Carclo (LSE:CAR) — Preliminary Results for the year ended 31 March 21

0:01 Good morning, ladies and gentlemen, and welcome to the CARCLO Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged, can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please simply just type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your investor meet company dashboard, and we will send you an email to notify you

0:32 when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you'd be so kind as to give that your attention, we'd be most grateful. And I'd now like to hand over to Phil White, CFO and Nick Sanders, CEO from CARCLO. Good morning to you both. Good morning. Good morning. Thank you, Mark. First of all, good morning, everybody.

0:57 This is a new thing for us today, trying to do a a sort of very broad communication to our investor base. So like any new thing, we very much welcome your feedback on this after the event. But for us, it's a it's a good way for us to try and connect more directly with our shareholder base than we've previously been able to do. So we're excited to be able to tell you about the business today. And and and hopefully, you'll find it helpful and give you some a better view of of what we're doing with the business. So

1:33 just to introduce myself, I'm Nick Huns. I'm actually the executive chairman rather than the CEO. I've been with the business since September last year, and my background is manufacturing, and I've been involved in a lot of turnarounds over the years. And Phil, do you wanna introduce yourself? Yeah. Thanks, Nick. So it's Phil Wise. I'm the chief financial officer. Joined on an interim basis just before Christmas twenty twenty and was appointed March 1 to the permanent role. My background again is heavily turnaround and bringing companies into change and sustainable change across PLC's owner managed businesses and private equity.

2:22 Thanks, Phil. So we've got a slide deck to run you through, which we will run through between the two of us. Thanks, Mark. And at the end of that, what we'll do is we'll take the slides away so you can see Phil and I again, and then we can do the Q and A. Okay. If we could go to the first slide, please. I think it's just a picture of Phil and I. So if you can click over, please, Phil. Right. Yeah. That's it. You've seen us. So if we move on to the next one, please, Phil. Right. So what we're going to do is I'm going to provide an overview of the business, talk about the strategy. Phil will then go into more detail on the financial position of the business, and I'll finish off with the summary and outlook, and then we'll do the Q and A, as Mark said. So we'll get to the next one, please, Phil.

3:10 Well, you didn't need me to tell you that this has been a year like no other, but I am very pleased with the way the business performed, particularly in the second half. And so our revenue, as you'll see, is pretty broadly flat over the year despite having plant closures in the first half of the year. So I think that was a pretty good performance. You'll see that we did well on cash. We really focused Illinois, particularly on working capital, which yielded results. And you'll also see that our statutory operating profit was back into the black after periods of very low operating profit. We did have an exceptional gain in the year of about $4,500,000 which was a combination of some benefits from pension credits and some some of other benefits around pensions offset by the remainder really of restructuring costs from the end of the the white pack administration.

4:14 It was was perhaps still happening at the beginning of this financial year and the entering into the trial part of that agreement with our lender and pension trustees. So the the the white pack LED business is is no longer part of the group. That's that's something you will be aware of. What we've really focused on on trying to do is to stabilize the business, simplify the management structure, and really drive the operational performance of the business. So that's really been our focus there, and I think that's starting to show signs of of of working and delivering results. We've also refreshed the board of my NEDs. I've got one who is an existing preexisting person, the other two are new, who bring great experience to the business, either in technical plastics or from a general overall business and finance point of view.

5:10 I think the platform for this year was really set by the agreement with our bank HSBC and our pension trustees about a three year deal that would stabilize the borrowing base of the business, what we're allowed to borrow against and pension contributions into the fund as well. So that actually happened in August of last year and that has set now a firm foundation for the next three years. So we we we're not constantly going back and negotiating with the bank or the pension trustees. And I think the relationship with the bank and the pension trustees has has moved on significantly in the second half of the year, and we now have very good constructive relationship with them. Any business needs to grow and through our cash generation, we've managed to invest quite heavily in the plastics division with more CapEx for technical upgrades and capacity increases as well.

6:10 So the cash that we've generated has been reinvested back into the business to support the future growth plans. Next one, please, Phil.

6:22 So talking about CTP, I think we saw, as I say, a strong performance year on year with almost exactly the same revenue and the same profit as the prior year despite the fact that we had enforced plant closures earlier on in the year and lots of disruptions, not just to our businesses, but also to our customers and to our supply base, you know, where isolation shutdowns were severely impacting the business. But despite that, we focused on keeping our business people safe. We did a good job with that and we and we got ourselves open and operating again just as quickly as we could. We won new business. There were two particular new contracts in the medical and diagnostic sector that we're particularly proud of that starts to come on stream as we go through the next next year or so.

7:15 We're not in a position to divulge who those customers are. That's all confidential stuff. But we were very pleased to win new business with new customers. And obviously, we won business with with existing customers as well. It's fair to say that COVID bought a balance of opportunities and risks. So some programs were accelerated because of COVID, others were put back. So it wasn't all a complete tailwind from COVID. And again, as I said, we invested significantly in CapEx in the business to help its growth. The aerospace business was, of course, severely impacted like the ease of the whole of the rest of the sector when people aren't flying, people don't buy aircraft, people don't service aircraft.

8:01 So that has been a very challenging period for the business. But nonetheless, we have remained EBITDA profitable and cash generative throughout that period. It has been the management team has done really well there to maintain that position. Market recovery in aerospace is some way off. You'll see the build rates for Boeing and Airbus are set to be starting to increase again in the second half of this year. It'll take a while for that to feed through and quite a while beyond that to get back to anything like the levels that were in 2019. So our response to that is not just to wait for the recovery, but to focus on winning new customers. And we're confident that we'll be able to do that, I think, over the coming months. So it will expand our customer base.

8:50 I think when you look at the group as a whole, we've really looked to simplify the the business structures. We took out a layer in the business. So myself being the exec chairman, we don't have a group CEO. And so the divisional chief execs report directly to me now. We've got a much shorter line of command and communication. And we're making the two divisions completely autonomous, whereas they were sort of mixed in with different functions. And it was very unclear. I I I like clear responsibilities, clear objectives, and rigor. So we spent a lot of time making sure that we focus on that operational performance, making sure we deliver to our customers. And that's about just a a relentless process of weekly and monthly reviews where we go through financial and non financial KPIs and drive the performance of the business with the with the management teams of both of those divisions.

9:49 And particularly within that, as you'll have seen from the cash flow performance, a very strong focus on working capital and keeping that nice and sharp and reducing inventory wherever we can, which again has allowed us to generate the cash to invest in the business, which has been a positive development. So we'll move to the next one, please, Phil. So our strategy remains the same. You know, we we want to be that trusted partner in the in the sectors that we already operate in. We're not looking to diversify outside of the sectors that we're in. We think there's a lot of room to develop within the in the markets that we're already in. And so the way we're gonna do that is we're going to really focus on our business development resources.

10:36 We actively have already recruited and we'll recruit some more people into the business to focus on opportunities for growth. And what we see also is that a lot of our customers are are pretty big blue chip customers who have global operations and want to expand their production around the world. And we see an opportunity to follow them, particularly by increasing our revenues in Europe and Asia, where we already have facilities that could do more. So we think there is opportunities in that area. We do think that we are slightly constrained in some areas by floor space. And so we are taking actions both short and medium term to increase the floor space that we've got to make sure we've got capacity to grow.

11:25 And and that whole drive on operational excellence, delivery, quality, safety of people, all of those basic metrics that you would drive into any manufacturing business, we've been rigorously doing that as well. And so based on all of those things and and what we can start to see happening in the business, particularly in the second half, is this moving out of a position of stabilizing the business into one now of an improving trend. And it is about for us delivering that sustainable top line and bottom line growth. And, you know, I think so far so good. I think we're six months in. I think both Phil and I feel pretty happy with the progress that we're we're starting to make. But it's a long journey, and there's, you know, always much more that you can do in a business.

12:11 So I think with that one, Phil, I'll hand over to you to talk about the financials, please. Thank you, Nick. Much appreciated. Good morning, everybody. So I'll take you through, a summary of the financial results, which you will now have seen published in the prelims. And starting with the highlights, And you'll see that we managed to keep revenue pretty resilient at 2.7% down. And I'll go into the half one, second half split of that later, so we can see how the revenue has moved during the year. In terms of the operating profit, that has dropped $2,500,000 to $4,800,000 which again, we'll go through the key two or three reasons there.

12:58 In terms of underlying earnings per share, the $2,500,000 drop converted into about $1,700,000 drop in earnings benefiting from an offsetting tax improvement in tax. But that means the earnings per share dropped to 2.4 from 4.9. We see quite a kick up on the statutory operating profit from last year from $1,800,000 to $9,300,000 Key driver of that, as Nick has already mentioned, the exceptional gains, particularly from the pension scheme retirement options being introduced and the benefits of that projected over the years. So we'll go into that in more detail.

13:44 And then the net debt, you'll see, excluding leasing liabilities, very steady improvement there, 20.5% against 22.1% and even including lease debts, very level with last year at 27.6 against 27.4%. So overall, I think we're seeing a pretty steady position given the pretty massive impact of COVID-nineteen, not just on the world, the different international markets we feature in. But given that situation, it's been a strong recovery. If we look at the underlying profit in a bit more of a simple bridge there, we see that we've got the 7.3 from last year, three main components.

14:39 And encouragingly, CTP, the technical plastics division, is almost zero change. So it's managed to maintain its profitability from last year on a slight drop in revenue that will go into. In aerospace, aerospace sector has been extremely heavily hit. Talk about it being the possibly the worst ever year in aerospace sector history, certainly in decades. And the impact was fairly swift on our own division, and we'll see that it was slightly muted by the fact that we're in aftermarket components business, which actually managed to

15:24 ameliorate the setback slightly, and we also took actions to improve and mitigate the situation. Overall, that's left, position where on the central costs to fairly, not normal core core costs. Is the pension protection fund. We do have to pay a levy there, but that increased significantly in the year, off the previous financial results. And we also had foreign exchange movements not working in our favor there, 600,000. The other central cost was steady. So that's what left us with a $4,800,000 operating profit. If we go to the, Technical Plastics division and compare the revenue and the underlying profit, look at those side by side, we see that very small change, year on year, 0.6% down on revenue.

16:20 And if we analyze that between H1 and H2, we see a 17% kick up in the second half of the year to 55.3%, and that was 47.2% when we released the interim results in H1. And of course, we had mandatory closures across just about all our sites across the world in line with COVID-nineteen lockdown and restrictions. So we got more activity in the second half of the year. In terms of the underlying operating profits, we've seen that CTP is on the same, GBP 9,200,000 against GBP 9,250,000 last year. And then in terms of where the second half profits have gone, they increased significantly GBP 6,000,000.

17:07 So the GBP 2,800,000 increase from the operating profits in CTP from H1 to GBP 3.2 And the sales, of course, were higher at 8.1%. So you see volume driven profits improvement there. Operating margins have stayed stable at 9%. So again, despite everything that's been thrown at us and, of course, before COVID occurred, everybody was worried about Brexit as well. So we've had both Brexit and COVID impact on the business, and it's encouraging to

17:40 see that all, although we've suffered supply chain inconveniences and problems as well and some tough challenges in the market, we managed to keep the operating margin stable. And the prospects remain robust for, the division as we go through into the new year.

18:01 If we look at aerospace, aerospace was the hardest hit sector. We think this could take years to recover. It could even be three to four years, in terms of the overall sector. What does it mean in terms of our business and what we've done? We're we're continuing to generate cash, and we generated over 1,000,000 in the year. And we were very focused on that to make sure that this did not become a major burden for the business, but still contributed. And we're glad to say it's contributed over $1,000,000 in cash. In terms of the scale, though,

18:34 it is much smaller in scale. So the impact being below 5% of CARCLO turnover, while aerospace has been hit very significantly, it's not had a major impact on the business as a whole as a group. And the COVID impact, it has taken longer to work through because we had a good pipeline. We keep a very good pipeline of inventory in terms of aerospace components. And that gave us H1 sales, which actually were better than H2. But it's that is leveling off.

19:07 And the operating profit as a result of the volume drop was 600,000 down. So we were $1,100,000 on $2,400,000 lower revenue. It was 600,000 profits and $1,100,000 down, sorry. If we look then at the consolidated income statement as a whole, just running from top to bottom, we've talked about the revenue. And interestingly, a very good strong H2 position against H1. Reported in terms of H1, 50,000,000. That rose 15% to 57.6%, giving us 107.6% for the year.

19:52 And that contrasts as well with 2020 revenues where it was a bit more level between H2 and H1. In fact, revenues dropped from 56% to 54 that was less impacted by COVID then. And then in terms of the underlying operating profit, we've already seen the components of that, the $4,800,000 In terms of the H2 and H1 components, H2 was much stronger on $3,300,000 So the profit recovered sharply from $1,800,000 when we reported at the interim stage. And again, that's on $7,600,000 higher revenue, so heavily volume driven. In terms of 2020, we saw the profits in H2 up $700,000 from H1. So it went from 3,300,000 to 4,000,000 So it did increase in 2020, H1 to H2, but much less significantly than this year.

20:54 We've mentioned exceptionals. And here, we've got a couple of key components, really. We've seen quite a remarkable swing there of £10,000,000 benefit against last year's exceptional charges of 5,500,000. Now we see a gain of 4.5. So 10,000,000 swing all in all, what's that due to? The The rationalization costs of last year, which were very heavy after the exiting of the LED technical businesses, they were very heavy in the previous year. And the rationalization costs are now dropping down, and they've dropped to GBP 2,000,000 from GBP 4,100,000 in the previous year. But more significantly, the gain of pension credits that we've posted of GBP 6,500,000 net, the main driver of that was 6,700,000, which was down to an offer of flexible retirement made to members. So the benefits don't change.

21:58 They're just given more options, but that actually improves the projected costs that the pension scheme has to reserve for those members in giving that option. And then against that, there was GBP 200,000 increase in the GMP equalization costs, just applying the latest assumptions and legislation.

22:20 Then finance costs, they were fairly steady underlying, slightly higher due to new bank agreement fees from the restructuring, and they went to 2.7 in year. Income tax itself reduced quite significantly from 1.4 the previous year. We've had a different mix of rates between the countries' tax rates. We've also had some provisions which were no longer required. I think at the time of flux last year, some provisions were needed just in case eventualities which did not occur came to pass. And then finally, in terms of profit after tax, that all leads to an $8,100,000 improvement of the continuing operations to 200,000 And then finally, the discontinued operations that we spoke about, the LED technology business.

23:16 We've actually had a gain there in that we've got residual receipts from the administrators totaling GBP 1,200,000 for the year. We look at net debt and just what has moved, although the net debt has hardly changed in the year, there has been some significant movement within that. And what we can see on the net debt

23:43 is basically the areas where the working capital has improved the position. And then we've also got the net pension contributions, which go through each year. And other cash flows from other operating activities have been positive. And exceptional rationalization costs bring that down again by $2,000,000 Then of course, we've got the YPAC, that's the LED technology business proceeds that we talked about.

24:13 CapEx has hit over $7,000,000 in terms of the outright straight purchase CapEx. We're also starting to invest more in our capital equipment and property through leasing. So leasing additions have increased there. So you can say that most of that, nearly all of that is capital additions. And then we also have ForEx 1,100,000 benefit from the debt there. And then overall, we're at 200,000 different from the start of the year. So overall, it stayed very stable. If we look at the pension scheme movements themselves that we've touched on so far in terms of the pension past service credit, it's called, we see that's made a good impact on the deficit. The deficit overall has hardly changed by $300,000 improvement.

25:18 There have been some swings and roundabouts within there. We have always constant annual net interest cost on the liabilities, 0.8 in this year, and the admin costs for administrating the scheme, including the pension protection from levy that we mentioned. And then there's the company contributions net of the admin expenses, which obviously bridges the deficit each year, 2,800,000 this year. And then GBP 6,700,000 in terms of changes in demographic assumptions, which has been a little bit unusual this year in that the downside of the COVID-nineteen impact has actually had a beneficial impact on the demographics and mortality, and that's a strong driver amongst other updates and assumptions within that figure.

26:12 And the financial assumptions, then they've gone down $12,300,000 in terms of the IAS 19 valuation of pension scheme. And major drivers on that is the key to the assumed discount rate, which is adopted for the scheme and the discount rate can have quite a significant effect on the IAS nineteen assessment of liabilities from year to year. And that dropped significantly at H1 and then recovered slightly by the end of the year. And then finally, we have the expected asset returns and what the experience was, and that was the $1,000,000 difference between the expectations. So overall, the pension liability deficit deficit has remained broadly stable.

27:01 If we look at the consolidated financial position, we can see that, net capitalization of assets is now increasing. So it's staying significantly ahead of depreciation at 2,800,000 improvement. So we're investing more in the capital equipment during the year. Working capital, we've had a really good tidy job as Nick and I have worked through the business in probably a lot more detail than some would expect in executive management, but also looking at the great detail in the working capital and managed to generate 3,700,000 in cash flow from the business. That has helped shore up a good result on net debt, excluding leases, as we said, now $20,500,000 And that includes a loan as well from the US government, which is touched on in the prelim statement whereby in April 20, it was in our interim report, we were granted a $2,900,000, £2,100,000 COVID support loan through the SBA. That's the Small Business Administration Department of the US government.

28:16 And we heard before we published these results in May that we've had an official forgiveness of the loan, which actually means, in terms of its treatment in the following financial year, that that will be, credited to grant income, and that happened in May 2021. So it's it's good to see that the support funding from the US government no longer has to be repaid. We had similar support from other governments in different forms across the sites, and that's published in the prelims. The net debt then, including leases, was $27,600,000 as said, and that does include $1,800,000 in increased lease debt balance sheet to balance sheet.

29:07 Retirement obligations we've spoken of, and they stay fairly stable. And overall, then we get a $800,000 reduction in net assets, and that's after FX translation losses, which touched on $1,700,000 If we move over to the cash flow summary then. Cash flow, some interesting numbers here, both year on year. We've managed to generate $11,200,000 from operations despite all the different things that have hit the business in COVID, say COVID more than Brexit. 2020 comparatives, they look very healthy, but they were mainly liquidating working capital from the LED technology discontinued operations.

29:53 So back to this year, where has the $11,200,000 been applied? 2.8 to standard servicing of debt and taxation, 7,300,000 of capital spend that we mentioned. And then through the restructuring and the refinancing that took place in August 20 that was mentioned in detail in the interim report, that has generated a new base of $6,300,000 in pricing if we include the LED technology proceeds of $200,000 in there. So overall, that's given a good increase in the cash base of $7,400,000 And it's given the business and management a chance to really stabilize the business and get it on a sound financial footing and not to start getting worried about liquidity, which can be a distraction to growth management.

30:49 So over to Thank you, Phil. Thanks for that. Yes. So so just to give you a sort of summary of where we feel we are. Obviously, as I said at the beginning, a year like no other. We but we feel that we come out of the year having stabilized the business and now definitely on an improving trend. We've we've streamlined the whole business structure and simplified reporting, reduced the number of levels in the business. And and the new management team that we've brought in are betting in well. And and the new board as well is also making a a big contribution to the business. So it's been a really big change actually in the second half of the year about how we manage it and direct and drive the business. But I think positive signs that that's really starting to work.

31:40 I'm a very operational person, Phil is as well, and and and we spend a lot of time just driving that rigour into reviewing the business, driving actions, following up on things. And that's what we will continue to do to go forward to make sure that that focus on great customer service, delivery quality, safety for our people. And if you get all of those things right, then your margins improve, your working capital improve as well. The investment in CapEx has been significant this year and will continue to be significant as we go forward because the route for this business is one of organic growth. And I think there are opportunities in actually in both of those, the main sectors that we operate into to be able to do that.

32:27 CTP has already regained a lot of its momentum in the second half. But as we've said, aerospace will take the market will take a while to recover. But nonetheless, we are looking to pursue opportunities to grow in other ways. Putting together clear strategies, the business overall strategy, the group strategy hasn't changed. It still as we said said it was before. But what we've done is being much more granular about the action plans that are needed to underpin that vision of becoming, you know, the trusted trading partners in the sectors that we operate in. And I think based on that, obviously, at the end of last year and what we're seeing so far at the beginning of this year gives us a feeling of confidence about the business going forward.

33:15 As you'll know from whatever you read in newspapers and you see with other businesses, the impact of COVID isn't over yet. You know, there are a lot of after effects, shipping times increasing, material input pricing, steel disruption and isolation happening, some countries being affected by further waves. So, you know, this is not by any means, this this current financial year is not gonna be a normal year as the after effects of the pandemic wash through. But having said that, you know, after the first three months, I think we're pretty pretty happy with where we've got to. We're not gonna issue some very detailed guidance for all the the reasons I've just said really about uncertainty in the world at the moment. But but really so far so good, I think, with what we're seeing in this financial year.

34:08 So that concludes our presentation. What I'd like to do now is we have some submitted questions before this session started. We've had some pop up on the screen as we've been talking. So what I'd like to do now is ask Mark just to run through with me and fill the the questions that were lodged before. Correct. Then we'll we'll pick up some of the questions that are that you've asked as we've gone along. Some of them we won't be able to answer because they're forward looking and and would would just be too much detail to give out on a call like this and would affect our commercial position in some cases. But we'll we'll do our best to answer those that we can. So perhaps, Mark, if you could start with the question before the call? Call. Yes, most definitely, I will. And thank you both to Nick and to Phil for updating investors.

35:02 Please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, will be made available to you after the event. Also, is important. And when the meeting has concluded, we'll redirect you in order that the company can really better understand your views and expectations. As you said, Nick, there four questions that we had that were pre submitted. The first one reads as follows: Can you give any further information about the recent tooling and contract awards, for example, potential income, contract longevity, client names, areas of diagnostic diagnostics and type of device to reassure shareholders further? We we what we can tell you is is that tooling revenues increased on us, Phil, just to sort of run over that again in a minute. We're we're not in a position where we can give you a whole load more detail about who exactly it was, but increasing tooling revenue is is a good thing because that precedes the the serial production, you know, the length of time. These pieces of kit, the the tooling, the CapEx are expensive.

36:11 They're big commitments from a customer. So when a customer is investing in tooling with us, it's a really good sign about further production for us in the future. And and these are, you know, multiyear usage for these tools. So, unfortunately, for for confidentiality reasons, I can't give you a whole load more detail. But, Phil, do just wanna give us the high level numbers on tooling, what we saw, you know, year on year? Well, yeah. I think as you say, Nick, we're still in a position where we'll be publishing those fully in the ARA, but we're pretty significantly ahead year on year on tooling. And the reason being mainly gain gaining new customers. And also, the other point that you picked picked up, Nick, is that this tends to, presage, you know, stronger revenues because they tend to turn up at the start of the contract. So if your tooling revenues are generally increasing, there's a general rule of thumb that that gives you an upward trajectory.

37:21 Okay. Thank you, Phil. Thank you. Okay. Should we move on to the Absolutely. Of course. The next question reads as follows. In which international region do you envisage most growth during 2122 in the technical plastics division? Okay. So for the new contract that we won and with the new customer that we alluded to in our release in December 2020, The primary regions that that benefits is is The UK and The US. However, having said that, that I would like to see the group even itself up. We've got facilities in Czech, India, and China, which are all capable of further growth within the existing footprints that we've got. And so I think that although we can see already that the contracts to grow The US and The UK are there, I think I'm pretty confident about the growth prospects in these other countries as well. So, you know, we would like to even up if you would like like the phrase is even up the revenues around the world doing the same thing with the same customers, but doing it more globally. So I do think there's opportunities for growth in actually, in all the regions in which we operate.

38:41 That's great. It's probably worth adding as well there, Nick, that different international sites that we have do serve the same customers. So there is potential to support the same customer from different geographical and international sites. That's what something that we're doing pretty much increasingly now. Thank you very much, Dave. The next question reads as follows. Would the Board anticipate being able to approve a dividend for the financial years 'twenty one and or 'twenty two? I think on that one, all I can say is that under the terms of the restructuring agreement that was agreed with the bank and the pension trustees were not allowed to pay a dividend until the end of that agreement period, which is July 2023.

39:33 We'll have to make decisions about dividends beyond that point, but certainly, we can't do anything for the next two years. That's very kind. And Nick, I think the final question was around the share price volatility, I guess, at the time when the results came out. And I'm mindful that this presentation is just a few days beyond that. So I don't know whether you want us to jump into the live Q and A or give reference to the Yes. Let me just pick up on that one. I think, know, the question was, you know, was I disappointed by the drop in the share price on the day of the results announcement? Well, no, actually. If I stand back and I look at how the share price has moved over the last six six months, it's gone up a lot and it has been pretty volatile.

40:19 So I'm not overly perturbed about that. You know, what we are hopefully outlining for you today is a business that's been stabilized and is now improving and and, you know, that will be reflected in the share prices as we announce things in the future. So no, don't think it's unfair. I don't think it's particularly unusual. We do see quite high levels of volatility in our share price. And this is a long game. You will have seen that Phil and I both bought shares this week, you know, so that gives you some idea of how we feel about the business. That's very, very kind, If if I could just ask you just to open that q and a tab on the right hand corner of your screen, of course, because investors have submitted questions there. If I could ask you where appropriate, just to read out the question before giving a response, that would be very helpful, and I'll pick you pick up from you at the end.

41:15 Okay. Thank you. I I just said before, because of the nature of some of the questions and and and the detail of them, and they would be forward looking. Unfortunately, we're not gonna be able to answer some of those. But let's let's pick up on a couple of them. There was one, if the price was right, would you consider selling the aerospace division, or do you regard it as a core part of CARCLO's business over the long term? The way I look at the business is that the the technical plastics business and and the aerospace business, there's no commonality of customers, of processes. The only commonality is their own by by CARCLO. So there's no reason why the two divisions should absolutely be together. But, you know, I'm driven by generating shareholder value here, and I think there is value to be created in both divisions.

42:06 Now I think the phrase at the beginning of the question was if the price was right. If the price was right for anything, I guess you would consider selling it, but that's not something that I anticipate in in the short or medium term. I see, you know, sufficient opportunity in both divisions to be able to really grow them organically and to improve profitability and cash generation. So that's not something I would consider right now. So the next one, can you give an idea of the long term ambition for revenue growth, operating margins, and return on capital when the business turnaround is complete? I I I can't give you those details again because that that's forward looking.

42:51 But I would say that, you know, what we do see is is that the markets that we're in, aerospace will recover and will be a good market. I've been operating in the aerospace sector for most of my career, and it is very cyclical. You've got to believe now is a down point and that things will recover. I think for CCP, you know, if I look again at optical, medical, diagnostic, I we see all of those as growth sectors. And and because we've got good market shares in parts of those markets, we think the opportunity to grow market share around the globe is is pretty significant. So but it's an organic growth story. And unfortunately, I just can't give you the detail yet of what we will what we'll be doing in terms of those growth rates.

43:46 There's another question. With the progress you've made with the business, would it be a good time to do a fundraise? No. I don't think so. We we don't we we we're adequately funded for what we wanna do at the moment. So but we will consider that question as we go forward as well. If, you know, I I think with the work that we've done on cash generation, we feel that we're able to execute the plans that we could see for the next two or three years under the existing facilities. So we don't feel a need particularly to go out and fundraise. And then whether Phil, do you want to comment anything on that at this stage? I think similar to what you said, Nick. Yeah. That, you know, we're at the start of the turnaround here. You know, these things these things take time, and we've seen really great results, I'd say, just within six months and a hell of a lot, you know, already under our belt. But in terms of the business at large and, the organic growth and the opportunities that we think we should get, there's still quite a bit of internal work to do to get to the right footprint that we want but within the funding kind of structures that we've got.

45:02 So there there's quite a lot to do still with the structures that we've got. And I'd also say it does take some time for credit insurance and the the uses of the financial statements to start to gain that confidence. It doesn't come overnight just in one or six or twelve months. You know, that can take some time before, you know, we get a really good body of confidence and a good track record behind us, which I think will improve the fundraise if and when it comes. Okay. Thanks, Bill. Next one is a question for Mr. Sanders. How did you come to join the business? Was it a result of a particular shareholder? And how has the shareholder base changed since you joined?

45:48 I was actually appointed by the board. The board recognized that things needed to change in the business. My my background is that I I'm an engineer, but I've spent most of my working life as either CEO or chairman of turning around industrial businesses. And so it was part of a search that the board initiated. They were looking for somebody with those sort of turnaround skills in industrial businesses. So was I was actually approached by the board rather than any particular shareholder. The shareholder base has changed a bit. We've still got a good core of institutional investors that's hovered around 53%, 55% of our shareholding. The retail base has changed. There's some smaller some maybe medium sized investors dropped out, but the capacity they created in the market was immediately taken up. So, you know, so so our shareholder has has base has changed.

46:46 And I think that was part of our thinking today as to why we wanted to do a broader communication to shareholders because we've got a really diverse shareholder base and and, you know, we appreciate your support and and we thought it would be good to try and communicate more directly with you. So let's have a look. Next one, if the technical sector plastics that is was running under full capacity next year, how much revenue would it generate with the main investments? You know, we're constantly looking at our capacity. We we you know, the things that dictate capacity for us are the floor space to operate in, the number of machine tools we've got, and and the number of people that we have to operate.

47:35 So again, I can't give you any concrete numbers on that. But for all of those constraints, whether it be floor space, whether it be machines, or whether it be people, we have action plans in place to make sure that we're not capacity constrained and that we can grow as the market wants us to grow. Next one is not a question, but it's a kind comment. It's not a question, but can I congratulate you on work done so far and a very detailed and comprehensive presentation? Very impressive. Thank you for that kind comments. Let's see if we got any of this. What do you see as the biggest opportunity moving forward? Don't know. Phil, do you want to pick it on that one? It's a very broad question. It's a broad question and probably a broad answer and probably goes a bit back to what I was just saying about the fundraise question, Nick, that, you know, there's there's a number of stages for for the for the group to go in and, you know, the potential in in in the long long term future is great because and the main reason is that the product and service is is second to none. We're probably in comparison with our competitors, you could say that we're a small hitter.

48:48 You know, as a small PLC group, we're competing with much bigger global companies, and we're we're holding our own. We're winning new business with global blue chip internationals. And I think any business which is able to do that and now has a real track record of doing it, it's been a little bit clouded, I understand, over the last few years of history because the business was involved and and invested heavily in other divisions and units, which it no longer does and now can give and afford the time and the focus to a really proven, business niche that it's in in the, technical plastics, sectors, medical diagnostics, optics, you name it. There's a wide range there, and we happen to be getting a lot of more business and and proving ourselves in parts of the plastics and technical plastics sector, which are particularly attractive now and and getting a lot more attention probably because of things like COVID nineteen and the things that have happened around the world. It's it's it's making the world pay a lot more attention to a niche and an expertise that we're good at.

50:07 Yeah. Thanks thanks, Scott. I think probably the way I would express it, what's the biggest opportunity, is that what we've what we've done is we've decluttered the organization. We've focused it. And and and and what you find underneath all that is actually you've got both divisions are really very good at what they do. And and what we want to do, Phil and I particularly at the center, is we create the environment for them to flourish. We help them with the strategy. We help them with the resources to do that, funding whatever it is. But we think the potential of the management teams that we've got and the markets that we operate in is really exciting. So for us, I think I would characterize it as saying it's about really giving the divisions their head to grow and the guidance. And perhaps in the past because of all the things that have gone on, that hasn't been the case.

50:59 So now I think it's an opportunity to really see how how the two divisions that we've got can really perform, and and it's still a nice job to facilitate that. I think that's probably as many questions as we can answer just at the minute. There are there are some others in there which unfortunately, I think are just too detailed or too forward looking for this environment. So I think all I can say is thank you for for joining us today. From what I can see, there's been quite a number of people have joined this call. Hope you found it useful. If you could give us some feedback, if you think it's worth doing, great. That that that will be encouraging for us. And if there are any questions that you have submitted that after the event, we think we can actually give you some guidance on, we'll we'll try and do that.

51:48 But I think from Phil and me, thank you for your attention. Mark, thanks for setting this up for us. Yeah. And, yeah, look forward to communicating with you in the future. Thank you very much. Thank you all. Bye, everybody. Nick, Phil, thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide feedback in order that management can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. So thank you if you could spend the time for that. On behalf of the management team at CARCLO PLC, I'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all.