Preliminary Results for year ended 5 April 2009 Presentations 1 and 2 June 2009

Transcription

1 Preliminary Results for year ended 5 April 2009 Presentations 1 and 2 June 2009

2 Personal introductions Experienced CEO, with Euronext and Nasdaq experience Track record of driving operational excellence Deep knowledge of Volex s key Telecom, Datacom and Consumer target sectors Wide experience across Europe, Asia and the Americas Graduate FCA with MBA 4 th CFO position 10 years experience in telcoms and technology Lived and worked in over 10 countries Worked for 5 FTSE 100 or equivalent companies complimented by start-up and turnaround

3 Contents 1. Recent achievements 2. Quick refresher on Volex 3. FY 2009 financial results 4. Unlocking the potential of Volex

4 Recent achievements

5 Recent achievements 1. New management appointed Following appointment of 3 new non-execs during 2008, new executive team appointed including new CEO and Group FD 2. Disposed of loss-making Wiring Harness division Enhances profit and cashflow profile of the Group Eliminates major management distraction allowing focus on core operations 3. Significant advances in Volex designed product Certifications achieved at Ericsson, HP and Cisco Around 10% of Interconnect sales underpinned by Volex content 4. Ongoing rationalisation of manufacturing footprint Completed closure of Hermosillo and Kanata factories, and in process of closing Jakarta 5

6 Recent achievements financial highlights 1. Banking facilities extended to Revenues up 19% at 265.1m 11% up in Power Products and 31% in Interconnect 3. Operating profits* up from 7.3m to 11.2m 4. Normalised pre-tax profit* up from 4.7m to 8.2m 5. Cash generated by operations before non-recurring items of 21.7m compared to prior year cash outflow of 2.2m 6. Net borrowings reduced 30% from 21.0m to 14.8m Revenues and profits are in line with previous guidance while cash flow and closing net debt are favourable * From continuing operations before non-recurring items and share based payments

7 Quick refresher on Volex

8 What we sell Power Products Interconnect Products 8

9 Telecoms illustration Volex is here Volex is here Volex is here Volex is here Volex is here

10 Datacoms illustration Volex is here Volex is here Volex is here Volex is here Volex is here

11 Our customers 11

12 Markets & positioning Powercords $2bn power cord market Market leader with ~12% share Margins of 10-15% Manufacture and sales are Asian centric Growth opportunities in halogen-free and other green consumer products Stable cash generator and door opener for cross-selling interconnect products Interconnect $15bn cable assembly market growing 8% p.a., with opportunity to expand into $44bn of adjacent markets 8th largest player with 1.3% market share, but only 1 of 5 players with global footprint Margins of 20 30% Significant opportunities in India and China Successfully increasing % of connectors developed in-house Well positioned to become market leader in high growth technologies 12

13 Global presence servicing global OEMs Main factories Main offices North Carolina UK Poland Suzhou, China Japan Mexico Shenzen & Zhongshan, China Vietnam Chennai, India Singapore Indonesia UK & Europe 68m 22% Americas 52m 17% Revenue by source Brazil Asia 183m 60% UK & Europe 108m 36% Americas 57m 19% Revenue by destination Asia 138m 45% 13

14 World class management Mike McTighe, Chairman Chairman Pace plc and director of OFCOM. Ex Carrier 1, Motorola, Cable & Wireless, Philips and GE Richard Arkle, NED NED of SDI Group plc and Cash Management Systems Ltd. Previously Partner KPMG LLP Karen Slatford, NED Chairman of Neverfail Group and EMEA advisory board member of Ciena Networks. Ex VP Sales and Marketing Worldwide of HP. Chris Geoghegan, NED Chairman of Hampson Industries plc and NED of Kier Group plc. Ex group executive director of BAE Systems plc Ray Walsh, CEO Ex CEO Via Networks and previously at KPNQwest, LCI International and Williams / Wiltel. Andrew Cherry, CFO Ex SpinVox, Vodafone, Cable & Wireless, GoIndustry, Gemini Consulting, B.A.T plc and Price Waterhouse Paul Roberts, Sales & Mkting Ex Managing Director John Crane (Smiths plc) MEA and UK Regions, EIS PLC and Strachan & Henshaw Ltd Tom Aubin, CTO Ex Amphenol and ADC Telecommunications. 20+ years in interconnect servicing TeleCom, DataCom and Mil-Aero. 1. Six of eight key managers new within last 12 months 2. Non-execs bring operational experience mirroring executive team 3. Ray has previously worked with Mike McTighe and Karen Slatford

15 FY09 financial results

16 Financial summary Income Statement millions Revenue from continuing operations Operating profit before non-recurring items Non-recurring items (4.6) (2.5) Operating profit Net finance costs (3.0) (2.6) Profit on ordinary activities before taxation Taxation (2.0) (2.5) Profit/(loss) from continuing operations 1.6 (0.4) Loss from discontinued operations (21.0) (3.0) Retained loss (19.4) (3.4) Adjusted basic earnings per share from continuing operations 10.9p 3.8p 1. Year on year growth on revenues, margins and profits 2. Income Statement enhanced as result of Wiring Harness disposal 3. Positive earning per share from continuing operations

17 Summary financials - Revenue 11% up in Power Products at 150.7m Strong year-on-year and quarter-over-quarter growth in first half Declined September through January but stabilised in Q4 and expected to recover during FY % up in Interconnect at 114.4m Consistent quarter on quarter growth throughout FY Total Group revenues up 19% at 265.1m on a full year basis (up 2% on a constant currency basis. As per graph below, decline in H2 FY 2009 due to Power Products impacted adversely on general upward growth trajectory H1 08 H2 08 H1 09 H2 09

18 Summary financials Operating profit Full year operating profit before non-recurring items and share based payments up from 7.3m to 11.2m Similarly normalised pre-tax profit up from 4.7m to 8.2m Following profits warnings in H2 FY2008, the Group have delivered consistent half-on-half growth with 7.2m of operating profit in H H1 08 H2 08 H1 09 H2 09

19 Financial summary Balance Sheet millions Non current assets Working capital Cash Current provisions (3.7) (3.4) Other (6.3) (4.4) Net current assets Bank overdrafts and loans (31.7) (25.3) Long term provisions (5.4) (3.8) Pension obligations (1.7) (1.5) Other (0.6) (0.2) Net current liabilities (39.4) (30.8) Net assets Net debt (14.8) (21.0) Undrawn committed facilities

20 Financial summary Cash Flow Statements millions Cash generated by operations before non recurring 21.8 (2.2) items Cash utilised by non recurring items (4.4) (3.9) Cash generated by operations 17.4 (6.1) Taxation paid (1.6) (0.9) Net interest paid (2.2) (1.4) Net cash inflow/(outflow) from operating activities 13.6 (8.4)

21 Summary financials Net debt Lloyds facility (US$62.7m) and HBOS facility ( 6.8m) both extended to March 2012 Simplified covenants Net borrowings reduced to 14.8m Undrawn committed borrowing facilities of 14.7m (2008: 8.1m) Adequate covenant and liquidity headroom

22 Unlocking the potential of Volex

23 Improvement programs Procurement, supply chain and manufacturing previously each of five business units operated autonomously opportunities to gain global scale economies in materials procurement (annual spend of ~ m representing nearly 65-70% of revenues) plan to reduce production overheads of ~ 25m through further factory rationalisation working capital and freight costs can be reduced through optimisation of supply chain and warehouse hubs

24 Improvement programs Marketing, sales and product development again each of five business units operated autonomously with limited cross selling between regions and product groups long standing relationships with global OEMs (of whom top 25 represent around 80% of revenues) opportunity to improve volumes and margins by repositioning as level 1 supplier build upon recent successes winning new customers and introducing new products capitalise on strengths in fast growing technologies and markets

25 Improvement programs Skills, information, processes and systems currently upskilling several key functions and augmenting management with new hires enhancing management information systems to improve visibility and control of the business streamlining processes to reduce costs and increase agility upgrading and extending existing ERP, Financial and CRM systems

26 Conclusions

27 Future prospects Stabilised the Group in the last 12 months, with refinancing, disposal of Wiring Harnesses division and appointment of new management Next year is focused on unlocking the potential of Volex through improved execution in the operational, commercial and financial arenas Successful delivery will build a firmer foundation and create options for both organic and acquisitive growth over the medium term.

28 Appendices

29 250% 200% 150% 100% 50% 0% -50% -100% 1/1/09 Relative share performance and valuations Volex & Key Competitors Relative Share Performance 9/1/09 Volex Amphenol Leoni Tyco Molex Tyco Molex 23/1/09 6/2/09 20/2/09 6/3/09 20/3/09 3/4/09 17/4/09 1/5/09 Ampheno l Leoni Volex Revenue $14.8bn $3.3bn $3.2bn 2.9bn 0.3bn Operating profit % Market Cap Revenue multiple Operating profit mult. 12% 10% 20% 2% 4% $7.9bn $2.7bn $5.3bn 0.3bn 30m Volex has significantly outperformed its peers during Despite this, it is trading at a significant discount to the sector. Growing revenues to 0.4bn and increasing margins to 10%, would imply a prospective valuation of ~ 250m.

30 Contact Details CEO Ray Walsh CFO Andrew Cherry London Stock Exchange code : VLX Current address Address from July 2009 Dornoch House Kelvin Close Birchwood Science Park Warrington WA3 7JX England 10 Eastbourne Terrace Paddington London W2 6LG England 30