Strip Tinning Holdings (LSE:STG) — Interim Results

0:01 Good afternoon, and welcome to the STRIP TINNING HOLDINGS PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by 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. And I'd now like to hand you over

0:31 to Richard Barton, CEO. Good afternoon to you, sir. Thank you. Thanks, Alessandra. So hello, everybody. Thanks for tuning in with us today. We're here to give you an introduction to STRIP TINNING and to report on our trading since we became a POC back on February the sixteenth this year. I'm Richard Barton, the CEO. This is essentially a family business. My dad started the company back in 1957. I started working with him about thirty years ago when we had just four employees. Today, we produce millions of automotive connectors exported worldwide and used on most passenger cars. We became a PLC earlier this year.

1:17 And with me today are Adam Robson, our executive chairman, and Adam Levan, our CFO. And I'll let Adam and Adam briefly introduce themselves before we move on. Thank you. Yep. Hello. This is Adam Robson here. We're pleased to be talking to you all.

1:36 I started my career in automotive at Lucas Varity, which then eventually merged to become TRW Automotive, making fuel injection systems. Then later, my first chief executive position was autocruise taking radars onto cars, which is the precursor to today's autonomous vehicles.

2:01 Moved through a number of other phases in in in the the automotive industry, most recently working for a period on an interim basis at Melrose to help them begin to integrate GKN Automotive.

2:15 Adam? Good afternoon, everyone. I'm Adam Levan. I'm a chartered chartered accountant. I've worked for KPMG in the past, but I've had a lot of exposure to the automotive industry, and I've worked in it pretty much for the last twenty years, most recently in a tier one alloy wheel supplier in The Midlands before I got the opportunity to come and work at STRIP TINNING down the road. Thank you. So for some of you who don't who don't really know us, a bit of an introduction to what we make. We have basically two product groups. Number one is, connectors for the automotive glazing industry, and secondly, connectors for the new electric vehicle battery packs more much more recently.

3:08 Historically, we've had strong strong sales and and EBITDA growth. The company's been around more than sixty years. Back in 2019, we started our entry into the EV battery market. And we have a we have a vision to grow the company between both glazing and EV about four times in the next five years and to be able to show and consistently deliver a 20% plus EBITDA margin despite some very severe headwinds at the current time. Customers basically split into two groups. We work with the tier one glassmakers such as Securit and NSG. We also work with the EV innovators and indeed the OEMs.

3:58 We completed our IPO successfully last February. We raised £6,800,000,000 worth of cash to invest into the business. We're committed to spending £2,100,000,000 this year, some of which we managed to get a grant for, so it's grant funded. And the CapEx really helps us to automate the glazing production and increases our EV capabilities.

4:30 Here's a bit more detail about the actual products and some timelines. Back in 1990, The picture with the red red spool on the left hand side, this is the buzz bar, which is really the basis of your heated car front windscreen. This goes around the periphery of the windscreen. You push the button that carries the current to the tungsten wire within the screen and melts the ice on the outside of your car. For the same customers a few years later, we then started making connectors which connect the buzz bar to the car wiring loom. And, really, you can see some other product developments over the years. There's more and more glass on cars. There are more and more demands for innovation.

5:17 Recently, we started producing this connector at the top for a panoramic glass roof. Very profitable, very niche, and we can only see that market growing for us. And it's really the combination of that product and the the the yellow flexible printed circuit front connector, which we developed in 2019, it's really those two things that led us and and got us into the electric vehicle market. They're similar. We're we have an automotive pedigree, but you can see from the the example at the bottom, the the unit price for components for electric vehicles are typically €25 and upwards.

6:03 And in the future, we'll be on every car on the road. Whereas you can see, historically, our glazing connectors, the prices are much, much smaller. So we're very excited about the opportunity ahead.

6:19 Next slide, please. A bit more about the customer the actual customers themselves. For glazing, we work with the the tier one glazing companies. Really, they supply and and in turn, they supply every car on the road. You see all the the logos at the bottom. Our products really are on all of those vehicles. And from an EV point of view, we're working with the innovators, some new entrants, but we are also working with OEMs as you can see. I think over to you, Adam. So we talk in in in the let's say, longer term about the opportunity. As I'm I'm sure you're all very aware, there's kind of five megatrends in in the automotive industry of which electrification is the biggest.

7:08 And for our us, that's created this opportunity in battery packs, making the connectors, which connect all the small cells in a battery pack together. And we'll talk a lot more about that. But there are other trends of autonomous driving, greater connectivity, sharing of mobility and new entrants. And as as Richard was explaining to you, all of those those middle three mean that there's more technology going into the glass. And if there's more technology in the glass, then there's a more complex connector, And that more complex connector means a a bigger product and more sophisticated product for us to supply. So both on the glazing side, which you might have thought it was kind of traditional business, there is quite a dynamic changing market and then even more so on on the battery pack side.

8:04 So we start by by looking at the glazing market. What you see is on the left is the majority of our sales are in Europe. It's very advantageous to us to be based on Europe because Europe is the, in automotive terms, the technology leading market. And so that's where we first work with customers who are bringing in the the the increased technology in the glass, like the the more sophisticated panoramic roofs, which themselves then need more sophisticated connectors. And what you see on the right is that we're one of the two leading players, actually number two in terms of market share. But because we focus very much on the specialty connectors And and because we're completely dedicated to the glazing products, we actually have a very significant position in the industry itself.

9:03 In terms of growth, on the top left, you see that in that major mark European market, we've grown our share in the last five years from 9% to 17%, and we firmly believe that our, in a sense, natural market share of that market is around one third, so 33%. That's you know, in automotive, typically, the purchasing managers and the OEMs will will seek to get to three core suppliers, and we absolutely believe that we we will and do merit to have that one third. And so we can see there's considerable growth potential in in Europe. In in North America, where we haven't yet localized, we we already have a a decent share, and we think we can grow that a lot more, particularly as our European customers are moving there and pulling us in a sense towards the American market.

10:02 And then China and and the rest of

10:05 the world, I think they're they're for the much longer term as developments we've pledged to do in those two core markets of Europe and North America. The other then very important for us is is the market for connector systems. Just in in relative terms, today, it's about the same size as the glazing market. But whereas that market's growing at sort of 7% per annum, the the the the ex battery pack market is growing at something of around 40% per annum, which I've saw something you you've all experienced in your own lives and in in in in other companies you've looked at, and it provides a tremendous growth opportunity for us.

10:51 What we're focusing on is the provision of the flexible connectors based on our flexible printed circuit technologies. These provide a much smarter, more compact, lighter way of collecting the myriad individual cells within a battery pack, and it becomes a very high value added product because it's this smart, sophisticated connector. So so whilst many of our current products today might sell for, say, around €3, these products would sell for €30. So it's a very big step up for us in in value added. We're working on next generation products. We have some key technology partners, particularly Williams Engineering, which you probably know also has a a very big position in in electrification of powertrains.

11:46 And we we've been also encouraged by winning grants from the Automotive Council, the APC. We've won the first 1,400,000 grant to further develop our processes and and and cover some of our CapEx costs. And we have a second one worth 2,100,000 called the Faraday grant, in which we've applied with two partners, one of which is is Williams and the other is the Warwick Manufacturing Group. And, again, you may know that Warwick Manufacturing Group have been very much leaders in developing technology around electric powertrains. So we've got a good set of partners in which in which to drive our growth in this very high growth market.

12:36 So in summary, for our strategy, it's a two pronged strategy. On the left, we have the traditional and core glazing business. Here, we want to build on our success, move into both the higher margin products of BuzzBar and to the higher margin new products such as the roof glass products, but particularly to expand our gross margins. This is both gonna be through investment in in automation, but also simply through pricing where where we see that we all learn more about that today. And on the right hand side, our fastest growing market and what we eventually think will be the bigger part of the company is connectors for electric vehicle battery packs.

13:26 We have an earlier mover advantage in that with customers keen to develop us as one of the new suppliers of this market. We've invested over £2,000,000 to date in developing our new know how and production line. We've had four minor production nominations, and we're looking to win more significant ones shortly. We're building up this dedicated business unit off off the back at the start of, as I said, those four nominations. So now what we'll do is move forward and take you forward to our first half results, which will show you the progress we've made along this journey. I'll hand back to Richard. Thank you, Adam. So really, really a summary of our performance since we became a public company. So the first half of twenty twenty two, it's been a very difficult start.

14:23 Lots of external events and headwinds against us. The the I think eight days after we became a public company, Russia invaded Ukraine. This had an impact. We have customers in Russia, not Russian companies, but automotive global glazing companies, one Japanese, one Turkish, one Chinese based in Russia that manufacture heated windscreens for Volkswagen, Skoda, and Lada within within the Russian market. These companies closed due to sanctions. We don't have really had the news as to whether these companies will reopen later this year or if if even ever at all. Consequently, our revenues for the first half have been down £1,100,000 compared to the first half of twenty twenty one.

15:16 Our EBITDA loss adjusted has been £1,400,000 compared to a profit last year of 1.1. Our cash is good, though. We have £3,100,000 of the cash and lots of other levers to pull should we need further cash later on. Operationally, we're taking lots of positive steps, which are beginning to bear fruit. We put up our own prices considerably. We're considering continuing to invest in automation to reduce our labor content. But the, you know, the inflationary pressures do continue. There are some strong strong headwinds. From an EV point of view, our shipments of samples and early production components is growing. We've had sales of 600,000,000 compared to just 100,000 in the same period last year.

16:08 Adam said earlier, we've received a £1,400,000 cash grant. This is from the part of the government's automotive transformation fund, which is determined to make The UK really pivotal as far as EV is concerned. The money can be spent on on CapEx. It's a it's a it's a fantastic boost for us and really shows confidence that they have in the company. We have had some ups and downs. We have lost a contract we had with

16:42 OEM for supplying electric Porsche nine eleven, which is a bit of a blow, but we have lots of other opportunities. The outlook for EV is good. The market is very buoyant. Legislation is on our side. Really, every car by 2035 will need to be electric. So whether it's whether we we land a big OEM this year or next year, it's it's really just a matter of time. We were certainly working hard and and really focused our attention. EV is the future. This is a huge growth opportunity for us. We're continuing to invest in our EV capabilities. We're working with partners, Warwick Manufacturing Group, as well as Williams Advanced Engineering.

17:31 From a glazing point of view, we're spending more time really looking at what we're doing. We have more skills within the business now. Since Adam, CFO, joined us, we're really working out which products make money for us and which don't, and therefore, are are in planning to reprice from January and and simply take a very, very bold approach moving forward. Adam Robson was our nonexecutive chairman when we became a PLC. I've asked him recently to now join us as executive chairman. Quite simply, I was used to running a small smallish family business, albeit with 200 employees, but the my time now is taking it takes a week or ten days of my time now just in really administering the fact that we're a public company. So Adam has been a big help to me from the start. So he's now working with us in that executive position and certainly bringing more focus to what we do every day.

18:31 And as as we said earlier, we have lots of levers from a cash point of view to strengthen that later on as required. So our capabilities are improving across the business since we listed. Mark Perrinz was recruited in February this year. He's the managing director of our glazing division. He has twenty years of experience in an automotive tier one in different automotive tier one companies. He worked with Lear Corporation and Plastic Omnium. He's a particular focus on quality and process improvements. We have new people in our engineering department in EV, new people in HR and quality and projects, and the team is settling down nicely.

19:20 The the it's a difficult market. People are coming and going, but we are we have a good team now settling down. Part of the IPO prospectus, we promised we would introduce a share incentive scheme. So every employee in the company now has is a share owner.

19:39 They are also now all paid above the national living wage, and we hope the the share ownership will certainly help with staff retention. We've been installing SAP management system for some time. That work and that is ongoing, and that's really improved our management accounting and where we focus. We can now see much more readily where we make money, where we lose money, and consequently,

20:04 is work we're doing now to increase prices from early next year on on products that, frankly, if we lose, we lose. But I think we're determined to increase the price, and I think that will improve our position. We have a a a strong ESG agenda. We've appointed a new manager there, HSE department, and we we we focus a lot on recycling shares for all electric vehicles. And we did receive a a grade a accreditation when we were independently audited recently.

20:41 So the the the market outlook, it's a it's a mixed it's really a mixed bag. The EV side is is performing ahead of where we thought it would be. There's there's no there's no reduction in demand. It's very lively.

21:00 The volumes are increasing. The attention is increasing. We're engaged with OEMs directly for a small company. We're talking directly to Porsche. We're talking directly to Audi as well as we're working with some of the some of the new entrants and some of the the innovators. But legislation is on our side. We do know every car in ten years' time will have to be electric. So the opportunity is is absolutely enormous, and we're determined to continue to invest and make sure EV is our our primary focus. From a glazing point of view, it's difficult and it's tough, but the company's been around sixty five years. We know car sales are down in Europe 14% in half one this year compared to the same period last year. Jaguar Land Rover particularly are down 35%.

21:48 So just the sheer volume of cars is is lower, which is impacting us. Supply chain is is is difficult. Chipgate continues, which means car sales continue to be down and car companies are prioritizing the the cars that where they can make the most money. But overall, the volumes are down. And we don't see these headwinds will continue. We don't see them abating anytime soon. I don't have any market intel that nobody else has, and it's it's really so we're determined to get glazing back to being a profitable unit so we can continue to invest on e in EV and make that our primary focus. The next slide, please, Adam.

22:37 This is really our our EV pipeline. The obviously, the ones in green are are is business we we are nominated with. We're ahead of expectation. The the first two green ones, they're they're really small entrance, but charge cars, Gordon Murray. And number four is Williams advanced engineering with two or three different projects. But we're also engaged with the all the amber ones. These are Porsche, Audi, Zoox, which is an autonomous vehicle owned by Amazon, and it's a delivery delivery truck driverless. But legislation has already been cleared from a safety point of view, so we have a very high expectation that that vehicle will be on the route on the road soon.

23:27 So, you know, again, a mixed bag, but a a very lively market. It's our determination to land an OEM. Obviously, a German one would be spectacular for us. We're talking to them all the time, and I just think it's won't be long before we have one signed and sealed. Thank you. K. We for those of you who've been following us from the IPO, you'll know that at that time, we announced just prior to the IPO that we'd actually been given a contract by a lead Slovakian technology developer to supply the battery pack for one of the big German OEMs.

24:19 So it was a a very fine contract for us to have won. And much to our surprise and indeed our disappointment, they chose in August to summarily tell us without consultation that they wanted to cancel that program.

24:40 We are unclear why the the explanations didn't really make sense to us in in any way, but it seems to be linked. We what we do know is that there was a change in management that they are a small technology startup, and and like many startups, they're constantly renewing and growing their management team indeed. And it seems like a new team came in, didn't feel any ownership of the previous contract, and for whatever reasons, has gone off in a different direction. Fortunately, that doesn't seem to have damaged us either with their customer who continues to talk about us to on up to us directly on other projects or with other customers.

25:27 The financial ink impact, it remains to be seen. There are a lot of negotiations to get through for their breach of contract.

25:35 So it it's been a, you know, a disappointment to us, but we're managing it. So we've also, you know, looked hard at the mirror and thought, well, what must we do to try and avoid anything like this in the future? We know we've got to put more effort into account management so we stay close to our customers and focused on customers who will deliver for us. We need to keep developing our the development of our technologies, our EV team, our overall credibility as as we are a new entrant to this field, so we're gonna prove ourselves. We're going to accelerate development of our particularly of our flex technology, the flexible PCBs, which are at the core of our product offering for battery packs.

26:23 And the new SERVE grant is very influential for that, allows us to to accelerate our our engineering spend in that area as well other grants if we can get them. We're going to maintain our full CapEx commitment despite the loss of our first contract so that we absolutely have a fully ready production capability that people can see and demonstrate and test. We've got a couple of gaps to close in our team. As you know, it all spoke to me. It's hard to find and retain engineers at this time. We have to keep working at that. And we will get we've already launched two products into production. We have two more that we're just launching into production now.

27:09 And all of those, albeit that they're on fairly low volume niche vehicles, build our credibility with customers. And lastly, we're we're looking at other partnership options. We people we can work with who will bring us either new capabilities or accelerate the the scope and scale of the the credit of the capabilities we can present to the market now.

27:45 That capabilities development is a key theme for us. So the the things that we've done so far in the first half where we won that serve grant worth 1,400,000. And just pure information, that 1,400,000 is doesn't require us to bring in new costs. That's covering costs we would have had before. So that's direct cash to our bottom line. We also there are two partners, of Warwick Manufacturing Group and Williams who've applied for the second £2,000,000 Faraday scheme grant. Course, not all of that money is for us. We get about a third of it, and the rest is it goes to the other two partners. But that will, again, be a significant both endorsement of our technology from the APC and further cements our relationship with those partners and allows us to further improve upon our technologies and our manufacturing capacity.

28:46 We've a 2,100,000, CapEx plan in hand. About 500,000 of that will actually, in cash terms, we spent this year, and that eventually will take up capacity up to 80,000 flex units per annum, which is enough for our sort of mid level customers that we have in the in the pipeline.

29:10 We're further continuing re recruiting in this area like like any startup, and particular highlights recently was a new German business development manager, German salesman, who's worked previously in this field and has been very instrumental in opening more doors for us with German OEMs and in helping us manage our way through their pretty heavy duty purchasing processes.

29:38 And we're further we've improved our production capability with a a new dedicated manager for our EV business now that sales there are are beginning to reach quite appreciable levels. And and last of all, we're beginning partnership discussions, and that's to be explored much further. There'll be more news on that, I I hope, in the future.

30:04 So, Adam, would you like to tell us about progress in glazing? Yeah. Sure. So the, yeah, the glazing business, it's it has had serious headwinds. As Richard said in the introduction, we actually had a a million pound we're going on for a million pounds of sales to Russia in half one twenty twenty one, which is obviously the comparison to to these results that we're presenting. So that that's hit us hard, and we've had high cost increases that have eroded the price increases we've been we've been doing. On the plus side, pricing and productivity are on the up, and scrap has been markedly reduced as well.

30:50 We have had a struggle retaining staff in in quality roles, and there's been a little bit of churn in our direct labor as well, which has hampered productivity improvements. So the gross margin is unacceptably poor in this business. But there's some real gems in there. There's much better there's some really high margins on specialist connectors and in BuzzBar in the BuzzBar product. So we're reviewing that portfolio. That's part of the the transformation of of the finance team. And Mark Perrin's, the new recruit is leading this this is looking to is is leading the return the improvement in this position. So we will see progress in half two twenty twenty two, and that will follow through into 2023.

31:41 There's been some questions posted on the side I can see about about pricing. We had our first round of discussions with customers in quarter two of this year. All non contracted sales, we started imposing price increases immediately, and we've been achieving around about 18% on average in in sales increases sale price increases. That's actually from a high base as well. The non contracted spot sales, we we price a lot higher than on the contracted sales. All the contracted sales with with the likes of Sam Gobain, NSG, size cam, They've all been renegotiated we've been achieving up to 20% price increases with them.

32:35 This has been done with the one of the questions on in in the sidebar is how's that being received? It's being received reluctantly, but inevitably

32:47 on the basis that they're having to put their prices up to customers. It's a common theme at the moment. So it's it was a hard fought battle. There was a little bit of reluctance, but but but they gave in in we we we've made some progress with them.

33:04 And obviously, that's then carried forward into new business as well. So all business, we're more selective. We focus on the higher margin connectors, the ones that we're we're particularly good at making and have a particular reputation for making even if that hampers sales growth. And we've had some some success at pricing high even when the customer's given us guide prices. They've still given us prototype orders on the back of pocket pricing. However, it's not been enough. We can't keep pace with some of the inflationary rises we've seen and the in although we're we're gonna deliver three three or 400,000 of EBITDA improvement from the price rises we've got, it's not adequate to make this business profitable without further action. And therefore, we're looking at very aggressive price increases. We'll be sending out notifications to customers of a further up to 40% price rise from the beginning of next year.

34:06 We expect that to rather than this be a negotiation, this is what is required to make sure that we turn this the connector business around. And therefore, we we do understand there is a risk of losing some sales and some business as as customers resource. But it's it's something that's necessary, and it's no longer as much negotiation focus. This is an essential. Despite this, we still have had some wins. So and we're focusing the business much more on the bus bar and tungsten, very high profitable businesses that we have. Tungsten's a a resale. We we just package the the product, and we source it well, package it well.

34:51 And BuzzBar, we've got patented processes where we've got a very, very high market share and a very, very competitive position on cost and on sourcing of of copper and tin, which gives us a lead time and competitive

35:05 advantage. So we think we've got remain with strong strong position in those areas. And on the back of that, we've signed a ten year deal with size cam for increased busbar volumes. That's €300,000 per year for these ten years. And we're actually talking to Saint Gaban, one of the giants who, funnily enough, don't actually take busbar and tungsten from us currently, but they've commenced trials of it in Germany and Romania. So that that's a that's a really great potential for us. So we've got our outlook is strong, and we're gonna put renewed focus on this. And in terms of connectors, we're exhibiting it at Glass Tech at the end of this month. And we've also won some really prestigious projects there, particularly on electric vehicles with with very, very high selling costs very, very high selling prices and high margins.

36:02 In terms of operational improvement plans, we keep a tracker of what we're trying to improve on. We've had mixed successes. So we we've had good ideas. We've had good plans, particularly on CapEx and automation. I think it's fair to say that with the analysis of Mark Perrin's and also the the drop in volumes, the increased inflationary prices from capital equipment suppliers and the long lead times, we're seeing damage to the payback on some of the CapEx investment that's being considered, which, you know, gives us some phasing opportunities, managing the cash position. But it it it is making it difficult to automate some of our products based on the the volumes that we now have and the increased cost of the CapEx, which is why these price increases are so important to us. But we have had some some successes in the automation area.

36:59 In terms of cost reductions, we've done a a we've had some success in bringing products manufactured in house, in sourcing, particularly around copper slicing. And we've also made progress with finding alternate supplies or alternate acceptable products for for our component supply, and we've moved moved customers to x works as well. But where we have really struggled is on the elimination of temporary labor and and and our direct labor. So although there's a few signs of improvement, we've been struggling to we we have to get two pay rises since, since half of one twenty twenty one to the to the direct staff, and, and there's been a lot of churn as well because of the the tightness of the market.

37:50 And we're still seeing excess supply costs as well. So it's we we we continue to have price increases from our supply base, and therefore, again, just reinforces how important the price rises are for us. So, obviously, that backdrop see comes through into our financials in terms of p and l. The there's a a we're at 1,200,000 behind on, revenue, for the like for like periods. I think I mentioned earlier, we had almost 1,000,000 of Russian sales, in 2021 in this period. We're significantly down on BuzzFar, part of it Russian, part of it customer stocks unwinding with the drop in volumes and demand.

38:43 And that that's it. Profitability very, very badly, the the BuzzFar losses. So we've had a a a big drop in in gross profit. A bit of flavor, some examples of that. Buzz bar, the buzz bar product material was 23% of the sales cost in in half one twenty twenty one. That peaked in half one twenty twenty two at 43%. It's now back at 30. If I do the same for connectors and tungsten connectors, we started off in 2021 at 44. It went up in 2022 to 52. Again, it's back down. So we are making progress on our initiatives, and and and that's why we're seeing a return to profit a a much bigger reduction in in a big reduction in losses in the second half of this year. And tungsten's the same 52 to 75 back down to fifty fifty one.

39:40 And direct label is the other big contributor of our our cost of sales degradation in and gross profit margin degradation. We've obviously continued the investment, which is reflecting the EV business, which is reflected in some of the administrative expenses and the framework for the supporting the IPO company, the public listed company with finance and IT investments and HR. And we've had to build up the EV and and and and quality framework as well. So that's that's explains the the the EBITDA fall. Outlook, we're looking at a 500,000, £600,000 loss for the rest of the year. So, the loss is slowed. We'll end up 2,000,000 forecast, for the for the year end, but then return to profitability based on the actions we've taken and cash generation during 2023, 2024, where we're we're forecasting to get up to 12% EBITDA margin in 2023.

40:45 In terms of balance sheet, stock, we're trying to unwind some stock. It's been difficult. We had to over purchase because of scarcity of product, but we we're trying to destock over the over the course of the next few months, and debtors are being chased hard. We've had a significant pay down of creditors following the IPO, both professional advisers, and trade creditors that have built up, and and creditors is a little bit of area of pressure. People want to be paid on time. We don't get much slack on that at the moment. But we do have cash in the bank, 3,000,000 oh, 3,100,000 at the end of the period. We're tracking to forecast on that. We we we we forecast to remain cash positive, and we're also working with two banks, Barclays and HSBC on potential export guarantee backed facilities based on our, you know, the fact that we're we are a big exporter. Most of our product goes overseas.

41:48 So we're looking at so that's one of the levers we can pull to to set ourselves up. And, obviously, the cash flow statement just links the p and l and balance sheet together. We've had a big pay down in creditors. CapEx is beginning to ramp up for the second half of the year. And and, yeah, we continue to we're we're we're looking at phasing of CapEx, asset finance, and as I said, potential new facilities to support business. Okay. Yeah. We did that. Okay. Good. That takes us on. We'll we'll try to wrap up, and and then we'll come back to your your questions. In summary then, it's been a difficult first half. Not not not the first half you'd ever choose for your first half year on a on the public markets really due to the external forces that have that have created considerable headwinds against us.

42:54 But, you know, despite that, we we we've looked at ourselves. We know the things we have to do to improve ourselves. Many of those we had in hand anyway. And and we're we're confident that the underlying trends in the business are positive. The EV market itself remains hugely buoyant. It's it's driven by completely different drivers than than the macroeconomic ones. Our EV and our glazing customers, since they are both keen to develop us further to see us grow and remain a a major player in this emerging market on the EV side. The customers are keen to grow a European supply base in an area which is so far dominated by Chinese suppliers.

43:41 And as you know, the whole megatrend again is towards localizing sourcing. So I think that's very positive for us. And our placing customers with the number two in the industry, and they are keen to see that we remain a strong number two to to to to keep the number one honest. Through all our own activities of pricing, of some automation, of improving productivity, and so forth, EBITDA is recovering. It will be improved in the second half over the first half. And by next year, we expect to be EBITDA positive. And, also, I take a lot of comfort for that. The team is settling down well.

44:29 We've had a lot of new faces in the business. That's beginning to gel well, and I'm confident that we have the right team to to deliver what we need to do. So we see a clear route forward to success. We're gonna be very focused on the customers we want to win, which we think is strategically right for us. It's in EV in particular. We're going to continue to improve our EV capabilities and quality delivery and productivity. We're gonna be enhancing our capabilities selectively through partners where they can either bring us unique things that we don't have today or accelerate the rate and scale of the the forces we can deploy for our very biggest customers.

45:16 We're going to improve the margins in glazing through a a further round of a of quite significant pricing increases. What we're very determined for is we're not going to be subsidizing the the glazing industry for the next few years. If it's not profitable, we're not going to do it. And our cash position is, as as Adam has explained, with a number of leakers levers we can pull, We think it's it's, we won't need most of them next year is if we get to the EBITDA positive, then that's a very good outlook. But we've got plenty of levers to pull if we need them. Thank you, Adam. So and Adam. I think that's about the presentation. Thank you for listening.

46:09 We can see a number of questions have come in. Should we pick up on a few of those? I think there's one from David h. David h. So, yes, David asked, we're looking to invest management culture as an important factor. I see recently the MD of Saga has directed his board to personally purchase shares over a minimum period as a multiple of their income. Well, David, thank you. Really important. Certainly something we're very keen on. We have all the senior management in within the company are part of an LTIP scheme, which is a which is a shares awarded on a percentage wise annually as a multiple of their income, and they don't vest, is it for three years? And then and then the the scheme is adjust is adjusted annually. So they're they're they're really sort of locked in and the share price and the rewards are are are really reflected in the work that they do. And I think as we mentioned earlier, we have started a a SIP scheme so that every single one of our 175 employees now own shares in the company.

47:18 They have an app on their phone, and they can see the daily daily share price. And it's really, really we've done that to hopefully, know, increase the retention of the regular shop floor employees. But it it has also really made them feel good about the business, and that it really has made made them feel more of a part of it than than I think they used to. So it's something we're very keen on. We will continue to expand it on on share ownership schemes wherever we can. Any other questions? Jump out to anyone. Jim h, you asked the question about our levers to improve our cash position. I think Adam has answered that. Adam, if you'll just give a quick recap. Yeah. Just just just to hope hopefully, if I did cover it, but to be clear to Jim. So we we do have some flexibility over our CapEx profile.

48:10 We've got the support going forward now of the SERVE grant, which subsidizes some of that CapEx and subsidizes some of our payroll as an overhead as well. We have had very productive talks with asset finances about our equipment list, which will give us upside to how we've modeled previously. And as I said, we're in talks with HSBC and Barclays about in export guarantee backed trade finance. They're working out the best form at the moment. I've had a phone call back to mister Dave from Barclays at chasing up next steps and progress. So we're confident we we can put something in place there should should it be required.

48:58 Thank you, Adam. Simon t, you asked two questions. One about automation and being more complex to execute. That is certainly true. That's partly as you you dig into products. We find it perhaps weren't as designed for automation as well as they could have been. But, actually, many of the problems are financial as well. The cost of machinery, like the cost of everything, is rising very fast. So things that we might have thought would cost, say, a £100,000 to it or automate, we're now getting quotes at £200,000. And at the same time, with the reduced volume expectations in the shortish to medium term just based off the market weakness, all of that's affecting paybacks, and that's perhaps a more more significant problem for us.

49:51 And then, Simon, your second question of where are staff going, the the basic one is they're going for more money. It's exceedingly competitive to retain people, and people are bidding up, the price of engineers. We're fortunate in this country to have an exceedingly strong automotive engineering base and with a lot of the new entrants being based in this market, but that also means there's an awful lot of demand for the good engineers. David h, you asked if we are planning in any investment into the hydrogen engine. Not not directly, but hydrogen vehicles will usually have a battery pack, and our technology is relevant to their battery packs.

50:40 And, of course, on the whole glazing side, it doesn't matter what the powertrain is. The the glazing is there anyway. Jim h, you asked, do you expect to be positive in the second half of this year? And the answer to that is no. But we expect our loss to be significantly lower than in the first half. And we're thinking next year will be positive. Yeah. Yes. Yeah. James h, you asked to expect more contract wins in the second half of the year. I think to a limited extent, given our on the glazing side, our activities in in in pricing, that's likely to hold back new contracts, although we may get some in BuzzFar where we won't be increasing prices.

51:33 And on the EV side, there may be some sample orders, but I don't think we're expecting any major nomination to come through in the next six months or the next three months. Yeah. Next next three months. Yeah. But they will hopefully be there early next year. Andrew, Joe, you asked who our competitors are in the EV space. They're a mixture of competitors. There's a lot of so firstly, the the core industry is in China. But as I said earlier, our customers are keen to move their supply base to Europe. There are both, some of the major sort of electrical products manufacturers like Drexel, Maya are moving into that space.

52:29 And then there are a couple of new entrants of of which we're one and there's one other. So to your question, we do we see consolidation likely into the larger OEM suppliers? I guess it always has to be a possibility, and that will probably depend on the progress of the smaller players. Steve K, you've asked how do we see the sales development across the two divisions in the next half year? Adam, could you give Yeah. Sure. So sorry. So, yeah, the sales going forward, the we we're looking at we're predicting based on the price rises that the connector business will see a short term decline.

53:25 So it's gonna pick up for the second half of this year. It's the forecast based on the order book that we've got, the orders received from customers. So it will be 5,500,000. We're we're forecasting for the second half, but then reduced to 3.8, 2.4 going forward. Busbar, we're also likely to see some increase in, we feel. And EV will will be a little bit ahead of the first half of the year, probably flat, based on, the loss, unfortunately, the contract in in 2023, but then pick up again as as our, closest denomination. We we ramp up in, in in 2024. So overall, yeah, it's gonna be a stronger second half of the year.

54:16 We're gonna be 5.7 overall for the second half of the year versus the the 4.7, so a million ahead of where we where we've been. Thank you. Thanks, Adam. And so thank you. James h asks, what if anything can be done regarding energy costs? That's a tough one, James. We've had I think our energy bill has increased by 250%. So I think it added another £250,000 to our year basis. Yeah. On a full year basis. I think our energy contracts are we can get out of them if we find significantly cheaper energy supply, but we'll wait to see what happens from that point of view. And then James H also asked, will you need to raise more funds going forward?

55:02 Certainly, the last thing in the world that I want to do. We're taking a lot of actions now to ensure that glazing, which is, you know, an established sixty five year old business, gets back to profitability and indeed generating cash to make sure that we can you know, the real focus on the business is is is to develop EV because EV is where the big prices are. And if we do have to come back to raise more funds, it's going to be because we need to invest more because we have landed a large OEM EV contract. And that really is the only reason I would want to come back to the market to raise more money. So I think I think that's about all the questions. Yeah. Thank you for visiting everybody and spending your time with us, and see you again soon.

55:54 Richard, Adam, Adam, thank you very much for that. I think you've addressed those questions you can for investors. And, of course, the company will review all questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Richard, was just wondering if you had any further closing comments. Thank you for listening. Thank you if you've invested with us and sticking with us. It's a tough time. I've been in the business for a number of years. I haven't known it quite like this, but we have a good reputation. We're established. We are we are there and ready and making lots of attempts to reduce our overheads, ensure we don't require cash in the future.

56:40 And EV certainly looks bright and is the route we're determined to stick to. Thank you. Richard, Adam, and Adam, thanks once again 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 the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. 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. Good afternoon.