Nexteq (LSE:NXQ) — Results for the six months ended 30 June 2021

0:01 Good afternoon, ladies and gentlemen, welcome to the Quixote Results for the Six Months Ending 06/30/2021 Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged, can be submitted at any time. Just use the Q and A tab on the right hand corner of your screen, type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and where appropriate, published responses. These will be available via your Investor Meet company to provide you financial also like to remind you that this presentation results. Is being recorded. Before we begin, we would like to submit the following poll. If you would give that your kind attention, we would be most grateful. And I'd now like to hand over to John JL, CEO and Johan Johan Olivier, CFO from QuickSent. Good afternoon to you both.

0:51 Good afternoon. Hi. Good afternoon. Thanks very much for dialing into our results presentation for the first half of the year.

0:59 We're gonna take you through a bit about the business and what we do. So the first thing to go through, Quixon is a technology company. And what we have formed is a business which has disciplines in several different engineering areas, hardware, software, display, and mechanical engineering expertise. And we deploy those disciplines to certain key markets in which we can deliver specialist products to solve particular market needs. And the first of the markets where we evolved this product offering was the gaming technology market. And what we saw is an opportunity to develop bespoke computer platforms, which could power the latest generation of what was evolving then as a video slot based gaming machine market. And by bringing these computer platforms to that market, we enable the manufacturers of those machines to focus entirely on the game design of the machines, and that's the most important part of what drives the slot machine performance within the players in the players' experience.

1:58 We we actually found the opportunity to build a gaming business while working previously in Densitron. And Densitron's got a very long pedigree of over fifty years in supplying industrial displays into into those markets. And those displays create a fantastic footprint in order for us to identify new markets and execute the group strategy to identify those focus sectors and move up the value chain within them. A few numbers. QuickSent was founded in 2005 and was floated on AIM in 2013, and actually, the origins of the Dentistron business are in 1970. So it's a company with a very long tenure. 200 employees across the group, and we've got operations very globally in nine countries and customers in 50. So though we're a UK listed business and we're still relatively small, we've got a very global footprint, and we're very used to working across multiple time zones. Span all the way from the West Coast Of The United States all the way to Australia.

2:58 We've got 20 patents that have been granted in the business and four of which are in application today, and we've got 19 registered trademarks. And, actually, our growth record since flotation has been very strong with double digit 14% casher since float to the financial year twenty revenue of 64,000,000. And over the period up to the end of financial year nineteen, we've actually had 23% casher $92,000,000. And I'll talk about some of the fall we had in in revenue in financial year twenty shortly. So what is it about gaming that was so exciting to us? It's a market which is huge globally, probably far bigger than than anybody could imagine. There's about 8,000,000 slot machines installed across the globe, of which 400,000 before COVID were being replaced by year.

3:47 And that replacement cycle of machines is what drives us to be able to supply our computer board to the manufacturers of those machines. And some of the major brands which are supplying into that market are listed on the slide there. And what these manufacturers are trying to do is to develop games which captivate the player's attention, and they give them an experience which is unique and entertaining. And the video gaming aspect of these machines enable them to be much more compelling and much more multi media rich in the form of mechanical real based machines they replaced. And as a result of that, all of the new machines that are coming to market are video slots rather than mechanical real based machines. And when we look at who we're competing against with our computer offering, it's principally around outsourcing what was previously in sourced to the engineering teams within our customers. So we provide an outsourced computer platform solution that enables our customers to focus on the game itself.

4:41 And why is that so important? Well, as a player of one of these machines, the thing that you see, the thing you experience, and the thing that makes you play one machine over another, so one particular vendors over a different vendor's machine, is the game itself. And before we came along, the the impact on customers' commercial success was unbalanced against how much was being invested in a computer platform development, which ultimately has very little impact on on that player experience. So when QuickSync came along, what we said is we're gonna balance the scorecard. So what you get in terms of commercial success is balanced against how much you're spending. You can now spend an increasing amount of your r and d budget on game design and and and a lesser amount on computer platform development, which is balanced with how much that impacts your your differentiating characteristics within the business.

5:31 And that's something that's been very successful, and it's enabled us to grow a company up to twenty fifteen by by by one market, the gaming sector. And we did that by focusing on the orange areas in this value stack, so some of the key parts of of the machine that sit sit within that those orange boxes. But also, over time, we've started to evolve our cabinet solutions, and that's what's in blue, and there's new opportunities that we're starting to evolve within that cabinet solution space. The stuff in gray is stuff that we won't get involved in. The stuff in gray is where our customers create and innovate, and those gray areas are things where that's how they differentiate their machines over over other people's.

6:16 If we look at Densitron, so in 2015, the group embarked on purchasing Densitron and delisting it from the stock market. And the reason we did that, as I said, is because it enables us to identify new vertical markets to build alongside gaming. And Dentistran's got a very long standing and successful business supplying industrial display components, the global global market for which is valued at around $6,000,000,000. But Dentistran's been very sector agnostic historically. There were lots of leads generated in the business, but they weren't generated in any specific targeted sectors. And so what we felt was that if we look across that fantastic broad customer base within Densitron, we can identify sectors where there are characteristics which are interesting for us to build a focused business and propagate propagate up the value chain in those markets.

7:08 And the first of the markets that we began investigating was the broadcast sector, and we've already developed products that achieve that goal within that sector.

7:17 And we believe that the core displays business for Dentsager on the display components business has the potential to grow low single digit, but actually, these growth businesses such as broadcast can grow double digit, which is what gaming has the ability to grow and and has done over many years in the company's history.

7:38 As we look into these broadcast focused sectors, what we are trying to do is to move what we're starting as a display component sale in those markets, which are at a lower unit price and a lower margin towards a more turnkey control surface, which embeds computer boards, higher resolution displays, and and tactile elements. And I'll show an example later on in the slides of what we mean by these tactile elements that sit on the touch screen surface. And and finally, some of the the the the highest level of integration we have in the value stack is around control systems, and this is where we embed our software through the IDS solution, which we acquired in 2019 as part of that hardware and display component combination. And that's where we exceed continue to grow our margin and and our unit price even higher. So as that migration of the value curve occurs, we create a business which is more profitable and has a great degree of concentration focus in in the broadcast market.

8:40 Hopefully, those areas of business are interesting as an investment opportunity. And what we've shown is we've had a proven effectiveness in delivering technology in a technically innovative products to certain key markets. Gaming is the first of those markets. Now we're working on a second in broadcast. Gaming is an incredibly highly regulated market, and that creates a barrier to entry. And the regulation is is something that's complex because it's not just about the the the technical features that are required by the product, but also the supply dynamics, the fact that all of the components in gaming have to be approved and regulated. And if you change any of those components, you have to go through a lengthy resubmission cycle. And that's something that means that for our customers, they're very much reliant on quicksense applying components, which are consistent in every in every comp product that we supply.

9:29 And we've created a very strong position in that core gaming marketplace, and we've returned to profitability and growth after a difficult year in in 2020 when the gaming markets will close. We've always felt it's important to keep a strong balance sheet and a strong cash balance on the on the on the books, and that was important last year where we were going through managing the COVID challenges that presented themselves to us. And and I've said that we've also identified these new opportunities in the broadcast sector and started working towards those to deliver a focused business within that marketplace.

10:05 So if I just sort of hand over now, we're gonna start talking about the group highlights for the six months for the for the first half of the year. And if we look at the revenue growth in the first half, we were up 31% year on year in h one, and actually also half on half we grew in the first half of twenty twenty one. So a really strong trading performance. And and a key reason behind that was that we've seen incredible demand returning to the businesses within gaming and Densitron. And that strong order intake that we're seeing across those businesses has fueled confidence in our full year 2021 trading and into 2022 as we look out in in into the next financial year. We've also been successful despite the fact that we've not been able to travel, despite the fact that many of the trade shows and the opportunities to go and see customers have been difficult.

10:56 We've been able to grow our new customer wins, and, actually, we've had 11 wins since the start of 2020, four of which are gonna enter mass production in 2021. And that gives us an underpinning of our confidence in growth for the the next financial year. And five of those new business wins actually were in the first half of this year. And and the key thing around that is last year was a difficult year to talk to customers about new business, but a lot of that new business has started to pick up in the second half of last year and the start of this year. One of the challenges that many hardware technology markets is face are facing is around supply chain and component shortages, and we're not isolated from that. But what we did do is take a significant strategic stock position at the beginning of the year, and that's enabled us to mitigate the worst impact of the electronic component shortages that are plaguing the market.

11:46 And also, Johan will speak a bit more about what we've been doing around that and the impact that's had on our margins. And we've also generated positive positive operating cash, and that's despite growing our inventory to handle loads of component shortages that are facing the market. Over to you, Johan. Thanks, John. Hello, everyone. I'm just going into specifics for the financials of the first half of twenty twenty one. As John mentioned, revenue up 31% to $36,500,000 in the first half as we've seen strong demand across both the gaming and Dentitron divisions. That's translated into gross profits increasing by 25% to 11,100,000 in the first half. We've seen a bit of a decline in in gross profit percentage, and I'll come on to that in a later slide and give some more details about the dynamics we see there.

12:39 The the higher revenues, the operational leverage that we gained from those higher revenues, and the the disciplined approach that we have to our to our overheads has meant that we were able to go from a loss of $1,200,000 last year to a profit before tax of $1,300,000 in the first half of this year. And we really see that as a progression in terms of improving on our on our bottom line, which we'll see improving throughout the rest of this year. As John mentioned, net operating cash flow of $1,100,000 in the first half of this year, which is positive compared to the the offer in the previous year and also considering the strategic stock investments that we've made in the first half. That brought us to a net cash position of $15,000,000 at the end of June twenty twenty one, which is part of the strong balance sheet that the group has.

13:30 Move on to the next slide. This next slide just sets out the revenues by division. If we start on the left with our gaming division, we've seen a strong recovery in gaming, up 55% year over year as gaming markets across the world has has reopened, and we've it's been particularly strong in in The US. We've seen elevated demand, which has somewhat been tempered by supply constraints of our critical components. If we move to the to the right, our Dentitron division, 13% growth year over year and also growing sequentially from h two of last year, which is which is so the strong momentum that we have in the Dentitron business. What's been particularly pleasing in Dentitron is that we've been able to deliver 98% of shipments that were scheduled for h one delivery by the end of June, which shows the strong supply chain management that we have in this division.

14:30 Then moving on to gross margins. We had a gross margin of 30.3% in h one of twenty twenty one, down from 31.7 in the first half of last year. And I think it's important to note that there's been no structural degradation in our in our gross margins year over year. The reason for the decline has been due to the raw material component price inflation that we've experienced due to shortages in our components similar to what we've seen in many industries across the world this year. Management has taken action to mitigate the impact of this inflation, and we've been able to successfully increase sales prices to our end customers. However, throughout the first half, our primary priority has been providing supply security to our customers, which has meant that there's been timing differences between cost price increases that we've experienced and us passing those on to our customers, which has been reflected in the gross margin decline.

15:26 But as I said earlier, we believe that this margin reduction is temporary, and there's no structural degradation. And we expect margins to return to normal as supply chains return to normality. And then finally, just again on on cash flows, this this bridge shows moving from our net cash at the end of twenty twenty to June 2021. A few things to highlight, as I mentioned earlier, positive operating cash flows of $1,000,000 despite, as you can see, the working capital outflow, which is due to the strategic stock investments that we made in the first half to secure components to meet the demand that we've seen in the markets. Beyond that, we've also continued to invest in our r and d and net new product development, which you see the $1,000,000 that we've capitalized to r and d in the in the first half. And then we also paid a dividend of $1,800,000 in the first half, bringing cash to to $15,000,000 at the end of the period.

16:27 So that hopefully gives you a flavor for the group's positioning. I'm gonna dive into a bit more about the two business segments, gaming and Densitron, and talk a bit about what we've been doing in those businesses and the nature of and and the shape of the end markets that we're in. So if we talk about gaming for a minute, gaming has seen a very, very difficult year in 2020, an unprecedented year in 2020 as have many other places around the around the world. And in gaming, if we look at The US gaming market as a proxy for for the end markets in which many of our customers supply, The US market in the commercial casinos, and this is the type of casino that you get in Las Vegas rather than the casinos you get on tribal properties. The US commercial casino market has rebounded very, very quickly from the lows of 2020. And you can see in the charts on this slide that are produced by the American Gaming Association that there's been a rebound through the third quarter of twenty twenty and that actually now, incredibly, as you look at the first first half of twenty nineteen and the year to date end July, actually, land based slot revenues are up 9% year on year versus pre pandemic levels.

17:38 So a market that we're that our customers are supplying into where gross gaming revenues are are are back at the point where they were pre pandemic and, in fact, above it. And, actually, the the overall health of the market is characterized by the total US commercial casino revenue because those are including some of the the sports betting and online gaming opportunities that have now opened the states have regulated. And The US commercial casino total revenue is up 17% year on year versus 2019. So really strong end market trading performance within The US and and monthly revenue prints consistently coming in ahead of 2019. So what that means is for our customers, they're supplying machines into casinos that are in a market where players are back in those casinos and are playing the games and enjoying the entertainment that they provide.

18:26 And that's a really important health factor in the future of of of our shipments into our end customers. So from a point last year where the gaming market was in a difficult position, we've seen certainly in The US a strong recovery. Other markets around the world are in slightly different positions. Europe is a is a mixed bag. Some parts are are coming back. Some parts are still in in a quite weak weakened state. If you look at Macau, Macau is still significantly under the point that it was pre pandemic. And Macau is a market which favors table games versus slot machines. So in the terms of the direct impact for Quicksence sales, that's not quite so significant. But, certainly, the core US market, which is such an important part for our sales, is is very buoyant today.

19:13 So with that, we've had to think about what priorities the gaming business is looking to deliver on. And the focus is on looking at looking after our existing customers, retaining them, and managing the portfolio, and that's been so important in a year where we've been having to work on on customers' payment plans, so helping them through their cash flow, but also then around managing the the price rises that Johans referred to already to to offset the the price inflation we're seeing from our from our components

19:43 and also to to ensure that we can handle balancing a fair balance of deliveries to them because that's one of the challenges we face today is the demand that we see from our customers. We're not able to fully satisfy with the supply chain availability of the the raw material components. And so retention and portfolio management is a really important part of of keeping our existing customers and making sure that they're happy. The other two areas are converting new customers to outsourcing and finally, creating new product category revenue. And I talked a bit about the the the cabinet opportunities we see. I'll come up to talk about that in a slide. Converting new customers to the outsourced model. Well, we've talked about the numbers, but let's talk about why. So the insourced customers who have not selected to adopt Quixen are facing unprecedented challenges around supply chain disruption today, and many of them have been asking us to help them on finding components for their own businesses.

20:43 And so what they're now saying is, well, is hardware really part of our core competence, or should we outsource it? And increasingly now, we're seeing that customers are saying, well, actually, hardware is not what we are here to

20:54 be. We're here to be a game developer in a software house. And so we are seeing increasing levels of opportunity for outsourcing purely because of the supply chain challenges. Also, our technical proposition allies itself with customers that are saying, well, actually, on our OpEx, what should we be spending our money on? Should we be spending money on on on on hardware design, or should we spending money on on software? And so our technical proposition, the depth of that proposition also helps them on that side as well. And and finally, just in terms of the multifaceted support, we are in this market as a key strategic shift key strategic component of the business. And so we're here for the long term. And last year, when customers were suffering with casino closures and they weren't seeing revenue flows from those casinos for their games, we were very pragmatic about the need to be reasonable about being paid by them. And so all of our customers and and and Quix have worked very closely together so that we came through this through through this difficult

21:54 year intact and and thriving. And that's that sort of long term multifaceted support is a key key part of what we demonstrate in terms of our partnership with them and helping them through the challenges that they face.

22:10 If we look at the new product category revenue I referred to, we launched our self-service betting terminal proposition in 2019. And while we didn't manage to progress that last year due to the COVID restrictions and and the level of of of closed down of the sports betting venues, we've had opportunities restored in 2021, two live ones of which we've had the first preproduction order from them. So our sports betting terminal opportunity allows people that are developing SSBTs, sports self-service betting terminals, to focus only on the sports book, the software sports book. We will supply them with a complete cabinet, which has got the computer board. It's a it's met meeting approval requirements, but it's also got all of the peripheral devices that make that product work and allow it to handle the cash that's put into it.

22:59 And what we believe is that our reputation for quality now can extend this adjacent product category and allow us a route to market for our computer boards. And also that there are other turnkey cabinet harbor opportunities. So SSBTs are only one, but there are other areas in which we believe we can bring our cabinet solutions to market and enable customers to focus increasingly on the software stack. So very, very exciting opportunities ahead for the gaming business. So let's let's come on to Densatron. And and the first thing is it's really important that we nurture that core Densitron display components business because that is the lifeblood which allows us to identify new markets and to and to keep us stable in years like 2020 because last year, Densitron had a resilient trading performance.

23:49 And so in that, we're gonna continue to bring new products into into play. And one of such products is called HoverTouch, and it allows you to interact with a touch screen without physically making contact with it. And that's a really key technology if you think about a world in in in in COVID times where people want to interact with perhaps a kiosk for public transport, but without physically contacting the kiosk. And so we've got opportunities for that new technology, and we will continue to bring new product offerings to that market till we'll be able to drive that business into a single digit growth. But let's jump over to broadcast and why we see this opportunity in broadcast. In broadcast, many of the manufacturers' equipment and and the types of product that you see is characterized on this slide as a as a as a rack mounted device with lots of mechanical controls on it historically in a small display.

24:41 And that device might perform a a myriad of different functions. Some might be for controlling microphones. Some might be for providing mid video mixes. But the key part of it is that that display and touch screen is is is relatively small, and we can't generate that much profit and and revenue out of. But nonetheless, we've got a deep pipeline of opportunities. In fact, 36 pipeline opportunities that are in final approval stage for that dense drum display component sale into the broadcast market. But what really captured our imagination in broadcast is that we see the market moving towards bigger displays with a much bigger screen, and the the bigger screen, which is now graphical in nature, requires electronics, computer boards, and software to drive it. And as soon as you add that, suddenly, the available technology we can supply into the market is much deeper in nature, and that allows us to elevate our our unit price and allows us to elevate the profit margins that we can earn from that from that sector.

25:41 And, also, you'll see something here, tactile overlay controls, and and I'll explain that in a moment what we mean by that. But one of the challenges with touch screens, you probably have seen in the consumer market in things like the iPhone, is it's very difficult to to get any kind of tactile feel from a touchscreen in the display. You don't have that ability to to make contact with the screen without triggering the screen. And in broadcast, for certain mission critical functions, that's something which is unacceptable, and we've innovated technology that allows that to be addressed. And we've got seven pipeline opportunities in final approval stage for these dense, long controlled surfaces. If we go a step further, we bought a business in 2019 called IDS, and that allows us to do the full turnkey software and hardware stack for end, broadcast solutions.

26:30 And we supply these already into some really high profile names such as the BBC. And what IDS allows companies to do is it allows them to have control of third party devices using a single touch screen interface. It allows them to have, you know, visual representation of of of technology onto different screens located on the network around studios. And and we can build all of these components into one package and sell that package. And, again, that allows for an elevated ASP and also an increased profit margin. And there are and there are 18 pipeline opportunities in final approval stage for IDS. So so now I'm gonna talk a bit about Tactila, and this is the brainchild of our of our tactile rotary objects that we have. And this is something that we filed a patent for in the first half of the year, and we launched

27:21 evaluation kits for in h one as well for customers and forms a critical building block to our HMI hardware solutions broadcast. If we could just play the video for a moment, I'll talk you through what we're seeing here. So what you see here is somebody's making contact with the rotary knob on screen. And when they make contact with it, you can see the color on the screen changing behind it. And what's really unique about this is this rotary sits in the active display area of the screen. And the fact it sits in the active display area allows you to make it context sensitive for whatever you show on the screen behind it. So you can see now on one's one mode is changing the zoom. On another mode, it's changing the volume. That's a totally context sensitive knob. And the other thing you'll see as well is that if you press the middle of it, you can see that that forms a separate function. So it allows you to select or mute or lots of different functions.

28:12 So what this creates is an incredible user experience for the user of this equipment. And so we're really, really excited about what this enables in the broadcast sector going forward. So Tactila is a cornerstone building block for our HMI hardware solutions for the broadcast market. And over time, we may well find other applications in other sectors for that technology. So just to round up on the outlook. We're really excited by the level of demand we're seeing across the business. Both both divisions are seeing that demand, and we've got an order backlog, which is strong, and and that gives us confidence for the second half of the year and the growth into 2022 as well. We've managed through a lot of the challenges around component shortages and the price inflation associated with those, but we expect that to continue to drive disruption to the second half and profit margin volatility through the second half of the year and into 2022.

29:10 Progress the the past. A expectations for the year. And And one of the things that I'm really proud about with how the company's performed over the last two years is we've been through a really tough period, and we've been through a difficult period where we've managed to maintain a strong cash balance and a really strong balance sheet. We've kept almost all of our team intact through that, and we've not gone through a a really painful, level of of redundancies or job cuts. And we've also kept customers happy, and that means we've retained all of our business. And if you look at that sort of strong bedrock that we've got with the company combined with some really fantastic opportunities we have to grow the gaming business, to have new adjacent products within gaming and cabinets, plus what we're doing around Densatron with broadcast, I think we've got a really bright future ahead to grow the company's revenues materially from where we are today.

30:12 So that's the the end of the presentation. We're very we're very happy to take some questions now. John. We've got John, Johan, thank you. Sorry to cut across, but thank you very much in tea for updating investors. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. Just while the company take a few moments to review the questions that we received during the meeting, I'd like to remind you that the recording of this presentation, along with a copy of the slides, can be made available to you via your investment company dashboard, and we'll send you an e mail when they're ready for your review. Finally, I'd just like to remind you that your feedback is important to the company. And then immediately after this presentation has ended, we'll redirect you so you can provide your thoughts and expectations to the company. John Johan, obviously, investors had the ability to pre submit questions. We received a couple, and the first one reads as follows: Where do you see future growth opportunities in the broadcast sector, and do you have new products coming on stream?

31:08 So so the answer to both of those is is yes, simplistically. So where where we see new opportunities in the broadcast sector are around this elevation within the value stack and pushing that out globally. IDS is a product that we that we bought in 2019, and really that the marketing effort of IDS, we've only been able to to target around from a UK based sales team. And and now that we've we've we've started to evolve the IDS offering and we've been building out the team, we're gonna make that go global. So IDS has got opportunities in multiple markets, and we're now just starting to scratch the surface around its it's it's growing that market presence of IDS into other broadcast corporations globally. We've got some fantastic reference customers in that already.

31:54 The the second the second part of it is around the the hardware the hardware HMI solutions we talked about, the dense, strong control surfaces. And we showed you Tactila. Tactila is a cornerstone of that strategy to build broadcast revolutionary control surfaces for that first three inches of the broadcast equipment. So we're we're really excited about how that can also provide that revolution in in broadcast control. So it's about globalizing and providing these new products to the market, which brings broadcast into the twenty first century. Great. Thank you very much indeed. The other presubmitted question that we received reads as follows, how is the leasing pilot going? Do you see this expanding over the next twelve months? Yes. We we we announced in these results that we had commenced with our our leasing scheme for machines into the gaming market, and that's with a pilot customer.

32:46 And we won't be moving that into a widespread business model at this point in time. We're gonna be evaluating that and understanding this for the working capital obligations that puts upon us. But we're we've we've built a strategic leasing model with that customer, and we believe that that will lead to, you know, both stickiness within the business, but also, again, part of this partnership working with our customers to drive their business success and, therefore, quick success as well. That's great. Thank you so much indeed. Now if I could ask you just to open up that q and a tab on the right hand side of your screen, if we could take the questions that are submitted by investors today. So thank you firstly to all those investors that have taken time to to submit their questions. Perhaps if I could just hand back to you, if possible, to read out the question and give a response where it's appropriate.

33:33 Sure. Yes. So so the first question is the figures quoted a year on year a year on year and look impressive, but 2020 was an excessive exceptionally bad year due to the pandemic. How do the year on year numbers look over a three year time horizon? And and the answer to that is is is whoever asked that question is absolutely right. So if we look back to 2018, that was our peak year in our revenues. And we very much believe that with the strategic positioning of the business, with the with the balance sheet and the resources that we've got, that we can very much be back at the levels that we have been in the past and indeed exceed them. So so we've had two or three very difficult years in the company. In in 2019, we saw some softness from some of our key gaming customers. Their products were not performing as well in the in the end market as they had done in the year before, and then we've had the pandemic to to weather for for '29 for 2020.

34:27 But what we really believe in is our structural positioning, the strategic positioning within the business and the the new the new growth opportunities that we've identified allied with the gaming new business wins puts us in a strong position for not only a recovery, but an exceeding of our former former highest level of revenue. Just gonna go down. Another question. What are some of the new markets, that the tailor made products could be sold into? And I've I've talked about broadcast a lot. There are almost certainly other markets where Tactila has application. And one of the things that we're cautious about is is getting into too many markets at the same time with too little focus.

35:14 And if we're too defocused, the problem is we never completely finish engineering a solution which is fantastically useful for one particular market. And so so whilst we are developing Tactila for a key broadcast application, there are certainly other markets where we could we could find revenue opportunities for that product. And and, actually, one of the great things about Densigron is this broad sales team that we have within the business, and that broad sales team allows us to take these products which we develop, and we develop an an IP rich technology for, and then to and then to transition them into other markets to see where else we'll find applications for them. Another question is we talked about medical in previous presentations.

36:03 Where where have we got to in the medical market? And and actually, the answer to that is medical is a is a very big market within Dentitron. In fact, medical in in the group is the second biggest segment today after the gaming after the gaming market. And so what we've been doing in medical is we've been showing some of these products which we've already got, as I was describing earlier, and seeing how those things might fit within the the medical environment. And we've got some ideas in that space, but, again, we're doing it on a on the basis of still evaluation and not moving towards a sort of a a a targeted focus market because doing so would be spreading our our resources too thinly at this point. So we're currently very much focused on our on our resources on broadcast and gaming. Medical is still in the in investigatory stage.

36:54 Another question was around expectations and what management expectations were versus the brokers' forecasts. So what the brokers have done in the guidance that is in the market is they've looked at the the 115% figure of order coverage of of management expected revenue, and and and and there's been some movement upward and upgrade on the revenue expectations for the full year as a result. And and also on the on the profit before tax, they they've they've left those numbers largely unchanged in in one of our brokers, and one of them has reduced them slightly because of the component price inflation that that we've signaled in the results. There's another question around competition that we face in the market, and I'm I'm guessing because I I mentioned the competition around in sourcing.

37:45 This is referring to the competition within the broadcast segment. And and if I just use the slides as a bit of a tool to explain this. So if we look at the broadcast market for just the display technology, there are lots and lots of competitors in that and and hence why the margins are lower. There are lots of vendors of these displays and touch screens in that market place. When when we go to the next stage up where we're doing a much deeper, richer value proposition, which includes computer board, we have a much smaller population of competitors, particularly when we start to provide some of the control software in that space. And when we provide the tactile overlay controls by virtue of the fact that we have filed patents for them, we believe we're pretty unique in what we're offering in that in that space. And and the same thing goes for when we're doing the full value chain. We've got a a a pretty unique proposition in what we're offering with that with that full value chain solution targeted towards the broadcast sector.

38:41 John, Johan, I think you've been very generous. I think you've actually addressed all the questions that we have from investors this afternoon. If, of course, any further questions do come through, we will make those immediately available to you for your review. John, Johan, I know that feedback is important. I'll shortly redirect investors with the opportunity to provide you with their thoughts and expectations. But perhaps before doing so, I could just ask you for a few closing comments, and then I'll say I'll redirect these investors to provide you some feedback. Yeah. Thanks very much. Yeah. So so we're fantastic we're fantastically excited by what we see ahead of us for opportunities within the group. We we we delivered a a very strong level of growth in the business over many years up to 2018, and we've had various challenges that have faced us over over a couple of years since then. But, actually, if we look at the positioning that we have now, we have a more diverse revenue mix than we had back then. We've got some really, really exciting new market opportunities, and we've continued to evolve products, which allows us to capitalize on those market opportunities.

39:43 And we've still got a really strong financial base behind us, allows us to execute on that. So I think we've got a fantastic few years ahead of us of growth, and and we're really excited as a team to be able to deliver on those promises. John, Johan, thank you very much once again for updating investors today. Could I please ask investors not to close the session as we'll now automatically redirect you for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? It'll only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Quitsent PLC, we'd like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.