Solid State (LSE:SOLI) — Full year Results for the year ended 31st March 2020 & COVID-19 Update

0:06 Good afternoon, ladies and gentlemen, and welcome to the SOLID STATE PLC presentation for the year ended 03/31/2020. To start with, if we could cover a couple of housekeeping items before we begin, we would like to submit the following poll which you will see on your screens. Throughout this presentation, investors will be in listen only mode. However, 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 or if anyone has dialed in via solidstatewarbrookpr dot com. The company may not be in a position to answer every question it receives during the meeting.

0:52 However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via the Investor Me Company dashboard. Finally, we'd like to remind you that this presentation is being recorded.

1:10 We anticipate that there'll be some newcomers to SOLID STATE, so we will take a couple of minutes at the beginning of the presentation to introduce the business. So let me now hand you over to chief executive, Gary Marsh, and Group Finance Director, Peter James. Gary? Thank you, Tom. I'd like to welcome you to our first Investor Day Company presentation. Thank you for taking the time to join us this afternoon. We'd welcome any feedback you may have, so please feel free to do that.

1:48 We're about to show you a short video on the group. It's two minutes four seconds to be precise. But before we do, I'll explain our group structure to put it in some context. SOLID STATE is made up of two divisions: manufacturing under the directorship of Matthew Richards focuses on computing power and communication products typically for use in harsh environments. And value added distribution, or VAD, as we'll refer to it through the presentation, under John McMichael, which now includes our last acquisition Pacer, which brought new Opto components to the group. There's very little overlap in products between SSS and Pacer, and it hugely increases our value added capability And this takes us into new markets such as medical, which have long been a target for the group.

2:52 SOLID STATE PLC is a high value add manufacturer and specialist design and distributor to the electronics industry we do the difficult things small companies can't do and the large manufacturers don't want to do SOLID STATE PLC has delivered double digit compound growth organically and through acquisition since it was admitted to AIM in 1996 the group has the operational infrastructure and its centers of excellence to deliver material growth with modest additional investment. We are increasing our margins through integrating into the value chain. Our enhanced capabilities in value added distribution and manufacturing provide a comprehensive offering to our customers seeking a design led solution and gives the group diversification and resilience. The manufacturing division delivers technology in the computing, power and communication sectors.

3:43 We deliver products that operate in the harshest environments on land, sea or air where reliability and safety are critically important. The distribution business focuses on providing leading edge products to customers. We provide value added services and technical support together with wide ranging commercial solutions our strategy has three key elements to invest in our people to maintain technical knowledge and remain at the forefront of the electronics industry secondly, to target strategic acquisitions which are aligned to our core capabilities and finally, to continue to develop our strategic partnerships with our customers and suppliers. We have built a proven acquisition track record over more than a decade.

4:30 Through future acquisitions we will continue to target structural growth markets. We are confident we have the capabilities and the strategy to deliver strong growth over the coming years. We've built a reputation of supplying trusted technology for demanding applications. We focus on all key capabilities, computing power communications and electronic distribution.

5:18 And these aren't generally the core competencies of our of our customers. Safety, quality, reliability are paramount to our customers, whether it be rugged computers, rugged computer systems for warship operations, battery packs, robotics, or antenna systems, met office, weather radar. We have a deep knowledge of our chosen fields providing impartial consultative product selection. As a trusted partner, we provide reliable long term supply with strict revision control. And our distribution division follows the same philosophy, taking the time to solve customers' problems through its technical staff, resulting in higher designing levels for our suppliers and increasing the value of distribution to our customers.

6:13 I'll obviously expect me to to go through where we are with COVID nineteen. So the business reacted early with all staff who could work from home being equipped to do so. The systems tested, long before the March 23, lockdown, together with implementation of hygiene and social distancing measures to keep staff who continue to work for the our our location safe. Our four production facilities have remained open throughout, this period. We've adopted new ways of working, including clean desk policies, a policy we'd we'd meant to implement ages ago, but this has this has brought that forward, so we're we're pleased with that.

7:02 That's to esanitization, and these changes have presented opportunities to streamline our systems. With the majority of our staff working remotely, regular, upbeat, honest communication by the directors has been key, whether through videos to staff or video conferencing. We wanted to provide regular market updates to the markets too, as we did so in March, April, and earlier this month.

7:34 Alongside health, the well-being of our staff has been just as important. Through a group medical cover, we introduced online mental health support. We established new ways to engage with staff, introduced online quiz nights, Friday afternoon clubs, and even walked the length of England, raising £10,000 for NHS charities together, which was covered in the local press. It was a a really good day. The board has taken prudent steps to mitigate and manage our cash flow and cost base. These included a recruitment freeze, salary increase freeze for all directors and staff, adoption of available deferrals for VAT and PAYE payments to HMRC, and furloughing of some of the staff under the coronavirus job retention scheme.

8:23 We've also negotiated better terms with some suppliers and landlords. Microsoft Teams has been a real godsend. Life would have been, very difficult had had this pandemic occurred twenty or thirty years ago. In many cases, it's improved productivity with our sales teams meeting seven customers in a day by Teams rather than one or two having driven a couple of hours to meet them face to face. We found new ways to engage with clients, including virtual hands on design and specification meetings, again, with more engineers joining these meetings than they would have done if we'd have held them face to face.

9:10 Some of these new initiatives that certainly have improved our productivity, I believe, are here to stay. We've used the time to accelerate product development for environmental applications and transportation, where we're likely to see, we believe, some government stimulus packages, and we can take benefit from those.

9:38 We've delivered another record year of revenue growth, achieving record EPS now up 50% since 2018. And given our our strong cash position, being a cash generative business and following a record year, we've maintained last year's dividend unlike Meli. We're continuing to execute on our strategy. Pace is now integrated with operating margins up more than 3% over the prior year, driven by a combination of operational efficiencies and increased value added sales. We're going to talk you through our product development, especially in fossil fuel replacement in our Power business unit, the steps we've taken to improve group collaboration.

10:26 Finally, we'll cover areas where we've been investing for the future.

10:34 I'll hand you over to Pete now, who'll talk you through some of the numbers. Thanks, Gary. So I'll just, start start with some of the headlines here. So, starting with the the top line and revenue, yeah, pleasingly reported revenue is up 20% and and pro form a revenue. So like for like revenue, including a full year pacer, is up 4.3%, reflecting organic growth. Coming down from there, margins have improved in spite of the, the growth in our value added distribution division, which might potentially be dilutive, which reflects strengthening margins in in both divisions. The full year of PACER has helped improve and increase the margins there, where we've got a a greater proportion of higher value added business through that division.

11:22 And the organic growth in manufacturing has bolstered margins there up to the high thirties this year from the mid thirties last year as the manufacturing division. Down to the the operating margin level, which is really the key metric for for the group, and you can see their adjusted operating margin is up 70 basis points to 7.2%, which is is very pleasing. And and that reflects the combination of the the top line growth leveraging the operational gearing as well as some of the the productivity and efficiencies we've we've managed to access through integrating Pacer into the value added distribution division. That translates into to record EPS for the group at 46.3 p, which is up, yeah, close to 30%.

12:13 And as Gary said just a moment ago, that's given the board the confidence to to maintain the dividend in spite of the challenges presented of COVID nineteen. So if we move on towards the the cash flow, cash this year, operating cash of of 8,000,000 is is very positive. If you look in the announcement, that has benefited from some pretty significant working capital inflows. Barry talked about the the steps we took in in our q four to conserve cash, and that resulted in a a working capital inflow of about 1,400,000. Even if you exclude that, the cash conversion is still in excess of a 125%, so very, very pleasing. The cash activities we took in terms of COVID nineteen were utilizing the the government deferments from PAYE, VAT, job retention scheme.

13:07 Particularly pleasing was the work we did with our supply chain to get better terms with our Asian suppliers. We did see lead times extend. We did place orders and build buffer stocks to to manage that. And in in doing that, we worked with our suppliers to get better terms, which which they were supportive in doing, which has been fantastic. Coming down, the the 500,000 cash flow and payment obligations for right of use assets, that's as a result of the adoption of IFRS 16 this year, where our leases get bought on balance sheet. So when we turn over lease, you'll see the the impact of that. And, yeah, CapEx, similar level, broadly comparable level. We've continued to invest in CapEx, and that's been particularly in our Weymouth facility where we do our value added distribution that was joined that was brought into the group with the Pacer acquisition. We've invested in some tooling there to to give us better productivity and operational efficiencies, and that's helped deliver that that operating margin improvement for that provision.

14:15 And finally, what does that turn into? That means we've translated our our net debt of 2,000,000 that we took on as a result of the acquisition of Pacer has now returned to net cash at just over 3,000,000, 3,200,000 by the year end.

14:32 Moving on to the balance sheet, IFRS 16, as I said, has has a has a material impact on grossing up of the balance sheet. So we recognize 1,100,000 of lease obligations and 1,100,000 of lease liabilities. So the net net asset impact is immaterial, but the the gross assets and gross liabilities are increased. Probably more more pertinent is the buffer stock. Year on year stock is pretty stable. Last year, we built some buffer stock to to ready the the supply chain for the the ill fated Brexit that never really happened, and that was backed by by customer demand through q four or the q four that had just gone in 1819.

15:17 In two thousand and nineteen, twenty, the current year, we did put buffer stock in to ready the business for what was gonna be a challenge potentially with COVID nineteen. And that buffer stock has been really important in enabling us to deliver well in q one, which we were pleased to be able to announce earlier this morning. Net cash, 3,200,000, and we've still got an RCF available that's now permitted out till November 2021. It puts the business in a very good position to invest as we come out of the COVID nineteen and hopefully exploit some opportunities on the m and a front that may well come to pass as we come towards the end of government support.

16:03 This slide's got probably the most arrogant slide. We're winning because up there's two re real key pillars to our strategy. The best in class people, we absolutely continue to invest in our people. In the current year, we've really invested in in technical resource and business development resource, and that really has enabled us to to penetrate the market and and improve our offering to our customers. Technology is is obviously the the complement to having those great people. They need great technology on which they can provide to customers. On the value added distribution side, our franchises continue to innovate. We remain at the leading edge in terms of technology, so five g solutions.

16:48 We've also got some new products around LoRaWAN networks, which is almost the exact opposite of five g, a low bandwidth radio wide area networks. And it's about, yeah, simple networks that tell people, I'm still here. Yeah. Day to day checks. And those those products innovations are are really important to the practice of customers we can service. Both divisions are are are really looking at the opportunities for for AI and those applications. Some examples of that might be in in the computing team in manufacturing, looking at computing platforms for autonomous quarry trucks. And on the distribution side, we're working with customers on intelligent app ultrasound. So the the computing platform behind the ultrasound system also identifies what it's seeing.

17:37 So those are quite important. The structure of the group, the combination of value added distribution and manufacturing gives us a a combination of resilience, diversity. You know, we've got a very broad customer base, and the collaborative working now, which we'll come on Gary will come on to talk to, is really starting to pay dividends and give us an opportunity which we're we're hoping to harness as we go forward.

18:02 The the Silicon Labs logo there is is is a highlight of some of the good work we've done more recently. Silicon Labs won a a new product line through an acquisition they've done at Redpine. They've actually decided to give for UK and Ireland all of those products to to the SOLID STATE Supplies franchise as their UK distributor. And they've done that on an annualized basis once we get up to full year run rate. That's probably a couple of million dollars worth of business. And they've done that because we didn't furlough our field sales team unlike some of our competitors. And, pleasingly, we anticipate receiving our first orders circa 50 ks, well ahead of expectations in the second in the first half of this financial year.

18:49 I'll I'll hand back to Garen. Thanks, Pete. So I'll talk you through our combustion engine replacement program. The drive for electrification in the mainstream automotive sector is evident, and that will continue to gain pace year on year.

19:09 In line with our strategy, our group strategy to avoid commoditized markets, we're looking to work with niche sectors that are equally looking to replace fossil fuel powered engines with carbon free solutions. The drive really is for zero emission vehicles. The sectors include agriculture, agricultural technology, ground care, light vehicles, the construction, railway maintenance, service and subsea vehicles. We've recognized that a battery alone won't solve the the partner's problems, so we've joined up with a specialist electric motor manufacturer, you can see on the the top right there, to offer a powertrain solution to to to our clients. So the box you see, the gray box you see is the next generation 500 series, high density pack we're developing. That will replace a 400 series pack that we we already sell in high volumes.

20:08 So we believe the new the new new design pack will be ideally suited to these applications. Initial interest following direct marketing has been encouraging. Even during lockdown, the proposition is not not selling, but to offer to solve a problem. New legislation is putting more restrictions on the use of diesel engines in particular. So we're finding companies are receptive to ideas to replace diesel with electric solution. Petrol has some disadvantages related to storage, as you could imagine.

20:45 Our business development team are now proactively defining market sectors and then identifying prospective partner companies. We've made good progress with a kickoff project already now underway, and other target companies have been contacted. Our prospective customers can focus on their solution, not worry about the powertrain. This follows the same sort of philosophy in our computer business with our computing customers focusing on their applications letting solid stay worry about the hardware challenge.

21:22 Back to you. Thanks, Gary. So this this slide is a is is an illustration of an example of of one of the real strategic objectives that we've identified, that cross collaboration is is a really key part of how we're gonna grow and succeed as a group. The the image on the left hand side is the the legacy computer platform that you see on trackside horse race betting booths. And the initial relationship there came it was a pacer relationship where we were looking to upgrade the display to a high brightness display to to help the guys on the trackside not have to power under the hoods on bright sunny days to see their their screens. We then realized pretty soon after that that we there was a a need for a processor and a and a and a upsell in terms of a module on that, which the the team at Pacer did.

22:17 More recently, we now have an opportunity to bid on a on a manufactured system in a ruggedized case, and that's been passed over to the the STIRE type computing team, which really plays to their expertise of harsh environment computing platforms. So rather than just providing a display with a with a processor on the back, we're now looking at bidding on a an integrated solution in a ruggedized case that will really address their needs as they upgrade their systems. And I think what the thing that this really is pleasing about is it shows the the cultural change. I think if you looked back five, six, seven years ago, SOLID STATE was was very siloed. You had the distribution division on the left and the manufacturing on the right, and there was not a great deal of collaboration and cross fertilization of opportunities.

23:10 Since Matthew and and John have been leading the business and the strategy review was done, it was very clear that the getting better together, you know, better you know, one plus one is three type mentality was gonna really help drive organic growth for the group and getting more from the broad customer base of distribution with the the key effect.

23:31 The Pacer acquisition really facilitated that because the Pacer team really saw the opportunity of joining a bigger group. They were an entrepreneurial bunch, and, yeah, they've been really open minded to that and not had any other history of the silo. So, actually, the PLC acquisition, one thing they brought that I didn't expect was to really see that collaboration accelerate with that team and integrate into the value added distribution. It really helped the cross working and the collaboration between both divisions. And and just to give you an idea on that that previous slide, we took that from being a two fifty pound display to 4,000 pound system. So that's sort of great upselling to existing customers.

24:25 So moving to the resilience and diversity.

24:30 Our business model has demonstrated some resilience in this pandemic, established almost fifty years ago now. We're proud of our track record, having paid a dividend every year since we joined AIM in 1996.

24:44 Our business has consistently been cash generative with low CapEx needs right across the group. And our organic growth is driven by servicing high growth sectors in IoT, autonomy, security and defense and transport and medical. And whilst governments understand to be focused on COVID-nineteen, risks haven't gone away in defense and security, and we're well placed to benefit from an increased expenditure in these markets. We recently won a defense program from the UK government as they're requiring now 30% of spend to be placed with SMEs.

25:26 Our wide customer base gives us resilience. We've got no single customer counting more than 10% of group sales, and that has been the case for a number of years now. Certainly, during lockdown, it's been invaluable having production close to home operating in the same jurisdiction.

25:45 And a wide product range, which requires technical support often with long product lead times affords us some protection as customers typically need to place scheduled orders. We're conscious of dilution and eroding shareholder value, and we've delivered strong EPS growth.

26:12 Okay. Moving on to the future and where we're looking to invest. Gary didn't believe to the fact initially we paused our CapEx program. As we come out of COVID nineteen, we will look to reinstate that CapEx program, and there's a number of key capabilities there. So on the test side of things, we're looking at our EMC chamber and RF testing suites That will enable us to bring in house

26:42 our testing capabilities for EMC, and that will reduce our reliance on third party test houses. That will afford us better flexibility and and make us better able to service our customer needs very rapidly. In terms of productivity, we've invested in wire bonders, bulk cure equipment, particularly down in Weymouth, which is the the picture you can see on the bottom of that slide. That's our facility in Weymouth. And that enables, yep, rapid setting of epoxies, and that gives us better reliability, better quality, and better productivity. And that's a cornerstone of improving those operating margins.

27:21 So we continue to invest in in systems upgrades, ERP systems upgrades. And looking forward on the the new battery pack programs that that Gary's talked about, we'll be looking at investing in a in a in a welding, an automated or semi automated welding tool to improve productivity and reliability there as well.

27:42 Those investments will will absolutely underpin quality and will enable us to deliver the the products that our customers want and need. We come on to to m and a. We will look to resume the m and a program as we come out of COVID nineteen. Yep. We'll continue to be opportunistic at the right time. We're in a pretty strong position with

28:07 debt free balance sheet, net cash that's continuing to grow, and strong facility with Lloyds Bank that's committed out to 2021. Yeah. I think my personal view is, yeah, in the near term, while government support is still here, businesses will probably not look yeah. M and a will probably be something that can becomes a feature for for businesses when that government support is taken away or reduced. So, yep, q three for us is likely to be the sort of time where businesses think, crikey, being part of a bigger group might be an attractive option. So I think,

28:43 yeah, potentially, there might be some opportunities for for bolt on acquisitions that complement the group with businesses that are just struggling after that government support's gone, where we can integrate them and and really be better together. So I think, yeah, q three, q four towards the end of our financial year is when the the m and a program, hopefully, will start to to pick back up. Before before I hand over to Gary to to sum up.

29:16 Thanks, Pete. A large customer base and a wide sector coverage and strong debt free balance sheet gives us some resilience in what's definitely uncertain times. We consider Q2 maybe the most unpredictable period as we begin emerging from lockdown. The business has traded well in Q1 as we announced our trading updates, and we've actually traded ahead of expectations in the first two months of this fiscal year. But we have seen soft order intake in Q1 down just under 15% compared to the same period last year, and that's come from particularly from our smaller customers. Our larger customers have been really quite stable during this period.

30:08 However, we enter Q2 with a strong open order book of about GBP 40,000,000, and we're well placed to emerge from this pandemic in a far stronger position than many of our unlisted competitors. One impact of COVID-nineteen, we feel may well be a shift in global supply chains. Our sales team is already reporting comments from our OEM customers about buying vital components close to home, and we stand to benefit from that shift. The drive to achieve further cross group collaboration will continue. That was part of our group strategy implementation over the coming years. With the focus remaining on supplying trusted technology, the demand to get patients as we strive to achieve our five year goal of doubling the size of business.

31:04 We believe post COVID-nineteen, we're well placed to achieve that. Thank you all. Super. Thank you, Gary. Thank you, Pete. Now if we could turn to the questions, we've had a number of questions that were submitted ahead of the presentation and questions have been coming in through the course. In fact, some of which have been answered in the progress of the presentation itself. But please do continue to submit your questions with the Q and A tab and we'll come on to those. Just in the meantime, I could remind you that this presentation is recorded and it will be posted along with a copy of the slides and the published q and a on the investor dashboard of the investor me company platform. So you'll always be able to go back to it or equally, if you know people who've who've not been able to attend, they'll be able to come back and and view it post the event.

32:05 Equally, as Gary previously mentioned, your feedback is very important. So afterwards, when we finish the presentation, if you could fill out the feedback form, that'd be very helpful. What we may do is group a couple of these questions together. And one of the more recent points made there was in respect of comments from clients that had suggested they were they were reviewing their supply chain. One question here is a question as to whether SOLID STATE has changed its supply chain in response to the pandemic. Gary, maybe you can just pick up on that. Yeah. Yeah. We've we've actually spent a considerable amount of time developing our supply chain as part of the service we offer to customers, having a robust supply chain.

32:56 And we've really been very pleasantly surprised, but very, very pleased that supply chain has stood up well. Obviously, they've had closures, but we buffered those with stock, but they've rebounded quite quickly and it's been testament to that work on developing the supply chain over many years. So we haven't had course to to change it specifically owing to COVID nineteen. Obviously, it's it's constantly under review with our procurement team. But as I say, they've, you know, they've responded very well to this pandemic. Okay. And then one other question which may lead on. Do you anticipate any long term effects from COVID?

33:44 We do. I think the the environmental side that we've we've touched on, I think, will be long term. There will probably be requirements that government stimulus for for a number of years and the the remote working has certainly brought up areas we can we can improve our systems and and become a bit more productive. So I think there are certainly three key themes that will carry through in the years to come. Okay. Super. Now we've got some just let me run through a couple of these questions here, which we'll we'll pick as we go through. Two two questions. What challenges and changes have you seen in the competitive landscape and pricing, which I'm assuming obviously relates equally to the COVID piece?

34:36 And the second question equally, you suggested M and A will be quiet for the next few months. Has this period not shaken loose some competition and bolt on opportunities that you can leverage sooner? And and there there are a couple of other acquisition related questions as well, but we'll come up to those in due course. Tom, why don't I grab that that one to start with? And then Gary can can add his perspective after. In in terms of competitive landscape and pricing, I think, yeah, the thing that's become increasingly important to our customers is reliability of supply chains And having put the buffer stock in and demonstrated that we are a reliable supplier in making sure we deliver has become increasingly important. Yes.

35:22 Price is still important to people, but actually the making sure that they get their product at the right time is is a is a real sort of focus point for them. So I would say, yeah, there is the competition is there, but it's making sure that we leverage the opportunities that buffer stock has provided us. And we've worked quite hard to do that. That's been reflected in our q one results where we've been able to maintain a good first quarter, probably better than we anticipated we might have done. In terms of m and a, I think, yeah, the the near term, while there's government support, a lot of businesses are are not necessarily feeling the the full challenge because you've got furlough job retention scheme, You've got, you know, the CBILs loans. There's various other forms of government support, and it feels a little predatory to be trying to approach businesses right now. Think, you know, when those government support features are being, you know, taken away and we're being weaned off them is when actually some businesses will look to is there an m and a opportunity that's willing buyer, willing seller to join a bigger group to provide a a more stable platform.

36:40 I think, yeah, the the question there is absolutely valid. We are monitoring a number of opportunities. We've got pipeline of of m and a things that we're looking at and we're we're keeping close to. But I think, you know, certainly my perspective is that's probably gonna be in our second half rather than in our first half. Super. Gary, do want anything you want to add to that? Yeah. We we've alerted our sales team to look at the competition. We've already got a a number of companies on the on, as you tell them, our watch list and we'll continue to actively monitor those. But I agree with Pete, I think the cash issues that will come up haven't fully hit yet with a number of companies furthering staff. So that's something we're we'll work on and we will approach these companies. I think a lot of it often is timing is important.

37:36 You don't want once you wanna be optimistic, you don't appear too opportunistic. And I think we something for the second half for us to focus on as we develop that that watch list. Tom, is it worth me adding the question above that on the feed is around outstanding cash or stock deferred consideration from recent acquisitions? But there there is no outstanding debt on those. That debt has been fully repaid. There's no deferred consideration due. So the Pacer acquisition is is now fully paid for in all aspects in terms of we've repaid the bank and there is no deferred consideration. Yeah. So the so the the the viewers can't see that. So the question was, are there any outstanding cash or stock deferred considerations from recent acquisitions?

38:22 So so the answer to to that is is no. We have a question here on the forward order book. How much of this is committed and under contract, therefore how much is potentially at risk for deferral or postponement? We only take fully committed purchase orders from customers. We don't we obviously have forecast business and business that can can shift, but those are all they are scheduled orders from customers. It's not so they can't be deferred, we're actually seeing some orders being pulled in. We're getting a mixture there. So for example, in transportation where the roads have been quieter or the trains have been quieter, we do maintenance programs and actually accelerating those in these early months.

39:18 But they aren't they are all scheduled committed orders. That's what we've always published in our open order book. Approximately 75% of that is deliverable in this calendar year. Great. Okay. A question here in relation to government support schemes. Have you taken benefit from the various government schemes in place for COVID-nineteen? What are the future liabilities? And are they addressed by the existing cash balance within the company or within the forecast 2020 outlook? That's probably one for you, Pete. Yes. No. So we absolutely have utilized the government support that's been available. So we've had, yeah, approximately 10% of our staff furloughed through the the last quarter.

40:10 And that's been typically production staff where we've aligned the the workforce with the demand. So we have utilized that support that's available. We have increased that slightly in the last few weeks to enable us the flexibility of the revised scheme for the next quarter through to the end of October. In terms of cash conservation, we did utilize the deferral of VAT and the like. However, by the end of q one this month, we've actually caught that back up. So in terms of the question around is that in in the plan and in the existing cash balance, there was relatively small level of favorable cash impact from government support at the end of March.

41:01 It grew through April and May, and it's unwound by June. The bigger impact for for the favorable cash position was actually the the terms with suppliers, which you can see in the the cash flow with the freight creditor working capital in play. Great. Okay. And we've I think we've got two more questions that we can probably fit in. The first one is from Sam m. Who do you see as your main competitors? We don't really have let me just be arrogant. We don't really have a a single competitor. We've got a mixture of competitive various parts of our business. The closest the nearest list is scrubber I e carrying the same sort of model as manufacturing and distribution but they really work in different areas to us. Most of our competition we find are some big global distributors on the the bad side but more typically smaller smaller private businesses to extent on across the business.

42:14 So there's, as I say, generally not one company we come across all the time. So okay. Thank you, Gary. Now look. There's one last question which might be one a good one to finish on. How close are you to achieving your five year plan? What is the target that you that you are aiming to hit? Now it might be that you just put that in context by explaining what the five year plan is and then then that would be a probably a good place to finish. The the five year plan is to, by 2022, double the size of the business and the key measure there, the adjusted EPS. So we started at 30p broadly and the target is to to get us to 60p of adjusted EPS.

43:02 And as I said, we've grown 50% since 2018, we're actually 54% of the way there, to be precise, at 46.3% as of the end of March last year. So we're absolutely on track taking that goal. And we've got plenty of good opportunities to explore in the coming couple of years. Excellent. Okay. Well, look, thank you both for updating everyone today as part of your roadshow. Greatly greatly appreciated. If I could ask investors not to close the session as you you will be automatically redirected for for feedback. So if you if you access this meeting from the website, then the feedback page will appear. If you access via the link, then an email will be sent to you to log in to submit your feedback.

43:52 If anyone has any further questions or would like further information on SOLID STATE, then please do get in contact via solidstate@walbrookpr.com. Alternatively, thank you again, and we will bring the presentation to a close.