AGM 13.12.2018

Agenda: Top level overview of performance 2017/18 2018/19 YTD Performance Update on Sales

2017/18 Performance Revenue achieved £2.89M Loss after tax £100.7k A Difficult Year Predominantly created by retardation of order award July – Dec 2017 c£1.1M Software and manufacturing teams under utilised however staff retention key due to anticipated order intake Order intake returned to normal Jan-June 2018 however too late to impact 2017/18 result Resource restructured early 2018 to align to future projects, caused temporary lack low in mechanical resource

2018/19 YTD Performance Strong order intake Jul 1st - Dec 1st 2018 Quotation level higher than ever at c£16M quoted YTD 5 months Current open Opportunities c£22M Significant increase in hourly bookable resource – key to profitability Addition of 6 mechanical engineers (5 to 11) Addition of 5 Software engineers (2 to 7) Addition of 2 Manufacturing engineers (7 to 9) Use of external mechanical design team to support current work volume (6 People) Overtime being worked most weekends (providing 10-15% extended hours) Resource utilisation at highest level for a number of years (average 90%+) Resource and skill mix optimised for today’s project makeup Overhead largely unchanged during 2018 Will look to add additional project engineering resource early 2019

2018/19 YTD Performance TED… Integration of Thomson Engineering Design into QM Systems Companies TED now strengthens Rail Systems Facet of QM Systems Development of International Sales Channel’s key and underway Recruitment of International Sales Manager Expect upturn in UK Rail infrastructure market from April 2018 onwards ‘In house’ provider of fabricated and machined parts to group and associated companies Requirement to increase manpower to meet increased demand Need to grow output to drive contribution and establish long term profitability

Sales Update 2018 Number of orders YTD 45 Highlights Increased repeat business as our market share has grown within existing accounts Acquisition of significant new clients (WHA, Penso, Cox) More profitable channels of business (lower risk projects resulting in higher margins Cox, Penso) Increase in business across a variety of industry sectors (Automotive, Rail, Aerospace, Retail, Building services, Off road vehicles, Oil & Gas and more) Established key partnerships that provide an additional sales channel (ABB, Kuka, Keyence) Quotation numbers 2018 = 17 x quotes per month average 2018 Number of orders YTD 45

Business split from exisiting and new business The retention of customers has proved key to an increase in profitability as we have established working systems with our customers considering their business constraints and needs. This has lead to an increase in QM System’s efficiency and therefore an increase in profitability. This has allowed the sales resource to focus on new business. A balance of retention and new sales is critical to both the growth and profitability of QM systems. Not all our customers have a year on year enquiry. The larger production lines tend to be one off projects whereas the production cells (£200k-£500k) tend to have more frequent need for our services. That is why a balance of new and existing clients is key to our success.

Sales update Addition of Internal Sales Engineer Sales Manager support for quotation preparation Production of 2D and 3D conceptualisation Supplier liaison New website released in early 2018 Significant increase in traffic to sales through website Increased use of social media to ‘sell’ our capability to the world The pipeline contains enquiries due for award in next 6 months of in excess of £18 million, including a number of large projects Plan to recruit an additional Sales Manager early in 2019 Sales team currently saturated Need to maintain opportunities to facilitate growth and stability Targeted Clients Focused on partnering approach New sectors as well as expansion into new technologies like automated Carbon Fibre manufacturing Recent award of grant from Innovate UK for a consortium automating factory based housing manufacture

Customers: Frequently working with major blue chip companies. Including 500 × 400Images may be subject to copyright. Find out more

AGM 13.12.2018