Xaar plc

Good afternoon and welcome to the ZAR PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&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 it receives during the meeting itself. However, the company can review all questions submitted today and publish responses when it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand over to John Mills, CEO. Good afternoon, sir.

Hi, thank you very much. And first of all, thank you everybody for taking the time to come along and listen to the story of Zaar. For some people who will have known Zaar from old, I just wanted to quickly run through some of the history and some of the things that would have characterised Zaar historically and hopefully how Zaar today contrasts with that. If you go back to 2013, Zaar was a FTSE 250 company, had 140 million of revenue, made 42 million profit. market cap of around about a billion dollars, but it was effectively a single product into a single market, and that was ceramics. And that market, they lost that market for various reasons and left the company really with no other revenue streams. And over the last decade, it's really been recovering from that situation. In contrast today, I've been with the company now for six years and we've really focused on making sure that we have a broad portfolio of applications based around a value proposition which is unique to SAR. And really what I would like you to take away with today is really two things. Firstly, that we have a unique capability to print fluids that no one else can, and that we deploy that capability across a broad range of applications revenue opportunity and indeed quite significant resilience against any individual market problems. So in order to, first of all, explain to you what the value proposition of the business is that we make industrial inkjet printers and print heads. And we compete with companies like Epson and Fuji, Kyocera, Ricoh, Konica, and also Seiko. These are huge Japanese corporations with global reach and substantially lower manufacturing costs than we have. And I think that the challenge and the problem for Zara over the previous 15, maybe 20 years, is trying to compete with these companies And having joined the company back in 2019, I, having known the company for many years, really focused on the attribute that Zaha had, which was unique, which is that we can print fluids that no one else can. And that parameter that's really important is viscosity. And viscosity is a measure of how thick the fluid is. So water has a viscosity of one, cream is 22, olive oil is 65, and yogurt all the way up at 1,000. So if you take the global number one, Epsom, they can go up to around about 8% of points. And some of the other competitors may be able to get over 20 and approaching 30, but really that will probably be a generous assessment. We've got applications well over 100, and therefore we have this capability of printing fluids that no one else can print. And the way to think about that is that if you have a fluid, if you want to add things into the fluid to add functionality to the fluid, the more you add in to the fluid, the more functionality you will have. But the more you add in, the more viscous, the thicker the material the fluid is likely to become. So there is a correlation between functionality and viscosity. So the more functional the fluid, typically the thicker, the higher the viscosity is. therefore what we are saying at Tsar is we can print fluids that are far more functional than other printhead manufacturers and so the question then remains is well what do you do with that and what I'd like to do today is just share with you some of the applications that you So you can see the sort of the breadth of applications that we are currently operating in. So the first one is decorating of So today, if you want to post a graphic on a car, you need to use a sticker. If anybody has a Mini or knows somebody with a new Mini, typically they have some form of graphic on there that's a sticker. And those are not really well liked in the industry. So if you want to put graphics on there, that's pretty much the only way you can do it. major global suppliers of car paint to the industry and also der who make wall blocks and 50 of the world's paint shops have the robots and in them and collectively we have created a technology called next jet and this allowed you to digitally print graphics onto onto cars So if you see the bottom right hand corner, we're printing on the side of a door and you could imagine that if we had a low viscosity watery fluid, then that would actually just drip and run down the side of the car and you would not be able to print graphics on a vertical surface. And so what I hope is clear from this that you actually need to have high viscosity capability to be able to print graphics onto vertical surfaces in this application. And so there's no other printhead that can do this. And we've enabled an industry to adopt digital technology through our ability to print high viscosity fluids. Just to go through another application. So this is car batteries. So this is another application where we started working with the battery industry about five years ago. There are issues around battery safety. And one of the contributory factors to this is that the insulation layer, the blue plastic film that goes around the battery to provide electrical insulation can be damaged through mechanical rubbing or through heat cycling of the battery as it's charged and then utilised Having developed a fluid which is UV curable, you print on the battery, you shine UV light on it and it turns into a plastic. This coating is non-flammable, it's much stronger, it doesn't crack and it has better peel strength away from the battery. So this is a better solution than the wrapping of the battery. As of today, we have three OEMs who we sell printheads to. They've built machines that print the battery. You see one of those operating on the bottom left-hand side of the video. And there are now 10 production lines in China that are making batteries on a daily basis for cars. To give you some sense of scale, we have about production line. There's 10 in there at the moment, and we expect another 10 to 15 going in this year. And overall, there are 1300 production lines in China. And so if the industry adopts this fully and changes all of the production lines to this digital core team, that would represent around about 200 million of revenue And if they did that over a five year period, that would be a good volume of revenue per year. For each of the applications that we have, there's a secondary revenue stream, which is from the replacement printhead cycle. So once you have an installed base, depending on the life of the printhead in that application, And that's a function of the type of fluid and the environment it works in. And in this application, the life of the battery may be four years. Then every year you would expect to replace 25% of million pounds worth of printheads, then 25% would get replaced on an annual basis. And that's the same across all industries. So you have revenue of printheads going in for new machines, and then depending on replacement cycle, you have an annuity revenue from the replacement and printheads. So that's the battery coating. Change attacks. If anybody has a desktop 3D printer, it's probably for those who recognise the term an FDM printer, which is like a roll of fishing line that essentially goes through a nozzle and heats up and basically an arm describes a path around and the fibre sticks to, the fiber that was previously laid down in that way you build up a 3D model And it typically is one colour or a couple of colours and it's not very high resolution. And that's the typical 3D printer that's bought today. But there are 5 million of those printers bought every year. If you want to print something high resolution in full colour, so things like you see on the bottom of the screen, all the things on the table next to the machine and the the little farm on the left hand side. If you want to print high resolution things of that nature, you probably have to pay somewhere between £40,000 and £150,000 for an industrial machine. We've been working with Flashforge, they're one of the major suppliers of the desktop 3D printers. They sold 700,000 units last year. We have been working with them to develop the world's first desktop 3D printer. We estimate that that printer will be on sale for around about £2,500 to £3,000. the occurrence now of AI, you can take a photograph of somebody or any object, AI will render that into a 3D model and you can print it out on the printer. Equally, you can describe something into AI and it will create the figure for you. So hobbyists around the world will be able to print whatever they would like to fulfil their needs in their hobby. So just if you have the opportunity, if you were to Google Flashforge CJ270, you'll be able to see the pre-marketing pre-launch, which we expect to be in the next few months. It's actually been shown at multiple trade shows to date ahead of the launch later this year. So I'll just play you the promotional video for the product. Thank you. Thank you.

Thank you.