Transense Technologies (LSE:TRT) — Interim Results

0:02 Good afternoon, ladies and gentlemen. Welcome to the TRANSENSE TECHNOLOGY PLC Interim Results Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. As usual, questions are encouraged. They can be submitted at any time. Just simply type in your question using the q and a tab situated on the right hand corner of your screen. Company may not be in a position to answer every question it receives during the meeting itself. Have the company camera view your questions submitted there, and we'll publish those where it's appropriate to do so. We'd now like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to Executive

0:32 Chairman, Nigel Rogers. Good afternoon. Good afternoon, Mark, and good afternoon, everybody who's attending. Thank you for joining us. Those who haven't seen us before, I'm Nigel Rogers, Executive Chairman. I have with me Ryan Moore, managing director, and Melvin Siegel, who's CFO of the company. We're gonna work on the assumption today that most people have seen the company before. We've got four or five introductory slides, which I'm gonna take very quickly, and then I'm gonna lead into the highlights from the, RNS that we announced this morning with our interim results for the period to 12/31/2024. And then Melvin will go through those interim results in a bit more detail from a financial perspective, and then Ryan's gonna put some meat on the bones of what's been happening within TRANSENSE TECHNOLOGIES and within SOURCENSENSE during the six month period and look at sort of current current activities and outlook towards the end. Presentation has been running at around half an hour, slightly more maybe when we've been doing it earlier today.

1:28 So I would imagine that we'll be able to have plenty of time for your questions at the end. We've got about a dozen questions pre submitted, but do feel free to keep them coming, we'll try and compare that at the end. So moving first of all into an an introduction, this might be a bit of a recap for some. It might be an introduction for others. But as I said, I'm gonna take it fairly quickly. We've been listed on the alternative investment market since 1991. Current market cap's around about 27,000,000, slightly lower than that at the moment, and I'll talk about that a little bit more on the share price graph there on the bottom right hand corner. We have a number of significant shareholders, the largest ones being and the board itself holds about three percent of the shares in the company. The board of directors, myself, Ryan, and Melvin, you'll meet today.

2:16 Steve Parker and Craig Wilson are nonexecutive directors who've joined the business in the last couple of years and both have a wealth of experience in industrial engineering. The head count of the company, as you're about to hear, has increased quite significantly over the last twelve months, around 30 now, so slightly more. Strong financial track record of good growth in revenue, adjusted EBITDA, and profit before tax as you can see there. And the share price after having had a really good run over the last few months, where the company's had something of a reevaluation, I think, on the stock market has come off a little bit of late. As many people will have heard me say before, the stock market is a weighing machine in the long term, but it's a voting machine in the short term. And over the short term, certainly, this morning, we had slightly more votes against.

3:04 Does that give us any cause for concern? Well, yes, but only on the days when we are buying or selling. And the rest of the time, we try and run the business for long term value and let the share price take care of itself over time. The company controls two operating businesses, SOURCENSE, which is a specialist design and supply in of advanced sensor solutions for the accurate measurement of torque, force, pressure and temperature. And put simply, we have a very advanced sensor system which is able to take measurements on a very rapid basis and use those to control industrial equipment, airplanes, machinery, motor vehicles, and the like. Ryan will talk more about how that works and the progress that we're making on commercial penetration later in the presentation.

3:51 We also own TRANSLOGIES, which is the developer and supplier of smart connected tire inspection tools. These are tools which are used to measure tire tread depth and tire pressure mainly used by large fleet users of commercial vehicles. Again, of that to come. A third leg to our business was a part of the business called iTRAQ, which was sold to Bridgestone in 2020. And the consideration for that deal was in the form of a ten year royalty on their revenue on the sale of the iTRAQ product. This graph here shows the success that that has had in the marketplace. In the first five years, the royalty revenue has grown from less to a mill less than 1,000,000 to more than £3,000,000 in the current financial year.

4:40 You can see there that over the next five years, that graph flattens slightly because the unit rate of royalty per installation starts to reduce in f y twenty six and then again in f y twenty eight. But there is still a significant amount of money to be collected from that transaction. Broadly speaking, we're probably about halfway there by the end of this calendar year. We'll have collected about $1,314,000,000, and, you know, arguably, it will be the same again to collect over the second half.

5:11 That's important to us because it provides the backdrop of financial stability for us to be able to work really hard on developing SourceSense and TRANSENSE TECHNOLOGIES into businesses which we think have very significant long term financial value. They have some very interesting characteristics. We are in very dynamic global markets. We have very high quality blue chip customers. They're mostly household names. Some of the market leaders in some of the biggest and highest growth industries around, particularly, as I've said, aerospace, electric vehicles, robotics. We've got some lots of very interesting positions in some very high growth markets. We also have innovative and highly engineered products which command premium margins and also provide us with the opportunity for sticky business.

6:00 Once our products are specified in on design, then it's unlikely that they will be designed back out again. So that gives us very long term visibility of earnings, in SORE SENSENSE. We also meet the green agenda. Our products are consistent with sustainability. They tend to work to improve efficiency and to improve the longevity of products and consequently do meet with the green agenda. And put all that together with our value focus and the strength of our people, we think we've got a very long term valuable business model. Let me move into the current presentation now then on the highlights. So these are the highlights for the first half of the financial year in which you'll see strong revenue growth. You'll see an investment in our team to provide customer facing people on both sides of the business who will be around to resource future growth in revenue.

6:58 You'll see that despite that investment, our EBITDA and our PBT are virtually unchanged since prior year, so we've been able to make that investment without sacrificing current profitability. Within SOURCENSENSE, the conversion of our sales pipeline is well underway. Lots of interesting development projects and also some good progress within the motorsports sector where you're about to hear about a record order book as of the first of January this year. We're also well advanced now in planning the introduction of our pilot production line at Western On The Green. You're about to see a schematic of that and an explanation of the benefits that it's going to bring to our business. And within TRANSENSE TECHNOLOGIES, we've seen some very good growth from revenue from our existing run rate customers, particularly the global tire majors, but also the completion of a software partnership to enable us to bundle our hardware together with software and sell on a subscription model with the first deal under that model, as we said in the r and s this morning, imminent.

7:59 We've also been working hard on the development of an international distribution network and closed two deals during the period and one very important landmark deal post period end in North America. Again, Ryan will be able to fill you in on much more of that. So I will now, if I may, pass over to Melvin. Melvin, the CFO, will take you through the interim financial results. Thank you, Nigel. There is a positive year on year increase in total revenues up by 36% from £1,800,000 to nearly £2,500,000 Gross profit has risen by 40%. And in the current period, excluding iTrack, the margins have moved up from 61% to 72%, reflecting the change in sales mix, in this case, the large increase in store revenues in this half year.

8:52 I should also note that following the successful move bringing TRANSLOGIES production in house, TRANSLOGIES margins on product sales should improve in h '2 by around 10%. Operating expenses are up 73% with the major part of that increase going towards building the TRANSENSE team from a headcount of 18 to 31 and also providing the facilities to support that enhanced team. Profit before tax is slightly down year on year, and operating margin has moved dropped from 34% to 22%, reflecting the buildup of operating costs in h one. I just saw the headline today on Alliance News in ADVFN that says TRANSENSE TECHNOLOGIES PLAYS RESEARCHNOLOGIES RESEARCH

9:44 but also misleading as the step up in operating costs is in response to the accelerated growth we are seeing in both actual sales and sales pipeline. And importantly, the point they miss, which makes it misleading, is that the new cost base should be broadly sufficient to support the anticipated growth in revenues over the next few years. In other words, it's more of a one off increase. Finally, I should always mention we have valuable tax losses of around 20,000,000 available to carry forward, which in tax terms is worth about £5,000,000. Onto the next slide, the graph on the left shows the geographical breakdown of revenues. Setting aside the blue suede on the left oh, sorry, on the right representing iTRAQ income and looking at the rest of the business, overseas sales represent 70% of those revenues across all continents, which in times of economic uncertainty means the risk of any single market reliance is greatly reduced.

10:46 The balance of 30%, which is the green part at the top of the bagel, is substantially UK motorsport income. Therefore, there is a large domestic market still to be addressed, particularly in terms of TRANSLOGIK. With regards to iTRAQ share of revenues at 63%, this probably represents a peak level, and I would expect it to be around 55% at the year end and in the next two years as the royalty rate drops in the thirties. The graph on the right shows a five year history of total revenues in half yearly bites. Two points arise from this. Firstly, the fact that we have nearly achieved continuous growth throughout the five years and 10 half yearly periods.

11:32 And secondly, and importantly, the impact that H2 has on our full year results. Extracting iTRAQ from these numbers in FY 2023 and FY 2024, we experienced strong growth in H2. In fact, FY '24 h two came in 75% ahead of h one. This gives us confidence in the current year, we could achieve a near doubling of our h one numbers for Source Sense and

12:03 so and the ProVIN and TRANSLOGIK numbers. Looking now at the segmental analysis, TRANSLOGIK has grown by 7% to over half a million pounds. Eye Track has increased by a healthy 26% to just under 1,600,000 and demonstrating the increased traction in SOAR. That segment enjoyed growth of 360% at £380,000 representing over 83% of FY twenty four's full year number. Since iTrack was rebranded to incorporate Bridgestone's name, we have seen an average monthly incremental truck increase in h one. This clearly bodes well for next year when the royalty rate drops.

12:49 Looking at segmental contributions with the exception of iTRAQ, you will see some reductions year on year rep year on year, representing the buildup of human resources in both SOAR and TRANSLOGIES as I've already covered. Addressing now the cash flow, there was a small fall in cash at the end of h one ending at just under 1,200,000 and rising to nearly 1,900,000 at the end of January following receipt of the quarterly royalty. The reduction in December reflects increased investment in working capital, including a rise in inventory levels of about 120,000. Additionally, there was CapEx spend of about 280,000. There is further CapEx spend planned, which is not yet finalized, but is likely to be around £2,000,000 split broadly fifty fifty between plant and machinery producing a working production line and intangibles relating to the next generation ASIC and AQP.

13:53 The new CapEx spend could be funded from cash resources. However, to leave cash headroom, I've opted to seek asset finance for the plant and machinery element and a clear sign of how far TRANSENSE has moved forward and the confidence that exists in our future performance, we have had no issue in securing a 100% funding for this expenditure. Appointing Cavendish as our new broker has provided an opportunity for their research team to issue a research note, which is certainly an important read for both investors and potential investors alike. From when I joined TRANSENSE in 2007 through nine fundraisers in twelve years, TRANSENSE today is unrecognizable. We are a profitable, cash generating, financially secure business working with numerous blue chip customers, the new offices and equipment already in situ and with new machinery to come has changed the office appearance from a cottage industry look to a highly professional respected organization, which is augmented by the strong team that has been put together.

15:02 We have been confident enough to support a new research note covering three years from FY '25 through to FY '27, including the two years when we experienced a fall in the iTRAQ royalty rates. FY '25 was revised following the known upward changes in both revenues and overheads, and FY '26 and '27 are in our view very achievable numbers culminating in research numbers for FY twenty seven showing revenues in excess of 7,000,000 and PBT at 2,000,000. Finally, as a board, our focus goes well beyond FY '27, and an important part of today's presentation is listening to the narrative from both Nigel and Ryan, understanding how far our company has progressed even in the last few years and even more so how far we can progress in the short to medium term with both the SOAR and TRANSLOGIES business segments continuing to mature.

16:01 On that note, I will pass over to Ryan.

16:08 Thank you, Melvin. So first off, we'll take a look at the TRANSENSE business. So the TRANSENSE TECHNOLOGIES business sells tire inspection equipment and to date, we've been very concentrated on the handheld Bluetooth connected tire inspection tool. We call it TLGX. That tool is connected to a mobile device like a tablet or a mobile phone, which is running software, which then connects to cloud software. Now up up until now, our main customers have been big tire manufacturers like Bridgestone and and Goodyear who have their own mobile apps and their own cloud software, and and those businesses have been buying our hardware, and and that's great.

17:01 The problem for us finding new markets and new customers has been, you know, not everyone has, suitable software in order to use our hardware. And that's why we did the deal with, Tire Task last year to to become a formalized reseller of their software so that we could offer that complete solution and actually start to take the product to a much wider customer base and provide the hardware and the software to people to be able to use and get the most out of the tool for inspecting their tires, which helps them to reduce costs, reduce downtime, and and greatly improves vehicle fleet safety and and compliance. So we now have a a complete offer for the the full ecosystem, hardware, and software, which will be on a subscription basis, and we continue also to support existing customers and key accounts with with hardware only where they they have their own software.

18:01 So we had, a big plan to grow this part of the business, and we've been executing on that plan and, you know, building relationships with existing customers. So we now deal with five out of the top 10 global tire manufacturers. And, you know, a year ago, that was four out of the top 10. So we've we've added a a major tire manufacturer. And we're talking to several other companies in this top 10 and actually outside of this top 10. So we do plan to continue to build that traditional business within the tire industry with tire manufacturers where they can use this in their in their businesses. We're working on expanding and establishing new partnerships with new software companies. So that will go beyond TRTASK in into other areas and and that can work both ways with us selling other people's software, but also us working with software providers in other territories.

18:57 We've been working to develop direct sales to service centers and fleets. We've got some things that are very close to coming through on that. Building new distribution partnerships is also key. Until now, TRANSENSE has not had any formal distributors in overseas territories despite the fact that most of our sales were actually export sales overseas.

19:21 Putting in place formal distributors who can work much more closely with us, who can strategically hold stock that can allow us to reduce shipping costs and improve support and service to customers has been a really key, really key thing. And finally, developing the product and developing our offer into the market, you know, talking to our customers and talking to the market to work out, you know, what people want, and what would be useful features to add to the product and how we might adapt the product to open up new areas of the market. You know, the current tool is very focused on commercial vehicle tire inspection. There are tires on on lots of other types of vehicles and machines. So how can we enter some some new markets?

20:05 The the the plan has gone very well so far. So, you know, we we have launched that software partnership that I mentioned before with TRTASK, a fantastic company and a a really great software package, very aimed at the commercial vehicle space. We really you know, we're not gonna stop there, and we are very close to signing an agreement with another software provider, will allow us to enter into another market sector and and offer a complete solution into another another market sector. We we have expanded that global network. So we added two distributors, one in Southeast Asia, one in South America earlier in the year. We just announced last week a new distributor in Holtec, Corporation.

20:52 Holtec are a huge company in The US who specialize in, hardware for commercial vehicle tires. They also supply aerospace industry, but they're they're mainly focused on commercial vehicles, heavy duty vehicles. So Haltech have an existing customer base that across the whole of North America, very well entrenched with fleet operators and with tire service centers across The US. They they've they've integrated our product into some of their software solutions, and and we expect this to bring dividends really quickly in in terms of additional sales.

21:29 We've brought the production in house. That's fully bedded in now. You know, doing that has given us the margin headroom to be able to appoint formal distributors and and give them some some good margin to play with without negatively impacting on ours. It's also allowed us to really improve the the service level and the quality that we're able to provide. So taking control of that is is paying dividends. We created a long term product roadmap and and that is now in play. We're looking at the next generation products and where we can take the the tool and the technology that we've got to bring benefits in in other applications. So an awful lot has been achieved in in the last six months. The the next half, really, the the key next steps for us are to secure some subscription business directly with a free fleet operator.

22:25 We're very close to to that. We're literally in contract negotiation at the moment. The company have run a trial for a long period of time. This is is business that we expect to be able to formally announce in in the very near future. We will continue to add some software partners and and also expand our global distribution network. So, you know, we are in active discussions with more distributors that would be significant distributors with stock holdings and and, you know, very big companies with big distribution networks that we can leverage. So there is a there is a lot of work going on on that to strengthen and expand our distribution network. And then finally, you know, really pushing forward on the development of the new products. So I can't really go too much into detail about it. We do have very exciting new product variant that we're working on now that will open up a very significant high value new market for us, and that's that's that's progressing very nicely.

23:23 So there's an awful lot that's been achieved in the TRANSENSE TECHNOLOGIES business in in the first half of the year. You know, obviously, the the growth was behind what what we would have liked. You know, the business did grow, but 7%. We ended the second half of the year with a with a good order book and a strong pipeline of opportunities. And so, you know, still confident about hitting the the full the full year number and and delivering the growth from there on. So really, really exciting time for the for the TRANSENSE business. Okay. So next, just to talk through the SOURCENSE business and and where we are on that. It's a very different business. SourceSense, deep sensor technology, which enables measurements not possible with other sensors used to improve the performance, efficiency and safety of things from helicopters to robots to electric drives for vehicles.

24:23 We have four key markets that we're focused on, aerospace, electric motors and drives, motorsport and industrial machinery. So these are very significant markets in their own right. Some people will know that, you know, we arrived on these four key markets after a very long process of trying to work through the areas where there was the most commercial potential for SAW technology. Aerospace has been a market that that that you know, we had this fantastic marquee customer in GE Aerospace on one of their major new engine programs. We've built from that. So we the the relationship with GE is really developing, and they're growing into a significant key account. The the lead engine, the t nine zero one is progressing.

25:10 We have some other programs with them, you know, very, very significant customer moving forwards. Long lead times, but we're now we've been working with GE for something like ten years, so very, very close to full production. That's an excellent platform in terms of winning other business. So we we mentioned in these results, we secured another aircraft engine manufacturer. We've got a running program with a a major aero tier one for non propulsion system application. And, of course, we got the the Airbus project as well. So some really significant stuff happening in the aerospace sector, and it's, you know, almost half of our our revenue at the moment is coming out of aero. Electric motors and drives is is another strong market for us in the near term. We've got a fantastic running project with TRTEAM where we're designing our sensor into their in wheel motor systems to help them improve performance and control in those. We also have some other other projects with some other very blue chip customers where we're designing the sensor into their electric motors either for torque measurement or temperature measurements in in those systems.

26:25 We're at a a project phase where we are doing sort of feasibility and prototyping and and that design in work. And I think it it it is important that,

26:37 you know, the the aerospace world, the the projects are very long gestation periods. There's a lot of engineering work upfront, but there's an opportunity for us for that to be revenue generating for us With the the electric drives, the projects are shorter, you know, so we should start to see things going into production in the next couple of years in in that in that market. The the upfront engineering is is lower value, but the production values of these programs are are very, very high, you know, in in the order of millions of per year in component supply once we're into production in in the electric mode world. And then finally, in terms of the the growth markets of industrial machinery and particularly robotics, we've got some key projects that we've just started where we've now supplied prototypes to customers and they're testing those with a with a view to integrating them into their robotic systems.

27:33 So, you know, I I think a lot of people are aware that the robotics market has grown massively in in the last few years, but a lot of of robotics in industrial manufacturing where people are used to seeing them, but also a huge amount of robotics going into warehouse and distribution operations and all sorts of applications like that. There's huge potential for SOAR in that market to improve the performance of robots and machines that are being used in a very wide range of applications. So again, like the automotive market, you know, many millions of pounds per year in terms of production values, you know, should we get some of these these things through to that point. And then finally, most important market,

28:14 our partnership with McLaren Applied is is really working very well. They have delivered some significant growth in this in this period. They've won a number of new championships. So we we we started this half with a a record order book from them, you know, and and we see that business growing quite significantly. So, you know, the aerospace, electric motors, and drives, and industrial machinery, you know, the the market potential in in those spaces is vast, tens of millions per year in each one. So very huge potential. Motorsport, I'd be quite happy if we were doing 1,000,000 a year in in sensors, you know, up up from where we are now. So it's significant, but, you know, it it's certainly not as big as the other three, but it's it's a very good proving ground for us and it gives production running through the business and so on. So motorsport is is performing well today and and it's giving us a good base to move forward from.

29:09 So in terms of the four key markets, think I've probably covered most of this. I've tried not to, but I slipped into covering most of this slide on the previous slide. So I won't go through that in too much detail again. Moving on to just sort of look at the SOAR technology. So we're asked about the business model and there's some questions that have come in on the pilot production line and, you know, some of the things that we're doing. So I thought it was worth just kind of running through, you know, what a saw system actually looks like. So what what we can see here, there's three shafts in this picture,

29:48 and in the middle of each of the shaft is a a saw torque measurement system. So these are motorsport shafts. It's it's actually an engine output gearbox input shaft. To give you an idea, the the diameter of the main part of the shaft is about 30 millimeters. It's transmitting about 2,000 newton meters of torque. You know, it's quite high performance shaft application. So in the middle of the shaft, there are actually two sensors, one on either side of the shaft, and these are what we call our AQPs, so our sensing elements. And they the sensing elements themselves are made to our design, but they're made by a specialist semiconductor foundry. So, you know, we we don't have to get involved in the manufacturing of those parts, although we we own the design and and the IP around that. So in the industry, that's what's known as a fabless business model, and it's quite normal.

30:39 It will allow us to scale up in the future as as volume comes through. So the sensing elements are mounted on the shafts with a very special process that's very tightly controlled, and I'll come back to that later. So our customer's part has to have our part attached to it to make a sensing system. There's then a much simpler component, the RF coupler, is also attached to the shaft, And then off the shaft, we've got a stationary RF coupler and then some electronics that make it all work. The the magic kinda happens in the ASIC. So that's an application specific integrated circuit. So our little microchip That does all the clever stuff to drive the sensor system, to make the sensor work, and then read back the values. And again, that ASIC is made in a a specialist semiconductor fab.

31:27 So in production, you know, we we don't have to make those parts. They're made to our design. It's our IP in that part. And but, again, we are what what would be termed in the industry a fabulous business in that sense. So in production, if if a customer wanted to make a million shafts a year, we would be able to supply the key components from the supply chain that we've developed. But one really important missing link has been the process that you need to do to attach the sensing element onto the shaft. It's a very specialized process. It's a sort of unusual combination of electronics assembly and mechanical engineering, and you can't just go out and buy a standard production line for that. We've been working on the development of a pilot installation line to allow our higher volume customers to get confidence and to derisk the process of adopting our technology.

32:25 So if you go to TRANSENSE today and saw the way that that assembly is done, it's it's very manual process. And for a a major, you know, manufacturing company, it's it's hard to imagine how that would translate into your production plant. So we are developing this line. We are we're starting to receive some of the key parts. We've I think, most of the things on here, at least on order. This month, the first main delivery will happen. Then we'll start to build the lineup inside TRANSENSE, get it commissioned. It really it gives us three things. First of all, our motorsport production will start to go down this line. So, you know, that's great. I mentioned before, might get that up to about 1,000,000 a year in revenue.

33:12 So this is a bit overkill in terms of the level of investment for that sort of revenue. But what it'll also allow us to do is prove out production for higher volume projects and customers. So that's a really important part of this is is being able to take a higher volume program and and do representative production to to get customers confident. And then thirdly, finally, it gives us effectively something that we can provide to people. So, you know, in the future, if a customer was setting up a high volume production for a sensor system, we'd expect them to buy our sensors and our ASICs, but they could also buy from us a production line. So, you know, completely de risk it, a turnkey production line. I can put that into customers' plant and it can install the sensing elements on their part.

34:00 They know it's gonna work. It's gonna do exactly what it needs to do, you know, and and we'll stand behind that and make sure that it it does everything they needed to do. So this this is a really important transition for TRANSENSE as a business, and it answers one of the key things that we are often challenged with when we are talking to high volume customers, you know, in terms of how how we can deliver this in a repeatable and reliable way in volumes of tens, hundreds, thousands, or or even millions of units a year. And we do have a number of projects that we're working on at the moment where when the product that our sensor is being designed into goes into production, you know, the customer is planning to build hundreds of thousands or millions of units a year. So, you know, we we have a need to be able to use this equipment now with with some of the projects that we're working on. It's it's not a speculative requirement.

34:57 So this is a major thing for the business. So just to very quickly, you know, so for SOAR SENSE, we again, we had a growth plan in the in the last six months. We've achieved some really key things for the business so that we got that commercial traction. You know, we mentioned in the the results 14 customers now and something like 18 projects. So some customers who have more than one project running with where they're looking at putting SOAR technology into, you know, two or three different products. We've built the team out, so we've got the capability to deliver the engineering, the application support, and work with the customers. We've got the building refurb complete, so ready for that production line. We've created the space, created the space for the people and for the the production line to go in.

35:47 We've got the supply chain secure now for the key components. So that was a major risk, you know. Could the suppliers for the AQP and the ASIC deliver what we needed in high volumes? That's that's something that we've really been working on. We've got this high volume capable installation process which I which I touched on. You know, there's a there's a huge amount of work had to go into specifying the correct machinery, how that needs to work, running trials and doing testing to to prove that it's gonna do what we want it to do before we put orders down for those very significant investments. And we've also started the development of our next generation ASIC. So that's a that's a really key part. But, you know, looking out into two or three years' time, you know, how do we supply lower cost, higher performance ASICs at much, much higher volumes than than we could currently do. So that's a significant program that started for us. There's a there's a lot of work still to do, you know, completing out on these things.

36:46 I won't have run through every bullet point there, but it's effectively finishing off and delivering on a a lot of projects that started. But the the other really key thing, you know, we've got some great commercial traction today. We've got some good customers we're dealing with, but we do still have a very strong pipeline of new opportunities with some some are with those existing customers as projects continue or the customer kind of realizes, oh, you know, it's working great in this engine. We've got this other engine project starting. We'd like to use it there. So, you know, there's good pipeline with existing customers, but we are still, you know, we're still fielding demand from new customers. There's a good pipeline with new customers in our key markets as well. So, you know, there's there's a lot of business development potentials to to close out on in the next next few months.

37:40 And that's that's it from me. So back to Nigel. Thank you, Ryan. That's it for now, but I've moved out some of the questions that will coming your way as well. So, you know, just to summarize that and get into the questions, I see we've got twenty minutes left for q and a. You know, essentially, from a current trading point of view, since the end of the period, which was December 31, first couple of months of twenty twenty five, we've seen revenue accelerating from the conversion of the existing pipeline. We're looking for very strong revenue growth in the second half of the year. I'm gonna make reference to the Cavendish research note when we get into q and a. And what you will see from that is an almost doubling of revenue coming out of SourceSense and TRANSENSE TECHNOLOGIES in the second half of the year compared to the first, and we feel very well placed to deliver that.

38:28 The cost base that we have built in the first half of the year is reflected in the first half numbers. We won't see a big increase in the second half, and that recruitment's pretty much complete now. So our internal focus is now all about generating output from the resource that we've put in place. We've closed some new business wins already since the end of the year. You've heard from Ryan closing out the Haltech deal, which is an important one, and we have others which we expect to be announcing in the next few weeks. So looking to the longer term outlook, you know, the investment that we're making in production and equipment and supply chain will enable us much more smoothly to take source sense customers from development phase into production phase because they will able be able to actually see and touch a production line working in anger that they will want to replicate in their own facilities.

39:17 So we're very happy with the strategic long term value creation in both TRANSLOGIES and SOURCENSENSE and with the growth trajectory that we're delivering now in terms of revenue and will be delivering starting in the second half in terms of profitability. So, you know, overall, you know, scorecard for where the company is now relative to where we were twelve months ago, I think we've made some very rapid strides forward, and I think we're in a really comfortable and and and strong position to springboard from here. I'm now going to suggest that we move to questions. We've got about 20 odd questions. I'm gonna try and group them together and just share this session and take them in groups. So I'm gonna take the first group myself, which is question seven.

40:08 What does the medium term outlook look like for TRANSENSE? Will the focus continue to be TRANSLOGIES and SourceSense, or are there intentions to expand into new product areas? I'm also going to take question number 18 from Dion. How does one access the Cavendish research note? And I'm going to answer question 21. Given the impending date for the drop in Bridge to an iTRAC royalties, how soon do you expect to be able to replicate this loss of revenue? So the answer to one of those questions is very easy. You access the Cavendish research note. There's a link from the TRANSENSE investor website. If you go on to, transence.com, you'll then find a link in the investor section of that website through to investment research, and there's a very simple sign up there free of charge be able to access the research note. What you will see in that is market estimate forecasts for f y twenty five through to f y twenty seven as well as some very interesting analysis and narrative.

41:13 So to take Ben's question, by the time you look at the f y twenty seven forecasts, you'll see there if you delve far enough into the detail at the back of the note that the revenue from iTrack is forecast in f y twenty seven to be 2,500,000 and the company profitability as a whole, 2,300,000. So at the moment, market estimates are that the company moves into profit excluding iTrack at the end of f y twenty seven and enters f y twenty eight of that run rate, giving us three full years before the royalty expires in f y thirty. If I move then sort of towards medium term outlook more generally and focus, you know, we are very focused on developing SourceSense and TRANSLOGIES.

41:58 We're not looking for a third leg to the business. I wouldn't rule out investing and expanding within those two areas, but, you know, we feel that we have sufficient market spread from the businesses that we're currently operating that we don't need to look outside of that. Ryan, I'm just gonna queue you up for a couple of questions, please, if I may. Sure. Looking at a question. Are any of the end applications for SOAR progressing more quickly or more slowly than you may have anticipated years ago? And allied to that, SoulSense, a lot of activity seems to be a new product development. Will this lead to more sales if they move to actual production? Yes. So yeah. In terms of the markets, probably, you know, the surprise, I guess, is aerospace.

42:54 Like, we've we've actually grown more quickly in aerospace and got more traction with a quite a sort of pinch yourself amazing roster of customers in in that in that market than I thought we we would have, you know. So so aerospace has been the surprise in terms of it's traditionally thought of as a very slow moving industry, but we've we've got some excellent traction there. I think, you know, we're I'm pretty pretty happy actually in terms of I wouldn't say anything else is behind. It's it's we're very much on track in in the other other markets, you know. So there's there's a there's a lot of of good good work going on with existing customers, but also strong, you know, good pipeline with and with other places.

43:43 All of the programs that we're working on are have the potential to go into production. So, you know, up until now, TRANSENSE hasn't done sort of test and measurement type work really. We've done, you know, design in of center systems into into production products. So, you know, obviously, the product has to go through a period of being developed and tested and then launched by our customer. But once it is launched, you know, goes through that cycle, we would we should start to see component revenues and other revenues. I think in in the last year or two, what we've done is changed the business model so that we're not totally reliant on the production end. You know, we're doing a lot more work with customers upfront, partly to help them get stuff into production, you know, to overcome some of the hurdles and challenges and derisk it for them. But also, it's a it's a revenue opportunity for us to provide that as an engineering service and and kind of nurse it through.

44:42 But, yeah, everything at present is is production orientated. That that might change in the future, but certainly everything that's in our our current projects is is a production you know, potential for production program. I think actually, maybe extending the answer a little bit on that. You know, not not all of them will make it into production. You know, that that's that's for sure. Not all of them make it in production. But on the flip side of that, not all of them won't make it into production either, you know. So there's definitely bugs. Yeah. Yeah. You know, and and we've we've seen it already, you know, for for some reasons, some customers slow down programs or pause them or, you know, whatever. But consistently, the SAW technology does what we wanted to do in those customer programs and and genuinely surprises people, you know, in terms of the level of performance it delivers.

45:36 I think it we consistently outperform what what people are expecting from us. So it's good. Outline for our listeners the timing for the introduction of the pilot production line, Ryan. Yeah. So so there's a there's a lot of months of effort have gone into spec in the machines out. We've been running some tests and trials as well in a a university facility where they had some similar equipment. So we're able to kind of do some advanced work. The the key the calibration rig has been in development and on order for probably over a year now and actually was supposed to have been installed before Christmas. That slipped with the supplier, but we are literally today running around booking transport and stuff to get that rig delivered next week. So that's a really significant event that comes in.

46:31 The the two other big investments are the the placement machine and the wire bond machine. They've they've both been ordered being ordered so sorry, I should say. And and we're looking at sort of between six and nine months lead time for those. So should start to see them towards the end of this year and early in next financial year. But in the in there's lots of other things that go alongside them that we'll be bringing in in the meantime around the preparation part of the process and the RF coupler assembly and build. It's effectively continuous work from now over the next sort of six, nine months of getting that production line set up. Great. Thank you.

47:17 I think, well, if we could stick with SourceSense, there's a question around what the sort of competitive environment's like and what the what the competitive technologies are, which I think would be a useful one to take. And you might just ally that with a a bit of an outline of what we work with that that is underway now on new patent applications and and how we sort of secure our IP position for the advances that we make. Yeah. So in in terms of in in application itself, there's a bit a really good video on our website which compares different saw different types of sensing technology for measuring talk. And there's there's four or five ways you can measure talk. We don't, you know, things like strain gauges and and things are not direct competition for for what we do. In in a in a typical application, it's normally either the other technology that you could use to measure torque doesn't work at all.

48:18 So for some reason, you can't make a conventional sense of work in that application. There's not enough space or packaging or, you know, the performance isn't right. So so quite often, we are enabling a measurement that isn't possible with conventional technology but where we are coming up against other technologies, it's normally either magneto restrictive sensors or what we call displacement sensors, so where you twist angle sensors. Twist angle is very traditional. Torque measurements have been done that way for a long time. They're quite big. They're quite bulky. They're not very accurate. The advantage we bring over them, in particular in aerospace, we're much smaller, much lighter, you know, literally saving kilos out of the system and, you know, percentage points more accurate and and more reliable.

49:10 Against the magnetostrictive, magnetostrictive is very clever technology. It uses magnetic fields and they're sort of changing magnetic field properties on a shaft to measure torque. And in some applications, that's very, very good, but it it can't be used near other magnetic fields. So you can't use it inside an electric motor for example because you've lots of magnetic fields inside the motor and it's quite susceptible to being of interfered with by external magnetic fields, you're seeing more and more now with, you know, people wanna put hybrid systems in and and put motors and and things with magnets in or even it's also affected by temperature as well, which, you know so so the magnetostrictive, our selling point over that tends to be to do with the reliability, like performance reliability.

49:57 Magneto restrictive sensor they have, maybe it it delivers a torque measurement, which is accurate, but, you know, it's it's good at room temperature. But if you get it hot, it doesn't like it. If you put it near another magnetic field or a powerful electrical cable, it doesn't like it. And, you know, we would be given a reliability advantage in those scenarios. Yep. Okay. And just segueing that into patent applications. Obviously, there was the one that we did earlier this year for the use in most control for electric drives. Yep. So we we're continuing to to try and put new patents down. So we've got two or three applications in in process now with a patent attorney that we start to use, and and there'll be more, you know, the the more things And and, of course, another another key part of protecting our IP is in the design of the components that we'll be putting into the system. So having the unique ASIC and then unique AQP will themselves give us a a strong degree of intellectual property protection.

51:02 Yep. Exactly. Perhaps we should flip over into TRANSENSE TECHNOLOGIES briefly. We've got about ten minutes left, so we're okay to take a couple more questions. I have allow me to navigate for a second. Trying to find the question, but I I have a a question. The progression in revenue in TRANSENSE TECHNOLOGIES seems a little slow given the size of the market. And could you comment on that? Yes. So, you know, it would have been great. Obviously, it would have been great if it had progressed a bit faster.

51:51 It it is a huge market, but like I said before, our tools, you know, need software and to you know, that environment to work within. So without being able to offer a software solution alongside, that restricts the market that we could open up to people who have already got software and and and other software partners. So putting that building block in place was was really key, and it and it it took some time to do that. Getting then our complete solution in front of customers, you know, we've done a lot of testing with some some really significant customers. They've been their technicians have been using it. We've been making improvements based on feedback and and kind of adapting.

52:38 So, you know, that process takes some some time as well. And, you know, we're yeah. We're relatively small business. So putting the distribution agreements in place and, you know, our current sales team of two, you know, is is quite insignificant compared to an organization like Holtec has, you know. So being able to leverage that kind of global sales network and, again, those those relationships take some time. So there's been a lot of building work done that should accelerate now. Yeah. Absolutely. And and and it's forecast to do so looking at the research notes. Absolutely. Okay. I'm gonna group together a few questions on the sort of share price, share performance, and markets.

53:23 So I have a question. What prompted the change of broker? I have a question. How would you respond to somebody who said this is a jam tomorrow stock? Another one, prospects seem very promising, so why are the shares down 35% from the top? Another one, would you consider moving on the main market since AIM is so difficult? And another one, given where the price is, can we expect to see more director buying? I think if we group all of those together, you know, we can all acknowledge that AIM is not an easy market to be on. You know, being brutally honest, if we weren't listed on AIM now, would we be seeking a listing on AIM? You know, the honest answer to that is probably not. It's probably not the optimal place for us to be.

54:16 But having said that, I think we get a lot of benefits out of the AIM market as well relative to the main market particularly. It is still relatively light touch. Believe it or not, there is still a strong investment community out there if you do the work to go and meet them. And we have actually got a lot of very interesting meetings over the next few days lined up through our new working partner in in investor relations, Cavendish. And that was one of the reasons that prompted a change in Nomad and Broker. And R and B Capital did a great job for us, and they were a great team. They were on board for five years. We signed them up as Nomad and Broker very shortly after the Bridgestone deal, and they've been excellent working alongside us. But the you know, there are times when it makes sense to make a change. Cavendish have some extremely talented people, and they have the breadth of distribution and the depth of resources to be able to offer us the next level of service in in our view. They've made an excellent start. I think the research note which has been published, which, as I've said, you can access via our website, is is a really good read, and it provides the the the figures that put down the investment fundamentals for you to be able to answer a lot of the questions which have been asked as far as the financial performance of the business is concerned. So is it a chance tomorrow, Scott? Well, yes.

55:37 I'm sure it is. You know, I I do genuinely believe that the fundamental underlying value of the business is higher than its current market capitalization. That motivates me to buy shares from time to time, including today, alongside of the directors. And, you you will have noticed that Brian has been repeatedly buying parcels of shares over the last few weeks, again, including today. So, you know, the share price really matters on the day that you buy and on the day that you sell. If you're an institutional fund matter manager, it really matters at the end of the quarter when you measure your performance as well. So, you know, we don't ignore it for the rest of the time. But we're not preoccupied on a daily basis by the share price. We are preoccupied on building a long term, very valuable business, and that's what we believe that we're doing.

56:27 And with that, I think we've dealt with the the main points on the q and a. There's actually one which probably warrants more than there is three minutes left, but I'm gonna let you have a stab at it, Ryan, which is what advantages do you think that AI will have in our technologies over the next couple of years and potentially threats, I guess? Yeah. So it's an interesting question. On the on the TRANSENSE TECHNOLOGIES side of the business, there's a there's a couple of sort of areas where, you know, AI is is having an impact. We we talked about one of those earlier. So if you're a truck fleet operator these days, you know, in in pretty much all of Europe, you you are being encouraged to and and in fact mandated to keep all of your records digitally and the reason for that is that the certification bodies or the approvals bodies basically, you know, they don't send a little man out anymore to inspect your trucks.

57:29 They use AI tools to scrape your data and look for trends and things in there and those tools are becoming more and more powerful and the requirement to keep digital records is is becoming stronger and stronger as a result. So that, you know, mandates the ability to capture tire data digitally and and put it into some sort of system that that AI can play with. So that's that's sort of one end. The other other part of that is, you know, we have been working with some companies who are using some AI tools to improve the tire inspection and to improve the data analytics. So you start to gather tire inspection data, what are the sort of things I can do with it in terms of predicting when I'm gonna need to change tires, predicting demand and and sort of patterns of behavior.

58:21 So there's there's a lot coming through that, you know. AI needs data. It eats data. Yeah. And TRANSENSE TECHNOLOGIES products create data, you know, with returning tire physical parameters in the digital data that then you can you can use with AI tools. So there's there's translogic sites, you know, quite quite a bit. On the source and side of the business, I think it's it's probably more down to autonomy. So I would use this sort of autonomy rather than AI, but it but they're obviously very linked, you know. If I want a smart robot that can function on its by itself, whether it's in a warehouse or doing some some tasks somewhere.

59:06 That robot needs to be aware of the environment around it. It needs to be able to touch and feel and and the AI needs to be able to interface with physical things. And our sensors come into play there to improve control in the system to, you know, allow allow it to to be aware of the physical world around it. So part as part of a suite of sensors, but, you know, more kind of robotic systems, more autonomous systems require more sensors and and and Okay. That's right. I'm sorry, but we're out of time. If your questions weren't answered, do look out on the platform. We'll try and answer them later. Meanwhile, thank you very much for your attention, everybody. I hope you found the session informative, and we'll look forward to updating you the next time around.

59:53 Thanks, guys. That's great. Nigel, Melvin, Ryan, thank you very much indeed for updating investors. If I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. So it'll take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of TRANSENSE TECHNOLOGIES PLC, we'd like to thank you for attending today's presentation.