Transense Technologies (LSE:TRT) — Final Results

0:01 Good afternoon, and welcome to the TRANSENSE TECHNOLOGIES PLC Final 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 review your questions submitted today and publish responses, which is appropriate to do so. I would now like to hand you over to Executive Chairman, Nigel Rogers. Good afternoon to you. Hello, and hello to everybody who's listening. Thank you for joining us today. I think we've got a full a full crowd in, so that's great. You will see alongside me Ryan Moore, managing director, and Melvin Segal, the CFO, and they will be supporting the presentation today.

0:54 The order of the presentation, I'm just going to sort of top and tail it. Melvin will take you through the financials, and Ryan will take you through both SourceSense and TRANSENSE TECHNOLOGIES with an update on trading during the year and prospects and pipeline. I think we've got plenty of content for you, so we'll take it fairly briefly. We've got one pre submitted question, but we certainly welcome them as we go along and we'll hopefully leave plenty of time for q and a at the end. So if I might start, a very quick refresher of the businesses that we're going to be talking about today. So we have two operating businesses within the company, SourceSense, which is a designer and supplier of advanced sensor solutions, primarily measuring torque and temperature. So particularly applicable to rotating shaft applications across a number of very high growth industries.

1:45 And then we have TRANSLOGIES, the supplier of smart connected tire inspection and data collection tools, which are used primarily in the truck and bus market. And, again, we'll we'll have a lot more details of those those two businesses to come. I'm just gonna cover the overview of the financial year FY '25. So at 07:00 this morning, we announced the published results the audited results for the year ended June 30. They included financial highlights, which showed that trading was in line with a pretty aggressive growth plan and that we're investing in the business for future. The revenue was up by a third, profits were up as well. Cash conversion was particularly high. The conversion of operating profit into cash was very good, generated a couple of million pounds worth of free cash flow, which was invested in the business primarily in SOAR but also in TRANSLOGIES for future growth.

2:39 Within SOAR SENSENSE, there's a real sense of traction within the business now and the scale up is well underway. Revenues grew by a 149% during the year largely from the depth of relationships with two existing customers that are already progressing towards production relationships, but also with the increased onboarding of a number of new customers through the development phase. And we've got quite a lot to talk about on that today. To support that scale up, we're now investing in a production line at Western on the Green and on the sourcing of next generation electronic components. And those programs are quite capital intensive. Melvin will take you through the figures, but they are on schedule and on budget, which is obviously pleasing.

3:24 And we've been able to take the opportunity to also deepen our resources within SourceSense, in fact, within both businesses, in both engineering and business development. So we have a lot more depth and resilience and bench strength within the management team than we had a year ago. Within TRANSLOGIES, we've built some very firm foundations for revenue growth and are seeing an improvement in visibility of future sales. TRANSLOGIES historically has been quite a transactional business and we're at the stage now we're able to build a pipeline particularly with the switch of the business towards a subscription model where we're improving the visibility of earnings. Revenues in the year were up 18%, but there's a there's a story to tell there which, Elvin and Ryan can tell between them. And the tire majors were up overall despite some weakness with one particular customer, which we'll talk about. And we added some new territory distributors and software partners in order to open up new routes to market.

4:20 The sales organization was revamped towards the end of the year and that improved further the pipeline visibility for FY twenty six in which we also expect to do some new product launches. So I think an exciting program today. And I shall now pass you on to Melvin to take you through the figures. Thank you, Nigel. And as Nigel mentioned, we have achieved a 33% increase in revenues. However, if you exclude iTrack revenues, we've actually experienced a year on year growth of 55, which affirms our goal for steep growth in both SOAR and TRANSLOGIES revenues. The overall gross profit for the year has improved, as you will see, to just under 90%, reflecting an underlying increase in TRANSLOGIES GP from 54% to 62%, and this follows our decision to bring production in house last September.

5:17 This move not only increased efficiencies in production, it has also enabled us to achieve much improved component costs. In f y twenty six, we will have a full year of in house productions, and margins may increase further depending on how large the subscription element of our income becomes. Operating expenses have risen reflecting the increased headcount with last year's average headcount of 21 rising to 31 this year. We currently have a headcount of 35 including the board. Other costs have risen as you would expect from the higher headcount and following the commitment made in f y twenty four to increase capital expenditure, which includes a new pilot line and the design of next generation components, the charge for depreciation and amortization has risen in the year. Finally, you will see at the bottom of the page, EBT is up 12% despite the substantial increase in running costs.

6:17 So in summary, whilst each year we strive to beat market expectations, we have now consistently produced results in line with expectation and this despite the challenging market conditions. We are, as I mentioned, achieving improved margins and investing for the future. And finally, we still have £19,000,000 of tax losses, which effectively saved us in the current year a tax charge of about £350,000. Looking to the next page, this is our revenues graphically. If we look on the left, we can see from the chart the global nature of our business reducing risk of reliance on any one territory.

7:03 ITrack, as you'll see from the green shade, has made up 58% of our revenues. And whilst it is paid from a Bridgestone UK subsidiary, the income is actually derived from all the large mining territories being Australasia, Africa, and North And South America. The UK income in orange is mainly derived from work with McLaren Applied, now called Motion Applied, and this suggests that there is still a large UK market to attack in both saw and particularly TRANSLOGIES. Looking at the chart on the right, this demonstrates the consistent growth achieved in the past five years, and the breakdown into half year snippet shows the growth enjoyed each year from h one to h two with that increase rising yearly to 30% in recent years.

7:57 So in summary, we have a truly global business. We have limited UK market expense exposure, but large potential in The UK market and revenue sustaining a positive momentum over five years. Moving on to the next slide, which is the segmental results. Looking at these results, you can see the growth achieved in revenues in each segment, with SOAR at 149% and TRANSENSE TECHNOLOGIES and iTrack at 1819% respectively. This is actually an appropriate point to pause and actually look back at what we've achieved in the last five years since the Bridgestone deal. So revenues have gone from less than 100,000 to over 1,100,000, TRANSLOGIES revenues from 500,000 to 1,300,000, and iTrack rev royalties have increased from an initial run rate of 600,000 to a closing run rate in 2025 of over 3,000,000.

9:02 Whatever the annual numbers have been each year since 2020, the numbers in the market, our five year numbers, we've certainly exceeded our expectations that we would have had in June 2020. The changes in EBT year on year for each segment show improvements in all segments, and the increase in central overhead reflects the higher charges relating to increased headcount and depreciation and amortization. In summary, we are enjoying high growth in our operating businesses. And importantly, we now have in place an overhead base which can support a much larger business, potentially 5,000,000 revenues for each of SOAR and TRANSLOGIES, which is our short to medium term goal.

9:52 So looking at the next graph, what has changed from f y twenty four to f y twenty five? This graph demonstrates the bridge with commencing with an EBT of 1,260,000 through to 1,400,000 with the main changes being source improved contribution of over £250,000 and the added 500,000 from iTRAK set against the additional central cost of £650,000. So in summary, volumes and margins up and investment in people in place to deliver future growth. Looking at the cash flow statement, operating cash flow has improved by over 30% at £2,000,000.

10:40 I want to highlight the CapEx of just over 2,000,000, which is part of the strategy that I mentioned earlier. It commenced in f y twenty four and is expected to be completed mostly in FY twenty six, which is the year we are currently in, and I would expect a further spend of over about 1,000,000. The net movement in the year is a small reduction in cash of 140,000, but we are still maintaining cash balances in excess of 1,000,000. We have also secured, but not yet used asset financing of 1,000,000 to fund the tangible element of CapEx, which is around 500,000 already expended. Looking at the balance sheet, this remains strong with net assets up at 47 p a share. And as I've already covered the fixed assets, the only points I want to pick up on with regards the balance sheet are trade debtors as it's worth mentioning that the quality of our customer base has meant we don't face any issues recovering debt where we might have in the past.

11:52 Deferred taxes, you will see, remains unchanged at 1,470,000, which at the current corporation tax recognizes losses of around 6,000,000. As I mentioned, we currently have losses of around 19,000,000, so we have a further 13,000,000 of unrecognized losses, which represents an additional deferred tax asset of 3,250,000, which is not on the balance sheet. Net assets have increased by 1,500,000 with distributable reserves standing at 4,800,000. Treasury shares not shown on this table are static at 1,030,000 as no investment was made in the year. Summarizing, we anticipate similar level of CapEx in FY '26, as I've mentioned, to complete projects in progress, and we have a strong balance sheet.

12:47 Finally, moving on to the iTRAQ chart, which is a chart that should be familiar to most people if you've seen it before. The light green shading on the chart represents the actual receipts, which ended the year over 3,000,000 for f y twenty five, and in total in the first five years is now worth £10,000,000. As you may recall, royalties are earned based on the number of trucks using iTrack technology, and the two darker shades of green illustrate the level of royalties that would be earned by applying the average incremental increase in TRT numbers experienced in the first five years. The lighter green being a prudent 50% of the average rate and the darker green using the average rate. So as you'll see from this in year six to ten, we could produce a further £10,000,000 worth of income from the iTrack deal broadly averaging at about 2,000,000 per year even taking into account the royalty rate changes and producing an income not too dissimilar from that we enjoyed in f y twenty three and f y twenty four.

14:02 I will now hand over to Ryan. Thanks, Melvin. So starting off with the SAW business. SAW is the surface acoustic wave technology. It's a patented sensor technology, and it's used in performance and safety critical applications normally for measuring torque or temperature, but also forces and pressures and things like that as well. It's a very novel sensing principle. It's TRANSENSE is is one of well, it's the only company in the world that does it for torque measurement and one of the very small number of companies that uses SAW for a sensor of any kind. The business has changed the business model in the last couple of years in order to make SAW more accessible to new customers and and help them derisk adoption.

14:56 Because it's a novel technology, there's a lot of risks or perceived risks from a a large company in bringing this into a product, and and we've been working very hard to derisk that. That's really delivered for us increasing customer engagement, revenue growth, as as Melvin's explained, and long term business value, creating a a very credible business and platform for growth for the future. This slide shows the current torque sensor market, segmented into our different, industries that we're operating in. So you can see from this slide that the the market today for known talk center applications is very, very large. So this this market research has it $9,600,000,000 per year revenue.

15:55 Some of the applications that we're working on wouldn't be included in this in this market because there are things that you you can't currently do with the talk sensor, such as in the e drives market. But even without that, it's it's a it's a huge market, and we are, you know, we're a very small part of this today. So there's a very big upside for us to find the applications where SOAR has a clear differentiator in in the market. I'll talk a bit more about the the specific markets on the next few slides. What you can see here, the automotive obviously is is the biggest market here, and it's got very big forecast growth. The applications are things like in electric power steering systems, which use torque sensors today. The e drive application that we've been working on for SOAR wouldn't be included here because it's it's not something that people do today. The aerospace market where GE are, this is torque sensors for helicopter engines like our program with GE, but also turboprop engines and actuation systems and other things on aircraft.

17:03 The humanoid robotics market is a is a market that's really quite interesting and forecast to grow very sharply over the next few years. And and essentially, humanoid robots rely on force and torque sensors to be able to operate. That's what allows them to stand up and to to walk and to have the dexterity of movement they have. In addition to humanoid robots, in conventional robotics, force and torque sensors are used today, particularly in type of robot called cobots. They're becoming more and more common and and deployed more frequently in robots. So, you know, where a few years ago, you might have had one sensor in a robot. We're starting to see multiples of sensors coming through. So that market is is also showing some very interesting growth. And then the motorsport market, which, you know, we've talked about a lot before. We we we have good growth in the motorsport market, but I think there's a there's an awful lot more that we could be going for.

17:56 So, you know, we're we're we're operating in a very large marketplace, and we've got some some key differentiators that we can bring. So in in the robotics market, that is a place where we're seeing some very good growing traction with some some really key global technology leaders. So we we have in the robotics market three projects running today. Two are with very large global companies, and and one is with a specialist business of a much smaller company. But the the the two larger projects are with very big, kinda globally renowned technology companies.

18:43 One is more towards the industrial robotics end of things, and the other is a higher volume, lighter application, both really interesting programs. We've got a a number of discussions ongoing with other robotics businesses and expect to see this sector grow for for us very strongly over the next the next few months and years. The aerospace markets, our cornerstone client there, has has been GE Aerospace for for a number of years. That's given us a good a good presence in the in the market. But we have added in in the last year or two a number of very strong new names in in this space. So, you know, some very good tier ones and aircraft makers that, unfortunately, we're not allowed to share the names of. The one project that is in the public domain is with Airbus, which I think gives a sense of the quality of some of the other companies that we're working within in the aerospace market.

19:45 Obviously, the the production projects for aerospace are much, much longer term than they are in in robotics. We're earning money from NRE and engineering income. Just starting to get towards component sales now with GE and and the projects that they're on as that the new engines go into production. But, you know, it's it's a very good market for us with very long term growth prospects. The the e drives market is a little bit different to the other two. So in e drives, you know, we as I mentioned before, we're developing new applications where today you can't currently have sensors. So that's in typically inside an electric motor, either in an ebike drive system or in an electric or hybrid vehicle drive system.

20:36 We've we've got some some good programs running with some leading OEMs, tier ones. We've got some new new programs coming through that we should be starting in this in this sector. So it's a really interesting market for us and and very good, strong, longer term growth prospect in this market. Motorsport market, we've got an excellent route into that market with motion applied. They they are, I think, without doubt, the the leader for control electronics in the motorsport. They supply engine ECUs to to many championships, every f one team, IndyCar, NASCAR, etcetera, etcetera. They're very, very successful business in the motorsport sport industry. We we've gone from having one race series that was using SAW sensors on a on a on their cars a couple of years ago to now having multiple vehicles in multiple different championships running with SOAR technology and and a and a really strong pipeline for growth. So, you know, motorsport's never gonna be as big as as robotics or e drives or aerospace, but it can be a very significant contributor in the near term for us, and and unlocking some more applications for SOAR in the multiple industries is really key to our growth on that side.

21:53 So just a a slide giving some analysis of where the revenue has come from in the last couple of years. So the chart on the left, we've got production. So production is low volume production inside TRANSENSE where we're making shafts for motorsport and some other applications, but but predominantly motorsport. So you can see that's grown very significantly from '24 to '25 and is is really a significant part of our business. Component sales, so that is where a customer has designed our system into their their product, their vehicle, their their system. That didn't exist as a a revenue line in '24. It's it's come in in '25, and and we actually have a very strong pipeline and order book there for for this new new financial year. So some good growth there.

22:48 The NRE is non recurring engineering revenue, so that's where we're working with a customer to design SOAR into their application. And we'll look at the phases of that on on the latest slide. You know, the the very good growth there for us. But one thing to sort of bear in mind is that this column to the right, the grant income, we the the grant income all relates to additional NRE projects with two key customers, Protein Electric and Airbus, where they've, they are leveraging government grants to support their, ongoing product development. So these grant programs, you know, if you're looking at this, really, would be included in the NRE, the the NRE programs developing, our technology into customers' products for the future.

23:41 So looking across at the chart on the right, revenue by sector, you you can see the growth in aerospace side of things. So that's been incredibly significant and really gone made made that a very significant part of our revenue. Motorsport's grown strongly as well. E drive systems, very strong growth as a sector there. And robotics, you know, we're just getting started in in robotics. We're just getting started with engagement, but pretty much nonexistent in '24. Very significant percentage growth, but still a small small proportion of our revenue. This should grow very significantly. We've we've got now some quite large PO coverage for delivery of next phases of projects with some key customers in the robotics market. We're expecting that to to grow in '26.

24:29 So the business is is all about scale up at the moment. You know, and and talking about pipeline, you know, developing those engagements with customers and and developing the markets that we operate in. We've got very strong pipeline, got very strong customer engagement, and we continue to work on that and increase our presence within our key markets. The parts development that we've been doing refers to our investment in the the fundamental core technology. So the the SAW sensor systems consist of three, four key components, and we've been investing getting those ready for scaled up production, making sure that we've got the right suppliers, that we can deliver them at the right scales and quality and cost.

25:21 So that's a really key key part of our business. And, you know, it's generating an asset on the balance sheet. There's investing in those next generation designs of these components as as well as actually, you know, just working in a normal way with suppliers and supply chain. We're also investing in the processes. So I mentioned earlier about a key part of, you know, SAW technology, the actual process by which you apply SAW sensors onto the part that you want to measure is unusual, and an and an obstacle to growth in the past or an obstacle to customers even engaging with TRANSENSE in the past was lack of an ability to demonstrate a high volume capable, repeatable process that could be used. We've made the equipment the investment in the machinery that that Melvin referred to, so buying the pilot line assets, so working with key equipment suppliers.

26:16 That that equipment's nearly all installed. We're waiting for one key machine, which should be with us very soon to get that pilot line finished, and then our process development will continue from there. But really key building block in making the technology accessible for for production at at scale in the future. And those three areas of focus have have really been underpinned by developing the people within the business and the team. So the team has grown very significantly. We've made a number of key hires in in the management side of the business and and the delivery side of the business, so growing the engineering team as well, the operational team, and and and the key leaders within the business. So very you know, we we really have been preparing the business for growth and and making those investments across the board and getting the business ready for substantial scale up in the in the coming years.

27:10 Just to look at the the pipeline, so we've shown this in various different ways in in the last the last updates. This shows us the column on the left hand side, our customers potential customers that we're talking to about programs, but where we're not yet on contracts is pre contract discussions. So, typically, that's us looking at an application, you know, coming up with a proposal, working out timeline, costings, etcetera of how we would embed the technology into the customer's particular application and then negotiating a project. So customers move, you know, move do move from that pre contract discussion into being on contract on a regular basis, and then would start to progress through the pipeline where we're working with the customer.

28:00 And then, you know, it goes from a feasibility study where we're doing an initial investigation to see if if the technology will work in the application to then more advanced prototype development, actual product development, and then into preproduction and production. So the the success rate, you know, we get to the point of of quoting a customer. Success rate is pretty high in terms of quotes turning into actual projects. Our, you know, estimating off the top of head about 75%. And then the progress through, you know, some customers do drop out along the way, but in general, again, the success rate of projects progressing through the pipeline is is pretty strong as well. It's it's at least 75%, if not more. So the pipeline's developing really nicely, and, you know, we're continuing to move projects through to the right hand side.

28:54 So I touched on this on a on the earlier slides, but the the SAW technology, we've got a typical system. It consists of a couple of key components. So up here is our AQP. So that's the sensing element. That's a unique TRANSENSE surface acoustic wave sensing element that's made to our design in a supply chain. So that's one of our key components. That would typically be installed on the customer's part. So in this case, this is a shaft for motorsport. It's a gearbox input shaft. It's a very special process needed to install the the sensor element on the shaft, and that's what we're developing the pilot production line for. The other component on the shaft is a we call a rotary coupler, an RF rotary coupler. That's basically a small antenna. It's a fairly simple part, but again, it's it's TRANSENSE design.

29:46 And then off the moving part, we've got another RF coupler. This part would be stationary, so that bolts into the gearbox in the in the front of the transmission, and it has an RF connection to some electronics. The key part on the electronics is our ASIC. So that is TRANSENSE's own design. We're on our our first generation of ASIC still. We started the development of next generation of ASIC to make sure we've got a part that's gonna continue to support us into the future, but that's that's the other key part of the system. So it's it fundamentally there's a lot of technicalities and and complexity in these parts, but overall, it's a it's a relatively simple system. And we've been, you know, working very hard to make these components available.

30:32 And our typical projects that we do with customers, we look at how these are designed into the customer's system, but working with a a common component set. The the the actual process for installing the sensing elements can kinda set out here with the the pilot AQP installation line. So we've been making the investment. A lot of these pictures are actually taken in on our site now of equipment that's been installed. So we've got the preparation of of shafts coming in at the business. This is installed equipment now on-site. The machine we're still waiting for is a tie bond so that it will pick and place the AQPs into precision dispensed adhesive. And the RF coupler installation and assembly is a is a more manual process.

31:21 And then we've got wire bonding and then finally calibration. So you can see from the ticks on the bottom of this slide, a good chunk of this equipment is is available already within the business. Once we've got the pilot line fully installed, we'll we'll then be able to start using it in anger, partly from a process development point of view. So I think one of the the questions that came in has been to do with the the payback on this line. Just just to be clear, really, the main justification for investing in the pilot line is all about demonstrating high volume capable processes as opposed to using it for for production in and of itself. We will use this line for for our, low volume production, but that's, it's not specifically why we bought it. We bought it to be able to show higher volume customers that there is a capable process available that you can use and put in a production plant, to make these things in in high volumes.

32:15 So moving on now to TRANSENSE So the the TRANSENSE TECHNOLOGIES part of the business, we make tire inspection equipment, so the the handheld inspection tool that you see there. And, you know, the the the tool is part of an ecosystem, so we can't sell tools to customers that don't have the apps and mobile devices and cloud management software. So it's it's really a key part of that overall ecosystem. The customers use our tools to reduce operating costs, to collect better data from vehicle inspections, to help them improve road safety from their from their fleets. So it's a it's a really important tool to the the customers that use it as part of that overall ecosystem.

33:06 We've had a growth plan running now for some for some time within TRANSENSE TECHNOLOGIES based on these five key steps that we've been making very good progress with, building our relationship with existing tire industry customers, so expanding sales within within that industry. Over the last year or so, we have added at least one new tire manufacturer that we're now supplying. We're talking to some other new tire manufacturers as well, and we have, you know, kept up the business on that side of things within the within tire manufacturers. Typically, that's where tire premium tire suppliers are using the tools as part of their managed tire business, you know, so that where they're supplying to large fleets on a pay per mile or pay per kilometer basis tires.

33:56 So that that's been the the historic main route to market for TRANSLOGIES. But, obviously, you know, there's risks with that. Not every truck fleet does pay per mile or pay per kilometer. So, you know, we recognized in order to grow the business, we were going to need to move beyond that. So we've been working to establish new partnerships with with tire companies and suppliers and and particularly with fleet management software developers. So with companies developing software specifically for for the for tires on commercial vehicles or on passenger cars, We've had some good success on that front. We've also been developing a new direct sales route. So in order to do that, we we made the deal with TRTASK to be able to resell their software into the commercial vehicle market, and we announced the first deal at the beginning of this year.

34:50 We've been working with the customer to to get that to the point where they can deploy it into their their technician group, and we're we're pretty much there with that now. So we expect that to start going being being able to be invoiced in in the in the coming weeks. That's gonna really open up a new market for us with the direct to sales and with the bundled software and and solutions. So we're excited about how that's gonna develop this year. Fourth on the list is new distribution partnerships. So, we we announced beginning of this calendar year a new partnership with Holtec, a distributor in The USA. We've made a couple of other announcements to do with distributors in other other territories. Those are starting to really come into effect now, and and we are also working on some other new distributor distribution partnerships as well. So there's there's plenty coming through on that side. And finally, the TRANSLOGIES business has has really been a one product business until now. So we have the TLGX inspection tool. There's four versions of it.

35:53 We've been working to develop new complementary products that we can bring into the market and develop our develop our products. So we we recently made an announcement about reduction in cost of the higher spec versions of the tool. That's a result of fantastic work the team have done looking at cost down opportunities and new componentry to reduce the cost of the TLGX three and four, and and that's a great upsell for us in the future to make those tools more accessible. In addition to that, we've also been looking at other products. We've got a product launch coming, which is really exciting. Obviously, we're now putting the software out into the market as well. So all these extra revenue lines coming where we've got you know, we do have a good route into market already where we can sell, you know, effectively more things to the the same customers that we already have as well as working to try and find new customers for those existing products. So the growth plan is is is really working well.

36:52 When you look at how the revenue splits down between types of customer, you'll see so the first column there is is tire majors. So we actually increased sales slightly from 24 to 25 to tire majors, and that's really as a result of growth with new tire majors and some of the existing. One one of our tire majors has had a a pretty tough year restructuring their business, and, actually, they they reduced significantly what they were buying from us. We do expect that to come back in in the future. We haven't lost them as a customer, just they've been restructuring as a a result of headwinds in their overall business. But, know, we we still manage to actually maintain and increase slightly sales to time ages because of the work that we've done elsewhere with with other customers.

37:42 The next column is the the fleets and service providers. You can see that was a tiny part of our business in '24. It's increased a bit in '25. We expect this to increase a a lot more in '26. Where where you can see some impressive growth already is is with software partners. So this is where we are supplying hardware to third party software companies. You know, we we almost doubled that from '24 to '25. So been very successful there with a a few really key new key accounts in in that space and and actually one in particular that's opened up a completely new market in the passenger car sector for us with a really smart AI tire inspection tool that they've developed. So really strong progress there. New distributors are just starting to take effect, and they'll start to contribute a lot more.

38:31 So really tangible results and and a lot more to come for this part of the business. So back to to Nigel now just to to summarize. Thank you very much, Ryan. And that's prompted plenty of questions, which is good. Thanks, everybody. So to wrap up for FY '25, I'll actually look at the start of FY twenty six, wherein current trading in the first two months, revenue from the two operating businesses was up a total of 23% on the prior year. So started off in the right direction with some good growth. ITrack revenues in the first two months of the year were 30% down on the prior year, which bearing in mind, there was a 40% unit rate reduction in the royalty suggests some strong volume increase, which was indeed the case despite a bit of FX headwind compared to the prior year also.

39:24 So the year started well. The Source Sense order book has doubled again since the beginning of the year. So during f y twenty five, the open order book for SOAR doubled from point one million to point two. It's doubled to 500,000 again since the 07/01/2025. So really starting to convert that pipeline into tangible purchase orders now. Similarly, TRANSENSE TECHNOLOGIES has entered the year, actually, for the first time with an order book from subscription. So as I said, this is a business which has previously been very transactional, you know, purchase orders fulfilled very quickly and little visibility. That business model is now changing, and we're starting to see tangible order book coming into f y twenty six. So overall, current trading is satisfactory.

40:10 This financial year, it's all about maintaining that momentum momentum in in gathering sales opportunities across the business and turning them into revenue. Between Source Sense and TRANSLOGIES together, there was something like a million added in revenue f y twenty five over f y twenty four. And in order to maintain the momentum and profitability for the business, looking at the f y twenty six forecast market expectation in Cavendish's latest note, then that would suggest that we need to add at least another million this year in order to keep momentum going. And we see plenty of opportunities for that to be done. You know, we are always cautious with our forecasting narrative in that, you know, we are still a business which has two operating divisions that are in scale up phase, and we don't have full granularity and and the ability that a mature business might have to forecast with confidence over the short term.

41:05 You know, however, we have a very healthy pipeline. We have a great level of in in incoming inquiries and a good order book to go at. So we're approaching this year with confidence despite the fact that we recognize it's challenging. We are also, as always, managing our cash headroom very carefully. We're investing for success in building strategic value in these businesses, but we're doing that by eating our own kill. You know, we're not resorting to the market for additional money, and that means that we have to manage our cash resources carefully, which we do. And we've also given ourselves additional headroom by looking at the possibility of financing the purchase of tangible assets rather than paying for them directly out of cash flow. So we have a facility of a million pounds in place to be able to do that for tangible fixed assets.

41:53 So putting that all together, we think that the company is actually in a really good place. We're where we we are where we expected to be at this point and very much looking forward to the future. I'm now going to suggest if we could bring cameras back up and take away the presentation, please. Thank you. We're gonna open up for any further questions. We've got a good string of questions here, and I'm gonna try and just share these and group them together a bit. So I'm gonna, first of all, turn to you if I could, Ryan, and I'm gonna try and group together the questions which are related to sales within SOAR first. So I'm looking at, first of all, question five.

42:41 On May 20, you updated the market on a licensing and supply agreement with ISI with a closing statement expecting to generate substantial new revenue streams. What's the progress and what revenue can we expect? And I'm going to group that together with question 13. You state that you've established a deeper engagement with GE. You expect significant revenue contribution from this sector in the financial year. Can you specify this expectation on the basis for it? Yep. So the the two things are linked as as Nigel has has alluded to there. So ISI is a semiconductor packaging house. We put in place a contracted arrangement with them to do final packaging of our ASICs for the aerospace market in North America earlier in the year.

43:36 Obviously, we have a key customer in the North American aerospace market in GE. So supply of finished ASICs into GE is a is a key part of what ISI would be doing, although not limited just to to that one customer. The work with ISI has progressed very, very well. We are now you know, we have contracted business that we're delivering against in conjunction with them. Actually, I'm missing a call with them right now. The team are taking on that running program. And and and also, you know, that that relates directly back with g and that we've got now contracted business with them to deliver, you know, significant levels of technical support and component supply, etcetera, you know, relating to their engine programs. And we've also got pipeline of opportunities sitting with them as well where we've got quotes sitting with them that we've not yet, you know, got onto contracts as well. So I've gone from having sort of no invoice business basically at all to from GE since the original license was signed. And, you know, in this financial year, it will be significant chunk of our revenue will be with the related businesses to the GE programs.

44:59 Thanks, Ryan. I'm I'm gonna jump to David B's question, question 10, which is an interesting one. Would you consider entering into exclusivity agreements for particular applications in SOAR, or is it the intention to be open to any party? I mean, the the overarching intention, isn't it, is to be open to any party, but I think the exclusivity things would depend on if a customer wanted it enough. We're certainly not looking to do that, but if, you know, if someone wanted to do that, we'd have to consider it depending on what what what we felt it off of the business and shareholders in the in the longer term. Thank you. I'm going to now cut across to the operational side of SOAR. So we have question eight.

45:50 I think this was mostly answered during the presentation, but you might want to expand on it a bit. In the cash flow statement, there's a large figure for purchase of intangibles. Please describe what was purchased and what is the expected CapEx spend for this year? And I'm just gonna tie that together with question 17 from Dion. What was the 1.25 increase in intangible assets represented by? Yep. Apologies, Melvin. You were just muted there, miss Clarissa. Please continue. Okay. Would you like me to answer the initial part of that? With regard with regards to spend, most of that initial spend, probably around about £1,000,000, is with respect to the new ASIC that we are developing.

46:43 There's also some spend on the new AQP, which is just under a couple of £100,000, and there is also some spend on developing the new TRANSLOGIES tool and various other tools for TRANSLOGIES. So that that's basically makes up the 1,250,000. Looking forward, there's probably another million or so spend to be done with regards to completing the new ASIC and the AQP. And, yeah, that that's the only bits in intangibles. There is a little bit more on tangible assets to be spent, although a big chunk of that has already been spent.

47:32 Thank you. I'm just gonna swing back to sales because another question come in, if I could please, Ryan. Can you give an update on SOARSense's involvement with the Land one project? For example, how long will it take, scale of the potential revenues if successful, etcetera? So Land one is our project with Airbus where we're developing a new application for SOAR in the landing gear, hence the project name. The project's running really well. We're we're making good progress on the the technical delivery side of it. Good working relationship with with Airbus and really good opportunity to work with them. Because of the nature of of the the project, it's a long term deal.

48:19 You know, we it's a long term development project in the first place, which would get us to fairly low TRL, a technology readiness level in in terms of Airbus' view. So, you know, that getting getting a technology like that through in a production will take several years from from here on in, but progress so far is is really good. Thank you. I have a couple of questions from here. It's it's kind of a mixture of, know, you a bit of Melvin, a bit of Ryan, and I'm happy to take them myself also, but we'll we'll we'll we'll see if we can get it tease out answers between us. What would the likely operating margin be for SOAR now that we've moved away from licensing and into a full service solution? And as a follow-up question, what level of revenue do we expect in the next two or three years in store?

49:10 Clearly, that's not a question that we can answer with too much precision bearing in mind. We don't want to put a forecast into the market that we we are will be bound by outside of what's already there. But the follow-up question says, would it be in the 2 to 5,000,000 range or the 10 to 20,000,000 range? I think It's a question that's good. Well, the first question, it's sort of the the operating margin is is what it is now. So we've moved away from the the licensing model already. So all of the new revenues that we've got coming in are with the new model. So, you know, it it it is what it is now. You could you can say if some higher volume programs convert into production business, then, you know, the the margin on those will come down in terms of, like, the nature of what we'll be doing if we move from doing engineering design in with a customer to supplying them components in really high volumes, you know, we'll be taking a a margin on the components, which are made outside.

50:13 So, you know, if we're supplying ASICs and sensing elements to a customer, we won't have tied up capital in that because it's made in a supply chain to our design. So other than the intangible asset in the design of that part, you know, so the the the margins will be reduced from what they are now. But, you know, we we are in the operating mode of the new new business now. I mean, you you know, you can go from that in terms of the levels of of revenue. I think what I said before, if you look at the different markets that we're operating in, you know, in the in the robotics market, there's some really interesting opportunities where they're about, you know, very significant hundreds of thousands, millions of units a year production requirements, and some of the other markets that we're in are similar.

51:05 Aerospace is not. Aerospace is low volume, but high engineering revenues. And and motorsports, you know, there's a lot more potential in motorsports than I think I realized certainly a couple of years ago, and that's that's a lot on how motorsports was changing, But also the the potential for SOAR within that industry, I think, is is bigger than it it was before. So, you know, the motorsport market could be in into the millions for us as well. So, yeah, I probably should leave it at that. Yeah. I mean, it I think it's it's a good answer to the question. I think that, you know, our current overhead base is set to take the business into the next level, which is, you know, 2 to 5,000,000 turnover. That is a range that we would have within our sites now, and we have a pipeline of NRE business and development business that will propel us into and through that level.

52:03 The business today is around breakeven. It's covering that cost base from a level of revenue of, you know, 1,100,000 in f y twenty five. So the operating margin impact of taking that through two to '5 would certainly take the operating margin into the 10 to 15% range. And I personally think that is sustainable through 10 to 20,000,000 of revenue. And, you know, I I think that a 12 to 15% operating margin target is certainly doable for the sole business. Perhaps we should pivot into TRANSENSE TECHNOLOGIES and take a couple of questions as I suspect we might run out of time before we run out of questions. So I'm gonna pivot to questions three and four from David b.

52:51 Again, I think you probably dealt with this actually. Has the pause in TRANSLOGIES sales to the major tire manufacturer passed? Have they resumed? Yeah. And do you expect to you know, have they been lost or do you expect a degree of catch up? So it it's it's it's not that customer is still with us, so they haven't got away. They are still there. We have regular contact with them. There's been a lot of change going on in their in their business. So they're not lost as a customer. The you know, whether the sales are lost or the catch up, that's not really how their business works. So, you know, like I said before, the May with the major tire manufacturers, they're using it as part of their managed tire services business. So they're they're taking tools either themselves or their service providers to their service providers, and they're using them to deliver PPM, PPK contracts.

53:46 You know? So when they win new contracts and add new technicians, they buy more tools. When they, you know when they're not, then they don't buy more more tools. So it's it's not so much whether the business was lost or not. They just when they're running in a normal mode, they would have a certain amount of uptake of, I mean, even replacement tools as well, you know, as as tools get to the end of their useful serviceable life that that comes into play. So they're still with us. Good relationship with them as a customer. I think some some interest from them is some of the new products that we're bringing online. But, yeah, definitely been a bump in the road in in the sort of running business and an element of restructuring that that's gone on.

54:33 Thank you. I'm gonna go to question 12 again from David. Could you outline how you expect customers to respond to the price reductions on the TLGX three and four tools? Well, it's so we immediately saw an uptick in demand for TLGX three and four tools. So it delivered on expectations. Basically, you know, we've we've had the four versions of the TLGX for a long time, the one, two, three, and four. And the way that it works is it's it's all modular. So you get the three the TLGX three has got this all the features of the one and the two, but then plus an extra, and the four has got all the features of the of the three plus an extra. There's a really big jump in cost from a two to a three. And then, actually, the difference in price between a three and a four was fairly fairly small, but there was a really big, like, double the price, basically. And that was driven by some key components that we were using in a approach in the electronics.

55:29 As part of our our product development program, we're able to get that out and and really narrow the narrow the gap. So, you know, RFID tags are very common now in tires in in Europe. Basically, every premium tire has got an RFID tag in it for commercial vehicles and an awful lot for for passenger vehicles. Being able to read the RFID tags makes it a lot easier for technicians who are doing the inspections on trucks because rather than having to try and read what it says on the side of the tire and and type it into a tablet, they just go up and scan the tire. So there's a there's a really good use case for it, but the problem with where where we were, the the price differential was just too big. So if the customer was buying, you know, a 100 tools or 50 tools, it was a really big difference in the investment go for twos as it was to threes and fours. So we we we were able to get the cost down. And really, know, the the the plan is that customers who would have bought who really wanted a three but couldn't quite make the business case for it, so we're buying twos, will now start to buy threes or or fours.

56:35 So, you know, revenue should should increase per unit sale as a result. Thank you. I'm gonna switch now to the corporate big picture. I've got a couple of questions. I have sorry. I'm trying to find the one I'm after, question nine. The share price year to date performance is minus 37 percent next the comes Mike's question, which I'll find in a second.

57:25 Oh, shucks. Thank you, Mike. But then he goes on to say, I'm not a finance person. I wonder why the stock market hasn't liked your results and presentation. So people have probably heard me say this before, but the stock market in the short term is a voting machine, not a weighing machine. In the long term, it weighs how big the bag of gold is, but in the short term, it's a voting machine. And markets have been very, very difficult for all AIM listed companies. The AIM index has struggled, and most AIM listed businesses have struggled over the last twelve years to maintain positive momentum on the share price. The share price reflects the marginal supply and demand of a very small number of shares sold on any given day, and there are times when it can be quite demotivating for management to see that the hard work that they're putting in, and I'm, you know, I'm particularly looking at Ryan and Melvin here, the hard work that they and their teams are putting into the business are not always rewarded by short term results in the share price.

58:24 However, we're in this business to build long term strategic value, And regardless of short term imperfections in the market, eventually, value finds its way out, and we're absolutely confident that that's what's going to happen here. So we try not to be demotivated by the share price. I'm mindful that investors from time to time must get very frustrated as well, and I'm sorry for that, but I think it's outside our control. We just have to keep doing the right things, keep calm, and carry on. I think we're just about out of time. I'm mindful that there are some questions that haven't been answered, but we will circle back and answer those in documentary form, which should be available within the next twenty four to forty eight hours.

59:11 So I'll wrap up by saying thank you very much again for your attention, and thank you to Ryan and Melvin for a great contribution. And enjoy the weekend when it comes. Bye. Fantastic. Nigel, Melvin, Ryan, 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 TRANSENSE TECHNOLOGIES PLC, we would like to thank you for attending today's presentation, and good afternoon to you