Investment for growth

Posted on 12 Aug 2010 by The Manufacturer

Exception, a leading UK electronics contract manufacturer, is confident about its future growth prospects, following the refinancing of the business.

The deal which completed on 30th June, was led by CEO Craig Wright and Exception’s senior management, and was backed by Lloyds Banking Group. The deal secures new facilities and reduces the legacy balance sheet debt of Exception by £12.7m, enabling the company to forge ahead with its growth strategy. The business is aiming to increase its annual turnover from a low point last year of £45m to £70m over the next two to three years, based on its proven ability to offer best-in-class electronics manufacturing solutions to specialist industrial markets such as medical devices, energy, aerospace, process control, transportation and communications.

The company employs approximately 350 people across UK sites in Calne and Tewkesbury, together with overseas operations in India and Malaysia. Exception is upbeat about the future, with great opportunities visible from both existing and new customers. The company has recently signed a number of major new contracts worth over £5m per annum for its offshore, UK contract manufacturing and PCB operations.. The business is predicting strong growth for its outsourcing services from the green energy, oil and gas, measurement, process control and medical equipment markets.

During the first half of 2010, Exception has seen its order book for Asian manufactured printed circuit boards (PCBs) rise by 20 per cent, reflecting levels of demand last seen in early 2008. With demand for its UK manufactured quick-turn and technology PCBs also growing well, Exception continues to build its market share in the competitive contract electronics manufacturing (CEM) sector.

Chief executive officer of Exception, Craig Wright, is very optimistic about the future for the business. He said: “This refinancing is a huge boost to our business as it provides a stable and solid financial platform from which to grow. The management have worked hard over the last eighteen months in an uncertain market to maintain high service levels with our customers and grow our market share. This refinancing demonstrates that financial institutions are willing to support UK manufacturers, as long as they can demonstrate a credible track record and a robust profitable strategy for the future.”

“The deal puts Exception in a very strong position for future growth, as it provides new working capital facilities with excellent cash headroom. Most significantly, it improves our debt/equity ratio from 2.3 to just 0.2, having removed £12.7m of debt from the business, leaving a £2m term loan repayable over 5 years.”

“Our strong and experienced senior management team has been joined by Mark O’Connor, who was recently appointed as managing director of Exception’s VAR division. VAR has already won several new contracts based on our unrivalled service quality and supply chain management capability for PCBs. As a global business, with sites in Asia and India, we are already seeing a spike in demand for our services in these geographies and expect this confidence to make its presence felt in our home markets during the rest of 2010.”

With its new funding structure in place, Exception expects to accelerate its strategic investment programme in new technology and service capabilities to help maintain its position as one of Europe’s leading tier 2 electronics outsourced solutions providers.

“Exception recently finalised investment in a new printed circuit assembly (PCA) line at its Calne facility. Exception also plans to announce several new technology investments at its Tewkesbury PCB manufacturing plant, where it specialises in the manufacture of highly sophisticated, quick-turn printed circuit boards for the semiconductor, medical technology, telecoms and aerospace industries. Our investment in VAR, our offshore PCB and PCA division will include further recruitment and enhanced IT infrastructure in Malaysia, China and India, as we further develop our supplier, customer and engineering interface. This underlines a strategy of continuing to excel in meeting our customers’ needs, delivering an increasingly flexible best in class supply chain at the lowest possible total cost.