Microlise Group (LSE:SAAS) — Results for the 12 months ended 30 June 2021

0:01 Good afternoon, ladies and gentlemen. Welcome to the MICROLISE GROUP PLC investor presentation for the full year results ended 06/30/2021. At the presentation, investors are being in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. Just click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question received 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 investment company dashboard, and you'll be notified once they're ready for your review. Also, I'd to remind you this presentation is being recorded. And before we begin, we'd like to submit the following poll. I'd now like to hand you over to Nadim Raza, CEO, Bill Wine, CFO of MICROLISE GROUP PLC. Good afternoon. Hi. Thank you very much for having us this afternoon, and, thanks to the audience for their time.

0:52 Just a quick introduction. So my name is Nadim Raza. I'm the CEO for MICROLISE GROUP. Been with the business since the late eighties, and my background is technology. I started life as a software engineer, went on to run our research development department, became technical director, and then CEO when we did a management buyout in 2008. During the last thirty or so years, though, I've also run a manufacturing division as well as our sales and marketing, our customer services, and our professional services division as well. So I've got a very good insight across the whole business. The only part of the business that I've not been directly managing at any point during that time is finance, and I'll hand across to Bill because that's where he comes in.

1:46 Good afternoon. My name is Bill Wynn. I'm the CFO of MICROLISE. I joined in 2007 to help Nadim successfully conclude the management bio, which we did. I've got a lot of experience of being CFO over thirty years at board level, primarily in private companies, but several of those have b b p backed, and most of them have been software companies. So that work in the p backed companies has enabled me to bring a lot of m and a experience to my clients as well.

2:20 Thanks, Bill. And, we're just gonna give you a few slides just to give you, an introduction to MICROLISE before we get on to actually talking about some of the results that we've recently, announced. So we're a provider of transport management solutions to large enterprise customers. So, essentially, we provide software and hardware, although we classify ourselves as a software business, and we supply that to, companies that run large fleets of, vehicles, particularly heavy goods vehicles.

2:58 And in The UK, in that large fleet sector of of fleets above 500 vehicles, we really dominate that space. We have a 58% market share. And in the next segment down from two fifty to 500 vehicles, we have a 46% market share. So, you know, we we really have a lot of great enterprise customers. And in particular segments, industry segments, so for example, in retail and groceries, we have an 88% market share. So, you know, we we cover a lot of different industries from retail, pharmaceuticals, construction, and so on. But in retail, we particularly dominate. So those are customers like Tesco, Sainsbury's, as the Morrison's. In fact, all of the top 15 retailers in The UK are our customers.

3:55 And the kind of things that the kind of benefits that we deliver are cost savings. We help them become more efficient. We also help them reduce their greenhouse gas emissions as well. We have a range of, offerings, and, they're very modular, and we'll cover that in a couple of slides time. But we have a very low churn rate. So once, customers buy into our portfolio, they stick with us for for quite a long time. We have some of those customers have been with us for ten, fifteen, twenty years. In fact, the customer that's been with us for the longest is has been with us since the late eighties. So we benefit from that very low churn rate, and, also, our contracts are generally five years long. So we have great visibility into the future of incoming revenue as well.

4:49 A couple of just highlights. We've been around since '82. We've always been owner managed. We've never had any, private equity or VC, input. And, obviously, we're now, IPO ed onto AIM as of, late July. We have around 600 staff around the world, four offices, and about 400 of those large enterprise customers. We have lots of smaller customers as well. In fact, hundreds and thousands of smaller customers, but that enterprise space is where we have our sweet spot, and that's where we, generally do a lot of our business. Our, results that we've just posted for the period July 1 through to the end of June, 2021. So that twelve month period revenue was up 57,000,000, and, our SAAS recurring part of that revenue was 35,100,000.

5:51 We also invest a lot in research and development, and that's has meant we've won quite a few awards, including three queen's awards for enterprise, two for innovation, and one of those was for international exports. We have a clear growth strategy, and we'll come on to that later on in the presentation. And as I mentioned, we IPO ed in July, this year. And as part of that, we raised 18,600,000 of primary capital to help us fund future growth. A little bit more about the products and services that we offer. So we produce a lot of different modules, but we categorize them into these six groups. So starting from the left, we have a a fleet performance group of software, and here, things that you will be very familiar with.

6:45 It's it's tracking and telematics, so, actually getting data about where the vehicle is. But our telematics is actually on steroids compared to a lot of the competition. We we gather enormous amounts of information from the engine management system as well as other sensors that we put onto the vehicles. The next group is fleet compliance. And here, this is a portfolio that we acquired when we bought a company called TrueTac last year. So if you run one or more trucks in your fleet, trucks being over three and a half tons, you have to have an operator's license. And the operator's license obligates you to ensure that you maintain those vehicles and trailers and also that you ensure that drivers driving those vehicles, abide by the, working hours regulations for truck drivers.

7:44 And you need to be able to evidence all of that information so that when you are audited by the DVSA, you can show that you are compliant. If you're not compliant, then you they can actually just take away your license and and stop your business dead in the water. So it's very, very important that, you have all of that information regarding your compliance. So that's our fleet compliance product. We then have, a fleet safety, group of modules. This includes cameras. If you are driving a truck into London, as of a few months ago, you have to have left and right sided cameras to make sure that you don't hit cyclists or pedestrians when you're turning a truck left or right. And we link that camera module into our incident data recorder. So it's very much like a black box that you have on, an airplane. It records everything that happened before, during, and after any kind of any kind of incident.

8:46 In this group, we also have a bridge strike avoidance application. There are approximately five bridge strikes a day on The UK roads. That's lorries trying to get under bridges, for which lorries too high. And, again, we have a module that, provides warning messages when a driver is approaching a bridge that that that vehicle can't actually fit under. We also have panic alarms and other door sensors, so a variety of different modules all aimed towards fleet safety. Our next our next group is planning and optimization. So if you have a five trucks in your fleet, then actually organizing the workload, what orders are going to be delivered by which truck, which driver is gonna operate that truck to make to meet his driving hours regulations and the remaining time that he has, what route that truck is gonna take to to make sure that they deliver within the prescribed windows for delivery.

9:48 All of that can be done generally by hand. If you've got 500 vehicles or 5,000 vehicles, that's an amazingly more complex, problem to solve. And we have a suite of software here that doesn't just plan all of that work, but then it optimizes it so that you're using the least amount of vehicles and the least amount of driving drivers and driving time, and, of course, that you're traveling the shortest distances to reduce and minimize fuel usage. This this product was developed in conjunction with Nottingham University. We own all the IP for it, but it's designed to operate a 100% in the cloud.

10:34 So it can benefit from huge amounts of compute resources and can, therefore, can come up with these plans far, far faster than the competition.

10:46 Once you have a plan and you know what how you're scheduling the work, you then actually have to execute that plan. And, again, once vehicles go on the roads, lots of things can go wrong. Vehicles can break down. They can get stuck in traffic. You can get delayed for a variety of reasons to to your delivery. Customers can reject orders for whatever reason. So there's lots of things that can go wrong once you actually start delivering things. And and, again, we have a suite of software here that allows you to automate all of those activities and actions that you have to take when things don't go according to plan. This is to make sure that you are being you know, you're able to do all of those things to ensure that you're communicating effectively to your end customer and that you're maintaining that high visibility of what's going on and also ensuring a great level of customer service to the end customer.

11:42 In order to be able to do that, you need to be able to talk to drivers or at least communicate with drivers. And here, we have our last grouping, driver connected mobility. So we have our own range of hardware as well as third party hardware, and, again, a suite of software that manages everything that the driver does from start of shift through to end of shift. So all the satellite navigation requirements, all the information about where he's gotta go and what he's gotta deliver, checking the items that that are being delivered in the right place at the right time, and, of course, also meeting all of those health and safety requirements to ensure that he's able to read and confirm all of the health and safety notes for any new site that he may drive his truck onto or operate on.

12:29 And what we often find is that customers tend to buy one or two of these products or groups of products when they first become a marketized customer. So very often, customers start to either on here on the left hand side with fleet performance or on the right hand side with driver connected mobility. And And then we have a dedicated team of sales and account managers that work with our customers to actually upsell new products. And we often find that, you know, nearly 90% of over 90% of our revenue in any year is actually driven not just by our SaaS revenue, but also by upselling new products and services to our existing customer base.

13:21 So the kind of benefits that customers can hope to achieve by using our products and services. Well, starting from the top left, by planning and optimizing, they can reduce the actual mileage that the vehicles travel. We have a suite of software through our telematics, programs that allow us to help drivers improve the way they drive vehicles. We have we measure over 21 different aspects of driving, and provide tailored feedback to drivers, to help them improve the way that they drive. And both of those things help to reduce the fuel that's used, and that, of course, that helps to reduce emissions.

14:06 And it and it's that it's those things that really help us achieve the green economy mark, which, we're rewarded when we when we listed on AIM. Of course, if you're driving less and you're driving vehicles better, then you reduce the wear and tear on the vehicle, so that reduces your maintenance costs. You also actually reduce accidents and incidents because drivers are are driving with far more awareness and preplanning of where they're going. And, of course, by reducing accidents, you also reduce insurance premiums. But, generally, what we're trying to do and what we're helping our customers do is improve that fleet efficiency and utilization, really enabling them to do more work, deliver more orders with the same numbers of vehicles and same number of drivers.

14:59 Everything is done in real time, and so by digitization, we we eliminate a lot of that paperwork. And that real time visibility of what's going on throughout an operation is extended out to customers, to the end customer, as well as to supply chain partners as well. So everybody gets a real time view of exactly what's going on throughout that transport operation, and that helps our customers deliver an enhanced customer experience to their end customers.

15:37 So our software is already global in the sense that, we monitor and, and manage assets around the world. In fact, we are in every single country around the world, including Greenland, including Antarctica even. So we have assets in every country around the world apart from North Korea. But we only have four offices around the world, so we are based in The UK. Our headquarters are in Nottingham, and roughly about 420 staff work there. We have a development support office in Pune in India, and we have about a 150 staff there.

16:24 And then we have two sales offices, one in Melbourne in Australia, and, again, another one in Marseille in France. And those are sales offices, so they are generally just salespeople and project implementation and support people. To give you an idea of the market sizes in each of those areas, The UK is about half a million registered vehicles trucks in this case. France is roughly the same size, and Australia is actually slightly bigger, about 640,000 trucks. If you look at our statutory accounts, you'll find that 90% of our business is classed as UK business.

17:09 Now it's a it's a bit of a misconception really because a lot of the business that we do is with a number of international organizations that happen to be in The UK. So it shows up as a UK transaction even though we're supplying around the world. So, for example, we sell to Tesco at at Tesco group level, but we actually deployed our systems in Thailand, Malaysia, all throughout Central Europe, including Hungary, and so on. And similarly, we also supply to Carlsberg, and Carlsberg is deployed all throughout Europe. One of our largest customers is JCB, and, again, that's classed as a UK transaction, although we're in about a 190 countries with JCB.

18:01 So when it comes to direct customers, most of our direct customers are UK based and hence why you get that you get that figure in our static accounts. But we do have direct customers in France and in Australia, and and this is where we see a lot of future growth occurring as we expand our footprint in those regions.

18:29 So just to give you some highlights of the twelve months trading period that we announced a week or so ago. So we won over 50 new customers. And, again, there was a range of customers including customers with, you know, 500 plus vehicles as well as smaller customers, but a good range of customers across a whole range of industry sectors. Our share of the grocery retail market, as mentioned earlier on, is 88%. And to give you an idea of how many assets we monitor around the world, that grew by 11%. So good growth even through quite a difficult and challenging period.

19:16 We launched a number of products. This is just a this is just two or three of them. So we launched our trailer brake performance monitoring solution. So this is a solution to help our customers monitor the brakes on trailers and ensure that we catch any failure modes before the fail the brakes actually fail. And this is our first bit of AI and machine learning software that we've introduced into our portfolio. We also, through our acquisition TrueTac, we also launched a number of software solutions for the passenger transport markets, so buses and coaches. And, of course, we continue to enhance all across our portfolio. So our ClearVision camera solution as well as our planning and optimization solution all added more features over that period.

20:11 Of course, post that period, we IPO ed in in late July. And shortly after the IPO, we also announced our fourth renewal of our contract with JCB. So this contract now renewed and runs through to June 2026. And just to give you an idea, JCB machines manufactured in June will have a five year contract, which means that we will continue to see revenue from those machines all the way through to June 2031. So real long term visibility of, future revenues there. Some highlights as far as numbers are concerned, and Bill will go into these in a bit more detail later on, but our revenue grew by 14% to 57,000,000.

21:07 Recurring revenue grew by 10 to 35,100,000. EBITDA grew by over a third to 7,600,000. Operating profit grew by 159% to 3,100,000, and PBT grew by 214% to 2,200,000. Cash remained roughly the same at around 10,000,000. So to give you an idea about market outlook, so there are some headwinds in the market in general. Driver shortages, you can't watch the news without hearing about this. Having said that, this is not something that's new to us. This has been around for years.

21:54 It has got a lot worse recently and has impacted a number of businesses and a number of supply chains, but the but the driver shortage continues to be something that a lot of our customers face on a day to day basis. The other issue is materials, particularly in terms of chip shortages. That's slowing down new hardware production and new hardware sales to to our

22:22 customers, but it's not stopping us. And both of these things, although these are headwinds, these are issues that we've been living with for about eight, nine months now. And so we we we are covering them in this presentation only to say that we are aware of these issues. They are headwinds. However, it's not changing any of our forecasts or expectations for our end of year results in December 21 because we've already been living through these for the last six, nine months, and we've catered for these issues as part of our forecasts anyway. On a more positive note, home shopping and ecommerce, is is an area that grew significantly, over COVID.

23:13 It's has no signs of of drawing back. We continue to see increases in home shopping and ecommerce. And, again, very positive for us in that driving more, requirements from from our customers to be able to deliver more goods, greater volumes of orders, and to be able to do them quicker and to do them for lower cost and, again, without impacting their emissions. So all of those things is really what our products is all about. Brexit also happened, but apart from creating some bureaucracy and paperwork requirements from our customer base, it hasn't really had any other impact.

23:58 Again, you know, Brexit has has meant that there's been a shortage of drivers, particularly EU drivers, but, again, has no real impact on us at all. So to be absolutely clear, we are still very positive, and we have a very, positive outlook going forward. And, none of the the news, etcetera, that you'll have seen in the press has had any impact on our forecast or expectations going forward. I'm gonna hand across to Bill now to cover some of the financial highlights. Thanks, Nadim. I'd like to start guys just by talking about our gross margins, year on year comparisons. We actually view our revenue and gross margin internally as either nonrecurring or recurring.

24:49 In this context, nonrecurring is hardware primarily, but we also have services, and these are onboarding services such as project management, any bespoke development, plus installation where commissioning the vehicles, that sort of thing. And just so you're year on year there, you'd see in the blue, our recurring gross margin grew from 73% to 77%. And in this context, our cost of sales is things like external hosting costs, mapping, and data time. And we've we're on trajectory on a gross margin enhancement program, and this is part of that. You'll see these four basis points improvement is all about whether renegotiating some of our relationships and really driving through some benefit.

25:40 Our nonrecurring in the Amber there, which, as I say, is primarily hardware, fell by three basis points in the year, and that was as a consequence of us having to

25:52 pay some premium pricing for some of those component shortages that Nadeem referred to. However, overall, as you see in the black, our gross margin overall grew from 57% to 58%. We are a SAAS business, and hardware is an enabler. So a lot of what we look at internally is is that recurring revenue. And this is just a chart just to show how our year on year growth has has moved. FY '21, our recurring software grew 10%.

26:29 However, what's not shown now in FY 'twenty, our year on year recurring revenue growth was actually 19%. And 19% is more typical of where we see the business and where the business has been in the past. However, COVID, especially people like JCB who had factory closures, just affected us last year. However, from an ARR perspective, our recurring revenue as at the end of June twenty was 29,700,000. Our ARR as at the end of June twenty one was 36.6. So we've actually seen a 23.3%

27:14 expansion in our ARR. So whilst that's not necessarily shown here, you'll see that coming through in future years. And also in the RNS, we mentioned one of our customers being Clipper Logistics PLC. That's significant contract for us, and they come on fairly late on, so that's not really in any of these numbers at the moment. P and L. Nadeem mentioned we grew our revenue £7,000,000 to 57,000,000 That delivered us an EBITDA of 7,600,000 You'll see there how we split the revenue. 38% of our revenue this year just ending with nonrecurring, I say, hardware, and 62% was nonrecurring.

28:02 However, 83% of our gross margin was recurring revenue. And point to note in admin expenses, there is our R and D expense. Traditionally, when we were reporting on The UK GAAP, we never capitalized any r and d expenses. All of that has just been historically expensed year on year. Now we're part we've had obviously implemented the international accounting standards. We do have to capitalize some software, but we do spend a considerable amount. We spend probably 7 to 8,000,000 a year. However, our auditors only allow us to to kind of record on the face of our accounts those R and D expenses that are subject to the R and T tax credit systems.

28:53 And therefore, it's norm we show normally around $5,000,005,500,000 However, 7,000,000, I'll just want to make on the 7,600,000 EBITDA.

29:05 As part of the road show, and I mentioned in the other slide, margin enhancement is something that's got a lot of focus on our business. And I did report to prospective investors that I would I have a target to kind of grow from our FY twenty five point five, which is at 11% EBITDA level to kind of 15% to 20% over the next eighteen months to three years. This the year just ended is despite the premium prices we paid on hardware was 13.3. So we are on that trajectory, and we'll see more of that in the future. Our balance sheet. Just wanted to highlight a couple of points here.

29:51 One, you'll see at the top there, intangible assets at 76,000,000. Just to give you some comfort around that. The bulk of that, some 72,000,000 of that figure was internally generated. Back in September 2018, I introduced a new Topco

30:09 over the business, and that was to enable me and and acted as the vehicle to enable me to do some share buyback in, obviously, preparation for the IPO and also to facilitate some plans that our shareholders highly were looking to exit at that point. So that enabled me to do that. So it's all our historic performance, obviously, moved up into intangible assets. With a couple of points to note, you'll see our trade and other payables, both current and noncurrent is quite significant. Just so you don't get alarmed by that, the bulk of that is noncash. It's actually deferred income from companies like JCB who pay us upfront.

30:54 And I think there's been some confusion with investors when I've said that. So just to explain what I mean by upfront, we we invoice JCB each month for the machines they've manufactured and deployed our solutions to. We invoice them both for the hardware that's gone on those machines and also for the recurring revenue contract aspect. That recurring revenue aspect is typically five years. So we'll invoice the hardware, and we'll then recognize the hardware as nonrecurring. We'll then invoice them the full five year term for that contract,

31:31 and we'll defer fifty nine sixtieth of that into the deferred income, and we'll recognize one month as we move through the contract. So we generate quite a lot of cash, which support the business' working capital up to this point. And as I say, that's where it's recorded. So please don't be alarmed by that. Another point I just wanted to note as part of the roadshow I did mention, which comes back to this top co I introduced in September 'eighteen. You'll see there at the bottom a merger reserve of 55,000,000. And I mentioned on the roadshow, I wanted to move that into distributable income, and that's what we've done. So you'll see that's now moved into retained earnings.

32:19 That's because at some point in the future, we do wanna start to look at issuing dividends. That's not on the plans in the near term because the whole purpose of the IPO was to raise funds for m and a. So we want to go through that program before we consider it. But the business is

32:36 very cash generative. So at an appropriate point, we will look to consider that. From a cash flow perspective, as Nadim mentioned, at the end of this year, which is obviously just before the IPO, our cash was similar around £10,000,000 However, you'll see at the top there, cash generated from operations actually fell from 8.9 to 6.9. Again, just so none of you guys get alarmed by that. That all relates to a timing issue. Our largest customer had put some changes to their product codes, and we agreed with that as part of the contract renewal. We simplify some of our product codes. So we've done that, and we invoiced the customer using those new product codes.

33:30 But there's a bit of an issue where they hadn't quite amended the back end of

33:34 their SAP system to accommodate that. So their system basically kicked out all our invoices because they didn't match. So that's what that relates to. It's not a performance issue. It's purely timing. And, yeah, he's to add a few weeks after year end, all those invoices have been paid. So when we come to our December results, which will be for the the full year, but it will be eighteen months, you know, you'll see that back into into normal. And just to bring everyone up to date with where we are post IPO, we raised, as Nadim mentioned, 18,600,000 of new money on the market, net of costs and combined with the money we had in our bankers. We've actually used that to pay down all our

34:24 debt in the business with the exception of the final deferred payment due to the former shareholders of TrueTac, which is due next March, and that's a million pound. So other than that, all the debt in the business has been paid down. We have currently circa around 10,000,000 in the bank. And I also have a 20,000,000 committed RCF facility with HSBC. Hence, why I paid down all the debt because I can take it back quite straightforwardly if there's m and a to to facilitate. And we are looking at currently, despite the distraction of the IPO moving straight to the results process, that hasn't stopped us looking at m and a. And we're currently going through, as you can imagine, it's a funnel. We're qualifying in and qualifying out opportunities.

35:17 We've also asked our teams in Australia and France who know their geography,

35:22 far better than us, to produce produce a wish list if they would like us to acquire. We've received that list, and we're currently moving through. So whilst I've nothing imminent to I'll be announcing to the market on m and a,

35:37 activities progressing at pace. And, you know, this time next year, me and Nadim will be bitterly disappointed if there wasn't one, if not two m and a opportunities that we'll have completed and integrated into the business. So that's a real high level tour of our numbers. I'll pass you back to Nadeep. Okay. So just to give you an idea about the market and where we are in the market. So if you look at this slide, it shows you a number of the companies that you may have heard of in the international landscape for for this type of solution. But interesting enough, you know, there are companies here like Cortex, which is another aim listed business.

36:28 I mean, Cortex, for example, do a lot of products in that fleet

36:32 performance segment, but they don't do anything in fleet compliance. Similarly, you have companies like Ortec or Descartes that do a lot of work in planning on optimization, but, again, they don't do anything in fleet performance. So what we find when we look across the landscape is there are lots of companies that do bits of what we do, but there isn't really isn't anyone that does all of the different things that we do. And this is really what helps us win win customers is because they can come to us and buy a suite of solutions that covers all of their operational needs and that is seamlessly integrated together, or they can buy point solutions from three or four or five different players and trying to work really hard to try and make them all link up and and work together.

37:26 And and that's really the reason why we win a lot of our a lot of our customers is because they recognize that they can have that one all encompassing solution that covers everything that they need to do. In terms of our market position, you know, since our IPO, we we continue to be very confident in our end to end offering. There's been no real changes in the competitive landscape over the last over the last few months. And as Bill mentioned, you know, we are looking at m and a activities as well as putting significant investment into continuing to develop products in house as well.

38:17 We have a very clear growth strategy. So we have lots of large existing customers who continue to get bigger, particularly in times like this. A lot of the smaller players don't survive and are swallowed up by large lots of our larger existing customers. A larger are also being driven by things like ecommerce. So, you know, our customers include DPD and Yodle, for example, who are growing, as well as Royal Mail who who are growing because of that boom in ecommerce. So we have structural growth that's that's helping us grow revenue from our existing customers. We also upsell, new modules and new products to our existing customers. And, generally, over a period of time, our revenue generated from existing customers grows, as they buy and take onboard new new products and solutions from from our portfolio.

39:20 Doesn't mean we stand still. We still acquire new customers. And, again, over that last twelve month period, we acquired 50 new customers, both UK and international. And although we have this very dominant, market share in large large fleets, we also have solutions for smaller fleets as well. And even in that sort of sub 100, vehicle fleet segment, we have a 22% market share. So we are continuing to grow across all of those different segments. So organic growth is important to us, and over the last ten years, we've grown by 400% just organically. But the key reason why we came to market was to help us raise funds for m and a. And we have some very clear view of the kind of targets we're looking for. So we're looking for targets that can add to our product portfolio so we can cross sell into our existing customer base and also sell our portfolio into the the the target to target company's own customer base and targets that can help us grow our geographic footprint. And so we you know, a lot of our customers are our direct customers are in The UK and and, really, we wanna grow that that internationally and trying to replicate that huge market share that we have in The UK doing that in other geographies.

40:46 So we are really looking for companies that meet those two criteria for acquisition. So just to summarize, you know, we've we've talked about a number of headwinds. However, despite that, we are confident of meeting our market expectations for our next period through to December 2021. Longer term, we're still very confident in our portfolio and, in in our operating model. And, you know, we see that there are other forces that will continue to push our market segment to be able to do more, deliver more, to deliver it faster, to deliver it more cheaply.

41:31 And, again, that's what our portfolio portfolio is is aligned to do. So very confident about our future as a business. And, of course, also important to note that I didn't sell any of my shares as part of the IPO, and I continue to be the largest share majority shareholder within the business. And part of the reason for that is because I, personally, am very confident in the future of this business and where it's going. So that's that's the summary. So I'll hand back over to our our hosts. Fantastic. Nadine, Bill, thank you very much indeed for a great presentation. Thank you for that. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. Just while the team take a few moments to review those investor questions submitted already, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard on the Investor Meet company platform.

42:29 I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Nadine, Bill, before we go into the live questions, we've had quite a few come through. We did have a couple of presubmitted questions. If I may just read out the first one. It reads as follows. You have a dominant market share in your core fleet market. Please, could you highlight the optionality of the business outside of this and where you intend to allocate capital? Okay. So you're absolutely right. We, you we do have a very dominant position in The UK, but we see that we've still got growth to happen in some of the smaller fleet segments. And and, again, we are growing in that space with some parts of our portfolio that's been tailored more towards that that smaller fleet segment. And, of course, international growth is is where we see our biggest opportunity.

43:25 You know, we're trying to replicate that market share market share that we've got in The UK and trying to do that in other geographies, particularly in in France and in Australia. So we still see lots of growth still to come in all of those areas. Fantastic. Thank you very much. The next one reads as follows. What are the plans for your JV with the Zebra Technologies? How much will it move the needle? Okay. Well, I think there's some confusion here because we don't have a JV with Zebra Technologies. We are we are one of a number of resellers of Zebra hardware as well as obviously supplying our own hardware hardware too. So so I'm not quite sure where where that particular question has come from, but there is no JV with Zebra.

44:15 Thanks for clearing that one up. And the last one we have here is, it seems that you run your SAAS platform. How is it provided? Is it colo or fully in house? And given you wish to expand to other geo geographics, how will this have the flexibility support wider geographies and their different data and security regulations? Okay. So, yes, we operate out of two data centers, one in East London, one in West London. They are colocation, so we hire the suite. But all of the hardware and equipment belongs to us, and, of course, we are we we're responsible maintaining and supporting all of that. Having said all that, we do also have some of our applications run-in AWS as well as Azure. And, you know, overall, we're fairly agnostic.

45:03 You know, we we operate a lot of applications on our own data sets because that's the most cost effective way of doing it. Equally, there are some applications that run-in other cloud providers because they're more appropriate to do to do that in in in in those environments. We have, I say, two of our own data centers as well as access for AWS and Azure. So we have a very a very strong position as far as Doctor and disaster recovery is concerned and resilience. And, of course, you know, we we meet all the different security standards that are required by our customers. We are at NICE, so 27,001 accredited business. And we also do a lot of work in in in the government sector and and military sector. So, again, security is quite key and important in all of those areas too.

45:55 Fantastic. Thank you, Nadim. And if I may, guys, just ask you to click on the q and a tab and just where appropriate to do so, perhaps, you start can at the top, work your way through. Just read out the question, even who it's from, give you a response. That'd be great. Thank you. Okay. So the first question was from Andrew g. So do you lose market share to Blue Yonder illuminate transport transportation? How do you position against it? Well, actually, you know, in The UK, certainly, our market share continues to grow. We have that very low churn rate of sub 1%, so we're not really we're not really giving away market share at all. And, generally, we we compete with businesses in very much the same way. We have an extensive portfolio that covers all of the operational needs of our customers, and it's and it's seamlessly integrated.

46:43 So they through one window, one to their operation, they can see everything that's going on in real time. So so, hopefully, that covers it. The next question is from Andrew c. It says, can you say a little bit more about the move to electric vehicles? You're doing a lot of very engineering to your solutions for vehicle diagnostics and driver behavior, and could the move to electric damage the company's opportunities? Well, it's fair to say we've actually been in with involved with electric vehicles for about eight years. So it's by no means anything new. We have lots of customers that have electric vehicles. And and the other important thing is that we don't just operate with electric, you know, with electric vehicles and and diesel vehicles.

47:31 We also have customers that operate with gas vehicles, LNG and CNG gas, as well as hydrogen too. So we've been involved with a number of trials over the over a number of years looking at all sorts of different types of fuel technologies. And, you know, our software already sports our software already sports a number of those technologies. So it's not something that we're afraid of. In fact, we wholeheartedly embrace it because it's all part of the the work that the industry needs to do to move away from fossil fuels and, you know, help reduce greenhouse gas emissions. Next question from Thierry is what will be the impact on your business of the move away from fuel? And I think we've answered that question as well. We see we only see those as positive things, and and in fact, we already support a lot of those alternative fuels. So so, again, we don't really see that as an issue for our business.

48:31 Could you comment next question is from Andrew c. Could you comment about acquisition opportunities? Is this an important drive for growth, and what might they look like? Well, I've hopefully, answered that question in the earlier slide that says that, really, we're looking for companies that provide complementary products and technology that will enhance our portfolio and that will enable us to sell that into our existing customer base. That's the kind of the businesses that we are looking for. And, yes, generally, the idea is that it should be fairly trans transformative in terms of size. The next question from SAPP says, when customer buys new trucks or when you acquire a new customer, do you send out your own engineers to install the kits in the trucks or do customers install the kit themselves?

49:23 Generally, it falls into three groups. So we have OEM customers, people that make vehicles, and and and they tend to to install our equipment directly on the production line. So, again, we're we're supplying just in time for for production line fitment. We have other customers that fit it themselves. So these are these are what what are called bodybuilders that are there that take vehicles and actually change the frame or add other sensors or other equipment on before delivery to the customer. So a number of our large customers actually order vehicles from their dealers or suppliers with our equipment as part of the specification.

50:08 So we supply to the dealer who then installs it and delivers it to the end customer. And then thirdly, where we are supplying equipment solutions to fleets that already have where the vehicles are already in situ. Again, the majority of those installations are carried out by our own engineers. Where there are peaks in demand, we do subcontract that to to third parties, but approximately 70% of of those installations are done by our own engineers. Next question from Donald g about Eurowag is currently undertaking IPO. Are they a competitor? The the short answer is is no. We've never come across we know of Eurowag, and I I know of Eurowag certainly, but they're not a competitor. We have never competed against them in any bid that we've done that I know of in the last seven, eight years.

51:03 So, you know, it's another business that operates in the same kind of market segment. And we also, as MICROLISE, we also have integrations with a number of other fuel card companies and another other providers in that fuel card space. But, no, we don't see them as competitors. Next question from Andrew g. Running a data center in London must be expensive due to the high cost of land and electricity. Do you consider cheaper alternatives? Actually, it's not that expensive, and part of the reason to run it in London is for the connectivity. Remember that we're we're integrating to a to systems worldwide. And by operating through London, we have access to some very fast connectivity all around the world. And so that's the other good reason for for operating London, and and it's not significantly more expensive for us.

52:00 And the last question from Damien c says, now that software development costs are to be capitalized over, what period will you amortize these costs? Well, we we aren't really you know, our our policy regarding capitalization of software development remains the same. We are going to have to do some capitalization because we've obviously now moved to the IFRS standard and and hence that means that there will be some capitalization that happens. But I'm gonna I'm gonna see whether Bill wants to answer in that question in any more detail. Sure. Our auditors are constantly on our back. They want us to capitalize a lot more. We've resisted it thus far, but it is an agenda item.

52:48 So it may well be something we do do in the future that goes beyond simply the requirements of the international standards. But at the moment, we'll just do the minimum of what we need to do, and we'll look to amortize that over a three to four year period. We're still working that through with our auditors, but it certainly won't go beyond that kind of time frame. Okay. Well, that's it. Nadine, Bill, thank you. You've asked answered every single question we've had through. So thank you very much, and thank you for the attendees for submitting. And if there are any further questions that do come through, of course, you will have the ability to review those post events as well. And just on that basis, Nadim, perhaps I could ask you for a closing snapshot before I redirect investors to give you some feedback, please. Sure. Thank you. So to to to summarize, you know, we've produced some interim results here that we think are pretty good given the the actual twelve month period that they cover. There's been challenges with multiple lockdowns, furlough, you know, the COVID ping as well as Brexit. And, you know, thanks to all of our staff who have been working diligently throughout that period as as, you know, we've managed to produce some some some great results and continue to show growth both top line and bottom line.

54:10 And I think we're well positioned for continuing that trajectory going forward. So thank you very much for your time, everyone. Thank you. Fantastic. Nadine, Bill, thanks again for updating investors today. Could I please ask investors not to close the session, which will be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of MICROLISE GROUP PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon.