by
an increased demand for Electric Vehicles and an
increase in European domestic appliances sales led
by the acquisition of DE-KA at the end of FY2021.
Volex plc Annual Report and Accounts 2022Stock code: VLX We have also continued to invest in expanding our
research and development activities. This includes
the recruitment of additional specialists to drive
our product development programmes. We expect
to enhance our research and development teams
through FY2023.
Creating value through acquisitions
The successful acquisition and integration of
quality businesses continues to be a major part
of our strategy. Our typical acquisition target is a
strong, well-managed business in a sector where
we have a deep understanding. We are attracted
to businesses with blue-chip, long-term customers
and good capabilities, enabling us to benefit from
cross-selling opportunities. Targets requiring
significant integration or restructuring effort are
only contemplated when we can identify the right
management resources to lead this activity.
We identify potential acquisitions through a variety
of methods, seeking out businesses that are not on
the market, as well as those already in a process.
All 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 proceed to due diligence only when
we have an alignment on commercial terms and
we only pursue opportunities that meet the strict
value criteria that we tailor for each transaction,
based on its specific characteristics.
31
Realising our strategy
Our strategy is built around five key pillars; product
development, revenue growth, operational
excellence, investment and acquisition and people.
We aim to develop the right products and
capabilities to be the manufacturing partner
of choice for our customers. We have invested
in product development through research and
development, working with our customers to
understand their product requirements.
We put the customer at the heart of what we do,
through regular and transparent communication.
We deliver customer value, alongside exceptional
quality and customer service. To meet these high
standards, we closely monitor our manufacturing
facilities and processes, identifying ways to improve
which will increase efficiency and quality. We have
invested in vertical integration, giving us greater
control over the supply chain and protecting
margins.
Delivering excellent customer service and
improving processes requires great people. We
have strengthened the organisation by bringing
in outside expertise, in addition to creating
development opportunities for existing employees.
Effective communication is important and we
use a variety of channels to drive employee
engagement. We have continued with our
site excellence awards as a way of recognising
exceptional performance and teamwork.
We are constantly assessing businesses that
are going through a sales process, or building
relationships with potential acquisition targets
that show strategic alignment, but are not ready
for sale.
Creating value through organic
investment
We have increased organic investment in
the business, building on our track record of
creating value, as we focus on growth areas,
while employing stringent financial criteria, with
payback on the investment typically achieved
within two years. Our investment in the business
not only maintains and enhances our assets, but
also meets identified increased customer demand
and develops new products. This investment is
enabling our future growth.
Total capital investment increased to $15.0 million
(FY2021: $7.8 million), amounting to 2.4% of revenue
(FY2021: 1.8% of revenue). Capital investment
in the year was slightly lower than planned, as
extended lead times meant that some investment
was deferred into FY2023. In the year, investment
was focused on high-growth areas, including EV
and data centre capabilities, as well as vertical
integration into our cable production, consistent
with our strategy, and the first phase of the new
global ERP system. Importantly, we now have the
capability to produce our own cable in two more
of our facilities in Asia. We expect our investment
to increase in FY2023, as we pursue growth
opportunities in our markets.
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Performance Review
32
Having acquired 10 businesses in four years, we
have become skilled at integrating new operations
into our organisation. We tailor the integration
programme to the requirements of the individual
transaction, focusing on cost synergies and
opportunities to cross sell.
expertise in wire harnesses for domestic appliances.
It provides cross-selling opportunities with our DE-
KA business in Turkey and the recently expanded
facility in Batam, Indonesia. It gives us a global low-
cost presence in the white goods and commercial
markets.
Acquisitions remain a high priority and we are
actively pursuing a number of opportunities, at
different stages of qualification. We have good
access to funding, with significant undrawn
facilities. The completion of any acquisition is
dependent on the business meeting our stringent
requirements following appropriate due diligence
and negotiations.
During FY2022 we successfully completed the
acquisitions of four businesses for a combined
cash consideration of $47.1 million, paying an
average Enterprise Value/EBITDA multiple of 5.5
times, which demonstrates our ability to acquire
quality businesses at reasonable valuations. These
acquisitions contributed revenues of $12.5 million to
the Group in FY2022.
f Irvine Electronics, LLC is based in California, USA
and was acquired in October 2021 for total cash
consideration of $15.1 million.
Irvine is a manufacturer of electronic solutions,
including printed circuit board assemblies, with
over 30 years’ experience and deep relationships
across a wide variety of blue-chip customers,
particularly in the defence, military aerospace
and medical markets. The acquisition will
strengthen our profile in North America, adding
further capabilities and capacity to the Group's
existing operations in Washington State and
Mexico, creating a compelling value proposition
for customers in the region. Expanding on our
integrated manufacturing services strategy, the
acquisition will further strengthen Volex's ability
to provide customers with vertically integrated
solutions through enhanced printed circuit board
assembly capabilities.
f Prodamex SA de CV and Terminal & Cable TC
Inc. were acquired in January 2022 for a total
cash consideration of $18.9 million.
Prodamex provides an advanced manufacturing
facility in Central Mexico serving North American
customers with higher volume requirements. It
complements our plants in Tijuana and Juarez,
Mexico, creating additional local flexibility for
customers. The business has long-standing
TC is one of the largest wire harness manufacturers
in Canada with over 50 years' experience,
establishing a strong Canadian market presence
for Volex as a leading defence supplier. It
complements our Irvine acquisition and broadens
our defence market capabilities into ground
vehicles on long-term customer programmes. TC
has ruggedised wire harness capabilities, allowing
expansion into the attractive "off-highway" market
sector supporting industrial, agricultural and
construction machinery manufacturers.
f An investment of $13.1 million, in March 2022,
for 51% of the equity and 100% of the land and
buildings of inYantra Technologies Pvt Ltd. In
the first quarter of FY2023, $5.0 million of this
transaction price was paid.
InYantra is an electronic manufacturing services
provider based in Pune, India delivering PCB
assemblies and box builds to automotive,
consumer electrical and industrial automation
customers. This acquisition allows Volex to enter
an important new geography, which benefits from
strong macroeconomic trends, with the Indian
Government seeing high-technology electronics
manufacturing businesses as a key growth sector.
The acquisition of the land enables us to scale this
operation over time.
Sustainability
We have continued to develop our approach
to conducting business in a sustainable way. It
is vitally important to our business, customers,
employees, the communities we operate in and our
shareholders. During the year we have designed
standardised sustainability performance metrics
and implemented a Group-wide sustainability
reporting platform. We have also developed a
kaizen-based framework to drive sustainability-
related improvement activities at all our factories.
This programme, once implemented, will ensure
that every factory identifies and then reports on key
improvement initiatives within the sustainability
framework.
Our enhanced focus on Sustainability will lead to
a significant number of improvement activities
happening in all of our sites and it will be
exciting to see the cumulative impact of these
improvements on our Group’s overall performance.
4
5.5x
2.4%
Acquisitions completed
in FY2022
Average EBITDA multiple
of acquisitions
Capital expenditure
as a % of revenue
Volex plc Annual Report and Accounts 2022Stock code: VLX Financial Review
Financial Review
STRATEGIC REPORT
Growing revenue strongly and delivering an
Growing revenue strongly and delivering an
underlying operating margin in excess of 9%
underlying operating margin in excess of 9%
is an excellent achievement in a high inflation
is an excellent achievement in a high inflation
environment with supply chain challenges.
environment with supply chain challenges.
Summary of financial results
$ million (unless otherwise stated)
Revenue
Gross profit
Gross margin
Underlying operating profit*
Underlying operating margin
Statutory operating profit
Net finance cost
Underlying tax (charge)/credit*
Underlying profit before tax*
Statutory profit before tax
Underlying diluted EPS*
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Chief
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3 April 2022
52 weeks
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4 April 2021
614.6
125.8
20.5%
56.2
9.1%
41.0
(5.2)
(9.1)
51.4
36.2
25.2c
443.3
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42.9
9.7%
30.7
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7.2
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29.4
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* Before adjusting items and share-based payment charges.
Statutory results
Revenue grew 38.6% to $614.6 million (FY2021: $443.3
million). Statutory operating profit increased by
$10.3 million to $41.0 million (FY2021: $30.7 million)
which is an increase of 33.6% compared to the prior
year. Net finance costs were $5.2 million (FY2021:
$2.1 million), resulting in a profit before tax of $36.2
million (FY2021: $29.4 million) which increased 23.1%.
There was a tax charge for the year of $5.8 million,
compared to a tax credit in FY2021 of $9.5 million
due to the recognition of deferred tax assets. Basic
earnings per share were 19.3 cents (FY2021: 25.5
cents), a decrease of 24.3%. Before tax, basic earnings
per share increased, but due to the recognition
of a significant deferred tax asset in FY2021 basic
earnings per share after tax decreased in FY2022.
Alternative performance measures
The 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 revenue
Group revenue increased by 38.6% to $614.6
million (FY2021: $443.3 million) driven by strong
organic growth from customer demand and the
contribution from acquisitions. Group organic
revenue growth was 19%, of which approximately
4% was driven by inflation-related price increases,
with the remaining 15% from volumetric growth.
Organic revenue from the fast-growing Electric
Vehicles sector was particularly strong, increasing
96% to $104.2 million (FY2021: $53.1 million), as
we expanded our product set. There was robust
demand in the Consumer Electricals sector with
organic growth of 14%. Overall our Consumer
Electricals revenue increased 60% to $262.4
million (FY2021: $164.0 million), as it benefited
from a full year contribution from DE-KA and the
FY2022 acquisition of Prodamex. Our Medical
revenue was also strong, following delays in the
installation of large medical equipment in the
prior year due to Covid-19-related access issues.
Medical revenues increased 13% on an organic
basis to $128.3 million (FY2021: $112.7 million), and
are now above pre-Covid-19 levels. Revenue from
Complex Industrial Technology increased 6% to
$119.8 million (FY2021: $113.5 million), 2% lower on
an organic basis. Excluding data centre customers
revenues were 12% higher on an organic basis.
Data Centre revenue, is an important sub-sector
of this market and declined due to customer
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destocking in preparation for the transition to the
new 400Gb cables, as well as a slower increase
in demand due to shortages of the new network
equipment needed to support the adoption of
400Gb architecture in data centres.
Gross margin
The Group’s gross margin was 20.5% (FY2021: 23.4%).
This was due in part to product mix with a higher
volume of lower margin Electric Vehicles and
Consumer Electricals products as well as an adverse
impact from global commodity price inflation. Our
contracts with power cord customers, where copper
is a significant cost component, have allowed us to
pass increases in the cost of copper to customers,
maintaining absolute gross profit levels, although
there is a short delay to allow implementation
of price changes. In passing through higher raw
material costs, absolute profit is preserved, but cost
of sales as a percentage of revenue increases, which
reduces the gross margin percentage.
Operating profit
Underlying operating profit increased 31.0% to $56.2
million (FY2021: $42.9 million). This was favourably
impacted by the strong organic growth and the
contribution from acquisitions. In addition, the
ratio of underlying operating expenses to revenue
improved to 11.3%, from 13.8% in the prior year,
demonstrating tight cost control and continuous
improvement activities. This was despite our
increased, targeted investment in the business.
Statutory operating profit also increased by 33.6% to
$41.0 million (FY2021: $30.7 million), also reflecting the
factors above.
The Group’s underlying operating margin of 9.1%
reduced slightly from 9.7% in FY2021. The margin
benefited from higher volumes in the year,
continued strong control over our cost base and
vertical integration activities in our Chinese and
Batam, Indonesia sites. There were a number of
headwinds which brought down margins in the
year, with the adverse product mix and commodity
price inflation set out in the ‘gross margin’ section
above. In addition, the prior year benefited from the
temporary lowering of employment taxes in some
Asian countries, related to the Covid-19 outbreak.
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
associated tax.
Acquisition costs of $2.5 million (FY2021: $0.4
million) were incurred in the year. 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.
Partially offsetting these items was a gain of $2.6
million (FY2021: $nil) recognised on the forgiveness
of the US Paycheck Protection Program loans
provided to parts of the Group’s North America
operations.
Amortisation of acquired intangibles increased
to $10.3 million (FY2021: $5.2 million) largely as a
result of the full year impact of amortisation of
DE-KA intangibles. 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 three years,
so amortisation is higher in the first few years
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.
The charge recognised through the income
statement for share-based payment awards
comprises $3.8 million (FY2021: $2.4 million) in
respect of senior management, $0.6 million
(FY2021: $2.6 million) in respect of acquisitions
and $nil (FY2021: $1.6 million) for associated
payroll taxes.
Share-based payments include awards made
to incentivise senior management as well as
awards granted to the senior management of
acquired companies. The awards made to acquired
company management form an important
part of the negotiation of consideration in an
acquisition situation. They 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.
Net finance costs
Net finance costs increased to $5.2 million
(FY2021: $2.1 million) mainly due to the increased
utilisation of the revolving credit facility following
the acquisition of DE-KA in the prior year and the
subsequent acquisitions of Irvine, TC, Prodamex
and inYantra during FY2022. The financing element
for leases for the year was $1.0 million (FY2021: $0.7
million). The Group recognises interest income
of $0.2 million (FY2021: $0.2 million) in relation to
accrued interest receivable on the 10% preference
shares issued by our associate, Kepler SignalTek.
$56.2m
Record underlying
operating profit
9.1%
Underlying operating margin
17.7%
Underlying effective
tax rate
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Taxation
The Group’s income tax expense for the period was
$5.8m (FY2021: credit of $9.5m), representing an
effective tax rate ("ETR") of 16.0% (FY2021: -32.4%). The
tax expense and the effective tax rate is affected by
the recognition of deferred tax assets, as required
by International Financial Reporting Standards. The
assets recognised this year and in the prior year
are principally due to the recognition of historical
operating losses, unclaimed capital allowances and
other temporary timing differences. The decision to
recognise these assets is based on an assessment, in
the relevant jurisdiction, of the probability of future
taxable profits which will be reduced by the historical
losses and allowances. As the profitability of the
Group’s operations has increased in recent years, this
threshold has been met in certain countries.
In FY2021, management made an assessment of
the probability of future operating profits in a key
location, recognising a corresponding deferred tax
asset resulting in a credit to underlying profit after
tax of $12.9 million. For FY2022, having performed
the same assessment, the credit to underlying
profit after tax was $2.9 million. Tax credits and
charges relating to the underlying operations of the
Group, including losses that have arisen through
underlying activities, are reported in underlying
profit after tax. The recognised deferred tax assets
are expected to be recovered from profits arising
from our underlying operations. Tax charges and
credits arising from transactions reported as
adjusting items and share-based payments are
reported outside of underlying profit after tax. The
deferred tax assets are recovered in future periods
by reducing cash tax payable and recognising a
deferred tax expense in the income statement.
The Group has $64.1 million (FY2021: $80.1 million)
of tax losses for which no deferred tax asset is
currently recognised due to uncertainty over
forecast future profitability in the respective
jurisdictions where the tax losses arose. Depending
on the Group’s future growth and performance in
those jurisdictions it is possible that some of the
unrecognised tax losses may become recoverable,
leading to additional deferred tax assets being
recognised in future periods and reducing the ETR.
The underlying ETR (representing the income tax
expense on profit before tax, adjusting items and
share-based payments) was 17.7% (FY2021: -17.5%).
This difference is, as set out above, mainly due to
lower deferred tax asset recognition. The ETR was
also affected by changes in foreign exchange rates
where local entities calculate tax in local currency
rather than the functional currency for Group
reporting. The impact of foreign exchange volatility
on the underlying ETR was 4.7% adverse (FY2021:
1.9% favourable), mainly arising in Turkey. There
was also a $1.7 million underlying tax credit from
changes to tax rates, particularly due to the effect
on deferred tax assets of the increase in the UK
tax rate to 25% from 1 April 2023, which had a 3.3%
favourable impact on the underlying ETR (FY2021:
0.2% adverse).
Cash tax paid during the period was $6.5 million
(FY2021: $3.1 million), representing an underlying
cash ETR of 12.6% (FY2021: 7.5%). The increase to
the underlying cash ETR is due to the above-
mentioned foreign exchange volatility whereby
a depreciating local currency increases tax
payable, and the effect of acquisitions in higher-
tax jurisdictions where the Group does not have
historical tax losses.
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 3 April 2022, the Group
has net current tax liabilities of $8.2 million (FY2021:
$6.7 million) which include $7.2 million (FY2021: $7.9
million) of provisions for tax uncertainties.
Earnings per share
Underlying diluted earnings per share decreased
16.0% to 25.2 cents (FY2021: 30.0 cents) reflecting
the deferred tax asset recognised lower than the
prior year partially offset by increased underlying
operating profits. Excluding deferred tax asset
recognition underlying diluted earnings per
share increased by 6.3%. Basic earnings per share
decreased to 19.3 cents (FY2021: 25.5 cents).
The weighted average number of shares in the year
was 157.2 million (FY2021: 152.2 million).
Foreign exchange
The majority of the Group’s revenue is in US dollars,
with limited sales in other currencies including euros
and British pounds sterling. Most raw materials
purchases are also denominated in US dollars but
other costs such as rent, utilities and salaries are paid
in local currencies. This creates a small operating
profit exposure to movements in foreign exchange,
some of which is hedged. Foreign exchange losses
recognised in the income statement for the period
were $0.6 million (FY2021: $1.3 million).
Cash flow
Operating cash flow before movements in working
capital was $60.9 million (FY2021: $50.0 million). While
benefiting from the strong operating performance,
operating cash flow reflects the increased investment
in the business. In addition, there was an adverse
working capital movement of $34.4 million, which
compares to a $7.6 million outflow in FY2021. The
reasons for this working capital movement are set
out below:
f An increase in inventory leading to a cash
outflow of $28.1 million (FY2021: $12.2 million).
Extended supply chain lead times have resulted
in approximately two additional weeks of
inventory being held as shipments of finished
goods to customers take longer, and therefore
goods-in-transit increase. Extended supplier
lead times have also increased inventory
levels. This was in addition to the increase
in inventories required due to growth in our
operations and new customer projects;
f An increase in receivables leading to a cash
outflow of $14.2 million (FY2021: $17.0 million)
with the increase reflecting growth of the
business; and
f An inflow related to payables of $7.9 million
(FY2021: $21.6 million). This was also due to the
growth of the business.
Capital expenditure increased to $15.0 million
from $7.8 million in FY2021. During the year, the
Group has continued to invest in automation
to deliver further production efficiencies in our
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higher volume factories. We have also increased
our investment in vertical integration and in our
higher-growth sectors.
Free cash flow was $4.1 million (FY2021: $31.3
million). Free cash flow represents net cash flows
before financing activities excluding the net
outflow from the acquisition of subsidiaries.
Net financing inflows were $40.4 million (FY2021:
inflows $14.5 million). This included dividend
payments of $7.2 million (FY2021: $6.0 million) and
the drawing of the revolving credit facility ("RCF")
to fund acquisitions. As part of the extension and
enhancement of the Group’s RCF, legal costs
and arrangement fees of $2.5 million (FY2021: $1.1
million) were incurred during the year, and these
will be amortised over the life of the facility.
Total cash expenditure on acquisitions (net of cash
acquired) was $54.9 million (FY2021: $42.2 million),
including $19.2 million (FY2021: $1.3 million) in
respect of contingent consideration.
The Group is expecting to make payments of
$17.8 million in FY2023 in relation to contingent
consideration for acquisitions made in FY2022 and
previous years. This includes $5.0 million of inYantra
consideration relating to land, which was paid in
the first quarter of FY2023.
The cash outflow associated with the settlement of
awards under share-based payment arrangements
was $5.1 million (FY2021: $9.1 million).
Net debt and gearing
At 3 April 2022, the Group’s net debt was $74.4
million before lease liabilities and $95.3 million
including lease liabilities. At 4 April 2021, net debt
before lease liabilities was $7.3 million and $27.3
million including lease liabilities.
At 3 April 2022 the Group's covenant basis net
debt/underlying EBITDA ratio was 1.3 times (4 April
2021: 0.3 times). For further details on the Group’s
covenants, see the section on ‘banking facilities,
covenants and going concern’.
Dividend
The Board's dividend policy, while taking into
account earnings cover, also takes into account
other factors such as the expected underlying
growth of the business, its capital and other
investment requirements. The strength of the
Group's balance sheet and its ability to generate
cash are also considered.
A final dividend of 2.4 pence per share (FY2021: 2.2
pence) will be recommended to shareholders at
the Annual General Meeting, reflecting the Board’s
confidence and the Group’s robust financial
position. The cash cost of this dividend is expected
to be approximately $5.0 million.
Together with an interim dividend of 1.2 pence per
share paid in December 2021, this equates to a full
year dividend of 3.6 pence per share (FY2021: 3.3
pence per share), an increase of 9.1%. If approved,
the final dividend will be paid on 26 August 2022 to
all shareholders on the register at 22 July 2022. The
ex-dividend date will be 21 July 2022.
Banking facilities, covenants
and going concern
In February 2022 the Group completed a
refinancing of its banking facilities, with a syndicate
of five banks. An enlarged $300 million facility
replaced the Group’s existing $100 million multi-
currency revolving credit facility. The new facility
has an initial three-year term, with two one-year
extension options. It comprises a $125 million
revolving credit facility, a $75 million term loan and
an additional $100 million uncommitted accordion.
The new facility has an improved net debt to
underlying EBITDA covenant facility, providing
additional headroom in comparison to the previous
facility, affording greater flexibility to undertake
organic and inorganic investment to support growth.
This facility is provided by a syndicate of five banks.
The key terms of the facility are:
f Available until February 2025 with the option to
extend for up to two further years;
f No scheduled amortisation; and
f Interest cover and total debt to underlying
EBITDA leverage covenants.
As at 3 April 2022, drawings under the facility were
$103.8 million (FY2021: $32.7 million) with $3.2
million drawn under the cash pool (FY2021: $nil).
At the year end the net debt to underlying EBITDA
ratio was 1.3x and interest cover was 39.4 times, well
within the covenant terms.
The Group’s financial statements have been prepared
on the going concern basis, which contemplates
the continuity of normal business activity with
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 cash flow forecast
for the period to end of September 2023, which is
based on the FY2023 Board-approved budget. The
Directors have performed sensitivity analysis on the
cash flow forecast using a base case and downside
scenario that take into account the principal risks
and uncertainties set out on pages 38 to 43 of the
Annual Report and the potential future impact from
$4.1m
Free cash flow
$54.9m
Cash expenditure
on acquisitions
1.3x
Covenant net debt :
EBITDA ratio
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Covid-19. The sensitivity analysis includes a severe
but plausible downside scenario which models a
15% reduction in year-on-year revenue, equivalent
to the worst result in recent history, which still
provides significant covenant headroom.
Based on their assessment and these sensitivity
scenarios, the Directors are satisfied that there are
no material uncertainties regarding 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 accounting
For 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 42 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 3 April 2022, a financial asset of $nil (FY2021:
$0.1 million) has been recognised in respect of the
fair value of open copper contracts. 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 FY2022 (FY2021: 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.
The Group also has certain foreign operations
whose net assets are exposed to foreign currency
translation risk. The Group’s policy is to hedge this
exposure through designating certain amounts of
foreign currency denominated debt as a hedging
instrument.
Defined benefit pension schemes
The Group’s net pension deficit under IAS 19 as at 3
April 2022 was $3.1 million (FY2021: $5.2 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 with a small part
of the decrease due to the movement in exchange
rates.
Jon Boaden
Chief Financial Officer
23 June 2022
STRATEGY IN ACTION
Raising awareness of our
products and services
A reinvigorated marketing support program
was launched in FY2022 to publicly promote
our expanding product portfolios and
manufacturing services.
This effort began with the segment-wide collection of technical
information, images, drawings, and specifications across our
entire company with the goal to create dynamic, content-rich,
product pages for addition to the Volex.com website. The newly
published website content immediately elevated key product-
type search rankings resulting in a year-over-year increase of
website user traffic.
The now strengthened website became the foundation for
development and spread of further customer and prospect
focused marketing and communication programs which
included an increased frequency of posts on our social media
channels, creation of sales literature, standardization of
technical data sheets, HTML email campaigns, and the use of
consistent Volex branding across the organization.
FY2022 also saw the return of trade show attendance where we
exhibited at industry-leading shows in China and North America
to raise customer awareness of Volex high-speed data centre
products. Our full Data Centre offering was represented at the
China International Optoelectronic Exposition (CIOE 2021) in
Shenzhen, China and DesignCon 2022 in Santa Clara, California
where we featured physical samples and demonstration videos
of our next generation portfolio of active and 400/800Gbps
direct attach copper (DAC) cables.
This resource building and information spread journey will
continue throughout FY2023 as we continue to strengthen
the website and publish additional pages that highlight the
wide variety, and ever-expanding, solutions we can offer our
customers and prospects. These online resources will also
allow convenient self-service of frequently requested technical
information and approvals/certificates.
Continue to check Volex.com and our social media channels
(LinkedIn and Twitter) frequently as new announcements and
support resources come online.
Link to Strategy
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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 managing the
impact of global supply chain issues, including
component costs, supply shortages and lead times.
While supply chain issues have been challenging
for the majority of businesses, the Group is
holding increased levels of inventory to meet
customer demand and has a strong, experienced
procurement function with robust processes
and effective supply chain tools to help mitigate
any adverse impact of the macroeconomic
environment.
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:
f 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
f 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.
Volex Risk Management
Approach
Structure
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.
Top Down
The Board
Strategic risk assessment
at Executive and Board level
Overall responsibility for
risk management
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
Risks assessed at operational
and functional level
Bottom Up
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10
7
4
6
2
3
13 14
5
89
12
1
Low
Likelihood
High
1
2
3
4
5
6
Acquisition Integration
Market Competition
Customer Concentration
7
8
9
Supply Chain
Technological Change
Product Quality
Global Economic Conditions
10
Staffing and People
Access to Finance
Commodity Price Volatility
and Foreign Exchange
11
12
Cyber and Data Security
Climate and Environment
13
Regulatory Compliance
14
Financial Controls
Key:
Strategic
Operational
Financial
Compliance
38
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Emerging risks
As part of the overall risk assessment process, a
review is conducted to identify emerging risks, so
that these can be monitored and the potential
impacts can be understood and managed.
The process identified that, while there continued
to be an acknowledgement of uncertainty around
macroeconomic and geopolitical risks during
2021 through to 2022, the invasion of Ukraine this
year risks further destabilising food and energy
supplies which could impact inflation contributing
to a recessionary environment. This risk will be
monitored by the Company’s Audit Committee
and Board.
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
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.
Financial
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.
Operational
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.
Compliance
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.
39
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TREND
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STRATEGY
+
Group Risk Management
Strategic risks
RISK AND POSSIBLE IMPACT
RISK MITIGATION ACTIVITIES
1 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.
The Group continues to focus on sequential acquisitions that add
value and are cash generation from day one, with an effective
earn-out model, where appropriate, 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.
2 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.
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 achieving greater vertical
integration to maintain competitiveness.
More complex Volex products often require specialised
engineering knowledge and are subject to stringent regulatory
approval, making changes in suppliers challenging for
customers. Volex is continually looking to keep its high-speed
product offering up to date.
3 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. Notwithstanding this, individual production sites and other
entities may be susceptible to reliance on individual customers.
4 Strategic – Global Economic Conditions
The economy has been
challenged by the Covid-19
pandemic. There are a range
of short and medium-term
outcomes in terms of how
the economy could respond.
In the scenario of economic
contraction, this could have
an impact on our sales and
profitability.
Covid-19 has had a limited financial impact on FY2022 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.
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.
Key:
Up Trend
Down Trend
No Change
Product development
+ Investment and Acquisition
People
Revenue growth
Operational excellence
40
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TREND
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STRATEGY
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Operational risks
RISK AND POSSIBLE IMPACT
RISK MITIGATION ACTIVITIES
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 components
that our customers may use
and global logistics routes are
experiencing some disruption.
Global supply chain issues continue to have an impact on
lead times, and component availability and costs. Volex will
need to maintain pursuing its current strategy of increased
vertical integration and supplier diversification. 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 disruptive effects caused by Covid-19,
individual sites and entities are taking steps to secure sufficient
stock, including from alternative sources, where possible.
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.
Competition for staff can be challenging, particularly in
contracting labour markets. A 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 local market conditions contributing
to higher rates of staff turnover in some of our production
sites. The global HR team is focusing on staff engagement and
improving employee satisfaction across the Group as well as
strengthening succession planning for management and key
staff positions.
7 Operational – IT and Cybersecurity
With a computer usage base
of an estimated 2,000–2,500
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.
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.
.
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Group Risk Management
Operational risks CONTINUED
RISK AND POSSIBLE IMPACT
RISK MITIGATION ACTIVITIES
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.
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.
10 Operational – Climate and Environment
As a global manufacturer, Volex depends on stable energy
supply and secure supply of resources and materials. Through
our successful diversification strategy and through establishing
production capabilities in different regions we are a more
resilient business.
Climate and environmental risk
factors are an emerging threat
to all companies and could
impact a business in terms
of energy supply, resource
availability and climate
disruption.
Financial risks
RISK AND POSSIBLE IMPACT
RISK MITIGATION ACTIVITIES
11 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. This year,
the Company successfully replaced its existing $100 million
revolving credit facility with a new $200 million committed
facility, together with an additional $100 million uncommitted
accordion. The Group considers the impact of any significant
transactions when undertaking short-term and long-term cash
flow forecasting.
12 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.
Key:
Up Trend
Down Trend
No Change
Product development
+ Investment and Acquisition
People
Revenue growth
TREND
LINK TO
STRATEGY
TREND
LINK TO
STRATEGY
+
Operational excellence
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Compliance risks
RISK AND POSSIBLE IMPACT
RISK MITIGATION ACTIVITIES
13 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.
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.
14 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.
The Group has an internal audit co-sourcing arrangement with
an external provider and a number of internal audit reviews
looking at financial controls have been completed during the
year. Central and regional head offices exercise ongoing review
and assessment of individual Volex operations.
Annual participation in the Volex Group Anti-Bribery online
learning course is mandatory for all relevant staff. Internal
authorisation processes are reviewed periodically to ensure that
they remain relevant and effective.
STRATEGIC REPORT
TREND
LINK TO
STRATEGY
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Section 172 Statement
44
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 and 19 and
in the Chief Operating Officer’s Q&A on pages 24
to 27.
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 ongoing effects of the
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 pillars.
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 ‘Social Impact’
section of the Sustainability Report on pages 51 to
53. The Safety, Environmental and Sustainability
Committee Report can be found on pages 73 to 74.
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 to 21, the Chief Operating Officer’s
Q&A on pages 24 to 27, and the Performance and
Financial Review on pages 28 to 37.
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 45 to 54. The Company maintained
regular monitoring and reporting of its energy use
and carbon emissions even when that was not
compulsory for AIM listed companies. 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. Details of the Company’s commitment
to engagement with the local community can
be found in the Sustainability Report on pages
45 to 54.
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. The
Company has upgraded its compliance hotline
and has implemented an independent reporting
system. 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 45 to 54 and in the Corporate Governance
Report on pages 62 to 67.
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 Annual
General Meeting ("AGM"). Smaller shareholders
are often the most regular attendees and active in
questioning the Board at the AGM.
Volex plc Annual Report and Accounts 2022Stock code: VLX Sustainability at Volex
Management and stewardship
Board governance – Safety, Environment and Sustainability Board Committee
In the past year with our Board’s approval and oversight through the Board’s Safety, Environment and Sustainability
Committee we have increased our focus on sustainability and have now established a framework upon which we can build
our sustainability agenda for the future. This framework identifies three key pillars of activity that will underpin our efforts to
improve our performance on sustainability. These key pillars are:
1. Data led insight
2. A bottom-up approach
3. Group-wide Action
this means getting our data,
data collection and data
reporting fit for purpose
this means driving
improvement actions at each of
our sites, only through site level
engagement can we achieve
sustainable improvement
where we identify common
themes or action areas to work
on and we use our global
scale to work with a common
purpose to achieve the
maximum impact for our effort
45
Building ‘Excellence in Sustainability’
at a factory level
In the past year we have worked hard to engage all of
our sites in the design and development of our Volex
Factory Sustainability Framework. We have used regional
sustainability networks to share thinking and best practice
examples and have engaged with all of our site leaders to
ensure that our ambitions in sustainability are credible.
We believe that the only way to deliver meaningful and
sustainable improvement in a global manufacturing
company is to generate engagement and improvement
effort at each and every one of our sites.
The establishment of our Volex Factory Sustainability
Framework acts as a platform for each of our
manufacturing facilities to select their own prioritised
improvement actions for the year ahead to ensure that they
enhance the sustainability performance of their site.
To ensure we celebrate the successes of our sites’
achievements to deliver on the sustainability agenda we
have also decided to expand our successful global Site
Excellence Awards programme to include Sustainability as
an additional category so that we recognise those sites who
demonstrate excellence in this area. The first Sustainability
Site Excellence Award will be announced in April 2023.
Volex Sustainability Reporting System
In the past year we have prioritised the implementation
of a Sustainability Reporting System and have established
a standardised set of ESG-related indicators across all of
our operating locations. We selected the UL360 Essentials
solution as our reporting platform and with this capability
we can now ensure that our ESG data is captured
consistently across all parts of our business.
We call this platform the Volex Sustainability Reporting
System (“V-SRS”). Not only does this investment deliver a
consistent set of management insights across a wide array of
environmental, social and governance related performance
indicators it also enables us to efficiently calculate our
global carbon emissions ensuring that we can be more
granular and responsive in our disclosures to our external
stakeholders.
Safety
Energy
efficiency
Local
communities
Volex Factory
Sustainability
Framework
Environmental
impact
Product,
process and
packaging
Working
practices
and labour
management
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Sustainability at Volex
46
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Our sustainability strategy
At Volex, sustainability is central to how we operate. As a
global manufacturer and provider of power and connectivity
related solutions we are dependent upon a sustainable
supply of resources and energy to enable us to meet the
expectations of both our customers and the end users of
our power cords, connectors and harness assemblies.
The greatest contributing factor to our carbon emissions, in
FY2022 87%, comes from the energy we consume to transform
materials into our customer’s products. We have started to
investigate our Scope 3 emissions more fully. We recognise
that at least a further 70% of our total emissions could fall
within the definition of Scope 3 emissions as defined by the
UN’s Global Compact.
We recognise that as a global manufacturer we have a
significant responsibility to protect and preserve these
natural resources and to use our energy as efficiently as
possible. We are committed to having a positive impact
on the communities in which we operate whilst providing
stable and meaningful employment to our workforce whilst
ensuring that we minimise any negative impacts on the
natural environment from our operations.
It is our responsibility to constantly strive for operational
excellence in our manufacturing processes to ensure that we
use the optimum amount of energy necessary to produce
our finished products. This approach requires a relentless
focus on kaizen. Our key challenges are to source our energy
responsibly to reduce our carbon emissions (per kilowatt hour
of energy sourced) and to eliminate waste through ensuring
a right first-time approach to our processes and by ensuring
that any waste produced through our operations is re-used,
re-purposed or recycled, therefore minimising our disposal of
waste to landfill.
AT VOLEX WE
STRIVE TO BE:
OUR IMPROVEMENT EFFORT
IS FOCUSED ON
UN SDG METRIC
FY2022
FY2021
A sustainable
business
f Delivering year-on-year improvements
in the efficiencies of our production
processes
f Using our resources efficiently and
maximising recycling rates
A responsible
business
f Ensuring all our employees are safe,
healthy and engaged whilst at work
A trusted
business
f Ensuring that all our workers receive
fair pay and benefits
f Ensuring an inclusive culture that
values diversity
f Delivering products and services to our
customers that provide their power and
connectivity needs helping to power
life and supporting the move to a
greener economy
f Operating our business ethically and
with integrity ensuring a robust Code
of Conduct is embraced by all our
employees
Carbon intensity1
tCO2e/mUSD
34.89
40.68
Waste to Landfill2
151,692 Kg
n/a
Recycling rates3
86.6%
Accident Rate4
3.2
n/a
2.0
Turnover5
Absence6
Diversity7
Number of
employees
trained on equal
opportunities and
diversity8
Number of
employees
trained on
CyberSecurity9
% covered by
ISO900110
3.28%
4.25%
3.86%
3.05%
53%
6,384
n/a
n/a
1,471
1,374
98.9%
n/a
1
tCO2e per million USD Revenue. The scope of our carbon emission measurement is shown on page 49.
2 Kgs of waste sent to landfill. We commenced data collection in FY2022, data shown is annualised based on seven months actuals. Data being reported is from 10
factories representing 76% of our global workforce. Our other sites are yet to commence waste data reporting.
3 Our recycling rate percentage is calculated as the % of solid waste produced that is sent for recycling averaged from the last three months of FY2022. Data is
reported from 9 factories representing 75% of our workforce. Our other sites are yet to commence waste data reporting.
4 Lost Time Accidents per million hours worked. Equivalent metrics are 0.6 accidents per 200,000 hours worked or 617 accidents per 100,000 employees. All sites
report monthly safety information.
5 Our Turnover rate is calculated as the number of leavers / total workforce as a percentage. We exclude leavers where short term fixed term contracts expire. Our
gross turnover for FY2022 is 3.99.
6 Our Absence percentage is calculated as the number of hours of absence as a percentage of total worked hours. In this KPI we exclude vacation, training and
maternity leave hours. In FY22 we saw increased sickness absence levels caused by Covid-19 cases across most of our global locations.
7 We introduced data reporting on workforce diversity in FY2022. This KPI shows the percentage of the total workforce who are female. Calculated based on P12
actuals. Additional diversity metrics are show on page 51.
8 We introduced data reporting in FY2022. This confirms the number of employees who received training on equal opportunities and diversity in FY2022. This
number is equivalent to 81% of our year end workforce.
9 Numbers of employees participating in our CyberSecurity E-Learning programme. This e-learning is applied to our management and professional workforce only.
In FY22 this represented 74% of our IT-enabled workforce.
10 Data reporting commenced in FY2022. This shows the percentage of total workforce employed at a location with an ISO9001 certified quality management
system. All certifications are available on our website. Additionally we have 51% of our workforce employed at an ISO45001 (occupational health and safety
management system) certified facility and 79% of our workforce employed at an ISO14001 (environmental management system) certified facility.
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Environmental Management
Our commitment to sound environmental stewardship
is enshrined within the Group's Code of Conduct which
has Board approval and oversight through the Safety,
Environment and Sustainability Committee. We are
committed to minimising the impact of our business on the
local environment in which we operate.
In FY2022 we have aligned our sustainability strategy to the
United Nations' Sustainable Development Goals to ensure
that as we develop our strategy we are clear on how our
efforts can be aligned to the wider sustainability agenda.
We will accelerate our efforts to promote more sustainable
business practices through the implementation of the Volex
Factory Sustainability Framework.
Environmental Management Systems
The majority of our factories have adopted an environmental
management system that is accredited to international
standard ISO 14001:2015. 79% of our global workforce currently
works in a factory which is ISO14001 certified. Compliance
is ensured through our internal audit process together with
regular external audit assessments. We did not receive any
environmental fines or penalties in FY2022.
Emissions
We are committed to reducing the carbon emissions
associated with our operations. We have delivered a 14%
reduction in carbon intensity per million USD revenue
compared to the prior year. We have established energy
efficiency as a key pillar within our factory sustainability
framework and improvement ideas generating energy
efficiency are already being identified through our kaizen
activities.
Energy and efficiency improvement
actions in 2022
We are committed to improving energy efficiency across
the business. As part of introducing the Volex Factory
Sustainability Framework we encourage each site to adopt
energy efficiency measures including the implementation of
LED lighting solutions, switch-off equipment whilst not in use
and replacing older energy intensive equipment with more
modern and more sustainable solutions.
We have continued to invest in more energy efficient process
equipment in our operations. Our Basingstoke, England
factory has adopted a fully green-certified energy supply
marking the first Volex factory to fully utilise renewable
energy supply. In Mexico, our recently acquired plant in
San Luis Potosi has a specially-adapted roof design which
enables operations to work with just natural light during
daylight hours without the need for energised lighting. In
China, our Henggang facility completed a project to adopt
energy efficient heaters for their moulding machines to avoid
unnecessary heat loss during their operation.
Volex Site Excellence Awards
In FY2021 we implemented a programme to recognise
excellence at a site level. Each site receives a certificate and a
bespoke trophy but even more importantly all winning sites
take time to hold a factory-wide celebration event involving
every employee. It is extremely important for us at Volex to
take the time ‘at a site level’ to recognise and celebrate with
every single employee.
In FY2023 we will add a category for Sustainability to enable
us to recognise excellence in this area as our sites start to
deliver improvement activities.
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Environmental Sustainability
ENVIRONMENTAL IMPACT SDGS:
We are working to improve the
environment impact of our operations.
Climate action
Take urgent action to
combat climate change
and its impacts
48
For information about individual regions and factories,
please visit our website www.volex.com
Climate Change
As Volex we recognise the increasingly disruptive
changes that are taking place to the world's climate
and we are committed to playing our part in
tackling climate change. Our overall objective is to
reduce our carbon footprint across our value chain
by working within our own operations and through
our engagement with external stakeholders.
We firmly support the recommendations of the
TCFD and are preparing for proper disclosure to
meet the requirement in the future. We are also
developing a Climate Change Policy, which will
include emissions reduction targets with the aim of
achieving net carbon zero.
Energy Consumption
Our energy consumption varies significantly by
site given the differences in the manufacturing
processes utilised at these locations. However with
the implementation of our V-SRS platform we can
now report on site energy consumption across the
Group identifying areas of excellence and areas
for improvement. We have defined FY2022 as our
base year for our emissions and fuel consumption
performance given the implementation of our
comprehensive sustainability reporting platform.
Water
Volex is committed to minimising the consumption
of water within the business. Our objective is
to ensure that this precious natural resource
is used sustainably and always returned to
the water system in a good condition. At
most of our locations water use is minimal as
it is not naturally required in our traditional
manufacturing processes. Water efficiency is
one of the improvement areas within our Factory
Sustainability Framework. In FY2022 we consumed
216,373 metric tonnes of water compared to 178,590
in FY2021. This year-on-year increase is caused by
both our acquisition strategy and increased levels
of production across the Group.
Waste
Volex is committing to minimising waste within
the business and to ensure that we minimise any
waste that is sent to landfill. In FY2022 we started
work to understand and manage the impact of
waste produced from our business. In FY2022
we started to encourage all sites to introduce
waste management arrangements to measure
the waste produced by their operations. It is
encouraging to see that by the end of FY2022 we
could report a recycling rate of 89%. This is based
on the submissions from nine of our factories
representing 75% of our global workforce. Our
UK-based subsidiary GTK UK is the only one of
our sites currently performing as a zero waste
to landfill business. With greater focus on waste
management and recycling planned for FY2023
we would anticipate delivering significant
improvements in this area in the years ahead.
Products and Sustainability
Many of our products are aligned to key ESG
objectives, including manufacturing for Electric
Vehicle charging, medical purposes and for greater
efficiency including robotics and automation.
From a product perspective we are compliant with
the provisions of EU RoHS and EU REACH, and
implement stringent controls to eliminate the use
of hazardous substances. We offer products that
are free from MCCP, phthalates, lead and DINP,
and a range of halogen-free cables.
We have also challenged our business through
our Factory Sustainability Framework to focus
on improvements within our global supply chain
to reduce the inherent emissions associated
with the transportation of products both in our
internal and in our external supply chain. Changing
the sources of key materials, becoming more
vertically integrated and considering greater use
of local supply possibilities enable us to further
decarbonise our supply chain. As we recognise that
an additional 70% of our total emissions could lie
within our Scope 3 emissions we have in FY2022
commenced a pilot project to investigate our
Scope 3 emissions from within our supply chain
and we would expect to expand our focus in this
area in the coming year.
Volex plc Annual Report and Accounts 2022Stock code: VLX STRATEGIC REPORT
Streamlined Energy & Carbon Reporting (SECR)
Statement FY2022
Company information
Volex plc (the "Company" and together with its subsidiaries the "Group") is a public company limited by shares domiciled
and incorporated in the United Kingdom under the Companies Act 2006. Its shares are listed on AIM, a market on the
London Stock Exchange. The address of the registered office is given on page 164.
Quantification and reporting methodology
For our reporting on Scope 1,2 and 3 we have followed the GHG Protocol and the 2013 UK Government environmental
reporting guidance as defined in The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and
The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. The
full global operations have been included within this assessment. The financial boundary was reviewed and has been
determined that all material emission sources have been captured within the assessment boundary.
We are working towards reporting against the remainder of our Scope 3 emissions. The figures relate to the required
elements of each Scope 3 category.
Table 1: Total Volex GHG emissions for the period 1 April 2021 – 31 March 2022* (tonnes CO2e1 unless stated)
* All sustainability data is reported using full calendar months. Therefore, there is a minor difference in our reporting periods.
2021/22
Global
(excl.
UK and
offshore)
UK and
offshore
Scope 11: Direct GHG emissions
Group Total
2021/223
UK and
offshore
2020/21
Global
(excl.
UK and
offshore)
Group Total
2020/21
Global GHG Emissions data in metric tonnes CO2e
Site Diesel
Refrigerants
Site Natural Gas
Company Vehicle Fuel Use (including LPG)
Company Owned Vans/Lorries
Company Owned Car Travel
Total Scope 1
Grid Electricity Non-Renewable
District Heating Emissions
Total Scope 2 (location based)
Total Scope 1 and Scope 2 Emissions
Intensity metric:
Scope 1 & 2 GHG emissions per $M turnover2
–
–
13
–
–
–
13
76
210
451
41
122
89
76
210
464
41
122
89
990
1,003
Scope 2: Indirect GHG emissions
2
–
2
15
18,469
18,471
265
18,734
19,724
265
18,736
19,739
34.9
Scope 3: Indirect emissions in the value chain
Employee Commuting inc. home workers emission
Grid Electricity Non-Renewable (T&D)
District Heating T&D Emissions
Business travel (rail, flights, taxi)
Total scope 3 emissions
–
–
–
–
–
–
1,235
14
436
1,685
n/a4
1,235
14
436
1,685
–
–
18
–
–
1
19
30
–
30
49
0.1
–
–
1
1
32
126
32
126
1,074
1,092
55
137
187
55
137
188
1,611
1,630
16,356
16,386
124
16,480
18,091
124
16,510
18,140
40.7
6
6
1,689
1,689
7
8
7
9
1,710
1,711
Total gross CO2e (Scope 1+2+3) (location based)
Total Energy consumption (Scope 1+2) (kWh)
Renewable Energy Consumption (kwh)
Renewables Energy Consumption (tCO2e)
15
21,409
21,4235
50
19,800
19,850
154,283 39,354,386 39,508,669
229,244 38,069,214 38,298,458
77,110
18
–
–
77,110
18
n/a
n/a
n/a
n/a
n/a
n/a
1 CO2e – carbon dioxide equivalent, this figure includes GHGs in addition to carbon dioxide.
2
Intensity ratio of gross global emissions in tonnes of CO2e per million dollars of revenue chosen as a common business metric for our industry sector. Acquisitions
in the reporting year include Irvine Electronics, TC, Prodamex which completed in FY2022. Emissions are recorded from day 1 of the acquisition as part of our
integration activities.
3 FY2022 is the first year in which we have a comprehensive data set to assess our environmental performance. FY2022 is the base year to monitor our future
performance.
4 Homeworker emissions have been excluded from the scope, they amount to 1% of the total emissions and so it is not material to the overall results.
5 This excludes the 18 tCO2e from our consumption of certified renewable energy so the gross total emissions for FY2022 is 21,442 CO2e.
49
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Streamlined Energy & Carbon Reporting (SECR)
Statement FY2022
Table 1 shows the GHG emissions for the Group,
broken down by Scope 1, Scope 2 and some Scope
3 emissions for FY2022 and FY2021.
Our reported emissions have increased this year
by 18.8% as a result of our expansion through
acquisition and an overall revenue growth of 38.6%.
Our Emissions Intensity has reduced by 14% for the
FY2022.
Emissions by Region (tCO2e)
Region
UK
Americas
China
Asia Pacific
Europe & Turkey
Group Total Emissions
FY2022
15
1,796
11,183
4,170
4,259
21,423
Targets
Now that we have a base year (FY2022) on which
to assess our emissions, through FY2023 we intend
to define our emissions reduction targets with the
aim of achieving net carbon zero.
Data Assurance
In FY2022 we engaged Carbon Footprint Ltd., to
undertake an independent third party verification
of carbon footprint assessment and supporting
evidence for our FY2022 reporting on our Scope 1, 2
and 3 emissions. A copy of their report is available
on our website. The verification undertaken
by Carbon Footprint Ltd was conducted in
accordance with ISO 14064-3 (2019): Greenhouse
gases- part 3: ‘Greenhouse Gases: Specification
with guidance for the verification and validation of
greenhouse gas statements.'
Page 3 of the Carbon Footprint Report confirms
that this provides a limited level of assurance.
Page 17 of the Carbon Footprint Report confirms
that Volex has established appropriate systems
for the collection, aggregation, and analysis
of quantitative data for determination of GHG
emissions for the stated period and boundaries.
50
Volex plc Annual Report and Accounts 2022Stock code: VLX Social Impact
Total Workforce
53%
47%
The Board
16%
Management
21%
n Male
n Female
84%
79%
Diversity
We are committed to developing a diverse
and inclusive workforce and to be an equal
opportunity employer and this is enshrined
within our Group Code of Conduct
endorsed and overseen by our Board. We
believe that the ability of our employees
to progress within the Company must
only be linked to their efforts and abilities.
Our overall workforce gender diversity is
well balanced with 53% of our workforce
being female and the global nature of our
operations ensures a broad representation
of nationalities exist across our workforce.
Each year we aim to deliver training on
equal opportunities and diversity related
topics to our workforce. With our new
reporting system we can confirm that 6,384
employees received this training in FY2022.
Health, Safety and Well-being
Our Sustainable Business Goal is to improve
the physical and mental health and well
being of our employees and to provide
them a safe place to work. This aligns
with the UN's SDG 3 “Good health and
well-being".
We are committed to ensuring that all of our
employees have a safe place to work. Our
people are our most important asset and
as a manufacturing company our primary
focus is on ensuring safety in our factories.
We achieve this through ensuring robust
health and safety management systems
and through a strategy of risk reduction and
accident and injury prevention.
51% of our global workforce is employed
within a plant accredited to ISO45001 which
is the international standard for occupational
health and safety management systems.
Compliance with these management
systems is ensured through an external
audit process with external assessments by
companies such as TUV and Intertek.
In FY2022 we trained 6,712 employees in
health and safety.
Actions taken to improve Health,
Safety and Well-being in the
business
Since 2019 we have adopted a rigorous
approach to reducing levels of risk across
all of our factories. We have implemented
our Group Health and Safety policy,
approved by the Board, to all of our
sites and we require all sites to follow
our Group’s incident reporting process
to ensure that all serious incidents are
quickly and professionally reported to
Management. Every lost time accident is
investigated by the local management
team and every incident report and
corrective action plans are reviewed by our
Group HR Director.
Feedback on safety causation and trend
information is regularly provided to the
Board through the Safety, Environment
and Sustainability Committee.
Despite the constraints of a Covid-19 world
we have continued to carry out Plant
Safety Reviews during the year. We have
focused on the two sites responsible for
the greatest number of our Lost Time
Accidents.
51
Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Social Impact
SOCIAL IMPACT SDGS:
With over 7,800 employees across 22
countries our focus is to ensure a positive
social impact.
52
Good health and well-
being
Ensure healthy lives and
promote well-being for all
at all ages
Decent work and
economic growth
Promote sustained, inclusive
and sustainable economic
growth, full and productive
employment and decent
work for all
For information about individual regions and factories,
please visit our website www.volex.com
As travel restrictions ease we will ramp up our
efforts to complete a greater number of Plant
Safety Reviews in FY2023 as these are the best way
to verify the real status of safety and risk on site.
Our primary KPI for safety is the number of lost
time accidents. We are determined to reduce
the number and severity of accidents in our
operations.
In FY2022 we had 29 lost time accidents. We have
not had a fatality in our business during FY2022 or
FY2021.
Number of fatal accidents
Number of lost time accidents
Number of sites with zero lost
time accidents
Accident Frequency Rate
Days lost due to lost time
accidents
Number of on-site plant safety
reviews
Workforce (%) covered by
ISO 45001
Number of employees receiving
H&S training during FY2022
6712
FY2022
FY2021
0
29
8
3.2
0
27
7
2.0
541
n/a
3
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1
n/a
n/a
Note, the scope of our health and safety reporting
disclosures covers the entire workforce inclusive
of accidents or injuries incurred by contractors or
agency-based personnel in support of business.
Acquired businesses report accidents and
incidents from day one.
With our enhanced reporting capabilities we now
monitor accident frequency rates on a monthly
basis with actual worked hours giving a more
precise insight into our performance. We use this
data to prioritise our improvement activities. Those
sites with higher accident frequency rates receive
greater support even if the overall number of
incidents remains low.
In FY2022 we started to report on all injury
accidents and near miss incidents and we would
expect to be able to report on these for FY2023.
Primary causes and types of accidents
Having assessed every lost time accident since
2015 we know that the primary cause of lost time
accidents historically has been employees injuring
their fingers when coming into contact with moving
machinery (43% of our lost time accidents in FY2022).
Since FY2020 we have placed a strong emphasis
on machinery safety and have seen some
significant improvements. Some of our more
recent acquisitions still have to complete this
improvement work before we successfully improve
our Group-wide performance.
Talent development and performance
management
Volex is committed to promoting career
development within our workforce. All of our
businesses are proactive in anticipating both
short and long-term employment needs and
skill requirements. All employees are encouraged
to actively engage in their career development
and training opportunities are available across
the Group.
Since 2020 we have operated a robust talent
review process in Q1 of the financial year. 1,584
colleagues (20% of our workforce) received an annual
performance review during FY2022. For our most
senior 250 employees we manage their performance
within an online performance management
system. Implemented in FY2021 this system
ensures alignment of objectives, regular reviews
and feedback and consistent year end evaluation.
Our shop floor based employees receive skill-based
assessments during the year but these are excluded
from the management and staff performance review
processes.
Training hours and training budget
In FY2022 we have started to record our investment
in training hours and spend across our business. For
FY2022 58,761 hours of training (8 hours per person
per year) were delivered across our business with
an investment in 'off the job training' in excess of
$132,000 also being reported by our sites.
Volex plc Annual Report and Accounts 2022Stock code: VLX Community engagement
The communities in which we operate are vital to
our workforce and many of our sites have continued
to engage pro-actively with their communities
despite the ongoing pandemic. In FY2022 across
the Group we donated $6,065 in cash donations to
recognised charities. This was brought into contrast
in the final quarter with the Ukrainian crisis. Our
Poland team located in Bydgoszcz immediately
started to pro-actively mobilise in support of the
Ukrainian people.
Workforce engagement and culture
Our goal is to create a great place to work for our
employees. We have adopted two key measures to
assess the levels of workforce engagement. As part
of our growing focus on Sustainability we provide
regular updates on issues affecting workforce
engagement and culture to the Board via the
Safety, Environment and Sustainability Committee.
In FY2022 with the implementation of the
Volex Sustainability Reporting System (“V-SRS”)
we are now able to establish a base year for a
comprehensive set of performance indicators for
our global workforce and this includes absenteeism
and turnover.
Absenteeism
We have established a global framework to monitor
absence consistently. We use an adjusted measure
for absence within the business. To calculate this
we exclude holiday, maternity leave and hours spent
on 'off the job' training. Total absence levels are also
recorded. In FY2022 3.86% of all worked hours were
lost due to absence factors including sickness but
excluding vacation, training and maternity leave.
Employee turnover
Our focus is on reducing voluntary employee
turnover. This means where the employee decides
to end their employment relationship compared to
the expiry of a fixed term employment agreement or
where an employment agreement is terminated for
some other substantial reason such as misconduct
or a restructuring.
For FY2022 total workforce turnover across the
Group was 3.96% although some sites continued to
face local challenges of high turnover particularly
within their shopfloor-based roles. If the expiry of
fixed term contracts is excluded from this data
then the adjusted workforce turnover for FY2022
was 3.32%.
Employee referral programmes
We believe in the principle that our employees
should be the best ambassadors of our business.
We therefore encourage every site to operate an
employee referral programme whereby employees
can financially benefit if they refer a potential
employee who then is hired and succeeds in their
role. In our first year of recording this data we
can report that 14% of our hires came through
employee referral programmes. This is a key area
of focus for our sites and especially for those sites
who do not currently have a referral programme
in place.
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Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT Governance and Compliance
GOVERNANCE IMPACT SDGS:
We are building an inclusive and diverse
workforce
Gender Equality
Achieve gender equality and
empower all women and girls.
54
Introduction
Ensuring that the business operates an effective
governance framework is a key challenge for us as
we continue to grow.
Providing clear guidance to all employees
especially those who join the Group through
acquisition is an essential task for the teams so that
we ensure fairness and consistency around non-
compliance and to ensure that any concerns are
quickly identified and corrected.
Volex code of conduct
In FY2022 we started to update our Code of Conduct
to provide a foundational framework that all of our
sites could use to train our employees in the core
principles, policies and values of our Company. We
would anticipate completing this work in FY2023.
Speak up
We upgraded our Speak Up policy during FY2022
in response to the EU’s Whistleblowing Directive.
Our Speak Up policy framework is proactively
communicated to all employees in local language
and employees are encouraged to use when
necessary. We have invested in the Navex
EthicsPoint system to provide an independent
incident response and reporting solution and
implemented this across the Group providing
access and information in 12 local languages.
Our Speak Up policy is available on our website.
The reporting system went live in December and
we received zero cases in the final three months
of FY2022. All cases will be reported to the Board’s
Audit Committee.
Anti bribery and corruption
As a Company we prohibit any form of bribery and
corruption. We have a clear policy on anti-bribery
and anti-corruption which has been reviewed and
approved by the Board covering all elements of our
workforce. This policy is published on the Group's
website and the commitment is also enshrined
within the Group's Code of Conduct.
Each year all eligible employees are required
to undertake Anti Bribery and Anti Corruption
e-learning. In FY2022 414 (98% of eligible)
employees completed this training programme.
Eligible employees include those in sales,
procurement and other management and
administrative functions. All training is evaluated
and the FY2022 programme received ratings of
4.5/5.0.
Volex plc Annual Report and Accounts 2022Stock code: VLX Modern slavery and human rights
We fully support the principles enshrined within
the UK’s Modern Slavery Act 2015. We publish
our annual Modern Slavery Statement onto the
UK Government’s portal and this is reviewed and
approved by our Board of Directors. Our Modern
Slavery policy is available on the Group's website.
Cyber security
The Company has a robust information systems,
technology and cyber security framework.
Business Continuity Principles are in place across
the Company and are subject to regular testing.
A management Cyber Security Committee meets
periodically with a cross-functional management
group to assess progress. Every month 1,368 eligible
employees complete quick bite-sized cyber security
training to ensure we stay alert to these risks.
RBA code of conduct
Our largest sites (Batam, Henggang, Suzhou
and Zhongshan) are regularly audited against
the requirements of the Responsible Business
Alliance’s Code of Conduct.
Conflict minerals and
responsible 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.
In FY2022 we updated our policy to be our
Responsible Minerals Policy and this has been
approved by the Board and is available on our
website.
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Volex plc Annual Report and Accounts 2022www.volex.comSTRATEGIC REPORT 56
Governance
Board of Directors
Executive Chairman’s Introduction
Corporate Governance Report
Audit Committee Report
Nomination Committee Report
Safety, Environmental and
Sustainability Committee Report
Remuneration Committee Report
Directors’ Report
Statement of Directors’
Responsibilities
Independent Auditors’ Report
to the Members of Volex Plc
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62
68
71
73
75
90
93
94
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Board of Directors
Nathaniel Rothschild
Executive Chairman
Jon Boaden
Chief Financial Officer
HN
Nathaniel 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:
Finance transformation,
acquisitions and integration,
raising finance, managerial
finance experience with
leading technology-focused
organisations, strategy.
Dean Moore
Senior Non-Executive
Director
A
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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 Senior
Independent Director
and Chairman of the
Remuneration Committee at
Cineworld plc, Non-Executive
Director and Chairman of the
Audit Committee at Griffin
Mining Ltd, and a Director and
Interim Chief Financial Officer
at Dignity plc.
Key areas of expertise:
Governance, risk
management, mergers and
acquisitions, managerial
finance, strategy.
Committee Membership:
A
Audit
Committee
N
Nominations
Committee
R
Remuneration
Committee
H
Safety, Environmental
and Sustainability
Committee
Chair of
Committee
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GOVERNANCE
Jeffrey Jackson
Non-Executive Director
Sir Peter Westmacott
Non-Executive Director
Amelia Murillo
Non-Executive Director
RH
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Jeffrey Jackson was appointed
as a Non-Executive Director on
30 July 2019.
Sir Peter Westmacott was
appointed as a Non-Executive
Director on 12 November 2020.
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 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 is currently Vice
President of Finance and CFO
for Carlisle Fluid Technologies.
Key areas of expertise:
Managerial finance and
HR experience within the
interconnect industry.
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.
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.
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Executive Chairman’s Introduction
Over the last five years, we have doubled
Over the last five years, we have doubled
the size of the business, enhanced our
the size of the business, enhanced our
capabilities and delivered significant growth.
capabilities and delivered significant growth.
While diversification improves resilience, it
While diversification improves resilience, it
also increases complexity. This makes good
also increases complexity. This makes good
governance all the more important.
governance all the more important.
Nathaniel
Rothschild
Executive
Chairman
The strength and resilience we have established
at Volex has been evident as we have successfully
navigated a challenging manufacturing
environment during the year. Having a well-
defined strategic plan and focussing on delivering
our objectives has allowed us to deliver significant
growth and expansion. The strategy of the Group is
set by our management team and is controlled by
an experienced Board providing valuable insight.
Our Board is focused on promoting the long-term
success of the Group, balancing the interests
of our various stakeholder groups. Our regular
Board meetings create an opportunity to consider
a variety of perspectives and benefit from the
experience of our Board members as we consider
strategic matters. Part of my role as Executive
Chairman is to facilitate the discussions to ensure
all Board members are able to fully contribute their
views and opinions.
Over the last five years, we have doubled the size
of the business, enhanced our capabilities and
delivered significant growth. While diversification
improves resilience, it also increases complexity.
This makes good governance all the more
important. Across our leadership team, we
understand the importance of maintaining high
standards of corporate governance. We continue to
follow the Quoted Companies Alliance Corporate
Governance Code (the ‘QCA Code’) and we comply
with the provisions of the QCA Code, with some
exceptions.
Our executive leadership structure includes my
position as Executive Chairman. 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.
Our Corporate Governance Report is set out on
pages 62 to 67 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 believe that effective governance, especially in
relation to environmental and social issues, is an
essential feature of a well-run business. 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.
With on-going logistical disruption during FY2022,
including in respect of international travel, our
Board has continued with its scheduled Board
and Committee meetings which have been held
remotely via video conference. This continues to
be a highly effective and productive approach,
and the use of this technology has not in any
way prevented robust discussion and effective
decision-making.
There have been no changes to the composition
of the Board during FY2022. Our regular meetings
have provided opportunities to keep the Directors
appraised of the success and challenges that we
have experienced during the period.
During the year, we undertook an evaluation of
the effectiveness of the Board. The evaluation
was undertaken through the completion of
questionnaires on various aspects of the Board’s
operation. The results were compared to external
benchmarking information to provide an objective
assessment of our performance.
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The evaluation considered the role of the Board in
value creation, the effectiveness of our meetings,
how the organisation manages talent and culture
as well as an appraisal of Board composition and
the operation of committees. In addition, the
evaluation looked at reporting, risk management
and the role of the Chairman. The results across
all sections of the evaluation were ahead of the
external benchmarks. The output of the exercise
and areas for improvement will inform the Board
development activities we undertake in FY2023.
I am confident in the ability of the Board to take
an active role in enriching our strategy in the year
ahead. This will include consideration of further
investment and acquisition opportunities. These
actions support our growth ambitions and allow
us to make further progress against the stretching
targets we have set out as an organisation.
Nathaniel Rothschild
Executive Chairman
23 June 2022
GOVERNANCE
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Corporate Governance Report
Effective corporate governance supports
our growth objectives, ensuring we create a
sustainable and robust business, operating
in accordance with well defined values.
Jon Boaden
Chief Financial
Officer
The 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 (the “QCA Code”) as its main
benchmark for good corporate practice for the
year ended 3 April 2022, 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 58 and 59.
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 Non-Executive 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. Combining the leadership of the
Company with the running of the Board is not the
preferred approach in the QCA Code. However,
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 independent
oversight and support available from the Non-
Executive Directors.
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 appointed a new Group
General Counsel and Company Secretary who,
from 19 May 2021, took over the duties of Company
Secretary. The role reports to the Executive
Chairman and Senior Non-Executive 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.
There were no changes during the year to the
Non-Executive Director appointments, the total
number of which is four. With this 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.
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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.
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 page 44
6363
Read more about our Board of Directors on page 58 and 59
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, and there is a process in place to ensure that risk
management and related control systems are effective..
Read more about Risk Management on pages 38 to 43
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 62 to 67
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 58 and 59
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
This year, the Board undertook an evaluation of its own performance,
assessing a number of important topics, including the Board
composition and dynamics.
Read more about our Nominations Committee on pages 71 and 72
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 62 to 67
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 62 to 67
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE Corporate Governance Report
Governance structure
THE BOARD
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATIONS
COMMITTEE
6464
Key responsibilities
f accounting policies
and audit reports
f assessing the
adequacy and
effectiveness of
internal financial
controls
f monitoring anti-
money laundering
Key responsibilities
f reviewing the pay and
employment terms
for the Company and
the Board
f approving targets and
performance-related
pay schemes and all
share incentive plans
and pensions
Key responsibilities
f reviewing the size
and composition of
the Board
f succession planning
for the Board
f oversight of the
appointments process
SAFETY,
ENVIRONMENTAL
AND SUSTAINABILITY
COMMITTEE
Key responsibilities
f monitor and evaluate
the Company’s
management systems
governing health,
safety, environmental
and other labour-
related risks
Read more about this
on pages 68 to 70
Read more about this
on pages 75 to 89
Read more about this
on pages 71 and 72
Read more about this
on pages 73 and 74
Board focus in FY2022
The main focus this year was to maintain the
progress made by the business in recent years
while continuing to navigate the impacts of the
global pandemic, including handling global supply
chain challenges effectively. 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
approving a refinancing of the Company with a
larger credit facility, approving four acquisitions
and identifying potential further acquisitions that
could bring additional value. In particular, this year
the Board:
f Monitored the effects on the business from
the Covid-19 pandemic and closely tracked
infection rates within our workforce;
f Oversaw the Company’s response to global
supply chain challenges, including responding
dynamically to meet customers’ expectations.
f Monitored inflationary cost pressures, and the
Company’s ability to pass through increased
costs to customers to protect profitability while
maintaining competitiveness.
f Approved the refinancing of the Company and
the implementation of an expanded credit
facility;
f Approved the acquisitions of Irvine Electronics,
LLC. (USA), Prodamex SA de CV (Mexico),
Terminal & Cable TC Inc. (Canada) and inYantra
Technologies Pvt Ltd (India).
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:
f Approval of the annual budget;
f Approval of the Company’s objectives and
setting its long-term strategy;
f Approval of material capital expenditure
projects;
f Approval of acquisitions;
f Approval of half-yearly reports, trading updates,
the preliminary announcement of year-end
results and the Annual Report and Accounts;
f Internal control and risk management; and
f Material contracts, expenditure and Group
borrowings.
Volex plc Annual Report and Accounts 2022Stock code: VLX 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
Jon Boaden
Non-Executive Directors
Dean Moore
Jeffrey Jackson
Sir Peter Westmacott
Amelia Murillo
Full Board
(8 meetings)
Audit
Committee
(4 meetings)
Remuneration
Committee
(7 meetings)
Nominations
Committee
(1 meeting)
Safety, Environmental
and Sustainability
Committee
(2 meetings)
8/8
8/8
8/8
8/8
8/8
8/8
–
–
4/4
–
–
4/4
–
–
7/7
7/7
–
7/7
1/1
–
1/1
–
1/1
–
6565
2/2
–
–
2/2
–
–
Representatives from the Internal Audit function and from the Company’s external auditors, PwC, usually
attend meetings of the Audit Committee.
Committees of the Board
The Board has delegated certain responsibilities to
the following Committees:
f the Nominations Committee;
f the Audit Committee;
f the Remuneration Committee; and
f 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. To ensure independent
oversight of the audit and remuneration functions,
only the Company’s independent Non-Executive
Directors serve on those Committees. 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 acts as
secretary.
Nominations Committee
The members of the Nominations Committee are Sir
Peter Westmacott (Chairman), Nathaniel Rothschild
and Dean Moore.
The Committee met once 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.
Details of the Nominations Committee’s activities
are contained in the Nominations Committee
Report on pages 71 and 72.
Audit Committee
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 68 to 70.
Remuneration Committee
The members of the Remuneration Committee
are Amelia Murillo (Chair), Dean Moore and Jeffrey
Jackson.
The Committee met seven 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
75 to 89.
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE
Corporate Governance Report
Safety, Environmental and
Sustainability Committee
The members of the Safety, Environmental and
Sustainability Committee are Jeffrey Jackson
(Chairman) and Nathaniel Rothschild. The Group
HR Director acts as the secretary to the Committee.
and in any event at least once every three years.
Nathaniel Rothschild will be offered for re-election
this year as it will be three years since he was last
re-elected, and Jeffrey Jackson will also be offered
for re-election as it will be three years since he was
elected to the Board.
The Committee met two 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 73 and 74.
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 Code requirement for
at least two independent Non-Executive Directors
has been met. Jeffrey Jackson, Dean Moore, Amelia
Murillo and Sir Peter Westmacott are considered
by the Board to be independent, as is required by
the QCA Code, 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 Company embraces diversity and is dedicated
to encouraging inclusion. The Board membership
comprises of individuals who have a wide range
of diverse experience and skills and each bring a
unique perspective to debate at Board level.
Board Diversity
The Board recognises the importance of diversity
in the Company and is committed to promoting
diversity throughout the organisation at all levels.
Further information on our diversity, including with
respect to the total female representation in our
workforce, is provided in the ‘Social Impact’ section
of the Sustainability Report on pages 51 to 53.
Executive Directors are expected to attend all
meetings of the Board, and of the Committees on
which they sit, and to devote sufficient time to the
Group’s affairs to enable them to fulfil their duties
as Directors. 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
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 have the opportunity
to meet separately with the Executive Chairman
and the Chief Financial Officer during the year to
discuss Board member performance.
In addition, all Board members took part in a Board
performance evaluation review, covering a number
of important topics. The results of the review, which
were considered in detail by the Directors, show
a well-structured and effective Board. The Board
recognises that a robust performance evaluation is
important to maximise Board effectiveness. Further
information on the Board performance evaluation
is provided in the Nominations Committee report
on pages 71 and 72.
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. 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 91.
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
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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.
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 Boaden
Chief Financial Officer
23 June 2022
the Group’s strategy with a view to safeguarding
shareholders’ investments and the Group’s assets.
During the year, a number of improvements
were implemented in relation to the way that the
Internal Audit function operates. In addition, the
compliance hotline process was re-launched to
ensure that all employees have a confidential route
to report concerns in relation to ethics, conduct
and compliance.
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 in the Risk Management section of
the Strategic Report on pages 38 to 43.
Key features of the Company’s
system of internal controls
Key elements of the Company’s system of internal
controls which have operated throughout the
year are:
f A system of regular reports from management
setting out key performance and risk indicators;
f Rigorous short-term management and
forecasting of cash flow;
f A schedule of specific, key matters reserved for
decision by the Board;
f A framework for reporting and escalating
matters of significance;
f Group-wide procedures, policies and standards
which incorporate statements of required
behaviour;
f Continuous review of operating performance
and monitoring of monthly results against
annual budgets, and periodic forecasts;
f 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
f 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 shareholders
The 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.
GOVERNANCE
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Audit Committee Report
The Audit Committee has an important
role to play in the oversight of the Group’s
systems of internal control and risk
management.
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Dean Moore
Chairman
of the Audit
Committee
I 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 Group Finance team, PwC
representatives and the Internal Audit function,
during the year. In FY2021, we completed a review
of the Internal Audit function with input from
specialists from a global accountancy firm. The
review suggested a number of recommendations to
improve the process. The implementation of these
changes began in FY2022.
As the Group grows through acquisition and
investment, the Group Finance and Legal functions
continue to review and update 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 objectives
The 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 Committee
The members of the Audit Committee were:
COMMITTEE
MEMBER
DATE OF
APPOINTMENT
Dean Moore (Chair)
18 April 2017
Amelia Murillo
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. All
current Committee members are independent
Non-Executive Directors and all have the
appropriate range of financial, commercial and
risk-management experience to fulfil their 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 58 and 59.
Meetings
The Audit Committee met four times in the
year, with the meetings and agendas linked
to events in the Group’s financial calendar.
The Audit Committee invites the Group Chief
Financial Officer, senior representatives of the
external auditors and internal audit co-source
provider and other staff to attend its meetings as
required. It reserves the right to request any of
these individuals to withdraw for specific items of
discussion.
Governance
The Audit Committee’s terms of reference can be
found on the Volex website.
The Committee is responsible for:
f 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;
f 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;
f Reviewing and challenging where necessary
the appropriateness of accounting policies and
the manner in which they are applied across
the Group;
f Reviewing the Group’s internal financial
controls and the Group’s internal risk-
management systems;
f Monitoring and reviewing the effectiveness
of the Group’s Internal Audit function in the
context of the Group’s overall risk-management
system;
f 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
f 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:
f The quality and acceptability of accounting
policies and practices;
f The clarity of the disclosures and compliance
with financial reporting standards and relevant
governance reporting requirements;
f Material areas in which significant judgements
or estimates have been applied or there has
been discussion with PwC; and
f 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 114
and 115. The primary areas of judgement estimates
considered and discussed by the Committee in
relation to the FY2022 financial statements and
how these have been addressed are listed below.
Going concern – The Committee reviewed the
Group’s budget and trading position, the potential
impact of possible future disruption, including
further challenges due to 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 117. Adjusting items during the year
amounted to $10.8 million (FY2021: $5.6 million).
Inventory provisions – The Committee reviewed
the level of provision held against inventory
in conjunction with the Group’s provisioning
policy, the ageing of the stock and forecast
future demand. Management review inventory
provisions regularly and the reviews require the
use of judgements and estimates. The Committee
believes the provision is reasonable.
Accounting for business combinations – The
Committee reviewed the principal assumptions
and judgements applied in accounting for business
combinations that occurred 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:
f The results of the annual Certificate of
Compliance exercise and survey, involving all
senior personnel in the organisation;
f The reports issued during the year by Internal
Audit following their risk-based review of sites
and processes;
f The annual risk survey conducted among
the executive team and other senior
management; and
f Investigations performed in the event of
whistleblowing, control breakdowns or fraud
issues.
Details of our internal controls and risk
management systems including controls over the
financial reporting process can be found on pages
66 and 67 in the Corporate Governance Report
with our risk factors in full in the Strategic report on
pages 38 to 43.
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:
f Establishes the function’s terms of reference,
reporting lines and access to the Audit
Committee;
f Approves the appointment and removal of the
Internal Auditor;
f Reviews and assesses the annual internal audit
plan in the context of the Group’s overall risk
management system; and
f Reviews promptly the internal audit reports
produced from the site/process reviews and
monitors management’s responsiveness to
the findings and recommendations included
therein.
GOVERNANCE
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A comprehensive review of the Internal Audit
function and approach was undertaken in FY2021.
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. The implementation of this
plan commenced in FY2022.
During the year, internal audit reviews took place
at four production sites, conducting an assessment
of key control procedures. In addition, there was
a review of the information technology general
control environment. No serious issues for concern
were raised and a number of improvements were
identified which management have committed to
implement.
The Group’s “Speak Up” 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 119 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 and, as part of this policy,
the lead engagement partner changed at the
beginning of FY2022.
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.
There were no non-audit fees during the year
(FY2021: $171,000).
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:
f Reviewed the external auditors’ plan for the
current year and agreed the scope of the audit
work to be performed;
f Agreed the fees to be paid to PwC for their
audit of the 2022 financial statements and
other non-audit fees;
f Reviewed a report from PwC describing their
arrangements to identify, report and manage
any conflicts of interest and confirming the
basis of their independence;
f Assessed PwC’s fulfilment of the agreed audit
plan and any variations from that plan; and
f Assessed the robustness and perceptiveness
of PwC in their handling of the key accounting
and audit judgements.
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 2
April 2023.
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
23 June 2022
Volex plc Annual Report and Accounts 2022Stock code: VLX Nominations Committee Report
GOVERNANCE
The results of the Board review,
The results of the Board review,
which were considered in detail by
which were considered in detail by
the Directors, show a well-structured,
the Directors, show a well-structured,
dynamic and effective Board.
dynamic and effective Board.
I am pleased to present the Nominations
Committee report for the year ended 3 April 2022.
During the year, the Nominations Committee has
successfully carried out its primary purpose of
reviewing the structure, size and composition of
the Board, including:
f Reviewing whether the balance of Executive
Directors and Non-Executive Directors
continues to be appropriate; and
f Giving consideration to succession planning.
This year, the Nominations Committee carried out a
board effectiveness review using a third party digital
Board evaluation platform. All of the members of
the Board participated in the review and the results
were shared with, and considered by, the Board.
Composition of the Nominations
Committee
The members of the Nominations Committee
are myself (as Chair), Dean Moore and Nathaniel
Rothschild.
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.
As such, two-thirds (66%) of the current Committee
are independent (myself and Dean Moore).
Meetings
The Nominations Committee met once 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.
Governance
The Nominations Committee’s Terms of Reference
can be found on the Volex website.
The Committee’s responsibilities include:
f 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;
f 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;
f 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;
f Identifying and nominating for approval of the
Board candidates to fill Board vacancies (as
necessary);
f 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;
f 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;
f Reviewing the time commitment of Non-
Executive Directors and, where necessary,
assessing (through performance evaluation)
fulfilment of their duties;
Sir Peter
Westmacott
Chair of the
Nominations
Committee
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Nominations Committee Report
Financial Officer, being welcomed to the Board
and promoted to the role of Chief Financial
Officer. Jon continues to play a pivotal role in the
significant growth and development of the Group’s
business and is a well-respected leader within
the organisation. This year, long-term succession
planning options for key roles in the organisation
continued to be assessed, together with plans for
orderly succession if required.
On behalf of the Nominations Committee
Sir Peter Westmacott
Chair of the Nominations Committee
23 June 2022
f Reviewing the results of the Board
performance evaluation process that relate to
the composition of the Board and succession
planning;
f 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 year
This year, the Nominations Committee initiated a
Board performance evaluation process, covering
a number of important topics. All of the members
of the Board took part. Overall, the Board
scored consistently well, as the following table
demonstrates:
TOPIC
VOLEX SCORE
(OUT OF 100)
BENCHMARK
(OUT OF 100)
Value creation
and strategy
Board agenda
and meetings
Talent and
culture
Board
composition and
dynamics
Chair
Information,
reporting,
and risk
management
Our committees
92
89
87
97
98
90
91
80
78
74
82
87
78
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The results of the Board review, which were
considered in detail by the Directors, show a well-
structured, dynamic and effective Board - with an
overall result of 92/100 which compares favourably
to the benchmark of 83/100, putting the Volex
Board in the top 5% of respondents.
The review’s strategic index, which measures
strategic aspects such as Board competence,
agility, alignment and time allocation scored
94/100, against the benchmark of 83/100.
The ESG index, which measures ESG aspects such
as culture, diversity, transparency, innovation and
sustainable value creation, scored 85/100 which
also compares well to the benchmark of 70/100.
In addition to evaluating Board performance,
long-term succession planning continued to be
an important area of consideration this year. Last
year, the implementation of succession planning
for the Chief Financial Officer role was high on
the Committee’s agenda with Jon Boaden, who
joined the business in April 2019 as Deputy Chief
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Safety, Environmental and
Sustainability Committee Report
GOVERNANCE
The Volex labour force being our most
The Volex labour force being our most
important asset, the health and safety
important asset, the health and safety
of employees is of primary importance
of employees is of primary importance
to the Board.
to the Board.
I am pleased to report on the work of the
Volex Safety, Environmental and Sustainability
Committee. This committee 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. In
2021 we expanded the scope of this Committee
to provide oversight to the broader topic of
sustainability and the Committee was renamed
accordingly.
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 practices wherever possible,
but we also want to provide a safe and productive
working environment for our employees.
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 made good progress in the development
of a long term roadmap for sustainability for the
business.
Objectives
The key aims of the Committee are to ensure that:
f The Volex management team operates an
effective system to control health, safety and
environmental risks as well as labour related
risks including those of direct relevance to the
industry standards defined by the Responsible
Business Alliance;
f 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
f 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
Committee shall consist of at least two members,
including one independent Non-Executive
Director of the Board. As such 50% of the current
Committee Is independent (myself).
The members of the Safety, Environmental and
Sustainability Committee were:
COMMITTEE
MEMBER
DATE OF
APPOINTMENT
Nathaniel Rothschild
15 October 2019
Jeffrey Jackson (Chair)
15 October 2019
Alan Taylor (Secretary)
15 October 2019
Meetings and Activities
The Committee met formally two times (November
and March) during FY2022 and received regular
updates on the impact of Covid-19 on the
workforce and 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:
f Oversight of the Company’s Covid-19 response
f Review of the approach being taken by the
Group to improve performance in the areas
of health, safety, environment and labour-
related risks.
f Review and approval of the Company’s
emerging sustainability strategy and its factory
sustainability framework.
With the continuation of the Covid-19 pandemic
the management team’s focus continued to be on
containing Covid-19 and limiting the consequences
of this virus on our workforce. Our focus was on
prioritising vaccination programmes particularly
in our larger sites whilst maintaining health
prevention regimes (such as wearing of masks
and daily temperature checks) throughout the
year even after local authorities had relaxed local
controls.
Jeffrey
Jackson
Safety,
Environmental
and
Sustainability
Committee
Report
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Safety, Environmental and Sustainability
Committee Report
A primary focus for the Committee this year
has been to establish a strategic roadmap for
Sustainability. With the implementation of the
Volex Sustainability Reporting System (V-SRS) the
Company now has access to a comprehensive set
of performance indicators to track our progress.
Our approach to Sustainability is set out on pages
46 and 47 within the Sustainability Section of this
year’s Annual Report.
With our growth strategy seeing new companies
join the Volex family, we saw the challenges of this
on our health and safety performance during the
year. At the year end we are reporting an accident
frequency rate of 3.2 lost time accidents per million
hours worked or 0.6 accidents per 200,000 worked
hours. This shows a clear increase on the previous
year. We had 29 lost time accidents during the
year, 43% of these were caused by employees
coming into contact with moving machinery.
FY2022 was the first year since 2019 that the
number of lost time accidents increased compared
to the prior year. 50% of our lost time accidents
in the year were within the two factories that we
acquired in Turkey in FY2021. Our management’s
focus has been to provide close support and
frequent visits to these two sites to ensure we can
quickly correct the issues in these sites that are
contributing to the higher number of accidents.
The increase in absolute numbers of accidents
needs to be interpreted within the following
context. In FY2022 we have added four factories
and over 900 new employees through our
acquisition strategy. Excluding recent acquisitions
such as DE-KA we achieved a 50% reduction
year on year in terms of the number of lost time
accidents. The two DE-KA sites achieved a 22%
reduction in the number of lost time accidents
compared to their previous year.
51% of our workforce work within an OHSAS or
ISO45001 accredited site and I would expect to see
this number increase year on year.
In FY2021 we launched the Volex Site Excellence
Award programme with one of the categories
being safety. With more sites in the group each year
the competition becomes more difficult to win. In
FY2022 the site recognised for the best performance
for Safety was our Henggang site located in South
China given their success in building a safety
culture in their site. This site was once one of the
most challenged sites but through team work and
a systematic kaizen culture they have been able to
transform their safety performance. It was also very
pleasing to see our Hanoi site in Vietnam achieve
3,000 days without a lost time accident for which
they received a Runner Up Award in the 2022 Site
Excellence Awards.
For the coming year, I look forward to ensuring
the Group maintains and further improves on its
record in this regard.
On behalf of the Safety, Environmental and
Sustainability Committee
Jeffrey Jackson
Chair of the Safety, Environmental
and Sustainability Committee
23 June 2022
Volex plc Annual Report and Accounts 2022Stock code: VLX Remuneration Committee Report
GOVERNANCE
We are continuously striving for a fair and
We are continuously striving for a fair and
competitive remuneration policy and
competitive remuneration policy and
practice that incentivises performance
practice that incentivises performance
aligned to our shareholder’s interests.
aligned to our shareholder’s interests.
Annual Statement
Overview from the Chair of the
Remuneration Committee
I am pleased to introduce the Remuneration
Report for the year ended 3 April 2022, which
includes my statement as Remuneration
Committee Chair, the Directors’ Remuneration
Policy and the Annual Report on Remuneration for
the year.
Composition of the Remuneration
Committee
The members of the Remuneration
Committee were:
COMMITTEE
MEMBER
DATE OF
APPOINTMENT
Amelia Murillo (Chair)
26 January 2021
Dean Moore
18 April 2017
Jeffrey Jackson
18 March 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. 100% of the
Committee’s members are independent.
The Terms of Reference for the Committee (which
are available on Volex’s website) provide that the
Committee must consist of at least two members,
all of whom shall be independent Non-Executive
Directors. Appointments to the Committee shall
be for a period of up to three years, which may
be extended for two further three-year periods,
provided the director remains independent and
still meets the criteria for membership of the
Committee. All three members of the current
Committee are independent Non-Executive
Directors and have the appropriate range of
experience to fulfil its duties.
Overview
FY2022 was a year in which the Company
continued to demonstrate its resilience as
the disruptive effects of the global pandemic
continued to be felt around the world. Other
significant geopolitical and economic factors
which emerged during the year brought further
challenges to the Company. Despite these external
factors the business has performed well and we are
pleased to report that the Company has exceeded
the underlying operating profit target that we set
out in last year’s Annual Report. The Company has
not met its free cash flow target for the year. The
Management team decided to manage its cash
flow to support our customers with a higher level
of inventory than we had planned. Cash was also
reinvested into the business to make strategic
investments in equipment and people to support
the business’s priorities during the year. The
Board and I commend the management team for
prioritising company objectives so as to steer the
business safely through the last 12 months.
The targets were challenging, and the strong
underlying profit performance reflects the
achievements of the Group over the year. Having
reviewed this performance the Committee
determined that bonuses of 56% of salary for the
Executive Chairman and 56% of salary for the CFO
were appropriate. 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
37% of the Executive Directors’ bonuses have
been deferred into Volex shares, and will vest after
one year.
In FY2023, 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.
However in light of the evolution of our strategic
plan we have reviewed our bonus structure with
the support of our remuneration advisors resulting
in changes to the financial metrics to be used for
the bonus plans in FY2023.
We continue to prioritise financial metrics for our
Executive Directors and to incentivise them to
focus on generating value for shareholders. We
want Volex to be a sustainable and cash-generative
company that aims to pay regular dividends.
Financial measures will make up 80% of the total
opportunity for Executive Directors.
Amelia Murillo
Chair of the
Remuneration
Committee
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Remuneration Committee Report
On 15 February 2022, Nathaniel Rothschild and Jon
Boaden were issued with equity awards under the
LTIP of 123% and 112% of base salary respectively, in
line with the policy.
During FY2022 the Company conducted an
assessment of its pay competitiveness enabled
by its implementation of a global job evaluation
methodology. Job evaluations were completed
for the top 40 roles by specialist external advisors
and their findings were reviewed and approved by
both Executives and the Remuneration Committee.
The purpose of this work was to ensure that
the Company maintained competitive and fair
remuneration practices and to ensure that these
could be objectively reviewed annually taking into
account the increasing size and complexity of the
Company and changes in market practices around
the world.
As a result of this work the Remuneration
Committee implemented base salary adjustments
to a number of senior positions in the Company.
Base salaries of the Executive Directors for FY2022
were reviewed and increased by 2.5% in line with
the UK employee salary increases based on the
Company’s policy for responding to inflation in
each country. A further increase of 12.5% was
applied to Jon Boaden to reflect his development
in the role of CFO since his appointment in
November 2020 bringing his salary broadly in line
with the market.
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,
maintain competitiveness in the market and do not
encourage excessive risk-taking.
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 continues to welcome feedback
from shareholders, and I hope that we can
continue to receive your support in the future on
the remuneration related votes at our AGM.
On behalf of the Remuneration Committee.
Amelia Murillo
Chair of the Remuneration
Committee
23 June 2022
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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
7777
share-price performance and is delivered in shares.
Policy report
Volex’s Remuneration Policy for Executive Directors
The table below sets out the Company’s Remuneration Policy.
PURPOSE AND LINK
TO STRATEGY
Base salary
To reflect market
value of the role
and individual’s
performance and
contribution.
Pension
To provide a market
competitive pension.
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:
f The individual’s
performance,
responsibility, skills and
experience; Company
performance and market
conditions;
f Salary levels for similar
roles at relevant
comparators, including
companies of similar
market capitalisation to
Volex and companies in a
similar sector; and
f Wider pay levels and
salary increases across
the Group.
Payable in cash.
Executives participate in a
money purchase scheme
or other scheme as may be
appropriate from time to
time (e.g. taking into account
location).
Company and individual
performance are considerations
in setting Executive Director base
salaries.
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.
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.
Executive Directors receive a
contribution of up to 10% of
salary. This may be exceeded
in exceptional circumstances
(e.g. recruitment).
Not performance-related
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE Remuneration Committee Report
PURPOSE AND LINK
TO STRATEGY
Benefits
To provide market
competitive benefits.
7878
Annual bonus
To incentivise delivery
of the Group’s
annual financial and
strategic goals.
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
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.
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 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.
Not performance-related.
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 as well as other
financial measures that support
our in-year goals. 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 pages 83 to 87.
Volex plc Annual Report and Accounts 2022Stock code: VLX PURPOSE AND LINK
TO STRATEGY
LTIP
To drive performance,
aid retention and
align the interests of
Executive Directors
with shareholders.
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
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, nominal or nil
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.
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 pages 83 to 87.
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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 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 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.
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 Company
utilises a globally recognised job evaluation system
and engaged external advisors to conduct a rigorous
benchmarking of remuneration for our top 40 leadership
positions. This work was reviewed and approved by the
Remuneration Committee in October 2021. The majority of
our employees (excluding those who are in shopfloor-based
roles 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 plc Annual Report and Accounts 2022www.volex.comGOVERNANCE Remuneration Committee Report
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.
PERFORMANCE
METRICS
Not applicable.
The current policy is:
PURPOSE AND LINK
TO STRATEGY
OPERATION
OPPORTUNITY
Fees
To reflect market
competitive rates
for the role, as
well as individual
performance and
contribution.
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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.
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.
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.
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 2022. For the annual bonus, the amounts illustrated are those potentially receivable in respect of performance for
FY2023. For the LTIP, the award opportunities are based on those LTIP awards which are expected to be granted in FY2023.
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.
In illustrating potential reward opportunities, the following assumptions have been made:
Component
Minimum
On-target
Stretch Target
Absolute TSR Multiplier
Base salary
Latest known salary
Fixed
Pension
Other benefits
Contribution rate applied to latest known
salary
Benefits as provided in the single figure
table (excluding relocation allowances)
Annual
bonus
LTIP
No bonus payable
20%
No LTIP vesting
30% vesting
100%
100%
Up to 2x award
Executive Chairman – Nathaniel Rothschild
Chief Financial Officer – Jon Boaden
Maximum + 50% share
price appreciation
Maximum
On-Target/
Threshold
Minimum
Maximum + 50% share
price appreciation
Maximum
On-Target/
Threshold
Minimum
£0
£500
£1,000
£1,500
£2,000
£0
£400
£800
£1,200
£1,600
Fixed
Annual Bonus
LTIP
Volex plc Annual Report and Accounts 2022Stock code: VLX GOVERNANCE
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
Pension
Benefits
Annual bonus
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.
New appointees will be eligible to participate in the Group’s defined
contribution pension plan or to receive a cash allowance.
New appointees will be eligible to receive benefits in line with the
Policy.
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.
MAXIMUM VALUE
Not applicable
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.
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 85. 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.
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Remuneration Committee Report
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
Nathaniel Rothschild
Executive Chairman
1 December 2015
Jon Boaden
Chief Financial Officer
12 November 2020
From Company
From Director
6 months
3 months
6 months
3 months
Notice period
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
DIRECTORS
DATE OF LETTER
UNEXPIRED TERM AS
AT 3 APRIL 2022
DATE OF
APPOINTMENT
NOTICE PERIOD
Dean Moore
18.04.2017
13 months
19.04.2020
Jeffrey Jackson
30.07.2019
4 months
30.07.2019
Peter Westmacott
12.11.2020
19 months
Amelia Murillo
26.01.2021
22 months
12.11.2020
26.01.2021
3 months
3 months
3 months
3 months
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 on the next page
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
LTIP
‘Good leaver’
Vest immediately on the
effective date of change of
control.
Outstanding awards vest in full.
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.
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Remuneration Committee Report
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 as the principal external advisers
to the Committee. The Committee evaluates the support
provided by its advisers annually and is comfortable that the
Mercer team provides independent remuneration advice
to the Committee and does not have any connections that
may impair independence.
Fees of £86,440 (FY2021: £29,600) were paid to advisers in
respect of work carried out for the year under review.
Summary of shareholder voting at the
FY2021 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 FY2021
Remuneration Report at the AGM on 29 July 2021.
FY2021 Remuneration Report
Total number
of votes % of votes cast
For (including discretionary)
73,729,782
Against
Total votes cast (excluding
withheld votes)1
Votes withheld
Total votes cast (including
withheld votes)
16,924,869
90,654,651
7,139,061
97,793,712
81.33%
18.67%
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.
Remuneration Committee membership
in FY2022
The Committee met seven times during the year. Attendance
by individual Committee members at meetings is
detailed below.
COMMITTEE MEMBER
MEMBER
THROUGHOUT
FY2022
NUMBER OF
MEETINGS
ATTENDED
Dean Moore
Amelia Murillo
Jeffrey Jackson
Yes
Yes
Yes
7
7
7
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 FY2022
The agenda during FY2022 included:
f Approval of the FY2021 Remuneration Committee
Report;
f Evaluation of share award proposals for Executive
Directors and senior managers for FY2022;
f Review of Executive Directors’ shareholdings;
f Review and approval of the vesting in full for the PSP
FY2019 vesting;
f Consideration and approval of remuneration packages;
f On appointment LTIP awards;
f Severance packages;
f Consideration of advisory bodies’ and institutional
investors’ current guidelines on executive compensation;
f Review and approval of the Company’s job evaluation
workstream and the recommendations to compensation
policy and levels for management that were identified
through this work.
f Review and ratification of the Remuneration Policy and
remuneration packages for Executive Directors and the
fees payable to our Non Executive Directors for FY2023,
incorporating institutional investor feedback;
f Evaluation of the proposal for the annual bonus plan for
FY2023;
f Review of the succession planning status for the top 20
management positions;
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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
3 April 2022 and the prior year:
Name
Year
Salary
GBP
Nat Rothschild
2022
£333,473
Jon Boaden
2021
2022
20215
£329,844
£ 212,310
£72,241
GBP
£2,832
£2,582
£3,146
£4,817
Benefits1
Pension2
Cash Annual
bonus3
GBP
GBP
Deferred
annual bonus
(restricted
shares)3
GBP
LTIP4
GBP
Total
GBP
£33,347
£117,827
£831,300
£68,918
£1,387,697
£32,984
£13,650
£7,790
£162,283
£910,000
£159,645
£1,597,338
£75,016
£39,356
£0
£0
£43,877
£347,999
£37,716
£161,920
1 Taxable value of benefits received in the year by Executives includes healthcare and life assurance.
2 Pension: Jon Boaden participates in a money purchase scheme into which the Company contributed 6% of salary.
3 Annual bonus: The operating profit target for FY2022 was met but the cash flow target was not met. 56% 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 proportion of the Executive Directors’
bonuses
(approximately 37%) were deferred into Volex shares for a period of one year. Details can be found on page 78 of this report.
4 During the year, Nathaniel Rothschild exercised awards in respect of 340,000 shares received under the PSP with a valuation (net of exercise price and fees) of
£910,000.
5
Jon Boaden was appointed as Chief Financial Office in November 2020. The prior year remuneration for Jon Boaden only includes the remuneration from his
appointment to the Board.
Year
Base fee
Committee fees
Additional Fee1
Non-Executive Director
Dean Moore
Jeffrey Jackson
Peter Westmacott
Amelia Murillo
2022
2021
2022
2021
2022
2021
2022
2021
GBP
£55,000
£50,000
£55,000
£50,000
£55,000
£21,073
£55,000
£10,220
GBP
£20,000
£20,000
£10,000
£10,000
£10,000
–
£10,000
£1,858
GBP
–
–
–
–
–
–
–
–
Benefits
GBP
–
–
–
–
–
–
–
–
Total
GBP
£75,000
£70,000
£65,000
£60,000
£65,000
£21,073
£65,000
£12,079
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 FY2023 are:
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Senior Independent Director fee
Chair of Committee additional fee
Fee1
FY2023
FY2022
£55,000
£10,000
£10,000
£55,000
£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.
Incentive outcomes for the year ended 3 April 2022
Annual bonus in respect of FY2022 performance
For FY2022, 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 56% for Nathaniel Rothschild and 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 37%) has been deferred into Volex shares, and will vest after
one year.
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Remuneration Committee Report
Annual bonus target for FY2023 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 FY2023 targets see page 88.
PSP Schemes
On the 11 December 2021 PSP awards held by Nathaniel Rothschild (340,000 options) and Jon Boaden (150,000 options)
vested based on the TSR target being 100% met and the cumulative profit target being 100% met.
Scheme interests awarded in FY2022
The following awards were granted during the year under the LTIP:
8686
Executive Chairman
Chief Financial Officer
LTIP award
Number of
shares
142,500
82,500
Market price
at date of
award
288.0p
288.0p
Face value
£410,400
£237,600
Date of grant
15 February 2022
15 February 2022
In the ordinary course, the LTIP Awards will vest and become exercisable on 7 December 2024, subject to the PDMRs
continuing employment with the Company and the satisfaction of TSR performance conditions measured over FY22, FY23
and FY24. If certain stretching conditions are met an absolute TSR performance multiplier will also apply, whereby if the
Company achieves 100% growth in absolute TSR over the three year vesting period a multiplier of up to 2.5x will be applied
to the Awards. Following vesting, the Shares will be subject to a two-year holding period (net of tax).
The FY2022 awards to the Executive Chairman and to the Chief Financial Officer amounted to 123% and 112% 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.
LTIP
The maximum base award available under the plan is 680,000 shares per recipient, or 750,000 in exceptional circumstances.
Awards are granted as nil-cost options. Final vesting of any grant 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. For the 2022 awards, this was linked to the Executive Directors voluntarily
electing to extend the vesting period of their 2020 LTIP grants for a further three years after the original vesting date, with a
multiplier of up to 2.5x available if 75% of more of the 2020 LTIP is deferred and a multiplier of up to 2x available if between
50% and 74.9% of the 2020 LTIP award is deferred.
PERFORMANCE CONDITION
Level of performance
Below target
Target
Stretch
ABSOLUTE TSR (SHARE PRICE GROWTH
PLUS REINVESTED DIVIDENDS)
Below 50%
50%
100% or above
Multiplier
n/a
1x
2x
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 FY2023 will be disclosed in the 2023 Annual Report on Remuneration.
Non-Executive Director fees
In FY2021 the Board determined that Non-Executive remuneration should be increased by 10% to better reflect market rates
and this was effective for FY2022. This was the first increase to this fee since July 2017. Fee levels will continue to be reviewed
on an annual basis.
Volex plc Annual Report and Accounts 2022Stock code: VLX Payments for loss of office
No Executive Director or person discharging managerial responsibility lost their office during FY2022.
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 2016 to March 2022. In the opinion of the
Directors, these indices are the most appropriate against which the total shareholder return of Volex should be measured.
900
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Volex
FTSE All Share
FTSE All Share Electronic & Electrical Equipment
FTSE AIM All Share Index
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.
CEO / Executive Chairman single
figure of remuneration (£’000)
Annual bonus pay-out (% of
maximum)
PSP vesting (% of maximum)
2017
392
50%
0
2018
534
74%
0
2019
620
97%
88%
2020
2021
2022
1,657
1,597
1,388
98%
100%
98%
100%
56%
100%
Implementation of Executive Director Remuneration Policy for FY2023
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. Each role has been independently evaluated and this job
evaluation reference provides the Committee with a more precise reference for assessing the competitiveness of Executive
compensation with consideration being given to base, total cash-based compensation and total direct compensation. 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 2.5% calculated on the average inflation over the previous 12 months. A further increase of 12.5% was applied
to Jon Boaden to reflect his development in the role of Chief Financial Officer since his appointment in November 2020
bringing his salary broadly in line with the market. Following this one-off repositioning of his salary it is envisaged that his
future increases will be in line with the UK-based workforce.
Nathaniel Rothschild
Jon Boaden
Base salary in place
prior to review
Base salary effective
from 4 April 2022
Percentage increase
from 4 April 2022
£333,473
£212,310
£341,810
£244,157
2.5%
15%
A salary increase averaging 2.5% across the UK employee population was awarded at the annual pay review.
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE
Remuneration Committee Report
Pension
There were no material changes to Pension arrangements during FY2022. 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.
Annual bonus
The annual bonus for FY2023 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.
The Committee is committed to disclosing targets on a prospective basis. For FY2023, the maximum bonus potential for the
Executive Directors was set at 100% of basic annual salary with 70% based on achieving an operating profit target, 10% on
achieving a working capital 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
Working Capital (as a percentage of sales)
Personal objectives
Threshold
(20%)
$65.3m
24.4%
n/a
Maximum
(100%)
$67.3m
n/a
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 versus 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
Weighting
50%
Cumulative operating profit
50%
Level of performance
Threshold
Maximum
Company’s TSR
outperformance of the index % of award vesting
% of award vesting
Index
Index + 15% p.a.
30%
100%
30%
100%
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There is straight-line vesting between the ‘threshold’ and ‘maximum’ performance levels.
For the top executive team, including Executive Directors, a potential multiplier of the normal award in the event of
exceptional performance can be applied at the point of award at the discretion of the Remuneration Committee, as
measured against an absolute TSR target.
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 2024
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 2023 Annual Report on Remuneration.
Non-Executive Director fees
The Board determined that there would be no change to Non-Executive Director fees for FY2023 after previously increasing
them at the start of FY2022.
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
FY2022 fees
FY2023 fees
£55,000
£55,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
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Directors’ 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 3 April
2022 (or date of
resignation)
Current
shareholding
(% salary/fees)
Shareholding1
guideline
(as % of salary)1
Guideline Met
Nathaniel Rothschild2
38,929,581
30,586%
Jon Boaden
Dean Moore
Jeffrey Jackson
Peter Westmacott
Amelia Murillo
1,788
15,000
12,500
5,900
–
2%
n/a
n/a
n/a
n/a
100%
100%
n/a
n/a
n/a
n/a
Yes
No
n/a
n/a
n/a
n/a
1
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.
Nathaniel Rothschild2
Jon Boaden
Dean Moore
Jeffrey Jackson
Peter Westmacott
Amelia Murillo
Not subject to performance
Subject to performance
Shares held
38,929,581
1,788
15,000
12,500
5,900
–
Vested but
unexercised
Deferred bonus
shares (FY2021)1
–
150,000
42,365
25,635
–
–
–
–
–
–
–
–
LTIP
722,500
272,500
Total
39,694,446
449,923
–
–
–
–
15,000
12,500
5,900
–
1 Under the FY2022 deferred share bonus plan, Nathaniel Rothschild will be awarded deferred bonus shares equal to a value of £68,918 and Jon Boaden will be
awarded deferred bonus shares equal to a value of £43,877 to be made in accordance with the terms of the deferred share bonus plan.
Directors’ interests in shares and options under Volex PSP and LTIP
Details of the Directors’ interests in long-term incentive schemes are set out below. Details, including explanation of
movements during FY2022, are set out on page 86 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
4 April 2021
Number of shares
subject to LTIP
options granted
during FY2022
Number of shares
subject to PSP
options exercised
during FY2022
Number of shares
subject to PSP
options lapsed
during FY2022
Number of shares
subject to
option held at
3 April 2022
Exercise price of
shares subject to
PSP options (£)
Nathaniel
Rothschild
Jon Boaden
920,000
340,000
142,500
82,500
(340,000)
–
–
–
722,500
422,500
0
0 – 0.25
The Remuneration Committee Report was approved by the Board of Directors on 23 June 2022 and signed on its behalf by:
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Chair of the Remuneration Committee
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Directors’ Report
The Directors of the Company present their Annual Report
for the year ended 3 April 2022 in accordance with section
415 of the Companies Act 2006.
As permitted by Paragraph 1A of Schedule 7 to the Large
and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 certain matters which are
required to be disclosed in the Report of the Directors have
been omitted as they are included in the Strategic Report
on pages 12 to 54. These matters relate to a full review of
the performance of the Group for the year, current trading
and future outlook. The statement by the Directors in
performance of their statutory duties in accordance with
section 172(1) Companies Act 2006 is provided on page 44.
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Results and dividend
Results for the year ended 3 April 2022 are set out in the
Consolidated Income Statement on page 102.
The Board is recommending payment of a final dividend
of 2.4 pence per share for the 52 weeks ended 3 April 2022
(FY2021: 2.2 pence). Together with the interim dividend of
1.2 pence per share paid on 14 December 2021 (FY2021: 1.1
pence), this makes a total for the year of 3.6 pence (FY2021:
3.3 pence).
Important events since the end of the
financial year
No important events have taken place in the period
between 4 April 2022 and 23 June 2022.
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
Jon Boaden
Non-Executive Directors
Dean Moore
Jeffrey Jackson
Peter Westmacott
Amelia Murillo
Biographical details of the Directors currently serving on the
Board and their dates of appointment are set out on pages
58 and 59.
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.
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.
Directors’ share interests
The number of ordinary shares of the Company in which the
Directors are beneficially interested at 3 April 2022 is set out
in the Remuneration Committee Report on page 89.
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 3 April 2022, there were
158,718,709 ordinary shares of 25p each in issue.
A new authority to allot shares will be sought at the
forthcoming Annual General Meeting.
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.
Volex plc Annual Report and Accounts 2022Stock code: VLX GOVERNANCE
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 1 June 2022.
Shareholder
NR Holdings Limited1
Ruffer LLP
Hargreaves Lansdown Asset Management
Investec Wealth & Investment
Interactive Investor
Cannacord Genuity Wealth Management
Herald Investment Management
Number of ordinary shares
of 25p each
Percentage of total
voting rights
38,964,581
10,850,550
8,813,990
8,084,329
6,554,222
6,273,173
5,038,020
24.55
6.84
5.55
5.09
4.13
3.95
3.17
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 2021 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 pages 81 and 82.
Future developments
The development of the business is detailed in the Strategic
Report on pages 12 to 54.
Research and development
The 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.
Employees
The Company’s disclosures on employee policies and
involvement can be found in the Sustainability Report on
pages 51 to 53.
Relationships with suppliers, customers and
other business partners
Information on the Company’s management of its business
relationships can be found in the Strategic Report on
page 44.
Corporate governance
The 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 62 to 67.
Political and charitable donations
The Group regularly contributes to local communities
through fundraising and charity events. The Company did
not make any political donations during the year.
Energy use and emissions
The disclosures on energy use and greenhouse gas
emissions are made within the Sustainability Report on
page 49.
Financial risk management
The 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 31 to the financial statements and in
the Group Risk Management section on pages 38 to 43.
Overseas branches
During the year, no new or additional overseas branches
were established. The Company closed its overseas branch
in Sweden during the year.
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Directors’ Report
Going concern statement
The considerations made by the Directors with
regards to going concern are set out in the
Performance and Financial Review on pages 36
and 37.
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 of information
to auditors
Each of the persons who is a Director at the date of
approval of this Annual Report confirms that:
f So far as the Director is aware, there is no
relevant audit information of which the
Company’s auditors are unaware; and
f The Director has taken all the steps that he
or she ought to have taken as a Director in
order to make himself or herself 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 Meeting
The Company’s Annual General Meeting will be
held on 19 August 2022. 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 Boaden
Chief Financial Officer
23 June 2022
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Statement of Directors’ Responsibilities
in respect of the financial statements
GOVERNANCE
The 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 UK-
adopted international accounting standards 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:
f select suitable accounting policies and then
apply them consistently;
f state whether applicable UK-adopted
international accounting standards 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;
f make judgements and accounting estimates
that are reasonable and prudent; and
f 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 Board
Nathaniel Rothschild
Executive Chairman
Officer
Jon Boaden
Chief Financial
23 June 2022
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Independent Auditors’ Report
to the Members of Volex Plc
Report on the audit of the financial statements
Opinion
In our opinion:
f 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 3 April 2022 and of the Group’s profit and the
Group’s cash flows for the 52 week period then ended;
f the Group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
f 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
f the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
9494
We have audited the financial statements, included within the Annual Report and Accounts 2022 (the “Annual Report”),
which comprise: the Consolidated and Company Statements of Financial Position as at 3 April 2022; 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.
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 other listed entities of public
interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
We have provided no non-audit services to the Company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
f We conducted a full scope audit of 9 components which were selected due to their size and risk characteristics.
f Specified audit procedures were performed on certain financial statement line items at a further 4 components.
f This enabled us to obtain 85% coverage of revenue, 87% of profit before tax, adjusting items and share based payments,
100% of adjusting items, and 62% of net assets of the Group. Desktop review procedures were performed on the
remaining components.
f 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, site visits, conducting file reviews
and meetings with local management and the component teams both remotely and in-person.
Key audit matters
f Accounting for business combinations (Group)
f Classification of adjusting Items (Group)
Materiality
f Overall Group materiality: US$2,570,000 (2021: US$1,750,000) based on 5% of profit before tax, adjusting items and share-
based payments.
f Overall Company materiality: £600,000 (2021: £500,000) based on 1% of total assets capped at allocated component
materiality.
f Performance materiality: US$1,570,000 (2021: US$1,312,500) (Group) and £450,000 (2021: £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.
Volex plc Annual Report and Accounts 2022Stock code: VLX Recognition of deferred tax assets (Group and Company) and Impact of Covid-19 (Group and Company), which were
key audit matters last year, are no longer included because of a reduction in the judgement involved in the Group and
Company’s ability to utilise the deferred tax assets arising from trading losses and the reduced impact of Covid-19 on the
Group and Company respectively. Otherwise, the key audit matters below are consistent with last year.
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Accounting for business combinations (Group)
As disclosed in Note 2 and Note 35 to the
financial statements, during the year the Group
acquired 100% of the issued share capital of Irvine
Electronics, Inc (‘Irvine’), Prodamex SA de CV
(‘Prodamex’) and Terminal and Cable TC Inc (‘TC’)
and 51% of the issued share capital of InYantra
Technologies Pvt Ltd (‘InYantra’).
The transactions are considered to be business
combinations under IFRS 3. Accounting for
business combinations is complex and involves
judgement in the determination of the fair
value of consideration paid and payable, and
assessment of the fair value of assets and
liabilities acquired. The fair value exercise resulted
in an $18.3m increase in goodwill and a $15.3m
increase in intangible assets.
Where necessary, management utilised the
services of valuation experts to help them
determine the fair value of the assets and
liabilities acquired and the translation of the
opening balances from local GAAP to IFRS.
TC and Prodamex were acquired under one sale
and purchase agreement. The assessment of
whether this was an acquisition of one or two
businesses required management judgement.
For InYantra, the acquisition of the land was
finalised after the acquisition and year end
date. Management has applied judgement
in concluding that the land was part of the
acquisition and hence included it in the
provisional net assets acquired.
Given the significance of the transactions and the
complexity around the associated judgements
and estimates, this is a key audit matter.
We obtained, read and understood the sale and purchase
agreements and the impact on the business combination
accounting.
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 undertook the following
procedures:
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f We reviewed management’s fair value assessment, 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.
f We used our valuation experts to evaluate the key assumptions,
methodology, 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
industries within which the businesses operate.
f We obtained management’s fair value calculations of the
consideration, including consideration for any contingent
consideration and deferred consideration elements, and assessed
the appropriateness of the calculations.
f For TC and Prodamex which were acquired under one sale and
purchase agreement, management has concluded that this was
an acquisition of two businesses. We evaluated management’s
judgement on whether this was an acquisition of one or two
businesses, determination of the fair value allocation of the
consideration and subsequent goodwill to the respective
entities. We note that the two entities operate in two different
jurisdictions, serve different markets, have different processes,
systems and management and are largely independent of each
other. On this basis, we consider management’s conclusion to be
reasonable.
f Regarding InYantra, we reviewed management’s assumptions
on including the land purchase as part of the acquisition. From
review of the sale and purchase agreements, we noted that
management was committed to the purchase at the date of
acquisition as the terms of land purchase finalisation were
included in the sale and purchase agreement for InYantra. We
consider management’s assumptions in including the land in the
provisional net assets acquired to be reasonable.
f 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.
f 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, customer attrition rate
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 reasonable. 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.
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE Independent Auditors’ Report
to the Members of Volex Plc
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Classification of adjusting Items (Group)
As disclosed in Note 2 and Note 4 to the financial
statements, the Directors have separately
classified $10.8m (2021: $5.6m) of adjusting items
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.
The Directors have assessed the adjusting items
included in note 4 to include non-recurring
items (such as one-off income and expenses,
acquisition-related costs, restructuring costs) and
amortisation of acquired intangible assets which
have arisen under IFRS 3 Business Combinations.
These have been classified as adjusting items in
line with the Group’s accounting policy in note 2.
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.
9696
We obtained management’s detailed listing of adjusting items and
our procedures included the following:
Testing that they have been classified in accordance with 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 that they were not given greater
prominence than the statutory results;
f For acquisition-related 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;
f We tested the amortisation of acquired intangibles in line with
the Group accounting policies with no issues identified;
f We tested that the reconciliation of underlying operating profit to
statutory measures as shown in note 7 is accurate; and
f 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
reasonable.
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 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. With the easing of Covid-19 travel restrictions, we
were able to perform site visits to Volex Inc, DE-KA, Volex (Asia) Pte, and G.T.K. For all the other components, we conducted
our oversight of the component teams through conference calls, video conferencing and remote working paper reviews
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 9 components which, in our view, required an audit of their complete financial information, either 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 85% of revenue, 87% of profit before tax, adjusting items and share based
payments, 100% of adjusting items, and 62% of net assets of the Group. Desktop review procedures were performed on all
other components. As a whole, these procedures gave us the evidence we needed for our opinion on the Group financial
statements.
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:
Volex plc Annual Report and Accounts 2022Stock code: VLX FINANCIAL STATEMENTS - GROUP
FINANCIAL STATEMENTS - COMPANY
Overall
materiality
US$2,570,000 (2021: US$1,750,000).
£600,000 (2021: £500,000).
How we
determined it
5% of profit before tax, adjusting items and
share-based payments
1% of total assets capped at allocated
component materiality
Rationale for
benchmark
applied
We consider profit before tax, 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.
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.
9797
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 US$400,000 and US$1,800,000. 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% (2021: 75%) of overall materiality, amounting
to US$1,570,000 (2021: US$1,312,500) for the Group financial statements and £450,000 (2021: £375,000) for the Company
financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our
normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit
above $128,500 (Group audit) (2021: $87,500) and £96,000 (Company audit) (2021: £25,000) 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:
f Obtaining and reviewing the Group and Company 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;
f Reviewing the Group and Company cash flow forecasts for both the base case and a severe but plausible downside
scenario, evaluating the assumptions used, and verifying the Group’s and Company’s ability to maintain liquidity within
the going concern period under these scenarios;
f Testing the model for mathematical accuracy and assessing the reasonableness of sensitivities performed by
management;
f We read and understood the key terms of its committed debt facilities to understand any terms and tested compliance
with the loan covenants; and
f 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.
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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Volex plc Annual Report and Accounts 2022www.volex.comGOVERNANCE Independent Auditors’ Report
to the Members of Volex Plc
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.
9898
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 period ended 3 April 2022 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.
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 corporate tax legislation 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:
f 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;
f Inspection of supporting documentation, where appropriate;
f Evaluation of management’s controls designed to prevent and detect irregularities;
f Reviewing minutes of meetings of the Board of Directors;
f Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations;
Volex plc Annual Report and Accounts 2022Stock code: VLX GOVERNANCE
f Challenging assumptions and judgements made by management in relation to their significant accounting
judgements and estimates; and
f 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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
f we have not obtained all the information and explanations we require for our audit; or
f 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
f certain disclosures of Directors’ remuneration specified by law are not made; or
f the Company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
99
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Richard Porter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
23 June 2022
.
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100
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
102
103
104
105
106
107
149
150
151
163
164
101
Consolidated Income Statement
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
2022
Before
adjusting
items and
share-based
payments
$’m
Adjusting
items and
share-based
payments
(Note 4)
$’m
614.6
(488.8)
125.8
(69.6)
56.2
0.4
0.3
(5.5)
51.4
(9.1)
–
–
–
(15.2)
(15.2)
–
–
–
(15.2)
3.3
Before
adjusting
items and
share-based
payments
$’m
2021
Adjusting
items and
share-based
payments
(Note 4)
$’m
443.3
(339.4)
103.9
(61.0)
42.9
0.8
0.3
(2.4)
41.6
7.2
–
–
–
(12.2)
(12.2)
–
–
–
(12.2)
2.3
Total
$’m
614.6
(488.8)
125.8
(84.8)
41.0
0.4
0.3
(5.5)
36.2
(5.8)
Total
$’m
443.3
(339.4)
103.9
(73.2)
30.7
0.8
0.3
(2.4)
29.4
9.5
42.3
(11.9)
30.4
48.8
(9.9)
38.9
26.9
25.2
19.3
18.1
32.1
30.0
25.5
23.9
Notes
3
16
5
6
10
7
11
11
Revenue
Cost of sales
Gross profit
Operating expenses
Operating profit
102102
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
The notes on pages 107 to 148 are an integral part of these financial statements.
Volex plc Annual Report and Accounts 2022Stock code: VLX Consolidated Statement of Comprehensive Income
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
Profit for the period
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(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 arising on cash flow hedges during the period
Exchange (loss)/gain on translation of foreign operations
Tax relating to items that may be reclassified
Other comprehensive (expense)/income for the period
Total comprehensive income for the period attributable to the owners of the parent
The notes on pages 107 to 148 are an integral part of these financial statements.
Notes
30
2022
$’m
30.4
0.7
(0.1)
0.6
0.1
(5.9)
0.1
(5.7)
(5.1)
25.3
2021
$’m
38.9
(1.1)
0.5
(0.6)
1.9
3.2
0.3
5.4
4.8
43.7
103103
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Consolidated Statement of Financial Position
As at 3 April 2022 (4 April 2021)
Notes
2022
$’m
2021
RESTATED
$’m
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use-asset
Interests in associates and joint ventures
Other receivables
Deferred tax assets
Current assets
Inventories
Trade receivables
Other receivables
Current tax assets
Derivative financial instruments
Cash and bank balances
Total assets
Current liabilities
Borrowings
Lease liabilities
Trade payables
Other payables
Current tax liabilities
Retirement benefit obligations
Provisions
Derivative financial instruments
Net current assets
Non-current liabilities
Borrowings
Lease liabilities
Other payables
Deferred tax liabilities
Retirement benefit obligations
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium account
Non-distributable reserve
Hedging and translation reserve
Own shares
Retained earnings
Total attributable to owners of the parent
Non-controlling interests
Total equity
12
13
14
15
16
18
21
17
18
18
31
28
19
19
20
20
30
22
31
19
19
20
21
30
22
23
23
24
24
25
82.9
47.0
43.4
19.4
1.5
2.1
20.6
216.9
119.3
119.0
16.7
1.9
0.4
29.1
286.4
503.3
5.0
4.3
84.7
61.9
10.1
1.1
2.3
0.1
169.5
116.9
98.5
16.6
1.0
7.0
2.0
0.2
125.3
294.8
208.5
62.5
60.9
2.5
(9.8)
(0.2)
85.2
201.1
7.4
208.5
68.0
39.6
32.4
18.0
0.9
4.4
22.0
185.3
76.9
100.3
10.3
2.8
0.4
36.5
227.2
412.5
9.6
4.6
72.1
58.9
9.5
1.1
1.8
–
157.6
69.6
34.2
15.4
9.1
7.8
4.1
0.3
70.9
228.5
184.0
62.0
60.9
2.5
(4.1)
(3.3)
66.0
184.0
–
184.0
RESTATED: In accordance with IFRS 3 the Group has amended provisional fair value associated with an acquisition
completed in the prior period. This has led to an increase in Goodwill and contingent consideration which is included in
other payables. See note 35 for further information.
The notes on pages 107 to 148 are an integral part of these financial statements. The consolidated financial statements on
pages 102 to 148 of Volex plc (company number: 158956) were approved by the Board of Directors and authorised for issue
on 23 June 2022 and signed on its behalf by:
Nathaniel Rothschild
Executive Chairman
Jon Boaden
Chief Financial Officer
104
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Consolidated Statement of Changes in Equity
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
Share
capital
$’m
Share
premium
account
$’m
Non-
distributable
reserves
$’m
Notes
Hedging
and
translation
reserve
$’m
Own
shares
$’m
Retained
earnings
$’m
Equity
attributable
to owners
$’m
Non-
controlling
interests
$’m
Balance at
5 April 2020
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
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
Balance at
4 April 2021
Profit for the period
attributable to the
owners of the parent
Other comprehensive
(expense)/income for
the period
Total comprehensive
income for the period
Share issue
Business
combination
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
Balance at
3 April 2022
23
23
24
24
26
23
35
24
24
26
60.3
46.5
2.5
(9.5)
(1.0)
32.0
130.8
–
–
–
1.6
0.1
–
–
–
–
–
–
–
–
14.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.4
5.4
–
–
–
–
–
–
–
–
–
–
–
–
38.9
38.9
(0.6)
4.8
38.3
–
43.7
16.0
(0.1)
–
1.7
(3.1)
(1.4)
(4.0)
–
–
–
–
(6.0)
0.1
4.8
(4.0)
(6.0)
0.1
4.8
62.0
60.9
2.5
(4.1)
(3.3)
66.0
184.0
–
–
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5.7)
(5.7)
–
–
–
–
–
–
–
–
–
–
–
–
30.4
30.4
0.6
(5.1)
31.0
(0.5)
–
25.3
–
–
–
7.5
(7.5)
(4.4)
–
–
–
–
(7.2)
(4.4)
(7.2)
4.2
4.2
(0.8)
(0.8)
105105
Total
equity
$’m
130.8
38.9
4.8
43.7
16.0
–
(1.4)
(4.0)
(6.0)
0.1
4.8
184.0
30.4
(5.1)
25.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.4
7.4
–
–
–
–
–
–
(4.4)
(7.2)
4.2
(0.8)
62.5
60.9
2.5
(9.8)
(0.2)
85.2
201.1
7.4
208.5
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Consolidated Statement of Cash Flows
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
Net cash generated from operating activities
Cash flow 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
106106
Net cash used in investing activities
Cash flows before financing activities
Cash used before adjusting items
Cash utilised in respect of adjusting items
Cash flow generated from financing activities
Dividend paid
Net purchase of shares for share schemes
Refinancing costs paid
New bank loans raised
Repayment of borrowings
(Outflow)/inflow from factoring
Interest element of lease payments
Receipt from lease debtor
Capital element of lease payments
Net cash generated from financing activities
Net (decrease)/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 107 to 148 are an integral part of these financial statements.
Notes
28
35
35
16
26
27
27
27
27
27
27
28
27
28
2022
$’m
18.5
0.1
(35.7)
(19.2)
0.5
(10.8)
(4.2)
–
(69.3)
(50.8)
(48.8)
(2.0)
(7.2)
(5.1)
(2.5)
69.3
(3.4)
(6.0)
(1.0)
0.5
(4.2)
40.4
(10.4)
36.5
(0.2)
25.9
2021
$’m
38.7
–
(40.9)
(1.3)
0.4
(7.7)
(0.1)
–
(49.6)
(10.9)
(10.5)
(0.4)
(6.0)
(9.1)
(1.1)
37.2
(3.1)
0.5
(0.7)
0.5
(3.7)
14.5
3.6
31.7
1.2
36.5
Volex plc Annual Report and Accounts 2022Stock code: VLX Notes to the Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
107107
1. Presentation of financial statements
Volex plc (‘the Company’ and together with its subsidiaries ‘the Group’) is a public company limited by shares domiciled and
incorporated in the United Kingdom under the Companies Act 2006. 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 54.
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.a) 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
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Volex
plc transitioned to UK-adopted International Accounting Standards in its financial statements on 5 April 2021. This change
constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the
period reported as a result of the change in framework.
The financial statements have been prepared in accordance with UK-adopted 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 cash flow forecast for the period to the end of September 2023, which is based on the FY2023
Board-approved budget. The Directors have sensitised the cash flow forecast using a base case and downside scenario that
take into account the principal risks and uncertainties set out on pages 38 to 43 of the Annual Report and the potential future
impact from Covid-19. The sensitivity analysis includes a severe but plausible downside scenario which models a 15% reduction
in year-on-year revenue, equivalent to the worst result in recent history, which still provides significant covenant headroom.
Based on their assessment and these sensitivity scenarios, the Directors are satisfied 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 4 April 2022 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.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity
therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination
and the non-controlling shareholder’s share of changes in equity since the date of the combination.
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. All acquisition-related costs are recognised in profit or loss within adjusting items as incurred.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
2.a) Significant accounting policies CONTINUED
CONTINUED
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. The interest of the non-controlling shareholders in the acquiree may initially be measured either at fair value
or at the non-controlling shareholders’ proportion of the net fair value of the identifiable assets acquired, liabilities and
contingent liabilities assumed. The choice of measurement basis is made on an acquisition by-acquisition basis.
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.
108108
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:
f Exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial
instruments/hedge accounting); and
f 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.
Volex plc Annual Report and Accounts 2022Stock code: VLX 2.a) Significant accounting policies CONTINUED
CONTINUED
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.
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. For sales to customers where a right to return
an item is granted, revenue is recognised to the extent of the consideration to which the Group ultimately expects to be
entitled.
109109
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:
f 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;
f 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
f 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.
Finance income
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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 2.a) Significant accounting policies CONTINUED
CONTINUED
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.
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.
110110
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
Assets under construction
3 to 15 years
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 relationships
up to 3 years
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:
f An asset is created that can be identified;
f It is probable that the asset created will generate future economic benefits; and
f 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. 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.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 2.a) Significant accounting policies CONTINUED
CONTINUED
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.
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.
111111
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:
f Fixed payments less any lease incentive receivable;
f Variable lease payments that are based on an index or a rate;
f Amounts expected to be payable by the Group under residual value guarantees;
f The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
f 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:
f The amount of the initial measurement of the lease liability or a revaluation of the liability;
f Any lease payments made at or before the commencement date less any lease incentives received;
f Any initial direct costs; and
f 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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 2.a) Significant accounting policies CONTINUED
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).
112112
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 to 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 sum 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.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 2.a) Significant accounting policies CONTINUED
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.
113113
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 income 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 uncollectible 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.
The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under
this arrangement, the Group has transferred the relevant receivables to the factor in exchange for cash and is prevented
from selling or pledging the receivables. However, the Group 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.
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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 2.a) Significant accounting policies CONTINUED
CONTINUED
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as
deferred income and they are credited to profit or loss on a straight-line basis over the expected lives of the related assets.
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 31 to the financial statements.
114114
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.
2.b) 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.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 2.b) Critical accounting judgements and key sources of estimation uncertainty CONTINUED
CONTINUED
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 $10.8m (2021: $5.6m). 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.
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.
115115
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.
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).
2.c) 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 3 April 2022, the Group had net inventories of $119.3m (2021: $76.9m).
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.
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.
3. Segment information
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 3 April 2022. These segments are discussed in the Performance Review on pages 28 to 32.
The accounting policies of the operating segments are the same as those described in the summary of significant
accounting policies on pages 107 to 114 of the Group accounts. 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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 3. Segment information CONTINUED
CONTINUED
The following is an analysis of the Group’s revenues and results by reportable segment.
North America
Asia
Europe
Unallocated Central costs
Divisional results before share-based payments and adjusting items
Adjusting operating items
116116
Share-based payment charge (see note 29)
Operating profit
Share of net profit from associates and joint ventures
Finance income
Finance costs
Profit before taxation
Taxation
Profit after taxation
52 weeks to 3 April 2022
52 weeks to 4 April 2021
Revenue
$’m
Profit/(loss)
$’m
Revenue
$’m
Profit/(loss)
$’m
272.1
142.7
199.8
–
614.6
203.1
133.7
106.5
–
443.3
21.4
11.6
32.1
(8.9)
56.2
(10.8)
(4.4)
41.0
0.4
0.3
(5.5)
36.2
(5.8)
30.4
19.8
14.1
15.4
(6.4)
42.9
(5.6)
(6.6)
30.7
0.8
0.3
(2.4)
29.4
9.5
38.9
The adjusting operating items charge of $10.8m (2021: $5.6m) was split $2.0m (2021: $2.3m) to North America, $7.2m (2021:
$3.4m) to Europe, a $1.1m in Asia (2021: credit $0.1m) and $0.5m (2021: nil) to Central.
The segmental 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 of non-acquired intangibles:
Depreciation and amortisation
North America
Asia
Europe
Central
2022
$’m
4.3
2.3
3.2
0.1
9.9
2021
$’m
3.6
2.3
1.9
0.1
7.9
Information about major customers
Two (2021: one) of the Group’s customers individually account for more than 10% of total Group revenue. Revenue from one
customer which operates in the Medical sector is reported across all three segments, and accounts for 12.9% of revenue
(2021: 14.9%). The other’s revenue is reported in North America, is within the Electric Vehicle sector and accounts for 14.7%
(2021: 9.7%).
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
2022
$’m
272.1
142.7
199.8
614.6
2021
$’m
203.1
133.7
106.5
443.3
2022
$’m
49.3
47.2
99.8
196.3
RESTATED
2021
$’m
23.1
25.7
114.5
163.3
Revenue is attributed to countries on the basis of the geographical location of the customer and delivery of the product.
Revenue and non-current assets attributable to the United Kingdom was $105.5m (2021: $89.2m) and $14.6m (2021: $16.8m)
respectively.
The restatement relates to amendment of the provisional value of Goodwill associated with the DE-KA acquisition
(see note 35).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 4. Adjusting items and share-based payments
Acquisition-related costs
Adjustment to fair value of contingent consideration
Restructuring costs
Amortisation of acquired intangibles
Paycheck Protection Program (‘PPP’) loan forgiveness
Pension past service costs
Total adjusting operating items
Share-based payments (see note 29)
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
2022
$’m
2.5
(0.2)
0.8
10.3
(2.6)
–
10.8
4.4
15.2
(3.3)
11.9
2021
$’m
0.4
(0.1)
–
5.2
–
0.1
5.6
6.6
12.2
(2.3)
9.9
117117
Adjusting items include costs that are one-off in nature and significant as well as the non-cash amortisation of acquired
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.
Acquisition-related costs of $2.5m (2021: $0.4m) consist of legal and professional fees relating to potential and completed
acquisitions. The acquisition-related costs associated with acquisitions completed during the year are Irvine Electronics LLC
(‘Irvine’) ($0.7m), Terminal & Cable TC Inc (‘TC’) ($0.4m), Prodamex SA de CV (‘Prodamex’) ($0.4m) and inYantra Technologies
Pvt Ltd (‘inYantra’) ($0.6m). The Irvine acquisition costs also include consultancy fees agreed with the previous owners as
part of the acquisition to support the transition of certain activities. The inYantra acquisition costs included the associated
costs of acquiring the land and building. The remaining acquisition costs relate to other acquisitions that have or are being
pursued. During the prior year the $0.4m of acquisition-related costs consisted of legal and professional fees associated
with the acquisition of De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi (‘DE-KA’).
The adjustment to the fair value of contingent consideration primarily relates to the acquisition of Ta Hsing Industries Ltd
in July 2019. As the lease was not extended a final contingent payment associated with a lease extension was not required.
During March 2022 the Group commenced the closure of this site in China with production being transferred to other sites
within the Group. The associated restructuring costs of $0.8m comprises of $0.5m of redundancy costs and $0.3m of other
closure-related costs.
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 $10.3m (2021: $5.2m) for the period.
The increase from prior year relates to the three acquisitions completed during the current period, Irvine, Prodamex and TC,
and the annualised impact of DE-KA which was acquired in February 2021.
During the period the Group’s North American operations received notification that $2.6m of Payroll Protection Program
loans provided during the pandemic were forgiven.
In 2019, the Group recognised a pension past service cost of $0.5m 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 $0.1m in 2021 arose 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.
5. Finance income
Lease interest income
Interest on preference shares
2022
$’m
0.1
0.2
0.3
2021
$’m
0.1
0.2
0.3
Finance income earned on financial assets was derived from preference shares and the sublease of a property. No other
gains or losses have been recognised in respect of receivables held at amortised cost other than those disclosed above and
impairment losses recognised in respect of trade receivables (see note 18).
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 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
30
27
2022
$’m
1.7
1.0
0.2
1.3
4.2
1.3
5.5
2021
$’m
0.6
0.7
0.1
0.3
1.7
0.7
2.4
118118
No gains or losses have been recognised on financial liabilities measured at amortised cost (including bank overdrafts and
loans) other than those disclosed above.
In February 2022 the Group entered into a new enlarged debt facility. Included within the amortisation of debt issue costs
is a $0.8m write-off of capitalised costs related to the previous facility. During the prior year the Group entered into a new
banking facility. Included within the prior year amortisation of debt issue costs is a $0.4m write-off of capitalised costs
related to the facility. See note 31 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
Research and development costs
Depreciation of property, plant and equipment
Depreciation 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
Reversal of impairment losses recognised on trade receivables
(Profit)/loss on disposal of property, plant and equipment
Research and development costs disclosed above comprise the following:
Employment costs
Raw materials and consultancy
Other
Notes
14
15
13
9
18
2022
$’m
0.6
3.8
6.4
3.4
10.4
382.2
2.1
(0.1)
114.0
(0.1)
(0.2)
2022
$’m
2.1
1.6
0.1
3.8
2021
$’m
1.3
3.2
4.6
3.2
5.3
250.3
1.1
(0.4)
95.8
(0.1)
0.1
2021
$’m
2.2
0.9
0.1
3.2
In addition to the above, during the current period, $2.8m development costs were capitalised (2021: nil).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 7. Profit for the period CONTINUED
CONTINUED
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)
Amortisation of intangible assets not acquired in a business combination (note 13)
Underlying EBITDA
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
2022
$’m
41.0
10.8
4.4
56.2
6.4
3.4
0.1
66.1
2021
$’m
30.7
5.6
6.6
42.9
4.6
3.2
0.1
50.8
119119
2022
$’m
2021
$’m
0.5
0.6
1.1
–
–
0.3
0.5
0.8
0.2
0.2
During the prior period other services include due diligence services performed in relation to the acquisition of DE-KA.
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 29)
Other pension costs (note 30)
2022
No.
6,009
541
575
7,125
2022
$’m
96.7
12.5
4.4
0.4
114.0
2021
No.
5,482
386
485
6,353
2021
$’m
80.6
8.2
6.6
0.4
95.8
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 9. Staff costs CONTINUED
CONTINUED
Remuneration of key management – Directors of the parent Company
Short-term employee benefits
Social security costs
Post-employment benefits
Compensation for loss of office
Share-based payment charge
10. Taxation
120120
Current tax – expense for the period
Current tax – adjustment in respect of
previous periods
Total current tax expense
Deferred tax – credit for the period
Deferred tax – adjustment in respect
of previous periods
Total deferred tax credit (note 21)
Income tax (expense)/credit
2022
$’m
1.8
0.1
0.1
–
2.1
4.1
2021
$’m
1.3
0.1
0.1
0.9
0.5
2.9
Total
$’m
(3.8)
0.2
(3.6)
12.9
0.2
13.1
9.5
2022
Adjusting
items and
share-based
payments
$’m
0.2
–
0.2
3.1
–
3.1
3.3
Before
adjusting
items
$’m
(10.1)
(0.1)
(10.2)
0.8
0.3
1.1
(9.1)
2021
Adjusting
items and
share-based
payments
$’m
Before
adjusting
items
$’m
(3.9)
0.2
(3.7)
10.8
0.1
10.9
7.2
0.1
–
0.1
2.1
0.1
2.2
2.3
Total
$’m
(9.9)
(0.1)
(10.0)
3.9
0.3
4.2
(5.8)
UK corporation tax is calculated at the standard rate of 19% (2021: 19%) of the estimated assessable profit for the period.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax (expense)/credit for the period is lower (2021: lower) than the standard rate of corporation tax in the UK and can be
reconciled to the profit before tax per the income statement as follows:
2022
Adjusting
items and
share-based
payments
$’m
(15.2)
2.9
0.4
–
–
0.1
0.3
(0.1)
–
(0.3)
3.3
Before
adjusting
items
$’m
51.4
(9.8)
0.1
(2.4)
0.2
1.7
(1.1)
(0.1)
2.9
(0.6)
(9.1)
2021
Adjusting
items and
share-based
payments
$’m
Before
adjusting
items
$’m
41.6
(7.9)
1.6
0.8
0.3
(0.1)
(0.3)
(0.1)
12.9
–
7.2
(12.2)
2.3
(0.9)
–
0.1
–
0.1
–
0.7
–
2.3
Total
$’m
36.2
(6.9)
0.5
(2.4)
0.2
1.8
(0.8)
(0.2)
2.9
(0.9)
(5.8)
Total
$’m
29.4
(5.6)
0.7
0.8
0.4
(0.1)
(0.2)
(0.1)
13.6
–
9.5
Profit before tax
Tax at the UK corporation tax rate
Tax effect of:
Expenses that are not deductible
and income that is not taxable in
determining taxable profit
Foreign exchange on entities with
different tax and functional currencies
Adjustment in respect of previous
periods
Changes to tax rates
Overseas tax rate differences
Current year tax losses and other items
not recognised
Recognition of previously
unrecognised deferred tax assets
Derecognition of previously
recognised deferred tax assets
Income tax (expense)/credit
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 10. Taxation CONTINUED
CONTINUED
Included in the non-deductible tax items is an increase to uncertain tax provisions of $0.4m (2021: $0.4m). 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 expense reported directly in equity of $0.8m (2021: credit of $4.8m) relates to share-based payments and
consists of a current tax credit of $1.6m (2021: $0.8m) and a deferred tax expense of $2.4m (2021: credit of $4.0m).
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 owners of the parent
Adjustments for:
Adjusting items
Share-based payment charge
Tax effect of adjusting items and share-based payments
Underlying earnings
Notes
2022
$’m
2021
$’m
121121
4
29
30.4
38.9
10.8
4.4
(3.3)
42.3
5.6
6.6
(2.3)
48.8
2022
No. shares
2021
No. shares
Weighted average number of Ordinary shares for the purpose of basic earnings per share
157,245,284
152,230,980
Effect of dilutive potential Ordinary shares/share options
10,309,105
10,288,152
Weighted average number of Ordinary shares for the purpose of diluted earnings per share
167,554,389
162,519,132
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
2022
cents
19.3
6.9
2.8
(2.1)
26.9
2022
cents
18.1
6.5
2.6
(2.0)
25.2
2021
cents
25.5
3.7
4.4
(1.5)
32.1
2021
cents
23.9
3.4
4.1
(1.4)
30.0
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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 12. Goodwill
Cost
At the beginning of the period
Business combinations (note 35)
Exchange differences
At the end of the period
Accumulated impairment losses
At the beginning of the period
122122
Exchange differences
At the end of the period
Carrying amount at the end of the period
Carrying amount at the beginning of the period
2022
$’m
70.7
18.3
(3.6)
85.4
2.7
(0.2)
2.5
82.9
68.0
2021
RESTATED
$’m
28.1
41.5
1.1
70.7
2.4
0.3
2.7
68.0
25.7
Restated: In accordance with IFRS 3 ‘Business Combinations’ the group has amended the Goodwill recognised on the
acquisition of DE-KA. The change reflects an amendment to the estimates made in relation to one part of the contingent
consideration which is linked to working capital performance over future periods. Further details are provided in note 35.
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
GTK
Irvine
inYantra
Prodamex
TC
Servatron
Silcotec
MC Electronics
Volex Asia
Volex North America
Volex Europe
2022
$’m
37.8
10.0
3.8
9.9
2.9
1.7
7.6
4.1
1.0
1.6
1.9
0.6
82.9
2021
RESTATED
$’m
40.3
10.6
–
–
–
–
7.6
4.3
1.0
1.6
2.0
0.6
68.0
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 of 2% (2021: 2%) in line
with long-term market expectations.
The rate used to discount the forecast cash flows is a pre-tax discount rate of 11.7% (2021: 10.9%), which reflects the Group’s
estimated cost of capital.
As part of the transfer of Ta Hsing production to other sites within Asia the Goodwill associated with this acquisition has
been transferred to the Volex Asia cash generating unit.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 13. Other intangible assets
Group
Cost
At 5 April 2020
Business combinations
Additions
Disposals
Exchange differences
At 4 April 2021
Business combinations
Additions
Disposals
Exchange differences
At 3 April 2022
Accumulated amortisation and impairment
At 5 April 2020
Amortisation charge for the period
Disposals
Exchange differences
At 4 April 2021
Amortisation charge for the period
Disposals
Exchange differences
At 3 April 2022
Carrying amount
At 3 April 2022
At 4 April 2021
At 5 April 2020
Acquired
patents
$’m
Capitalised
development
costs
$’m
Software and
licences
$’m
Customer
contracts
and
relationships
$’m
1.2
–
–
–
0.1
1.3
–
–
–
(0.1)
1.2
1.2
–
–
0.1
1.3
–
–
(0.1)
1.2
–
–
–
3.0
–
–
–
0.3
3.3
–
2.8
–
(0.2)
5.9
3.0
–
–
0.3
3.3
–
–
(0.1)
3.2
2.7
–
–
4.0
–
0.2
(0.1)
0.4
4.5
–
1.4
(0.9)
(0.1)
4.9
3.8
0.1
(0.1)
0.4
4.2
0.1
(0.9)
(0.1)
3.3
1.6
0.3
0.2
22.8
29.3
–
–
0.4
52.5
15.3
–
–
(2.5)
65.3
7.4
5.2
–
0.6
13.2
10.3
–
(0.9)
22.6
42.7
39.3
15.4
123123
Total
$’m
31.0
29.3
0.2
(0.1)
1.2
61.6
15.3
4.2
(0.9)
(2.9)
77.3
15.4
5.3
(0.1)
1.4
22.0
10.4
(0.9)
(1.2)
30.3
47.0
39.6
15.6
Computer software is amortised over the estimated useful life, not exceeding five years. The amortisation charge for the
period is fully expensed within operating expenses.
Customer contracts and relationships relate to customer-related intangible assets acquired as part of a business
combination. They are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-
line basis on the timing of projected cash flows of the contracts and relationships over their estimated useful lives. More
details on business combinations are included in note 35.
Customer contracts and relationships include individually significant customer-related assets. The carrying value of
these are:
Acquisition
DE-KA
Irvine
Servatron
TC
Region
Europe
North America
North America
North America
Customer
Relationship
($’m)
Remaining
Useful
life (years)
21.4
5.4
3.4
2.7
13.9
9.0
1.6
10.0
At the prior period end the significant customer-related assets related to DE-KA ($24.4m) with a remaining useful economic
life of 14.9 years, and the order backlog ($3.3m) with a remaining useful economic life of 0.9 years. The net book value of
customer relationships in Servatron was $5.5m with a remaining useful economic life of 2.6 years.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 14. Property, plant and equipment
Group
Cost
At 5 April 2020
Additions
Business combination
Disposals
Exchange differences
At 4 April 2021
124124
Additions
Business combination
Disposals
Transferred to completed assets
Exchange differences
At 3 April 2022
Accumulated depreciation and impairment
At 5 April 2020
Depreciation charge for the period
Disposals
Exchange differences
At 4 April 2021
Depreciation charge for the period
Disposals
Exchange differences
At 3 April 2022
Carrying amount
At 3 April 2022
At 4 April 2021
At 5 April 2020
Freehold land
and buildings
$’m
Leasehold
improvements
$’m
Plant and
machinery
$’m
Assets under
construction
$’m
3.1
–
–
–
0.3
3.4
–
5.0
–
–
(0.2)
8.2
0.4
0.3
–
–
0.7
0.3
–
(0.1)
0.9
7.3
2.7
2.7
9.8
–
–
–
0.2
10.0
0.2
0.2
–
5.2
–
15.6
4.6
0.5
–
0.1
5.2
0.7
–
–
5.9
9.7
4.8
5.2
48.3
3.8
8.2
(2.7)
(0.3)
57.3
5.9
1.9
(3.8)
1.0
(1.8)
60.5
35.9
3.8
(2.0)
(0.1)
37.6
5.4
(3.5)
(1.4)
38.1
22.4
19.7
12.4
1.3
3.9
–
–
–
5.2
5.0
–
–
(6.2)
–
4.0
–
–
–
–
–
–
–
–
–
4.0
5.2
1.3
Total
$’m
62.5
7.7
8.2
(2.7)
0.2
75.9
11.1
7.1
(3.8)
–
(2.0)
88.3
40.9
4.6
(2.0)
–
43.5
6.4
(3.5)
(1.5)
44.9
43.4
32.4
21.6
At 3 April 2022, the Group had $5.2m (2021: $1.6m) contractual commitments for the acquisition of property, plant and
equipment.
Of the $6.4m (2021: $4.6m) depreciation charge for the period, $5.7m (2021: $3.9m) was expensed through cost of sales and
$0.7m (2021: $0.7m) was expensed through operating expenses. Depreciation of property, plant and equipment that is used
in production activities is expensed through cost of sales.
The Group recognised a fair value decrease of $0.1m (2021: uplift of $5.1m) in relation to the acquisition of plant and
machinery acquired as part of business combinations (see note 35 for further details).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 15. Right-of-use assets
Cost
At 5 April 2020
Additions
Business combination
Disposals
Exchange differences
At 4 April 2021
Additions
Business combination (note 35)
Disposals
Exchange differences
At 3 April 2022
Accumulated depreciation and impairment
At 5 April 2020
Depreciation charge for the period
Disposals
Exchange differences
At 4 April 2021
Depreciation charge for the period
Disposals
Exchange differences
At 3 April 2022
Carrying amount
At 3 April 2022
At 4 April 2021
At 5 April 2020
Buildings
$’m
Vehicles
$’m
Other
$’m
Total
$’m
9.4
3.2
9.3
(0.7)
–
21.2
0.1
5.1
(0.5)
(0.6)
25.3
2.1
2.6
(0.7)
0.2
4.2
3.0
(0.2)
(0.1)
6.9
18.4
17.0
7.3
0.4
0.3
–
(0.2)
0.1
0.6
0.4
–
(0.1)
–
0.9
0.2
0.3
(0.2)
–
0.3
0.2
(0.1)
–
0.4
0.5
0.3
0.2
1.2
–
–
–
0.1
1.3
–
–
–
–
1.3
0.3
0.3
–
–
0.6
0.2
–
–
0.8
0.5
0.7
0.9
125125
11.0
3.5
9.3
(0.9)
0.2
23.1
0.5
5.1
(0.6)
(0.6)
27.5
2.6
3.2
(0.9)
0.2
5.1
3.4
(0.3)
(0.1)
8.1
19.4
18.0
8.4
During the prior period the Group recognised right-of-use assets of $9.3m 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.
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 Ltd
2022
$’m
1.5
1.5
2021
$’m
0.9
0.9
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 16. Interests in associates and joint ventures CONTINUED
CONTINUED
Kepler SignalTek Ltd
On 12 April 2017, the Group acquired 26.09% of the voting shares in Kepler SignalTek Ltd (a company incorporated in Hong
Kong) for consideration of $0.3m. Subsequently the Group increased its shareholding to 27.4%. 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 Ltd is set out below. The summarised information below
represents amounts before intra-group eliminations.
126126
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
As at
3 April
2022
$’m
10.1
0.9
(6.0)
–
5.0
As at
4 April
2021
$’m
6.8
1.0
(2.9)
(1.6)
3.3
Period to
3 April
2022
$’m
Period to
4 April
2021
$’m
13.1
1.4
–
1.4
16.0
3.5
0.2
3.7
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 of the associate
Proportion of the Group
Carrying amount of the Group’s interest in Kepler SignalTek Ltd
Goodwill
Carrying amount
As at
3 April
2022
$’m
5.0
27%
1.4
0.1
1.5
As at
4 April
2021
$’m
3.3
26%
0.9
–
0.9
During the period, Kepler SignalTek Ltd redeemed $0.03m (2021: $0.05m) of the preference shares owned by Volex (see
note 18).
17. Inventories
Raw materials
Work in progress
Finished goods
2022
$’m
64.6
5.1
49.6
119.3
2021
$’m
35.0
2.6
39.3
76.9
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 18. Trade and other receivables
Trade receivables
Amounts receivable for the sale of goods
Loss allowance
Other receivables
Other receivables
Investment in finance lease
Preference shares due from related parties
Prepayments
Due for settlement within 12 months
Due for settlement after 12 months
2022
$’m
121.4
(2.4)
119.0
13.1
1.0
2.0
2.7
18.8
16.7
2.1
18.8
2021
$’m
102.2
(1.9)
100.3
7.8
1.4
2.1
3.4
14.7
10.3
4.4
14.7
127127
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. Where there is recourse
the Group 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. Where there is non-
recourse, the receivable is de-recognised upon receipt of the cash.
At the balance sheet date the Group’s preference shares in Kepler SignalTek Ltd were repayable in April 2022, as such the
$2.0m receivable is presented as current. At the prior period end the $2.1m balance was shown as non-current. Subsequent
to the period end, in accordance with the shareholder agreement the shareholders unanimously agreed to extend the
preference shares for up to 3 years.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The Group has a sublease on a vacant property in North America. A corresponding lease liability was recognised in relation
to the payments due under the head lease.
Two (2021: one) of the Group’s customers individually account for more than 10% of total Group revenue. The largest
customers operate in the Medical sector and Electric Vehicle sectors, they account for 27.6% (2021: largest customer 14.9%)
of total Group revenue. Other than these customers, the Group has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers. At 3 April 2022, the largest two customers represented 27% of
the net trade receivables (2021: largest customer 7%).
The average credit period taken on sales of goods is 74 days (2021: 75 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 $9.4m (2021: $8.7m) 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
2022
$’m
8.9
0.4
0.1
–
9.4
2021
$’m
8.1
0.4
0.1
0.1
8.7
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 18. Trade and other receivables CONTINUED
CONTINUED
Movement in the allowance for doubtful debts
Balance at the beginning of the period
Amounts acquired on business combination
Increase/(decrease) in allowance recognised in profit or loss
Balance at the end of the period
2022
$’m
1.9
0.6
(0.1)
2.4
2021
$’m
1.4
0.6
(0.1)
1.9
Exchange differences, write off and recovery amounts were $nil in both periods. 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 two customers noted above (2021: one customer), the
concentration of credit risk is limited due to the customer base being large and unrelated.
128128
Given the economic uncertainty associated with Covid-19 and other events in the world, the Directors have considered the
impact upon IFRS 9 and the Group’s provision matrix. After consideration of historical loss rates, the growth in the business,
the movement in credit scores observed for a range of customers the expected credit loss provision has been adjusted to
$2.4m (2021: $1.9m).
Ageing of impaired trade receivables
Current
0–60 days
60–90 days
90–120 days
120+ days
19. Borrowings and lease liabilities
Secured borrowings at amortised cost
Bank overdrafts
Bank loans
Lease liabilities
Total borrowings at amortised cost
Amount due for settlement within 12 months
Amount due for settlement after 12 months
2022
$’m
1.1
0.3
–
0.6
0.4
2.4
2022
$’m
3.2
100.3
20.9
124.4
9.3
115.1
124.4
2021
$’m
0.8
0.6
0.1
0.1
0.3
1.9
2021
$’m
–
43.8
20.0
63.8
14.2
49.6
63.8
Of the bank loans, $0.7m (2021: $6.8m) relate to factored receivables (see note 18) and $0.4m (2021: $2.9m) of loans acquired
as part of the acquisition of DE-KA. During the prior period due to uncertainty caused by the Covid-19 pandemic, the
Group’s North American operations applied for PPP (‘Paycheck Protection Program’) support loans in North America which
totalled $2.6m. During the period the PPP loans were forgiven. The remaining bank loans and overdrafts are secured by a
floating charge over the assets of key subsidiaries of Volex plc.
At 3 April 2022 unamortised debt issue costs of $2.2m (2021: $1.1m) are included within bank loans.
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.
The total cash outflow for leases is $5.2m (2021: $4.4m) comprising lease repayments of $4.2m (2021: $3.7m) and $1.0m
(2021: $0.7m) of interest on lease. Interest on leases liabilities is shown in note 6 and the maturity of lease liabilities is shown
in note 31.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 19. Borrowings and lease liabilities CONTINUED
CONTINUED
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
2022
$’m
0.6
2022
%
2.2
2021
$’m
0.5
2021
%
1.6
The Group started the period with a $70.0m multi-currency combined revolving overdraft and guarantee facility. The
syndicate comprised HSBC UK Bank plc, J.P. Morgan Securities PLC and Citibank, N.A. London branch. The facility included
an additional $30.0m 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.
129129
In September 2021 the Group activated the $30.0m accordion feature on the facility. In February 2022 the Group completed
a refinancing with a syndicate of five banks, replacing its existing $100 million revolving credit facility with a new $200
million committed facility (the “Facility”) together with an additional $100 million uncommitted accordion (the “Accordion”).
The new facility comprises a $125 million revolving credit facility and a $75 million term loan. As a number of the terms
changed as a result of the refinancing the facility the $0.8m debt issue costs associated with the previous facility were
written off during the current period (see note 6).
The new syndicate comprised HSBC UK Bank plc, Citibank, N.A. London branch, Barclays Bank PLC, Fifth Third Bank,
National Association and Unicredit Bank AG, 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 $217.8m (2021: $192.3m).
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.
During the period, professional fees of $2.4m were incurred in relation to the new banking facility. Of this, $1.5m was paid
to the syndicate. The $2.4m 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. A further $0.1m was incurred in relation to the
exercise of the accordion.
At 3 April 2022, the facility incurred interest at a margin of 2.1% (2021: 2.3%) above the applicable rate, typically SOFR or
EURIBOR.
Also, drawn under the facilities, and not included above are guarantees and letters of credit amounts to $0.3m (2021: $0.3m).
During the prior period these letters of credit were in the process of being transferred to the Group’s new banking facility.
Drawings under the facilities were made in various currencies. Total borrowings for the Group at 3 April 2022 can be
analysed by currency as follows:
USD
Euro
INR
Less: debt issue costs (note 27)
2022
$’m
89.6
11.8
1.1
102.5
(2.2)
100.3
2021
$’m
24.1
20.8
–
44.9
(1.1)
43.8
Undrawn borrowing facilities
At 3 April 2022, the Group had undrawn committed borrowing facilities available of $96.0m (2021: $37.3m).
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 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
130130
2022
$’m
84.7
4.6
58.3
62.9
61.9
1.0
62.9
RESTATED
2021
$’m
72.1
4.0
64.0
68.0
58.9
9.1
68.0
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 $11.2m (2021: RESTATED $24.5m) relating to deferred and contingent
consideration for acquisitions.
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
$’m
Intangible
assets
$’m
Trading
losses
$’m
Accelerated
tax
depreciation
$’m
Other short
term timing
differences
$’m
Share-based
payments
$’m
At 5 April 2020
Acquisitions
Credit to income
statement
Credit to other
comprehensive income
Credit directly to equity
Exchange differences
At 4 April 2021
Acquisitions
Credit/(expense) to
income statement
Expense to other
comprehensive income
Expense directly to
equity
Exchange differences
(2.8)
–
1.7
–
–
–
(1.1)
–
0.2
–
–
–
At 3 April 2022
(0.9)
(2.4)
(5.8)
0.8
–
–
0.1
(7.3)
(2.3)
2.2
–
–
0.3
(7.1)
4.5
–
3.9
–
–
0.2
8.6
–
2.0
–
–
(0.4)
10.2
(0.3)
(1.4)
2.3
–
–
–
0.6
(0.2)
0.4
–
–
0.1
0.9
2.7
0.5
4.0
0.5
–
0.1
7.8
0.4
1.1
–
0.4
–
4.0
0.1
5.6
–
(0.4)
(0.2)
(0.1)
–
(0.1)
7.6
–
(2.4)
(0.1)
2.9
Total
$’m
2.8
(6.7)
13.1
0.5
4.0
0.5
14.2
(2.1)
4.2
(0.1)
(2.4)
(0.2)
13.6
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
2022
$’m
20.6
(7.0)
13.6
2021
$’m
22.0
(7.8)
14.2
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 21. Deferred tax CONTINUED
CONTINUED
At the balance sheet date, the Group had unused tax losses of $107.0m (2021: $120.8m) available for offset against future
profits. No deferred tax asset has been recognised in respect of $64.1m (2021: $80.1m) of these losses.
Included in the unrecognised tax losses are losses of $12.1m (2021: $10.9m) that cannot be carried forward indefinitely. Of this
amount, $3.2m (2021: $1.1m) 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 $20.6m (2021: $22.0m) consists of $9.2m (2021: $8.6m) tax losses, $2.8m (2021: $5.6m)
share options, $2.2m (2021: $2.4m) fixed assets, $7.2m (2021: $7.2m) short-term timing differences, and ($0.8m) (2021: ($1.8m))
intangible assets. The Group expects $8.4m (2021: $6.2m) of the deferred tax assets and $0.2m (2021: $1.1m) of the deferred
tax liabilities (after offset) to be recovered or settled within the next 12 months.
At the reporting date, a deferred tax liability of $0.9m (2021: $1.1m) has been recognised relating to the unremitted earnings
of overseas subsidiaries. No deferred tax liability is recognised on temporary differences of $60.6m (2021: $42.6m) 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.
131131
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%. This tax rate change was substantively enacted on 24 May
2021 and therefore has been reflected in the UK deferred tax balances in the current period, resulting in an increase to the
value of the net UK deferred tax asset. Deferred tax assets and liabilities are measured at the tax rate expected to apply in
the period in which the asset is realised or the liability is settled.
22. Provisions
At 5 April 2020
Charge in the period
Utilisation of provision
Exchange differences
At 4 April 2021
Charge in the period
Utilisation of provision
Amounts acquired on business combination
Exchange differences
At 3 April 2022
Current liabilities
Non-current liabilities
Property
$’m
Restructuring
$’m
Other
$’m
Total
$’m
0.3
(0.1)
–
–
0.2
–
–
0.1
–
0.3
0.1
0.2
0.1
–
–
–
0.1
0.5
–
–
–
0.6
0.6
–
1.0
0.8
(0.1)
0.1
1.8
(0.1)
(0.1)
–
–
1.6
1.6
–
1.4
0.7
(0.1)
0.1
2.1
0.4
(0.1)
0.1
–
2.5
2.3
0.2
Restructuring
During March 2022 the Group commenced the closure of its Ta Hsing factory in China with production being transferred to
other sites within the Group. Following the communication to all those involved a restructuring provision of $0.5m made to
cover the redundancy and other associated exit costs.
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. The Group
has a provision of $0.9m (2021: $0.7m) 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 Group has $0.3m (2021: $0.3m) provided for legal costs associated with a pending legal case in Canada. The case is
on going 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.
During the year the Group made the second payment related to a legacy legal claim at MC Electronics LLC. The case was
identified as part of the acquisition with an indemnity obtained from the sellers. The Group holds a provision of $0.1m to
cover the final payment and associated costs which will be payable during FY2023.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 23. Share capital
Allotted, called up and fully paid:
At 5 April 2020
Issue of deferred bonus shares
Acquisition of DE-KA
Acquisition of Servatron – contingent consideration
At 4 April 2021
132132
Issue of new shares
At 3 April 2022
Ordinary
shares of
£0.25 each
Number
151,818,762
432,040
3,320,000
1,481,239
157,052,041
1,666,668
158,718,709
Par
value
$’m
Share
premium
$’m
60.3
0.1
1.1
0.5
62.0
0.5
62.5
46.5
–
14.4
–
60.9
–
60.9
Total
$’m
106.8
0.1
15.5
0.5
122.9
0.5
123.4
The Company does not have an authorised share capital.
During the current and prior year the Group issued shares to satisfy the requirement of share awards, deferred bonus
awards and fund acquisitions. The current year movements were as follows:
f Issued 1,666,668 ordinary shares to satisfy the vesting of the share awards granted to the senior employees and/or former
owners of Servatron and GTK as the businesses met the required operating profit targets set out in the acquisition
agreements.
The prior year movements were:
f Issued 432,040 shares under the 2019 deferred share bonus plan.
f Issued 3,320,000 shares as part of the initial consideration for the acquisition of DE-KA.
f 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 terms of the Group’s various share schemes, the following rights to subscribe for Ordinary shares are outstanding:
Date of grant
Option price (p) Exercise period
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
7 December 2021
Acquisition Retention Awards
11 December 2018
31 July 2019
Deferred Bonus Plan
16 June 2020
16 June 2020
25
25
25
25
25
–
–
–
–
–
–
–
–
March 2019 – March 2026
December 2019 – December 2026
December 2020 – December 2027
December 2021 – December 2028
March 2022 – March 2029
Number of shares
2022
2021
227,461
407,642
530,000
227,461
503,921
995,000
600,000
1,840,000
300,000
300,000
September 2022 – September 2029
2,370,000
2,370,000
December 2022 – December 2029
December 2023 – December 2030
December 2024 – December 2031
June 2019 – June 2022
March 2020 – March 2027
June 2021
June 2022
437,500
961,000
944,425
457,500
961,000
–
–
2,666,667
966,666
2,000,000
–
202,097
97,011
–
7,841,705
12,523,646
For further details of the Group’s share option schemes, see note 29.
Under the FY2022 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.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 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
2022
$’m
3.3
(7.5)
4.4
0.2
2021
$’m
1.0
(1.7)
4.0
3.3
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 29).
The number of Ordinary shares held by the Volex Group plc Employee Share Trust at 3 April 2022 was 53,205 (2021: 931,577).
The market value of the shares as at 3 April 2022 was $0.2m (2021: $4.4m).
133133
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 3,645,040 (2021: 625,000) shares were utilised on the exercise of share awards. During the year, the Company
purchased 1,100,000 shares (2021: 1,100,001) at a cost of $4.4m (2021: $4.0m) and issued 1,666,668 new shares (2021: nil).
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 $2.5m non-
distributable reserve balance.
25. Non-controlling interest
InYantra is a company incorporated in India. A 51% equity stake was acquired on 30 March 2022. Non-controlling interests
hold a 49% interest. Due to the timing of the acquisition no contribution to the Group income statement has been recorded.
26. Dividends
Dividends
Declared during the financial period:
Final dividend for the period ended 4 April 2021: 2.2p per share (2020: 2p per share)
Interim dividend for the period ended 3 April 2022: 1.2p per share (2021: 1.1p per share)
Proposed after the end of the year and not recognised as a liability
Final dividend for the period ended 3 April 2022: 2.4p per share (2021: 2.2p per share)
2022
$’m
2021
$’m
4.7
2.5
7.2
5.0
3.8
2.2
6.0
4.8
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 27. Analysis of net funds/(debt)
At 5 April 2020
Business combination
Cash flow
New leases entered into during the
year
Lease interest
Exchange differences
134134
Amortisation of debt issue costs
At 4 April 2021
Business combination
Cash flow
New leases entered into during the
year
Lease interest
PPP loan forgiveness
Exchange differences
Amortisation of debt issue costs
At 3 April 2022
Cash
and cash
equivalents
$’m
31.7
6.4
(2.8)
–
–
1.2
–
36.5
5.3
(15.7)
–
–
–
(0.2)
–
25.9
Bank
loans
$’m
(0.1)
(4.4)
(34.1)
–
–
0.5
–
(38.1)
(1.1)
(65.9)
–
–
2.6
0.7
–
(101.8)
Factoring
$’m
Lease
liability
$’m
Debt issue
costs
$’m
–
(6.5)
(0.5)
–
–
0.2
–
(6.8)
–
6.0
–
–
–
0.1
–
(0.7)
(10.9)
(9.2)
4.4
(3.5)
(0.7)
(0.1)
–
(20.0)
(5.2)
5.2
(0.5)
(1.0)
–
0.6
–
(20.9)
0.5
–
1.1
–
–
0.2
(0.7)
1.1
–
2.5
–
–
–
(0.1)
(1.3)
2.2
Total
$’m
21.2
(13.7)
(31.9)
(3.5)
(0.7)
2.0
(0.7)
(27.3)
(1.0)
(67.9)
(0.5)
(1.0)
2.6
1.1
(1.3)
(95.3)
Debt issue costs relate to bank facility arrangement fees. During the year, $2.5m of professional fees were capitalised, $2.3m
related to the new banking facility entered into during February 2022 and $0.2m associated with executing the accordion
on the previous facility. During the prior year, $1.1m was capitalised related to the extension of the previous facility. The
refinancing resulted in a write-off of $0.8m (2021: $0.4m) during the current period (see note 6).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 28. Notes to the statement of cash flows
Profit for the period
Adjustments for:
Finance income (note 5)
Finance costs (note 6)
Income tax expense/(credit) (note 10)
Share of net profit from associates
Depreciation of property, plant and equipment (note 14)
Depreciation of right-of-use assets (note 15)
Amortisation of intangible assets (note 13)
(Profit)/loss on disposal of property, plant and equipment
Share-based payment charge (note 29)
Fair value adjustment to derivatives
PPP loan forgiveness (note 4)
Contingent consideration adjustments (note 4)
Decrease in provisions
Operating cash flow before movement in working capital
Increase in inventories
Increase 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
2022
$’m
30.4
(0.3)
5.5
5.8
(0.4)
6.4
3.4
10.4
(0.2)
4.4
–
(2.6)
(0.2)
(1.7)
60.9
(28.1)
(14.2)
7.9
(34.4)
26.5
28.5
(2.0)
(6.5)
(1.5)
18.5
2022
$’m
29.1
(3.2)
25.9
135135
2021
$’m
38.9
(0.3)
2.4
(9.5)
(0.8)
4.6
3.2
5.3
0.1
6.6
(0.2)
–
–
(0.3)
50.0
(12.2)
(17.0)
21.6
(7.6)
42.4
42.8
(0.4)
(3.1)
(0.6)
38.7
2021
$’m
36.5
–
36.5
Cash and cash equivalents comprise cash held by the Group, short-term bank deposits with an original maturity of three
months or less from inception and bank overdrafts. The carrying amount of these assets approximates their fair value.
Included within cash and cash equivalents is $0.3m (2021: nil) held in trust which can only be used for Volex employees.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 29. 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. 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 86 of the Remuneration Committee Report.
Performance Share Plan (‘PSP’)
The PSP scheme was replaced by the Long Term Incentive Plan (‘LTIP’) during 2020. 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.
136136
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:
PSP
Number
LTIP
Number
DBP
Number
ARA
Number
Total
Number
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
Outstanding at 5 April 2021
3,866,382
3,788,500
202,097
4,666,667
12,523,646
Granted during the period
–
950,725
97,011
–
1,047,736
Exercised during the period
(1,801,279)
–
(202,097)
(1,666,668)
(3,670,044)
Lapsed during the period
–
(26,300)
–
(2,033,333)
(2,059,633)
Outstanding at 3 April 2022
2,065,103
4,712,925
97,011
966,666
7,841,705
Exercisable at the 3 April 2022
2,065,103
–
–
–
2,065,103
Weighted
average
exercise
price (p)
14
25
14
0
(10)
(11)
7
25
7
0
(10)
–
6
25
Included within the LTIP awards are 3,547,500 (2021: 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 86 of the Remuneration
Committee Report. Of the share awards that lapsed during the period, 1,059,633 (2021: 1,457,319) lapsed in respect of leavers
and 1,000,000 (2021: nil) lapsed due to failure to meet performance conditions.
The awards outstanding at 3 April 2022 had a weighted average remaining contractual life of eight years (2021: eight years).
Of the 7,841,705 awards outstanding at 3 April 2022, 2,065,103 had an exercise price of £0.25 and 5,776,602 had an exercise
price of £nil.
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.
The aggregate of the estimated fair values of the options granted during the period was $4.6m (2021: $5.5m).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 29. Share-based payments CONTINUED
CONTINUED
Of the awards granted during the period, 97,011 were deferred bonus plan awards with an exercise price of £nil, a service
period of one year and no performance conditions. The remaining 950,725 awards were long term incentive 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 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
2022
LTIP
£3.56
£nil
52%
3
2021
LTIP
£3.09
£nil
50%
3
0.40%
–0.08%
1%
1%
137137
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 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
2022
$’m
0.4
3.3
0.1
0.6
4.4
–
4.4
2021
$’m
0.6
1.4
0.4
2.6
5.0
1.6
6.6
30. 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 $0.4m (2021: $0.4m).
Defined benefit schemes
The Group operates five 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
£0.8m p.a. (payable in quarterly instalments) over the period to 30 September 2025.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 30. Retirement benefit obligations CONTINUED
CONTINUED
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:
f 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.
f 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.
138138
f 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.
f Mortality risk. In the event that members live longer than assumed deficits may emerge in the Scheme.
There were no plan amendments, curtailments or settlements during the period. A prior service cost was recognised in the
previous period 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)
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
Valuation at
2022
2.7%
3.4%
4.0%
3.6%
2022
Years
22.6
24.2
23.2
24.9
2021
1.9%
3.0%
3.6%
3.1%
2021
Years
22.5
24.1
23.1
24.8
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
($1.2m)/$1.4m
$0.9m/($0.9m)
$1.1m/($1.0m)
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
2022
$’m
(0.4)
0.3
(0.1)
–
(0.1)
2021
$’m
(0.4)
0.3
(0.1)
(0.1)
(0.2)
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 30. Retirement benefit obligations CONTINUED
CONTINUED
In 2019 the Group recognised a pension past service cost of $0.5m 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 $0.1m in 2021 arose 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 gain of $0.6m (2021: loss $1.1m) has been reported in the statement of comprehensive income.
Cumulative actuarial losses recognised in equity
At the beginning of the period
Net actuarial gains/(losses) recognised in the period
At the end of the period
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
2022
$’m
(4.9)
0.6
(4.3)
2022
$’m
17.5
(18.9)
(1.4)
(1.1)
(0.3)
(1.4)
The Group has contributed $1.1m to the defined benefit pension plan in the period ended 3 April 2022 (2021: $1.0m).
Movements in the present value of defined benefit obligations
At the beginning of the period
Interest cost
Past service costs
Experience loss on liabilities
Remeasurement gain/(loss)
Benefits paid
Foreign exchange
At the end of the period
The average duration of the Scheme’s defined benefit obligation is approximately 15 years (2021: 15 years).
Movements in the fair value of scheme assets
At the beginning of the period
Interest on assets
Actuarial (losses)/gains
Contributions from the sponsoring company
Benefits paid
Foreign exchange
At the end of the period
2022
$’m
18.8
0.3
(0.6)
1.1
(1.2)
(0.9)
17.5
2021
$’m
15.9
0.3
1.7
1.0
(2.2)
2.1
18.8
139139
2021
$’m
(3.8)
(1.1)
(4.9)
2021
$’m
18.8
(22.0)
(3.2)
(1.1)
(2.1)
(3.2)
2021
$’m
(18.6)
(0.4)
(0.1)
(0.2)
(2.6)
2.2
(2.3)
2022
$’m
(22.0)
(0.4)
–
–
1.2
1.2
1.1
(18.9)
(22.0)
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
30. Retirement benefit obligations CONTINUED
Assets
Asset category
Target return assets1
Corporate Bonds2
Liability Driven Investments1
Cash
Total
2022
$’m
8.7
3.7
4.5
0.6
17.5
2021
$’m
10.4
5.5
2.2
0.7
18.8
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 which are not quoted. 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 (2021: nil).
The actual return on scheme assets for the period was a loss of $0.3m (2021: a gain of $2.0m).
The estimated amount of contributions expected to be paid to the Scheme during the 52 weeks to 2 April 2023 is $1.1m
(2021: $1.1m).
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 3 April 2022 has been calculated as $0.9m (2021: $0.8m) by
an external actuary.
DE-KA also operates an unfunded defined benefit scheme. The scheme requires continuous employment with a lump sum
payable upon retirement. The actuarial liability as at 3 April 2022 has been calculated as $0.5m (2021: $1.2m) by an external
actuary. The Group also operates unfunded schemes in Mexico and India.
31. 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 the owners 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 February 2022, as at 3 April 2022 the Group has a term loan of $75m and a $125m multi-
currency revolving credit facility (‘RCF’). At the 3 April 2022 the term loans of $75m was fully drawn and $25.6m (2021:
$32.7m) was also utilised under the RCF. The Group also operates a cashpool facility which is denominated in a variety of
currencies. At 3 April 2022, there was a $3.2m overdraft (2021: no operational cashpool). The average combined utilisation of
the cashpool during the period was $1.5m (2021: $nil). The three-year facilty includes two one-year extensions and is due to
expire on 10 February 2025.
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 3 April 2022
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.
140
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31. Financial instruments CONTINUED
CONTINUED
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. 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
Financial derivatives for which hedge accounting has been
applied
Derivative financial instruments
Financial derivatives for which hedge accounting has not been
applied
Derivative financial instruments
Book value
2022
$’m
RESTATED
Book value
2021
$’m
Fair value
2022
$’m
RESTATED
Fair value
2021
$’m
141141
29.1
123.8
(103.5)
(20.9)
(115.5)
0.3
–
36.5
104.4
(43.8)
(20.0)
(132.4)
0.2
0.2
29.1
123.8
(105.7)
(20.9)
(115.5)
0.3
–
36.5
104.4
(44.9)
(20.0)
(132.4)
0.2
0.2
Other payables restated due to amendment to DE-KA provisional Goodwill and contingent consideration (see note 35).
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.
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. The Group holds 10% cumulative preference shares with its associate, Kepler SignalTek Ltd. The following
table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk:
2022
Fixed rate
Trade and other receivables
Bank loans and borrowings
Floating rate
Cash assets
Bank loans and borrowings
Within
1 year
$’m
1–2
years
$’m
2–3
years
$’m
3–4
years
$’m
4–5
years
$’m
More than
5 years
$’m
2.0
(1.1)
29.1
(3.9)
–
–
–
–
–
–
–
(100.7)
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’m
2.0
(1.1)
29.1
(104.6)
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 31. Financial instruments CONTINUED
CONTINUED
2021
Fixed rate
Trade and other receivables
Bank loans and borrowings
Floating rate
Cash assets
Bank loans and borrowings
Within
1 year
$’m
–
(2.1)
36.5
(7.5)
1–2
years
$’m
2.1
(2.6)
–
–
2–3
years
$’m
3–4
years
$’m
4–5
years
$’m
More than
5 years
$’m
–
–
–
(32.7)
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’m
2.1
(4.7)
36.5
(40.2)
142142
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 3 April 2022, the Group is exposed to floating rate interest on its RCF borrowings at a margin of 2.1% (31
March 2021: 2.3%) above SOFR (2021: 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 $0.3m lower/$0.1m higher (2021: $nil lower/$nil 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.
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
2022
$’m
127.8
36.8
24.6
15.1
6.4
19.9
RESTATED
2021
$’m
75.9
56.8
24.9
10.9
0.9
6.5
2022
$’m
92.8
32.7
15.9
1.1
6.9
4.0
2021
$’m
84.6
40.8
7.5
2.6
0.2
4.1
Euro denominated monetary liabilities restated due to amendment to DE-KA provisional Goodwill and contingent
consideration (see note 35).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 31. Financial instruments CONTINUED
CONTINUED
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
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*
2022
$’m
2021
$’m
2022
$’m
2021
$’m
2022
$’m
(0.1)
(4.3)
0.1
3.5
(1.5)
(3.6)
1.2
2.9
0.1
(0.6)
(0.1)
0.5
1.3
(3.2)
(1.1)
2.6
(1.2)
–
1.0
–
143143
2021
$’m
(2.0)
–
1.7
–
i. The main exposure impacting profit before tax is on Chinese renminbi monetary liabilities in the Group at the reporting date.
ii.
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.
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
$9,000–$9,500
$9,500–$10,000
All contracts expire within 12 months of 3 April 2022.
2022
2021
Contracted
volume
(MT)
Fair value
$’m
Contracted
volume
(MT)
Fair value
$’m
–
–
–
–
–
–
18
–
13
31
–
–
–
–
–
–
–
–
–
–
30
0.1
–
–
–
–
–
200
–
–
230
–
–
–
–
–
–
–
–
0.1
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 31. Financial instruments CONTINUED
CONTINUED
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.
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).
2022
144144
Non-derivative financial liabilities
Trade and other payables
Bank overdrafts and loans
Lease liabilities
Derivative financial liabilities
Carrying
amount
$’m
Contractual
cash flows
$’m
Within
1 year
$’m
(115.5)
(103.5)
(20.9)
(115.5)
(105.7)
(24.2)
(115.3)
(5.0)
(4.7)
1–2
years
$’m
(0.2)
–
(11.9)
Derivative financial instruments
(0.1)
(0.1)
(0.1)
–
–
2–5
years
$’m
More than
5 years
$’m
–
(100.7)
(3.5)
–
–
(4.1)
–
2021
Non-derivative financial liabilities
Trade and other payables
Bank overdrafts and loans
Lease liabilities
RESTATED
Carrying
amount
$’m
RESTATED
Contractual
cash flows
$’m
RESTATED
Within
1 year
$’m
(132.4)
(43.8)
(20.0)
(134.3)
(44.9)
(23.5)
(124.1)
(9.6)
(4.6)
1–2
years
$’m
(6.6)
(2.6)
(3.8)
2–5
years
$’m
More than
5 years
$’m
(3.6)
(32.7)
(13.1)
–
–
(2.0)
Other payables restated due to amendment to DE-KA provisional Goodwill and contingent consideration (see note 35).
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.
32. 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.
Where 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. At the
period end there were no outstanding guarantees (2021: none).
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 33. 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 85.
As explained in note 16, the Group has a 27.4% interest in Kepler SignalTek Ltd, which is accounted for as an associate. The
Group invested $2.0m ($1.7m preference shares and $0.3m equity investment). During the period, $0.03m of preference
shares were repaid (2021: $0.05m) and $0.25m was converted into shares. During the period, the Group accrued financial
income of $0.2m on the preference shares (2021: $0.2m). The balance due from the associate as at the period end date was
$2.0m (2021: $2.1m).
The Group also has a 43% interest in Volex-Jem Co. Ltd. The Group did not transact with the entity during the current or
prior periods. The balance due to the associate as at the period end date was $0.1m (2021: $0.1m).
34. Events after the balance sheet date
There are no disclosable events after the balance sheet date.
145145
35. Business combinations
Irvine Electronics LLC
On 29 October 2021 the Group completed the acquisition of 100% of the membership interests in Irvine Electronics LLC
(‘Irvine’), a US-based manufacturer of electronic solutions, including printed circuit board assemblies, across a wide variety
of blue-chip customers, particularly in the defence, military aerospace and medical markets.
Irvine was acquired for cash consideration of $15.1m funded from the Group’s existing debt facilities. Cash paid includes the
initial consideration and the working capital adjustment. There is no deferred or contingent consideration.
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
Property, plant and equipment
Right-of-use asset
Inventories
Trade receivables
Trade payables
Other debtors and creditors
Customer deposits
Provisions
Cash
Lease liabilities
Total identifiable assets
Goodwill
Consideration
Fair Value
$’m
7.0
0.1
1.6
5.2
3.2
(1.1)
(0.3)
(3.6)
(0.1)
0.9
(1.6)
11.3
3.8
15.1
An exercise has been conducted to assess the provisional fair value of assets and liabilities assumed. This exercise identified
customer relationships and order backlog intangible assets.
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.
The provisional goodwill balance recognised above includes certain intangible assets that cannot be separately identified
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. The goodwill recognised is expected to be
deductible for income tax purposes over a 15-year period.
In FY2022, Irvine contributed $6.8m to Group revenue and $40,000 to adjusted operating profit. Associated acquisition costs
of $0.7m and intangible asset amortisation of $0.5m have both been expensed as adjusting items in the period.
If Irvine had been acquired at the beginning of the year, it would have contributed revenues of $21.7m and operating profit
of $4.4m to the results of the Group.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 35. Business combinations CONTINUED
CONTINUED
Terminal & Cable TC Inc and Prodamex SA de CV
On 4 January 2022 the Group completed the acquisitions of Terminal and Cable TC Inc (‘TC’) and Prodamex SA de CV
(‘Prodamex’). TC provides ruggedised wire harness manufacturing capabilities focusing in the “off-highway” market sector,
supporting defence, industrial, agricultural and construction machinery. Prodamex is a business focused on wire harnesses
for domestic appliances from its manufacturing facility in Central Mexico.
TC and Prodamex were acquired for a combined cash consideration of $18.9m funded from the Group’s existing debt
facilities. Included within this amount is the estimated working capital adjustment of $1.2m which will be paid during
FY2023. There is no deferred or contingent consideration.
The provisional fair value amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set
out in the table below:
146146
Identifiable intangible assets
Property, plant and equipment
Right-of-use asset
Inventories
Trade receivables
Trade payables
Other debtors and creditors
Cash
Deferred taxes
Retirement benefit obligation
Lease liabilities
Total identifiable assets
Goodwill
Consideration
TC
$’m
3.0
0.3
2.8
3.7
2.1
(1.0)
(0.5)
1.8
(0.8)
–
(2.8)
8.6
1.7
Prodamex
$’m
Total
$’m
3.0
0.7
0.7
3.6
1.2
(1.6)
(0.5)
–
(0.6)
(0.1)
(0.7)
5.7
2.9
6.0
1.0
3.5
7.3
3.3
(2.6)
(1.0)
1.8
(1.4)
(0.1)
(3.5)
14.3
4.6
18.9
An exercise has been conducted to assess the provisional fair value of assets and liabilities assumed. This exercise identified
customer relationships and order backlog intangible assets.
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.
The provisional goodwill balance recognised above includes certain intangible assets that cannot be separately identified
and measured due to their nature. This includes control over the acquired businesses, the skills and experience of the
assembled workforce and the anticipated synergies arising on integration. None of the goodwill recognised is expected to
be deductible for income tax purposes.
In FY2022, TC contributed $2.4m to Group revenue and a loss of $0.1m to the Group adjusted operating profit. Associated
acquisition costs of $0.4m and intangible asset amortisation of $0.1m have both been expensed as adjusting items in the
period. If TC had been acquired at the beginning of the year, it would have contributed revenues of $11.6m and operating
profit of $0.9m to the results of the Group.
In FY2022, Prodamex contributed $3.3m to Group revenue and $0.2m to adjusted operating profit. Associated acquisition
costs of $0.4m and intangible asset amortisation of $0.2m have both been expensed as adjusting items in the period. If
Prodamex had been acquired at the beginning of the year, it would have contributed revenues of $14.9m and operating
profit of $1.0m to the results of the Group.
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) 35. Business combinations CONTINUED
CONTINUED
inYantra Technologies Pvt Ltd
On 30 March 2022 the Group completed the acquisition of 51% of the share capital in inYantra Technologies Pvt Ltd
(‘inYantra’) and 100% of the industrial land and operational buildings. The company operates from a site in Pune, India, with
expertise in printed circuit board assembly and box build integrated solutions.
The inYantra business was acquired for a total cash consideration of $13.1m with $8.1m paid initially with $5.0m paid in April
2022 upon completion of the transfer of the building. There is no other deferred or contingent consideration.
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
Property, plant and equipment
Inventories
Trade receivables
Trade payables
Other debtors and creditors
Cash
Deferred taxes
Bank loan
Total identifiable assets
Less non-controlling interest
Goodwill
Consideration
147147
Fair Value
$’m
2.3
6.0
3.6
3.9
(4.5)
(1.4)
2.5
(0.7)
(1.1)
10.6
(7.4)
9.9
13.1
An exercise has been conducted to assess the provisional fair value of assets and liabilities assumed. This exercise identified
customer relationships and order backlog intangible assets. The property and property, plant and equipment were subject
to an external valuation.
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. The interest of
the non-controlling interest has been initially measured at fair value.
The provisional goodwill balance recognised above includes certain intangible assets that cannot be separately identified
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. None of the goodwill recognised is expected to
be deductible for income tax purposes.
Due to the timing of the acquisition no trading activity has been consolidated into the FY2022 income statement.
Associated acquisition costs of $0.6m have been expensed as adjusting items in the period. If inYantra had been acquired
at the beginning of the year, it would have contributed revenues of $21.9m and operating profit of $1.2m to the results of
the Group.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS 35. Business combinations CONTINUED
CONTINUED
DE-KA
On 18 February 2021 Volex plc completed the acquisition of DE-KA. In accordance with IFRS 3 ‘Business Combinations’ the
group has updated the provisional fair value of the contingent consideration used in calculating Goodwill. The change in
estimate reflects improved understanding associated with a potential working capital payment to/from the former owners
of the business measured over the July - December 2022 period. The impact of this change was to increase Goodwill by
$2.5m and record contingent consideration of $2.5m.
Net cash outflow on acquisitions
Cash consideration
– Irvine
– TC and Prodamex
– inYantra
Total cash consideration
Less: cash and cash equivalents acquired
148148
– Irvine
– TC and Prodamex
– inYantra
Net cash outflow
Payment of deferred and contingent consideration
– DE-KA
– Servatron
– Ta Hsing
Net cash outflow
$’m
15.1
17.7
8.1
40.9
0.9
1.8
2.5
35.7
17.2
1.7
0.3
19.2
Volex plc Annual Report and Accounts 2022Stock code: VLXNotes to the Financial StatementsFor the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021) Company Statement of Financial Position
As at 3 April 2022 (4 April 2021)
FINANCIALS
Non-current assets
Right-of-use-assets
Investments
Deferred tax asset
Current assets
Inventories
Trade receivables
Other receivables
Derivative financial instruments
Cash and bank balances
Total assets
Current liabilities
Borrowings
Trade payables
Other payables
Lease liability
Provisions
Derivative financial instruments
Retirement benefit obligation
Net current assets
Non-current liabilities
Borrowings
Other payables
Retirement benefit obligation
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium account
Hedging and translation reserve
Merger reserve
Retained earnings
Total equity
Company
2022
£’m
2021
£’m
Notes
4
5
10
6
7
7
9
9
4
9
11
8
9
11
13
13
0.1
191.3
8.0
199.4
4.6
9.6
16.2
0.3
0.1
30.8
230.2
2.3
0.7
23.0
0.1
0.4
0.1
0.8
27.4
3.4
75.1
2.8
0.2
78.1
105.5
124.7
39.7
44.3
(3.4)
8.2
35.9
124.7
149
V
o
l
e
x
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
2
–
147.7
6.0
153.7
3.9
7.1
17.9
0.1
5.5
34.5
188.2
–
0.6
28.6
–
0.4
–
0.8
30.4
4.1
22.9
7.1
1.5
31.5
61.9
126.3
39.3
44.3
(3.3)
8.2
37.8
126.3
The notes on pages 151 to 162 are an integral part of these financial statements. The loss after tax for the period of the
Company amounted to £0.1m (2021: profit of £9.6m). The financial statements on pages 149 to 162 of Volex plc (company
number: 158956) were approved by the Board of Directors and authorised for issue on 23 June 2022. They were signed on its
behalf by:
Nathaniel Rothschild
Executive Chairman
Jon Boaden
Chief Financial Officer
.
w
w
w
v
o
e
x
c
o
m
l
.
Company Statement of Changes in Equity
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
Notes
Share
capital
£’m
38.0
Share
premium
account
£’m
Hedging and
translation
reserve
£’m
Merger
reserve
£’m
Retained
earnings
£’m
33.7
(3.4)
8.2
29.9
150150
Balance at 5 April 2020
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
Exercise of deferred bonus
shares
Dividend paid
Credit to equity for equity-
settled share-based payments
Tax effect of share options
Balance at 4 April 2021
Loss for the period attributable
to the owners of the parent
Other comprehensive
(expense)/income for the
period
Total comprehensive (expense)/
income for the period
Shares issued
Dividend paid
Credit to equity for equity-
settled share-based payments
Tax effect of share options
Balance at 3 April 2022
13
13
14
13
14
–
–
–
1.2
0.1
–
–
–
–
–
–
10.6
–
–
–
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
39.3
44.3
(3.3)
8.2
–
–
–
0.4
–
–
–
–
–
–
–
–
–
–
–
(0.1)
(0.1)
–
–
–
–
–
–
–
–
–
–
–
39.7
44.3
(3.4)
8.2
Total
equity
£’m
106.4
9.6
(0.3)
9.3
11.8
–
(4.7)
2.4
1.1
126.3
9.6
(0.4)
9.2
–
(0.1)
(4.7)
2.4
1.1
37.8
(0.1)
(0.1)
0.4
0.3
(0.4)
(5.3)
3.2
0.3
35.9
0.3
0.2
–
(5.3)
3.2
0.3
124.7
Volex plc Annual Report and Accounts 2022Stock code: VLX Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
1. General Information
Volex plc (the Company) is a public company limited by shares domiciled and incorporated in the United Kingdom
under the Companies Act 2006. 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.
151151
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:
f 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);
f IFRS 7 ‘Financial Instruments: Disclosures’;
f 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);
f Paragraph 38 of IAS 1 ‘Presentation of financial statements’ comparative information requirements in respect of
paragraph 79(a)(iv) of IAS 1;
f Paragraph 118(e) of IAS 38, ‘Intangible assets’ (reconciliations between the carrying amount at the beginning and end of
the period).
f 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).
f IAS 7 ‘Statement of cash flows’;
f 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);
f The requirements in IAS 24 ‘Related party disclosures’ to disclose related party transactions entered into between two or
more members of a group.
f 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 loss for the parent Company for the
period was £0.1m (2021: profit of £9.6m).
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 107 for further information on the going concern assessment.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
2. Significant accounting policies CONTINUED
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.
152152
2.4 Business combinations
Acquisitions are accounted for using the acquisition method as described in the Group’s 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.
Volex plc Annual Report and Accounts 2022Stock code: VLX 2. Significant accounting policies CONTINUED
CONTINUED
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.
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.
153153
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 31 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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
2. Significant accounting policies CONTINUED
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 for employees of the Company 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.
154154
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. The fair value of share-based payments in respect of employees of Group subsidiaries is recharged to those
subsidiary undertakings on exercise of the awards. In the Company financial statements the amount recoverable from
subsidiaries is reported as a capital contribution increasing the Company’s investment in the employing subsidiary. A credit
is recognised directly in shareholders’ funds for both Company and subsidiary employees.
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:
f Remeasurement;
f Net interest expense or income; and
f 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.
Volex plc Annual Report and Accounts 2022Stock code: VLX 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)
2022
Number
2021
Number
2
16
18
2022
£’m
3.0
0.3
0.1
3.4
2
12
14
2021
£’m
2.4
0.3
0.2
2.9
155155
Directors’ remuneration for the year totalled £2.3m (2021: £2.3m). The remuneration of the highest paid Director is £1.3m
(2021: £1.1m). Employer contributions of £0.1m (2021: £0.1m) 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 75 to 89 and form part of the financial statements.
4. Right-of-use asset
This note provides information for leases where the Company is a lessee.
Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Vehicles
Lease liability
Current
Non-current
Additions during the period to the right-of-use assets were £0.1m (2021: £0.0m).
3 April
2022
£’m
4 April
2021
£’m
0.1
0.1
0.1
–
–
–
–
–
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
5. Investments
The Company’s fixed asset investments comprise investments in wholly-owned subsidiary undertakings and long-term
loans as follows:
Cost
At 5 April 2020
Additions
Contribution
Disposals
Repayment
156156
Exchange differences
At 4 April 2021
Additions
Capital contribution
Repayment
Exchange differences
At 3 April 2022
Accumulated depreciation and impairment
At 5 April 2020
Impairment
Exchange differences
At 4 April 2021
Impairment
Exchange differences
At 3 April 2022
Carrying amount
At 3 April 2022
At 4 April 2021
At 5 April 2020
Shares
£’m
Loans
£’m
67.1
112.4
15.0
(57.7)
–
–
136.8
7.8
1.5
–
–
146.1
5.2
7.3
–
12.5
3.8
–
16.3
129.8
124.3
61.9
61.1
2.3
(15.0)
–
(16.1)
(4.1)
28.2
39.3
–
(6.5)
2.6
63.6
13.1
(7.3)
(1.0)
4.8
(3.8)
1.1
2.1
61.5
23.4
48.0
Total
£’m
128.2
114.7
–
(57.7)
(16.1)
(4.1)
165.0
47.1
1.5
(6.5)
2.6
209.7
18.3
–
(1.0)
17.3
–
1.1
18.4
191.3
147.7
109.9
In the United Kingdom, the Company includes two operational branches, Volex Powercords Europe and Volex Europe Cable
Assemblies. Details of the Company’s subsidiary undertakings are set out in note 17 ‘Related undertakings’. Investments in
subsidiaries are all stated at cost less provision for impairment.
During the period the Group subscribed to share capital in Volex Group Holdings Ltd (£4.0m) and Volex Canada Inc
(‘Volex Canada’) (£3.8m) to support the subsidiaries acquisitions of Prodamex and TC. The Company’s previous investment
and loans in Volex Canada were previously impaired, as such upon subscription of the new shares the investment was
immediately impaired with a corresponding reversal of the previously impaired loan balance.
The capital contribution of £1.5m (2021: £nil) is in respect of the fair value of equity-settled share-based payment transactions
during the period with employees of Group subsidiary companies which will be recharged to the employing subsidiaries
when the awards are exercised. A corresponding increase to shareholders’ funds was recognised.
During the prior period on 18 February 2021, the Company acquired De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi
(‘DE-KA’) for consideration of £57.7m. Following this acquisition the Company decided to transfer ownership to Volex
(Asia) Pte Ltd which owns a number of the Group’s power businesses. As part of the transfer process, the Company also
recapitalised Volex Holdings Inc 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 £49.6m of preferred stock in Volex Holdings Inc which included the
contribution of an existing £15.0m receivable. DE-KA was then sold to Volex (Asia) Pte Ltd at book value, in return for a new
inter-company note receivable. A loss of £0.9m was recognised on the remeasurement of the fair value of the transaction.
The note receivable was subsequently eliminated through Volex plc subscribing to £20.2m of additional share capital in
Volex Pte Ltd.
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 3 April 2022, the Company’s loans receivable accrued interest of between 0% - 3%. Repayments were received from Volex
Inc, Silcotec Europe Ltd and Volex (Asia) Pte Ltd during the period.
During the period, the Company received one dividend (2021: two) totalling £2.8m (2021: £3.8m) from GTK (Holdco) Ltd.
Volex plc Annual Report and Accounts 2022Stock code: VLX 6. Inventories
Finished goods
7. Trade and other receivables
Trade receivables
Amounts receivable for the sale of goods
Loss allowance
Other receivables
Amounts due from Group undertakings
Other debtors
Prepayments
Due for settlement within 12 months
Due for settlement after 12 months
Amounts due from Group undertakings are unsecured, non-interest bearing and repayable on demand.
8. 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
2022
£’m
4.6
4.6
2022
£’m
9.6
–
9.6
15.4
0.4
0.4
16.2
16.2
–
16.2
2022
£’m
75.1
0.1
75.2
0.1
75.1
75.2
157157
2021
£’m
3.9
3.9
2021
£’m
7.1
–
7.1
17.1
0.5
0.3
17.9
17.9
–
17.9
2021
£’m
22.9
–
22.9
–
22.9
22.9
At 3 April 2022, debt issue costs of £1.7m were included within the total bank loan balance shown above (2021: £0.8m). Full
details of the bank loans are disclosed in note 19 ‘Borrowings and lease liabilities’ to the consolidated financial statements.
9. 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
2022
£’m
0.7
17.5
0.3
8.0
25.8
23.0
2.8
25.8
2021
£’m
0.6
15.0
–
20.7
35.7
28.6
7.1
35.7
Amounts owed to Group undertakings are unsecured, non-interest bearing and repayable on demand. The Directors
consider that the carrying amount of trade and other payables approximates to their fair value.
The Company has a provision of £0.4m (2021: £0.4m) 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. Included in accruals and deferred income is £4.2m (2021: £15.4m) relating to deferred and
contingent consideration for acquisitions.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
10. Deferred tax
The following are the 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
At 4 April 2021
158158
Credit/(expense) to income statement
Expense directly to equity
At 3 April 2022
Trading
losses
£’m
Accelerated
tax
depreciation
£’m
Other short
term timing
differences
£’m
Share-based
payments
£’m
–
3.9
–
–
3.9
1.7
–
5.6
–
0.6
–
–
0.6
0.4
–
1.0
–
0.1
0.4
–
0.5
(0.1)
–
0.4
–
0.4
–
0.6
1.0
0.2
(0.2)
1.0
Total
£’m
–
5.0
0.4
0.6
6.0
2.2
(0.2)
8.0
At the reporting date, the Company had unused tax losses of £41.0m (2021: £42.9m) available for offset against future profits.
Of this amount, £10.3m (2021: £10.6m) 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%. This tax rate change was substantively enacted on 24 May
2021 and therefore has been reflected in the Company deferred tax balances in the current period, resulting in an increase
to the value of the deferred tax assets. Deferred tax assets are measured at the tax rate expected to apply in the period in
which the asset is realised.
11. 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 has agreed to pay contributions of
£0.8m p.a. (payable in quarterly instalments) over the period to 2 April 2023.
In 2019 the Company recognised a pension past service cost of £0.4m 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 prior period, an additional charge of £0.1m arose
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 30 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 £0.1m (2021: £0.1m).
12. 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 29 ‘Share-based payments’ to the consolidated financial statements.
Volex plc Annual Report and Accounts 2022Stock code: VLX 13. Share capital
Allotted, called up and fully paid:
At 5 April 2020
Issue of deferred bonus shares
Acquisition of DE-KA
Acquisition of Servatron – contingent consideration
At 4 April 2021
Issue of new shares
At 3 April 2022
The Company has no authorised share capital.
Ordinary
shares of
£0.25 each
Number
151,818,762
432,040
3,320,000
1,481,239
157,052,041
1,666,668
158,718,709
Par value
£’m
Share
premium
£’m
38.0
0.1
0.8
0.4
39.3
0.4
39.7
33.7
–
10.6
–
44.3
–
44.3
Total
£’m
71.7
0.1
11.4
0.4
83.6
0.4
84.0
159159
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 Company issued 1,666,668 ordinary shares to satisfy the vesting
of the share awards granted to the senior employees and/or former owners of Servatron and GTK as the businesses met the
required operating profit targets set out in the acquisition agreements.
Under the FY2022 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.
14. 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 period ended 4 April 2021: 2.2p per share (2020: 2p per share)
Interim dividend for the period ended 3 April 2022: 1.2p per share (2021: 1.1p per share)
Proposed after the balance sheet date and not recognised as a liability:
Final dividend for the period ended 3 April 2022: 2.4p per share (2021: 2.2p per share)
2022
£’m
2021
£’m
3.4
1.9
5.3
3.8
3.0
1.7
4.7
3.4
The Group’s consolidated reserves set out on page 105 do not reflect the profits available for distribution in the Group.
15. Other matters
The auditors’ remuneration for the current period in respect of audit services was £0.3m (2021: £0.3m) and £nil for non-audit
services performed (2021: £0.1m).
16. 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.
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
17. Related undertakings
Volex Powercords Europe and Volex Europe Cable Assemblies are both trading divisions of Volex plc. In accordance with
Section 409 of the Companies Act 2006, the subsidiaries owned at 3 April 2022 are disclosed below. Unless otherwise
stated 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.
Footnote
Country of
incorporation
Address
Percentage
owned by plc
Name of entity
Directly held
Volex Pte Ltd
Volex Holdings Inc
Terminal & Cable TC Inc
160
Volex Group Holdings Ltd
GTK (Holdco) Ltd
Volex Poland Sp z.o.o.
Volex Germany GmbH
Volex Sweden AB
2
2
1
2
2
1
3
3
Singapore
37A Tampines Street 92, #08–01, Singapore 528886
USA
Canada
UK
UK
Poland
Germany
Sweden
511 E San Ysidro Blvd # 509, San Ysidro CA 92173
300 - 50 O’Connor Street, Ottawa ON K1P 6L2,
Canada
Unit C1 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Unit C2 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Podłuzna 11–13, 85–790, Bydgoszcz, Kuyavian–
Pomeranian Voivodeship, Poland
Zu den Mühlen 19, 35390 Gießen, Deutschland
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
Volex Electrical Products Ltd
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
Volex Interconnect Systems
Ltd
Volex Europe (No.1) Ltd
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
1 Manufacture and/or sale of power and data cables
2 Holding company
3 Dormant company
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
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
Unit C1 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Ireland
Carraroe Industrial Estate, Carraroe, Co Galway,
H91WR82
100%
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%
99%
V
o
l
e
x
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
2
S
t
o
c
k
c
o
d
e
:
V
L
X
FINANCIALS
Percentage
owned
by Group
companies
Footnote
Country of
incorporation
Address
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.
Irvine Electronics LLC
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
1
3
1
1
3
1
1
1
3
1
1
1
1
1
1
1
3
1
1
1
1
1
1
inYantra Technologies Pvt Ltd 1
Volex Interconnect (India)
Pvt Ltd
Volex Cables (HK) Ltd
Ta Hsing Industries Ltd
1
1
1
UK
UK
Turkey
Romania
UK
Germany
Romania
Unit C2 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Unit C2 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Akse Mah. Fevzi Çakmak Cad. No: 140 Çayırova,
Kocaeli
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
USA
Unit C1 Antura, Bond Close, Basingstoke,
Hampshire, England, RG24 8PZ
Carraroe Industrial Estate, Carraroe, Co Galway,
H91WR82
511 E San Ysidro Blvd # 509, San Ysidro CA 92173
9571 Pan American Drive, El Paso, TX 79927
12825 Mirabeau Parkway, Suite 104, Spokane Valley,
WA 99216–1617
1601 Alton Parkway, Suite A, Irvine CA 92606
Singapore
37A Tampines Street 92, #08–01, Singapore 528886
Indonesia
Indonesia
Philippines
Japan
Taiwan
Thailand
Vietnam
Malaysia
India
India
Hong Kong
Hong Kong
Kawasan Industri Sekupang, Batam, Kepulauan
Riau, Indonesia 29428
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
GAT NO. 208-210, 221, 224 & Others, Shindewadi,
Shirval - 412801
Level 9, Olympia Teknos Park, No. 28 Sidco
Industrial Estate, Guindy, Chennai, Tamil Nadu, IN
600 032
Unit 5805, 58/F., Two International Finance Centre,
8 Finance Street, Central, Hong Kong
Unit 5805, 58/F., Two International Finance Centre,
8 Finance Street, Central, Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
100%
161
V
o
l
e
x
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
2
.
w
w
w
v
o
e
x
c
o
m
l
.
Percentage
owned
by Group
companies
100%
100%
100%
100%
100%
100%
100%
100%
Notes to the Company Financial Statements
For the 52 weeks ended 3 April 2022 (52 weeks ended 4 April 2021)
Name of entity
Shenzhen Ta Hsing Wire and
Cable Ltd
Volex Interconnect Systems
(Suzhou) Co. Ltd
Volex Cable Assembly
(Shenzhen) Co. Ltd
162
Volex Cable Assembly
(Zhongshan) Co. Ltd
Prodamex SA de CV
Volex Hermosillo SA de CV
Volex de Mexico SA de CV
Footnote
Country of
incorporation
Address
1
1
1
1
1
3
1
China
China
China
China
Mexico
Mexico
Mexico
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, Longgang Avenue, Longgang District,
Shenzhen City
2 Xingda Street, Torch High–tech Ind Dvpt Zone,
Zhongshan, 528437, China
Carretera a Zacatecas Km 12.5 Nave 5, Parque
Industrial Pueblo Viejo, Mexquitic de Carmona, SLP
CP 78480, Mexico
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
Volex Group plc Employees’
Share Trust
Guernsey
St. Peter’s House, Le Bordage, St. Peter Port,
Guernsey, GY1 1BR
Interests in associates/joint ventures
Kepler SignalTek Ltd
Volex-Jem Co Ltd
Volex-Jem Cable Precision
(Dongguan) Co., Limited
1
2
1
Hong Kong
Unit 912 9/F Two Harbourfront 22 Tak Fung Street
Hunghom KL, Hong Kong
Taiwan
19F.-13, No. 79, Sec. 1, Xintai 5th Rd., Xizhi Dist., New
Taipei City 22101, Taiwan (R.O.C.)
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
Results
Revenue – total Group
Gross profit – total Group
Operating expenses – total Group
Underlying operating profit(i) – total Group
Adjusting operating items
Share-based payment charge
Profit on ordinary activities before taxation
Unaudited
IFRS
2022
$’m
Unaudited
IFRS
2021
$’m
Unaudited
IFRS
2020
$’m
Unaudited
IFRS
2019
$’m
Unaudited
IFRS
2018
$’m
614.6
125.8
(84.8)
56.2
(10.8)
(4.4)
36.2
443.3
103.9
(73.2)
42.9
(5.6)
(6.6)
29.4
391.4
90.7
(73.6)
31.6
(5.8)
(8.7)
15.9
6.5
372.1
73.5
(60.5)
21.6
(6.2)
(2.4)
11.6
3.8
322.4
55.8
(47.1)
11.5
(1.6)
(1.1)
7.0
3.2
163163
Depreciation and amortisation (excluding intangible
assets acquired in a business combination)
9.9
7.9
Basic underlying earnings per share – total Group(ii)
Basic earnings per share – total Group
Statement of financial position
Non-current assets
Net cash/(debt)(iii)
Other assets and liabilities
Net assets
Gearing
Cents
Cents
Cents
Cents
Cents
26.9
19.3
$’m
216.9
(74.4)
66.0
208.5
36%
32.1
25.5
RESTATED(iv)
$’m
185.3
(7.3)
6.0
184.0
4%
18.2
9.9
$’m
84.7
31.6
14.2
130.5
–
13.1
6.9
$’m
56.0
20.6
39.0
115.6
–
9.2
4.4
$’m
24.6
9.9
13.6
48.1
–
i. Defined as operating profit before adjusting items and share-based payments.
ii. Defined as earnings 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.
iv. The amounts for non-current assets and other assets and liabilities in 2021 have been restated due to the amendment to Goodwill and
contingent consideration relating to the DE-KA acquisition (see note 35 to the Group accounts for further information).
Volex plc Annual Report and Accounts 2022www.volex.comFINANCIALS Shareholder Information
Provisional Financial Calendar
FY2023
Interim Results Announced w/c 7 November 2022
Period End 2 April 2023
Final Results Announced w/c 19 June 2023
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)
164164
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
Citibank, N.A. London branch
Barclays Bank plc
Fifth Third Bank, National Association
UniCredit Bank AG, London Branch
Nominated Adviser & Joint Broker
Singer Capital Markets
Joint Broker
HSBC Bank plc
Solicitors
Travers Smith LLP
Volex plc Annual Report and Accounts 2022Stock code: VLX Volex plc
Unit C1 Antura
Bond Close
Basingstoke
Hampshire
RG24 8PZ
United Kingdom
www.volex.com
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