Strip Tinning Holdings (LSE:STG) — Final Results Presentation

0:00 Good afternoon and welcome to the STRIP TINNING HOLDINGS PLC Final Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be answered at any time via the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:29 I'd now like to hand you over to Richard Barton, CEO, and Adam Levant, CFO. Good afternoon to you both. Good afternoon. Hi there. Good afternoon, everybody. Thanks for listening and joining with us today. I'm Richard Barton, CEO of STRIP TINNING Automotive. This is a a sixty five year old family business. I started working with my dad probably thirty years ago. At the time, I think we had just three employees.

0:55 Today, we export to 35 different countries and all the world's tier one glazing manufacturers and currently employ a 175 people based here in Birmingham. Thank you. I'm Adam Levan. I'm a qualified chartered accountant. I've worked with KPMG in transaction services specializing in the automotive sector, and I've been in automotive around twenty years years now. I think we're now gonna just play you a short video that introduces the products of the products of strip tinning just to try and bring it a little bit to life for you as we as we then try and explain them further in the markets we serve that we're in.

4:21 Okay. I think I think we're back on. I hope you enjoyed the video. It gives a bit of flavor of what we do. So, really, since since the since the beginning, we've been producing the tin coated, buzz bar that goes into the heated front windscreen. Depending how old you are, if you remember the original Ford Fiestas and Ford Sierras back in the nineteen nineties, you push the button on your car and it melts the ice on the front windscreen with a very fine tungsten wires. That's the original product of the company and and the the backbone of the company, and it's what we've been doing for for more than thirty years.

5:00 Since then, we've developed a new product for electric vehicles. This is the picture on the right hand side labeled EV battery packs. So we effectively now have two divisions within the company. One is for glazing and all connectors associated with glazing, and more recently, this new product EV battery packs.

5:23 Historically, we've had very strong EBITDA growth. We've been growing at 12% a year in the existing glazing business. And we we entered this sort of new battery market in about 2019. It's kind of been an evolution from glazing. It uses the same type of materials. They're plastics. They're metals. They're laminated together, and they're used on cars. Whilst they have very different applications, it's been our sort of our history and our pedigree that's enabled us to get this early mover advantage and foothold in the electric vehicle market.

6:01 On the right hand side, our customers, I mean, they're they're all all the tier one glazing manufacturers worldwide for the glazing industry. We we we just know everybody.

6:12 I've spent twenty five years traveling the world, seeing them, and successfully gaining business. We've never lost a customer, and the business grows year on year with each with each account. For the EV battery packs, our customers are some of the new entrants, but as well as existing OEMs. So we we have business with people such as Rimac, but also Porsche and Williams directly. Since since the IPO we did in February earlier this year, we array we raised nearly £6,000,000 of cash to invest and help to grow the business. We've committed to spend nearly £4,000,000 on CapEx for equipment for both glazing and EV to increase our capacity and improve the production rates.

7:15 So this page gives you a bit of a breakdown. It was all going a bit fast in the video. But if if on a vehicle, this this is really where all our products are used. The front windscreen contains this is actually a coil of co the coil of copper strip, so it unwinds a bit like a bit like sellotape, and that material goes around the the complete perimeter of the windscreen. And then within the windscreen are the vertical tungsten wires that you may see. They're really, really fine, usually only about 20 microns in diameter. That that is the basis of a heated windscreen. We started doing that, obviously, years ago.

7:53 The customers then asked us if we could then manufacture the connector that connects the car wiring loom to the heated windscreen. And that's that's this type of product. Again, it's it's the essence of what we do. It's it's it's a copper strip coated in tin, then encapsulated in plastic, then with a mold. So every every buzz bar, heater, windscreen customer we originally had, we now sell these components to millions of per year.

8:25 And you got that version as well you moved on to? The technology has moved on considerably. In a new flexible printed circuit line, which is this connector here that Adam is holding up. And it was it was our investment into that process, which has enabled us to get into the electric vehicle cell contact system market. So if you look at the bottom right hand side of your screen there, that's a cell contact system. All the components you've seen up till now, we put some dates on there and really how much typically how much they sell for a euro each, €3 each, €9 each. This product is for electric vehicle battery packs. Essentially the same, it's copper strip, it's encapsulated

9:12 in plastic, and then it has an overmold. Each one of these sits on top of an electric vehicle battery. We sell these units for more like €60 each.

9:28 Our customers next slide, please. Really just an outline of our customers. We work with all the glazing tier ones on the left hand side, household names, Sangaban, AGC, NSG. And also for for EV, we're working with these companies, Williams, Arrival, McLaren, Scania, Porsche. So some of those are new entrants. Some of those are existing OEMs. And then between them, all of our products end up on the on the vehicles on the vehicles listed below. So in terms of the opportunity where this business sits, you know, this this is this is lifted pretty much from a a a big consultancy report, not necessarily our own work, but it it's it sums up where we are.

10:18 What described as five megatrends, electrification,

10:23 which is battery packs requiring flexible complex flexible smart connectors, and that is that cell contacting system that we showed you that is for specifically the electric vehicle battery market. But all of these other trends also stimulate the glazing part of our business as well. So autonomous driving, typically, autonomous applications, they contain large amounts of glazing, more fat functionality like smart glass, which is where our connectors come in. Connectivity as a whole, all cars, you know, connected with FM signals, with TV signals, with and and for your phone. So there's more antenna going into glazing, which again fits our our our glazing connector business.

11:15 The sharing and mobility, the extra functionality, more glazing, and then the new entrants who've got the new entrants into the market like Tesla, Fisker, Arrival, all of these companies that that have Lucid, all of these companies that are shaking up the car industry and have got more technology, more glazing, more innovation on, they all drive the connectors as the cars get more and more complex. So we've got a growing connector business as demonstrated by our historic sales growth as well. So that carries on even if it the the most excitement is around the the battery cell systems themselves.

11:56 In terms of sales, the company exports virtually all of its product. So we we send most of it out to Europe, but we we actually do export successfully to South Korea, South Africa, South America. And as I mentioned in a sec, we've we've got a growing presence in in in North America. In terms of market share, we're a strong third, and we're actually now having launched a couple of extra products in the last eighteen months, two years. We are the only actual glazing connector company in the world that serves all of the connector needs of of the tier one glass manufacturers.

12:41 So that's the buzz bar, the front connectors, the roof connectors, the rear connectors, and the flexible printed circuit connectors. We're the only ones that actually do that. So we're a strong third in in terms of size behind FEW of Germany, but we've also got a reputation for doing some of the more complex work and and at the higher premium and end of the market. In terms of BuzzBar, the other important name on this slide is Schlenk, which is smaller business in terms of automotive exposure, but they're our big competitor in busbar. So we we carve up the market between ourselves on that. They've got about 30%. We've got about 70% of the automotive busbar market. In terms of where our focus on growth is, our market shares in Europe, we're in the low as I said, we're we're around about 17%.

13:42 Richard's targeted the business to get to where it needs to be in the low thirties over the next few years, which the the our customers typically like to have a choice of three strong suppliers that they can trade off. And, you know, you either pick up a third of the business if it's all going well, maybe a little bit more if it's going particularly well. If you drop the ball on something, your your share will drop to 25% of of new nominations. But we we should be around about 30%. Our focus will remain on Europe because that's where the majority of innovation in vehicles still still takes place driven by the German OEMs. So that's where we'll stay. However, there is an incumbent supplier in North America, Anteya.

14:27 They've got a reputation of being a little bit behind the curve. And as American cars have got more sophisticated, including with more electric vehicles, which tend to have fire functionality, which suits the the glazing connectors, there's more pull for them. And with increasing European presence by BMW, Mercedes, and VW in North America, we're actually being pulled over there. So we've had significant sales wins in the North American market. So that's that's our that's our focus. They're they're the two geographic areas of our focus at the moment. In terms of the cell contacting system market, so the the glazing connected market is growing.

15:13 Our premium products outgrow the the the general market a little bit of the rear connectors, are on basically pretty much every single car just to heat your rear windscreen. Growth comes from heating and functionality in front

15:26 windscreens in the roof and in the roof as well. So we've got products serving that. So we're growing in that glazing market, but it's almost capped by the amount of glazing that's produced, and that's not grown substantially. But I'm not gonna dwell on this slide because you all know from from the press and general experience keeping up with the news that electric vehicles are taking off massively. So the the compound growth figures, you could pick any different source. This one's showing expected growth of getting on for forty percent 2021 through to 2026. We suspect that's probably an understatement, but it it proves the point that there's there's great growth opportunity out there for our for our product. And now, you know, we've we've got all of the technologies in house already. It's an evolution of something that we've done for, you know, twenty, thirty years anyway. And we're already working on the next generation of our cell contacting systems building on the one that we've already got series production order from a German sports car manufacturer.

16:33 So in terms of the growth strategy, just in in summary, we're gonna continue to grow global sales and margins in the in the core glazing connector business. So we've we've had we've had some successes with new products. We're the only company in the world that supplies the a roof glass product. It's for a BMW vehicle, one of their new electric vehicles. You touch the you touch the roof with your finger, and the glass turns opaque. Touch it again, and it returns to being transparent. We're the only company that's that's got that product at the moment. This that technology has been around in architectural glass for a while, but it's and and in in in aerospace for a while, but it's it's new to be carried through into automotive. So we've got a 100% share of an admittedly relatively small market at the moment, and we started with our patented rear glass connectors as well. So we've got good growth from from new products as well as the core growth in the front connectors and FPC connectors we've had for a while now. We're expanding gross margin or recovering gross margin through automation.

17:38 We've had some notable successes that we can we can mention to you later in this presentation, and we're backing that up with continued investment in CapEx to keep ahead of the curve and also with our sales effort in in North America to accelerate penetration there. And then we continue our entry strategy into the market for connectors for the cell contacting systems. We've got an early mover advantage there based on the technologies we had in house already and the fact that we've been given this fantastic opportunity by the German sports car manufacturer and its parent group. So we're working very closely with them and also Williams Advanced Engineering here in The UK.

18:20 We put the Richard took a a punt on this market, which is now paying off and then invested over 2,000,000 of of of his own money to date in the business. And we're just working to secure further serial production nominations, and we're building this up as a dedicated business unit. So this will be a separate reporting unit for 2022. And, you know, we're backed by the German OEM who's who's funding themselves a lot of our CapEx and and giving us an order. There's actually we've got on this slide £1,700,000 of sales for five years. That's closer to 3,000,000 on revised volumes. So we're already making progress post IPO, which is what this this this presentation, by the way, is is a is what we used on the IPO road roadshow. But now the section operation operational highlights, this is this is the update as what's happened to to post IPO.

19:17 Thank thank you, Adam. So since IPO, I'm sure we're all reading in the press, car sales are certainly and car volumes are certainly down. I think the car volumes are down 20% at the end of May compared to the same period last year. So it's a it's a tough market. All of our products go on go on to go on to cars. So if they simply, if the volume is down, then that that does have an impact on us. But the the demand is very strong. We continue to get lots of inquiries, for new model electric vehicles for glazing components. So just to sort of run you through the the opportunities that are really coming out,

19:59 we we have a one competitor we talked about earlier called Carl Schlenk. For years and years, they've been the sole supplier to our our biggest customer, which is Securit. We supply Securit with just connectors. BuzzBar, which is our most profitable product, has always been regarded as a bit of a commodity. It's used generally on every vehicle, whereas connectors are individually tailored to a particular model. Securit have always regarded it as a commodity and and never really given us the opportunity to quote the business. I think in the in the the the the uncertain world we're in now, prices are increasing enormously. And we found out recently that one competitor, Karl Schlenk in Germany, is charging €62 for the BuzzBar products.

20:54 Our typical price for BuzzBar, albeit we do different variants and sizes, but our typical price price for BuzzBar is more like €35. So because of the the the state of play right now, security have now asked us and have ordered trial orders for BuzzBar, which we produced and have sent to several European plants. They use in excess of 40 tons a year, so we do feel there's an opportunity to secure not all of that business, but certainly some of it over the coming months. We have another large Turkish producer who we just received a ten ten year deal from. The the long term automotive deals are normally three or four years. We've secured a ten year deal.

21:43 This is for the whole range of new full transit vehicles, some of which are electric, all of which have heated front windscreens. These are manufactured in Turkey, Spain, and North America. It's an existing customer, but it's given us an uplift of maybe €300,000 a year. So the value of that business to us over the lifetime will be 10 or €12,000,000. Just this year, we've received some new connector nominations. Very interestingly, if you the vehicle they're all electric vehicles, so we've received £2,300,000 approximately of new new nominations. And these are for the Tesla Model y, an electric Porsche, and also the Volkswagen ID Cross.

22:32 It's whilst the market is subdued at the moment and volumes are down, it's very nice that we've been nominated for this work, especially for Volkswagen. Because once we get onto one Volkswagen model, it means Volkswagen will effectively homologate us across the whole group. So a great opportunity for us to get lots more work from Volkswagen. And when the market comes round, we'll be we'll be very well positioned to to be supplying these new models of car, which in turn have a have a lifespan of five or seven years. Thanks, Adam. So, also, since so from a from an EV point of view and the cell contact systems,

23:18 since the IPO, just bear with me. I think at IPO, if you look at the the green section, at IPO, we had we just had two nominations for cell contact systems, and that business was worth £2,000,000 a year to us guaranteed for five years. So in just a few months since we IPO ed middle of February, we now have five nominations in total with guaranteed business of £4,300,000 a year for a period of five years. We the left hand side, I think there are 12 lines there. Those 12 lines represent 10 different customers. So five of these customers are OEMs.

24:04 Three of those OEMs are German, and the the other the other customers on there are the new entrants, people like Arrival and Vertical Aerospace, Johnson, Matti. So we've got the we've got the business in green. The the the actual inquiry list is much, much bigger than this. These are these are the programs we're currently working on. So we're advanced design stage. We produce prototypes or in automotive speak, we're producing b samples, which means they're actually on vehicles being tested at the moment. So we're we're confident that we will secure much of this business. I can't make any guarantees yet, but it's all following the trend of line number three, which is Porsche.

24:57 This is the first order we got. This is for 30,000 units a year at €68 each. So that's guaranteed business we have for five years. They've subsequently increased the order requirements of 41,000 units a year, and, again, guaranteed for five years. Number number seven on this list is Audi. So no doubt we've got the Audi inquiry because we're working closely with Porsche. Again, it's in Amber. We don't have the business yet, but it's a new program. They're working closely with us. So it's developing from start to finish. I think the Porsche business took us probably three years to get from start to finish.

25:42 I think because of the way the market is developing and there's more knowledge out there about cell contact systems, it's a real collaborative type of engineering agreement and arrangement. We have engineers from Porsche with us every week. Visit there frequently. I think that the the development lead time now will get down to maybe eighteen months. But just really to show there's been we we it's ahead of where we thought it would be at this stage, And the the overall potential for us is now more like £26,000,000 a year, whereas three or four months ago, we were thinking it would be about £16,000,000 a year. As you get as you get one program, another one follows. And each of these programs lasts five or seven years.

26:30 This next slide is just a a little bit of an illustration of this case study, actually, with with with Porsche. So as Richard said, originally, it started off back in April 20 when we first made contact with them. We went through a number of stages, and they decided to update from just use upgrade from just using the flexible printed circuits that we produce into a full blown cell contacting system. So that added to the development time but gave us, you know, gave them a better solution and helped develop our our business. We've been very collaborative with them, like Richard said, which is a bit of a a unique selling point in in terms of how we work with the customers.

27:17 And they wanted to work at pace, and they skipped some of the the audits that they would typically do because of the shortage of suppliers with this expertise in the market. So, you know, we've we've had this time and again. They would rather tick a few boxes to say you can do this, you can do that. They don't have time because there's such pressure on these OEMs to develop their EV vehicle offering and their electric vehicle offering. So they're they're they're working in ways that they wouldn't with traditional tier one or tier two suppliers. Normally, they don't work with tier two suppliers at all. So we've we got through to our nomination. And in a further unusual twist, they've started requesting engineering changes, which never happens normally at nomination. Normally, everything's frozen at that point. But, again, because the market's quite fast or or very fast moving, they're looking at what they can do to upgrade, future proof this product, or give it a benefit on on other programs that they've got they've got running to bring those to market quicker.

28:17 And so that gives us another opportunity to charge for engineering design changes

28:23 and and and also we we'll we'll get a little bit of extra capital out out of them for the manufacturing process. So this is really quite unusual way of working with OEMs, but it's actually very, very good for us, very refreshing. And from Richard's point of view, this mirrors how things evolved in the glazing business years ago, so he's got a really good experience of of executing on this in the development on on these collaborative approaches with these big with these big companies. And, you know, it is it is quite remarkable and shows how tight the market is for supply of ex an expertise for this product that that Porsche are dealing with a a company of our size currently that shows the opportunity we've got. In terms of progress on delivering that, I think Ali's just got a we're able to show a a a short video just to some of the robotization that's going on on the laser world. So you hopefully, you can recognize these cell contacting systems that we held up earlier.

29:43 So, yeah, that's that's that's progress on the delivery of the automation and robotization of of the high high volume lines that we're we're putting in significantly funded by by Porsche. So our engineers are working with a German supplier to develop that process, and I think we're at 95% accuracy of where we need to be. This needs to be delivered for the end of the year. We're at 95% accuracy and 80% of of the speed targets as well. So that that that is progressing well. In terms of financials, we came in in line with expectations for 2021. This is for the old company, STRIP TINNING HOLDINGS So this is prior to IPO.

30:34 So our EBITDA numbers reflected the investment we're making in EV, but, obviously, together with the, you know, the pressures in the market on the on the material material price inflation and and the the supply disruption that everyone's been experiencing that, again, you'll be familiar with the news. So, you know, performance in glazing was was reasonable for the year, and the overall EBITDA results are are being being pushed down by the investment into into EV. So we're working on on the margin recovery plans for that. In terms of balance sheet, again, this is pre IPO, so it doesn't reflect the the injection of cash. There is there's there's been a little bit of pressure on working capital. We've had to carry more stock than we would have liked because of the supply chain disruption, but but we're managing our way through that.

31:28 And cash flow, we we've paid dividends last year as we have done previous years, but, obviously, that's now that's now stopped to be reinvested in in in the growth story. So we're we're we're managing our cash fine at the moment despite the despite the headwinds. We we've been doing the roadshow to the city this week, and this is being accepted that these these are the numbers as forecast.

31:55 So we don't propose to dwell on this. But if there's any questions, these are the the results the full accounts are available on our website. If there's any questions, we're happy to take that we're happy to take those all up after the presentation, but we wanted to concentrate more on the opportunity in the future. So in terms of outlook, Richard, do you wanna give a a quick update on Thank you. Thanks, Adam. It just just really as we've been we've been talking so we we can skip over this. The the car European car market has certainly softened. Everybody asks me when I think it's gonna get better. I really don't know. This is chip gate. It's completely chip gate. The Ukraine war has exacerbated it slightly by a shortage of wiring harnesses, but that product is typically sourced from three or four different countries. And already the the car giants have have dealt with that that shortage.

32:49 The chips, however, I think the it's it's a longer term issue. Since COVID in 2019 when we were all staying at home, not buying cars, Everybody was buying laptops, iPads, PlayStations, consumer domestic electrical goods. That's taken up the the hoovered up the

33:11 surplus silicon chips. New capacity is being laid down now, but for silicon chip production, but this takes five years and costs billions of pounds. I think it'll be at least a year, I would think, before things are back to what what we we we would call normal. We we've seen no demand no no reduction in the demand or interest in the products. As I mentioned, we we had several new nominations for connectors in glazing for electric vehicles. I think I have 13 RFQs to look at over the next couple of days, every one of which is for a new electric car. So when this is over, we're really very well positioned because as we've been we will be on a lot of new models which have a five or seven year lifespan.

34:02 Obviously, lots of pressure on pricing and lots of inflationary costs coming through to the business, so we we take the opportunity to look at our own prices. We we have really have contracted business and noncontracted business. So the noncontracted probably makes up 20% of our sales. We've been increasing our prices as and when these new orders come in since the beginning of May. We've managed and we've achieved, I think, 18% across the board increase. We I think we've had 54 new orders. We've achieved that 18% on 50 of them. A few have dropped away, but that's quite typical.

34:48 Often the spot orders or the smaller orders, it might be for some guy that makes heated windscreens for ships or boats or trains. And it's it may be a small engineering requirement from an engineer that he has an alternative way of making it, so it hasn't hasn't paid our increase.

35:03 That's a noncontracted business, so we're pleased with the result there. The contracted sales, so we have contracts with all our our our big accounts, NSG, secure it. Usually, with six month or even two year get out clauses, fixed amounts of products, fixed volumes, and fixed prices. We had we had our lawyers review all the fit all the contracts, we've gone back to the purchasing directors of all our big accounts. So we've just said to them, we we have to increase the prices. So and we've been talking to them about 20% for connectors and 30% for BuzzBar, Remembering we haven't increased our prices for a number of years. We've always been sort of

35:54 cowed by the fact that we do have a contract, and it's it's that security that that keeps us in our place. But we're emboldened now because of what's happening in the market. I'm not saying we're gonna achieve 20 or 30%, but the pushback actually has been less than I thought it was gonna be. There have been some, you know, really realistic conversations.

36:14 People are asking us how we can mitigate any potential increase. We have one guy who manufactures windscreens in Poland, delivers them to Nissan in Sunderland, goes back with empty lorries. He suggested he collects all the goods that would save a £170,000 on transport. Lots of things, and there's a real conversation going on. So I think the the the we will get a bit of a bruising, but we're we're determined. There's certainly resistance, but nothing like I thought it was going to be. And some people are coming to see us, and I would expect, I don't know, maybe I I I expect a 15%, let's say, a 15% across the board price increase, and I hope we've hope to have that all in place by the middle of July.

37:02 And then there's new business.

37:07 I'm just determined now. I just see no point in in in with the uncertainty and the inflationary pressures and the costs coming in. I just see no point in quoting new connectors where we're just just gonna break even or make an even make a loss. So we decided to get really bold, and we had a normally, an engineer at the glazing companies send you a drawing tells you his target price, and you you normally go back to a million 5 or 10% of that, and you you probably get the order half of the time. This happened to us the other day. We had a we had a guideline price suggested at €2.70, and we just we thought about it, and we just we just decided to dip our toe in the water and see what would happen if we went really high. So we went back to them at €4.70.

37:52 I wouldn't have had the guts to do that two years ago.

37:55 And, incredibly, three days later, they ordered the prototypes. So half of me sort of kicking myself, why didn't we do this five years ago? Obviously, I think there's room there to to get greatly increased margins, especially at the moment. So I think I think that's gonna be good for us moving forward. So that's what we're doing about pricing, then our own our own operational improvement plans. I think, again, back at IPO, we suggested to the market and the investors at the time, we had about a million pounds worth of improvements we thought we could make within the business, little bits of automation, little bits of CapEx, bringing some subcontract work back in house. And this is really a list. You know, the left hand side shows about a million million pounds of their improvements at IPO. We've, in fact, revised the target. We think we can now achieve about £1,200,000.

38:50 These these these are the titles. I've given you the sort of traffic light system so you can see where where we're at. We've found some new processes we can do. We're just gonna save 12 heads on that first one at £207,000 saving. At the same time, you know, one of the red ones at the bottom, we we thought we were about to reduce our temporary labor as we were getting on top of things. But, you know, the the there's a

39:15 cost of living crisis out there. We have a number of people here, probably 80 people here, shop floor, the assembly workers, they're they're around the minimum wage type level. We feel, you know, we want to. We feel we need to put a a a pay increase through for those guys. That's probably gonna cost the business a 120, £150,000 a year. But we're also we're also tying that in with a new skills matrix to make sure they're cross trained. At IPO, we promised that we would be introducing a SIP, a share incentive plan.

39:52 The share incentive plan is now coming to fruition, and everybody here will be receiving free shares in the company. So we hope the sort of we hope the free shares, the the the the shop floor basic wage increase will will sort of help help keep the retention of the staff. Thank you, Adam. So just I think this is this is one for you, Richard, really, just the the summary of of the opportunity. Yeah. A real summary of what we've been talking about today. So a lot lots of trends in both glazing and EV, you know, huge demand and excitement in the market for electric vehicles. Glazing isn't dead by any means. More and more technical requirements are needed. We're established in the glazing business.

40:38 People known us. We've been around for years and years. We got our foot in the door with EV early on. Little company like us is working really well directly with people people like Porsche, Williams, and Audi. Quite unusual. We have a long term contracted customer base.

40:57 We have a good reputation in the market. We have millions of connectors on millions of cars have been on the road for years. So we have a real automotive pedigree, and that's really helping us with the cell contact systems and and the electric vehicles. We've won new business in 2021, both in glazing and electric vehicles. And we have a well rewarded, engaged, motivated management team. I think that's about the end. The presentation, so it's not more of a a q and a session? I think we can hand hand back to our administrator, and then we'll invite any questions, please. Richard, Adam, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab situated on the top right hand corner of your screen. But just for the company to take a few minutes to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

41:55 Rich and Adam, as you know, we received a number of pre submitted questions ahead of today's presentation and we've received a number of questions throughout the live event. Just wanna say thank you to all the investors for submitting those. Could I just ask you both to read out those questions and give response when it's appropriate to do so? And then I'll pick up from you at the end. Sure. Thank you. So where where have we got? So, no, the first question we got, are you still confident that the EV division is trading ahead of expectation? Well, yes. Thank you. It it it is. We we I think we said earlier, we had two nominations at the time of IPO. We now have five actual nominations. We're ahead. I think we're ahead of where we said we were going to be, and it it frankly, absolutely delighted with that. Are you worried about further delays in your EV contracts? Not not really. I mean, I think think it's it's inevitable in automotive.

42:45 Some projects get delayed. The the start of production for Porsche has been delayed a quarter, but, you know, Porsche is a real car company. It's not a it's not a it's not a new entrant. It's not a it's not a sort of driverless taxi. So it's a real car company, and it's really going to happen, and it really will be launched. So we're very sort of pleased. And we've worked hard that that list of customers you saw. We have we have a lot of OEMs as well as some of the new entrants. So we're not reliant on anyone, and we will make sure certainly as we as we as we move forward that we that we we maintain a really good spread. I've got a question here. Do you expect to see an order uplift in any other of the EV nominations?

43:32 Well, there's been order uplift in every single EV nomination that we've had for the cell contacting system and for every single glazing connector that we've sold on EV vehicles. So I think the answer to that is yes. We would expect to see that at least in in the short term, you know, in the next couple of years. That's definitely very much the the pattern. Related, I think, question, do you still anticipate the same growth in the EV market as estimated at IPO? I think I mentioned that on on the graph we showed. You can get the statistics. Well, they say you can prove anything with statistics, and I I don't see any slackening off. And although the I think Richard alluded to it in some of his his presentation and in his answers, there's been no slacking in the interest in Devon for the cell contacting system and the growth in EV. And and our the OEM customers are short cutting processes and fast tracking processes.

44:31 So that Audi that Audi piece of work that we're that that we're working on, they've gone straight to B sample and cut out some of the prototyping stages because they know that that we can do this work. Five. Please can you explain the investment that has gone into the business, especially the EV side, and has this had to be reduced? Richard had put in £3,000,000 of his own money prior to the IPO in developing the kit that can be used for the flexible printed circuits, which is which has been the foundation of of the cell contacting system. And then the customer has put in £2,400,000 of their own of their money as well, which is off our balance sheet. But for the but for the CapEx to to develop that, then we've got further commitments ourselves to round out that capacity and enable us to to service other customers better.

45:31 We haven't had to pull back on on on our EV CapEx investment. Answering a question I haven't actually been asked, the on the glazing side, we've got more flexibility. We've been reviewing how we deploy CapEx, and that's not I hasten to add because we're not as focused on that area anymore. It's just we've got a new very high caliber managing director of the glazing division, Mark Perrins, that joined us that that actually started in his day job here a couple of weeks after the IPO, after the listing. And he's looking at things very differently where instead of linking CapEx to a program, he's linking it to a process. And that is able to reduce our CapEx bill, improve our bank for buck and and return, and it's giving us some phasing advantages.

46:20 What's the reason for the two EV contracts being delayed, Richard? Yeah. So, one of those, I think, was, for Scania trucks. I think this is early on. We were I think this is really our own fault, but I think we were working very hard on the the Porsche business and simply, that stage, didn't have the resource we were being developed by them in in tandem with another supplier in China. I think we've lost this early Scania opportunity. However, they it's it's their intention to to to have a European supply chain, and this is this is, I think, the the advantage we have. So I I I don't think that business is lost forever. I suspect when Scania have their next model that is is is coming up for development, we they'll they'll engage us in that.

47:17 We also I think the other was probably Arrival Yes. Which was a which is, yeah, a huge inquiry for, again, I think, a driverless vehicle. I I believe they're they have their own issues, and that general program has been has been has been shelved. But, again, it's it's why we like the spreads. You know, we have we have 10 customers altogether, five OEMs, and five new entrants. So we're not gonna do wonderfully on all of them. And it's I think it's just developing piece by piece by piece. You know, some some some will be successful with others others maybe not so as to as to see who we fit with best. We've got a few questions, I think, that can be rolled into one.

48:07 Hopefully, it does address the points. And I think that some of which we tried to cover in the presentation, price rises, how have they mitigated costs rising costs, and have your price rises compared to the competitors? I think we we don't fully know how our competitors have have responded on the pricing. We do know, obviously, that Schlenk put prices up substantially, and we do know that other connector suppliers have put prices up because Sangaban and Sakharov have been quite open and transparent and told us on a couple of ones, but we're not sure how it is across the board. In terms of how our price rises, yes, for the time being and a little bit more, we put a bit of extra bumps in there. They mitigate the price rises that we're seeing. So although we buy lots of copper and tin, we buy them in a process form. So although the prices have gone up substantially, they don't go up by the same q swings you you have seen on the the LME.

49:10 Thank you, Adam. And then interestingly, there's a it's just the new question just coming from Simon t. Yeah. Do you have the manufacturing capacity to cope with a big upturn in orders? I think I think since IPO, I think we really said at IPO that we really thought the with with the premises and the equipment we have here, we can probably get to 16, maybe £20,000,000 turnover within a couple of years. It then means, I think as with Porsche, if we received another large EV commitment, it we we would then be able to talk to the customer about the customer investing further with us to expect to expand the premises we have.

49:58 We're also in touch with the APC, government backed grant organization, the advanced propulsion center. We have a grant application in specifically to expand the business. The grant title is is really about the electric vehicle supply chain. So we fit really, really nicely into that into the title of the the the grant funding. We have a grant application for 1,500,000. We even I think we're even due to hear about the results of that grant this week. Yeah. So there's lots of grant money out there too. And I think if we're the right sort of company, a a good opportunity for us to to get that money to help to help expand more quickly. But it's the whole point really why we came to market.

50:44 We had you know, previously in glazing, we made profits. We reinvested in the business. The business grew. You know, last year, we identified we had investment opportunities in glazing as well as in electric vehicles. And it was really if we were gonna capitalize on both opportunities, it was too much for us on our own to self fund, and that was really what drove us, I think, to come to market. So we've raised the money. All of that money is for reinvestment within the business, and let let let let's see how we get on. But that's that's certainly certainly the intention and was the driver for coming to market in the first place. There's I've got one here as well. Can you talk us through the impact of the Russian invasion of Ukraine on the automotive supply chain and your business in particular?

51:33 We had there's there was I think, as Richard said, the biggest disruptor to the automotive supply chain on top of COVID causing general supply shortages and disruption has been microchips. Russia, Ukraine, that was just, compounded, particularly with the amount of wiring harnesses that seem to be produced in Ukraine. So we've been hit in that car companies can't make cars, so they don't take our glazing products. There's been no impact whatsoever on the EV part of the business. Russia has had a little bit of a direct impact on our business as well. We serve three glazing plants that are based in Russia. They're owned by multinationals, one Japanese firm, one Chinese firm, one Turkish firm.

52:27 The supply is a mix of all the Russian domestic market and also for export, and that's being disrupted. We're not really making any sales to Russia on the whole at the moment, and we've taken those out of our forecasts. However, it will come back at least partially as that as the supply to non Russian markets is is produced in in other glazing at other glazing factories in Europe. And there's another one in from Simon t. Is is weak sterling good or bad for you? Actually, Simon, very good. The pound is weaker and weaker. I think we're on a dollar 22 today and a euro 16. We sell most of our products in euros and US dollars.

53:16 I think in in May alone, we had a 40,000 FX gain. I don't know. I mean, no no skill of mine, but I'll take it wherever it comes from. I think I don't know where the pound's going, but I think the general feeling seems to be only only really getting weaker certainly for the rest of this year. So we, you know, we'll take it. Thank you. This was a presubmitted question, about, for Richard, you've been in glazing for many years. What drew you into the cell management systems for EV? How do you see the opportunity when you first got today? Are they comparable? I think we kinda covered that in the Yeah. We got the the key. We we had the connected technologies, then we got into the FPC. Rich it was BMW that pulled Richard you into that, wasn't it? They asked for for that kind of product. Yeah. We started we started producing that very small orangey flexible printed circuit on the diagram of the car early on.

54:15 And essentially, I think because our our automotive pedigree, the fact that we supply really all the glazing companies which supply all the cars there are, that pedigree and the that capability of copper and plastics and tin and lamination is effectively what a cell contact system is. And we we we're not a new entrant. We've been around in automotive for thirty years, and I think it's that pedigree, the reputation. People know us. We have millions of parts and millions of cars that work and have consistently worked. I think that's why we was kind of selected for, you know, giant tier ones to work directly with us to to develop the cell contact system. It's just worth adding. I think we we missed this from our presentation that the the company has 15 patents and which really cover all of our turnover in terms of UK Patent Box.

55:12 And we're just about to add, thanks to the new group mark pairings, a a sixteenth, at least the patent application's in, and that that's linked to a really good win win with with Sanger Bank Secrid of connectors. I think we're gonna run out of time with all the questions, but there's one other final one, which is very personal for you, Richard. The question is, saw that CEO family sold 2,000,000 at IPO. What is your holding now, and are you committed to the long term? Can you evidence that commitment? I I can't even say unfortunate at the moment because I'm here at 7AM, and I'm going home at 7PM. But it's it's it's very exciting. I never saw this I never really saw the IPO as a way out. This is really just you know, for us, it's chapter two for the business. I mean, we still the family still own 55%, and it it's my intention that, you know, long after I've gone that that whether it's that percentage or a a slightly smaller percentage, but really still a a big controlling stake, I would really, really like that to stay in the family forever.

56:13 And but but, you know, continue it's just a continued cycle of investment and investment. It's it's exciting. It's challenging at the moment, but it's very exciting, and I wouldn't like to do anything else. Richard. Yeah. Richard, Adam, thank you very much. I think you've addressed those questions from investors. And, of course, the company will review all questions submitted today and will publish those responses on the investor meet company platform. But just before redirecting investors provide you with their feedback, which I know is particularly important to you both, Richard, could I just ask you for a few closing comments? Thank you for listening to us. This is a very tough period. The the the fairy tale IPO, hasn't quite turned out to be a fairy tale.

56:59 Seven days after we raised the money and had a euphoric day at the London Stock Exchange, the Russians decided to invade Ukraine. I still haven't quite got over the shock of that. I think had we been a week later, this thing would just would not have happened. It's a very challenging market. It's an extremely exciting time, nevertheless. We've been around since 1957. We've been through lots of peaks and troughs in the past. There's lots of opportunity. I'm I'm very excited about the future. Richard, Adam, thank you very much for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that management team can better understand your views and expectations. This will only take a few minutes to complete, and I'm sure be greatly valued by the company.

57:47 On behalf of the management team of STRIP TINNING HOLDINGS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Absolutely.