Metir (LSE:MET) — AGM

0:00 Good morning, and welcome to the Microsaix Systems PLC post AGM investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company will not be responding to questions during the meeting itself. However, the company will review all questions post today's event and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to executive chairman, Jared Brandon. Good morning to you, sir.

0:31 Good morning, Alexandra. Good morning, everybody. Thank you very much for attending. We've just concluded the annual general meeting. The votes of the six that, resolutions, five were passed. The resolution special resolution six wasn't passed, due to the shortfall of numbers. One one who voted against had a majority that actually allowed that not to be passed. We will be reviewing that and speaking with the with the investor to address any issues. But I would like to actually start off with the background information on on the MicroSAIC Systems company and what we've actually done. So let's begin. First draw you to the notice, obviously, the disclaimer in relation to all of the issues that's of of being accompanied that's listed on AIM.

1:27 And these will be available as part of the actual PDF, though, once we complete the current presentation that you can download and read yourself. So, background on myself, I got involved with the company, back in January of of last year, 2021, when the company was pretty, you know, literally ten days away from being sent into liquidation, even administration possibly. But it it had completely failed from a commercial perspective, although the science itself was actually extremely valuable. And my background is in change management and turnaround, transforming companies that are under commercialized into, commercialized businesses, seeking additional or extended areas where we can generate additional revenue for the company or completely change the actual direction of the company.

2:24 So, let me just say, the key metrics on on what happened last year, the sales were up three hundred and fifty fifty seven percent. Now okay. That was on the back of, the COVID year of 2020 when it was only at two hundred thousand. However, 2021, everybody was still in lockdown, and yet we were able to actually return the sales volume back up to, a little over £900,000. And that's being done because we've, transformed the business to generate revenue from additional areas of expertise that's inside the company, and I'll explain that a little bit later. The EBITDA loss was also reduced from 2,170,000 to 1,800,000, and that was on the back of, obviously, overhead, but also the increased margin on areas that we actually, again, I'll discuss a little bit later.

3:18 We had orders in excess of a million, although with supply chain issues, a 100 25,000 of that was pushed back into, 2021, Sorry. 2022. How however, again, that was probably one close to one of the best years that the company has ever had. Obviously, it has struggled for many, many years trying to sell individual units and and and not take advantage of the expertise and technologies that are actually inside of the company. And, hopefully, after us concluding a 5,500,000 oversubscription placing in 2021, early in 2021, That transformation had begun and is now close to completion.

4:04 And, again, I'll cover some of that. Our cash position is fine. Cash and cash equivalents were available to us at 3.46 at at the end of December. We've been very, very astute with our our cash and also generating revenue from increased margin areas of of service have actually managed helped us manage and see forward the issue of actually being in very strong position cash wise at this point in time. So a little bit more on where we are. So as briefly touched on there, we are nearing completion of the transition from the capital instrument sales to the fulfillment of workflows in human environmental health. So what does that mean? Previously, the company was focused, very much focused on selling equipment and selling equipment of these, you know, 90% smaller than the existing size of your average mass spectrometer with this wonderful little, small portable or mobile mass spectrometry unit.

5:11 The problem, obviously, of course, is that you're selling into large corporates who already have large enough space and have their own mass spectrometry, perspective and even their units. So you're asking them to change something that they're currently, you know, not necessarily looking for. It's a very hard sell. And in order to actually support that sell, you have the back end supply of services, the back end support of engineering, and the back end applications, development team to assist in the transition from the larger mass spectrometry units to the small units, all of which is actually a very large expense. So for years, the company has had, a very large overhead and a very small, revenue stream.

5:57 And, obviously, that balance led it to the position back at the beginning of of, you know, 2021 where it can no longer survive, and its funding was, impossible to secure based on the existing business model. Now we've transformed it into fulfillment of workflows, and that basically is to solve solutions for clients rather than selling them a kit. And obviously, if you're solving problems for the clients, you're also in a position to actually sell the kits alongside the services. And that has been, again, focused very much in human health and environmental health, literally in relation to testing of water in collaboration with DeepVerge, which is a company, obviously, I'm familiar with, being the chief executive of that particular company.

6:44 So let me just take you a little bit further on the background. So this was the model where the sales and support services were expenses that were used purposely to actually make a sale of the MicroSAIC unit. So you had all of that area on the right hand side and all of the actual personnel inside, expertise over twenty years, accumulated knowledge, magnificent technology, and yet your objective was to sell a 50,000 pound piece of kit, and you are carrying all that on the right hand side. So what we've actually done is we've moved some of the engineering expertise, microelectronic engineering expertise, the physicists, the chemists, and the mechanical engineers into providing a service that we outsource to companies, small companies, who would be turning over anywhere between five and ten million pounds, and and help them innovate and upgrade their existing equipment in areas where they wouldn't have personnel inside, and it will actually be quite expensive for them to hire full time people to do that. And yet here we have expertise built together in the team over the last twenty years with all of that expertise.

8:02 So by simply transforming the back end of this organization into a fee earning consultancy, it has transformed the company completely, and therefore solve the problems of companies that they currently work with. And as you've seen this morning, in the RNS, we have improved the revenue stream, even with supply chain issues of the equipment from £499,000 to, over £700,000 in h one with a very solid, strong order book going into the second half of twenty twenty two, and and certainly expected to beat even our own internal market management expectations for the for the end of the year. I won't give you a number because, again, we're seeing a very, very strong order book that has been put in place in h one now signed going into h '2, which should easily, easily beat, our expectations.

9:05 So that's the first part. Certainly, when it comes to the analytical services, well, these are the actual chemistry, areas of of helping customers who would be buying the smaller equipment in their methods. And these analytical services, you know, we've been working on for the last twenty years, and they are unique in house developed for the equipments that we use, but also for mass spectrometry. And and we are particularly mass spectrometry experts having been in this business for twenty years and recognized around the world, with installation and a couple of 100 just under a couple of 100, installations of these units. So these are areas now that we could actually be charging for.

9:52 So, now we, have a situation where not only do we actually have the ability to offer these services and charge these services, But with Modern War, a subsidiary of Deep Verge, we're sharing revenue on the introduction of using those pieces of equipment as monitoring PFAS, which is forever chemicals in water, and other areas that, certainly the Modern Warrior team would be an extension to their existing offering to to clients. Furthermore, we have additional areas of expertise that that was never originally thought about, such as toxic shock for female hygiene products, metabolize project for what happens on your skin when you actually have a product used on that. Now normally, this goes into a completely different company, but certainly on the skin trust side of the business of deep verge, you actually have home test kits. Those home test kits give you a microbiome or actually the state of the skin that you actually have.

11:03 However, what it doesn't do is it doesn't actually show you the what is created by the skin itself. So this is an area that's extended beyond what the possibilities were for the Microsanic team with their chemists and the mass spectrometry units that they have, allowing us further to see for very large tier one corporates around the world this ability to actually see what's actually happening to the skin in reality in situ. Very, very big area for us for microsaic because, again, it's a continuation and a niche area for us as well. And the insulin project is is another area where we're able to see the penetration through the skin of the likes of insulin in in nano capsules, again, for a client, under contract. So again, more areas of of revenue stream that were never even considered, beyond what we actually had previously.

12:05 And then finally, we have the other services. Now we have obviously got an extremely, highly skilled software team building the software into the equipment that we are, the microsafe equipment and maintaining that. But also, that gives us an opportunity to actually take their skill set and use it to extract data from machinery that we have access to in the distribution channel of our clients. So this, again, allows us to collect or aggregate data and help analyze that for clients of ours and also for clients of our partners. Unit refurbishment offering. So one of the the the, areas of interest for the partnership that exists between DeepVerge and MicroSAIC is that the refurbishment of equipment inside of modern water, and the upscale or upgrading of those units to add on sensors, etcetera, are areas of expertise inside of Microsaig that are being contracted to Microsaig by Modern Water, and that in turn gives us an enhanced offering and data collection opportunity with our clients around the world.

13:21 And and as and literally being responsible as we have been working with MicroSAIC on these for a number of months and will be further, evidenced by the growth in sales from the orders that we're getting in deepfurge, from the units here. So we refurbish the old units, add in new sensors, and then just refit them back again. The Protein ID and the MIDEX, these are services that are offered to mobile, where we can go to sites and we can test on-site, whether it's the food industry, whether it's the, aerospace industry, whether it's the military areas for detecting, items in the field, the pharmaceutical area.

14:07 Again, these are being explored currently and up further opportunities. And it's the the end, that's the right hand side. Remember, on the left hand side of your screen, you'll actually see the sales portfolio, which was MET and METAS, and everything was actually focused on selling that. Here, what we've actually done and transformed the company is everything on the right hand side now generates revenue. And that's the difference. That's the transformation. And that's growing at a very, very fast pace at this point in time. So background on the revenues of last year, the products sold, the services, as you can see, are up from 2020, obviously, because of COVID situation.

14:53 But going forward, that mix of product and service will be substantially different. So the services, will be much, much greater because we're generating revenue from the team, and the services that are provided on the back end of what was originally support for the sales of the of the of the products themselves. And let me just slip on to this one. So, the the loss is reduced simply because of the, you know, growth in the in the revenues, obviously, over the year and the margins, etcetera, on that. And we've kept costs consistent with support for the actual back end. And even now, we're in a position to have seen in the last, six months the lowering of of employee numbers just simply by two, but now refocusing on services. So we will be adding more people to the team, but very specifically to support the services side of our business and generate more revenue. And incidentally, the the the cost of the products or the equipment, were in the region of 22 to £25,000, and the sale of that piece of equipment was in the region of around about 40 to £60,000.

16:11 So when you take the margin on services, which is substantially higher for this type of business offering and consultancy, it's an extremely high margin compared to the margin that we have for the sale of equipment. And, again, that's seriously contributing to the actual increase in margin and therefore should see a reduction in EBITDA this year as well. EBITDA losses, is. Hang on. So let me just briefly touch on where we are. As I said this morning, we put out a significant growth to 701,000 compared to five just under 500,000 in h one of last year, up 40%.

16:56 Now obviously, it's a it's a small base, but the the strongest order book that the company has ever had going into h two, knowing full well that we will, you know, have a substantially greater number, than the than the year end last year, simply from the order book that we've actually seen. We're not saying what the guidance is, but we're certainly comfortable with actually exceeding the, the the revenues of of last year alone. And when you think that the highest value of of revenue from this company ever have actually only ever been about 1,200,000, turning this around in two months, three months, for services to generate this much, is is is quite a task and is a credit to the actual team who obviously had to transition their mindset as well to to actually be able to do this for external clients and have stepped up to the mark. And, you know, it's great watching what they've actually achieved in the in the short time that we've actually been working with them.

17:58 And, you know, from from the type of business management that's that's, you know, myself and and and Nigel who came in, at the beginning of of twenty twenty one, we're very much hands off and empowering the staff. And, you know, it's it's great to see that they've opened up to this new type of services offering and delivered way better than our expectations in this short term. So the rollout of scientific and micro engineering design services had begun early this year. I stepped into the acting executive chairman only in in March. Now we had initiated this, obviously, at the beginning of the year. And the CEO, Glenn, had built the team up over the last seven years. So the team was a very robust, strong team of application scientists, engineering, design, commercial, design, scientific, and it just lacked the right commercial acumen.

19:01 It's a fabulous, fabulous little company. They are fabulous people to work with. I'm very proud of what they've achieved, what they're achieving right now, and excited for the second half of this year. Our areas of expertise are associated mostly with what we've identified across with the partnership in Deep Verge, but that has allowed them to open up their offering, and they're already receiving interest from other parties outside of the partnerships that they've generated through us. And, again, that bodes well for them, in this year and certainly into 2023. And and and very large partners, the OEM partners that they actually are currently working with, who manage the equipment assembly of their their kit also have an interest in looking at extending their offering of the services of of MicroSAIC.

19:56 So again, another very exciting opportunity there. And that opens up further expansion of revenues through the multiple strategic partners, and there'll be more strategic partners for this for this company. As I said, it's very exciting. They've achieved an awful lot, and I have no doubt in 2022, 2023, it's a completely different company. So that's pretty much it. I just wanted to get you up to speed on where we are, what we've done, what we've achieved, and, look forward to your support going forward, because it's an awful lot brighter than what it was in January 2021. Thank you very much. Gerald, thank you very much for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

20:51 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 MicroZetic Systems PLC, we'd like to thank you for attending today's presentation, and good morning to you all.