Nexteq (LSE:NXQ) — Quixant PLC FY21 results

0:01 Good afternoon, and welcome to the Quixon PLC Full Year twenty twenty one Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Simply click q and a, scroll to the bottom, type your question, press send. The company may not be in a position to answer every question received during the meeting itself. However, company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Johan Olivier, CFO and John Jiao,

0:31 CEO. Good afternoon. Thank you very much, and thank you to everybody for dialing in. Good afternoon to you all. So I'm just gonna start off by, painting a picture in which we had a much stronger and improved trading pattern through 2021. And that was driven by strong recovery in market demand, both from existing customers and through new business conversion, which were key drivers behind a good level of demand in the year and a strong order book as we enter 2022. One of the characteristics in the year which defined a lot of the technology markets was the supply chain challenges and the component shortages. And we took decisive action at the beginning of the year in January to mitigate against those through strategic stock purchases.

1:18 And I'm pleased to say that had the effect of mitigating the worst impact on our business and on that of our customers. And that meant we were able to deliver, during the year, broad based double digit revenue growth, and we'll go into a bit more detail shortly around what that looks like. We entered the year and ended the year with a healthy balance sheet and continued to hold a strong net cash position during the year and exited the year at a run rate on revenue, which was at pre pandemic levels. So significantly improved trading performance through 2021. Just a a short recap on what we do. So Quicks and PLC is a technology business, and what we seek to identify specific vertical markets in which we could focus and develop technology which has a a much better alignment for the needs of those markets.

2:06 We first deployed this strategy within the gaming sector where we brought to bring out a bespoke computer platform solution, which addressed the unique needs of the casino gaming industry. And that combines hardware, software, and mechanical elements to the design, which makes it a well well aligned product for the casino game machine manufacturers which write the games. And that meant that they can increase the level of r and d efforts spent on game design, which is the most critical aspect of their of their offering and is what makes players play their machines over their competition. We see other opportunities, however, where we can adopt a similar model to design bespoke solutions in other markets. And in order to execute on that strategy to diversify to new focus markets and move up the value chain within those sectors, we acquired Densitron in 2015.

2:57 And it's got a very long pedigree over fifty years of supplying industrial display products into global customers. And through that, we've identified other vertical markets alongside gaming where we can deliver much higher value product offerings into those sectors. We're an IP generative company. We've got 22 patents that have been granted and seven under application, and we've got 28 registered trademarks within the business. A company of of significant global scale, so two twenty employees that are split across nine countries of operation and customers in 50. So a a global business really at its heart despite the fact that you see a UK listed company within it. So I talked about the gaming business and what we do. So on the left hand side of the slide here, you see an example of one of our customers' machines with our board installed in the back of it.

3:49 The orange box is what we what we supply. The reason why we believe that we're a compelling a compelling supplier for our customers is we align their investment with their commercial benefit. So the investment they make into r and d goes into without quits and put an in source solution, the computer platform, the camera design, and the game development. But, actually, the game development is really the main driver behind our customers' commercial success. It's what drives the player attraction retention. And so when they outsource to Quitsum, what it means is their computer platform r and d cost is is really quite low. And instead, they can focus much more of their r and d budget on game development. The gaming market is large. It's an addressable market, which we estimate to be over $1,000,000,000.

4:36 There are some very major players within the market, which we have business with in all cases to some extent. And globally, the replacement cycle is about 4% to 5% of the total installed base of 9,000,000 machines. And this was pre pandemic. It has been lower for the last couple of years as we've seen the recovery, but we've seen a strong rebound in 2021 of demand. And an average lifetime of a physical machine is three to five years. And

5:02 during that time, there would be several game upgrades that the customers would provide to the casinos. So on to the Dentistron business. Dentistron is an industrial display components business at its heart, and that's what it's done for the last fifty or so years. That's a very big market, over $6,000,000,000 of the sector, but it is very highly very, very competitive. So it's a highly competitive marketplace. And while we serve, it's a very diverse range of customers within the sector. It's the competition means that the ability for us to generate good margins in it is is compromised. However, what we identify through that is vertical sectors where we can focus. In the broadcast sector, we saw a an an evolution of broadcast technology towards ever larger, higher graphical display products and also with the need to have computing behind those products. And in some cases, adopting touch screens in these was was unfavorable given the the lack of tactility.

6:03 And we've also innovated to add tactile objects to the front of those touch screens, which makes them really, we believe, unique in nature. And and therefore, we can charge high unit prices and also high margins to the customers for these for these bespoke products for the broadcast sector. And and finally, we also evolved in broadcast to offering a control systems where we add software to that mix. We acquired a business in 2019 called IDS. And through that, we actually offer control room solutions for a range of broadcast customers, some of whom are some of biggest corporations in in in in the business. So people like the BBC, travel for Sky utilize our broadcast solutions as part of their part of their control rooms. So really exciting business within Dents and Front to move us into other vertical markets alongside the success that we've seen in gaming.

6:51 I'm going to hand you over to Johan now, who is going to take you through the 2021 financial results. Thank you, John, and good afternoon, everyone. As we turn to Slide seven, the financial highlights for the group for 2021 compared to 2020. And as John noted, an improved performance from the group. Revenue of $87,000,000 up 37% year over year as we've seen increased demand from our customers across both our divisions. Good growth in gross profit and adjusted profit for tax meant that we were able to grow adjusted diluted earnings per share to $0.59 significantly ahead of 2020. And then we've continued to generate cash from operations of 4,400,000, 10% up on the on the previous year despite making investments in our working capital, specifically strategic stock to secure product and meet customer demand.

7:48 And then the group continues to have a healthy balance sheet and good operational liquidity. And at the end of the year, we were in a net cash position of 17,600,000 As we move on to Slide eight, and it's just a more detail about the group revenue. As the chart on the top left shows, good growth over the last eighteen months, accelerating into the second half of twenty twenty one with $50,600,000 of revenue, 39% up on the on the first half, and also the highest half year performance that the group has delivered since the second half of twenty eighteen. And while absolute revenue growth is is a goal and objective for the group, What we also wanna build is a is a healthier, more diversified revenue base. And the graph on the on the bottom left shows our revenue from our top 10 customers as a percentage of our overall group revenue. And as you can see, that that has the the revenue base has diversified over the last few years.

8:50 That's been driven twofold. One, by diversifying the diversifying within our our gaming customer base, going to more gaming customers with as we enter new markets and release new products. And then also through the consistent growth of the Dentitron division, which by its nature is quite diversified. And this is a metric that we continue to focus on as a group in the coming years. Slide nine shows our revenue performance by division. And if we start with with gaming on the left, you can see in the in the first half of twenty twenty, the impact of the closures of casinos due to the COVID pandemic had on our gaming revenues. Since then, we've recovered, and that recovery has accelerated through the second half of the year with revenues of $28,900,000 up 57% on the first half of twenty twenty one and the second half

9:46 of twenty twenty. That was, as I mentioned earlier, not just driven by an increased demand from our existing customers, but also new business wins from new markets and new products. Dentaton on the right was more resilient through the pandemic and a relatively smaller decline in revenues. So it's good to see consistent growth from Dentaton in the last eighteen months, accelerating to $21,700,000 or 20% ahead of the first half of the year. And for the year as a whole, Dentitron delivered $40,000,000 of revenue, which is the best performance that this division has done since since the acquisition in 2015. And this was due to, in part, good demand from our customers, but also reflects some of the operational improvements that we've made in Denton over the last couple of years.

10:41 We've centralized our supply chain and procurement in Asia, and that's meant that through 2021, despite some of the supply chain challenges, we were able to deliver 95% of orders on time to our customers. Moving on to Slide 10 and gross margins. So in 2021, we delivered gross margin of 29.7%, 170 basis points lower than the previous year. And the principal reason for this was the component price inflation and in the second half of year, higher freight costs that we've seen due to the supply chain challenges and the broader supply chain issues in the market. Structurally, there's been no change in our sales margins.

11:27 We've we've taken action to mitigate the component price inflation by by passing on price rises to our customers. And once supply chains normalize, we we see no reason why our gross margins won't return to the levels that we saw in 2018 and 2019.

11:50 This slide shows our profit before tax progress in 2021, going from 1,300,000 in the previous year to 5,400,000 for 2021. The principal reason for the increase being the the higher sales volumes, which added $7,300,000 profit at 2020 margins. That was partially offset by the the lower margin rate that we that I mentioned in the previous slide. We also had some FX headwinds due to the weakening of the US dollar in 2021 compared to major currencies. We've taken action in terms of hedging against further movement, and so we don't expect that inclined to to to be a risk again. And then finally, our overheads increased by about 700,000 year over year, principally as we've invested in our people to to support the business growth.

12:42 We've seen some cost inflation in the second half of twenty twenty one and and expect that to continue through 2022, principally around wage inflation as as it's been reported by many, many companies across the world. We've taken action to mitigate against those those factors. And then the graph on the bottom left shows profit before tax as a percentage of revenues. And what it shows is in 2020, we've started that recovery from the COVID impacted margins of 2020, and we expect our profit margin to continue growing as we we grow our revenues and we benefit from the operational leverage that, that brings us. And then finally, this slide just shows the movement of cash through the year. As I mentioned earlier, net cash of $17,600,000 at at the end of twenty twenty one.

13:34 We were able to generate cash flow from operations despite the investments in in working capital. Those investments was principally around strategic stock investments, and they supported our revenues in the second half of the year. So it's going to be a a good decision by the board to make that investment decision. Looking ahead looking into 2022, those supply chain constraints have remained. And to secure key components to meet customer demand and drive further growth, we expect continued working capital investment in 2022. Beyond operating cash flows, we also continue to invest in new products with $2,000,000 capitalized in 2021.

14:19 And we also paid a dividend of 1,800,000,000 in the year. And for 2022, the the board has recommended dividend of 2.4p or $2,100,000 to be paid in the year, which reflects the board's confidence in the group's prospects. And with that, I'll hand it back to you, John. Thanks, Johan. So I'm gonna talk to you now just a bit about the gaming market, and in particular, what's been going around in the sort of the end markets that our customers apply into, which which are the the casinos of the gaming venues. So the The US gaming market is is the most important for our business and represents, from our customers, about 60% of the the the quicks of business from those US from those US gaming customers.

15:07 In in that market, there's been a very, very pronounced decline through the second quarter of twenty twenty as the pandemic weighed and caused casino closures across The United States. But very quickly, you saw a stark recovery in the third quarter of twenty twenty as the restrictions started to ease. And really, from there on in, it's been a consistent improving trading pattern for our for for the casinos revenue. And actually, incredibly, in 2021, the commercial casinos in North America were were reporting land based revenues that were 10% higher than they were pre pandemic in 2019 and sixty eight percent higher than they were in 2020. So the sort of the health of The US casino market from the point of view of our of our customers' customers is is extremely good.

15:56 That means that our customers are seeing more demand from their customers, from the casinos, and and therefore, that filtered through to elevated demand for our products from our immediate customers. So a really strong recovery in demand from The US casino markets. The European land based market recovery has been much more muted, and and the principal reason behind that is that the vaccination programs weren't in place through lots of 2021, but now they are. We're expecting that to reduce the level of restrictions across many European countries. And Europe is our second biggest territory in which we do business. We expect to see a decent recovery in the European Gaming and Betting Association. It is predicting that sort of start recovery to more normal revenues in 2022.

16:45 Asian markets, which the biggest of which is Macau, continue to remain subdued due to COVID. However, the the Asian market, in particular, Macau is not a particularly large slots market. So it's a very large table games market. It's a very big market in terms of revenue based on its its performance pre pandemic. However, in terms of the addressable opportunity for our customers, it's relatively small because it's it's a table games focus, and there's not that many slot machines installed in it. So sort of the the gaming market recovery, really, The US are performing really well. Europe, a bit more muted, but we could promise for 2022. Asia and the Macau market, which isn't the key part of the drivers behind our business, a lot more a lot more muted in performance.

17:33 And and, you know, with with that, what have been the growth drivers for the last year? So we set aside three key targets through 2021. One is, really importantly, retaining our portfolio of customers that are already doing business for this secondly, around converting new customers to outsourcing their computer platform technology to us and thirdly, to generate new product category revenue by supplying more of value share to our customers than we were already. And I'm really pleased to say in all three areas, we've made good progress. So the first is, and by no means the least, is we've retained all of our existing customer base and going in through the year. And in a year where there was significant disruption around supply chains, and we tirelessly work to try and mitigate the effects of that, that really is a very strong achievement, and we're very proud of of of keeping our existing customer base intact.

18:24 But also, we saw opportunities where customers that we're already working with were giving us leads into cross selling our products into other divisions of those existing businesses. So that's a that's a really sort of good opportunity in which we can, you know, demonstrate that our handling of the COVID crisis has been has been effective and and hopefully has given us opportunity for new business within our existing customer base. And we supply just over 40,000 computer platforms in the year, which is considerably up, nearly double what we supplied in 2020 and and pretty much the same level as we supplied in 2019. So a really good performance from our existing customer base during the year. But we also managed to convert new customers to an outsourced model. And actually, there were 10 new customer wins, which entered production in 2021.

19:14 There's three of the names that are on the slide there, and we expect further growth from these in 'twenty two as they continue to ramp up in their production volumes using our products. And we also saw new business opportunities arose simply because we had a better availability and better lead time than other vendors. And and I'll explain some of the the things that we were working on during the year to try and handle the the component shortages with with with practical steps that that that made a difference. And finally, we've talked in the past around our self-service betting terminal opportunity, so where we supply self-service betting terminals as a complete product to customers to enable them to put their sports book into bricks and mortar betting venues. And and we had a slow start having had the pandemic in 2020. However, I'm pleased to say that we've made our first deliveries of those self-service betting terminals for field travels, and so we're very pleased with the progress we're making in that area.

20:12 So much so that we also have launched our second cabinet product, a video lottery terminal, which is for electronic gaming machines. And that really moves us from just being a computer board vendor to provide turnkey cabinet options for customers that are looking to fully outsource their hardware their hardware to us. And in a world where hardware is so difficult to do given the supply shortages, we believe that would be a compelling option for many customers to consider. So on to Densitron. As Johan said earlier, we've had a record revenue performance from Densitron since the company was acquired late in 2015. And that builds on the resilient trading pattern that we saw through the pandemic due to the diversity of the business and and the strategic positioning of the company focusing on the broadcast market yielded results and delivered its second consecutive year of double digit growth with broadcast sector growing

21:07 21% year on year. But that's not the only growth within the business. There's also broader growth across multiple other sectors within Densitron. So a really strong period of progress and really reflects the hard work that's gone into the company over several years as we try to reposition it, improve its operational efficiency and strategically align it to certain key markets such as broadcast.

21:30 If we during the year, we continued the innovation and product development agenda that we have and launched and filed patents for our rotary rotary coders. These sit on the glass of a touch screen, and what they enable is broadcast manufacturers making broadcast equipment to adopt touch technology for the best parts of touch, but put mechanical controls on the front of the glass for the areas that need to have tactility and are mission critical in nature. So these these rotaries are totally reprogrammable

22:03 in terms of what they do because they are sat in the active area of the touch screen. And so in one function, they may be a volume control. In another function, they may be a menu selector. They're a totally reprogrammable object, and we're really excited to be demonstrating these technologies for the first time publicly at the NAB show, takes place in Las Vegas later this month. And that will be the first time we've been able to demonstrate these at a trade show because clearly, for the last two years, they've not been taking place. We we also certified our popular u ready two u panel for mass production. This combines, in some cases, a tactile overlays, but but a computer of of of different specification with a touch screen, really nice display, and can be used to to control broadcast equipment that is installed in equipment racks. So two two exciting product launches we've had during the year, and we believe those are compelling for future revenue opportunities for the broadcast business within within the group.

23:02 So so going forward, want to explain a bit about what we see the broadcast opportunity be. So the first thing is this customer, Grass Valley, is a really prominent brand within the broadcast industry, and it's going through quite radical change as a company. So following the sale of the business to private equity, it has been increasingly focused on generating SaaS revenues and software revenues rather than doing you know, generating hardware revenues and doing hardware RFP. And so as a result of that, we've seen this customer partnering with us to generate a a new advanced route to control panel. And what that replaces is what you see at the top of the slide, which has got lots of buttons, a a a monogram display, quite a bulky set of electronics behind it. And what we've replaced that with is a touch screen with a small simple computer in the back of the, in the back of the touch screen connected to the network, which then controls a cloud based video switcher.

23:58 And that means that there's no longer that need to have some bulky equipment in the rack. It's all centralized in a in a in a data center within the broadcast studios. So these these control panel solutions are just an example of where the market is going. It's going away from buttons. It's going to larger screens with graphics and and adopting touch technology whole scale. And these these control panel solutions have entered mass production in the last part of 2020, ramp three last year. So it's a real life case study of what we see as the broadcast business opportunity.

24:32 So the group's growth strategy is simplistically, we identify and target specific market verticals where there's a technology evolution that's occurring, and the and the vendors to those verticals currently don't have specialist solutions or expertise as outsourced providers. They have a generic product, which they try and target across multiple verticals. We we do that a bit differently. Secondly, we try and acquire market acquire customers in those markets and increase our share of the customer wallet by providing additional outsourced solutions within those within those verticals. That requires us to undertake R and D activities. And sometimes, we may complement the organic growth with strategic acquisitions, which add to our product set and our market access. And during the year, we made good progress in all of these areas. So we delivered our second consecutive year of double digit broadcast growth, which is around how we identify and target additional markets.

25:26 We entered new revenue from customer wins in gaming and Dentitron, which is driving the business growth. And we also launched our first half orders of our

25:34 new gaming cabinet products, which moves up the value curve within the gaming sector. Our Tactila product range was launched and patents will file for it, which which is way where we do additional R and D effort to increase value of our products. And we've got a really good position to be able to seek additional acquisition through the robust balance sheet and the cash position that the company has at the year end. So supply chains were really the biggest headwind that most technology businesses faced during the year. And the slide here takes you through exactly what was happening through the year and what we did about it. It. So in normal times, there was a sort of a typically, a sort of a four to six week lead time for component parts, and we were holding about three months' worth of inventory.

26:23 And in the fourth quarter twenty twenty, we saw the first evidence of supply chain shortages creeping into component markets. And really, that got worse and worse as the year went by. So component lead times start to spike out twelve to sixteen weeks in Q1. In fact, in Q2, we weren't getting any lead times quoted. We weren't getting any delivery dates. And then finally, by Q3 and Q4, we started to get extended lead times at sixty to fifty two weeks. So as I said at the beginning, the Board took very decisive action early on in the year to approve a strategic stock purchase program, which started at $5,000,000 and was extended to $7,000,000 in the second quarter of the year, and we've continued to roll that program through the second half of 'twenty one and into 2022. And what that means is that we've been able to buy or we've been seeking to buy parts to buffer customers from the supply chain shortages.

27:16 So we're we're ahead we're advanced purchasing stock. We have good inventory levels, which enables us to continue supply. And that's really one of the key reasons why in the second half of last year, we were able to deliver a strong revenue performance is because we had a good inventory of components. But we also worked with customers really early on in the year to be transparent around the problems and to work with them around component substitutions. And what that meant was an intense load of engineering effort between us and our customers to redesign products with alternative parts, with second sourced parts so that they they could continue to manufacture their machines and their electronic equipment. But also, it meant that we were able to, you know, to have alternative supplies, which meant the pricing impact was mitigated.

28:01 And through the year, we also worked with our customers to increase our prices on several occasions, four times through the year and into 'twenty one and into the first quarter of twenty twenty two. And really, these price increases are enough to protect in the longer term our better materials against the inflation that we see coming through in the input stocks. We're not looking to increase prices beyond the level at which we see input stock inflation. It's all about just trying to protect our margin. So whilst, as Johan said, we've seen pricing pressure, and that's had a degradation on gross margin through the year. Over the longer term, we're very confident that our structural gross margin will remain intact once these price increases start to filter through our P and L. The board takes very seriously its responsibilities as a good employer and as a good corporate citizen and assigned off a corporate responsibility strategy in which there are measurable annual targets which are set for the company to adopt, which improve performance in the business across environmental social and governance governance matters.

29:05 And we made good progress in all of these areas during the year. We tried to get our staff vaccinated if they wished, and, also, we got our suppliers to sign up to a code of conduct to ensure that they are operating as as good supplies to us and looking after their teams. We also try to improve our environmental agenda by making it easier to get to the office environment through environmentally friendly means. And we've undertaken significant work around corporate governance to improve our performance in that area. So ESG, the board considers very importantly and has a standing agenda item in every board meeting in which the ESG agenda is discussed and that we track progress against our annual targets. So in terms of outlook, we've signaled the fact that we've got very good customer demand, strong new and existing customer demand, which is driving an order book, which is ahead of the current year's revenues in q one twenty twenty two and ahead of the order book we had in the prior year in 2021.

30:09 So customer demand really is is is exceptionally strong right now. That's really only mitigated by our ability to supply it, and component supply and inflationary pressures are expected to persist through 2022. And while they're mitigated by the extent of our supplier relationships, and I don't underestimate that point. We've worked tirelessly with suppliers and treated suppliers, I hope, well. That means that we've got good relationships with our suppliers, and they allocate us parts on a favorable basis. And also that we've deployed working capital that supports the future growth of the business. And we've been willing to have that. We've had the ability to do that because of the strength of our balance sheet. So we're well positioned for a diversified revenue and profit growth as we ramp up new business.

30:56 And longer term, we're very excited by the outlook for the company, which is backed by strong market demand, a well established and probably strengthened customer relationship and a a level of product innovation and domain expertise, which I believe is unrivaled and gives us excellent positioning for a sustainably long term growth prospect. That's the the presentation. Thanks very much. Fantastic, John. Johann, thank you very much indeed for the presentation. 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 company take a few moments to review those questions submitted today, I'd like to remind you that recording this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see, we received several questions throughout today's presentation, and thank you for everyone for submitting those.

31:46 If I could just hand back to you both just to read out the question where appropriate to do so and give you a response, that would be fantastic. Thank you. Thank you. So we've got three questions that have been asked. The first question is the operating expenses look reasonably static. Will this continue with increased revenue and drive gearing? How much of the forward order book can you typically see at any one time? So we'll pick that up in two parts. So in terms of the operating expenses, we are expecting to continue investment into the business. So we aren't expecting a completely static operating expense base. That will be partly because of inflationary pressures, which we're seeing across our staff in particular, but also because of investment into future growth in new markets and new products. However, it is fair to say that we are expecting expansion on our profit before tax margin as we go forward.

32:38 So the profit before tax margin has been in the teens in the past, and structurally, we believe that's very achievable going forward in the future. So operating expenses will be up, but we expect an operational leverage to drive additional percentage profitability on a PBT basis. In terms of the forward order book, we are tip we would typically have sort of three to four months' worth of orders. We have a larger level of visibility of orders right now, and that's unsurprising in the context of the lead times that we're we're quoting customers because of the extension in supplier in supplier lead times. So hopefully, that was answered. Just gonna get the second question. So the the second question is another company has an organic growth strategy. Can you expand on potential new verticals you're looking to enter and the market opportunity?

33:33 So the first one I can talk to is around the broadcast sector, which I've described. Really, the broadcast sector is all about the transition from mechanical control to touch and how do we enable that trend to occur. It's it's more complicated than just that simple transition to put a glass touchscreen in front of a control panel because it's also about how do you drive that touchscreen. Suddenly, need to introduce computing to it. You software need to make that touch screen have something on the screen behind it. And then you also need to have this tactile area where you make the touch screen more accessible and usable in an environment where there's mission criticality, which in the professional broadcast world clearly is a is a very mission critical area. So the broadcast is is one area. One of the one of the wonderful things about the Dentistrop business is the the breadth of sector exposure that it has. So it's exposed to multiple other markets, the medical market being another significant one within within its sector base.

34:28 And so what we try and identify is where what we try and identify is where in those sectors that it supplies product, there is a trend occurring. So we're listening to what customers are saying. We're looking at what the customer's technology needs that they're submitting RFQs to us for. And we then try and understand whether there's something where we can participate and do a more bespoke and unique product with services and market better and hopefully then allow them to outsource part of their infrastructure to us and therefore to to become a more competitive player in the marketplace and focus their core competencies on things that matter the most. And then the third question is how has Tactila been received by customers, and what revenue do you expect this to deliver?

35:18 So Tactila has not been in front of customers publicly yet. So it's a new product that we are launching, as I said, at the NAB show. We have had it on the website. We have had data sheets and demonstrators out, but it's one of those things where you really need to feel it to to experience and to understand how it has a value to to your product offering. So the reception that we've had so far is good. It is a product which people need to understand how they can use it or think about how they can use it to change the user experience. And in terms of the the the applications and the sizing of that market, in the broadcast sector, we see a a a significant opportunity for growth of our display control surfaces, But also, actually, Tactile has widespread application in multiple other markets. So really any market in which you have the need for a physical object, which is reprogrammable in nature that can be used to control equipment but still has that level of precision that you need, Tactile has a has a an option to be used or an opportunity to be used. So we believe whilst there is a significant revenue available for Tactile and Broadcast, actually, there's a much wider opportunity in other sectors. And through the densitron supply network, we have the opportunity to get in front of those other sectors.

36:39 That's fantastic, John. Thank you. You've covered all those questions that we've had through. And of course, there are any further questions that do come through, the company will have the ability to review those. And we publish responses where appropriate to do so on the investment company platform. John, perhaps if I may, just before redirecting investors to provide you some feedback, which I do know is particularly important, if I could just ask you for a few closing comments, please. Of course. Thanks very much. So just in summary, we've talked about the demand in the business really being extremely good right now, and we've managed through the supply chains, I think, in a way in which we've been resilient and been able to look after the needs of our customers to the best extent possible in circumstances. So we've we've got a proven investment case, which we believe is compelling, and we've been able to deliver products which have got high value to them to certain key markets, gaming and broadcast being two notable ones.

37:33 We've got a significant, you know, installed base within those markets. And our products, the combination of the hardware, the software, and the and the and the regulation within the markets offer a a barrier to entry for competition, and that makes us more difficult to attack from from from other competitors within the marketplace. We've got a very strong position within the gaming market, and the business momentum within that market is is is also robust and has gathered steam over the last year. And the supply chain management we've achieved over the last year has also been a proven benefit to the company, which has differentiated against our peers. The strength of balance sheet and the strong cash generation, low leverage positions in a good place for future growth and to consider further acquisition should we see opportunities to do so. So we're very excited about our prospects in the time ahead and believe there's a significant sustainable growth story ahead for our stock.

38:34 That's fantastic. Thank you very much indeed. John, Johan, thank you for updating investors today. Could I please ask investors not to close the session? Should be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, I know it's greatly valued by the company. On behalf of the management team of Quicks and PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all.