Chesterfield Special Cylinders Holdings (LSE:CSC) — FY25 Results

0:00 Good morning, and welcome to the CHESTERFIELD SPECIAL CYLINDERS HOLDINGS PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can view all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Chris Walters. Good morning to you. Thank you, Alex, and good morning, everyone. Welcome to the presentation of our 2025 full year results, including an update on the strategic progress we're making in key markets and the outlook for the business. I'm Chris Walters, Chief Executive. I'm joined by my colleagues, Sally Millan, Director of Finance and Chris Webster, Chief Operating Officer.

0:57 Before we begin, I'm required to refer you to our disclaimer and note that the presentation includes forward looking statements based on current expectations that are subject to risks and uncertainties. I'm pleased to present here our 2025 highlights. Strong performance in the second half of the year as expected delivered significant full year revenue growth over 2024 and a return to profitability at an adjusted EBITDA level, well ahead of market expectations. A strong balance sheet with a cash position of $2,100,000 was significant increase over the 2024 year end balance following the successful sale of the PMC division, which completed at the beginning of the financial year. The sale of PMC has enabled a clear strategic focus on the development and growth of CSC throughout 2025.

1:50 Financial performance reflected strong growth from overseas defense contracts secured in the first half of the year and record revenue from our Integrity Management Services business. Hydrogen revenue also reached a record level as we delivered initial milestones on our first large scale UK newbuild contract for the BP Aberdeen hydrogen hub project. We made good strategic progress towards the 2028 targets we first announced with our 2024 results, and we expect further strong revenue and earnings growth in 2026. Here's an overview of today's presentation. In the first section, Sally will cover the financial results in detail. We'll then present an update on our strategy, including a reminder of our midterm targets to 2028 before reviewing the progress made during 2025 towards those targets, when Chris will also cover the steps taken to ensure operational readiness for growth.

2:49 We'll conclude the presentation with the outlook for 2026 and a summary. Sally, Chris and I will be very happy then to take your questions. Okay. I'm going to hand over to Sally now to cover the financial results. Thanks, Chris. So this slide presents the financial results of CSC and central PLC functions comparing with FY twenty twenty four results. CSC delivered revenue of 16,600,000, which was up GBP 1,800,000, an increase of 12% compared with the prior year. This performance reflects strong growth from overseas defense contracts secured during the first half of the year, record performance from UK Integrity Management deployments and record Hydrogen revenue. I'd like to note that the revenue performance of GBP 11,200,000 in the second half of the year was more than double that in the first half, reflecting expected phasing of contract milestones and integrity management deployments throughout the year.

3:47 FY 2025 saw a return to adjusted EBITDA profit of GBP 800,000 after central costs and well ahead of expectations compared with an EBITDA loss in FY 2024 of $900,000 Loss before tax was $800,000 against a loss before tax of $2,700,000 in FY 2024. Central costs were $800,000 compared with $1,700,000 in the prior year, reflecting cost restructuring following the sale of PMC. So the trade in EBITDA profit before central costs was 1,600,000 double the $800,000 in the previous year. Operating cash inflow of $300,000 and our cash balance was $2,100,000 compared with $100,000 at the end of September twenty twenty four.

4:37 The term loan of $1,000,000 at the end of the prior year was fully repaid in October 2024. This slide presents the revenue by market sector for the year compared with FY 'twenty four. $12,800,000 77% of total revenue came from sales into the defense market, a similar proportion to the prior year. This reflects strong growth from overseas contracts secured during the first half of the year and record performance from UK naval integrity management deployments as revenue reduced from UK naval newbuild programs nearing completion. Hydrogen revenue of 2,600,000 was the highest on record for CSC and reflects in factory life cycle services for static storage and road trailers and initial milestones for the BP Aberdeen Hydrogen Hub Static Storage contract secured in the first half of the year.

5:33 The remaining $1,200,000 of revenue came from industrial and offshore services customers. Included within these sector revenues is $7,100,000 of life cycle services. Life cycle services include our institute integrity management services, as well as our in factory services covering mandatory inspection, testing, and recertification. Together, these lifecycle services represented 43% of total revenue, reflecting a record integrity management services performance of 4,800,000, doubled from the previous year of 2,400,000. This record performance reflects a peak of activity on major UK naval deployments during the year. This slide presents the P and L comparing with FY 2024.

6:24 The adjusted EBITDA performance of the trading entity of CSC was $1,600,000 compared with $800,000 in the prior year, reflecting the growth in defense, hydrogen and integrity management. Improved gross margins reflect the strong performance in high value integrity management services, which are noncapital intensive and cash generative. The P and L also highlights the impact of central costs of GBP 800,000, significantly reduced from 1,700,000 in the prior year, reflecting a considerable reduction in the scale and complexity of the company following the sale of PMC. Note that central costs include the remuneration of the nonexecutive directors and the chief executive and the cost required to maintain a public listing, while all of the staff costs are included in the results of the trading subsidiary.

7:15 Exceptional items relate primarily to the disposal costs of the PLC division. This slide presents the balance sheet at September 2025 compared with the prior year end September 2024. Tangible assets have fallen slightly since the end of the last financial year due to relatively low levels of CapEx offset by depreciation charges. Key movements in working capital included higher trade receivables at the end of the year due to increased sales in the second half. The company has a significantly stronger balance sheet with a cash position of GBP 2,100,000 at the end of FY 2025 compared with GBP 900,000 net borrowing at the end of the previous year. This slide presents the movement in the cash balance over the period from September September twenty twenty five.

8:10 The cash balance for CSC at the start of the financial period was $100,000 Initial cash consideration from the sale of PMC in October was 4,800,000 Total PNC transaction costs were 1,200,000, and the working capital adjustment related to the sale was 9,600,000, representing the net movement in the PNC balance sheet between the locked box date and sale completion. The proceeds of the sale facilitated the repayment of the term loan balance of 1,000,000. Positive operating cash flows driven from the improved profitability, together with lower CapEx spend, repayment of leases and other exceptional costs resulted in a healthy GBP 2,100,000 cash position at the end of September.

8:56 We're pleased with the company's significantly improved progress and performance in FY 2025 to a return to profitability as well as its net cash position and strengthened balance sheet, which positions us well for our strategy and medium term targets, which Chris will now take you through. Over to you, Chris. Thanks, Sally. This section of the presentation covers our strategy in key market sectors and the progress we made during 2025 towards our 2028 targets. The delivery of value for our shareholders, customers and other stakeholders is through the strategic development and growth of CHESTERFIELD SPECIAL CYLINDERS in established defense and emerging hydrogen energy markets and through the growth of life cycle services as summarized here.

9:42 In the defense market, we are the trusted supplier of mission critical pressure systems to navies and defense contractors worldwide with a proud 125 history. This market is characterized by high value contracts with the benefit of long term program visibility, but are often subject to delayed order placements and irregular project milestone phasing as we've seen in recent years. We're a sole supplier to UK submarine and surface ship programs and long term partner to several major European shipbuilders for their domestic and export submarine projects, where we have the advantage of early engagement with engineering and procurement teams to support long range operational planning. We're also well positioned for growth in overseas defense markets, including the submarine newbuild programs for the US Navy.

10:34 In the hydrogen market, our world leading reputation in safety critical hydrogen storage and transportation systems reflects our extensive knowledge and several decades of experience. Strong UK government backing for clean energy production and support for the development of domestic supply chains provides an exciting opportunity for new build supply and life cycle support of hydrogen storage and transportation systems over the medium to long term, where CSC is now having a comprehensive product and service capability. Life cycle services represent the third and final area of strategic focus and growth, where we're well positioned as a pressure system OEM to capture noncapital intensive repeat revenue throughout the product life cycle.

11:24 Where installed pressure systems cannot easily or cost effectively be removed in service, our unique in situ integrity management services enable mandatory testing and recertification in the field, either on-site or onboard a vessel, helping to minimize operational disruption and maximize system availability. Our in factory life cycle services cover the mandatory inspection, testing and recertifications of systems from a wide range of safety critical regulated markets, including defense, hydrogen, power generation, offshore services and industrial gas transport. As we set out in February this year with our 2024 results, these three areas are the basis of our strategy, our growth plans and our midterm targets to 2028.

12:19 This is a reminder of those 2028 targets against a 2024 baseline. The targets are unchanged as follows: We'll deliver revenue greater than 30,000,000 from organic growth. We'll double high value overseas defense sales to around 6,000,000, underpinning a 40% increase in overall defense sector revenue. We'll grow hydrogen sales to 30% of total revenue, and we'll double integrity management revenues to around 5,000,000. We'll maintain at least 30% of revenue from life cycle support services throughout the growth period. And we will deliver an adjusted EBITDA margin greater than 15% before central costs.

13:08 Okay. I'll now present the outlook and opportunities in the defense and hydrogen markets. First, defense. Mission critical systems manufactured by CSC are installed on the submarines and surface ships of more than 25 NATO friendly navies worldwide, delivered through long term relationships with well known defense contractors and shipbuilders shown on this slide. In particular, I would highlight that CSC is the sole supplier to UK Royal Navy newbuild programs through prime contractors BA Systems, Babcock and Rolls Royce. CSC is also a long term supplier to French shipbuilder Naval Group for domestic and export newbuild programs.

13:55 In January this year, we were awarded a strategically significant contract to supply safety critical pressure systems to The US defense prime contractor General Dynamics Electric Boat, the company responsible for the design, construction and life cycle support of submarines for the US Navy. We're also currently suppliers to Novantia in Spain, Irving Shipbuilding in Canada, and BA Systems in Australia amongst others, and we're actively engaged with these companies in planning for their future programs. With today's backdrop of geopolitical tensions, commitments made within NATO to increase defense budgets remain a primary focus behind the market outlook for naval newbuild programs, which remains strong.

14:44 The publicly announced long term naval newbuild programs extending to 2040 and beyond are shown here, with an estimated 125,000,000 of qualified revenue opportunities for CSC in pressure systems supply over the next fifteen years. The UK government has reaffirmed its commitment to to the defense budget after spending reached an estimated 2.3% of GDP in 2024, making it the second largest defense budget in NATO. Looking ahead, the government remains committed to increasing the defense budget to 2.5% of GDP by 2030 and has repeatedly stated that this investment will deliver a so called defense dividend with an increase in orders for UK manufacturers like CSC, enabling greater levels of private investment and job creation across the supply chain.

15:40 The SSNA AUKUS submarine program, the trilateral agreement with The United States and Australia to deliver to deliver next generation nuclear powered attack submarines to replace the Astute class, remains fundamental to The UK's long term defense strategy. This program continues to drive significant investment in skills, training, and jobs in The UK, and we expect to commence early manufacturing stages from 2027. Global defense spending saw a sharp increase during 2024 and is projected to continue growing, particularly with a significant number of naval new construction programs now commencing and many more in the design and planning stages across major allied nations.

16:27 The US, Australia, Canada, and France remain committed to long term investment programs for submarines and surface ships. In The US, new build programs for the Columbia class ballistic missile submarine and Virginia class attack submarine are active. These programs continue to involve the use of critical UK manufacturers. Now the hydrogen market. CSC has a world leading reputation and over one hundred years experience in the design, manufacture and life cycle support of safety critical high pressure hydrogen storage systems. In this slide, we're summarizing the role we play in the established market for industrial bulk hydrogen storage and transportation and increasingly in the emerging market for green hydrogen, supporting decarbonization and mobility projects.

17:20 For new build static storage and transportation solution, our core product range is based on proven type one steel technology, while we're also an experienced integrator of lightweight composite type three and type four cylinders. Our life cycle services cover the mandatory inspection, testing and recertification of safety critical hydrogen systems, including road trailers and transportable bundles, which we carry out in situ and through in factory processes at our Sheffield facility. The global hydrogen energy market continues to develop, underpinned by its potential to support decarbonization in transport, power and industrial applications as part of the overall energy mix.

18:07 We're well positioned to supply products and services to this developing market and see an exciting outlook in The UK, where the government's funding commitment to hydrogen production targets through the hydrogen business model remains strong. The delayed rollout of UK government funded hydrogen projects has been frustrating for developers and the wider supply chain. However, in April this year, the government confirmed its commitment through the approval of 10 projects under the first hydrogen allocation round, one, representing a total planned production capacity of 120 megawatts, just short of the initial government target of 125 megawatts. The rollout of Har one projects was delayed in 2025, but developers are now progressing their technical and commercial work towards key supplier contract awards in 2026, with first hydrogen production anticipated from 2027.

19:04 We are expecting one major storage contract under Har one in the first quarter of twenty twenty six and several smaller road trailer opportunities from 2027. For Hartu, a total of 27 projects were shortlisted by the government this spring, representing 765 megawatts of the 875 megawatt target for this second allocation round. The next stage is for developers to secure low carbon hydrogen agreements from the government, which are currently anticipated in the first half of twenty twenty six. We expect that up to one third of HAR2 projects will require large scale static hydrogen storage, while all projects will require road trailers of varying capacities and types.

19:52 We're in discussion with key HAR two developers regarding their project requirements and expect the first storage contract awards in late twenty twenty six, followed by road trailer opportunities during 2027. The government is expected to publish an update to its hydrogen strategy in January, and the recent budget confirmed that the three process will be launched in 2026, with four to follow in 2028. It has been encouraging to note that the UK government has stated that it will take action to increase levels of UK content in projects. A call for evidence on options for the hydrogen supply chain will soon be published, and the government is considering an expansion of the clean industry bonus into the hydrogen sector to incentivize developers to evidence a greater use of UK technology and UK job creation.

20:48 Aligned with this pro UK supply sentiment, in September this year, CSC launched a joint industry campaign, bringing together 11 UK hydrogen technology manufacturers to secure stronger policy support to help maximize The UK manufactured content in projects on the basis that these projects are ultimately funded by UK taxpayers. The campaign group met with government officials from the Department of Energy Security and Net Zero in November ahead of meeting planned with the minister for energy, Michael Shanks, in January. We're encouraged by the government's response to our campaign so far and appear to be aligned with their industrial strategy to grow domestic supply chains for hydrogen. Now focusing specifically on 2025, the following slides present the strong progress we made during the year towards our 2028 targets.

21:46 As Sally highlighted earlier, overall defense revenue increased by 15% to 12,800,000, reflecting strong growth from overseas contracts and from UK naval integrity management deployments. Revenue from overseas defense contracts was 4,900,000, an increase of 58% over 2024. This represents 38% of the 12,800,000 total defense revenue in twenty twenty five and sixty percent of defense newbuild revenue as UK newbuild programs near completion. Overall defense order intake more than doubled to 19,100,000, with overseas orders at 8,300,000, an increase of 69% over 2024.

22:34 Recent contracts award contract awards for the Royal Australian, Royal Canadian, US and Spanish navies have strengthened the order book, and we're positioned well for further overseas contract wins in the new year. The initial qualification contract to supply the US Navy is progressing well, with delivery of pressure vessels to the program and qualification expected in early twenty twenty seven. The first major orders are anticipated later that year for delivery in 2028. This significant step for CSC will provide a foundation for future growth and development in The US market, where ongoing submarine new construction programs are already planned to run through until 2043.

23:22 Also of note in 2025 was the growth in margin performance, influenced by a strong integrity management result and through the operational performance improvements and production efficiencies achieved since 2024, which Chris will come on to discuss later on. So in summary, we're pleased with the progress being made here. The overall defense order book at the end of the period was significantly stronger at 14,600,000 compared to 8,200,000 at the end of twenty twenty four. The outlook for overseas and UK defense markets remains strong, and we're on track to meet our 2028 targets. Hydrogen revenue increased by over 50% to 2,600,000 in 2025, which was our highest hydrogen revenue on record.

24:12 This performance reflects an in factory life cycle services for road trailers and storage bundles and includes initial milestones for the BP hydrogen hub contract secured in the first half of the year. As our first order to supply large scale hydrogen storage systems to a new generation of groundbreaking clean energy projects in The UK, this long awaited contract represented a significant strategic milestone for CSC during 2025. System delivery is planned for next year. Hydrogen order intake more than doubled to 3,200,000 during 2025, and the hydrogen order book at the end of the period was 1,200,000. Our first major contract award under UK HAR one program was originally expected during 2025.

25:03 The project has UK government approval and is progressing toward final investment decision with engineering input from CSC. Contract award is now expected in the first quarter of twenty twenty six. The anticipated growth in green hydrogen production from and several privately funded projects is driving fleet expansion plans for hydrogen road trailers in The UK. Building on our extensive history in proven type one steel solutions, we've signed a strategically important cooperation agreement with leading type four composite cylinder manufacturer, nProx, enabling the integration and supply of lightweight modular hydrogen storage systems and road trailers to meet this growing UK demand from 2027, giving us a full service offering to the market.

25:54 Given the UK government's commitment to support for UK supply chains and CSC's strong industry position, the outlook for hydrogen from 2026 is strong, and we are confidently on track to achieve our 30% of total revenue target by 2028 at around £9,000,000. Total Lifecycle Services revenue in 2025 was 7,100,000, an increase of 60% over 2024, driven by record revenue growth in Integrity Management, which doubled to 4,800,000, reflecting a peak in activity on major UK naval deployments throughout the year. The longer term outlook for integrity management services remains strong, especially for naval deployments across the existing UK fleet.

26:44 CSC is also in discussions with several overseas navies regarding integrity management revalidation services for their surface ship and submarine programs, with fleet deployments expected in 2026. Margins improved during the year for in factory inspection, testing and recertification services following operational improvements and efficiencies implemented since 2024. Delivery performance and stronger gas major relationships underpin this visible, noncapital intensive repeat revenue stream. We're on track to achieve our target for integrity management services of around £5,000,000 by 2028, double the performance of 2024, noting that 2025 reflects a peak in UK naval deployments.

27:37 The expected growth in integrity management services and a predictable demand for in factory recertification work together support our goal of maintaining 30% of revenue from high value life cycle services throughout the period to 2028. Okay. I'm going to hand over to Chris to review the progress made in manufacturing operations that supported our strong performance in 2025 and underpin our outlook and growth plans. Chris? Thanks, Chris. We commenced our operational improvement strategy in 2022 and have successfully moved on from the back to basics phase and built ourselves a solid foundation to improve from. Through 2025, we have been making change in a systematic manner to all three of the operational themes depicted on the right hand side of this slide.

28:28 We are well positioned to continue to make change and move into the accelerate performance phase. Over the next two slides, I'll describe some of our key achievements and the plans we have for growing the business through operational excellence in the coming years. We've been working hard on improving our operational flow, increasing our performance and equipment uptime and developing the skills and competence of our valued workforce. On this slide, you can see some of our achievements in pictures. In 2024, we recommenced our apprenticeship program and continued that with another three apprentices in 2025. This is enabling us to have a strong pipeline of new talent to enter the business.

29:15 So due to this influx of new personnel and the expectation of additions to our team as we grow, we've overhauled our training and assessment process to lock in the skills and move from a tacit knowledge based organization to one that is increasingly process driven. We've had another successful year of ensuring the Meadowhall site is well organized with clear set standards around the factory. This has enabled a continued improvement in safety and quality performance and generated operational efficiency gains. A change to the organizational arrangements with the introduction of process managers has led to a stabilized process performance at key work centers, which in turn have led to an increased capacity whilst providing a better level of service to our customers.

30:06 The changes we've made through this last year have put us into a position of strength, and I'm sure we will start to accelerate our performance through 2026 and beyond. We'll do this through a structured multifunctional improvement process with clear aligned objectives and change projects, using visual management techniques to enable our teams across the business to actively engage. We're embracing technology and have started to introduce more visual controls with some high-tech solution providers to enable us to use data wisely to improve equipment uptime, achieve repeatable quality first time and increase efficiency for our customers. As you're all aware, we're in the qualification phase to supply the U. S. Navy.

30:52 We are already planning for our success with a reconfigured factory layout with several phases to enable us to achieve our growth aspirations into 2028 and beyond. These changes will introduce some new processes at the same time as providing a clear flow for a more diverse product range through the factory. None of this is achievable without the development of our people. All our team have development plans and stretch goals, and we're striving for at least 30% of our team to be capable of implementing change through formal lean manufacturing training. We're increasing our integrity management team and upskilling them so they can be fully flexible. This strategy is key to achieve the growth targets for integrity management alongside factory operations.

31:43 Thanks, Chris. We'll conclude the presentation with a brief outlook for 2026 and a summary. We're confident in the outlook for 2026 and expect to deliver further strategic progress and significant earnings growth. Contract revenues will be weighted heavily towards the second half of the year, much as they were in 2025. In defense, we have a robust order book and expect further order placements from overseas naval customers in the first quarter of the new year. We also expect to secure our first contract under the SSNA AUKUS submarine program and progress our qualification to supply the U. S. Navy. In hydrogen, we're encouraged by the momentum in The UK market and expect our first major HAR-one contract award in the first quarter of the new year.

32:34 We also expect our first HAR two contract award later in 2026, along with road trailer orders for delivery from 2027. In Life Cycle Services, the outlook remains strong for integrity management in UK naval deployments, and our first overseas naval orders are expected very soon for deployment in the first half of twenty twenty six. Improved pricing and operational efficiencies underpin further expected margin growth from in factory life cycle services. So to summarize, we're pleased we were pleased to deliver significantly improved financial performance in 2025, with earnings well ahead of market expectations, starting 2026 with a strong balance sheet.

33:21 We're making good progress towards our targets, and we're looking forward confidently to further progress and growth in the year ahead, underpinning exciting prospects for the business and shareholders. That concludes the presentation. Chris, Sally, and I will answer any questions. Alex, over to you. Fantastic. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to view those questions submitted today, 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. And, Christopher, may I hand over to you to share the Q and A? Read out the questions where appropriate, and I'll pick up from you at the end. Thank you. Thank you, Alex. So we've got a couple of questions here specifically on the first half, second half phasing of the performance in 'twenty five. Why is the performance weighted towards the second half of the year?

34:27 And 2025 was a year of of two very different halves. How does 2026 look, Sally? Would you perhaps pick those up? Yeah. Sure. So we're not we're not a seasonal business. New build revenue is driven by contract milestones, which do vary in size and timing. And the timing of order placement and product delivery requirements are controlled by the customer, which can significant which can result in significant fluctuations between periods. Over the longer term, recurring revenue from integrity management and life cycle services from within the factory should help smooth those working capital profiles, but lumpiness is a feature of defense new programs.

35:16 Phasing in 2026, I think, will be fairly similar to '25, and performance will be weighted heavily towards the second half of the year. It will reflect the timing of existing contract milestones, new hydrogen orders, and integrity management deployments. With the improved cash position, we've got the working capital flexibility and headroom to more easily navigate this phase in. Okay. Thanks, Sally. I have a question related to the US Navy project, which says the US Navy project appears to be delayed. Can you tell us more about this project and when you think you'll get orders, Chris? Sure. So look, I think in general, we're definitely progressing well with the qualification phase for the US Navy. It's been slightly delayed, but this is quite a complex program that we're working through here.

36:12 And we're looking to start to conclude this at the early part of twenty twenty seven. But we're absolutely confident that that will then lead itself to a good conclusion post the qualification phase as was described in the presentation. I think it's good news that if you've read in the press just recently that the strong collaboration between The US and The UK with the announcements of being involved in the manufacturing phase for the Virginia class submarines. I think all of that is just generally showing that the movement is in a positive direction. Thanks, Chris. We've got a related question. Perhaps, Sally, you could pick this up. How are tariffs affecting the bottom line in terms of finished goods and raw materials?

37:00 K. I think in summary, we don't anticipate any impact on our profit from tariffs. In terms of goods inwards, we source most of our raw materials from Europe, including the stainless steel tube. So where costs are currently stable, and we're not exposed to tariffs from there. In terms of export, we would anticipate that tariffs would be applied on our products exported to The US, including those for the US Navy. The customers using CSC because of our expertise track and track record and the way that the contract contracts are set up, they will take responsibility for the importation on the tariffs. Okay. Thanks, Sally. We've got a question about the sale of PMC and and the variable element of the of the the of the sale. Please, can you update shareholders on the variable element of the proceeds from the sale of PMC?

37:58 Is anything payable. We've stated we're not anticipating any further cash consideration from the sale of PMC. And whilst this is a disappointing, we're no longer involved in the management of the PMC business, and we're focused on the growth and development of CSC. We're pleased not to be exposed to the volatility of oil and gas markets. We have a question, Chris, related to the resources and skills to deliver the growth plans. Have you got the resources and skills to deliver growth plans to 2020, 2028? K. So I think that we're lucky to be based where we are in South Yorkshire. It's a good industrial zone to be based from.

38:47 As as we've described that the apprenticeship scheme is live, and that is feeding through to us. And we've got good relationships with the AMRC and and the local facilities. It's got a very good apprenticeship program. So we've had no problem getting good candidates. And in fact, in this 2025, we had more people applying to the tune of tenfold compared to what we needed. So we're clearly attracting some good apprenticeships. And then in terms of them just mixing in with other skills as well, then they they they are available and we're looking forward to developing our welding skills because that's what's needed as part and parcel of our change of product profile, then I cannot see any issues with that in this area to develop up to 2028 and beyond.

39:35 Okay. Thanks, Chris. We've got a question related to the PLC capital structure. With the company, so small compared to most PLCs, is it time to do something structurally, or do you think your current size is tenable? Clearly, it's it's a good question. Our core strategy and targets are very much based on being a PLC and having that capital structure and indeed having those costs, which we recognize, you know, may may be a drag at very small scale. But but but over time, central cost, we expect to to become a decreasing proportion of our overall cost and, of course, decreasing portion of our overall earnings as we are projecting significant growth out to to twenty twenty eight. So so we believe the model to be attainable over the midterm, but, of course, the board will continue at all times, to evaluate options to reduce PLC cost, and maximize value for for for shareholders.

40:38 We have a question on operational improvements. You mentioned the operational improvements to support 2028 growth. What investments in the Sheffield factory do you need to deliver the growth, Chris? Okay. So I think that as was described in the presentation, the CapEx has been somewhat subdued over the last few years and has flown through to the cash position that Sally described at the start of this financial year. It's certainly anticipated that we start to increase that over our three year time period. There's a base level of maintenance CapEx that will be required at circa 300,000 to 400,000. But I think I think the the the main elements that we want to invest in are some semi automations and possibly some automated programs.

41:29 We've got some welding equipment that we require to feed feed through into some of the products that we want to manufacture. And then certainly from a paint system perspective, we've got some ambitions in that area that will improve our throughput to make sure that we can support the hydrogen growth areas particularly. Yeah. Well, actually, covering hydrogen then, Chris, we've got a couple of questions that that are similar in relation to to to hydrogen. Please, would you comment on the the speed and degree of mobilization, which is occurring under HAR one and HAR two, and whether what we're seeing from the government is as committed to hydrogen as we anticipated it would be twelve months ago. In other words, have we have we seen funding being released? So so, actually, as as we said earlier on in in in the presentation, I I think it's been a frustrating few years since the HAR one program was was first launched back in 2022.

42:25 We we we're frustrated by it. I'm sure that the the developers are as well, the wider supply chain is is indeed. But I think what we've seen the momentum throughout 2025 and what we anticipate happening in 2026 does underpin the government's commitment. We're seeing projects moving now very quickly towards final investment decision, and and those those projects themselves, of course, are depending on on on the government funding. The signing of low carbon hydrogen agreements is evidence of that of that government government commitment. So, yes, slow slow and and long long waited, but we are confident about the outlook. And and in relation to that, a further question about the £9,000,000 revenue.

43:11 So you're you're forecasting £9,000,000 revenue by 2028 from hydrogen, you know, with with less than only less than 33,000,000 in 2025. How many projects are we expecting to to win? Well, as we indicated earlier on, the the focus with with the 27 shortlisted projects, we we anticipate around a third of those projects, about nine projects in total, will require large scale high pressure hydrogen storage. And our forecasts are based on securing a good proportion of those of those projects. Principally, revenues from the second program, are likely to to to be delivered in from 2027 onwards, so through '27 and '28 for h r two, and we we anticipate then h three projects starting to kick in from from from 2029.

44:11 But but that assumption of a proportion of the nine h r two contracts gives us confidence in delivering that £9,000,000 revenue by by 2028. Yes. So there's a question regarding niche areas where CSC is the market leader. Chris, do you want to take that one? Yeah. Sure. So I think that I I guess where where we're pushing ourselves is certainly with integrity management. I think that that is a key offering that is part and parcel of our business that is certainly we would describe as niche.

44:59 Clearly with the OEM, but we would provide a service to not our own cylinders, but other manufacturers as well worldwide. And I think that it's certainly speaking to the customers in terms of what we can offer through our integrity management business is is the ability to be able to respond and the ability to be able to review and and reinspect and recertify a number of different cylinder types. And I think that that's been very successful, and I think that we can certainly go above and beyond and reach our twenty twenty eight targets. Thanks, Chris. So a challenge and the question is a challenging business to forecast. How are you using technology to facilitate forecasting and improve its its accurate accuracy?

45:48 Well, I'll ask Sally in a moment to talk about some of the internal processes we use to to underpin accuracy and forecasting. But but I think the the the strongest intelligence that that that we gain to support our forecasting is the closeness of the relationships we have with with our customers, though that's the the end the end users, the the the navies, the the developers of hydrogen projects, and and their prime contractors, the likes of b BAE Systems, for instance, as as a good example. The closeness of those relationships gives us the very best insight overall to the to the programs that are going to be contracted. And then how have we how do we manage that as a forecasting process internally, but there's been significant improvement over the over the last few years in that. And I'll ask Sally to call in.

46:38 Yes. I think the improvements, Chris, that you alluded to, we've got we've got a great system at the moment that the forecasting tool that we use that is that has a lot of input from various people in the business. We've now got an established forecast forecasted cost to complete process, which means that we regularly know for the longer term contracts how those costs could change over time, which makes our forecasting much more accurate. The month end process is a fairly quick turnaround, so we're straight onto the new month fairly quickly. You know, we're a small finance team, but with input from the rest of the business, I think the forecasting process is is is is is much better than it was, and it and it's fit for purpose. Great. So Yeah. Yeah. Thanks, Sally.

47:30 Question about integrity management. Clearly, 2025 was a was a very strong performance at 4,800,000. Why aren't you adjusting your forecasts? I think it's a very fair fair question. I think that, you know, we we we we also acknowledge during the presentation that that 2025 was a peak in inactivity due to the docking schedule of the of of the UK naval UK naval program. There's quite a bit of catch up to do during during that program, and so we we we, at the moment, see '25 as being being a peak. We do see the market, you know, being being strong. But but for now, we're holding our 5,000,000 target for 2028. We'll continue to review those targets, though, as as as we move as we move forward.

48:29 Maybe this the last question, if we might, Alex. So a question also related to to hydrogen. So green hydrogen contract was announced today involving ITM and and and Kimberly Kimberly Clark. So ITM, our neighbors here in in Sheffield, just one junction down down the M 1, clearly, you know, anticipating and waiting for the growth and development of of UK, funded funded projects. We're pleased to to to see them securing a contract for electrolyzer supply, which we know that we've been waiting for for a while. We're not directly involved in the Kimberly Clark project as as as such. It doesn't require large scale static static storage, but there are certainly several other opportunities within the overall heart program that we are working on that, undoubtedly, ITM, we hope, wish them success as well.

49:24 That's great. Chris, if I may just jump back in there, and thank you all for addressing those questions for investors today. And of course, the company can view your questions submitted today, and we'll publish those responses on the Investor Me company platform. But Chris, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I please ask you for a few closing comments? Sure. Thanks, Alex, and thank you all for taking the time to attend the presentation today and for those questions. I think following the transitional period of the last few years, Sally, Chris and I and the wider CSC team are very much looking forward confidently to the year ahead and to making further progress towards our targets. Thank you for your continued support. Best wishes for the festive season and a successful 2026.

50:09 Thank you. Fantastic. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of CHESTERFIELD SPECIAL CYLINDERS HOLDINGS PLC, we would like to thank you for attending today's presentation, and good morning to you all.