Zytronic (ZYT) — Preliminary Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the ZYTRONIC PLC investor presentation. Q and a tab that's just situated on the right hand corner of your screen. Please 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 of the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit

0:33 the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to acting executive chair, Mark Cambridge. Good afternoon, sir. Good afternoon, everybody. Thank you very much for attending this investor meet company presentation of our preliminary results twenty twenty twenty two. I'd just like to to sort of take the opportunity as opening remarks to just thank all of our... My colleagues and employees of ZYTRONIC who I know will eventually get around to sort of reviewing this presentation as they have... They did do at the interims in in in May.

1:11 And thank them for all their efforts during the the fiscal year that we've just performed the numbers for. It's been a year of unpredictability, and and, obviously, we'll cover those points as we're we're we're going through. I'd also like to take the opportunity to thank the two chairman during the fiscal year, being Tudor Davies, who stepped down at the AGM in March, And and and David Buffum, who unfortunately due to illness, had to step down at the beginning of October. And we wish David all the best in in his recovery going forward. So I'd like to now just sort of move move on, and we'll continue with the presentation. The first slide that we've we've presenting here is just a very quick overview slide catching a couple of critical points that we'll we'll cover in significantly more detail as we're moving through the presentation.

2:07 The way that we normally present our... Present to the the investment community is we usually start off with the financial results for the year and then move forward through to cover operational parts and marketing and opportunities as we look forward. So at the moment, I'll hand straight over to Claire, and Claire will pick up on on a a number of points regarding the financial performance of the business. Good afternoon everyone. I'm going to take you through the financial results for the year just gone. Pleasingly, we did report a group revenue increase by 5.6%, which resulted in 12,300,000 of sales being recorded for the year ended. This was in the main as a result of increased sales into the gaming and vending markets, but also there was a considerable decrease in sales into the financial market.

3:02 However, we were expecting this and this is something that we had flagged to the investment community over a number of periods. We showed an improved gross profit margin albeit quite marginal to 30.5% over the year. There were a number of factors that contributed to this. In the main, we did see an improved mix of the products sold whereby we sold more of the larger format curved and bespoke sensors, which ultimately yield a stronger margin for the company. We were also not exposed to significant rises in utility costs over the period. The group has a purchasing ahead strategy, which meant that we had already bought a significant amount of our utility, usage before the price rises kicked in, and that's helped us, to not bear the impact of the current costs of utilities.

3:58 So that's a strategy that we are continuing with and we're hopeful that that will continue to bear fruit going forward. Outside of the benefits however, we did see an increase to raw material costs over the year. We had a problem as did most people who purchased semiconductors and electronic components in trying to source those types of raw materials.

4:25 We we had to pay, in some instances, costs up to three to four times our normal costs for those parts, and due to how we work with our customers, we weren't always able to pass on the price rises in our raw material purchases. So that was an area which did impact us in gross margin. We also saw labor inflation costs go up and that was in the second half of the year whereby we awarded all our employees a 5.6% pay rise and a 1% additional employer contribution to their pension. We were due to actually... Well, if we set the scene there, we hadn't given anybody a pay award from October 2018.

5:11 We were due to undertake the next pay award in 2020, but at that time COVID hit and we postponed any future pay awards until we were on a more even footing within the business, which is why we made a significant award in April of this year. We are however mindful of the rising cost of living and the inflationary impact that that's having on all employees and so we do expect labor costs to increase going forward. We also had increased commissions payable over the period as we sold more product through our channel partners. Moving on to admin expenses, we did see a slight saving over the year. In the main this was due to a reduction in professional fees whereby in 2021 we undertook the share tender program and that incurred quite considerable professional fees as you might expect.

6:08 However, again going forward, we do expect that as our sales team continue to face to face prospect and we attend and exhibit at more exhibitions, then those costs will increase going forward. EBITDA increased marginally to 1,500,000 and that with the increase to gross profit gave us a profit before tax of 7,700,000 compared to 0.5 in 2021. Our effective tax rate for the period was 13%. We continue to claim for all reliefs that are available. We as a company have never paid the full rate of corporation tax. However, we are mindful that as the corporation tax has been increased from April 2023, our effective rate will go up also.

7:02 EPS over the period increased to 5.6p. This is as a result of increased profitability and a lower tax rate, but also it is impacted by the lower weighted average number of shares that are in place for the year compared to the same period last year. So for clarity, the weighted average shares in 2021 were 13,300,000 and at the end of twenty twenty two they were 10,800,000. The closing shares in issue at the end of September however were 10,200,000, so going forward if there's no change to shares in issue, the EPS will be calculated on that lower number. However, we are mindful that the tax rate will bear on that result in the year ahead.

7:54 Because of the increased profitability, again, we have proposed a final dividend of 2.2p which is a 47% increase on the prior year. Moving forward to the statement of financial position and cash flow, it remains strong. We have reported cash at the year end of 6,400,000 This is obviously reduced from the 2021 year end, however we did give away 2,000,000 through the capital reduction process that we undertook between February and May, whereby we bought back just over 1,200,000 shares at a weighted average price of £1.61 This concluded the authorities that were granted at the twenty twenty two AGM.

8:44 We continue to hedge with our currency, has been effective over the year. Nothing has changed in that respect. We hedge ahead up to three to four months depending on our working capital requirements. And as is the norm within this business, we have more exposure to dollars and so we have benefited with regards to the exchange rate over the year.

9:09 Moving on to the cash position and cash flows, we actually utilized cash in operating activities of £100,000 this year. In the main that was as a result of increased working capital of £1,400,000 where we had instances of higher stocks and higher debtors at the year end. Stocks were overall £700,000 higher than the previous year. However, what I would say is that the previous year was probably slightly understated from what was the norm as we'd won down some of the stocks in 2020 over the course of the recovery of the pandemic. But at '22, the stock holding is probably more in line with what we would normally hold. However, we have also had to buy ahead for raw material stock in some instances because...

9:58 Just because The UK came out of the pandemic quite quickly, a lot of our suppliers and and customers across the world were still in lock lockdowns which has impacted our operations so we've bought in advance of raw material stocks to ensure that we have sufficient holdings of the right materials when we need to manufacture those parts. Debtors were overstated at the year end compared to the previous year. In the main that was due to a £400,000 outstanding debt from one particular customer which was overdue at the end of September. We didn't provide for this because we had complete confidence that this would be repaid, which it has been in full as we we come to present today.

10:43 However, we did control this situation by postponing any future deliveries into that customer until they repaid their outstanding debt. So what I would say is that the debtor's position was overstated at the year end and had that not occurred then working capital wouldn't have been as high as what it was. We continue to spend on CapEx over the year. This was increased from the year before. We invested £200,000 into development costs and £300,000 into plant and equipment. We have over the year just recently commenced a new ERP implementation which is currently in progression of development and installation and we expect that to complete in 2023.

11:30 We paid tax of 200,000 over the year and we also paid dividends over 2022 of 200,000, which was the final payment from the previous year's results. K. Mark? Thank you for that, Claire. Now we move on to slide four onwards. Just starting to look at an overview of sales and how that impacted the business and moving then on to sort of looking at what we're look... We're working on and and what we have been working on and what we're going to be working on looking forward. So as Claire covered, total revenues increased to 5.6. I think we we... Commentary on the business has always indicated that there is a a sort of a second half weighting to the business, and we certainly saw that occur again in '22.

12:20 It was more back to what I I would consider more of a normal waiting in the business. So it was 52% weighted h two to h one, which was pretty counter to what we'd seen in fiscal year twenty one, which is a 59% h two waiting, which was really the the the the the return and... Of delayed orders that had happened through '20 and early twenty one regarding sort of gaming in particular. So when the gaming market started to open up, we got orders towards February and March '21, really sort of fueled the output that occurred in in h two and improve the weighting in in '21. But as I said, this year, we're back to more of a of a normal weighting average.

13:07 The business continues to be highly geared towards exporting its products. And again, this year, it was 95%. There has been movement in those numbers as one would expect. We're seeing gaming returning. We've seen a significant increase in in product going to Asia. And and then so, obviously, 5,500,000 of our sales going out to countries in Asia, predominantly South Korea. But equally, we then saw a fall in the European sales, which was predominantly driven by the the drop in financial ATM sales, which normally would go through Hungary. As I started off and mentioning the, you know, the unpredictability of the business and the effects that that had during the the fiscal year. Certainly, COVID nineteen has continued to affect the business and constrain things that we were we were working on through '22.

14:00 Predominantly, we saw that in the in the ordering... Order intake that we saw where we had a a significant weighting towards first half order intake compared with the second half. And the number... The primary reason for for for that was in some instances, we were getting customers due to knowledge in the marketplace of electronic issues, COVID nineteen related issues. We're placing purchase orders on us for for extended terms that we're gonna be taking us into production into the second half of the year, which is which is count... Which is abnormal to what we normally receive, where we're normally receiving purchase orders where we're delivering within thirty to sixty days. Claire touched on the the electronic component supply.

14:48 I think, again, what we saw in the year was was not just semiconductors, and I know that that's... That has basically been what the marketplace has been portraying that that in the car industries and other industries, everything was related to, semiconductors. But this had a significant knock on effect right across the marketplace. So even in the resistors, connectors, PCB boards, and what we were finding was that to attain levels of stock and and get production through to produce controllers for our own products, we were very much hand to mouth and having to, in some instance, to buy components at elevated costs on the gray market. A situation, I might add, that we believe is likely to continue through to at least the halfway point of calendar twenty three before we see sort of this situation truly alleviating itself.

15:41 And then, unfortunately, on top of all of that, we then had COVID re... Re raising its head with the Omicron variants across the globe in in January. I think if everybody had read commentary that was made at December 21 regarding the preliminaries, we we were very bull... Bullish about basically everything returning to normal and and our our business development and and marketing practices would all be restarting at at at elevated levels in January '22 onwards, which unfortunately, we really didn't see until very much late April and beyond, and even still constraints that was occurring in in Asia in particular that really didn't alleviate itself until sort of the end of the fiscal year, we started to to to be able to make visits into that territory on... In October onwards.

16:38 Obviously, commenting commenting on on the Russian war in Ukraine, that's that's... It did have an immediate impact on our sales of EMI products into... Through our channels into into that territory. Part of the reason for that is that, RFI EMI products are exported under what they call a dual use, standard. And what that... What this means is although we may be selling to people that might be using them in an industrial application or a medical application, those same products could quite easily be used in a military application. And without getting qualification from the customers exactly that they were going to be used at that, We ultimately were not able to make export sales without that knowledge and being able to present that.

17:27 In total, we... Our exposure to that particular area in the year runs at an average of about a £100,000 per annum. We've seen very little sales, obviously, in '22 as a consequence of the the the Russian war on those particular products. The other side of it as well is that we had been working and engaged in the encrypted touch with our partner in that area, Cryptera, a Dutch company, who take our products, incorporate it with their encryption technology, and then

17:58 upsell their... That product, which they call Crypto Touch to to OEM customers. And a lot of work that they've been doing in that area, unfortunately, was with a rush... Russian banking customers. And when the Russian war initiated, both ourselves and Crypto Crypto basically had to state that we we were we were not gonna be continuing development work towards providing solutions into that particular market area.

18:29 Moving on to the next slide and looking at more detail of the actual sales and markets. Obviously, what stands out is that gaming show... Showed a 62% increase in the year and vending strengthened with a 39% increase. But as we mentioned in the commentary, the the the the increase in value that we saw in the gaming was almost offset by the reduction that we we we saw in the financial marketplace, which actually reduced by 59%.

19:03 Touching on financial first. Financial has always primarily been ATM related products, and that is... That was touch as well as non touch items. So the the security glasses that would sit into a screen where it wasn't touch active and you you just were were accessing sort of buttons on on the ATM themselves. That was a primary marketplace for for for ZYTRONIC. With the advancement of the ATMs

19:30 and and the COVID effects of of of the cashless society and a move towards the digital society, generally, we have been seeing is a reduction in the deployment of of new ATMs in total. But the general reports of revenue coming from the ATM marketplace is showing to be increasing because ATMs themselves are becoming more...

19:57 Are showing higher use of functionalities rather than just being very simple cash transactional items. Now the commentary that we've been speaking over a number of years was that we expected the non touch element of the of the marketplace to continue to wind itself down as it was, excuse me, as it was very much a a plain glass laminate solution and that other areas in the world would be probably producing them more effectively and efficiently and cheaper than we were able to do, and certainly we saw that. But the big change really came also from a number... A couple of years ago when the ATM customers that we deal with were starting to look at the development of their their newest platforms that they would be taking to market in '21, '22, and beyond.

20:49 ATM platforms normally run on a development cycle of between five and ten years. And, obviously, over that period of 2003 through to now, we'd at least been through three platform redesigns with the ATM customers that we dealt with. Unfortunately, the ATM customers at that time were looking to greater enhancements of the performance characteristics of the touch technology and and improved pricing. And ZYTRONIC was not quite at the stage with its multi touch technology to be able to offer in a solution at that time when they were looking at the redesigns. So, unfortunately, that's where we lost the the design and then the platforms. There is two market at this moment in time. As we look forward, we obviously are looking at the time when the the the ATM platforms will be going through another reset, another redesign.

21:42 And at that point, obviously, ZYTRONIC will be coming back in and looking to see if we can get

21:47 our product redesigned back in. Obviously, we're very hopeful that the touch products that they've used at that date, certainly in certain environments, have not been performing at the same sort of levels that the ZYTRONIC technology is capable of. And we're also very hopeful that the encrypted solution will find its way into the ATM marketplace as far as redesigns or products as as it moves forward. And as I said, we we were unfortunate really with what happened with Russia that that probably didn't happen in in '22. With gaming, I think the the expectation of an increase in gaming was was was not... Was something that we we had expected. We saw a return of the delayed programs that we've been working on, and we're expecting the volume of those to have picked up during the year, which is obviously what we did see.

22:40 What I would state is that that a lot of a lot of commentary is being made previously regarding Macau, ZYT, Macau, Las Vegas, Australia, and that, you know, when things are improving in Macau, that that hopefully will have an impact. What I would say is that for ZYTRONIC, the primary market use of our products and and the designs that we work on is going through Las Vegas and to a lesser degree, Macau, which is really again why when we saw Las Vegas starting to reengage and come back to to to life after the pandemic, that's when we have started to see the improvement of sales coming back through the business. What I did comment on in the overview was that we didn't really see a lot of new innovation that had gone on in the marketplace.

23:31 And and and arguably, everything that we deal with really is key is is designing and... Into new innovative products and designing into new designs of products going forward. So, although generally, there's been an increase in gaming, and that's really as a consequence of the volume of products being sold, the key more to the future is getting your products and your capabilities designed into new platforms that will be coming to the fore as time moves forward. And the real statement I was making was during the COVID period, really none of that work had been undertaken by the gaming companies. And even in in in... We weren't really expecting that happen until everything was back to to life for them, and really that was 2023 was really the start point on that.

24:17 Vending, particularly another growth area for The UK for for ZYTRONIC, sorry. What we saw was growth in in The US sales, and this was for another drinks dispensing type of units that our product is used in. It's an unbranded product, so it's not for one of the two major drink drinks companies. But arguably in the sales process, their drinks may well be used on a particular product. Again, we're not... Although designed and specified by that end product OEM, we we are we are providing our product through the display integrator for for for that particular product. What we also saw in a couple of regions in Europe, France and Spain, was an increase really in electric vehicle charging deployments.

25:04 And really what we're seeing in that particular area, and I... Again, I commented that I said it was it was was regionally fragmented. And what I was meaning by that was at this very moment in time, if there's deployments in France, for instance, it will be a French companies that are doing it. If it's in Spain, it's Spanish companies that are doing it. What we're not seeing, but are emerging is more the global players that ultimately will be looking at at designs that will be able to go across numerous geographies and countries, such companies as ABB and and Tritium alike. And we're just really starting to see the emergence of those companies and and and starting to to see engagements coming through on that side. Industrial, pretty much static in the year. It's it's one of the areas that is is is a is a constant for ZYTRONIC as far as where our USPs of product sits.

25:59 And signage, again, slightly down in the year, mostly associated with not seeing US smart city street furniture deployments happening during the COVID period and still not really engaging at this moment in time. Regarding other, which is a myriad of the other markets that were involved with telematics, health, military, etcetera, medical, and normally smaller sizes, The the the drop in performance that we saw in this particular year has really come from one single item or at least at least nearly 90% of of that drop has come from one area, which is in one company. And that was related to a Singaporean medical device manufacturer that we were dealing with in in 2021, particularly related to COVID testing.

26:55 And and there was been no sales of that particular product to them in fiscal year twenty two. I think the other the other point to sort of pick up and just going back to financial is we can see that this now has attained sort of, position four in our markets if one's looking at the graph. Historically, it's it's been, either position or position... Position one or position two for a number of years. And arguably, in '21, it was position one because of the drop that we'd observed in gaming compared with the other the other years. But I do believe that we're probably now at what I've described as maintenance type of levels. And that's... That the marketplace for us is the continuing supply of of spares and product that be used in existing deployments where they're they're doing facial uplifts and such like. So no no new bills per se, but certain banks will still be ordering the the existing platforms. They don't necessarily always jump straight into putting new platforms in. There will be some sort of new product or new new ATM products still going out for a significantly lower rates due to that conversion.

28:16 And if we then look at the next slide again, it's really just covering a couple of key points of looking at the changes that we observed in the particular market areas for the the the touch technology. I mean, obviously, what was disappointing in one sense was that we actually produced and sold less touch sensors in '22 than we did in '21, albeit that we saw an increase in revenue coming off the the... Of the business in totality. But the the key really to what we saw is is on the right hand side of the graph where we see the growth in in in gaming and vending in particularly large sizes, and slide size has been greater than 30 inch. So with the business, they carry a greater revenue generation and and and significantly improved margins compared with the smaller sized products.

29:10 So seeing a combination really of the larger sizes, the the multi touch technology sensing tech products, and then also the curved products all increasing in the volume produced. That's really where we started to see the offsetting of some of the reductions that Claire talked about in in costs in the in the margin being offsetted by the the change in mix of the particular product. Obviously, what is also pretty visible in in the graph is the the the degree and level of the change in the financial marketplace of touch in the volume that's really went from from what it was in '21 to '22. And the other side of it really was the offsetting in the industrial marketplace of a of an ink... Of a decrease in the volume of those produced in the smaller sizes compensated by the increase in the volume in the medium size range. So, again, it's this mix consideration that Claire was mentioning when she was speaking about gross margin.

30:15 If we then look at sort of developments within the business, I mean, one thing I touched on really at the beginning was was the the the issues that we had in supply chains and the electronic marketplaces. Unfortunately, that meant that r and d was was heavily involved throughout the the year, and as I said, continuing at this moment in time in in really sourcing and approving and in in some instances redesigning the controllers that we we produce to sell out in combination with the manufactured sensors that we do to the customer base. And as I said, that that was a constant, not only because semiconductors and processes were were reduced in availability, but it was also because of issues associated with getting resistors and capacitors and and connectors and PCB boards.

31:14 What they also spent a lot of time on as we were then moving towards the the expos that we were planning in '22 was was the productionization and the... And presentation of the ZYBRIDGE type of product to the marketplace, which we did at the ISE Expo, and then continuing with the developments of the electric glass design concepts that we'd been working on that we were dig... Gearing up to to present at the Alighton Building Expo. In combination with all of that was the work that we were continuing to do to try and drive innovation in the premise of our offering into various market areas, and one of them being... One being predominantly gaming was the potential use of the micro fine filament technology that we use to to provide our touch sensing capabilities and determining whether or not we could utilize that and added it to it to to basically power low low voltage devices that we may be then attaching to products in the form of the touch sensor or or even using it to... As as IO lines to to do data communication.

32:31 And a lot of that was then in... We we brought together under one umbrella when we did the the expo unit for the latest g two e expo in in October where we developed a complete cabinet design to present showing all of the aspects of this, including the work that we've been doing in advancing glass processing. So to enable us to do more features on the glass, either taking material away or in some instances, we've been working on getting glass molded products and and using them as novel added structures onto the touch technology to create to create localized touch interactivity in the form, say, of a a a robust tactile but non mechanical button, for instance.

33:26 And and also, we're looking at yield improvements and have continued to look at how we're gonna improve yield as we've been moving through the process. And one of the key areas that we'd we'd advanced was the the bonding of our sensing filaments to the flexible tail system that we use to connect to the controller. And a couple of years ago, I think if everybody can remember, we we designed and developed and brought in a novel laser bonding piece of equipment to do that. What we had been looking at in '22 was how could we improve on that particular product, how could we improve on... And provide... Improve production capabilities across the the site, but more importantly, provide ourselves with risk mitigation. I... Did not just want one machine.

34:15 So, again, r and d had been heavily involved in in designing and then sourcing and then having a a a new unit built, which has just come into us and is going through sort of factory field... Factory trials at this moment in time. And we fully expect to be production ready in the very early part of calendar twenty three. With all of the advancements that we've been looking at in the development of the touch technology, we we had three of our patents that were were were still under examination stage pre '22 granted during the year '22. And we now have an IP portfolio where we have 12 internationally granted patents.

35:05 And we weighed one more application during '22, which was around the the novel glass structure, which is termed an interactive device. And that's basically, at this moment in time, takes those applications made and those under... Presently still under examination by patent officers also up to 12. Obviously, it in no way guarantees that because you've applied for a patent that a patent becomes granted, but there is a possibility that we could see another 12 granted patents as time moves forward.

35:46 If we then just sort of look at the slide, the next slide, which is really talking about marketing. And really, it's just continuing to reiterate the impacts, and I'll I'll re... Reference those impacts again when I move to the next slide. It's really referencing the impact that that the COVID delays had on the business and in reality, how that's reaffected the marketing exercises that we ultimately go through. As a business, a lot of our engagement really is coming from doing trade shows. I think, again, we've we've explained that the the basis of the business is very much a a technical consultative sales process, and it it benefits highly as a consequence of that with face to face engagement.

36:38 And a lot of that really is coming from us exhibiting and also participating in a trade shows and and and conversing with the tier partners that we will have in that particular area. ZYTRONIC as a component is selling up the chain to a display company, for instance, that will integrate it. And in some instances, it will sell straight to the OEM because they're the people that are building the equipment.

37:07 But equally, the expos, from a marketing perspective, what we're trying to do is get the conversations with end users where they will ultimately be telling their suppliers to utilize the ZYTRONIC the ZYTRONIC touch technology. So it's pretty much... We're trying to generate both a push and a pull within the sort of the environment that we're working in.

37:29 But unfortunately, as I said, we had some impacts on that and that that's that's... We can track that and see the effects of that as we as we roll through. We did undertake several trade shows in the year, which which benefited really, although not available for The UK people to get to them and although would have normal... Under normal circumstances being in international trade shows, very much unfortunately ended up being regional trade shows. So g two e in twenty one, October 21, was very much just attended by local US people, Touch Taiwan in in in May 22. Unfortunately, it was was was more with... Because of the lockdowns that were going on, there was only Taiwanese were attending it, and digital signage Japan, same as what we saw in in in Taiwan.

38:20 But we were able to participate in the rescheduling of ISE and Leighton Building. Unfortunately, ISE moving from the February slot as a consequence of Omicron and then being being rescheduled to May and Latent Building being being rescheduled from March all the way through to October. And meanwhile, whilst all that was going on, we were very much engaged with our channel partners and aiding them in provide... Material or support or in some instance of some financial support in in providing... Allowing them to show our products at trade shows that they would be undertaking.

39:02 Around all of that, we obviously continued with all of the release of case studies, white papers, the digital marketing that we were undertaking, and and focusing on the application areas that we we we could our product was going into. I've referenced a few of those available on the website for anybody to look at. And I would always sort of comment that for the for the trade related news regarding the regarding the the company, it's much better to look at the ZYTRONIC displays website, which is geared towards the the trade environment rather than ZYTRONIC PLC, which is the investor community. In combination with all of that, we started to look at how we could enhance the the the personnel within the business again as we were moving through and providing...

39:53 Ensuring that what we're going to have is the right building blocks to move ourselves forward as we were coming out of all of the related problems associated with COVID and looking towards the future. So part of that was the recruitment of a marketing specialist as we as we are now seeing the marketing activity starting to pick up on significant calendar of future trade shows. But in combination with that, we also look to strengthen the electronic engineering side. We increased the capabilities of the software engineering side, and, obviously, we were recruiting direct labor employees for the production side as it was going on. Also, I'd sort of say we've looked at we've looked at improving US sales, after this... After sort of slightly reducing it during the COVID period.

40:38 So although it was the October 1 appointment, all of the development negotiations and bringing the person in was occurring through fiscal twenty two or the latter end of fiscal twenty two. So what we now have is appointed as a as a Californian based West Coast business development manager with vast experience in the marketplace, now employed by us and starting to to to go out and and and undertake the business development work in that particular area. And then moving on to the next slide and opportunities. And as I said, really, how this sort of impacts the the points that we've been leading up to regarding marketing delays and things that had happened. Again, think anybody that's looked at the the commentary in the annual report over a number of years, you'll see various sort of aspects of how we've been trying to present it, either looking at its entirety or looking at movements in it from one year to the next or just looking at what we define within the system as as... Excuse me, projects, which if you're looking at a hopper type of system, one would really define as the exiting point of of the the the key high probability action opportunities.

41:59 Excuse me. But I thought this year, probably, it was best because of everything that happened through COVID was was to show a much broader picture of how we'd seen effects in the business and how it affected the opportunity log in the pipeline moving forward. So, again, what I've done is we've graph graphed up the month end closing points of our system. Being dynamic. It is changing all of the time. It's changing day to day, week to week, and within a month. But choosing month end is is is a relevant time period point and showing how not only the number of opportunities are moving at that time, being the ones that are open, and and the the the customer projected lifetime value of those opportunities at that time.

42:48 So, again, what what we can see from it in reality is that, you know, the last major two trade shows that we did leading into the COVID period was g two e in October 2019 before, obviously, everybody was aware of COVID and the effects of it by come January 20. And we can see how that was maintaining a high level of opportunities, high level of value. We then started to... We then done the ISE export in the middle of February twenty, and we see sort of the pickup in value... In volume that was occurring post that as The UK had locked down come come March. But then really what we then start to see as due to the global lockdowns and and the inability to do that face to face marketing work, business development work, was the sort of the steady decline of the work that we have been doing in those those opportunities converting either into production or being closed because they were... They they were they were then either... They were lost or won.

43:58 And how that over the period at c... As we've seen a decline of our inability to to to filter more in than was ultimately coming out at the time, taking us right down to a sort of a bottoming point come the summer of twenty one. Now round about the period of summer of twenty one was the time when we just started to see degrees of engagement coming back. If I go back to... We did in that year touch Taiwan. We did in that year displays displays digital signage Japan following up with, as as I mentioned, g two e in the October '21. And we can see that the effects of those just starting to wedge an improvement coming through. But then, obviously, in January, we get the Omicron variants and everything closing down again, so we get a little bit of a

44:44 retraction. And then, you know, come come sort of May onwards, we then start seeing the engagement of ISE and and get... Basically, being able to get our people out talking to people again. So the benefits really of of the engagements going on, the face to face business development starting to show the rebuild of the of the pipeline and the... And arguably an acceleration of it as we're now starting to get much better, fuller engagement and coming back to more normality levels, which was equivalent of what we were doing pre pandemic. Obviously, at the end of September... At the end of September twenty two, that's 484 opportunities. It's... That's obviously up compared with the the closing point in September 21, and and the the the the custom projected lifetime value of that is sitting at about 59,000,000 as we stand. But still some way off the point where we were pre pandemic.

45:48 Vending's accounting for a larger proportion of that at this moment in time. Certainly, a significant growth area for us. We we have a lot of opportunities in the vending area. You know, a 156 of those open opportunities are for vending, and that's accounting for about 33,000,000. As it stands at this moment in time, a lot... Not a lot of that really is an electric vehicle charging. That's accounting for about seven of the 156 and about 1,000,000 of the 33,000,000. Where we are seeing a lot of... Well, a lot of the opportunities coming from with the work that we've previously been doing in the engagement and everything opening up now is what we refer to as product vending, which is anything from... You know, it could be coffee, it could be food, it could be medicines, and about 27 of those 156 are in that particular area, and that's accounting at the moment for about 21,000,000.

46:45 I'm just really winding up the end of the presentation. Just a quick summary and outlook slide. Again, I won't touch on on all the particular areas. I think, you know, we've we've ultimately seen an improvement in '22 over '21, but there's been a a a lot of unpredictability in the supply chains that our customers' markets being affected by that as well, which is which is just retracted slightly, but the product mix has been in in the right direction. We concluded the buyback process that Claire mentioned by May 22. And in combination with what we've done over the fiscal year, that had returned a new... Another 2,000,000 of cash to the participating shareholders. It allowed us to cancel roughly approximately 1,300,000 shares. So in combination at this moment in time between what we've done with the tender offer and the buyback process, that is... That has had us return to to to participating shareholders about 8,700,000 of surplus cash.

47:48 The resumption of the face to face marketing expected in '22 was delayed, and we can see the effects of that. The global impact of the supply chain, we... I believe will continue through the... Certainly this period and probably halfway through calendar '23. We may comment on the on the the the two months of order intake in the in the outlook statement. And there... And, again, we can see partly that's still coming from from not only supply chain related issues, but the fact that the opportunities log in the fuel that was going... Is going to be driving everything bottoming out roughly in in July 21. So that... With a a two year average maturation period from us engaging on a... On an inquiry to us seeing something go to full scale production.

48:41 At this moment in time, it has about a two year average. So we're just starting to come out the period where the impact of the lowest part of of our v shaped opportunities graph is just starting to now sort of unwind itself and come through. So the expectation really six months onwards would would be an acceleration of of all that coming through. And I guess the real key key matter for us all is that, you know, we're we're now really encouraged by the fact that we're we're... As a business, with the people that we're able to talk to and drive forward with, you know, business development and marketing activities are very much on the up, and they will do nothing but positively impact the opportunities pipeline rebuild. That sort of concludes the presentation for today.

49:29 I'll I'll hand back to Jake now if if if that's okay. Mark, absolutely. And Claire as well, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were 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. Claire, Mark, as you can see, we have received a number of questions throughout your presentation this afternoon. So thank you to everyone on the call for taking the time to submit their questions. And, Mark, Claire, if I could just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Yeah. No problem. Thank you very much, Jake.

50:15 I can see there's been a myriad of questions coming in, but I I do notice there were a number of stages as we were going through the presentation. And I do believe that we've probably answered quite a few of the early ones as the presentation went on. But certainly, as I'm just going down them at this moment in time... Yeah. I mean, there's a question... There's... First question I would sort of try and answer is what benefit does the CRM bring and what resources are required to maintain it? Closed opportunities can go down as lost. Are there not situations where no end product materialized and this was genuine inquiry? What happens if you have several customers pursuing the same piece of business?

51:01 Is the value multiplied?

51:03 Yeah. Quickly answering that one, the CRM system was something that we introduced after we saw a a dip occur in the business round about 2012. So we've had the the CRM system, and various guys has been pretty active since that point going forward. And it's just really a tool for us to gather all of the input points that we have, you know, be trade shows, be direct business development, be from our channel partners, be from advertising campaigns that we've... We we undertake in some instances to put it all under one roof to allow us then to evaluate and monitor it. You know, you're quite right with the comment. Is the multiplication going on?

51:51 That certainly can happen as far as being a number of potential customers chasing the one final output. But we're we're monitoring that and ensure that there's no value multiplication that ultimately goes on. So in in a lot of instances, for instance, we would ultimately then be closing down the opportunities from the customers that potentially are definitely lost that end end application program or projects, But it wouldn't necessarily affect the value because we'd be ultimately left with the one customer that we were ultimately going... Be going to go... Be going ahead with. And and hopefully, they would move to a successful outcome. I think there's another question really.

52:37 Cash reserves to do an acquisition. If not, is that because there are no companies worth buying or you feel that you do not have the management depth? I would certainly say that the cash reserves have always been there to allow us to undertake any degree that we saw necessary of whether it be an acquisition or or not. Certainly, there's been things that have been looked at in the past, but up to now, the strategy of the business has been to continue to look to good organic growth within the touch ecosystem that we're operating and not necessarily look to to undertake acquisitions. That may be a a a change that that that we we look at when we when we when we're evaluating looking forward.

53:24 But, certainly, it's it's at this moment in time on the things that had been looked in the past, we did not see the the effectiveness of of buying them as being something that would be contributory without being highly risked.

53:38 And I think that was the the the key to it at that point was was trying a little bit to to mitigate risk as we were we were undertaking the organic growth strategy that we were undertaking at that time. Can an investor expect to see another buyback during the course of this year? Well, I'll hand over Claire to answer answer that one. I'd I'd say that's more of a financial question. Yep. Thanks, Mark. With regards to the authorities that were granted at the twenty twenty two AGM, we have utilized those in full. There will be another authority proposed for the twenty three AGM, and it will be dependent on that authority being passed as to whether or not the company has the ability to undertake another buyback.

54:25 At the minute, we have no firm plans to do so, and we are conscious that with increasing

54:32 costs going forward and working capital requirements that, you know, we might feel that the cash on the balance sheet is sufficient for for growth in the business instead of undertaking a buyback. Thank you, Claire. Just looking down at other other questions.

55:02 Yeah. Do do... Question again. Do do you invoice any customers for product development as they may not guarantee a result in order? There... We do. It's a combination in in in truth. If we're doing very bespoke considerations around development, we may well not charge them any development costs because ultimately, we want ownership of whatever is being designed and developed to ensure that we can offer it out across a broader rep... Breadth of our applications. However, if there's instances where there's engineering costs associated with it, it could be due with printing or it could be to do with glass processing work, and we may ultimately have to buy tooling and such like to do all of that. We would then charge a sort of development costs associated with that particular aspect of it.

56:00 I think just picking up on one file because I kinda know we're we're sort of running right up against the hour time slot. There is a question sort of saying where are your products made? And I would... To answer that quite quite quickly and clearly is we're a a UK based company in the the Newcastle Upon Tyne area of the country. And we have three factories here. All all are in part and parcel of the manufacturing process, and we do not manufacture any other products in any other place in the world as it stands at this moment in time. Jake, I know we're we're we're practically right up against the the... Against up the time limit. There is a a few more questions that might take a little bit longer to answer, but we'll we'll certainly pick them up in in written form and and provide answers against all the questions after the event. Mark, that sounds great. And, obviously, we will provide all those questions as well as any more that do come through back to you immediately after the presentation's ended for you to review to then add any additional responses, of course, where it's appropriate to do so.

57:04 Mark, perhaps before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. I think... Yeah. I'd I'd finally like to just, you know, again, thank the investor made company for hosting today. It's been the second one that we've done, and I think there's a lot of benefit not only to us as a company, but for our shareholders to to to get an improved benefit of information to them. You know, I think just to wrap it up quite quite clearly, you know, I would just describe COVID as being a not very nice period for the for the business. It certainly was quite was quite damaging, and we can see that in all of the data that we've got. I think we're now starting to come out of that that that time of flux.

57:55 And as a consequence, we can see the benefit of the the the organic work that we'll be undertaking to to to to rebuild and drive the business back towards the performance levels and improve upon than it... Than it was pre pandemic. Mark, that's great. And Claire as well, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order 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 ZYTRONIC PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.

58:40 Thank you.