Transense Technologies (LSE:TRT) — Annual General Meeting

0:02 Good morning, ladies and gentlemen, and welcome to the TRANSENSE TECHNOLOGIES Annual General Meeting. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen only mode. However, questions can be submitted at any time via the Q and A tab situated on the right hand corner of your screen or if anyone's dialed in via transcentwarbrookpr dot com. Finally, we would like to remind you that this presentation is being recorded. We will handle Q and A at the

0:34 end. We do have a couple of advanced questions that have already been submitted. So I would now like to hand you over to Executive Chairman, Nigel Rogers. Thank you very much, Tom. I'm Nigel Rogers. Welcome to everybody who's joined the meeting on the online platform. I'll just introduce you to the members of the board, if I may, Rodney Westhead and Steve Parker, who are independent non executive directors, Ryan Morne, the business development director, and Melvin Siegel, the CFO. It's good to have such good attendance today. Thank you very much. What I'd like to do first, if I may, is read the contents of our trading update this morning for anybody who hasn't had the opportunity to see that. It's fairly long, but I'll try and get through it as cleanly as I can.

1:23 So this was announced at 7AM by RNS today. TRANSENSE TECHNOLOGIES PLC, the provider of specialist sensing solutions and measurement systems, announces the following trading update for the first four months of the financial year to 06/30/2024, hereafter called the period, ahead of its annual general meeting to be held at 10AM today. Trading update revenues in the period were 13% higher than in the comparable period last year. The unaudited profit before taxation increased threefold on that generated in the comparable period, assisted by a temporary reduction in operating costs following the team reorganization, and that took place in March 2023. Although well ahead of the prior period, revenue in the period was below the board's expectations.

2:11 Royalty income from iTrack continues to rise, although more slowly than the historic run rate. Revenues from TRANSLOGIES and SOULCENSE were substantially unchanged from the prior period with a return to strong growth expected towards the second half of the financial year. The short term order book and opportunity pipeline for both Source Sense and TRANSLOGIES indicate an upturn in trading, and therefore, the board expects to meet market expectations for the full year. Operating cash flow is robust, and the net cash balance of 10/31/2023 following the receipt of the q one ITRAP royalties was approximately £1,720,000 compared with no point nine eight at the previous year end '32.

2:56 To drive further revenue growth, market awareness, and accelerate pipeline conversion across its divisions, the company is actively recruiting. An additional senior mechanical engineer joined this month and offers an employment have been accepted by four further team members, a business development director for TRANSLOGIES, and three experienced engineering and project management professionals to support the delivery of new projects and the industrialization activity in SourceSense. The company is also hiring a dedicated marketing lead to support the business development teams across both divisions. These new team men these sorry. These new members of the team will be joining early in the New Year with a full workload. As well as supporting a growing blue chip customer base, r and d activity in the period has led to significant progress towards the industrialization of SourceSense technology.

3:47 This meets the objective of being able to better support customers by demonstrating a clear pathway to scale up manufacturing as well as improving low volume production capability and capacity. TRANSENSE has also expanded functionality and delivery delivered enhancements to the TRANSLOGIES product in response to customers' requests that will open up new market potential. This r and d activity has also led to the company making its first new patent applications in ten years, significantly extending the SOARSense IP base. Details of these new patents will be released in due course. TRANSENSE signed an MOU last year with Meggitt SA with the joint aim of completing a license for SOAR technology in the aerospace sector by 12/31/2023.

4:34 The acquisition of Meggitt by Parker since then opens up new potential to expand the current working relationships between both parties, but the resulting organizational changes within their business have impacted their ability to progress license discussions. Whilst the pace of progress has been measured, the board continues to value the relationship with Parker Meggitt. TRANSENSE does not expect to conclude a license by December 31 and will provide further updates in due course. Independently, TRANSENSE has made excellent progress in the broader aerospace market where the company is now engaged directly with a number of additional engine and airframe manufacturers. Since the announcement of a no £650,000 share buyback program on 09/27/2022, the company has acquired 528,000 shares to be held in treasury at a total cost of nought £470,000.

5:29 The remainder of the nought 0.18 is available for further such purchases subject to set shareholder approval at today's AGM. The board may announce a further program during the year if this is considered appropriate. The board is pleased with the momentum in the ongoing commercial pipeline, both for Source Sense and TRANSLOGIES, which provides confidence in the prospects for the current financial year and beyond. And that is the the end of today's statement.

6:00 What I'd like to do next before we go into the formal, parts of the meeting is to open up the q and a now. So Tom, if you could perhaps help us with any additional questions who've come in, I'll I'll pass to you to ask the questions. I'll either answer them myself or I may ask other board members to become involved as well. Over to you, Tom, please. Yep. Okay. Yeah. Thank you, Nigel. Well, we've got a couple that I think we'll get through fairly quickly. So the first, I'll read out to you. I'm I'm not sure we've actually got the answer to it, but the question is, I'm an individual investor, eager to invest in your company. I can't do it because my broker, Interactive Brokers, doesn't have your stock available on their platform. I'm not sure we've got the answer to this. Maybe somebody maybe if if you ask that question, you could contact us directly on transcents at walbrook p r dot com. We've looked on Interactive Investors, and we can see the

6:53 stock. We're also able we know we're able to trade it on Hargreaves Lansdowne. Nigel, is there anything else that you might add to that to assist this person? At at this point, no, Tom. But, of course, we'll be happy to help if somebody's having difficulty in identifying a suitable platform. I'm I'm sure we'll be able to help offline. Yeah. Super. Thank you. So we do have three questions I'm gonna read out and they they all interlink. So the legislation mandating trucks to have tire pressure monitoring in Europe and The US is potentially transformational. Do you have estimates for the percentage of trucks on the road that already have this equipment installed and as such will be unaffected by the

7:36 legislation is question one. Do you anticipate that the legislation will eventually be rolled out to all vehicles? Question two. And question three is, of the 57 active inquiries announced in your recent results, how many of these are directly related to this legislation? Right. So I think there's perhaps two two slightly mixed signals there. First of all, if I deal with TRANSLOGIES, I think the question refers to the information that was in our recent final results presentation relating to the adoption of new legislation relating to TPMS in truck and bus tires. In specific answer to the question, I don't think there is any published information about what level of adoption is currently in place, but it is going to be mandated in some major markets.

8:25 And I think that we would certainly expect to see additional regulatory compliance requirements across the world really being rolled out. It is becoming an increasing awareness of the safety case of having live TPMS on truck and bus tires. So it's certainly one of the drivers of the marketplace. I think the second part of the question is, actually relates to SourceSense, and and I've just ex explained to the questioner. The information TECHNOLOGIES, that we publish from time to time on live inquiries relates to the adoption of SOAR technology and not to inquiries on

9:03 which are on our CRM package, and we we log separately, but they're not currently put into the public domain. You want anything to add on that, Ryan? Yeah. So the I think the the TPMS legislation is is really interesting for us. In Europe, that is firm, and the the timing is understood and and cleared to the end of this year. So for next year, trucks and trailers will have to have TPMS systems. I think because that's been quite near term in Europe, the adoption of TPMS has been, you know, quite strong already. And and that does create an opportunity for the TRANSLOGIES product, which it it's a great tool to work with TPMS systems to fault, find, and diagnose, and and now help in reprogramming sensors as part of the maintenance of the TPMS systems. So it it supports the the TRANSLOGIES business and in particular, the the TLGX four tool, so the the top of the range product to work with the TPMS systems. The The US market, though, is a bit behind. So for heavy duty trucks, they don't have a date yet. So it is being discussed, and it's it's on the table as as legislation.

10:16 But there's quite strong pushback from the industry. So the the date that's being kicked around is 2027 for for heavy duty trucks in in The US, but it's not a firm date yet. So any adoption of TPMS in The US market is is on a voluntary basis at the moment, and we do see it being sort of fewer much lower market penetration for TPMS. And hence, we don't tend to sell the TLGX four in The US market at at the moment. There's more twos that go into The US. There there's there's still a lot of opportunity in The US market, but not specifically with TPMS. And then, of course, the the the sort of final point on that question there, the the TRANSENSE pipeline is is is separate,

11:01 and it's it's not something that's been reported on to date. So, you know, really excited about the new business development director coming on online there and looking forward to accelerating the growth of that business. But I think the SOARSense opportunity is is not connected to TPMS at at all. It's something in the early days the business looked at, but it was an application that was found not to be particularly suitable for this this sort of technology. So, you know, it's it it won't impact on SourceSense. There are lots of other things that are positive that will impact on SourceSense, but not TPMS legislation. Thank you. I imagine those watching may have seen the balloons going up there. I assure you that's a a screensaver rather than a party.

11:50 Okay. Well, look. Does that conclude those questions? Nothing again. Yes. That completes the question. Okay. Well well, it's brought us neatly on to SourceSense because we do have a couple of questions on SourceSense. The SourceSense pipeline has shown in the last presentation to have doubled from circa 24 to 50 projects. Are all of the 50 clients still fully engaged? Do you exclude from the table any clients who have gone cold or who are no longer appropriate to continue working with? For example, if SourceSense is not the best solution for them. Yeah. Again, I'm happy to pass that to Ryan if I may since he manages that pipeline. Yes. So in the pipeline, we've categorized the different stages of of opportunity.

12:36 The the first stage of the pipeline is where we're at an an information exchange points with with a customer, and we we would, at that point, look to qualify an opportunity in terms of is it the right customer for the business, and does the opportunity look look good and look suitable for SourceSense. So there is quite an involved qualification process to to try and make sure that these are real credible opportunities that then would move through the pipeline. What that does mean is that at the the sort of first level of the pipeline, there is a bit of churn. So opportunities will be be qualified out. But then what we're finding is as we we're getting better exposure in the market, we're get we're getting a a higher rate of inbound inquiries and and new leads that are are coming in at a faster rate than we're qualifying opportunities out at. So so the the answer is yes. We do we do qualify opportunities out.

13:35 The the the projects that remain in the pipeline are good, credible opportunities that look like they could progress. They they do typically take a long time to move through the business. I mean, these are they're very large companies that we're dealing with typically, and that they are designing, you know, new aircraft, new aircraft engines, new vehicles, new vehicle power trades, etcetera. So these are long term programs and projects. So, you know, it it does take a while to progress them through. But but we are seeing those programs starting to convert from that information exchange into live projects within the business. We we've been a bit capacity constrained as well, you know, in terms of actually getting through to the the stage of of quoting on a on an initial project and and and taking it through.

14:28 Actually, the the extra capacity that we'll have in the business in the new year will allow us to move more quickly through through the pipeline, I think. So that's that's quite an exciting development in terms of progressing more more projects through to the to the initial kind of development project stage with a a potential customer. Great. Okay. And a further question on on the pipeline. TRANSENSE has previously suggested a total addressable market for of circa $127,000,000 revenue in 2030. Please could you provide some detail on how the firm plans to achieve this significant expansion?

15:14 So so that that number has come from a quite detailed analysis of the different markets that we're working in, the customers that we're working in, and and what we know today about the sort of applications where the source sensor technology can add value. It's it's not the right technology for every application, but it does it does appear to be the right technology for a significant number of applications where it can bring value. I I think the the progress the business is making and the plan in terms of delivering on that is is really what you see before you in terms of engaging with customers in the market, getting the technology better known about. You know, we listened to feedback from existing customers that we had about the adoption process.

16:04 So we've been working really hard to make the adoption process easier and provide more added value in terms of industrialization and and sort of manufacturing adoption support and application engineering for customers, which I think is a bit of a step change in the business, which was very science focused in the past and couldn't necessarily help customers to the extent it needed to in terms of adopting the technology into new applications. So being much more application engineering focused as a business is is a big part of that. And then there's there's a number of other changes going through in the business, all of which have been documented and and talked about to build the capacity to deliver on on on the plan. Super.

16:51 Thank you. Okay. That concludes the the current questions. So if I can hand back to you, Nigel, and if any further questions come in, I'll let you know. Thank you. So I will now turn to the formal part of the meeting. I'm with the permission of those members in the room going to take the notice as read. I'm sure having heard me read the trading update, you're very keen to hear me read the notice of meeting from start to finish as well, but I'll spare you that pain. So I'm now going to turn to the resolutions. I can tell you that we already have received proxies in advance of which they're all more than 99% in favor of the resolutions. We have a small shareholding amongst the board of directors in percentage terms of approximately two or 3%, I think, which we'll also be able to vote in person.

17:41 So I'm going to, first of all, take resolution one, which is to receive and adopt the annual report and accounts. All those in favor, please? Any against? I declare the resolution carried. Thank you. Resolution two is to receive and adopt the remuneration report under the circumstances the directors will, not vote on this resolution. However, I can tell you that the proxies were overwhelmingly, in favor. So I declare that resolution passed also. Resolution three relates to the reappointment of Cooper Perry Group Limited as the company's auditors and authorizes the directors to set their remuneration. All those in favor, please. Any against? I declare the resolution carried. Thank you. Resolution four to eight relates to the reappointment of the directors.

18:31 In in accordance with best practice, we actually have each of the directors reelected on an annual basis. So resolution four is to reelect myself as a director. All those in favor, please. Any against? You'll notice I have abstained, but thank you very much indeed, everybody. Resolution five to reelect Melvin Siegel as a director. All those in favor?

18:55 Any against? I declare the resolution carried. Thank you. All those in favor to reelect Ryan Moore under resolution six, please? In favor? I declare the resolution carried. Resolution seven to reelect Stephen Parker as director. Those in favor? I declare the resolution carried. Thank you. Resolution eight to reelect Rodney Westhead as a director. Those in favor? Any against? Thank you. I declare the resolution carried. I'll move on now to resolution nine. Resolution nine deals with the allotment of shared capital, and it authorizes the directors to allot new ordinary shares in the share capital of the company in accordance with section five five one of the act up to a maximum nominal amount of £511,579 representing approximately one third of the company's issued ordinary share capital. All those favor?

19:53 Declare the motion carried. The next two resolutions are special resolutions. Resolution 10 relates to the disapplication of statutory preemption rights. The resolution gives the directors the authority to allot shares in the capital of the company for cash without complying with the preemption rights in the act up to a maximum nominal value of a £164,377 representing approximately 10% of the issued only share capital of the company. Those in favor? I declare the motion carried. And resolution 11, also a special resolution provides the company with authority to purchase company's own shares. This resolution grants the authority to make purchases up to a maximum of 10 of the issued ordinary share capital of the company in accordance with various limits which are set out in the resolution.

20:43 All those in favor, I declare the resolution carried. That closes the formal business of the meeting. Just gonna pause for one moment to see if any late questions have come in, Tom. Thank you, Nigel. No. We don't have any further questions, so that concludes the meeting from our side. Great. Thanks very much for attending, everybody, and we look forward to seeing you next time on the IRMC platform next up. Yeah. Thank you, Board, and feedback will be appreciated. You'll be directed on the close of this meeting. Many thank you.