Zytronic (ZYT) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the ZYTRONIC PLC Interim Results Investor Presentation. Situated on the right hand corner of your screen. Please 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 of the questions submitted today and publish responses where it is appropriate to do so. These will be available via your investment company dashboard,

0:33 and we will notify you by email when these are ready for your review. Before we begin, I would like to submit the following poll. And if you give that your kind attention, I'm sure the company would be most grateful. And I'd like to hand you over to chief executive, Mark Cambridge, and finance director, Claire Smith. Good morning. Good morning, everybody, and thank you very much for coming to this inaugural customer investor meet company webinar. As Jake's introduced, it says around our interim results presentation, which we put out last week. As a consequence of people coming to to the webinar who may not fully have information on the business, what we'd like to do is start by playing a a short introductory video. It's about one and a half minutes, which should give a little bit of flavor of what the company does.

1:22 Thank you. We live in a world that has become interactive and responsive to our touch, Where using a touch screen has become second nature, enhancing every aspect of our lives, whether at work, rest, or play. At ZYTRONIC, we are leaders in providing touch solutions that are incredibly durable and yet reacts to the lightest of touches. Where the sensing takes place behind the touch surface and is safely protected from the rough and tumble of everyday life. Our range of patented and award winning projected capacitive touch products are manufactured in a near limitless range of sizes and shapes.

2:15 Designed and produced within our state of the art manufacturing facilities, our dedicated and experienced team create bespoke touch sensors tailored to the exact requirements of our clients

2:29 and their customers. Our technology will detect multiple user touches through thick surfaces and even through a glove. And it will operate reliably in the harshest environments imaginable, ignoring the effects of raindrops, leaves, dirt, and ice, making it ideal for use as touch screens for outdoor as well as indoor use. ZYTRONIC, the world at your fingertips.

3:02 Thank you for that. The presentation follows roughly six slides of financial information, which Claire will cover firstly. And then the latter slides is more on the operational sales side of the business, which I'll I'll cover and present. So slide one really is a summary of the information that we'll be covering as we're going through. I'll just add that all of the monetary values that we caught in the presentation that just rounded to the nearest point 1,000,000. So if you're doing comparisons against the actual release, you may see slight differences on that. So I'll now hand over to Claire for the next... On the next slide. Good morning, everyone. As Mark said, I'll be taking you through the the financials.

3:49 Slide number three is statement of comprehensive income, just the normal format in that way in which that's presented. If we move on to slide number four to talk around the numbers, this year, we had group revenue of 5,900,000 compared to 4,800,000 for the same period last year. This was a twenty four percent year on year improvement in revenue, the biggest drivers being from an increase in sales into the gaming and vending market areas, which performed particularly well. This also had a benefit into gross profit margin, which saw an improvement to 31.7%, and that was as a result of the sale of the larger format curved and multi touch sensors, which for our business attract a bigger margin premium.

4:42 The, the margin of 31.7% continued on from h two of twenty twenty. However, moving forward into '22, second half, we do expect there to be a little bit of a margin squeeze because we've... Oh, we've been... We have had to offer pay awards for our employees, and that's taking effect into h two. And we're also having issues with regards to the supply of raw materials, which is something that we've talked about for a number of months now, and it's no, surprise in the marketplace with the demand being a global problem. Our admin expenses of 1,300,000 were slightly lower than this time last year.

5:29 Last year had the costs of the share tender in there, which we've not repeated in this financial year. So we have seen a slight benefit. However, again,

5:43 because we will have higher marketing costs in the business as the exhibitions were pushed back into h two as a result of COVID. We've also had the pay negotiations into overheads for all the other staff that are nonoperational. Our EBITDA was 800,000, and that was an increase over last year, which was 200,000. This all resulted in a half year profit before tax of 400,000 compared to a loss of 300,000 from the previous year. We have a very small tax charge in the first half of the year. We have some, loss carryforward relief available to us from the previous years where we we, did suffer loss. And we also take advantage of all the tax incentives that are available from r and d tax credits to

6:36 enhanced capital allowances and so forth. So we will never pay, the normal rate of corporation tax, and we estimate that for the year up being 14%. The result in profit and tax charge gave us an EPS of 3p, which was considerably improved from that of the loss per share of 1.2p. Moving on to Slide five. This is the statement of financial position. And slide six is the the summarized consolidated cash flow statement. Our balance sheet is very, very strong. We still have £60,000,000 worth of assets. We have £7,500,000 worth of cash in the business, which compares with 9.2 at the year end.

7:25 This is still after the buyback of 750,500 shares at the half year end, which we entered into in February through the, the buyback that was with the authorities that were granted at the previous AGM in '21, but also the new authorities that were granted at the twenty twenty two AGM. We've continued to, generate cash, albeit it was slightly smaller this year at the half year end at point 1,000,000. It was... Normally, we're a lot more cash generative. However, because we've had to purchase stocks in advance to make sure we can meet the the supply because of the product shortages that we're all experiencing, our stocks increased over the half year end.

8:14 We've continued to spend on CapEx. It was smaller in each one of the year. We do expect that to increase slightly in h two. We've paid tax out of £100,000 in the in the half year period, and we've utilized cash in financing activities of 1,200,000 for the share buyback and 200,000 of dividends. So at £7,500,000 worth of cash at the half year, we're very comfortable in that position. Our buyback is continuing. We have purchased further shares in the market post the year end, and we have a small amount of shares left available under the current authority to do so. Moving on to slide eight, I'll pass you over to Mark. Okay. Thank you, Claire.

9:02 I think one of the things we we obviously need to touch on is the continuing impact of COVID, which is why I've made it the first bullet point. The issue regarding COVID for ZYTRONIC is a... As a global exporter of products is that we're still experiencing demand related issues across the globe as not all countries, unfortunately, have managed to come to the to the position that that that The UK is finding itself in at this moment in time. Predominantly, the issue that we are seeing though, and again, as as Claire touched on it earlier, was the the level of issues associated with the electronic component supply chain. And what we're finding is that that's impacting us on the purchasing side where we're continuing to see the inability because of our economies of scale of not being able to get the full allocations that we've had had orders placed for.

10:00 But equally, and I think this is a is a key point looking forward, is that our product is also an electronic component that we are ultimately selling and providing into equipment manufacturers who are combining it with numerous other pieces of electronic componentry. So the business predominantly is is is working on projects and purchase orders, and the demand cycle that we see from customers is generally associated with them placing orders at the time they require our product, which we supply in a four to six week window in normal circumstances. Now, unfortunately, with the issues associated right across the board, and and these are global, we're not necessarily always seeing the demand levels that we would see because the customers arguably are not having to require our product at the time because they can't get other components.

10:52 I think the other pleasing side of of what we saw on the numbers was the order intake increased, and that was up 16% to 7,400,000. But returning back to the point on the relative short visibility that the business normally sees because of projects and purchase orders rather than contracts. What we we did see, and again, linked back to the prior point, was the placement of forward orders by several customers looking at placing orders to try and ensure that they've got their allocation in place through the year. Now arguably, we think that million pound increase that we've saw between h one twenty one and h one twenty two, probably £800,000 of it ish is is carried... Is being orders placed that will be deliverable in h two.

11:43 As Claire touched on with the gaming markets and the vending markets, that also then increased our revenues to... In the export markets. So we saw a significant increase in the Asia Pacific region where, generally, we're supplying the product for integration with displays that then in the gaming market predominantly that then comes back into The US for places like Las Vegas And in America's direct with vending projects that we had go... Ongoing that was related to drink fountain type of dispensers, but I would add not the Coca Cola freestyle model. This is different third party units. As far as EMEA, those sales have slightly declined in the year, and I think the predominantly impact of that was being the movement that we saw in the financial marketplace, which, again, is is predominantly ATM driven.

12:39 So just touching on the on on the point where gaming was up a 116% in comparison. Vending was up 89%. Industrial also increased 11%, but I guess the key issue really was the movement in the financial marketplace. Again, we've touched on this for a number of presentations now talking really about how mobile banking and digital banking really is starting to affect the ATM marketplace and that although ZYTRONIC had been a predominant supplier into that marketplace from about 2,003 onwards, there is really roughly about every five to ten years replatform designs and new models coming out. And in the last platform design for two of our major customers, ZYTRONIC didn't win the designs of the touch screens that were going into them. It was very much price driven at that point.

13:32 And, unfortunately, ZYTRONIC was not able to match price aspirations. Signage slightly down and others, which crazily encompass most of all the other market areas that we're involved with, that was down against the 21 same period figures. Graphically looking at it, it's... It looks a little bit like this when we when we look at it. So we can see the substantial improvement in gaming and vending, slight interest movement in in in industrial. Financial, obviously, was the big movement down. If you'd looked at this graph a year ago, what we'd have seen was financial was probably sitting in... Well, it would have been the highest point if we'd looked at the same graph. But generally, in our marketplace, it was really sitting as our number two market behind gaming when when we were looking forward.

14:24 Claire touched on margins. And, again, we don't necessarily break the products down by market by margin because they're so diverse. Everything goes through the same manufacturing facility. Everything is utilizing the same people and the same processes. The only difference really on what we're doing regarding markets is we're maybe producing different sized products for different markets, but quite diverse across all of the range. So, again, graphing it up where we've broken it down into size ranges, we can see generally the impact that we're basically getting as we're doing the larger products where we get significant uplift in not only the price points, but the diversity and designs that we're doing, where we're doing additional premium ads like the multi touch technology is is predominantly driven into the larger sizes.

15:15 Curve shapes are predominantly driving into the larger sizes. So, again, a significant uplift in those drives a significant revenue uplift us into our marketplaces, into our revenues, and then also push us through as as improvements in the margin levels that we produce.

15:38 Touching on marketing, and as Claire again mentioned, there'd been some sort of issues that we've had in in the trade shows. I think key things happened during the COVID period. Obviously, trade shows became a a nonexistent thing for direct participation. A lot of trade shows try to go onto digital platforms, which have not really worked out too well for them. We did see some trade shows that ultimately went in in... Into bankruptcy as a consequence of it, although some of them have have re come out of it in... Into different forms. So ZYTRONIC tackled it in a number of ways, which was trying to enhance what we were doing with social media and and digital presentations, utilizing the advantages that we've been doing in driving technology forward and going for going for various electronic awards with the product.

16:35 ZYBRID HOVR and ElectroGlass were two primary drivers of technology that we were offering into different award categories. ZYBRID HOVR over the period did actually win two two awards, the latter one being the electronic industry award for display of product of the year. Unfortunately, the date, electric glass are low shortlisted and finalized in a lot of categories didn't quite get over the line as as as being category winners. I think, again, if people were looking at what we were seeing at at the a... In the annual accounts for for '21 and certainly in the prelim presentations that we were we were giving around that time, we did very much think that the the go date for everything returning back to norm...

17:22 Normality for the year was likely to be January, and we were very bullish about that point, saying that we were anticipated to to start seeing our salespeople and our our trade show marketing efforts sternly picking up steam from January onwards. And and as a part of the reason for us was... For that was that we did actually get to do one trade show in in the fiscal... In the period being g two e, being the gaming show in the October in The US. But, unfortunately, still with everything that was going on, it was limited attendance, not not only from the number of participants that were visiting the show, but from ourselves, basically being a UK based company, not actually being able to get over there in support of our personnel that we have in The US.

18:11 But the plan trade shows that we really was driving that that that enthusiasm for a January start was was really the ISE show where we were going to relaunch officially the ZYBRID Edge product, and that was due to go very beginning of February. And within one week of that show about to go, unfortunately, it was then canceled and rescheduled back to May, which happened two weeks ago now. And the electric glass show that we'd... We would anticipate it doing, which is light and building in in Frankfurt, that was supposed to happen in the March. And, that got canceled mid January. And, unfortunately, that show has now been moved back through into fiscal year twenty three, albeit October this year.

18:59 However, that hasn't now stopped us looking forward. Certainly, with ISE happening two weeks ago, unfortunately, January has now turned into May, but May looks as if it is really the start point. We now have our salespeople, UK based out there in support of the territories that we have. My sales director is in The US at this moment in time,

19:22 and we we ultimately are now getting around Europe significantly more. We do plan really on doing more trade shows other than the tie... Touch Taiwan we did in April and ISE in May. We're intending to do digital signage Japan in June, and we just really can't finish with one of our partners, Technologia, in in May. So we do believe that the the trade show participation is really gonna start engaging for us again, which will be fairly key in what we're ultimately looking to do to drive the opportunities and improve the opportunities log that we we we... We're dealing with. Again, with... Through the marketing, I think everybody will probably be aware that we have two websites.

20:09 We have the ZYTRONIC PLC website, which is mostly for the financial investor community. And therefore, the trade, we know... We we operate through the zytronic.co.uk website. And a lot of what we ultimately do regarding case studies, white papers, thought pieces, you generally will see on the on the zytronic.co.uk trade site. And I would recommend that most people, if they haven't seen that site, look look at that site. You'll get much more of a flavor for ultimately what we're doing, the product ranges, where they're actually going, case studies of people that we've we've worked with.

20:48 I guess one of the questions that's often asked is why do we not see a lot of information coming out of ZYTRONIC of of contract wins?

20:57 And I think a lot a lot of that is really around the fact that we don't really win contracts. What we're winning is designing of... Into projects going back to what we actually receive as purchase orders around the demand that those customers are then placing on us at the point that they need them. But the key really on the... The fact that even some projects obviously are substantial and you don't really see as as as releasing information on that is that as a component supplier into fairly large pieces of equipment that could be very unique or opening up new market opportunities for those particular customers, they they they have us under numerous NDAs at the time because they don't want their competitors ultimately knowing what we're doing or what they're doing with us or what their product is likely to be doing and why they're they're utilizing our product to enable them to do it.

21:54 Just touching on sort of business developments as as we look forward. I guess one of the big drivers for the business is the continuation of innovation within the product line and the technology and the capabilities of the technology and the products that we're offering. And a lot of what we're ultimately doing around that is is looking at the patenting of various things that we're working on and that we're designing. Over the period, we've had a further patent application made, which is again... Is incorporation... Incorporating an additional item on top of our touch technology, which then the touch technology is operating through to give a different feature use. When this... In this particular play... In this particular instance, it was a... It's a glass dome to represent a touch button.

22:42 So it's a it's an it's a non mechanical interactive system, which obviously is giving haptic feedback in the form of of something of a different shape. And, also, we had the granting of the patents for earlier work that we'd ultimately done in incorporating mechanical buttons into the body of a touch techno... Body of our touch product. So that, again, you have mechanical button and touch in front of a display rather than the button being remote to the display itself. Now a lot of the work that's being done in this area is is around gaming. But equally, the things that we're doing that we've have patented are very much applicable to other technical areas and markets that we would be involved in such as gear... Such as vending and industrial type of applications.

23:36 I guess one of the key questions that's generally asked is is the size of the opportunities that ZYTRONIC is is is working on. Again, if a number of people have followed the business and the presentations and the annual reports over the last number of years, you'll have seen various iterations of how that data has been presented, looking at just the apex of it, I e, what we would class as projects or the or the the items which are likely to within reason go into production in a in a short period of time to looking at the full scope of the the opportunities log in size. In this instance, I'm looking at the full opportunities pipeline size and the movement that's that's occurred in in in that particular area.

24:23 And again, what what we... We're referring to is what I've called a forecasted lifetime value. This is the sensitized value that we're looking at when we're anticipating what is the customer demand really likely to look at, what's the volume that's coming off it, what is the design, the pricing, all generating to it to look at it. So, it's a very much a dynamic system. It's monitored through our CRM, which is three six five Dynamics. And looking at comparison and really what I'm showing in the table here is that at the end of September, before we ended this fiscal year, we had 391 opportunities, open opportunities, we would call them. So ones that we're actively working on, and they had a a a forecasted lifetime value of just below 30,000,000.

25:12 As we've gone through the last six month period, there's been a 163 additional opportunity added to the... To the... That number, and that's added a further 19,000,000 of of f l... FLV. Also in that six month period, we then have have won or in our terms of... It's gone into production. That opportunity has moved out of the opportunities log and into our production forecasting, and that's that's that's been 51 opportunities have been moved into production, and they have a a forecasted lifetime value of 3,100,000. Now we're not time lining any of this. We're not saying that that 3,100,000 is a is a one month impact, a three month impact, a six month impact. It may be projects that possibly have a two to three year lifetime on them.

26:06 Countering all of that, and, you know, we're not saying that every opportunity that ZYTRONIC is involved with that goes into our system turns into production. Obviously, for various reasons, we we we ultimately might lose that opportunity or... And ultimately in the system, we then close it. Once we've lost it, it might be that the customer is not going forward. It might be that they don't like the product in the end. They don't like the price point that we're offering for them. But over that six month period, there were 75 opportunities closed, and their closed value was 3,600,000. So by the end of March, our opportunities log at that point in time was sitting with 428 opportunities and a forecasted lifetime value of 42,000,000.

26:55 The predominant driver in a lot of this is is the vending marketplace at this moment in time. And to put a little bit of flavor around that, of those 428 opportunities at at the end of March, a 125 of them were related with the vending marketplace. And alone, they were... We're we're accounting for a forecasted lifetime value of about 24,000,000. A lot of what that driver is coming from is is is mostly a combination of electric vehicle charging. For us, it's the electric vehicle charging obviously is is... Would be publicly deployed type of scenarios. You know, when when... You won't find touch on on household units.

27:43 And this is a this is a global potential that's that's going on. I mean, obviously, as things are now moving forward and a lot of governments around the world are trying to drive electric vehicle conversion, you know, we anticipate a fairly significant uplift over the next eight years as a lot of a lot of governments are trying to hit their their 20, 30 targets. The sort of information that we're seeing on there would would be something like a compound growth rate of about 30% over the over the next sort of seven to eight years. To put a sort of a little bit of flavor on that, the the UK government has just recently released a report looking at public charging. They believe at the moment there's roughly about 25,000 units deployed, in various guises.

28:34 And they believe by 2030, this number may be needing to be into the order of about 480,000. So more more more than a a sort of a a 20 fold increase potentially over the existing units. Now I think to try and again say how how that sort of establishes, and I and I think it has a lot of resonance really with the ATM marketplace as as it looked to really convert all of you... All those years ago from being sort of button interactive to touch interactive. I would suggest that probably what what we will be seeing is sort of 10 to 20% of deployed units potentially will have interactivity on it... On on them. Equally, I would say we're not saying that ZYTRONIC is going to capture every one of that ten ten to 20% of the number of units.

29:25 You know, there's there's various forms, various guises, various sizes, price points will also have a bearing on it. But I think the the essence of all of this and the thing that I I guess is infusing ZYTRONIC at this moment in time, in that marketplace going forward, is they will be externally deployed. They they will be unattended. They will need to operate in every environment. There will be having to be, conscious of vandalism. And all of those things play into the significant USP of the ZYTRONIC technology and product offerings as it as it as it stands. Again, I think touching on it slightly, electro glass and ZYBRIDGE are not impacting into into these opportunity numbers at this moment in time predominantly because the delay in the trade shows.

30:16 I would suggest that if everything really runs to form, which is what we normally see, which is a a two year maturation period of an opportunity coming in when it's relatively new product, new new technology or new market, and it taking at least on average about a two year period for us to see that move through into sort of production values of it. We're probably again still looking over that sort of period with the adoption of sort of electric glass and ZYBRID opportunities as the as the horizon come forward. Again, commentary on the Ukraine conflict. ZYTRONIC does not buy any any items that come out of that sort of Ukraine, Belarus, Russia particular territories.

31:06 However, when... Well, we are not aware to the extent that possibly some of our customers may or may not be buying or or have previously been buying items coming out of that particular area. So, again, we may ultimately start to see issues associated with with that particular problems. Regarding revenues generated from us or sales to that area, ZYTRONIC really, for the last twenty odd years have never traded directly certainly with that particular area. We've always gone through third party partners for that predominantly Germany based who who sort of interface with that particular area, and we are we are selling to them.

31:52 And for the last five years, our exposure to that particular area has probably been on average about a £100,000 per annum. So very... It's it's it's not material really in in in looking at the sales of that particular area.

32:10 Moving on to what in essence is is the the the last slide to be presented, although there is some appendices at the end of the slide deck, which just draw comparisons really into what last five fiscal years have been variations on sort of the sales level for the touch in particular markets over five years, and a bit of biographies on on the on the directors and commentary really on the shareholder base. But just to conclude at this moment in time, sort of the summary of of of what we've presented at this moment in time, I think, you know, h one trading has has improved, but as we've said earlier, it is being still impacted by COVID nineteen, but not to obviously the degree it was through the 2020,

32:57 know, first half of twenty one period. We're continuing to innovate in the technologies, and we have further patents that we're ultimately looking that we may ultimately apply for, hopefully looking forward, and ones that are still being under the examination phase. And hopefully, we'll move to the grand phase shortly. There is post pandemic issues still in the electronic componentry, and we do... From everything that we have been informed and the information that we're getting back from the supply chains at this moment in time, we're certainly seeing what we're seeing continuing through for the remainder of our our h two fiscal year and indicate at the moment that it might might even still continue into f y twenty three to a degree.

33:46 But the, you know, the the opportunities that we're ultimately seeing and the growth that we're seeing, the potential for the trade shows now now initiating and is getting back to being doing what we we did best in that pre COVID area of of being out there prospecting, driving, looking for new things that we can ultimately put our touch technology onto. That really has really started to sort of move in in earnest. And I I I think, you know, as a consequence, we we we do remain sort of pretty well positioned both financially to to to drive the opportunities going forward and and look for for for future generations of of opportunities.

34:30 Okay. That... At the moment, that that actually concludes the the presentations, and we're we're we're quite happy to to look at some of the questions that were were were raised over the period. Mark, Claire, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while Claire and Mark take a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Mark, Claire, I will shortly invite you to open up that Q and A tab where as you can see we've received a number of questions that have come in throughout today's presentation. But perhaps for doing so, we did we did also receive a number of presubmitted questions from investors.

35:19 And if I may, I wanted to start off the q and a session with these. The first one reads as follows. Have you been able to rehire employees that were let go during COVID? How easily can you meet the demand given current headcount? Yeah. Thanks for that, Jake. Yeah. I mean, it it... You know, during the COVID period and and the the extent that we have to make cuts into the into the labor over the period. It was it was a fairly dramatic period. I think anybody that's listened to me talking about it, it's... It was never a nice thing to do. And really, the the the the business relies on its people. Not not not only those that are technically developing things or out there selling and marketing, but the, you know, the admin support to it, but predominantly those that are actually manufacturing our products.

36:07 And unfortunately, with the the the the the change in the business that happened, it was unfortunately, it was... That was the largest impact that that actually happened into that particular area. As we move through the COVID period and things have generally improved, we did look at basically bringing people back that were available at the time. And I think arguably our direct labor force was down at roughly about 40, 45 people at the time. We're we're now back towards the sort of the 70, 75 people. Obviously, not all the people were able to bring back or rehired at the time as a consequence of that they'll... Unfortunately, they they were able to go and secure other jobs.

36:53 However, what has been a problem, and I think this is probably a a common feature. There are a lot of potentially manufacturing companies are talking about this moment in time is the ability to get labor or the ability to get skills coming in. And certainly, we found that difficulty looking forward. I think everybody was predominantly anticipating a a flood of people availability after the furlough system ended, and I don't think any of us are actually seeing that. And I guess to put a little bit of flavor on that 30 people increase that we've had from the depth of COVID to where we are at this moment in time, we've we've had roughly double the amount of people in to get to the 30 that we actually have. So it's, you know, it's it's it's a constant churn that we're we're ultimately going on. We're very conscious of that at the time because we are we are having to train people when we bring them in because it's not it's not an unskilled operation that we're doing.

37:55 But equally, whilst that training is going on, we do generally start to see a little bit of impact on our yield numbers at the same time. Okay. Thank you. Thank you very much for that, Mark. And the next pre submitted question that we have here reads as follows. Following last year's tender offer and the current buyback, given the amount of cash still within the company, do you envisage a further buyback? I'll I'll answer this one, Jake. Prior to the pandemic, the the board had been discussing about the levels of cash that were were needed within the business. And at that time, we had earmarked around 10,000,000 that we felt could be distributed back. So we proposed that amount in the tender offer in 2021, at which point £6,700,000 worth of cash was returned back to shareholders.

38:45 Since then, we've gone on to participate in a buyback program, and we've returned £1,800,000 to date, which added together gives you a total of 8,500,000. So, ultimately, we believe we've still got £1,500,000 to return to the the spare cash in the business. With regards to another buyback, our authorities, only last at present until the the next AGM at 2023, and we only have a very small amount of shares available left to be purchased under those authorities. So at the minute, unless we did something differently, we couldn't participate further at this time, but it is always a conversation for the board that we're discussing around the best use of cash.

39:36 Thank you very much for that, Claire. And that actually concludes the pre submitted questions. If I could please just hand back to you to run through that q and a tab and where it's appropriate to do so, if you could please read out the questions and give your response and then I'll pick up from you at the end, that would be great. Thank you. Yep. No problem. I'll just pick on a few that I can see that I think have some relevance that haven't probably been covered at this moment in time.

40:01 So a question came in from Roger, which is really talking about the annual report and a citing key risk as being pricing pressures from competing technologies. And could we expand on that? I think generally, if you look at the touch marketplace, you have a combination of different features. You have people who who are manufacturing what would be called touch monitors, which is a completely integrated solution. You'd have people who are just producing sensors, people who produce electronic controllers that are then marrying with with other people's sensors. And you have people like ZYTRONIC who have complete ownership of a one stop shop type of solution of... It's our electronics that are marrying up with sensors that we are producing that that that then we're on upselling into the equipment...

40:52 Original equipment manufacturers marketplace for various different applications. But but within the bounds of that, you have a number of different touch technologies.

41:02 Some of them are still surface activated. So surface acoustic wave, infrared, and you have other capacitive based ones. And then you have a myriad of what would be classed as projected capacitive producers, which is where our technology sort of falls. And they ultimately marrying into different market applications such as mobile phones and iPad and, you know, tablets and all in one computers. So it's a it's a myriad mix of everything that's going on. And really what we sort of see is that in some instances, certainly on the smaller sizes, where, you know, the producers of mobile phones probably see the potential of higher margins being gained by offering sort of their products availability into the industrial marketplace.

41:53 We do see sort of price pressure coming from those those offerings that are coming in. I think the the defense on all of this all of the time is that the process of ZYTRONIC winning business is is a technical consultative sale, I e, we're we're working with that customer to design in the product, and that design in process might be taking multiple years to get to a point where there's there's, you know, there's an end product for that particular customer into their marketplace. So, know, again, we... We're ultimately... We're never doing anything at at marginal levels. It's always

42:29 it's always significant cost premiums. And and therefore, when we do see sort of price, that might be an area where we don't win business as a consequence of the price pressure that that that does exist in the... Naturally in any marketplace. Another question that came in was from Simon asking about sales to the gaming sector were 8,500,000 in 2018 versus the 2,900,000 in fiscal year twenty one. And can we just recap on this decline and give our thoughts on what would prevent sales returning to these prior levels? Again, I think there's a number of factors that's involved in in that side. And, unfortunately, again, restrengthening Europe, it's not that the business is winning contracts. It's the business is winning a a design.

43:19 And on that design, the the product then is sold against purchase orders to the demand that the customer would require over a sort of a four to six week period.

43:31 The gaming sector pre 2018 was a growth area that we put a lot of effort into moving from about 2012 onwards when we got involved in fixed odds betting terminals, which ultimately have rolled into all of the the work that we're doing in the casino marketplace, which is really what gaming is to us, is is casino based units. And a number of sort of predominantly designs that were done in that sort of twenty fourteen to twenty eighteen period that was basically bringing curved large format touchscreens to the marketplace. And for ZYTRONIC, we we basically were in... Designed into the one unit that really took a massive hold in that particular marketplace over that particular time.

44:19 So so the the the volume that we actually done over that period was was significantly

44:25 higher than than what the opportunity was telling us it was going to be at the beginning because their end customers bought products. But like most designs, designs change over time and move, and they're always looking for the latest and greatest better things. So what we're ultimately seeing now is that that we're working on different designs with those customers. That particular design went end of life towards 2019. Obviously, COVID massively impacted the sort of the 2021 sort of period, and we really didn't see gaming coming out of that until the February, March of of twenty one, which is really why you saw the 2,900,000. You know, will it will it bounce back to sort of the 2018 levels? Well, that's pretty much dependent upon how product ultimately is sold in the particular marketplace.

45:16 What I can say is that we are dealing now with significantly more gaming customers than we were at that time with significantly more different design opportunities than we had at that time as well.

45:33 I'm just looking down. I mean, there's there's there's obviously questions around repurchasing, which Claire sort of covered in in last one. I think there's a question from Paul on ElectroGlass, which I hopefully covered during the presentation.

45:54 There's a question from Quentin really on our ability to pass cost increases to to customers. And, again, it comes back a little bit to really what's happening going forward rather than what's happening here and now as a consequence of that opportunity log and that time really for it to coming through. So we we build in sort of relative costs as they are now in the courts that we're courting out as we're looking forward. We've always looked to, cover ourselves regarding potential margin movements that's in there. Sometimes we're courting out on currency, so we have to look at currency fluctuations that may or may not be occurring over the period. So I think looking forward, certainly, we're passing through the costs that we believe are going to be in play at the time that we're going forward.

46:44 But very much the here and now, we are ultimately having to take a hit as we're getting certain cost increases coming through, which is why we're seeing the margin possibly not not moving in a a sort of strengthening as much as we would have hoped to have seen with the increasing revenues that we're putting out As a consequence of that, we we need to keep those customers happy because a lot of the business is going to be coming from them placing future orders either for the work that we're doing now or future work that we hopefully will be capturing with them as as we look forward.

47:28 There there is a question on... From Roger on following the tender offer. You have no institutional shareholders and vote to turn out the AGM was only 10%. How comfortable are you with the structure of your shareholder base, and what explanation do your brokers give to the lack of institutional shareholders? I'll I'll pass that one on to to to Claire to sort of just add a little bit of flavor around that one. Yeah. Thanks for that question, Roger. Historically, ZYTRONIC has had a a very large institutional shareholder base from, you know, from conception up until the the tender offer. We were advised by our brokers that at the time of the tender offer, which was still in the midst of the pandemic, a lot of institutions were looking to to take cash, which is why a lot of them did exit the business.

48:22 We are always active with our brokers, and they're active with their institutions, and we can only say that there is, you know, there's there's always conversations being had. But prior to the tender offer, we only had 16,000,000 shares in issue, and we've always been quite in a liquid stock. So that does have a... An impact. With regards the the voter turnout with the AGM, that's consistent with how it's always been across this business. We've never had a particularly strong voting outcome.

48:59 You know, we... Everybody gets the information that's available, so it is difficult to understand why why that is. Maybe that is the norm. I'm not sure. Okay. I think just one final question to take, before we sort of close this off. There's a question really from Mark. For a relatively small business, we have three factories, and I must add them. I'm reading this as Mark's not me. Is there a no opportunity to bring these together under one roof? Think if anybody has the opportunity to come and visit ZYTRONIC, and we very much would welcome that for anybody because I think as a as a manufacturer of a technical component, I think a lot of people... And I know a lot of people who have visited the factory or investors previously around the AGM or even having an opportunity to come when the... When they've they've had the... Been in the locality.

49:56 They get a lot out of actually seeing the facilities and seeing what we're doing in the various different factories and how ultimately it's split.

50:06 So I'll always say three factories. It is three factories... Individual factories on one location. It's not three factories spread around everywhere. And the... Pretty much it is split into different manufacturing areas. We try to keep what we call the dirty operations separate from the clean operations. So at at this moment in time, it very much works for us having the three factories rather than trying to bring everything under one one roof. Mark, that's great. And, Claire, thank you very much indeed for addressing all of those questions that you can that came in from investors today. And, of course, ladies and gentlemen, the company will review all the the questions submitted today, and we'll publish those responses where it's appropriate to do so on the investor meet company platform.

50:54 Mark, perhaps we're redirecting the investors on the call to provide you their feedback, which I know is particularly important to the company. If I could please just please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. I think I'd just like to thank Investor Meet company for hosting this today. As I say, wasn't our inaugural webinar to the to the investor community. I hope a lot of people have got a lot more out of it than than they would have got previously, which is probably just seeing a very two d presentation on on our website. I hope the questions have had adequate answers to them. We look forward to receiving feedback along them once we've had a chance to review them more and and and publish them more.

51:40 I think, really, generally, just to sort of summarize it again, you know, we believe we're in a a much better position as we're coming out of the COVID period and very much as a business looking forward to driving everything forward again. That's great. Mark, Claire, thank you very much indeed for taking the time to update investors this morning. Could I please ask investors not to close this session you'll now be automatically redirected for the opportunity to provide your feedback in order that management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of ZYTRONIC PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.