Interim Results 2005/06

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Volex Group plc

Interim Results 2005/06

November 2005

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Briefing Agenda

1. Introduction

Martin May , Chairman

2. Results Overview

John Corcoran, Group CEO

3. Financials

Derek Walter, Group FD

4. Regional Review

John Corcoran

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Financial Summary - H1 2005/06

Operating Profit*

£1.4m

Equity Raising (June)

£19.0m

* Pre major restructuring programme

£123m

1H LY

Turnover

£124.0m

£1.2m

£2.5m

Finance Charges reduced

£1.7m

7.8p

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Key Features of H1

SALES:

In line with budget expectations, improved performance in North America. Strong sector performance in Consumer Products

MARGIN:

Commodity price (PVC and copper) impact continued. Gross margin held.

FUNDING:

Successful £19m equity fund raising, June Cash injection to effect competitive position.

DEBT:

Re-negotiated 3 year facility with reducing interest rates.

FOOTPRINT:

4 of 12 sites planned were successfully closed, no customer impact. Full benefit in H2.

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Trading Conditions

• Wireless demand continues to improve with exception of Europe

• Mobile voice and data and broadband – focus on convergence at service level

• 2006 outlook consensus for moderate growth

• Emerging markets gaining momentum

• Fixed line business flat to negative

Tele/Networking

Computing

• PC unit sales rising, heavily commoditised

• Server demand improving - IBM and HP

• Drive to mobility – phone convergence

• Entertainment drive media centres, portables

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Trading Conditions

• Digital migration to plasma, LCD – price sensitive

• Copper price effect significant – but equalising

• Innovation differentiating at sub-assembly level

• Technology churn benefit on new design margin

• RoHS compliance key – environmental drive

• Appliance demand improving – supply base consolidating

Consumer Products

• Aerospace demand returns, contract awards improving

• Off-highway stable to slightly positive

• Focus on defence ground communications

• Opportunities for growth but incubation period extensive

• Strategic review of harness market/business

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Group Sales by Destination

Europe

North America Asia

United Kingdom

2005/06 Percentage variation on prior H1

1.1% -8.6% 6.1% 0.2% -10% -5% 0% 5% 10% 29% 31% 14% 26%

6.5% -15.0% 6.0% 3.0% -20% -15% -10% -5% 0% 5% 10%

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Group Sales by Product

Data/Telecommunications Power Cords

Harnesses

-2.8% 1.8% 10.5% -5% 0% 5% 10% 15% 13% 45% 42%

0.5% 2.7% 3.0% 0% 5% 10% 15%

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Group Sales by Market Sector

Data/Telecommunications Consumer Products

Industrial & Medical Vehicles & Aerospace

-7.3% 3.6% 6.1% 14.1% -10% -5% 0% 5% 10% 15% 20% 36% 40% 11%

13% _{2005/06 Percentage variation on prior H2}

-5.1% 5.3% 8.7% 6.4% -10% -5% 0% 5% 10%

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What’s Different…..

Where we came from…

¾ At end of 2004/05

- cash balances of £15.0m - gross debt of £45.5m

- debt fully serviced throughout year

¾ However………….. the Group was cash constrained:

- scheduled debt repayments (totalling £5m) deferred

- substantial interest and debt arrangement fees in 2004/05 - free cash from major disposals taken by the Banks

¾ Further restructuring was required to achieve acceptable returns by: - accelerating cost reduction

- investing for growth

- normalising the debt servicing

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What’s Different…..

Where we are now..…

¾ Reducing the manufacturing footprint and moving to lower cost locations

¾ Retain levels of capacity but closing 12 manufacturing sites

4 closed to date: Malaysia, Philippines, Conover (USA), Tczew (Poland), Kanata (Canada) significantly downsized

¾ Since half year Fremont downsizing and Aguascalientes closure announced

¾ Re-profiled the PLC executive directors’ team… reduced from 5 to 3

¾ Significant improvement in operating profit on re-profiling manufacturing cost base alone

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Volex Group plc

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Financial Highlights

_{for the Half Year to 2 October 2005}

H1

1

H2

1

2006

2005

£m

Sales

123.9

122.9

121.7 Operating profit

2

1.4

1.2

0.6 Major restructuring programme

(1.8)

1.3 (8.0)

Loss before tax

2

(0.2)

(1.2)

(1.3)

Loss per share

2

(3.3) p

(7.8) p

(15.6) p

1 As restated for IFRS

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Gross Sales by Source

39% 31% 12% 18% 10.6% 3.4% 3.8% -11.9% -20% 0% 20%

4.4% 4.3% 3.5% -8.6% -20% 0% 20% Europe North America Asia United Kingdom

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Balance Sheet

2 Oct 3 April 3 April

2005 2005 2005

IFRS IFRS UK GAAP

£m £m £m

Tangible fixed assets 13.2 13.4 13.6

Inventories 30.7 28.0 28.0 Receivables 55.2 50.4 50.4 Current liabilities (46.2) (40.9) (40.2) CAPITAL EMPLOYED 52.9 50.9 51.8 Provisions (7.5) (7.4) (4.2) Intangible assets 2.1 2.1 1.8 Net debt (17.5) (30.5) (30.5)

Net assets employed 30.0 15.1 18.9

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Operating Cash Flow

H1 2006 FY 2005

Ongoing MRP Total Ongoing MRP Total £m £m £m £m £m £m Operating profit 1.4 (1.7) (0.3) 1.8 (6.8) (5.0)

Amort., dep'n and impairment 2.0 - 2.0 4.5 3.3 7.8

Profit on disposal - - - - (1.9) (1.9)

Working capital 0.1 (0.2) (0.1) (4.1) 1.4 (2.7)

Provisions (0.3) 0.8 0.5 (0.2) 3.6 3.4

Free cash flow 3.2 (1.1) 2.1 2.0 (0.4) 1.6

Capital expenditure (1.1) - (1.1) (2.2) - (2.2)

Proceeds on disposal - - - 0.6 7.2 7.8

Operating cash flow 2.1 (1.1) 1.0 0.4 6.8 7.2

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Cash Flow

H1 FY 2006 2005

£m £m Ongoing operating cash flow 2.1 0.4

Tax paid (2.3) (2.2)

Interest paid (1.4) (3.8)

Ongoing cash flow (1.6) (5.6)

Cash flows of major restructuring programme (1.1) 6.8

Issue of share capital 17.6

-Refinancing costs paid (2.4) (0.7)

FX movement (2.0) 0.7

Movement in debt 10.5 1.2

Movement in net issue costs 2.5 (0.2)

Movement in net debt 13.0 1.0

Opening net debt (30.5) (31.5)

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Volex Group plc

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Volex in North America

Revenue by source improved by 3.4% over 1H

prior year

Market strong in Q1, weakened somewhat in Q2

Closed Conover, downsizing Kanata and Fremont,

announced closure of Aguascalientes

Accelerated transfer of power cord production

from Mexico to Asia

Business restored close to break-even

Further closures and overhead reductions will

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Volex in Asia

Sales flat, consumer electronics weak. Level of

profitability improved

Copper price increase of 20% over start of year

Telecom and data business weak – have

transitioned to North American team

Power cord sales strong

New product designs represent 10% of power

cord sales

Malaysia and Philippines closed.

Industrial market – growing strongly

Brazil – strategic and improving, especially in

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Volex in Europe

Sales by source (excl. UK) at 88% of

comparable period – 1H 04/05

Some one-off projects last year not repeated

2 Poland sites consolidated – Tczew closed

Operating profit margin ahead of

expectations

Vehicle Harness steady to slightly negative,

low-cost solutions from China and Estonia

Aerospace remains a concern. Drive for

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Volex Group plc

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Our Strategy

To be the leading

Value

provider of

Global

cable assembly

Solutions

Differentiated:

On portfolio breadth

On value-add service offering

On ability to supply non-specific solutions

• Service • Quality • Responsiveness • Flexibility • Independence • Footprint • Account mgt. • Product transfer

• Low cost options

• Global technology • Global materials • Standardised mfg. • Design • Development • NPI • Logistics • Portfolio mgt. • Supply base mgt. • Total Supplier

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Momentum Building..

¾ Volex operates in a growing market whose demand is not significantly cyclical – competitiveness is key

¾ Potential for significant margin improvement – costs are being stripped out

¾ Revenues can be grown in a highly fragmented market place

¾ Post refinancing, the Group has a stronger balance sheet with appropriate gearing and cash flow to invest and realign resources to meet customers’ needs

¾ Opportunity to leverage Volex key attributes of design strength, product quality, global sourcing and supply chain range of

services

¾ Volex can be a leading provider of assembly solutions in the sub-assembly market.

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Defined Value Offering....

• Global service for a global customer base

• Global cost solutions for a regional customer base

GLOBAL

PEOPLE

PRODUCT

Volex has the people:

• Account Management

• Engineering

• SCM experts

Volex has the culture:

• Responsive

• Flexible

• Customer focused Providing a one-stop

shop to service our customers’ total product requirements with a range of services from solution engineering to product supply

SERVICE

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Outlook...

Demand holding for balance of year, further site closures planned for completion by year-end:

but…..

Oil prices continue to pressure global economy, and

PVC prices to Volex

Copper prices continue to rise, risk to Q4 Consumer spending levels questionable so…..

Expect modest sales growth (cautious)

Expect second half to benefit from closures and overhead reductions Further improvements in H2 will have full year ’07 benefit

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Volex Group plc