Volex (LSE:VLX) — H1 Results Meeting

0:05 Morning, everyone. Sorry, good morning, ladies and gentlemen, and welcome to the VOLEX Half one Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply type in your questions in the box below and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor

0:37 Meet company dashboard. Before we begin, I would like to submit the following poll. Be very grateful to remove that from your screen. Just simply click yes, no or do it later. I'd finally like to remind you that this presentation is being recorded. I'd now like to hand over to Nat Rothschild, the Chairman of VOLEX. Good morning to you, Nat. Good morning, and good morning, everyone, and you can tell that I'm very eager to get going. My name is Nat Rothschild. I'm the Executive Chairman of VOLEX PLC. Welcome to our half year results, and update on our acquisition of Deka. I'm joined by John Bowden, our group CFO and also John Malloy, our Chief Operating Officer.

1:22 I'll begin with an overview of our performance and an update on our acquisition of Deka. So let's turn now to Slide two. John will then take you through our financial performance before I return to discuss our outlook and summarize our performance. There will be plenty of time for questions at the end. So let's get started. We delivered another robust performance in the first half despite the challenges that we faced from COVID-nineteen. We increased our underlying operating profit by 31% to $20,800,000 which is a record for VOLEX. With revenue of $2.00 $2,000,000 in the first half, this represents an operating margin of 10.3%, which is, by any metric, an excellent performance.

2:17 This is a strong performance as well within the backdrop of the pandemic, demonstrating the benefit of the strategic improvements we have made to diversify and strengthen our operations in recent years. Today, we are also announcing the acquisition of Deka. This is a fantastic business, which will significantly develop our scale in the global power products market. I will come back to this shortly and take you through the highlights of this transaction as well. Against the backdrop of the ongoing uncertainty caused by the continuing pandemic, we continue to maintain significant headroom and financial flexibility.

3:04 We closed the first half of the year with $32,000,000 of cash in the bank. We have also extended our revolving credit facility and now have a facility of up to $100,000,000 to allow us to pursue value accretive acquisitions. Our strong performance in the first half of the year has given us the confidence to increase our interim dividend by 10%, and we will be making a payment of 1.1p per share next month.

3:36 So moving on to Slide number three, what we do. I know that some of you on the call will have followed VOLEX for some time and have built up a good understanding of how we stand out from our competition. There may there may, however, be others on the call who are new to the VOLEX story, and I would like to take a few moments to provide an introduction to what we do. Whether we are working with global medical device manufacturers or household name consumer electronics businesses, a common theme is that all of our customers expect outstanding quality and reliability. Our products are used in homes, hospitals, and production sites around the world, so safety is critical.

4:25 And we work closely with our customers to ensure the relevant requirements are met. Our customers are typically global operations who are looking to partner with a truly global manufacturer. We operate across Asia, Europe and North America with an international approach to sales and customer services. Our footprint allows us to support customers from multiple locations. This has significant benefits for sales into The US, where our ability to manufacture outside of China reduces tariffs. We are also capable of producing of providing dual manufacturing locations, which reduces risk in the supply chain, a significant consideration at present.

5:14 Our industry is fragmented. As a significant player, we use our scale and purchasing power to drive efficiency and maintain competitive pricing. We specialize in a range of fast growing and well developed market segments. Our high speed copper cables deliver exceptional performance for significant global players in the data center space. We have significant further opportunities to increase our share in this sector. We work with pioneering companies in the medical space and are proud of the support we are able to provide in meeting the technological challenges that allow our medical customers to transform patient care.

6:00 During the pandemic pandemic, we have been responsive to the changing requirements in this market by supporting the demand for respiratory care equipment. Our reputation for quality makes us the manufacturing partner of choice for premium brands in the consumer electronics sector. Our acquisition last year of a cable extrusion business has been a significant success, allowing us to become even more competitive in this space. I'm extremely proud of the progress we have made with our electric vehicle customers. We support some of the biggest names in the world with best in class products. This is a new and exciting market for us with significant opportunities for growth.

6:54 So I'm now moving on to slide number four. From the simplest power cord to a complex box build with thousands of components, we make sure we understand the customer's requirements and deliver them the products that they require. We are continually developing our capabilities to provide our customers with access to new technologies and services. Our customers love working with us. We are often asked to do more for our customers and support them with more complex requirements. The acquisitions we've made in the last two years have given us additional capabilities, which mean we can deepen our relationship with those customers. Moving on to slide number five.

7:43 We have manufacturing sites on three continents, meaning we are a truly global supplier. Our head office is in The UK, and we have a regional head office in Singapore, which manages our operations in Asia. We are developing our footprint continually to support our customers' requirements. In particular, we are investing in manufacturing capability in Asia outside of China. This allows us to reduce tariffs for customers in The United States as well as support customers who are trying to reduce reliance on any single country. Moving on to slide number six. Power products have performed well in the first half of the year.

8:30 Volumes for electric vehicle customers have increased and now represent over 15% of our sales in power products. Given the anticipated growth in the EV market, we are delighted with our strong positioning in this segment. Our investments in factory automation have allowed us to ramp up capacity to meet increased demand, particularly in the second quarter of the year. Last year, we acquired a cable extrusion business and brought this capability in house. This has been a very successful project, giving us more control over our supply chain and also allowing us to improve our competitiveness. We now have two sites capable of producing the most advanced copper high speed cables for use in data center environments.

9:22 Significantly, one of these locations is in Batam, Indonesia. This means our customers in The United States face lower tariffs compared to sourcing in China while still benefiting from an attractive price, reflecting the competitive and stable labor market in Bataan. In China, we are relocating our manufacturing plant in Suzhou to a brand new state of the art facility. This has allowed us to consolidate the plant and optimize the footprint.

9:56 We are making additional investments in Bataan and are well progressed in the construction of a new cable extrusion plant. This will give us one of the best Asian power product manufacturing sites outside China. When this plant is fully operational next year, this will give us additional capacity to support our global customer base. Moving on to Slide number seven. Let me give you some details on our agreement to acquire Deka. Deka is the leading manufacturer of power cords in Europe, specializing in the European white goods market. It is based in Turkey and has a great customer list.

10:44 The acquisition brings us access to new customers. We are buying Deka at a multiple of 6.8 times our projected EBITDA for FY '21.

10:54 This represents a terrific deal for a business of this caliber with an excellent and impressive customer list. We are funding the transaction with a combination of equity and cash. The total cash at closing will be €37,000,000, and we will also issue 3,300,000 shares in consideration for the transaction. We have agreed €15,000,000 of deferred contingent consideration, which is dependent on the business hitting stretching acquisition targets over the next two years. The acquisition of Deka will create a platform for us to further expand our power product sales in Europe.

11:41 Deka have best in class manufacturing sites and processes. There is a further opportunity to share knowledge between our sites and to optimize the production process. The highly experienced management team at Deka will remain with the business. In line with other acquisitions, we have structured the deal as a mixture of cash and shares upfront with a contingent earn out structure based on the business achieving some stretching profit targets post acquisition. The acquisition will have a significant impact on our Power Products segment. To win in Power Products, you have to be the lowest cost producer. DeCA have an excellent position and reputation in the European market, and their location and facilities allow them to win on price and quality against local competition.

12:33 As we expand and develop our power product capacity in China and Bataan, the acquisition of Deka gives us opportunities for huge revenue synergies. Moving on to Slide eight. I'd like to give you some more color about the business that we are buying. Deka have state of the art facilities in Turkey. It is it is an impressive and well run business, and we we believe it will be a perfect fit with the rest of our operations. They have a high level of automation and are vertically integrated, which allows them to operate on a very cost effective basis. They have 450 employees working across three facilities.

13:22 Like VOLEX, DECA have shown resilient performance through the period of the COVID-nineteen pandemic and reported €33,000,000 of revenues for the nine months to September 2020 on an unaudited basis.

13:42 Moving on to slide nine. The implications of COVID nineteen became apparent to us early on in the pandemic when we were required to keep our Chinese manufacturing plants closed for an extended period following the Chinese Lunar New Year. As we reopened, we committed to taking appropriate steps to keep our people safe and to maintain continuity of supply for our customers. We have reviewed and modified our operating procedures to allow split shifts, working from home, safe distancing and ensuring a sanitized environment. I'm extremely pleased with the way that all of our teams have responded to these challenges, and in particular, the leadership shown by local management.

14:34 Our decentralized model creates site managers who take ownership of their colleagues, their facilities and their customers. Their response has been outstanding. We implemented a range of measures to limit the risk of COVID-nineteen coming into our facilities and to protect our colleagues. So far, these measures have been successful, and we have not suffered any significant factory closures during the first half of the year. As a critical manufacturer in the medical supply in the medical devices supply chain, we have been involved in the production of equipment which is essential in the battle against COVID-nineteen. We have been involved with efforts to accelerate the production of respiratory care equipment, and we are proud of our part in the fight against this terrible virus.

15:26 Some of our customers supply large diagnostic and therapeutic machines, which require complex assembly within a hospital setting. These customers have seen installation schedules being deferred as health care providers limit access into their facilities. We have seen a reduction in demand for components and assemblies in this sector. We expect this demand to return as the situation in hospitals normalizes. Our supply chain teams have done an excellent job of securing the cables and components that we need to deliver complex products to our customers. Within a few weeks of identifying the possible supply chain risk, we were able to put in place planning to secure our requirements, and we have continued to have excellent availability.

16:14 Unfortunately, no prevention measures can guarantee that there will be no disruption in our production sites or that there will be no impact on demand with our customers. We continue to be highly vigilant to the risks of COVID, and we are acting responsibly to manage the risks.

16:40 I would now like to hand over to John Bowden. John Bowden has stepped up the CFO position, having spent the last eighteen months working as our Deputy CFO. He has played a key role in the significant growth and development of the group's business since joining over eighteen months ago and has quickly established himself as a well respected leader within the organization. Over to you, John. Thank you, Nat, and thank you for your kind introduction. Good morning, everyone. I'm really pleased that my first half year presentation as CFO has me presenting such a strong set of numbers. And with that, I'll turn to slide 11, where I would like to briefly review the results for the half year ended the 10/04/2020.

17:30 Looking at the group's key headlines, our underlying operating profit has increased significantly from 8.1% to 10.3%. We achieved this through careful cost control. Our investment in vertical integration and automation is making a significant impact on profitability, which has contributed to the strong margin performance.

17:51 We benefited during the year due to lower copper prices, beneficial foreign exchange rates, and negotiated price reductions. It is worth noting that we don't expect the favorable foreign exchange rate position and the lower copper prices to continue in the second half as global economic fundamentals return to normal levels. Today, we have announced the completion of refinancing, which extends our borrowing facilities. We received great support from our banking group through the process and achieved more flexible covenants as well as an increase in the facility size from $30,000,000 to a $100,000,000. Our facility is made up of a committed facility of $70,000,000 and an accordion feature of $30,000,000. This positions us well to make further acquisitions beyond DECA.

18:40 We are increasing our interim dividend by 10%, signaling our confidence in our abilities to generate cash and our intention of maintaining a progressive dividend policy. Our acquisition of DeCA today demonstrates that we can identify excellent acquisition targets that will deliver long term value. As well as focusing on acquisitions, we are investing in growing our capabilities. In the first half of the year, we invested $2,500,000 in capital expenditure, the vast majority of which was growth CapEx. Our operations team delivering some interesting projects, which will help us grow revenue and optimize our cost base as we go forward. Moving on to slide 12, let's have a look at the key items in the income statement.

19:30 Our revenue for the period was up by 3.5% to $202,500,000. The pandemic has created some variability in demand in the first half of the year, which I'll return to when I talk about the performance in each of our two divisions. We've maintained revenue growth against the backdrop of a challenging global economy as a result of the efforts we've undertaken in recent years to diversify our capabilities and customer base. This has reduced our exposure to customer concentration risk. Our underlying operating profit is up to 20,800,000, an increase of 30.8%. This represents an operating margin of 10.3%.

20:14 We've controlled cost very carefully during the period and have seen some savings due to lower travel costs. There are some one off factors that helped with margins, and I will go through these when I talk about the individual sectors in a moment. The movement in earnings per share is particularly pronounced. That is because it includes the impact of a tax credit that we recognized in respect of historic tax losses, which we've started to recognize on the balance sheet as a deferred tax asset.

20:47 Moving now to slide 13, I would like to give you some more detail on our integrated manufacturing services division. This division includes complex connectivity solutions for the transmission of power and data, including high speed copper cables, which are used in data centers.

21:05 Revenue here improved by 9.7% to a $114,700,000. Growth was particularly strong in data center products where the underlying trend of data migrating to the cloud as a result of streaming and remote working is creating demand. In addition, some customers built up buffer stocks of high speed cables in the first quarter to reduce their risk from any subsequent supply chain disruption. Demand varied across our medical customers who make up the largest single customer segment for us in integrated manufacturing services. We were very proud to be selected to support various initiatives to accelerate the manufacture of ventilators to support the battle against COVID. We also worked closely with our customers to help them meet significantly increased demand for certain elements of their product set.

21:58 For other medical customers, the last twelve months has disrupted access to hospitals, which has delayed the installation of large diagnostic and therapeutic medical devices. We believe that this demand has been pushed out rather than canceled, and we're starting to see signs of recovery in demand from these customers. The strong demand for data center products, which have a higher margin than other connectivity products, resulted in favorable margin impact, pushing up the operating margin in this division to 13.3% compared with 11.2% in the comparative period.

22:33 We continue to work hard on optimizing optimizing quality and costs, which has also had a positive benefit on margin. This has been achieved through our experienced operations team working on process improvements.

22:51 Turning now to slide 14 on Power Products. Revenue declined slightly in Power Products, the division where we make a variety of high quality and safety approved power cords for a wide range of household names as well as power products designed to charge electric vehicles. The fall in revenue of 3.7% to $87,700,000 arose after a slow start to the year. A number of our customers either closed their factories or they ran at reduced capacity in April and May. Throughout the period, demand for consumer electronics has been high, driven by the move to home driven by the move to working at home and individuals looking to upgrade home entertainment products.

23:35 Demand from electric vehicles customers started off slowly, again impacted by the pandemic, but picked up significant significantly in the second quarter. We are making real progress in this segment and working with some of the most important manufacturers. Last year, we purchased a cable extrusion business called Tarshing, which allowed us to vertically integrate a key element of our supply chain. This move, coupled with investments in targeted automation, has allowed us to improve efficiencies, which is coming through in the margins. We also benefited from lower copper prices, which were about 10% lower than the comparative period. Although we minimized our exposure to copper through a combination of customer and supplier arrangements as well as hedging, the speed and magnitude of the falling copper prices in the first quarter of the year resulted in a beneficial impact to our margins.

24:30 As we move into the second half of the year, copper prices have increased significantly, and we expect that this will have an adverse impact on our margins in the second half, although the impact is difficult to quantify. Our largest power product sites are in China and Indonesia. Most of our sales are in dollars, but we have input costs in local currencies.

24:50 During the period, the dollar was strong relative to the Chinese renminbi, which has also had a beneficial impact on margins. Again, we expect this to reverse in the second half of the year. I'll now walk us through the cash flow on slide 15. We had underlying EBITDA of $24,300,000 which represented an improvement of $6,500,000 CapEx was higher at $2,500,000 and this includes our ongoing investment in expanding our facility in Bhutan. We will incur further CapEx in the second half associated with this project as we prepare for full production next year.

25:36 There were some interesting movements in working capital. With our Chinese production sites closed for three weeks towards the end of the last financial year, customers withdrew inventory from hub locations and our level of invoicing fell. This results in lower working capital at the end of the last financial year. As production normalized during the period, the inventory and other working capital balances have built back up again. This is behind the adverse working capital movements.

26:05 We paid $1,800,000 of tax during the first half of the year. Other items, including pension payments, were naught $600,000. This gave an underlying free cash flow of $8,200,000 for the period. The acquisition costs in the period represent earn out payments in respect of acquisitions that we made last year. We also paid last year's full year dividend in the first half of this year, which represented an outflow of $3,800,000.

26:37 As well as a small movement in respect of debt and leases, we also incurred an outflow of $1,600,000 to settle share based payment obligations related to a previous acquisition. Overall, this resulted in a net cash inflow of $2,000,000.

26:55 We have a robust and cash generative business, and this gives us the opportunity to make further investments. I will now hand back to Nat to talk about the outlook and summarize the presentation. Thank you, John.

27:15 So moving on to Slide 16. I'd like to take you through our outlook. We are delighted with the progress we made in the first half of this year, and we go into the second half with optimism tempered by some caution regarding COVID-nineteen.

27:34 Our performance in Q2 was very strong, and this has continued in the first month of this quarter. We have good visibility of our order pipeline to the end of Q3. When our acquisition of DeCA completes following competition clearance, we will have the opportunity to work on integrating this acquisition with the rest of our Power Products operations, and we are excited about what we can achieve here. We continue to identify other interesting companies in our sector to meet that fit that meet and fit our acquisition parameters and could produce further opportunities for investment. Our extended facility gives us the flexibility to pursue these opportunities.

28:22 We continue to invest in developing our business with further investment in capacity in Asia planned for the second half of the year. This reflects strong demand that we are seeing from our customers. After such a strong set of results, we feel confident that, barring any material disruption from COVID-nineteen, we will deliver on full year expectations. The longer term prospects for our business remain extremely strong.

28:56 Moving on to Slide 17. To summarize, we have an extremely strong business that has coped well with the pressures of COVID-nineteen. Our diverse customer base and global footprint have helped us deliver a robust performance in the first half of the year. Our acquisition of Deka brings with it some excellent customers, people and production facilities. We continue to enhance our manufacturing capabilities, moving up the value chain and offering customers more complex integrated solutions. We have a very strong management team who are highly focused on adding shareholder value.

29:39 We have a strong balance sheet. With access to additional borrowing facilities, we have further scope to expand. We have successfully grown this business by making intelligent acquisitions in sectors that we understand well. DECA represents a further step in our journey, and we are excited by the prospects ahead of us. That concludes our presentation. I would now like to hand the meeting over to the moderator so we can take questions using the Q and A tab situated on the right hand corner of your screen. But just while the company take a few moments to review investor questions already submitted, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard.

30:31 I think also worth noting with over 200

30:33 investors on the call, the company may not be in a position to answer every question it receives during the meeting itself, but of course, all your questions are warmly received and the company can review post conclusion of this meeting. And finally, I guess before we hand back to the team, I'd like to remind you that your feedback is important to the company. After the presentation has ended, you'll be redirected for take your questions. Company. And And we'll On the you'll see a little speech bubble, a blue bubble at the bottom. If you press on that, that will open the Q and A tab.

31:19 Hopefully, you'll be able to see that. So perhaps if I could ask you, because investors can't see other investors' questions, if you start at the top, there is a scroll bar on the right hand side. If I could ask you to read the question, perhaps even know who the question is from, and then give your response, that would be great. Thank you very much indeed, Nat. Sure. So what I'm going to do, everyone, is I'm going to read out the questions, and I'm then going to offer one of my colleagues the opportunity to answer those questions, or I'm going to answer the question myself. So the first question is from Jeff Jay, and I'm going to ask John Malloy to answer this question. How is the acquisition of a power cord maker consistent with the strategy to move up the value curve?

32:11 Hello? I'm assuming everybody can hear me. Hello? Yeah. We can hear you, John. We can hear you, John. Yeah. I wasn't sure because it wasn't coming out. It's a good question. Thank you for that, Jeff. I don't think our strategy is necessarily, you know, only to move up the value chain. I think if we if we split the two businesses, our cable harness business and our power cords business, then our strategy within the power cords business is to be the lowest cost, most efficient global power cord business offering good value to our customers.

33:02 And an area that where we have weakness geographically at the moment is in Europe. The addition of DeCA brings with us some opportunities for purchasing power, opportunities for migration of customers because DeCA's customers has very little crossover now between existing VOLEX customers, brings us opportunities to share in technology, and really at the same time brings opportunities to improve our margins between both companies. Okay. So thanks, thanks, John. So look, this is a we've got a question about how does the forecast increase in copper prices impact on margins?

34:00 To what extent can you use pricing power to pass on those increased costs to customers? So John Bowden, do you want to just talk a little bit about how copper prices have affected our margins for this half year and then maybe about how it might how it could reverse in the second half? Yeah. Of course, Nat. I'd be happy to. So what we've seen in the first half of the year is a benefit from lower copper prices. So copper prices, we had in our budget about 6,000 per metric ton, $6,000 per metric ton. And we actually saw the copper prices in the first quarter in particular go as low as 5,000 per metric ton.

34:46 So we do have in place a strategy where we hedge some of our copper exposure risk, but not all of it. We also pass a lot of our copper exposure onto our customers. So most of our customers have contracts that will reprice on either a quarterly basis or an annual basis. Now in a in a relatively stable market, that isolates us from most of the risk around copper without being particularly onerous for our customers. When the market is moving very significantly and there's lots of volatility, then that does mean that we're left with some risk. So the level of risk we had in the first half of the year was between probably 0.3 and 400,000 US dollars, and that was with some quite large movements in copper prices.

35:42 What we've seen as we've been monitoring the commodity price indexes as we move forward is that there is a lot of global demand for copper at present, and there are still some supply restrictions on some of the production areas, particularly in parts of The Americas. So as a result of that, we're expecting copper prices to be higher in the second half, and that will have an impact on margins. But it's quite hard to quantify because it would depend on where those prices settle at as we go through the rest of the half. Okay. Thanks, John. So there's a few questions here about the CFO transition that I would just like to to answer.

36:34 So rather than rather than reading out the individual questions, I think it's just important to say a few words about the CFO transition. Darren told the board in 2018 that he wished to retire from VOLEX within two years. And that's why we hired a headhunting firm in November 2018 and went through an exhaustive search process and hired John, who's obviously on the call today. What's happened is is that as that that date has come closer, we've decided as a as a as a board that given John's performance and given the increasing role that he's playing in the business, that it was right to make that transition at the half year results.

37:28 So I hope that is a good summary of our thinking, and it's certainly an accurate summary. So I'm just going to look through the other questions to try and see. Okay. Here's a here's a good question. John Malloy, you can you can have a go at this one. Could you please give an idea what size in revenue terms and by the way, John's not gonna like this question. Could you please give an idea what size and revenue terms the EV market could be to VOLEX in the next two years? Oh, you're right there. No. I don't like that question.

38:21 I think the easiest thing to explain is we don't know. What we can say is that our job is to focus on making sure that we're using our technology to be on as many new car platforms as we can. And, you know, so far, we've been very successful in winning the majority of the key players providing into that particular space in terms of different types of technology, different types of programs, and on different cars. Most of those are really just starting out in production and really haven't sort of hit the market in terms of where they're gonna go in growth. So it's very difficult to predict that particular figure. It's also very difficult to predict where the EV market will be in total sales in the next two years.

39:21 So but what we can say is that we've been very successful in winning programs on the majority of the the world's car market as it as it stands today. Yeah. So I would just add to that. Look, we think we're in a sort of nascent stage still in in the the in the EV sector, and we think that the growth is going to be is going to be exponential. We're very well positioned. We have a first mover advantage. Our quality is good, and our relationships with our customers are good. So we think it's a very, very exciting opportunity. Okay.

40:11 Let's have a look. Okay. There's a few questions, John Bowden, around tax credits. Sure. Do you wanna just talk a little bit more about about that about how the tax credits have, have benefited us this year? Yeah. Absolutely. So what we are what we have is a number of years ago, we had a significant manufacturing business in The UK that was loss making, and we subsequently exited that business. But it's meant that we've had historical losses in The UK through sort of optimizing our transfer pricing arrangements and through the acquisition of GTK, which is a subsidiary, a manufacturing company we purchased in The UK.

41:10 We are now producing greater profits in The UK, and that's allowing us to recover some of those tax losses. So it means that we we have a very low effective tax rate in The UK. Now what the accounting requires you to do is when you've got certainty of the ability to generate profits that will enable you to to utilize a a tax credit, then you start to recognize deferred tax assets on the balance sheet. So we've reached the point where as as the business has become more more profitable, that we're confident in our our future profits profits in that jurisdiction, and that's allowed us to recognize a tax credit. And that goes through in our underlying result because it relates to our underlying operations.

42:01 So there were some questions on whether that's in the underlying earnings per share, and that tax credit is included in the underlying earnings per share. Okay. Thanks, John. So there's a question here about revenue synergies. Where will they come from? P to S, could you say a little bit more over revenue synergies, where they will come from and on what sort of potential scale? Are there any cost synergies to be expected? So John Malloy, what would be very helpful is if you could just give your perspectives on how we can cross sell Deka's customers into Bataan in the future and maybe also some of the synergies that we see on purchasing in between between Dekka and our and our and our power business.

43:01 Okay. Thank you for that, Matt. If if we look at Dekka as a business that while they're a leading manufacturer in the European space, they're not a global business in the sense, VOLEX crosses a number of different continents. We don't share at the present stage, we don't share much of a customer overlap. But what we do have is the opportunity to help with their customers globalize around the world. So our Batamf facility is a state of the art facility set up in a very similar way to the Deka facilities in Turkey, able to offer to our customers globally tariff free products into America and products direct into Asia.

44:01 So for the same customers, there's the opportunity there for to help them globalize that business. In and and that's the same way with a number of the acquisitions that we've we've brought on over the last eighteen months. You know, one of the key parts is where we've been able to take customers that they had and customers that we had and cross sell, as it were, into each of those businesses. And we've had success in a number of those acquisitions already. In terms of purchase power, that's something that we're always looking at. The benefit of Dekker is you take a large chunk of the power cord business with significant purchase power and you join that with ours.

44:49 And you have really one of the largest well, the largest power cord business on the globe with the ability to put all that purchasing power together. And we fully expect that sitting down with the team and working together on on certain cost reduction initiatives, there'll be benefits for both sides of this acquisition on the VOLEX side and on the the decker side. Not really in terms of copper because copper is is, again, is is a global commodity. But in terms of some of the other elements that go into the manufacturing of the power cord and also in shared technology around automation.

45:35 As Dekka are one of the leaders in the market in automation in that space. Hopefully, answers your question. Great. Great. Thanks, John. So there's a couple of questions about Peter Westmacott and what what experience he he will bring to VOLEX. So the answer the answer is very simple. Peter is a a fluent Turkish speaker. He lives part of the year in Turkey. He knows Turkey better than anyone in The UK, and he he brings a a unique and an important area of expertise that that we don't currently have on the on the VLX board, which is which is a window a window into Turkey where we've just made our our biggest acquisition.

46:30 He was also the British ambassador to The United States until 2016. So so by default, he was Britain's most senior diplomat in the foreign service. He's also been British ambassador to France as well. So so I think it's given where we're going as a company, we think he's an incredibly strong addition to the board. So there's a question about from Abby R. Great presentation, very reassuring. Post Decca, what does your acquisition pipeline look like? And are there any new areas of interest? Well, look, I mean, it's a I chose this question because it's a it's an area it's one that's very it's very easy to answer. And we have a we have an incredibly deep pipeline of acquisitions.

47:29 We're very, very, very valuation sensitive, so we will never overpay for an acquisition. We're looking to buy businesses that are reasonably priced but are also additive to our overall story. And we have, I would say, in the hopper today, probably three potential deals that are at a very advanced stage. So I think it would be not outside the realms of possibility to try and to try and get another deal done by the by the first calendar quarter of next of next year. That's certainly what we would be we would be aiming for. So I'm just looking at any additional questions.

48:34 Just to give you a bit of time, Nat, just to obviously reassure all investors that just given the number of questions, there's a number to scroll through, some of a very similar nature. So, yeah, they will all be present on the dashboard afterwards as well if we don't get through them currently. Yeah. I think we've answered most of them. Can't see any can we expect any big John Bowden, can we expect any big moves in working capital in in h two? Yes. Good question. I mean, capital is quite hard to to forecast, and that's partly because as as revenue grows, as you deliver new revenue, then your working capital requirements increase.

49:23 What I can say about working capital is there were some significant movements in the first half, which I've explained and related to sort of the unusual scenario that we found ourselves in at the end of last financial year with with COVID nineteen and having to shut some of our production facilities in China and customers drawing down on inventory. And then we've had to put that inventory back in in the first half of the year. So I feel that we've we've dealt with the issue of having to rebuild the the inventory. We are, as a business, as you would expect, very focused on working capital. So it's something that we are continually monitoring at all levels of our business and working very hard to optimize our inventory position, to get the the best possible collections around our trade receivables and also make sure that we negotiate the best deals that we can with our suppliers to extend payment terms and, therefore, to manage our working capital cycle.

50:29 So, it is it's definitely an area of of focus for us. Thanks, John. So there's a question here from Leo H. Do you see any risk of intervention from competition regulators with the Dekra acquisition? Simple answer, no, we don't. We none. So we think it will close on track and on time. Matt, I'm just mindful of time, and I do know that investor feedback is very important to the company. Perhaps I may suggest that in a moment or two, we could wrap up, and then I'll be able to very simply, direct, investors to, give you feedback, if that would be prudent.

51:20 That's fine. So, Pat, if I could just ask you for a few closing remarks. And then, as I say, I will automatically redirect investors to give feedback as we are coming up to the hour. So I'd just like to thank everyone for joining this call. We have over two fifty people on this call today. Clearly, it's been a very, very difficult year. And and and the last thing I need to say is just to thank all my colleagues around the world, all the operations team, all the finance team, And we really believe we can carry this on.

52:12 And I think come next June, we'll be with the with the introduction of Deka, the performance of the Deka and the performance of our existing business. We should be in a position to hand out a cracking set of results. So thank you, everyone, for your support and your interest in VOLEX PLC. That's very kind of you, Nat. Thank you very much indeed to Nat, John and John for updating investors as part of the road show. Thank you once again. Could I please ask investors not to close this session as you'll now be automatically redirected to provide feedback. If you access this meeting via our platform, the feedback page will instantly appear. However, if you access via the link sent to you by email, you will be asked to log in and simply provide your feedback.

53:01 But once again, we do very much encourage that to happen. On behalf of the management team of VOLEX, we'd like to thank you very much indeed for attending today's presentation. That now concludes today's session, and good morning,