Ladies and gentlemen, Welcome to the Volex plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q&A tab on the right-hand corner of your screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and if you'd give that your kind participation, I'm sure the company will be most grateful. I'd now like to hand over to Chairman Nat Rothschild. Good morning to you, sir. Good afternoon. Good afternoon, everyone. I'd like to welcome you all to the half year results presentation for Volex. I'm Nat Rothschild, Executive Chairman, and as always, I'm joined by Jon Boaden, Chief Financial Officer. Once again, we're delighted to present another set of excellent results which demonstrate strong momentum across our business. We will start with an overview of our main achievements and operational highlights for the year. Then I'll hand over to Jon, who'll take us through the financial performance. Following that, I'll provide you with details of our latest acquisition and give an update on our strategy, including progress against our new five-year plan and outlook. There will be an opportunity for questions at the end of the presentation. Today's results demonstrate our ability to deliver higher organic revenues despite a challenging backdrop for manufacturers. We've been able to achieve this because we have a resilient and extremely defensive business model. We've delivered excellent organic growth of over 14%. This has resulted in an underlying operating profit that has increased by 17.6%, achieving a margin of 9%. Once again, we've seen exceptional progress in the Electric Vehicles sector, where we've grown organically by over 50%. We continue to expand in the Medical and Complex Industrial Technology sectors, delivering organic growth of 12% and 9% respectively. In addition, we have a range of new products at the prototype stage for our high-speed data center customers, which will provide benefits in the future. Our program of investment and innovation is allowing us to expand our operations to meet customer demand. Our global footprint and range of complementary capabilities means that we are well-positioned to support customers who are looking to simplify their supply chains with regional manufacturing expertise. We continue to enhance our capabilities and secure new customer projects in our attractive markets. Together, these elements are allowing us to be comfortably on track for our five-year plan. We have a competitive advantage in each of our key markets. We combine deep knowledge of these sectors with our engineering and technical skills. We are market leaders in power solutions for Electric Vehicles, supporting the most famous worldwide brands. Our engineering teams are best in class, working closely with our customers to solve complex technical challenges. This is allowing us to take advantage of the rapid expansion in this sector. Our Consumer Electrical power core business is a true lowest cost producer and a first choice supplier for international manufacturers. We continue to win market share with both new and existing customers. We now have a global footprint in the domestic appliance wire harness space following the acquisition of Prodamex in the prior year. This offers customers an attractive diversification of their supply chain and demonstrates our ability to effectively cross-sell. We combine stringent quality assurance and manufacturing expertise to produce technically complex solutions for our cutting-edge Medical customers. Again, our global capability means we are perfectly positioned to support trends towards localization. In India, for example, we are constructing a new purpose-built Medical production site. In Complex Industrial Technology, we are delivering a diverse range of advanced solutions. These range from the latest active high-speed cables to the world's biggest cloud services company, through to printed circuit board assemblies for mission-critical aerospace applications. We are adaptable to support a range of technical requirements from our specialist manufacturing facilities on three continents. I'd now like to hand over to Jon to take us through the financial performance. Thank you, Nat. As Nat set out, the first half has been a great start to the year with strong financial performance. Revenue at $357.5 million was an increase of 22.1% from the previous year, which included an organic increase in revenue of 14.3%. The robust performance on revenue allowed us to deliver $32 million of underlying operating profit, which represents an underlying operating margin of 9%. This results in a statutory profit before tax of $21.5 million. We are paying an interim dividend of GBP 0.013 per share, which is an increase of over 8% from the previous year. Since we reintroduced the dividend, we have increased it every period, and it is now 30% higher than when it was reinstated in November 2019. Operating margins have remained very consistent at 9% for the first half of the year. This compares with 9.3% for the same period a year ago, and 9.1% for the last financial year. A strong dollar has two impacts on our business. Firstly, we see a benefit to our cost base with lower employment costs due to weaker local currencies. We also see a reduction in revenue for non-dollar denominated sales. Only 25% of our revenues are in euros and pound sterling, so the impact of this is relatively small. We have continued to see benefits from our continuous improvement and cost-saving initiatives, as well as a product mix effect caused by a changing proportion of sales with different margin profiles. We made four acquisitions in the second half of FY22. This included a high volume PCB assembler in India, which has slightly lower operating margins compared to the rest of the group. As we scale these operations and deliver synergies and efficiency benefits, we would expect to see an improvement in the margins of our acquired businesses. The final element is the estimated impact of inflation, representing the differential between higher costs that we experience and what is passed on to the customer. We are working hard to manage the impact of inflation and to make sure that higher input costs are reflected in customer pricing on a timely basis. However, there will always be a time lag between the higher costs coming through and the price increases being agreed. To support our growth objectives, we make robust capital allocation decisions, pursuing the optimal balance between organic investments and acquisitions. Across the group, we're experiencing healthy customer demand for both existing business and also to deliver new customer projects. We're responding to this with an expansion and investment program targeting high growth areas and locations. We qualify all of our capital investment projects carefully. Around 90% of our capital investment is to support expansion. On average, these projects pay back within 20 months, and virtually all of them pay back within two years. This gives us an excellent return on investment, contributing to a return on capital employed of over 20% for the group as a whole. We've been very active acquiring quality businesses in recent years, with 10 acquisitions completed in the last four years, as well as the acquisition of RDS, announced today and of which more later. We analyze the acquisitions we made more than two years ago. This is long enough to complete the integration program and transition operations to the Volex way of working. These operations are delivering a return on investment of over 22%. In fact, the three businesses that we acquired in FY19 have achieved cash payback already. These were extremely good return rates for our industry and demonstrate why we have achieved a great track record for identifying acquisitions and integrating them effectively. In the first half of the year, we generated an underlying EBITDA of $38.1 million. This is more than double the same period three years ago, giving an indication of just how far we've come in recent years. As we flagged at the year-end results, capital investment is going up this year, and we had cash CapEx of $10 million in the first half targeted on our key markets. We saw an extra $21 million of working capital going in, of which $13.7 million was to support growth. The remaining $7.5 million reflects other working capital movements associated with the continued supply chain uncertainty. We are seeing improvements in freight times, but increases in supply lead times as supply chains settle down. Our expectation is that supply chain complexities will ease and working capital levels will improve in due course. Cash taxes were higher than last year, which was a combination of timing, but also the tax effect of some overseas foreign exchange gains caused by the strong dollar. Interest was higher, reflecting the acquisitions we made in the second half of FY22, which were debt funded. Overall, we broke even in the first half at a free cash flow level. This came about after our investment in capability, capacity, and working capital. The covenant ratio of net debt to EBITDA stands at 1.4x, which we expect to remain flat in the second half. This is very manageable given the healthy returns made through our acquisition and investment program, and we have now fixed the interest rate on approximately half of our debt to protect ourselves from interest rate volatility. The progression in earnings per share is good, showing an 11.7% improvement in underlying EPS before taking into account tax. The after-tax position is more complicated due to the impact of foreign exchange rate movements and the impact that changes in the U.K. tax rate had on our deferred tax assets last year. It is important to remember that while our tax in the income statement is affected by the timing of loss recognition and deferred tax, the cash effective tax rate is not. Our statutory cash effective tax rate, which is how much tax we're actually paying, is less than 17%. Turning to the performance in each of our sectors and starting with Electric Vehicles. It's been a story of consistently high growth since we launched these products five years ago. In that time, we've grown a sizable business with a range of products and customers. We've been concentrating on developing new products to meet customer demand as the market grows. Consumers are becoming more comfortable with the advantages of Electric Vehicles, and demands for faster modes of charging, both at home and away from home, are growing, and we are benefiting from these trends. With a focus on creating a vertically integrated supply chain for these products, we've maintained our position as a lowest cost producer. This combination of technical knowledge, reputation, and price competitiveness is behind the 53% organic growth in the sector. In Consumer Electricals, we've had a reassuringly strong start to the year with an organic increase of approximately 4%. The demand dynamics vary between customers. Certainly, some customers with meaningful exposure to Europe have seen some lower demand. At the same time, other customers have seen increased demand, particularly as their supply chain situations have improved. We continue to win new business and increase our market share. We are achieving this because we have an extremely cost-efficient model, and customers prefer our global footprint. In the second half, we will see lower copper costs. As we reported last year, we pass through changes in the cost of copper to our customers. This will result in a slight reduction in revenue, but it will not reduce the profits that we generate on these products. Moving on to Medical. We've had further progress in this sector. We talked about the robust returning demand in Medical at the year-end. This is driven by a multitude of factors. Some of it is a response to the patient backlog stemming from the pandemic, where procedures were delayed. We work with some leading companies in the world of medical technology who are bringing substantial innovation into the healthcare arena in fields such as robotic surgery and image-guided therapy. This is generating long-term structural demand for the large medical devices that we support with our complex cable assemblies. As a result, we expect demand to remain high in this sector. It was a great performance with our Complex Industrial Technology customers as well. We are seeing improvements in supply chain in this market, which is creating greater stability in demand and allowing production to flow better. Again, we support customers at the leading edge of innovation with our advanced manufacturing. This results in deep relationships and long-term partnerships. We are particularly attuned to the needs of customers who are looking for localization opportunities, and our global footprint is an important differentiator. In the data center space, we continue to be at the forefront of developing new products to support the next generation of data centers. As we said back in June, we expect to see the ramp up to production volumes in these products towards the end of this financial year, reflecting the complex supply chain in this industry. I will now hand back to Nat to talk about some of our strategic and operational highlights. Thanks, Jon. We've made Volex an extremely good business with our focus on generating highly attractive returns, continually reinvesting in our operations, and relentlessly diversifying our customer base and global footprint. Despite the challenges of COVID, global supply chain issues, and the recent unprecedented inflation, we have consistently delivered operating margins between 9% and 10% over the last two and a half years. This is a testimony to the depth of the customer relationships, our proven scope to add value through manufacturing processes, and our pricing power as we are a true low cost producer. We haven't lost a single significant customer through this period, and in many cases, relationships have expanded. The cash that we generate is reinvested both organically and through acquisitions to deliver further growth. Our operations run efficiently with a focus on the future and the delivery of our five-year plans. We are making everyday sensible investment decisions, allowing us to target clearly identified opportunities. Our investments have consistently demonstrated excellent returns. The vast majority of all our organic investment has a cash payback within two years, is tied to specific customer projects with some amortized into the business we are quoting for, reducing risk and maximizing returns. As an example of the capital allocations decisions we make, today we announce the acquisition of Review Display Systems, a U.K.-based designer and manufacturer of electronic display systems for Medical and industrial applications. RDS have specialist technical knowledge on the integration of touch screen and display technology into customer solutions, working with customers from the design stage through to full production. RDS will combine and complement GTK, our successful and growing U.K.-based subsidiary. The businesses will operate under a single leadership team to maximize cross-selling and to create a combined go-to-market approach. This will leverage GTK's significant experience in cable assemblies and integrated solutions with RDS's expertise in displays and associated technology. Although this is a small transaction with an initial consideration of just over GBP 5 million, it is worth remembering that Volex had no presence in the U.K. at all until FY 2019, and now has pro forma revenue of just under GBP 30 million. Our aim is to raise this to over GBP 40 million by the end of FY 2027. The transaction also includes an earn-out of up to GBP 2.9 million, subject to the business achieving stretching earn-out targets over the next two years. Back in June, we set out our ambitious new five-year plan to grow to $1.2 billion of revenue by the end of FY 2027. We intend to maintain our current level of underlying operating margin between 9% and 10% and pursue acquisitions that will deliver $200 million of incremental revenue over the period. We remain firmly on track toward our goals, growing either ahead of or in line with our expectations over this period. Our investment program is well progressed, a combination of enhancements to our infrastructure and capacity, as well as onboarding expertise in design, engineering, and business development. The rollout of these plans within Volex has created a strong sense of purpose, and the team are enthusiastic and motivated to deliver on the opportunities ahead. In summary, another great set of results with an organic increase of 14% in revenue and maintaining our margins about 9%. This demonstrates that we have the right momentum to take us towards our five-year plan targets, and we are very encouraged by the early progress we are making. With access to diverse end markets in sectors with attractive structural growth drivers, we have a resilient and extremely robust business which will support our long-term plans. Our global footprint provides us with an excellent platform to take advantage of the trends towards localization. In fact, many of our customer conversations are on this very topic. Furthermore, we continue to make excellent returns on our investments, both in our current business and in attractive earnings-enhancing acquisitions that support our growth plans. Turning to the outlook. We have dealt with the inflation that we've experienced to date, and we will continue to defend our margins. We have the confidence to do this because we have created an efficient manufacturing base, and we understand the value that we add to our customers. The structural long-term growth drivers underpinning our business remain in place. Our investment plans are well developed and well thought through, and we are very targeted in how we deploy our capital, having demonstrated clear discipline in this regard, as evidenced by our very high return on capital. Finally, I'm pleased to report that despite a challenging economic backdrop, we remain on track to deliver full year revenues and underlying operating profit that are in line with market expectations. Although it's an early stage, we are making great progress towards our new five-year plan. That concludes our presentation, and we would now be very happy to take questions. That's very kind of you, Nat. Thank you, Nat, Jon, for updating investors this afternoon. Ladies, gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. Just while Nat and Jon take a few moments to review those questions submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. Jon, if I may, you can see you've had a number of questions, from investors today, so thank you very much indeed for your engagement this afternoon. If I may, Jon, could I hand back to you to read out the questions and obviously, a response whether that's appropriate to do so, and then I'll pick up from you at the end. Yeah, of course. Yeah. Thank you, Mark. First question we've had in is from Nick. Nick's question is: What does the pipeline of acquisitions look like, and what's your appetite given current market conditions? Nat, would you like to take that question? Look, I mean, the first thing I would say is that the financing market has largely sort of dried up, so you're seeing private equity sort of unable to pay the types of multiples that they have previously been able to reach. It's a much more fluid market today. There are, I would argue, kind of more opportunities. That said, we are incredibly price sensitive, and we are really, really trying to buy businesses at, you know, at the most attractive multiples possible. We have been, you know, we've come close in this sort of period on a number of acquisitions, including some quite sizable ones, but we just, you know, we have not been willing to sort of break our own our own metrics of what we're willing to pay for these for these businesses. There's a really good acquisition pipeline. There's also, you know, even greater price sensitivity on our part. We've got. You know, it's our capital. We're investing our own capital, and we're not going to overpay for deals. I think that you can see in other public companies, you know, what happens when you pay too high multiples for businesses. I mean, you. It's not the right thing to do, especially not in this market. Good. Thanks, Nat. The next question is from Alistair, and his question is: Will the latest acquisition be margin enhancing after synergies, and will future acquisitions be at higher than group average margins, or could lower margin businesses also be acquired? In terms of the latest acquisition, RDS, that has slightly higher margins than the group average. We experience different margins in different parts of the business, and when they're blended together, that achieves the underlying operating margin that we reported of 9%. The type of business that RDS is, it's heavily involved in the design and integration of complex display solutions for industrial manufacturers, so it's adding a lot of value in the process, and consequently, that's a slightly higher margin business than the group average. That will have a positive impact on the group margins, albeit it is quite a small acquisition relative to the size of the overall group. In terms of what we look for from a margin profile, in general, we're attracted to businesses that have better margins than we make across the rest of the group, so acquisitions that blend up the margin profile. However, one of the businesses that we acquired last year, a business called inYantra in India, that has lower margins than the rest of the group, and the reason for that is it specializes in higher volume printed circuit board assemblies. We see a huge opportunity with that business to not only grow and benefit from cross-selling, we also believe that we can improve the margins in that business. We don't have a hard and fast rule 'cause we assess every potential acquisition opportunity on its merits and look at a number of characteristics before we make a final decision. In general, we are more attracted to businesses with margins that would improve the group position. Is there anything you wanted to add on that point, Nat? No. No, I think you've answered it perfectly. Great. A question from Steve. Steve's question is: Why do you think that the market and the share price doesn't reflect the progress that the company has made over the last couple of years? Would you like to take that one, Nat? Yeah. Look, again, we are making good progress. We, as a management team, have bought a tremendous amount of shares in the business since 2019. I, you know, looked at the numbers just a few days ago, and we've bought around GBP 4 million worth of shares as a management team, and that has not all been me. There's been a lot of other people buying as well. We obviously believe ourselves that the business is doing well. Since March of this year, we've bought about GBP 1.3 million worth of shares ourselves. We think the share price is undervalued here. We obviously have, you know, near perfect visibility ourselves in the future. Look, I do believe there's a. That the shares probably got ahead of themselves last year when they traded up to the, you know, close to the GBP 5 level. I think the trick is to understand when they're ahead and when they're maybe behind where they should be. I think we feel very strongly today that if you're prepared to take a sort of medium to long-term view, the true value in the business will come out. We've got really strong organic growth in Electric Vehicles. It's a tremendous opportunity. There are also other parts of the group that are they're equally as interesting and as exciting. Look, I mean, what makes Volex the attractive investment that it is is the quality of the management team, the very kind of heavy insider ownership, you know, the strong bench of people that we've got coming up through the organization, the future leaders of the organization. It's just a very attractive story today. You know, we look forward to the next sort of three to five years with great excitement as we carry out our five-year plan. Great. Thanks, Nat. The next question is from Jack, and Jack asks: How have COVID lockdowns in China affected Volex's manufacturing there? I think I'd start by saying that in the first half of the year, we've been unaffected by any lockdowns in China, and we have obviously have a number of policies and procedures in place that both contingency plans and plans to try and prevent us being affected by future lockdowns in China. We're very popular with customers because our manufacturing footprint allows us to manufacture in multiple locations. For many of our customers, we're offering them locations within China and outside of China. That is a selling point from our global footprint and offers us an alternative if there is any disruption in China. What we've also seen is that our customers are holding more inventory, so if there is some disruption, then they're less affected by that disruption. That's a decision that customers have made, and sometimes that inventory is on the customer's balance sheet, and sometimes it's on our balance sheet 'cause we hold it on behalf of the customer to limit disruption. More broadly, there is a real meaningful shift towards localization, where customers are coming to us and they're asking for manufacturing solutions which are closer to home. They're offering. They're asking for low-cost manufacturing alternatives to China, and we're addressing that through the expansion program that we have in place at the moment, where we're growing our business in Mexico, we're growing our business in Indonesia, growing our business in Poland, and importantly, we're also growing in India, and India is an ideal low-cost manufacturing alternative to China. We're planning for the long term, and we're responding to the trend in the market, which is all around localization. A question from Melvin, which I think really probably follows on from that last question, so I might not have that much to add. Melvin asks, "We're reading much at present about China, political issues, economic challenges, including potential deflation, continuing presence of COVID, a bellicose approach to Taiwan. Do you see any significant risks for Volex arising out of these? If so, how are you responding to those risks?" Really following on from the last question, from our perspective, we see a huge opportunity with the global manufacturing footprint that we've had. We're having a lot of conversations with customers who are looking at these same risks that you've highlighted, Melvin, and they want to address it by making changes to their supply chain. They're asking us to give them quotes for manufacturing in Europe, in North America, in Mexico in particular, our very capable and growing factory in Indonesia, and then of course, India. We see some of the moves in the market to try and insulate companies from any risk around China is a huge opportunity, and we think that we will be net beneficiaries of that trend. Did you have anything to add on that point, Nat? No, I agree with you. We are seeing competitors who are kind of scrambling to get out of China and to find production outside China. I mean, we already have a very balanced footprint, and that has helped us. We don't have any plans to invest in our footprint in China. We only have plans to invest outside. We're very well covered in China. We have great engineering there, and we have a great team there. We think we have a kind of a really good balance at the moment. The important sort of missing link was India, which we have now filled in with the acquisition of inYantra. We bought 13 acres of land there. We're building a big new Medical facility there, which will come on stream next year. As we've said repeatedly, we have the right footprint for the environment that we're in. Good. Thank you, Nat. Good context. The next question's from Ketan, and Ketan asks about a breakdown of the movement in net debt, and has specifically asked about the year-on-year movement in net debt. What we've published in the presentation is how net debt has moved from the year end. The reason there's quite a significant increase, if you look at it from the end of H1 FY22 to the end of H1 FY23, is predominantly because we did four acquisitions in the second half of FY22, which were debt funded. We went into the year end with a higher level of net debt, and our leverage was at 1.1x. Our net debt during H1 has increased by GBP 24 million, and that is a result of the investment that we've made in working capital, the investment that we've made in capital expenditure, and we also had some acquisition payments relating to acquisitions made in previous years. The cash related to the acquisition of RDS, which is GBP 5.4 million, is the initial consideration. That will be recorded in H2 FY23. We have a question from Gavin. Gavin has said, "You mentioned the 9%-10% margin a few times. What do the peers make? Is the static margin level defensively done to keep the customer base?" I'll start with that, and then Nat might want to add something. In relation to the margin, the way that we think about is we have different margin levels in different parts of the group, depending on the customer's type of products that we're supplying, the complexity and some of the other manufacturing specialisms that go into the particular product. We're aiming to blend towards a margin for the overall group of between 9% and 10%, and that includes the significant investment that we're making in product development and also other things that will grow the business in the future, such as recruiting the right sales people, making sure that we're marketing effectively to the right customers. The 9%-10% margin is something that we've had for the last two and a half years. We've been consistently at those levels, and we're continuously balancing our competitive proposition in very competitive markets to make sure that we're pricing at the right levels and that we're winning business with our requirements to expand and to grow the business and to have the right level of OpEx for what we want to achieve. It's a very good question, actually. The answer is our margins are broadly similar to our peers, and there's a few peers out there who I'm not gonna mention by name, who we look at very closely, who we compete with. We understand that from a customer's perspective, there's a cost of moving business. There's an engineering cost of moving business. The customer has to identify a real saving to move business. We make sure that, you know, we have the right margin to protect our business. You know, at the same time, we're always working to lower our costs. It's absolutely clear that, you know, when I got involved in Volex in 2015, our costs were all wrong, and we were a high cost producer making much lower margins than our competitors with vertical integration, with automation. You know, we have gone from being a high cost producer to a genuine low cost producer. Therefore, it's very difficult, extremely difficult for our competitors to undercut us, and that's one of the kind of secrets of our success today. Great. Thank you, Nat. A question from Mark Mayall. Mark asks, "What multiples have you paid for the most recent acquisitions, and what multiples do you see currently? What is the maximum multiple you'd be willing to pay?" For the most recent acquisition for RDS, that's very straightforward. We're paying GBP 5.4 million for a business that delivers GBP 1 million a year of EBITDA, so that's 5.4x. If that business hits its stretching earn-out targets, then that multiple will drop even after we've paid the additional consideration for the earn-out, so about 4.6x. We see that as a very attractive multiple for a quality business, which will fit incredibly well with our existing business GTK in the U.K.. In terms of multiples, the multiples that we look at for businesses reflect a lot of the underlying characteristics of those businesses. The margin profile, some of the competitive characteristics, like the type of customer relationships, the customer concentration also reflects the growth of the business, how mature the business is in terms of systems and processes and how much investment will be required. Multiples can vary quite widely from approximately 5x to going up to 9x to even 10x is about the most that we see when we're assessing businesses. There isn't a strict maximum that we would pay for a business, but we'd make sure that any business that we acquire, we can absolutely justify that particular investment because of the quality of the business, the characteristics and the returns that we make from it. Ketan, I would just add to that is the following. Look at the multiples that we've paid for the 10 or 11, I can't remember how many it is now, businesses that we've bought since I became the senior executive of Volex. We've paid very, very low multiples for these businesses because we are, you know, we're parsimonious and we're investing our own capital, so we're just not gonna go out and pay high multiples for businesses when if you're patient, you can find great opportunities. We have continually found interesting acquisition investment opportunities at attractive multiples and that's what we're good at and I don't see us sort of going out and trying to. For example, we would never buy a business in EV because the multiples would be crazy and we built a, you know, an EV business from nothing since 2017. I mean, I can't imagine what our EV business is actually worth today, given what it's grown at. We would never go and buy that, we would build it. We're looking for interesting attractive acquisitions with good management teams, with cross-selling opportunities. Those opportunities will inevitably increase given the macroeconomic climate we're in at the moment. Good. Thank you, Nat. A question, another question from Ketan, who's asked, "Could you give an idea which new areas in the EV are likely to bring the biggest growth for Volex?" Would you like to take that one, Nat? No, I'm gonna let you do that. Yeah. Please. Really for EV, I mean, the reality in EV is that the whole market is growing significantly. We see the opportunity as being the expansion in Electric Vehicles as a whole. The adoption by consumers, which is driven by, in some markets, government incentives, in some markets, government policies that are going to prohibit the sale of internal combustion engine cars in due course. The fact that the environmental benefits of EV ownership are becoming incredibly clear, and it's a popular choice for people to make when they're considering a new vehicle. The biggest growth factor in EV will be the continued adoption rates for Electric Vehicles and the expansion in Electric Vehicles. In terms of things we're particularly excited about at the moment, we're seeing a lot of traction with customers in the out-of-home charging market, and there's a race to get infrastructure in 'cause it's some point soon, there'll need to be a lot more infrastructure to allow people to charge when they're away from the home. That's a really good opportunity for Volex, and we've got some existing customers which are growing very strongly in that space, and lots of conversations with new customers about those types of products. There's a question from Mark Mayall again: "How does your order book and momentum look like these days? Do you see any signs of weakness?" As we mentioned in the presentation, that we have strong levels of demand across the majority of our business, so across the Medical complex, industrial technology, in EV in particular. What we're seeing in Consumer Electricals is a mixture. Some customers are reporting a softening in the demand that they're experiencing, and that's particularly customers in Europe. We have a lot of customers in the European domestic appliances space. People are clearly deferring large purchases at the moment as they wait to see how the economy develops. That has caused some of our customers to reduce their orders slightly as they manage demand. At the same time, in other parts of our Consumer Electricals business, we're seeing customers increase their demand, and that's a combination of some customers it's to do with restocking. For other customers, they're seeing their demand increase because supply chain issues are easing and their supply chain has improved. It's a real mix across the different parts of our business. What I would say around Consumer Electricals is that it is. We're a very agile business, and we're incredibly dynamic in how we think about things, so we're quite capable of taking decisions, either short-term or long-term decisions, to rightsize any part of our business to match with the market. If we need to take some choices in Consumer Electricals, either in the short term to reduce staffing and sort of maintain profitability, or longer term around site consolidation, we're perfectly capable of doing that. A question from Olegario, which is: "In light of the increase in interest rates, wouldn't it be interesting to delever a little bit the balance sheet or at least keep the debt to EBITDA ratio below 1.5x?" The debt to EBITDA ratio and the way that we look at it, which is the way that our covenants work, which is net debt excluding operating leases to EBITDA, is already below 1.5x, so we're at 1.4x at the end of the first half of the year. Our view on the leverage and the balance sheet is that interest rates have gone up, and we're mindful of that fact, but we're making very good returns both on the acquisitions, and we had that slide up that said acquisitions that we did two years ago have had a return on investment of over 20%. Also we're making excellent returns on the capital investment in our business and achieving cash payback on growth CapEx within two years. The returns that we're generating are very, very high relative to interest rates. Where we see opportunities that we can deliver significantly higher returns than the hurdle rates that you would derive from the current interest rate costs, then we would still look to pursue those opportunities. In particular, the opportunity that we have at the moment with our global footprint, which is incredibly relevant to customers. The opportunity we have with that global footprint to support localization is tremendous, and that is a once in a generation opportunity. That there's a seismic shift coming in supply chains with a move from China to elsewhere around the world. As I've mentioned, we've got great facilities in Europe, in North America, in Asia, outside of China, and we want to make sure that we're able to take advantage of that. We are absolutely investing in increasing capacity because customers are desperate for that capacity. I hope that sort of answers how we think about leveraging debt. There's another question from Mark Mayall. It's about what's our view on share buybacks these days, and where could pro forma EBITDA stand at the end of the year? In terms of the question on EBITDA, we don't give guidance on EBITDA, so, I'm not gonna answer that question directly. In relation to share buybacks, we set out at the year-end our view on capital allocation, and we talked about the three areas where we allocate our capital. The first is capital investment, where we make these great returns, two-year cash payback. The second is acquisitions, where we demonstrate that we're achieving in acquisitions that we've made previously a 20% return on investment. Then we said thirdly, if after doing the capital investment and the acquisitions that we had cash left over, then we would look at share buybacks or other forms of return of capital. It's something that we would always consider, but the opportunities that we have for investment and acquisitions at the moment are really, really strong. That is our primary focus. There's a question from Jon. The market for third-party design and supply of electronic modules like displays is very fragmented. Will you manage RDS as an in-house integrator, or will you try to roll up other similar contractors? Well, our initial intention in how we're going to manage RDS is we're going to manage it in combination with GTK, which is a very successful business that we acquired three years ago in the U.K. We feel that the two businesses together, they have a complementary mix of overlapping capabilities and customers. There's some very good opportunities for cross-sell, and that's what we will be pursuing. We are impressed with RDS. It's got some great customers, but some very strong customer relationships, and it's identified a niche area of the market where it can add a lot of value. We will look to enhance that by finding it more customers and sort of broadening its customer reach. Question from Alistair. How much visibility is there into the new data center growth cycle that's expected towards the end of the year? Is it sensitive to macroeconomics or are spending plans now set in stone? It's a good question. We've put a lot of investment into our suite of products for data centers, and we now have a very compelling portfolio of products across both 100 G, which is the more traditional technology, and 400 G, which is the emerging technology. In addition to the Passive Copper Cables that we've been very successful to, we now have a solution for Active Copper Cables, which we believe will be a significant part of the market going forward. Those products really support the next generation of data centers. The next generation of data centers is taking longer to come online than we would have expected due to availability of semiconductors. That's the principal factor that is delaying that, which means our customers are waiting until they can get significant quantities of the network switches and storage devices, et cetera, that they need in order to convert existing data centers into the new generation of data centers. My view is that that's not. That trend is so important for those cloud computing providers that to meet the growing demand for cloud computing and the fact that so much technology is moving into the cloud, that the current macroeconomic uncertainty won't hold back those trends. We expect to see a ramp up in volumes of our data center products towards the end of this financial year, really kicking in at the start of next financial year. A question from John D, which I can answer quite quickly. He says, you mentioned that Volex had fixed interest on 50% of its debt. Are you able to disclose the interest rate and the term of the fix? Yes. It's just slightly above 3% is the fixed rate, and that is for four years. It's worth just sort of thinking about it. I mean, the rates you can get even by fixing are incredibly compelling. If you're paying just over 3% and you're investing and getting returns on investment in excess of 20%, it's a very compelling arbitrage. There's a question from Jack. He said there was an increase in working capital in the period. Do you see this as a normal part of growth, or is this some one-off events affecting working capital in the period? The working capital movement is there was a $21 million investment in working capital. $7.5 million of that was really down to supply chain consideration. Either where we're putting in more inventory into the business to deal with supply chain disruptions, or we're buying from different suppliers to the ones that we'd normally use, where the terms that we have in terms of payment terms aren't as good 'cause they're not our normal suppliers. But we're using them because we're trying to secure availability of particularly difficult to get hold of components on the spot market. That's sort of driving $7.5 million of the $21 million increase. The other circa $14 million was as a result of growth in the business. As the business grows, you need to hold more inventory, you're billing more, so you've got higher receivables and you've got higher payables. There's a mixture of things going on there. It would be our intention to look to bring down inventory levels in due course, but we can't do that too soon because that inventory is allowing us to deliver to customers in a world where there's still quite a lot of variability in supply chain. A question from Alan: Will the proposed increase in corporation tax have a significant effect on the group? I think Alan's referring to the proposed increase in U.K. corporation tax, and it's a good opportunity to point out that we have significant brought forward losses that Volex generated many years ago in the U.K., and that will protect us from having to pay any tax in the U.K., probably for the next five or six years. The impact of the change in the tax rate doesn't pose any problems to us. Of course, we operate as a global business, so we have lots of profits in different parts of the world and different tax rates. The U.K. is only one of the markets in which we operate. Question from Sean, who says, "What% of revenue is represented by the top three customers globally?" We haven't disclosed that for the half year. We did disclose a statistic at the year-end, which was customers who were greater than 10% of the overall group revenue. There were two customers who were over 10% of group revenue, and that's in the annual report and accounts for FY22. It was a customer in Medical, and they made up 12.9% of group revenue, and a customer in Electric Vehicles who made up 14.7% of group revenue. At the year-end, there were no other customers with greater than 10% of group revenue. Hopefully, that answers that question. Then just got time for probably one more question, and that's from Steve. Can you see lithium battery supply issues hitting the volume of electric cars going forward? What we are seeing from our electric vehicle customers is growing demand, and we're seeing growth across all of our customers in that space. There's significant demand from the end consumer for Electric Vehicles, and we believe that the trajectory in Electric Vehicles will be a significant increase, whether that's through lithium batteries or through other technology that emerges in due course. That's great, Jon. Thank you very much indeed. You've taken pretty much every single question posed from investors. Thank you once again to everybody on the call for your engagement. Jon, Nat, if any further questions do make themselves present to us, we'll obviously provide those to you after today's meeting. I know investor feedback is as usual, very important to you both, and I'll shortly redirect investors on the call to give you their thoughts and expectations. Before doing so, Nat, if I may, maybe just hand back to you for a few closing comments. I'd just like to thank all my colleagues and all our stakeholders for a really good six months, and we look forward to talking to you again. Thank you very much. That's great. Jon, Nat, thank you once again for your time this afternoon and for updating investors. Can I please ask investors on the call not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Volex plc, we'd like to thank you for attending today's presentation. Good afternoon to you all.