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Half-Year Results 2012 - Volex

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Half-Year Results 2012 - Volex Powered By Docstoc
					31 October 2012
                                                       VOLEX plc
                       Half-year results for the 26 weeks ended 30 September 2012

Volex plc (‘Volex’ or the ‘Group’), the global provider of customised electrical and optical interconnect
solutions, today announces its unaudited half-year results for the 26 weeks ended 30 September 2012
(‘H1 FY2013’).


First half financial summary:
        Revenue in H1 FY2013 of $249.3m (H1 FY2012: $270.7m);
        Gross margin of 17.8% for H1 FY2013 (H1 FY2012: 19.2%);
        Normalised* operating profit of $5.3m (H1 FY2012: $14.9m);
        Normalised* diluted earnings per share for H1 FY2013 of 5.8 cents (H1 FY2012: 17.6 cents). Basic
         earnings per share of 3.1 cents (H1 FY2012: 15.0 cents);
        Capex of $14.2m (H1 FY2012: $4.8m), to drive future production efficiencies and revenue
         opportunities;
        Return on capital employed (‘ROCE’) of 17% in H1 FY2013 (H1 FY2012: 46%);
        Free cash outflow of $6.3m in the first half (H1 FY2012: $1.3m inflow) primarily as a result of the
         increased capex;
        Net debt of $4.6m at end of H1 FY2013 (H1 FY2012 : $11.9m); and
        Interim dividend of 2.0 cents per share declared (H1 FY2012: 1.5 cents).
*   Before exceptional restructuring costs and share based payments charge



First half operating highlights:
        Restructuring programme initiated targeting annualised savings of circa $10m;
        Increased allocations generating 60% increase in revenue from the Group’s largest customer;
        Continued growth in non-Consumer gross margin;
        Greater sales pipeline than at any time in the past 4 years; and
        Highly experienced Chief Operating Officer appointed to drive production efficiency.

The Chairman of Volex, Mike McTighe, commented:
The Board recognises that trading in the first half of FY2013 has been challenging, which coupled with
our investment in production capacity and capabilities, has led to the disappointing H1 FY2013 financial
results. Whilst we believe that the significant revenue growth seen with our largest customer supports
our strategy, the Board has initiated a number of revenue and productivity initiatives as well as a group
wide restructuring programme aimed at returning Group profitability to its long-term forecast levels.

As a result, the Board expects revenue growth across all sectors in the second of half of FY2013 and is
confident that profits for the full year FY2013 will be in line with new market expectations, following the
18 September 2012 trading update. Furthermore, the Board is optimistic on the outlook for FY2014.
The Company will be presenting its half year results at 09.00 am on Wednesday 31 October 2012. A live
audio webcast facility with the option to ask questions will be available at the following link:

http://www.media-server.com/m/p/389ykipn




                                                                     END

For further information please contact:

Volex Group plc
Ray Walsh, Group Chief Executive                                                            +44 20 3370 8830
Andrew Cherry, Group Finance Director                                                       +44 20 3370 8830

Buchanan Communications
Charles Ryland / Louise Hadcocks                                                            +44 20 7466 5000

Forward looking statements
Certain statements in this announcement are forward-looking statements which are based on Volex’s expectations, intentions and projections
regarding its future operating performance and objectives, anticipated events or trends and other matters that are not historical facts. Forward-
looking statements are sometimes, but not always, identified by their use of a date in the future or such words as ‘anticipates’, ‘aims’, ‘could’,
‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘targets’, ‘goal’ or ‘estimates’. By their very nature forward-looking statements are
inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or
implied by these forward-looking statements. Factors that could cause or contribute to such differences include, by way of example only and not
limited to, general economic conditions, currency fluctuations, competitive factors, the loss or failure of one or more major customers, changes
in raw materials or labour costs, and issues associated with implementing our restructuring programmes among other risks. Given these risks
and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements
speak only as of the date of such statements and, except as required by applicable law, Volex undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
HALF YEAR RESULTS
26 Weeks ended 30 September 2012
As previously announced the first half of FY2013 has been challenging, with the Group’s significant
investment in its production capacity and capabilities failing to deliver the forecast financial returns as
quickly as had been anticipated. Adverse market conditions have hampered growth across all sectors while
customer specific growth programmes have been slower to deliver than projected. In response,
management has initiated a programme of cost reductions across the Group in order to underpin the
FY2014 performance targets.

                            Revenue                    Norm. gross profit           Norm. gross margin
                   H1 13       H1 12               H1 13      H1 12               H1 13    H1 12     H2 12
                  Y11201
                   $’000       $’000     % Var     $’000      $’000      % Var      %      12201
                                                                                             %         %
                     1                                                                       0
Consumer          164,663    169,890      (3)      24,439     29,261      (16)     14.8     17.2      17.7
Telecoms / Data      0
                  45,192        6
                              56,246      (20)     10,412     11,528      (10)     23.0     20.5      22.0
Healthcare         22,024     24,193      (9)      5,939      6,143         (3)    27.0     25.4      29.3
Industrial         17,372     20,325      (15)     3,553      4,926       (34)     20.5     24.2      20.5
Total             249,251    270,654      (8)      44,343     51,858      (15)     17.8     19.2      19.9
                                4
Group revenue in H1 FY2013 decreased by 8% to $249.3m, from $270.7m in H1 FY2012. Whilst revenue in
the Consumer sector as a whole decreased year-on-year, sales to the Group’s largest customer increased
by 60%, with the Group enjoying increased allocations as a result of its competitive advantage in
production capabilities, particularly in the halogen free cable and duckhead markets. Growth in this
account, together with new business wins with several customers, was more than offset by a decline
across the majority of other accounts, as a result of weakened demand due to macro-economic pressures.

Telecoms/datacoms revenue in the first half of FY2013 was 20% down on last year, primarily due to
reduced investment by telecoms operators as a result of general economic uncertainty. Encouragingly,
however, Q2 FY2013 revenue was 9% ahead of Q1 FY2013 with revenue in a key telecoms account
increasing towards more historic levels, following three quarters of slower activity. Furthermore Q2
FY2013 saw a significant improvement in Telecoms trading performance in our Indian business, which had
been particularly affected by curtailed network operator spend.

Revenue in the Healthcare sector was down 9% on last year as a result of weaker demand from our key
account due to a contraction of their own business and customer design release delays on new products in
the imaging systems space. These new imaging systems products are expected to drive revenue growth in
the second half, as legacy products start to be phased out. Significantly, Q2 FY2013 revenue was 14%
ahead of Q1 FY2013 revenue driven by a new cabling solution programme that came on stream during the
second quarter.

Industrial revenue was down 15% in H1 FY2013 compared to last year. Whilst there have been notable
smaller business wins in the first half, the weaker demand previously reported in the second half of FY2012
from our principal customer in this sector has continued. Reduced orders after a period of de-stocking last
year and continued delays in the anticipated regulatory changes that will drive market adoption of new
telematics products have combined to arrest revenue growth in H1. Revenue growth is expected to return
in the second half as the effects of these temporary drags on growth decrease.

                                                  -1-
Group normalised gross margin in Q2 FY2013 was 18.0%, an improvement over the 17.6% recorded in the
first quarter, and resulted in an H1 FY2013 normalised gross margin of 17.8%, a reduction of 1.4
percentage points over last year. This decrease is principally due to the previously communicated advance
investment in production capacity and capability which commenced in Q1 FY2013 and continued to a
lesser extent in Q2, in anticipation of significant revenue growth in our largest customer in the Consumer
sector. This adverse leverage effect, due to lower than forecast revenue, held gross margin back, offsetting
the positive mix effects of increased revenue from higher margin products, particularly in the Healthcare
and Telecoms/Datacoms sectors.

Normalised operating profit (operating profit before non-recurring items and share based payment charge)
in H1 FY2013 decreased to $5.3m (H1 FY2013: $14.9m). This disappointing operating profit performance in
the first half is due to a combination of three factors; i) reduced revenue across all sectors, ii) reduced
gross margin in our Consumer sector as a result of the advance production ramp-up costs and production
inefficiencies relating to new product launches with our largest customer mentioned above and iii)
increased operating expenses caused by investments in our sales, engineering and operations functions
ahead of significant anticipated revenue growth. Management has already initiated programmes in each of
these three areas to bring revenue, margins and profitability back to a level commensurate with its
objectives for the business. In addition the Board has re-iterated its confidence in the longer term growth
prospects for the Group and declared an increased interim dividend of 2.0 cents per share (H1 FY2012: 1.5
cents).
Focus for H2 FY2013
Revenue growth
The first half of FY2013 has seen significant revenue growth of 60% with our largest customer but has also
produced an aggregate contraction of 21% in revenue from the remainder of the Group’s business.
Although challenging macro-economic conditions are expected to continue, a key strategic focus in H2
FY2013 is to drive revenue growth across all sectors whilst also growing gross margin. Encouragingly we
are seeing a greater sales pipeline than at any time during the last four years with several new customers
set to contribute significant revenues across all sectors over the next 12-36 months.

In the Consumer sector we currently expect revenue from our largest customer to be broadly flat in H2
compared to H1 and accordingly we have focussed our efforts on diversifying our customer base, including
securing substantial new Duckhead business from alternative customers.

In the Telecoms/Datacoms, Healthcare and Industrial sectors, delayed product introductions which have
contributed to revenue in H1 FY2013 being lower than last year are expected to benefit revenue in the
second half. Imaging systems products in the European Healthcare market and new telematics products in
Industrial are set to drive revenue growth in H2 FY2013. Furthermore, in Telecoms/Datacoms we expect to
be able to announce a significant initiative in the high speed optical arena during H2.

As a result we expect that all four sectors will see half-over-half and year-on-year growth in H2 FY2013.

Gross margin improvement plan
Production improvements and operational efficiencies have also been identified as a critical focus for H2
FY2013, in order to restore overall Consumer margins to their long run average of 18% by the end of
FY2013. Under the guidance of our new Chief Operating Officer significant initiatives have already
commenced, including:
    the introduction of a New Product Introduction process;
    the redesign of our Shenzhen facility including the piloting of robotic automation;
    establishing focussed quality and engineering teams; and
    reviewing targeted core processes with a view to bringing certain of these in house (eg. printed
       circuit board assembly “PCBa” and precision tooling).

                                                   -2-
In addition to driving immediate improvements in production yields and labour productivity which will
positively impact gross margin in H2 FY2013, these new programmes will provide the processes and
foundation for efficient manufacturing of new products, avoiding the significant start-up costs that have
hindered recent financial performance.

Allied to these new initiatives, we have a number of on-going programmes which will be important in
restoring Consumer margins. These include:
      the continued rolling out of new precision moulding and tooling equipment;
      the continued application of core lean manufacturing techniques; and
      completing the upgrade of our production capabilities at our Batam facility

The FY2013 Group-wide restructuring initiative, covered in more detail below, will also be effective in
improving gross margin in H2 FY2013. While there will be some direct labour savings, the more significant
gross margin benefits will accrue from reductions in indirect labour in the factories, which is expected to
decrease by approximately 15%.

Whilst these new programmes will address Consumer margins, the Group is encouraged that non-
Consumer margins have continued on their upward trend of the last three years. Aggregate gross margin
in the Interconnect sectors in H1 FY2013 was 23.5%, an increase of 1.1 percentage pts over H1 FY2012,
which was itself higher than that recorded in H1 FY2011. Our stated strategy of increasing Volex content
through greater collaboration and engagement with customers at an early stage of their product
development cycles has continued to be successful and will remain a focus in the second half of FY2013
and beyond.

FY2013 Group-wide restructuring initiative

As reported in the trading update of 18 September 2012, management has initiated a restructuring
programme across all functions and regions that aligns the Group’s manufacturing and support facilities
more closely with its revised revenue and operating profit expectations.

Following a comprehensive review of its cost base, management has identified potential savings in both
indirect labour/fixed production overheads and in operating expenditures (‘Opex’). We have identified
approximately $10m of combined savings across these two cost categories with Opex in particular likely to
be around $70m in FY2014, $13m below the analyst consensus prior to the recent Trading Update and
$5m below the consensus immediately prior to this announcement.

This programme will give rise to non-recurring restructuring charges of approximately $5m for the full year
FY2013, $0.7m of which has already been incurred in Q2 FY2013. The Opex reduction programme
primarily involves the downsizing of supporting back-office functions and will reduce headcount by
approximately 150, driving a c.15% reduction in non-factory staff costs. Importantly vital business and
customer facing functions will be relatively unaffected and the savings will be achieved by delayering, the
relocation of some functions to lower cost locations and the elimination of less value-add activities.

In addition we are also investigating further structural cost reductions beyond those already identified.
These second phase opex savings will reduce FY2014 opex further below $70m but may also increase H2
FY2013 restructuring charges.




                                                  -3-
Consumer sector
                                                              Consumer quartely revenue ($m)
       80



       70



       60



       50



       40



       30



       20



       10



        0
            Q1 FY10   Q2 FY10   Q3 FY10   Q4 FY10   Q1 FY11     Q2 FY11      Q3 FY11      Q4 FY11       Q1 FY12     Q2 FY12   Q3 FY12   Q4 FY12   Q1 FY13   Q2 FY13

                                                                 Asia     Americas     Europe   India     Largest


Our Consumer sector continues as a world leader in power cords for a large range of consumer and
computing products. Our customers in the Consumer sector are well-known brand-name manufacturers
of consumer electronics (including TVs and games consoles), personal computing devices (PCs, laptops,
tablets, printers) and household appliances (refrigerators, freezers, rice cookers, floor care equipment, DIY
products).

Traditionally our business has been the supply of AC power cords taking AC high voltage from the wall
socket to the customer’s AC:DC low voltage transformer. This power cord would in the most simplistic of
terms have comprised of a cable and an engineered plug at either end. This is referred to as “in-line”
power supply as opposed to “wall-plug” in which the appliance’s power adaptor plugs directly into the wall
socket, thereby dispensing with the need for a separate power cord. The in-line market is forecast to grow
at 10%1 per annum out to 2016 and therefore continues to provide substantial opportunity for growth.
Alongside our in-line offerings, however, we have also developed a number of new wall-plug products and
this gives us access to a market that is forecast to grow at 14%1 per annum out to 2016.

In recent years, due to both our customers’ desire for distinctive design and also greater adaptability we
have developed our duckhead connector offering. The duckhead connects to a customer’s transformer
and then may either plug directly into a wall socket or be attached to a cable with a traditional wall plug.
We have seen significant demand for the duckhead connector and expect this to continue into the
foreseeable future.

A recent trend that we have identified in the lower power range market is the move to the USB plug
(which includes an in-built transformer) with a number of mobile phone manufacturers favouring this
option. Due to limitations on the level of power that can be transformed through the USB plug, the
applicability of this offering is currently restricted to lower power devices such as smartphones. However,
we believe Volex is well positioned to take advantage of this emerging trend.

The Consumer revenue for H1 FY2013 of $164.7m was 3% down on H1 FY2012, however, encouragingly
3% up on H2 FY2012. Business with our largest customer continued to show significant growth, up 60% on
H1 FY2012 and 20% on H2 FY2012, on the back of demand for our duckhead connector offering and our
halogen free cables, the majority of which are new products introduced during the last 18 months.
Business away from our largest customer has proved to be challenging. The impact of the uncertain
macro-economic environment on consumer electronics has been well documented and we have been
impacted by the resultant reduced spend. In the second quarter of FY2013 we achieved several new
significant project wins, primarily with existing customers, which have enabled us to arrest the quarterly
revenue decline observed in the past three quarters.


1
    Source: External AC-DC Power Supplies: Worldwide Forecasts, Tenth Edition, published April 2011 by Darnell Group Inc
                                                                               -4-
Consumer gross profit for H1 FY2013 of $24.4m (H1 FY2012: $29.3m) represented a 14.8% gross margin
(H1 FY2012: 17.2%). As previously reported, in Q1 FY2013 we incurred approximately $2.1m of production
capacity enhancement costs including the recruitment and training of more than 1,000 new production
employees together with additional tooling and site expansion costs. This level of spend was predicated
on certain forecast revenue levels from our largest customer. Whilst the 60% increase in sales noted
above was encouraging and demonstrated the demand for our power offerings, it fell below that forecast.
As a consequence of this, the Consumer gross margin for the half year has fallen. In response,
management has initiated a programme of substantial cost reductions in order to realign the cost base to
the revised forecasts and to return the Consumer gross margin to its long run average of 18% by the end of
FY2013.

In addition to the production capacity enhancement costs, temporary production inefficiencies arising on
our new product range (including scrap rates above the historic average and labour productivity rates
below the historic average) have held back the sector gross margin in the period. A number of new
initiatives have been enacted in the period, alongside the on-going lean manufacturing programme,
designed to return the sector to its expected efficiency levels.

Telecoms / Datacoms sector

               Telecoms / Datacoms quarterly revenue ($m)                                                       Volex delivers customised interconnect solutions for
 35.0                                                                                                           global    equipment      manufacturers      in  the
 30.0                                                                                                           telecommunications and data communications
 25.0
                                                                                                                industries. Our interconnect solutions are used in
                                                                                                                mobile telecoms networks, both at the cell-site and
 20.0
                                                                                                                for the core network, fixed-line telecoms equipment
 15.0                                                                                                           and high-performance computing (HPC) and data-
 10.0                                                                                                           centre environments.
  5.0


   -
         Q1     Q2     Q3     Q4     Q1     Q2     Q3      Q4      Q1       Q2     Q3     Q4     Q1     Q2
        FY10   FY10   FY10   FY10   FY11   FY11   FY11    FY11    FY12     FY12   FY12   FY12   FY13   FY13

                                    Asia    Americas     Europe    India




Telecoms/datacoms revenue of $45.2m in H1 FY2013 was 20% down on H1 FY2012, primarily due to
reduced investment by telecoms operators as a result of the on-going economic uncertainty.
Encouragingly however, Q2 FY2013 revenue was 9% ahead of Q1 FY2013 with revenue in a key telecoms
account increasing towards more historic levels, following three quarters of slower activity. Furthermore
Q2 FY2013 saw a significant improvement in Telecoms trading performance in our Indian business, which
had been particularly affected by curtailed network operator spend. Along with new account wins in H1
FY2013 which are beginning to yield significant revenues, we are optimistic that the modest growth in this
sector can continue for the remainder of the year.

Telecoms/datacoms gross profit of $10.4m in H1 FY2013 (H1 FY2012: $11.5m) represented a 23% gross
margin, up 3% on H1 FY2012. This improved gross margin is due to several factors including better pricing
on new products brought to market particularly in our Asia and India regions and tight cost control
especially with respect to freight.




                                                                                                              -5-
Healthcare sector

                        Healthcare quarterly revenue ($m)                                                                Volex provides interconnect cabling solutions to
 16.0                                                                                                                    the healthcare sector, traditionally for imaging
 14.0                                                                                                                    systems such as MRI and ultrasound machines.
 12.0                                                                                                                    Whilst imaging systems contribute approximately
 10.0                                                                                                                    70% to Healthcare revenue we have seen recent
  8.0
                                                                                                                         growth in other fields, including clinical
  6.0
                                                                                                                         diagnostics, surgical systems and patient
  4.0
                                                                                                                         monitoring equipment. The Healthcare customer
                                                                                                                         engagement model is typified by long term, deep
  2.0
                                                                                                                         collaboration and early design involvement which
   -
         Q1     Q2     Q3     Q4     Q1      Q2      Q3       Q4       Q1        Q2      Q3      Q4      Q1      Q2      historically have yielded the highest gross margins
        FY10   FY10   FY10   FY10   FY11    FY11    FY11     FY11     FY12      FY12    FY12    FY12    FY13    FY13
                                                                                                                         observed in any of our sectors.
                                     Asia     Americas      Europe      India



Healthcare revenue of $22.0m in H1 FY2013 was 9% down on H1 FY2012 due to reduced demand in the
nuclear medicine imaging field and delayed orders from the sector’s largest customer as they postponed
their roll out of new imaging systems. Encouragingly, however, the Q2 FY2013 revenue was 14% ahead of
Q1 FY2013 with a new MRI cabling solution programme generating significant sales in Europe and North
America.

Gross profit of $5.9m in H1 FY2013 (H1 FY2012: $6.1m) represented a 27% gross margin, up 2% on H1
FY2012. This continues the high levels of margins achieved for the sector during FY2012 and supports the
strategy of extensive customer engagement and increasing Volex design content in our products.

Industrial sector

                         Industrial quarterly revenue ($m)                                                              The Industrial sector for Volex comprises a diverse
 12.0
                                                                                                                        set of markets including test and measurement
 10.0
                                                                                                                        equipment,         manufacturing        automation,
                                                                                                                        refrigeration, trucking telematics, agricultural and
  8.0
                                                                                                                        renewable energy.
  6.0



  4.0



  2.0



   -
         Q1     Q2     Q3     Q4     Q1      Q2     Q3       Q4       Q1       Q2       Q3      Q4      Q1      Q2
        FY10   FY10   FY10   FY10   FY11    FY11   FY11     FY11     FY12     FY12     FY12    FY12    FY13    FY13

                                    Asia     Americas      Europe     India




Industrial revenue of $17.4m in H1 FY2013 was 15% down on H1 FY2012 due in part to reduced orders
from the sector’s largest customer and also on-going delays in the approval of regulatory changes that will
drive market adoption of new telematics products. Once these changes are ratified, we believe we are
well placed to take advantage of the new market requirements.

Gross profit of $3.5m in H1 FY2013 (H1 FY2012: $4.9m) represented a 20% gross margin, down 4% on H1
FY2012. This reduction was primarily due to the leverage effect with fixed production costs shared over a
lower revenue base. In addition the transfer of business from our North America region to Asia did incur
some write downs.




                                                                                                                      -6-
Financial Review

Revenue and normalised gross profit
Revenue in the 26 weeks ending 30 September 2012 (‘H1 FY2013’) was $249.3m, down 8% on the same
period in the prior year (‘H1 FY2012’).

Normalised gross profit decreased 15% from $51.9m in H1 FY2012 to $44.3m in H1 FY2013, in part due to
the reduced revenue but also due to the ramp up costs incurred within the Consumer sector. This resulted
in a normalised gross margin of 17.8% in H1 FY2013 versus a H1 FY2012 gross margin of 19.2%.

Normalised Operating Profit
Normalised operating profit in H1 FY2013 was $5.3m, down $9.5m on the same period in the prior year.

The normalised operating profit was arrived at after deducting normalised operating expenditure of
$39.0m in H1 FY2013, up $2.0m on H1 FY2012. The majority of this increase was targeted at the support
functions at the manufacturing facilities, including sales, engineering, purchasing and logistics. This level of
spend was predicated on high forecast sales from the Consumer sector’s largest customer, however, whilst
significant sales growth was achieved it was insufficient to support this on-going spend. As a result, a cost
reduction programme has been initiated seeking to realign the future operating expenditure to the revised
revenue and operating profit expectations.

Non-recurring items and share-based payments
During H1 FY2013, $0.7m of redundancy costs were incurred as part of the restructuring programme. This
programme is expected to continue on into the second half of the year with full year restructuring charges
forecast to be approximately $5m.

The share based payment charge of $1.2m in H1 FY2013 has decreased by $0.9m from $2.1m in H1
FY2012.

Net finance costs
Total net finance costs in H1 FY2013 decreased by 52% to $1.2m from $2.5m in H1 FY2012. The principal
reason for this was the write-off in H1 FY2012 of $0.8m of capitalised debt issue costs associated with the
old financing facility which was replaced in May 2011.

Tax
The Group incurred a tax charge of $0.5m (H1 FY2012: $1.9m), representing an effective tax rate (ETR) of
21% (H1 FY2012: 18%), consistent with our expectation of the ETR for the full FY2013 financial year.

Earnings per share
Basic earnings per share for H1 FY2013 was 3.1 cents compared with 15.0 cents in H1 FY2012. Normalised
fully diluted earnings per share (adjusted for non-recurring items and share based payments charge) in H1
FY2013 was 5.8 cents versus 17.6 cents in H1 FY2012.




                                                     -7-
Dividends
At the Volex plc Annual General Meeting held on 26 July 2012, the shareholders approved the proposed
final dividend for FY2012 of 3 cents per share. The dividend was paid out on the 56,621,763 shares on the
share register as at 27 July 2012, resulting in a dividend cash outflow of $1.7m.

The Board has recommended an interim dividend of 2.0 cents per share to be paid on 15 February 2013 to
shareholders on the register as at 11 January 2013 (the ‘record date’). Shareholders will have the option
to receive this dividend in either USD or GBP with the Company’s Registrars providing a currency election
facility. Shareholders who prefer to receive their dividend in USD must make their election to receive their
dividend in USD by 17:00 on 25 January 2013. If no election is made, the dividend will be paid in GBP, the
default currency for the dividend, with the GBP amount payable calculated by reference to the GBP:USD
exchange rate prevailing at the record date. If you hold your ordinary shares in certificated form, you may
only elect to receive your dividend in US dollars by signing and returning a currency election form,
available from Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent
BR3 4TU. If you hold your ordinary shares in uncertificated form, to elect to receive your dividend in US
dollars you must input a valid Dividend Election Input Message, in accordance with the CREST procedures
described in the CREST manual. Partial elections will not be permitted.

Return on Capital Employed (‘ROCE’)
ROCE for H1 FY2013 was 17% versus 46% for H1 FY2012. The reduction in ROCE is primarily due to the
reduced normalised operating profit which fell from $14.9m in H1 FY2012 to $5.3m in H1 FY2013. The
capital base on which the ratio is calculated has remained relatively flat (H1 FY2013 of $62.8m versus
$64.6m in H1 FY2012) with the higher current asset balances as at 2 October 2011 replaced with higher
fixed asset balances as at 30 September 2012.

Cash flow, free cash flow and net debt
Operating cash flow before movements in working capital in H1 FY2013 was $6.6m (H1 FY2012: $15.9m)
with the $9.3m reduction attributed primarily to reduced operating profit.

The impact of working capital movements on the cash flow in H1 FY2013 was an outflow of $1.2m (H1
FY2012: outflow of $6.4m). This is primarily due to a $10.3m build-up of stock to service customers in the
second half of the year and a $4.0m increase in debtors arising from the higher level of sales in the second
quarter of FY2013 versus the fourth quarter of FY2012. Off-setting these outflows was a $13.0m inflow
(H1 FY2012: $7.6m) through management of supplier payments.

After aggregate outflows for tax and interest of $2.8m (H1 FY2012: $3.4m), net cash generated from
operating activities was $2.6m (H1 FY2012: $6.1m).

Capital expenditure has increased to $9.0m in H1 FY2013 from $4.8m in H1 FY2012. This expenditure has
largely been targeted at enhancing our manufacturing facilities in Asia with significant site expansion at
two of our factories with accompanying investment in new tooling and machinery. In addition to the
$9.0m of cash spend, a further $5.2m of capital assets have been acquired for which payment will be made
in H2 FY2013.

The above has resulted in a free cash outflow for H1 FY2013 of $6.3m (H1 FY2012: inflow of $1.3m).

In the prior year, the Group, through its employee share trust, acquired 769,800 shares in Volex plc at a
cost of $3.3m. These shares are held for the benefit of Volex employees and directors to facilitate
participation in the Company’s share option schemes. 130,000 such options were exercised in H1 FY2012
yielding a cash inflow of $0.1m. In H1 FY2013, 55,000 further options have been exercised.

                                                   -8-
The full year dividend for FY2012 of 3 cents per share was paid out in the period, generating a cash outflow
of $1.7m (H1 FY2012: $1.9m).

In the prior year, Volex entered into its current financing facility. As a result of this $26.4m was paid out by
the Group to close out the pre-existing facility and $39.5m was drawn down under the current
arrangement. In securing the new facility, the Company incurred $1.4m in arrangement and professional
fees. In H1 FY2013, $14.0m of the loan facility has been repaid.

In the prior period, 80,000 cumulative preference shares of £1 each were cancelled at a cost of $0.1m. The
interest that had accrued on these shares was also paid and has been included in the interest paid cash
outflow category.

As a result of the above cash flows, net debt at 30 September 2012 amounted to $4.6m (H1 FY2012:
$11.9m).

Financial instruments and cash flow hedge accounting
In accordance with the Group’s policy to minimise exposure to copper price volatility observed in cost of
sales, the Group has continued to utilise contracts with financial institutions which are linked to the
average copper price as published by the London Metal Exchange (‘LME’).

These contracts are accounted for as cash flow hedges of forecast future purchases of copper under IAS
39. As at 30 September 2012, an asset of $0.3m has been recognised (1 April 2012: $1.5m) with a
corresponding credit recognised in reserves. This credit will be retained in reserves until such time as the
forecast copper purchase takes place.

A charge of $0.2m has been recognised in cost of sales in H1 FY2013 (H1 FY2012: $nil) in respect of closed
out contracts. This charge has arisen since the average LME copper price in the period has been below the
contracted price.

Defined benefit pension schemes
The Group’s net pension deficit under IAS 19 decreased by $0.3m from $3.6m at 1 April 2012 to $3.3m at
30 September 2012. This decrease is in line with the current funding plan.




                                                     -9-
Current Trading and Prospects
The Board recognises that the first half of FY2013 has been tough and that lower than anticipated growth
with the largest customer in the Consumer sector and a challenging economic environment have
combined to produce a disappointing set of H1 results. Although this uncertain economic environment is
expected to continue, the Board is confident that the revenue and gross margin improvement initiatives
and cost saving plans already initiated by management will return consumer profitability to expected
levels. In addition, the Board is encouraged by the healthy sales pipeline in all sectors.

As a result, the Board expects growth across all sectors in the second of half of FY2013 and is confident
that profits for the full year FY2013 will be in line with new market expectations, following the 18
September 2012 trading update. Furthermore, the Board is optimistic on the outlook for FY2014.

Risks and uncertainties
Risks to Volex are anticipated and regularly assessed and internal controls are enhanced where necessary
to ensure that such risks are appropriately mitigated. The principal risks and uncertainties facing the Group
in the second half of the year remain those detailed in the FY2012 Annual Report and Accounts on pages
41 to 44, a copy of which is available on the website at www.volex.com.

The principal risks and uncertainties are summarised as:
     Non-compliance with legislation and regulation;
     Loss of or reduced trade with key customers;
     Failure to maintain an effective system of internal control;
     Exchange rate fluctuations;
     Increased competition;
     Failure to attract, develop and retain key personnel;
     Rising commodity prices;
     Adverse trading conditions; and
     Production challenges and risks.


Ray Walsh                                       Andrew Cherry
Group Chief Executive                           Group Finance Director
31 October 2012                                 31 October 2012




                                                  - 10 -
Unaudited consolidated income statement

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

                                                        26 weeks ended 30 September 2012               26 weeks ended 2 October 2011
                                                           Before         Non-                          Before            Non-
                                                    non-recurring     recurring                  non-recurring        recurring
                                                       items and     items and                      items and       items and
                                                     share based share based                      share based     share based
                                                       payments      payments            Total      payments        payments             Total
                                              Notes         $’000         $’000          $’000           $’000           $’000           $’000


Revenue                                          2      249,251              -       249,251       270,654                -        270,654
Cost of sales                                         (204,908)           (63)     (204,971)     (218,796)                -      (218,796)
Gross profit                                             44,343           (63)        44,280         51,858               -             51,858
Operating expenses                                     (39,011)        (1,859)      (40,870)       (36,973)         (2,059)           (39,032)
Operating profit/(loss)                          2        5,332        (1,922)         3,410         14,885         (2,059)             12,826
Finance income                                               85              -            85             27               -                 27
Finance costs                                           (1,256)              -       (1,256)        (2,488)               -            (2,488)
Profit/(loss) on ordinary activities before               4,161        (1,922)         2,239         12,424         (2,059)            10,365
taxation
Taxation                                         5        (796)           322           (474)       (2,031)             160            (1,871)
Profit/(loss) for the period attributable                 3,365        (1,600)         1,765         10,393         (1,899)             8,494
to the owners of the parent
Earnings per share (cents)
Basic                                            6           5.9                          3.1           18.3                             15.0
Diluted                                          6           5.8                          3.0           17.6                             14.4

                                                                                                        52 weeks ended 1 April 2012
                                                                                                       Before            Non-
                                                                                                 non-recurring       recurring
                                                                                                    items and      items and
                                                                                                  share based    share based
                                                                                                    payments       payments              Total
                                              Notes                                                     $’000           $’000            $’000


Revenue                                          2                                                 517,769                -        517,769
Cost of sales                                                                                    (415,250)          (4,990)      (420,240)
Gross profit                                                                                       102,519          (4,990)         97,529
Operating expenses                                                                                (70,515)          (3,976)       (74,491)
Operating profit/(loss)                          2                                                  32,004          (8,966)         23,038
Finance income                                                                                           73               -              73
Finance costs                                                                                       (3,900)               -         (3,900)
Profit/(loss) on ordinary activities before
taxation                                                                                            28,177          (8,966)            19,211
Taxation                                         5                                                  (3,445)           1,416            (2,029)
Profit/(loss) for the period attributable
to the owners of the parent                                                                          24,732         (7,550)            17,182
Earnings per share (cents)
Basic                                            6                                                      43.7                             30.4
Diluted                                          6                                                      42.4                             29.4




                                                              - 11 -
Unaudited consolidated statement of comprehensive income

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)


                                                                                                   (Audited)
                                                                     26 weeks to   26 weeks to   52 weeks to
                                                                   30 September      2 October        1 April
                                                                           2012           2011         2012
                                                                           $’000         $’000         $’000
 Profit for the period                                                     1,765         8,494       17,182
 Other comprehensive income:
 Gain/(loss) on hedge of net investment taken to equity                     (70)       (1,061)         (479)
 Cash flow hedges:
   Gain/(loss) arising during the period                                 (1,204)       (2,131)         1,295
 Exchange gain/(loss) on translation of foreign operations                 (553)          (35)         (886)
 Actuarial gain/(loss) on defined benefit pension schemes                     77       (2,868)       (1,828)
 Other comprehensive income/(loss)                                       (1,750)       (6,095)       (1,898)

 Tax relating to components of other comprehensive income/(loss)               -             -             -
 Other comprehensive income/(loss) for the period                        (1,750)       (6,095)       (1,898)

 Total comprehensive income/(loss) for the period                            15         2,399         15,284




                                                       - 12 -
Unaudited consolidated statement of financial position

As at 30 September 2012 (2 October 2011)

                                                                                       (Audited)
                                                           30 September    2 October      1 April
                                                   Note            2012         2011        2012
                                                                   $’000       $’000       $’000
Non-current assets
Goodwill                                                          3,116       3,006       3,085
Other intangible assets                                           2,398       3,228       2,897
Property, plant and equipment                                    31,849      13,763      20,022
Other receivables                                                   546         311         543
Deferred tax asset                                                5,515       2,550       5,098
                                                                 43,424      22,858      31,645
Current assets
Inventories                                                      59,714      52,852      49,790
Trade receivables                                                91,436     115,433      90,612
Other receivables                                                17,207      11,782      15,092
Current tax assets                                                  413         680         703
Derivative financial instruments                                    254           -       1,453
Cash and bank balances                                 8         21,142      25,777      43,578
                                                                190,166     206,524     201,228
Total assets                                                    233,590     229,382     232,873
Current liabilities
Borrowings                                             8          2,646           -       2,398
Obligations under finance leases                       8             52         179         117
Trade payables                                                  101,358      91,584      88,551
Other payables                                                   39,023      41,208      34,574
Current tax liabilities                                           4,744       4,083       5,938
Retirement benefit obligation                                       602         573         596
Provisions                                                        1,059       2,773       1,078
Derivative financial instruments                                      -       2,374          54
                                                                149,484     142,774     133,306
Net current assets                                               40,682      63,750      67,922
Non-current liabilities
Borrowings                                             8         23,060      37,497      37,420
Obligations under finance leases                                      -          45           -
Trade and other payables                                            709           -         706
Deferred tax liabilities                                          2,428       2,556       2,563
Retirement benefit obligation                                     2,651       4,211       2,976
Provisions                                                        4,230       4,921       4,590
                                                                 33,078      49,230      48,255
Total liabilities                                               182,562     192,004     181,561
Net assets                                                       51,028      37,378      51,312

Equity attributable to owners of the parent
Share capital                                                    28,180      28,180      28,180
Share premium account                                              2,586       2,586       2,586
Hedging and translation reserve                                  (6,079)     (7,409)     (4,252)
Own shares                                                       (5,249)     (5,442)     (5,271)
Retained gains/(losses)                                          31,590      19,463      30,069
Total equity                                                     51,028      37,378      51,312



                                              - 13 -
Unaudited Consolidated Statement of Changes in Equity

For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)

                                                           Share   Hedging and    Treasury
                                             Share      premium     translation      share   Accumulated     Total
                                            capital      account       reserve     reserve        profits   equity
                                             $’000         $’000          $’000      $’000         $’000     $’000
Balance at 3 April 2011                     28,180         2,586        (4,182)    (2,240)        13,942    38,286
Profit for the period attributable to the         -            -              -          -         8,494     8,494
owners of the parent
Other comprehensive income / (loss) for           -            -        (3,227)          -        (2,868)   (6,095)
the period
Total comprehensive income / (loss) for           -            -        (3,227)          -         5,626     2,399
the period
Dividends                                        -             -              -          -        (1,850)   (1,850)
Own shares acquired in the period                -             -              -    (3,202)              -   (3,202)
Reserve entry for share option charges           -             -              -          -          1,745     1,745
Balance at 2 October 2011                   28,180         2,586        (7,409)    (5,442)        19,463    37,378

Balance at 1 April 2012                     28,180         2,586        (4,252)    (5,271)        30,069    51,312
Profit for the period attributable to the        -             -              -          -         1,765     1,765
owners of the parent
Other comprehensive income / (loss) for           -            -        (1,827)          -            77    (1,750)
the period
Total comprehensive income / (loss) for           -            -        (1,827)          -         1,842        15
the period
Dividends                                        -             -              -          -        (1,690)   (1,690)
Own shares utilised in the period                -             -              -         22              -        22
Reserve entry for share option charges           -             -              -          -          1,369     1,369
Balance at 30 September 2012                28,180         2,586        (6,079)    (5,249)        31,590    51,028




                                                      - 14 -
Unaudited consolidated statement of cash flows
For the 26 weeks ended 30 September 2012 (26 weeks ended 2 October 2011)
                                                                                                          (Audited)
                                                                           26 weeks to   26 weeks to    52 weeks to
                                                                         30 September      2 October         1 April
                                                                 Notes           2012           2011          2012
                                                                                 $’000         $’000          $’000
Profit for the period                                                            1,765         8,494        17,182
Adjustments for:
Finance income                                                                    (85)           (27)           (73)
Finance costs                                                                   1,256          2,488          3,900
Income tax expense                                                                474          1,871          2,029
Depreciation of property, plant and equipment                                   2,253          1,737          2,448
Amortisation of intangible assets                                                 532            347          1,155
Loss on disposal of property, plant and equipment                                   74             18             48
Share option charge                                                             1,195          2,059          3,976
Decrease in provisions                                                          (868)        (1,058)        (3,122)
Operating cash flow before movements in working capital                         6,596        15,929         27,543
(Increase) / decrease in inventories                                          (10,278)       (1,902)            968
(Increase) / decrease in receivables                                           (3,970)      (12,102)          9,161
Increase / (decrease) in payables                                               13,013         7,591        (1,340)
Movement in working capital                                                    (1,235)       (6,413)          8,789
Cash generated by operations                                                     5,361         9,516        36,332
Taxation paid                                                                  (1,928)       (2,190)        (3,199)
Interest paid                                                                    (868)       (1,227)        (2,780)
Net cash generated from / (used in) operating activities                         2,565         6,099        30,353

Cash flow from investing activities
Interest received                                                                  85             27             73
Proceeds on disposal of intangible assets, property, plant and                      8             29             79
equipment
Purchases of property, plant and equipment                                     (8,945)       (3,152)       (10,263)
Purchases of intangible assets                                                    (33)       (1,650)        (1,986)
Acquisition / Utilisation of own shares (net of funds received                      22       (3,202)        (3,031)
on option exercise)
Net cash generated from / (used in) investing activities                       (8,863)       (7,948)       (15,128)

Cash flow before financing activities                                          (6,298)       (1,849)        15,225
Cash generated / (used) before non-recurring items                             (5,571)       (1,849)        19,932
Cash utilised in respect of non-recurring items                                  (727)             -        (4,707)

Cash flow from financing activities
Dividends paid                                                                 (1,690)       (1,850)        (2,712)
Repayment of borrowings                                           8           (14,000)      (26,377)       (26,377)
Repayment of preference shares                                                       -         (130)          (130)
Refinancing costs paid                                            8                (5)       (1,386)        (1,655)
New bank loans raised                                             8                  -        39,544         39,544
Repayments of obligations under finance leases                    8               (66)           (73)         (181)
Net cash generated from / (used in) financing activities                      (15,761)         9,728          8,489

Net increase / (decrease) in cash and cash equivalents                        (22,059)        7,879          23,714

Cash and cash equivalents at beginning of period                  8            41,180        18,525         18,525
Effect of foreign exchange rate changes                                         (625)         (627)         (1,059)
Cash and cash equivalents at end of period                        8            18,496        25,777         41,180

                                                       - 15 -
Notes to the Interim Statements

1. Basis of preparation
These interim financial statements have been prepared in accordance with IAS 34, ‘Interim Financial
Reporting’ as adopted by the European Union. The condensed consolidated interim financial information
should be read in conjunction with the annual financial statements for the 52 weeks ended 1 April 2012,
which have been prepared in accordance with IFRSs as adopted by the European Union.
This condensed consolidated interim financial information does not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. The financial information presented for the 26
weeks ended 30 September 2012 and the 26 weeks ended 2 October 2011 has not been reviewed by the
auditors. The financial information for the 52 weeks ended 1 April 2012 is extracted and abridged from the
Group’s full accounts for that year. The statutory accounts for the 52 weeks ended 1 April 2012 have been
filed with the Registrar of Companies for England and Wales and have been reported on by the Group’s
auditors. The Report of the Auditors was not qualified and did not contain a statement under Section 498
of the Companies Act 2006.
The interim report was approved by the Board of Directors on 31 October 2012.
This interim report can be downloaded or viewed via the Group’s website at www.volex.com. Copies of
the annual report for the financial year ended 1 April 2012 are available at the Company’s registered office
at 10 Eastbourne Terrace, London, W2 6LG, UK and can also be downloaded or viewed via the Group’s
website.
The directors are satisfied that the Group has sufficient resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing these condensed financial statements.
The same presentation and methods of computation are followed in these condensed financial statements
as applied in the Group’s latest annual financial statements. These condensed financial statements have
also been prepared using accounting policies consistent with International Financial Reporting Standards
as adopted for use in the European Union (‘IFRS’) and which are consistent with those disclosed in the
annual report and accounts for the 52 weeks ended 1 April 2012, except as described below.
Adoption of new and revised International Financial Reporting Standards (IFRSs)
The following new and revised standards and interpretations have been adopted in the current period.
New and amended standards adopted by the Group
       IFRS 7 (amendment) ‘Financial Instruments’
Standards and interpretations adopted with no effect on the financial statements
       IAS 12 (amendment) ‘Income Taxes’
Standards and interpretations that are not yet effective and have not been early adopted by the Group
       IAS 1 (amendment) ‘Financial Statement Presentation’ – effective for year ended 30 March 2014;
       IAS 27 (amendment) ‘Separate Financial Statements’ - effective for year ended 30 March 2014;
       IAS 28 (amendment) ‘ Associates and Joint Ventures’ effective for year ended 30 March 2014;
       IAS 19 (amendment) ‘Employee Benefits’ - effective for year ended 30 March 2014;
       IFRS 7 (amendment) ‘Financial Instruments’ (off-setting financial assets and liabilities) – effective
        for year ended 30 March 2014;
       IFRS 10 ‘Consolidated Financial Statements’ - effective for year ended 30 March 2014;
       IFRS 11 ‘ Joint Arrangements’ - effective for year ended 30 March 2014;
       IFRS 12 ‘ Disclosure of Interests in Other Entities’ - effective for year ended 30 March 2014;
       IFRS 13 ‘Fair Value Measurement’ - effective for year ended 30 March 2014;

                                                  - 16 -
1. Basis of preparation (continued)
Standards and interpretations that are not yet effective and have not been early adopted by the Group
(continued)
       IAS 32 (amendment) ‘Financial Instruments: Presentation’ – effective for year ended 29 March
        2015; and
       IFRS 9 ‘Financial Instruments’ - effective for year ended 3 April 2016

The directors anticipate that the future adoption of those standards, interpretations and amendments
listed above will not have a material impact on the Group’s financial statements.

2. Business and geographical segments

Business segments
The market sectors below are the basis on which the group reports its segment information and are based
on the end markets that the group’s products are supplied into.

                                                                                                   (Audited)
                                                                   26 weeks to     26 weeks to   52 weeks to
                                                                 30 September        2 October        1 April
                                                                         2012             2011          2012
                                                                         $’000           $’000         $’000
Revenue
Consumer                                                              164,663         169,890       330,372
Telecoms/Datacoms                                                      45,192          56,246        99,440
Healthcare                                                             22,024          24,193        51,663
Industrial                                                             17,372          20,325        36,294
                                                                      249,251         270,654       517,769

                                                                 Non-recurring
                                                 Before non-        items and      26 weeks to   26 weeks to
                                                   recurring      share-based    30 September      2 October
                                                       items        payments              2012          2011
                                                       $’000            $’000            $’000         $’000
Gross profit
Consumer                                              24,439                 -          24,439        29,261
Telecoms/Datacoms                                     10,412              (10)          10,402        11,528
Healthcare                                             5,939              (23)           5,916         6,143
Industrial                                             3,553              (30)           3,523         4,926
                                                      44,343              (63)          44,280        51,858
Unallocated operating expenses                      (39,011)             (664)        (39,675)      (36,973)
(excluding share-based payments)
Operating profit before share-based payments             5,332           (727)           4,605       14,885
Share-based payments                                         -         (1,195)         (1,195)       (2,059)
Operating profit                                         5,332         (1,922)           3,410       12,826
Finance income                                                                              85            27
Finance costs                                                                          (1,256)       (2,488)
Profit before tax                                                                        2,239       10,365
Tax                                                                                      (474)       (1,871)
Profit after tax                                                                         1,765         8,494




                                                - 17 -
2. Business and geographical segments (continued)
                                                                                           Non-recurring       (Audited)
                                                                            Before non-       items and      52 weeks to
                                                                         recurring items    share-based           1 April
                                                                                   $’000      payments              2012
                                                                                                  $’000            $’000
Gross profit
Consumer                                                                         59,113           (4,990)            54,123
Telecoms/Datacoms                                                                21,034                 -            21,034
Healthcare                                                                       14,186                 -            14,186
Industrial                                                                        8,186                 -             8,186
                                                                               102,519            (4,990)            97,529
Unallocated operating expenses (excluding share-based payments)                (70,515)                 -          (70,515)
Operating profit before share-based payments                                     32,004           (4,990)            27,014
Share-based payments                                                                  -           (3,976)           (3,976)
Operating profit                                                                 32,004           (8,966)            23,038
Finance income                                                                                                           73
Finance costs                                                                                                       (3,900)
Profit before tax                                                                                                    19,211
Tax                                                                                                                 (2,029)
Profit after tax                                                                                                     17,182

Other segmental information
                                      External revenue                                 Non-current assets
                                                                                 (excluding deferred tax assets)
                                                            (Audited)                                          (Audited)
                            26 weeks to    26 weeks to    52 weeks to       26 weeks to     26 weeks to      52 weeks to
                          30 September       2 October         1 April    30 September        2 October           1 April
                                  2012            2011           2012             2012             2011             2012
                                  $’000          $’000          $’000             $’000           $’000            $’000
Geographical segments
Asia (excluding India)          156,957        149,830       299,205             30,370           12,510            18,594
North America                    43,293         53,849       100,446                697              689               742
Europe (excluding UK)            36,848         49,628        89,723                432              246               420
India                             4,292          6,318        11,371                502              684               574
South America                     7,861         11,029        17,024                443              286               430
UK                                    -              -             -              5,465            5,893             5,787
                                249,251        270,654       517,769             37,909           20,308            26,547




                                                   - 18 -
3. Non-recurring items

                                                                                                               (Audited)
                                                                                 26 weeks to   26 weeks to   52 weeks to
                                                                               30 September      2 October        1 April
                                                                                       2012           2011          2012
                                                                                       $’000         $’000         $’000
New product start-up costs                                                                 -             -         4,990
Restructuring charge                                                                     727             -              -
                                                                                         727             -         4,990

In the 26 weeks to 30 September 2012, the Group initiated a restructuring programme to realign the
Group’s resources to its latest forecasts. The $727,000 represents redundancy costs incurred. We expect
further restructuring charges to be incurred in the second half of the year to 31 March 2013. Of the
$727,000, $63,000 was charged to cost of sales and $664,000 to operating expenses.

In the 52 weeks to 1 April 2012, exceptional start-up costs of $4,990,000 were incurred in relation to new
product introductions; specifically the migration from PVC to Halogen Free power cords. These new
products necessitated wide ranging improvements to our manufacturing processes and investments in
higher grade tooling and precision moulding technologies. The exceptional costs include the materials
scrap costs and labour inefficiencies associated with the new product lines.

4. Dividends
                                                                                                               (Audited)
                                                                                 26 weeks to   26 weeks to   52 weeks to
                                                                               30 September      2 October        1 April
                                                                                       2012           2011          2012
Amounts recognised as distributions to equity holders in the period:                   $’000         $’000         $’000
Final dividend for the year ended 1 April 2012 of 3.0 cents per share (2011:           1,690         1,850         1,850
2 pence per share)
Interim dividend for the year ended 31 March 2013 of 2.0 cents per share                   -             -           862
(2012: 1.5 cents per share)
                                                                                      1,690         1,850          2,712

Proposed interim dividend for the 26 weeks to 30 September 2012 of 2.0                1,134           851               -
cents per share (2011: 1.5 cents per share)
Proposed final dividend for the year ended 1 April 2012 of 3.0 cents per                   -             -         1,699
share (2011: 2 pence per share)

The final dividend of 3.0 cents per share in respect of the year ended 1 April 2012 (2011: 2 pence per
share) was paid to shareholders on 24 August 2012.

The interim dividend of 2.0 cents per share was announced on 31 October 2012 in USD. Shareholders will
have the option to receive this dividend in either USD or GBP. The total amount payable in USD may vary,
depending on movements in exchange rates between October 2012 and February 2013, when the
dividend will be paid.

5. Tax charge
The Group tax charge for the period is based on the forecast tax charge for the year as a whole and has
been influenced by the differing tax rates in the UK and the various overseas countries in which the Group
operates.




                                                       - 19 -
6. Earnings per ordinary share
The calculations of the earnings per share are based on the following data:
                                                                                                        (Audited)
                                                                        26 weeks to   26 weeks to   52 weeks to 1
                                                                      30 September      2 October           April
                                                                              2012           2011           2012
Earnings                                                                      $’000         $’000          $’000
Earnings for the purpose of basic earnings per share                          1,765         8,494         17,182
Adjustments for:
Non-recurring items                                                             727            -            4,990
Share based payments charge                                                   1,195        2,059            3,976
Tax effect of above adjustments                                               (322)        (160)          (1,416)
Normalised earnings                                                           3,365       10,393          24,732

Weighted average number of ordinary shares                               No. shares    No. shares      No. shares
Weighted average number of ordinary shares for the purpose of basic
earnings per share                                                      56,623,144    56,736,404      56,582,380
Effect of dilutive potential ordinary shares – share options             1,653,245     2,302,547       1,777,754
Weighted average number of ordinary shares for the purpose of
diluted earnings per share                                              58,276,389    59,038,951      58,360,134

Basic earnings per share                                                      Cents        Cents             Cents
Basic earnings per share from continuing operations                             3.1         15.0              30.4
Adjustments for:
Non-recurring items                                                             1.3             -              8.8
Share based payments charge                                                     2.1           3.6              7.0
Tax effect of above adjustments                                               (0.6)         (0.3)            (2.5)
Normalised basic earnings per share                                             5.9         18.3             43.7

Diluted earnings per share
Diluted earnings per share                                                      3.0          14.4             29.4
Adjustments for:
Non-recurring items                                                             1.3             -              8.6
Share based payments charge                                                     2.1           3.5              6.8
Tax effect of above adjustments                                               (0.6)         (0.3)            (2.4)
Normalised diluted earnings per share                                           5.8         17.6             42.4

The normalised earnings per share has been calculated on the basis of continuing activities before non-
recurring items and the share-based payments charge, net of tax. The Directors consider that this earnings
per share calculation gives a better understanding of the Group’s earnings per share in the current and
prior period.




                                                       - 20 -
7. Own shares
                                                                                                                    (Audited)
                                                                                26 weeks to      26 weeks to    52 weeks to 1
                                                                              30 September         2 October             April
                                                                                      2012              2011            2012
                                                                                      $’000            $’000           $’000
At the start of the period                                                            5,271            2,240           2,240
Acquired in the period                                                                     -           3,256           3,256
Disposed of in the period on exercise of options                                        (22)             (54)           (225)
At the end of the period                                                              5,249            5,442           5,271

The own shares reserve represents the cost of shares in the Company held by the Volex Group plc
Employee Share Trust and the Volex Group Guernsey Purpose Trust to satisfy future share option exercises
under the Group’s share option schemes.

The number of ordinary shares held by the Volex Group plc Employee Share Trust at 30 September 2012
was 4,811,815 (1 April 2012: 4,866,815; 2 October 2011: 5,306,815) and the Volex Group Guernsey
Purpose Trust was 1,005,000 (1 April 2012: 1,005,000; 2 October 2011: 230,000).

8. Analysis of net debt
                                                                                                        Other
                                                     1 April           Cash         Exchange         non-cash    30 September
                                                       2012            flow        movement           changes             2012
                                                      $’000           $’000            $’000            $’000            $’000
Cash and cash equivalents                            41,180        (22,059)             (625)               -           18,496
Bank loans                                         (38,663)          14,000               540               -         (24,123)
Finance leases                                        (117)              66                (1)              -              (52)
Debt issue costs                                      1,243               5                  9          (194)            1,063
Net debt                                              3,643         (7,988)              (77)           (194)          (4,616)

9. Related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated
on consolidation and are not disclosed in this note.

Key management compensation is in line with the amounts disclosed in the annual report for the year
ended 1 April 2012.

10. 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 advisors, full compliance with all customs,
duty and sales tax regulations cannot be guaranteed.
Volex plc (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.




                                                          - 21 -

				
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