Zytronic (ZYT) — Results for the year ended 30 September 2023

0:01 Good afternoon, ladies and gentlemen, and welcome to the ZYTRONIC PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the 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 can review all questions submitted today, we'll publish those responses where it's appropriate to do so on the investor meet company platform. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from ZYTRONIC PLC. Mark Claire. Good afternoon. Thank you very much, Jake. Thank you. Good afternoon, everybody. Thank you for joining this fourth presentation that we've done on the investor meet platform.

0:54 This is for the preliminary results... Well, sorry, the results for the year ended 09/30/2023. As we go through the presentation, obviously, we're picking up relative points looking at what has happened, but more importantly, what is going to be happening and what we believe is going to be happening going forward. Page one, as we move forward, is just a a quick overview in the presentation. I really won't touch on any of the points here just to say there was obviously some issues that we we had in a couple of markets that we'll pick up on as we go through the presentation. But more importantly, there were some

1:31 costs that were exceptional that Claire will pick up on as we as we move forward. I'll hand over to Claire now to take us through the sort of the various slides on the numbers. Good afternoon, everybody, and thank you for listening. I would just like to run through the financial results for the year ended 09/30/2023. September ended twenty twenty three was a difficult year for ZYTRONIC. Our group revenue decreased by 30% to CHF 8,600,000 compared to CHF 12,300,000 of the same period last year. This was in the main as a result of reduced revenues across all our major markets with the biggest impacts being in the vending market and the gaming market.

2:21 Mark will go into a lot more detail around that when he gets his chance to present, but in summary, the vending market was impacted by overstocking in the prior year from one of our big customers and the gaming market was also impacted by the unexpected demise of a big end customer who went into bankruptcy over the period. Reduced sales over the year meant we had a reduced gross profit. Our gross profit margin, excluding exceptional costs, declined to 24.5% and including exceptional costs to 17.4%. There was GBP 600,000 worth of exceptional costs over the period, pounds 200,000 of this related to a stock write down that the group undertook in the first half of the year and this related to the product that we had manufactured for the gaming customer who went into bankruptcy that we couldn't sell on to anybody else as this is a bespoke part and is unique for that customer.

3:27 However, what I would like to add is that since the year end, we have reversed the stock write down as we have since sold the goods to another customer into the same market. We also decided to impair the goodwill of 200,000 over the year. This related to a dormant subsidiary company that had been acquired back in 2000 as part of the company's IPO and the technology that was utilized over the years ahead is now no longer a key driving factor in this company and we wrote down the goodwill on that. We also had some restructuring that occurred over the year that happened just towards the end of the financial year and that cost us 100,000.

4:17 So all of those exceptional costs did have a big impact into gross margin over the period. The change in sales mix with the reduced volume of larger format, higher margin products sold also impacted into gross margin over the period and we had a reduction year on year of 6,000 units on those higher margin larger format sensors. So that does play into gross margin also. Our raw material costs increased over the year. We'd had a situation in the previous year with supply chain shortages which caused us problems for some of our sales. So we had to place orders ahead over that period to make sure that any stock that we required came into the business and that happened over the year.

5:07 But we were unable in some instances to pass on those price hikes as the prices for the products that they went into had been pre agreed in the past. Admin expenses also increased over the period by GBP 700,000. There were exceptional costs of GBP 400,000 in that number and that related to the bad debt impairment and also some restructuring costs. The bad debt impairment was £300,000 of the increase and this was for the gaming customers previously mentioned. Since the year end however, we have had an installment paid of part of that bad debt so we've recovered £100,000 since then. The restructuring costs were also a one off over the year hence why they've been classed as exceptional.

5:56 Taking out the exceptional costs, we have had an increase in our overall admin costs whereby travel and marketing spend has increased over the prior year. This was always going to be expected as the company has been able to get back to more normal prospecting activity in helping to drive opportunity growth, which is what we have seen and hopefully future sales. The reported loss before interest tax and depreciation and amortization excluding exceptional costs was GBP 400,000 and including at GBP 1,400,000. This has resulted in a loss before tax of 2,000,000, which has given us a tax credit of CHF 400,000 in the period.

6:44 What we've decided to do at present is to roll forward the tax loss incurred and obtain the relief at a higher rate at 25% on any future profits arising. Resultant loss per share is 15.4p and as we've previously disclosed, because of the situation in which we found ourselves in not making profit, we propose not to pay a dividend for the year.

7:15 Moving on to the next slide, the balance sheet does remain strong. We still have reported cash of CHF4.7 million. We utilized CHF0.9 million of that over the year in operating activities, of which CHF0.5 million was a decrease to working capital with trade and other receivables decreasing by GBP 1,700,000 over the year, which is as a result of obviously lower sales in the period. But also at the year end of 2022, the closing debtors position was overly inflated by GBP 400,000 by a slow paying debtor who repaid their debt in the early part of FY 2023.

8:03 Inventories increased by GBP 500,000 as because of the aforementioned increase to raw material stock and creditors decreased by GBP 700,000. We've continued to invest into capital equipment. We've spent 300,000 on tangible assets where we've bought in new kit where necessary to replace kit that has been basically out of use. And we've also brought in the new laser machine over the year to give us the ability to laser bond the flexi tails in both our factories. From a disaster recovery point of view, it's very helpful but also by having the two pieces of laser equipment, we're getting more efficiency through the factory output.

8:55 We've continued to spend in intangible assets that was GBP 500,000 over the period and Mark will talk you through about some of the product development that's been occurring. We earned interest of GBP 200,000 over the year. Our average interest on deposit was around the 4.6% to 5% mark and we were able to manage that with short term deposits and at the same time looking after working capital requirements. We also received a tax rebate of GBP 100,000 and paid dividend payments of GBP 200,000 over the year. I will now hand you back to Mark and he will take you through the operational side of the financial year.

9:39 Thank you, Claire. The the graph on the slide basically is a is a representing the sort of the changes that we've we've seen in in the the ratios of our sales to the various territories, geographic territories that we go. We are still a highly export invested business. So even although revenues were down in in FY twenty three, it still represented 92% of our overall output. I know over the years, there's been a big comment regarding the risk effects of COVID and how they have affected the business certainly as we were coming through '22 and into '23.

10:25 Obviously, as we've rolled into into '23, we've seen some of those start to mitigate themselves. And, certainly, we've had less negative influences on the sales process as a consequence. However, as a consequence of, as Claire mentioned, the overstocking that occurred in in f y twenty two by a vending customer, it did ultimately affect f y twenty three revenue. Mostly, this is related to the componentry issues, electronic componentry issues that we we... And we occurred in '22. And those customers over ordering to basically provide themselves with some ring fencing of of demand. Although the electronic component supply issues have have started to to to remove, We obviously have seen some of those affecting ourselves in in gaming where regulatory approvals were required in... Particularly in in them going through the changes of the control electronics that we were providing.

11:29 And the the the point that I'm making really about human factor changes is that although we've seen this slow move... Well, a pretty dynamic move to working from home and then to hybrid working. Hopefully, it's a thing that I hope will start to eradicate itself as we move forward because I think certainly in our industries, being in the office and being able to get to face to face meetings is very critical. That really what we've seen is in certain geographic areas, the continuation of hybrid working and homeworking has has made it a little bit more difficult to continue to do quality face to face lead generation. But I do think that's something that ultimately will be starting to change as we move forward.

12:16 As Claire pointed out, we saw... You know, we were affected in all of our major marketplaces. Although gaming and vending were the most significantly impacted, and I'll touch on that in the the next slide, we did see a decline in in all of the the marketplaces that we were we were involved with. And as part of what we were doing in trying to mitigate and control the costs that were occurring, particularly over the second half of the year, and retain the skills which we believe is critical within the business and maintain the workforce morale Whilst productive manpower was being adjusted to to to work with the workload, we did run retention... A ZYTRONIC furlough scheme to to cover non worked time periods for for our our labor during that period.

13:14 As we look at slide two... The next slide. Sorry. The next two slides are very common and are sure sure what ultimately has been happening year upon year as people sort of review it. As we can see, we have significant movements certainly in in gaming and significant movements in vending. But as I said previously, industrial financial signage, all relatively down in comparison to the other years. Vending, as we've picked up on, was really from the drinks dispenser unit that we were doing for a program in The U... US where their sales were slightly... Were down completely. Very... No orders in f y twenty three as a consequence of the overstocking in f y twenty two. However, we did see some pickup in EMEA sales in that particular market area coming particularly from Italy and Spain.

14:12 Italy, certainly, on on traditional vending machines, Spain, there was a significant drive coming through from EV charging that we saw benefits from. Gaming, there's... There was a lot of commentary made at the interims regarding the effects of the chapter eleven event in The US of of the Gaming

14:34 Americas company and the consequences that then has moved through their business, which basically resulted in in in them closing their doors, completely shutting down the whole group system by July. And, obviously, the effects that that had on ZYTRONIC's business regarding debt debt recoveries and stocks.

15:00 Ultimately, it was purchased as part of a a... An auction process. And subsequently, ZYTRONIC has been trying to deal with the revised entity that has come through from that. And as Claire mentioned, part of that is being some sales of the stock of the items that we had to this new entity. Industrial mainly is here my... HMI devices and kiosks.

15:28 Unfortunately, we did see a significant reduction in revenues coming from that section through the EMEA countries or the EMEA region, and particularly across nearly all of the Western European countries other than Spain, where, again, we did see some pickup in that particular area. In The US, the drop that we observed in that, again, was coming from one project only where it was... It's a control unit for a for a industrial boiler unit. However, we have seen sales starting from that company as we've moved into f y twenty four. Financial, again, over the past several reports... Reported periods talking about is probably achieving what I what I define as maintenance levels at this moment in time.

16:22 Again, it swings and roundabouts on that. We've always dealt primarily with two of the largest ATM producers. And although we saw very little movement in financial between year upon year, what we did see is as one was up, one was down.

16:41 Signage, again, information systems and tables, it's pretty static in terms of what it's doing at this moment in time, but that's one area that we're looking to try and address as we move forward on looking at potentially products rather than components into that particular market area, which I'll look to pick up as we move through the next couple of slides.

17:08 The next slide basically is just presenting the data as we... Again, as we've always showed it, showing the movements that we've we've had in in both value and volume in the particular area. Obviously, the largest negative variance is in the larger format, higher margin products as we can see. Although relative twenty two to twenty three gaming being slightly down in value terms, the bigger impact in that particular area came through vending. But we can see significant drop in the total units that we produced over that period. More importantly, the higher value, higher premium units, which we would see as the the multiple... Multi touch capable functional products and the volume of curved units are significantly down in comparison to the words of '22.

17:56 And these generally are providing us with the the the margin benefits that we've normally been seeing.

18:05 As we move on now and start looking at really what we're doing going forward, what we have done and what we're doing going forward. You know, as commented in f y twenty three, we've we've started to see a return of pre COVID normality. I'll I'll I'll I'll put it that way. The global export participation, we've certainly increased what we were doing in FY twenty three. Our customers and our partners have certainly been increasing what they've been doing in f y twenty three. And the the expos that we were attending, the attendance levels were significantly up and less regional in attendance and more international, which again is moving us back more to more normality.

18:54 Obviously, as far as the trade shows, it does provide us with the opportunity to address geographical markets in a in a concentrated compact time frame and and able to address significantly more people in one particular visit time frame than than just doing sequential visits over a longer time frame. The... We we exhibited in The US, Spain, Germany, UK, Taiwan, Japan, Italy, and China. So, again, the areas that we were traditionally would have been addressing pre COVID, we addressed through '23. And I think it was noted that in the in Barcelona in '23, one of our demo units

19:46 actually won a... Was was was award winning as far as a touch control piece. So we were gaining more gaining more momentum as the year was going forward. Obviously, we did have some negative impacts, which we touched upon. You know, we we we had some changes in in manpower regarding marketing and sales, which occurred in the March and July. Having reviewed what we were doing as a board and how we wanted to go forward, we felt that the most pertinent response was was was using

20:23 the the ability to move one of our existing personnel through into the sales director role to keep continuity going as far as how we were going to continue to address the market and drive the news... The the the sales process forward. As part of all of that, as part of the changes in marketing, we've we've ultimately looked at how we need to go forward as part of that. We're looking to bring the ZPLC and the ZDL websites under one con... One banner now and and not remain disparate. And we expect to really conclude the development work and the launch of that web in in early in h two twenty four.

21:13 We've engaged and looked at how we're intending to change the trade PR and the digital PR to look to try and drive ourselves away from being highly geared towards technology and leverage ourselves more into the expertise and knowledge that we have in the market applications that our products... Our component products to use. And looking at how we intend to try and change and utilize social media a little bit better. I mean, we we recognize that we are a a b to b business sales process, And although social media has its part to play in in all of the areas of life that people want to address, things like Facebook and TikTok and Instagram have very little part to play in the development of the ZYTRONIC social media campaigns.

22:07 And what we're looking to do is in the critical areas now of LinkedIn and YouTube. And as far as that, we will be looking to introduce pay per click campaigns in in in the link... On the LinkedIn platform to be more targeted in what we're trying to address and who we're trying to address as we go forward. On the page, there are several sort of case study reference points that we've put down that one can can link through from, but the reference back to the the the pages on on the ZYTRONIC website. I think the critical thing as we as we sort of look forward, we're making commentary on really is the opportunities that are being generated within the business, certainly post the COVID events and really how we've started to see more of an acceleration as we come through the twenty three fiscal year as things have sort of continued to return.

23:05 And arguably, as we look at the measures that we would utilize, which is the number of opportunities that we have active at any one point and the value of those active... Those those opportunities, we can see that generally, we've had a significant improvement and increase back in the in the volume of opportunities that the business is now seeing visibility on and is looking to try and address going forward. Primarily, we see the strength really is is in in vending at this moment in time. Although gaming, there's still significant opportunities in gaming. What you can see is we sort of move through industrial financial signage, there are low volumes is is relatively high ish.

23:55 You know, the the values of them are are relatively... As average sales prices are are relatively low, which is telling us that there's a lot of opportunities that we're we're dealing with in low volume applications at this moment in time. I think one point that I've made... I'll point out and I made commentary on, and I'll expand it when we go into the questions a little bit later on because there has been several questions put in about it. It's a commentary really around the value of the of of the opportunities and how we believe this has been significantly impacted by competition, particularly coming out of the Asia region. And as I say, I'll pick some of that up in in the in the q and a at the end.

24:41 But as as we move forward, I think the critical thing to sort of... The message that I would like to get across as part of this presentation is that although we're seeing this significant improvement as we're coming through, the comment that I've always made is within the business and the project nature of the business is that this average two year decline that we have... Sorry, average two year maturation period that we have from when we start talking to somebody and it goes on to our opportunities log and the point at which we would convert it and put it into production. And the reason I'm sort of stating this continuously at this moment in time is that it's not a case of that because we've got higher opportunities, higher value now that we'll see an almost instantaneous return from it. What we are seeing at this moment in time is the effects of that dip that occurred.

25:39 The the the quite quick decline that we had through late twenty through twenty one before we started to see any movement, positive movement coming back. And the effect that we have where our conversion rate off the opportunities is is about a 34% win rate as far as volume, which arguably translates into the sort of a 20 ish percent in in value terms. So as we've moved forward, as we've sort of hit that sort of bottom period coming through, what we are... What we've seen and what we are seeing is the is the 34%, 20% effects of that bottoming effect now nearly two years, on. So I think the positive things to come out is we are continuing to see the strength of everything coming through.

26:27 We are continuing to see opportunities rise. Now we're significantly more active. Although value isn't quite running at a very similar rate, we will come... Obviously start to see that creep up as we continue to see the value... The volume coming in. And the return ultimately as a consequence of the measures that we have regarding win rates and conversion rates would tell us that we will ultimately be continuing to see a positive movement as we sort of move through '24, '25 and '26 as we move forward. As we look at developments and Claire Claire picked up on on some of that, you know, fortunately, again, as we've moved through '23 and the effects of electronic component shortages and redesigns having to be undertaken, finally, r and d was able to resume its its its key innovation and development work as we as we move through. So this this basically has taken us to the point now of in certain areas looking at is there is there products that ultimately we can look at look at rather than utilizing what we're doing at component level and making component sales.

27:43 So the the two critical areas regarding that was really looking at electric glass and the potential of the conversion of of the the touch entity into into... In the in... Integrated interactive table solutions. So what we're looking at with electric glasses, lighting systems, charging systems, on the shelves, on the display cabinets, and with the the the touch integrated into into new novel round tables and square square monitors or rectangular monitors, we're looking at the high end side of this where we're almost immediately going to four k monitor performance with potentially incorporating it with a a new development of a sensor technology that we've been looking at.

28:39 But still maintaining our key peak up performance driven by our our controller electronics and and AI algorithms. And as consequence of that, we continue to develop the AI algorithms for our sensing technologies. And as we're looking forward and working with the marketplaces and looking at what we're wanting to do with that, we've got to move away from looking at what was probably five, ten years ago touchscreens in a vanilla format to now looking at the incorporation of additional items with touch screens, which I refer to as as a... As hybrid systems,

29:21 where people are bringing together the the combination of touch with with pseudomechanical devices. When I mean pseudo, I'm talking really about a button that is no longer a a mechanical button, but a button that's basically working off the utilization of the touch system as well. Rotary dials that are working off the touch system, potentially joysticks, potentially tactile features that we can incorporate into the products to to to to put into the glass. So all of these are basically things that we can utilize our technology for to cut... To off... To make new potential product offerings into key market areas that will ultimately create the driving force for for... As we look forward.

30:12 As part and parcel of all of that, we continue with IP development and have had three further patents... International patents granted in the year, taking our total IP portfolio... Granted portfolio to 15, and that's from 10 different patent families. We also have ten ten patent applications still pending from four of those patent patent families and are still continuing to address the new things that we're working on to see whether they are novel enough for patent applications. As we look forward to '24 and what we're doing this year, we believe the the increased work that we're doing on hybrid feature solutions will continue to position us as a go

31:03 to innovative touch sensor provider into into certain marketplaces, particularly gaming we're targeting with our floating button sensor systems. We're looking at the potential productionization of an alternative peak up sensing technology utilizing our control electronics. And we're also, at this moment in time, looking at the potential... Well, looking at scoping for a for a new ASIC to improve the functionality performance and reduce costs of our existing ASIC, which in the multi touch sphere, which we've really had in play now since 2018.

31:48 As we move to the next slide, which is really the summary and outlook, you know, unfortunately, in the year, as thing... As we were looking for things to start to improve, we were impacted by significant things that were coming out of our control slightly with the bankruptcy event in the gaming and, unfortunately, the overstocking that happened in in in the vending.

32:15 And, also, our our need to to continue to look at workforce considerations around the demand and skilling and retention that we had. The heightened business risks associated with global events are finally showing signs of improvement, and we're seeing that really in the opportunities log and the marketing initiatives that we're actually putting through and the return of the r and d continuing with their innovation work

32:46 to position us. And part part and parcel of that is the ISE twenty four Expo is actually on this week in Barcelona, and we have a couple of table units actually onshore for the first time at a trade show where we're not just there advertising the touch capability on a table. We're we're actually there to basically sell the premise of ZYTRONIC providing a table or table solutions.

33:18 We obviously have, as Claire touched touched on, saw some recovery in the in the in the debt recovery that we've had and some ability to move some of the stock that was occurred as a consequence of the bankruptcy event. I believe last year when when we were going through the preliminary results, we were talking... Were mentioning that we were moving towards appointing and working towards bringing in a new nonexecutive chair. That actually occurred, and and and he was in place in August of this year. However, unfortunately, as we sort of move forward at this moment in time, the the positioning that we find ourselves at this moment in time with the the the revenues is that the first quarter trends are similar to the second half of last year, not necessarily running at the same rate as the first half.

34:14 But we have a strong statement of financial position with a good twelve month visibility over our cost base. And I believe everything that we've got going on at this moment in time does give us good grounds for for cautious optimism as we reinvigorate the business development function and try and drive that differentiated technology and products.

34:40 Thank you very much. I think that sort of concludes all of the slides. There is several slides beyond this where we've we've highlighted the financial positions more detailed

34:56 and the biography of the of the board as it existed at the end of the the results period. Okay. Thank you very much, everybody. Perfect. Mark, Claire, if I may just jump back in there, and 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, we obviously received a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Mark, Claire, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Yep.

35:56 As I'm just looking at the questions, we had six pre submitted questions, and there's a further... Actually, a further 17 that's being generated as part of the presentation as we've gone through. When I'm quickly looking at the ones generated, I think some of them will be covered by the pre submitted. So I suggest initially what we do is go through the pre submitted questions. And as... Hopefully, as we go through, some of the answers will be picked up on the prior questions. And if not, we can try and see within the time frame if we can if we can shed some light on on the majority of them. So I think the the first presubmitted question that we had was could you could you please explain why admin expenses have gone up 10% instead of being decreased?

36:49 So I'll hand that one over to Claire at this moment in time. Thanks Mark. Yes, with regards to the admin expenses increase, this is obviously an increase of 10% excluding the exceptional costs. The biggest increase in admin expenses over the year was the increase in costs in travel and marketing expense where we've traveled more, we've also attended more trade shows and the actual costs of traveling post COVID have increased considerably, which is

37:23 obviously impacted on the business, but travel and marketing spend is essential to our company to try and drive opportunity growth. Was also a small amount of increases in other areas such as in salary costs and audit fees as well.

37:43 Thanks, Claire. The next pre submitted question was, you have explained the reasons revenue has dropped, but given the sheer amount of the drop in revenue, could we be witnessing a more structural change in the market away from our main products?

38:05 I can... I I believe that generally as time moves on, we continue to see changes in in all of the marketplaces that we're involved with. And that's been something that's happened since day one as we've developed the products and developed our capabilities and developed our expertise in the certain marketplaces. I think

38:29 a structural change happened in the marketplace several several years ago if I go back to 2010 when PCAP touch technology became the the the predominant and preeminent touch technology that was being used in the whole marketplace. I think ZYTRONIC was in a a good position at that time with its its its USP certainly for external deployed products, and it's something that really hasn't changed in the marketplace per se. What we are seeing is more competition coming out of Asia in particular where competition striving to improve the performance of their technology. ZYTRONIC still sits in a very unique position in that not only does it build its own touch sensors and supplies the electro... Its own electronics to work with them

39:24 rather than sort of being a company that's using either or from from certain individuals. So I think the the the drop in the revenue is ultimately a consequence of things that were slightly out of our control in a sense. You know, no one was expecting a a large entity in the gaming marketplace to go in the chapter 11 and finally go into bankruptcy.

39:49 But structurally, I believe we're still in a very good position as we look forward with the novel things that we're ultimately working on, our XPs and our experience and knowledge within the marketplace that we have to continue to take advantage of what will be continuing to develop.

40:13 The third pre submitted question was, what is the minimum amount of revenue the company needs to have positive free cash flow at these levels of fixed costs? So, Claire, I'll pass that one onto you again. Thanks, Mark. Based on our analysis and understanding of our our cost base, we would assume around the £10,000,000 mark of revenue would allow us to have free cash flow... Positive free cash flow. Okay. Thank you, Claire. Yeah. Again, I think pre submitted four, I think, is covered by a number of people asking the sim... Very similar things as we move move forward, and I I did say I would shed a little bit more light on it. So presubmitted four was you mentioned that revenue was impacted by competition from Asian competitors.

41:07 Could you shed some light on the changing competitive landscape for our products?

41:12 And could you give more detail on how the value proposition of the competition differs from ours? Could you please also give the names of ZYTRONIC's closest competitors who've taken market share from us. Regarding the Asian competitors, I think no... Everybody can probably see that there's significant global turmoil continuing to go on. And, you know, as was reported not so long ago, even output coming out of China was was was basically down for several months over a over a period, which is very unusual at this moment in time. What we ultimately have seen is is that continuation of Asian supplies in the marketplace, which no doubtedly do not use exactly the same sensing technology as ZYTRONIC. ZYTRONIC is fairly unique in what we're doing with our our microfine electrode system.

42:13 But the the... When we've analyzed the the basis of raw materials, ours probably is one of the cheaper raw material solutions. But as we've often said, it doesn't necessarily lend itself to high volume manufacture because of the nature of the processes. But when we're now starting to see

42:39 really low value solutions being offered out in in what we would have considered high premium areas, that's where we're starting to see some of the issues that are coming out in Asia. So if I if I give a... For for example, if we were looking at a a 55 inch

42:59 curved multi touch touch screen where we previously were probably in the regions of getting 750 to $800 per unit for one of them. You know, revising our cost down, we're probably into the mid 6 hundreds.

43:20 But arguably, the competition are courting out figures into the into the mid 3 hundreds. So, you know, we're not sure at this moment in time whether they're trying to buy market share to maintain positioning or whether that's... They are truly cost... Well, prices based upon actual costs because those actual... Though... If they were actual costs, they're high... Our pricing... Our actual cost is higher than their pricing. So there is a there is a significant change coming out of the Asian competitors in that marketplace. And and I think wholeheartedly, probably 95% of the competition in the marketplace are Asian based.

44:10 So I think it's pretty much covered a lot of the points that were asked in that question. Yeah. I mean, I I guess regarding sort of comp... Competition, there's there's there's numerous in there, numerous people. What I don't believe has happened is I don't believe we've lost market share because we have... We've had people swapping us out for something that we we were selling into in an existing design. I think the key really is as we've moved forward and going back to the opportunities graph is that as everything has dropped and we started to sort of price out and price forward looking at looking at the opportunities that we have had, you know, we are having to be a little bit more competitive conscious on the pricing that we're looking to to to put out. So I don't I don't think we've lost we've lost market share existing. What we are looking at is what we may not gain out of the opportunities log as we look forward.

45:18 Pre submitted five was, could you give more details on the departure of the sales director? Given the nature of the business, would it have not been better to hire someone from the competition with a strong track record of sales and relationships to add to our existing relationships? I think an easy... It's not an easy answer to this one, but if I could just answer the first part of it. Obviously, people leave for various personal reasons, and it's inappropriate for anybody to make comment on why somebody would have particularly provided details on why somebody would have particularly departed. And certainly under regulations like GDPR, you can't make such such comments on it.

46:03 So I think we'd need to draw a line under the fact that the sales director departed the company, and and and that that is it. I mean, given the nature of the business, I think is the reason why the board took its time to review and assess ultimately what we believe we wanted to do, looked at the succession planning that we had in place, and felt that it was appropriate and correct to appoint internally a new sales director with skills and expertise and experience in the marketplaces that we are involved with at this moment in time. That's not to say as we look to develop new opportunities and new up... New market opportunities and marketplace opportunities potentially potentially with products rather than components that we don't look to be additive in in a more formal way at that point.

46:58 Presubmitted six was good afternoon. I am the happy owner of 10,000 shares. According to the Feet, the share price in a year's time will be 190 p. According to Wallet Investor, it will be 44 p. Who will be closer? I I I honestly wish I could give a sort of a genuine answer as... Than that question, but I think it's it's... For the biz... The business needs to continue to perform. If the business continues to perform and continues to show improvement, which I believe it will, then I'm very hopeful that it'll be the former rather than the latter, I think, is the answer to that one.

47:45 And then we're into sub... Into submitted questions during during the presentation. Yeah. This... Which trade show for you is the most important to attend? I think at the moment, we have two two primary key ones, which is the g two e gaming expo, which occurs in every October, which is in Las Vegas, which gives us a chance to address all of the major gaming companies and sub tier suppliers within the gaming environment that ultimately as a comp... As a component company, we would be working with and working through. The second one is the ISE Expo, which is an audio visual exposition, which is occurs every January...

48:38 Late January, February, which I said is is going to be on this... Is is on this week. And as soon as this webinar is finished, I'm on a plane over there. And then we have a a myriad of mixed ones which cover various application areas that we do that we don't necessarily always do it with as ourselves. We work through channel partners that are doing their regional shores at that point. What we have missed, the... One of the primary ones that existed pre COVID was a was a a a... An equivalent of ISE in The US, which was significantly around the the monitor marketplace, the touch marketplace, and and their reference digital signage.

49:27 But that that went into bankruptcy during the COVID period. It's just started to to come back out, but we don't believe it's... This moment in time, it's in a good position for us to be spending arguably $4,050,000 pounds I'm going to an international trade show at it, but we continue to to reference that one.

49:55 Another question is is the Berkeley facility secured?

49:59 Claire? Yep. The the answer to that one is no. It's not secured against anything. It's repayable on demand. It has increased to 1,500,000 over the year, which we're not expecting to utilize. It's just there is a buffer. Okay.

50:18 Will the boards review a strategy consider all options for the company? The answer to that one is yes. Strategy is constantly looked at and reviewed at every board meeting. I think what we're what we're really at is a position as with a new chair in place and and and him coming in with a fresh set of eyes and a new oversight is us reviewing, looking at the sort of things that we give... Can give consideration to as we as we move forward that may be different from what we've addressed at this moment in time.

50:58 Yeah. Have the raw materials previously subject to supply chain shortages returned to normal lead times and pricing?

51:05 Do you still need... Do you still hold raw materials bought at higher prices? Claire, do you want to cover that one? Yes.

51:15 The... Some of the the, lead times have certainly reduced following the, the return to normal demand for the the electronic product shortages. However, we do hold stock of the, of those items at the higher prices. However, what I would say is that any new product that we will be engaged in, the prices will be included in the courts to the customer. However, what we were unable to do was go back and, in some instances, and reprice controllers to customers where we'd already agreed that price. Okay. Thanks, Claire.

52:01 In terms of CapEx, can we go on the basis that it is orientated towards efficiency and quality improvements rather than capacity increases?

52:11 I can definitely say yes. The answer on that one is yes. We we certainly are not looking at anything at this moment in time which would create capacity increases. The the laser machine that we brought in last year, which we'd... Was basically several years after we'd brought the first one in, was more a risk mitigation than it was to improve capacity, but inevitably, it improved our capacity our capacity capabilities.

52:43 But as Claire sort of commented commented on, we've been working on the machinery that we would need to improve what we believe is a critical area in our processes, which is the bond... The bonding of the flex tail to the the micro fine filament sensing system. And the the yield improvements that we're starting to see coming off that is certainly proving the benefits that we were getting in ensuring quality improvements and efficiency.

53:20 I apologize, everyone. I'm just quickly reading through the questions to see if there's ones which are unique that we haven't really covered previously. Mark, I'll take the question that came in that says, are you going to do buybacks? Sorry. Go on, Claire. Didn't get that far down. Yep. We have over the past three years undertaken an exercise to do a share tender and also a share buyback offering.

54:11 However, that is not something at present that is on the the table for the board. We have not proposed that resolution in this year's annual general meeting, but it's not something that we would never say no to in the future should things change. Okay. I'm just reading through, and I think there's a there's a there's a lot of repeat questions that I think we've covered as as we've we've gone through. I mean, I think I've... I... Fact, to take this final one, it it basically is... In mister Pott's letter, he mentioned the group will also recruit further business development and sales executives and expand the channel partner network to ensure the continued growth in the opportunities pipeline.

55:12 The question being, however, shouldn't the focus now shift towards the conversion of these opportunities into revenue and profits rather than just increasing their number?

55:23 Think it's a it's a it's a combination of of of everything. I mean, as I've said previously, when opportunities come on to the business, we see something like a 34% conversion win rate. That's that's a... That's an average over about a ten year period. When I've looked pre COVID, post COVID, it's it's it's very it's very similar, which in essence is the reason why, I guess, as we've moved through the COVID period and the volume and value dropped, that 34% volume... 24... 20% conversion value basically is on a is on a reducing number, which is why I say we're seeing part of what we're we're observing at this moment in time. However, the business is continuously looking to make conversions over that two year period of the opportunities that are in the pipeline. It's nothing has forgotten.

56:15 Nothing has moved forward. But as at the project nature of the business, obviously, what we need to be doing is ensuring that we have more opportunities coming on, more opportunities coming on, more opportunities coming on, increasing the value of them. Because if that 34% stroke volume and 20% value is is about right, it can only be maintained by seeing an ever increasing pipeline. So it's business development and and and sales is is key. So I think, you know, we've gotta we've gotta continue to move this forward, and we've... You know, we can only do this by expanding how we're actually attacking and addressing the marketplace. Okay. I think I've come to a conclusion on on the on the questions at this moment in time. If if there is other questions as we're going through, we'll we'll provide a written written response to them as part of the q and a feedback... Of q and a feedback in this... In the system after the event.

57:20 Perfect. Mark, Claire, thank you very much indeed for being so generous of your time then addressing all of those questions that that came in from investors. And, of course, as as you just mentioned, if there are any further questions that do come through, we'll be able to give you those back immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform. But, Mark, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important 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 I'd just like to thank everybody for their time today in attending this this webinar. It's something that the business finds pretty... Very useful in doing, and I'm hopeful it's something that the... Our shareholders and those interested in the business also find interesting in in in listening to. So thank you very much to investor made company for hosting today.

58:17 Mark, that's great. And 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 really 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.