Volex : Move to AIM and Notice of GM

28 November 2017

Volex plc

(VLX)

Proposed cancellation of Ordinary Shares from the Official List, Admission to trading on AIM and Notice of General Meeting

As previously contemplated in Volex plc's ('Volex' or the 'Company') interim results announcement on 10 November 2017, the Board is proposing to cancel admission of the Company's Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities ('Cancellation') and apply for the admission of the Company's Ordinary Shares to trading on AIM ('Admission'). A circular to Shareholders (the 'Circular') is expected to be posted later today containing details of the proposed Cancellation and Admission.

Under the Listing Rules, the Cancellation requires the prior approval of a resolution (the 'Resolution') by Shareholders in General Meeting, passed by not less than 75 per cent. of those Shareholders who vote in person or by proxy. If approved by Shareholders, it is anticipated that the effective date of the Cancellation and Admission will be 19 January 2018, being not less than 20 business days from the passing of the Resolution.

The Circular contains a notice convening a General Meeting of Shareholders to be held at Meeting Room 2, The Novotel Reading Centre, 25b Friar Street, Reading, RG1 1DP on 15 December 2017 at 11.00 a.m. at which the Resolution will be proposed as a special resolution to approve the Cancellation and Admission.

The Circular will be made available shortly on the Company's website atwww.volex.com/investor-relationsand will be submitted to the National Storage Mechanism where it will shortly be available to view atwww.morningstar.co.uk/uk/nsm.

For further information please contact:

Unless otherwise stated, capitalised terms in this announcement have the same meaning as in the Circular.

Appendix 1 - Expected timetable of key events

Appendix 2 - Extracts from the Circular

Background to and reasons for Cancellation and Admission

As announced in the Company's interim results on 10 November 2017, the Company has made good progress with the restructuring of its business and operations and is now focussed on ongoing operational efficiencies and profitable growth.

As part of its strategy to realise value for shareholders the Board also recognises that opportunities may arise to consolidate the highly fragmented cable assembly industry through the acquisition of smaller competitors, and thereby realise savings in group-wide procurement and more efficient sales and operations. In addition, Volex's consumer power cord business faces intense competition from low-cost vertically integrated competitors, and Volex may benefit from a combination of its business with one of its competitors, to combine lower cost production with Volex's global blue-chip customer base.

Given this strategic intent to grow and re-configure the Group, and the Company's current size and market capitalisation, the Board has considered whether it is still appropriate for the Ordinary Shares to be admitted to trading on the Main Market and concluded that the Company would benefit from the proposed Cancellation and Admission.

AIM has the benefit of lower transaction costs associated with corporate actions, lower ongoing annual costs, and simpler administration and regulatory requirements more appropriate to a company of Volex's size and ambition.

Additionally, the Cancellation and Admission will offer greater flexibility to the Company, particularly with regard to corporate transactions and, should the opportunity arise, will enable the Company to execute certain transactions more quickly and cost effectively when compared to the requirements of the Official List. Should such opportunities arise they could entail significant additional complexity and larger transaction costs if the Company were to remain on the Official List. Importantly, AIM will provide current Shareholders with a continuing market quotation and represents a market on which they may potentially trade their Ordinary Shares. AIM will also provide the Company with continuing access to the public equity capital market should it be appropriate to obtain funding in the future. Any of these initiatives may feature in the implementation of the Company's future strategy, and the Board considers that AIM represents the most appropriate financial market for the Ordinary Shares as it seeks to create value for Shareholders.

AIM, which is operated and regulated by the London Stock Exchange, has an established reputation with investors and analysts and is an internationally recognised market. It was launched in June 1995 as the London Stock Exchange's market specifically designed for smaller companies, with a more flexible regulatory regime.

If the Cancellation is approved by Shareholders, the Board intends to operate the Company's business, including its reporting and governance, in substantially the same manner and with the same objectives as at present. Thus, the Board sees the Company as being attractive to specialist institutional investors while the AIM tax regime, referred to in more detail below, will also make the Company potentially attractive to AIM specific funds as well as to retail investors.

For these reasons, the Board considers that it is in the Company's interests to seek approval to effect the Cancellation. However, Shareholders should note that following the Cancellation becoming effective:

• The regulatory regime which applies solely to companies such as the Company with shares admitted to the premium segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities will no longer apply, including the requirement for shareholder approval under the Listing Rules to approve transactions above a certain size not in the ordinary course of business or with related parties. Further details regarding certain aspects of the regulatory regime that would no longer apply to such transactions are provided in the Circular.

• The Cancellation might have either positive or negative taxation consequences for Shareholders. Since 5 August 2013, shares traded on AIM can be held in ISAs and, with effect from 28 April 2014, stamp duty and stamp duty reserve tax (SDRT) on transfers of shares listed on AIM has been abolished. Individuals who hold Ordinary Shares following Admission may, after two years, also be eligible for certain inheritance tax benefits. Further details on taxation consequences are provided in the Circular.

• The Cancellation may have implications for Shareholders holding Ordinary Shares in a Self-Invested Personal Pension (SIPP). For example, shares in unlisted companies may not qualify for certain SIPPs under the terms of that SIPP and, if in any doubt, Shareholders should consult with their SIPP provider immediately. Following Admission, the Company will be categorised for these purposes as unlisted.

Details of the Cancellation and Admission

Conditional upon the Resolution being approved at the General Meeting, the Company will apply to (i) cancel the listing of the Ordinary Shares on the Official List and their admission to trading on the London Stock Exchange's Main Market for listed securities; and (ii) the London Stock Exchange for the admission of the Ordinary Shares to trading on AIM. It is anticipated that the last day of dealings of the Ordinary Shares on the Main Market will be 18 January 2018. Cancellation of the listing of the Ordinary Shares on the Official List is expected to take effect at 8.00 a.m. on 19 January 2018, being not less than 20 Business Days from the passing of the Resolution.

Admission is expected to take place and dealings in Ordinary Shares are expected to commence on AIM at 8.00 a.m. on 19 January 2018.

As the Ordinary Shares have been listed on the Official List for more than 18 months, the AIM Rules do not require an admission document to be published by the Company in connection with Admission. However, subject to the passing of the Resolution at the General Meeting, the Company will publish an announcement which complies with the requirements of Schedule One to the AIM Rules, comprising information required to be disclosed by companies transferring their securities from the Official List, as an AIM Designated Market, to AIM.

Following Cancellation and Admission, Ordinary Shares that are held in uncertificated form will continue to be held and dealt through CREST. Share certificates representing those Ordinary Shares held in certificated form will continue to be valid and no new Ordinary Share certificates will be issued.

In accordance with the Listing Rules, the Resolution is subject to approval being obtained from not less than 75 per cent. of all Shareholders voting in person or by proxy. If the requisite percentage of Shareholders does not approve the Resolution, the Ordinary Shares will not be admitted to AIM and will continue to be admitted to the premium segment of the Official List and to trading on the Main Market for listed securities of the London Stock Exchange.

Implications of the transfer to AIM

Following Admission, the Company will be subject to the regulatory and disciplinary controls of the AIM Rules. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. Shareholders should note that the protections afforded to investors in AIM companies are less rigorous than those afforded to investors in companies such as a company listed on the premium segment of the Official List. Under the AIM Rules, a Nominated Adviser and broker is required to be engaged by the Company at all times and a Nominated Adviser has ongoing responsibilities to both the Company and to the London Stock Exchange. Conditional on Admission, the Company has appointed Liberum Capital Limited as its Nominated Adviser and broker. The obligations of a company whose shares are traded on AIM are broadly similar to those of companies such as Volex whose shares are listed on the premium segment of the Official List, however there are certain exceptions, including those referred to in the Circular.

Outlook and current trading

In the first six months of the current financial year to 1 October 2017, the Group has returned to profitability. The restructuring activities taken in previous periods have allowed the Group to operate more efficiently and Volex is now seeing growth from both new and existing customers as the revenues diversify.

The Cable Assemblies division has enjoyed a particularly strong six months in which revenue has increased by 8% in comparison to the prior financial year. When the Group strips out the Cable Assemblies revenue contribution from its largest Power customer and its largest European telecoms customer (both of which have continued their decline), the remaining Cable Assemblies revenue grew by 20%. This growth has been driven across all sectors with the Group's North American logistics business proving exceptionally buoyant. This growth presents operational challenges, primarily at the Mexico facility, as investment is made in additional staff and raw materials to cope with the increase in demand. However, operational efficiency initiatives executed in prior periods have allowed the Cable Assemblies division to maintain overall margins despite these inefficiencies caused by expansion, significant labour cost inflation and adverse movements in key currencies against the US Dollar.

The Power Cords division's revenue continued its decline, down 10% on the prior financial year, with the division's largest customer's Power revenue down by 25%. It is felt that this customer's revenue has now reached a low point as new products move into commercial production in the second half of the financial year. The division's decline had been previously forecast and hence the restructuring activities taken in the prior year had been focused on this division. As a result, despite the lost revenue, gross margin and operating profit is significantly ahead of the prior year. In addition, our previously announced joint venture agreement with a Taiwanese manufacturer, producing competitively priced Volex-branded AC raw cables, began commercial production in the period and we hope to see margin benefit from this during the next year.

Volex's core markets are expected to remain highly competitive in the near term. Second half trading performance is expected to be at a similar level to that achieved in the first half with the strong sales pipeline helping off-set the traditional seasonality seen in the business.

Cost inflation in both raw materials and labour rates is expected to continue and where we are unable to pass these increases onto our customers, we will look to further improve factory operational efficiency, particularly in our Mexico facility. We will continue to closely monitor the cost base of the Group and where necessary will take further cost reduction actions.

Given the strong sales pipeline and the optimised cost base following last year's restructuring, we are confident in delivering a trading performance for the full year in line with the Board's expectations.

Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolution from those Directors who hold Ordinary Shares and certain other Shareholders holding, in total, 46,825,069 Ordinary Shares, representing, in aggregate, 51.9 per cent. of the Company's issued Ordinary Shares.

Recommendation

The Board considers the terms of the Proposal to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends that you vote in favour of the Resolution to be proposed at the General Meeting, as those Directors who hold Ordinary Shares have irrevocably undertaken to do in respect of their own beneficial holdings amounting, in aggregate, to 23,390,771 Ordinary Shares and representing approximately 25.9 per cent. of the Company's issued share capital.

IMPORTANT INFORMATION

The distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law. Therefore, persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

This announcement contains (or may contain) certain forward‐looking statements with respect to the Company and certain of its goals and expectations relating to its future financial condition and performance which involve a number of risks and uncertainties. No forward‐looking statement is a guarantee of future performance and actual results could differ materially from those contained in any forward‐looking statements. All statements, other than statements of historical facts, contained in this announcement, including statements regarding the Group's future financial position, business strategy and plans, business model and approach and objectives of management for future operations, are forward‐looking statements. Generally, the forward‐looking statements in this announcement use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'plan', 'goal', 'believe', 'will', 'may', 'could', 'should', 'future', 'intend' 'opportunity', 'potential', 'project', 'seek' and other words having a similar meaning. By their nature, forward‐looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of changes in interest rates and foreign exchange rates, changes in legislation, changes in customer habits and other factors outside the control of the Company, that may cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward‐looking statements. All forward looking statements contained in this announcement are based upon information available to the Directors at the date of this announcement and access to this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date. The forward‐looking statements in this announcement are based on the relevant Directors' beliefs and assumptions and information only as of the date of this announcement, and the forward‐looking events discussed in this announcement might not occur. Therefore, Shareholders should not place any reliance on any forward‐looking statements. Except as required by law or regulation (including, without limitation, as a consequence of the Prospectus Rules, Listing Rules, the AIM Rules and/or the Disclosure Guidance and Transparency Rules), the Directors undertake no obligation to publicly update any forward‐looking statements, whether as a result of new information, future earnings or otherwise.

Liberum Capital Limited ('Liberum') is authorised and regulated by the Financial Conduct Authority (the 'FCA') in the United Kingdom, and is acting exclusively for the Company and no-one else in connection with Admission. Liberum will not regard any other person as its client in relation to Admission and will not be responsible to anyone other than the Company for providing the regulatory protections afforded to its clients, nor for providing advice in relation to the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Neither Liberum nor any of its subsidiary undertakings, affiliates or any of its partners, directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.