Transense Technologies (LSE:TRT) — Interim Results and Prospects

0:03 Good afternoon, ladies and gentlemen, and welcome to the TRANSENSE TECHNOLOGIES results presentation. To start with, if we could cover a couple of housekeeping items. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen only mode. However, questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen or if anyone has dialed in via trans sense at Warbrook p r dot com. The company may not be

0:33 in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where appropriate. These will be available via your investor and company dashboard. Finally, we would like to remind you that this presentation is being recorded. I would now like to hand you over to executive chairman, Nigel Rogers chief financial officer, Melvin Siegel and Ryan our business development director. Thank you very much, Tom, and hello, everybody, and thank you for joining us this afternoon for our interim results presentation. Good to see a good attendance again. I'm sure we've got plenty of people who've met the company before onboard and it'll be good to give you an update. But we're also, I think, probably going to be speaking to some people for the first time. There may be parts of the presentation that go a bit quickly. If you're not familiar with the company, then you'll find more information in the appendices appendices and we'll be very happy to take questions or take an opportunity to meet you offline at some point in the future if you need more details.

1:33 I'm going to start today's presentation with an overview and then I'll pass to Melvin, who's going to take us through the financial update for the first half of our financial year. Later, I'll be introducing Ryan to you, and he's going to expand on the achievements in our SOAR business over the second half of calendar year 2022, first half of our financial year, June 23, and also outline some objectives for our SOAR business over the next twelve months and talk a little bit about the development of the sales pipeline, which I think you'll find interesting and hopefully exciting. After Ryan, you'll come back to me. I'm going to talk a little bit about capital allocation in the business and distribution policy, and then I'm going to close with an update on current trading and the outlook for the business.

2:19 We're aiming to try and get the presentation through in twenty five, thirty minutes and leave plenty of time to take your questions. So we'd certainly encourage your questions to come in whilst we're speaking. We've already had some in advance, which we'll deal with also. So once again, thank you. We're going to turn cameras off while we're presenting, but we'll have them back on for the Q and A at the end. Next slide, thanks. So first of all, just an overview of what we're going to be talking about during the session. First of all, Melvin will be taking us through a financial summary. And I think what you'll find from that is another pleasing set of figures. We're certainly happy with the performance of the business in the first half of our financial year. We've seen strong revenue growth. We're trading in line with our expectations.

3:07 And I think in terms of both P and L and cash generation, a good set of results. I'm just going to pause one second. Guys, could you just just mute your microphones whilst I'm speaking? And then I'll do the same otherwise because there's a little bit of background noise there. Turning to the iTrack royalty income stream, then we're going to be talking about reasons why its growth rate has been slightly more subdued during the calendar year twenty twenty ten 2022, but we'll expand on the reasons why that's happened and why we're confident of a return to a stronger growth rate in 2023. So that's, you know, not giving us any causes for concern. Then we're going to turn to the TRANSENSE TECHNOLOGIES PLC business, where we're building really good momentum in sales and the outlook for the rest of the year is looking very good and thereafter. So we've got some positive things to say about that. And then within our SOAR business, some real tangible signs of traction now.

4:02 Revenues come from a small base, but it's doubled during the period. Pipeline activity has grown very rapidly in business development. We're seeing some real traction in the business, but especially in aerospace and across really all of our four key target markets. So we'll have some interesting things to tell you about there, all of the indicators in that business going in the right direction. Also, I think, interestingly and importantly, it would be good to hear from Ryan on external verification of using saw talk data to increase power availability and efficiency in electric drive systems. And I think electrification and the whole ESG agenda is obviously very topical for investors in our company, but also in all of our customers' companies. And it'll be interesting to hear how torque sensing is being used to improve efficiency and electrification.

4:51 So that's an overview of what we're going to be talking about. I'll now pass over to Melvin, if I may, and he will start to take you through the figures. Thank you, Nigel. The financial highlights for the first half of the financial year '23, the revenue for the period are up 37% on the comparable period, and the profit before tax and earnings per share have increased by well over threefold. It's also worth noting that the FY twenty three half year profit before tax is nearly equal to the whole of last year's profit before tax. What makes these results even more impressive is they've been achieved in a backdrop of global economic gloom and component shortages in the electronics market.

5:36 The cash balance at the period end dropped, but this is due to a planned investment in working capital, in particular, a buildup of TRANSLOGIES inventory in response to a strong pipeline of future sales. In addition to this, we had exceptionally high debtors at the period end as a result of two very strong sales months in November and December. As I've mentioned in the past, reporting dates in June and December would generally represent a low point for cash. The post period end receipt of the quarterly royalty and coupled with the trade debtor receipt has resulted in the latest balance as at the close on Friday being 1,280,000.

6:16 Just to clarify a point, noticed on the bulletin board someone referred to whether that was net. If we refer to cash balance, they are always net because we have no borrowings, so it's exactly the same. With regards to treasury shares, we continued our investment up to the AGM with the total sum invested now standing at 450,000, and that's at an average price of just over 75 p. Finally, as you'd expect with increased profitability, the distributable reserves have increased and now stand at 1,450,000, and Nigel will discuss later the question of dividend versus share buyback. Next slide, please. Now looking at the segmental analysis. This slide gives a more granular view of the performance of our three business sectors.

7:03 The growth in revenues in all segments can be seen clearly. ITrack up 48%, TRANSLOGIK up 11%. Incidentally, the g GP level, it was up 16%, and SOAR's revenues have doubled. The profit before tax contribution has increased at a similar rate for both iTrack and TRANSLOGIK. Looking at the SAW number, I need to go back to June 2020 when the board decided post the Bridgestone deal to use some of the future profitability to invest in a controlled manner in the SAW business. I believe the successes we have achieved thus far, Nigel and Ryan will obviously cover that later in the presentation, certainly support this decision. The increase in the h one negative contribution of SOAR is on the whole down to additional headcount and some duplication in salary costs during the course of the handover from Victor Kalanin to Andy Bullock as chief technical officer.

8:02 Victor stepped down on the December 31. And at this point, I'd like to say on behalf of the board, him for his contribution to TRANSENSE for many, many years. Victor has made himself available in the consultancy capacity going forward. We expect to see a reduction in the negative SOAR contribution in the second six months as a result of reduced costs from the duplicated salaries and continuing increased revenues. The initial milestone for SOAR business segment remains the achievement of breakeven, and we are certainly moving in the right direction to achieve this first milestone. The increase in central overheads is principally down to FX costs in the half year, plus there was also increased costs relating to the TDAP project we were involved in. And with the skies now open again, travel costs have increased with us visiting some of our global customers and attending exhibitions.

8:58 Can we move to the next slide, please? This is the financial dashboard. The pattern of growth I've already referred to is now shown graphically on this page. We are two and a half years post the Bridgestone deal and have published five sets of results, including the interims. Our track record in this period is one of consistent growth and achieving or exceeding market expectations. Looking at the revenue by segment, the market expectation for f y twenty three is revenues to be around 3,500,000, which will yet be another important milestone for our business. What is significant for the future is that the revenues generated by both SOAR and TRANSLOGIES combined continue to represent a significant proportion of those total business revenues.

9:44 Again, the PBT has shown strong upward trend in this respect. The market number of 1,100,000 remains our target for this year. Earnings per share is based on post tax profits, and the increase follows the profit trend but is also enhanced by a deferred tax credit, which will increase as forecast future profits increase until we utilize the historic tax losses, which currently stand at approximately 23,000,000. The projected earnings per share, by the way, is 9 p per share. The cash balance remains steady, supporting our assertion that all increased spending on SOAR is carried out in a controlled fashion.

10:25 Finally, I should mention, it's not on the slide, but the FX hedging transaction relating to the future h two royalty receipts was at a rate of 1.17. And at the latest exchange rate of 1.21, this would result in a credit which would reverse the FX charge incurred in h one. I'll now pass back to Nigel. Thank you.

10:53 Thank you, Melvin. And I'm going to start now by giving a bit of an overview of what's been going on in TRANSLOGIES, our probe business. What you see on the screen here in the top left hand corner is the revenue stream coming from TRANSLOGIES tire equipment over the last four full financial years in dark green and then the first half of financial year twenty three in light green on the right hand side. And the pie chart shows the revenue by territory and shows a very small proportion of the sales in gray there towards the bottom of that pie chart in The UK. It's about a 90% export business, this. Just as a refresher or for people who aren't familiar with the company, TRANSENSE TECHNOLOGIES sells a range of tire monitoring equipment.

11:39 And just to recap, we we launched the TLGX range in f y twenty shortly after the Bridgestone deal, and that's used to measure tread depth from a basic model of TLGX one up to a much more complex TLGX four, which measures tread depth, remote pressure from tire sensors, and RFID identification tags. And it transmits that data via Bluetooth to a fleet management system for a large fleet user, typically bus and, and truck. The benefits of this technology are that it provides improved safety, it vastly increases throughput in the tyre bay and great deal more efficiency for the tyre bay operators, but also can be used to extend tyre life and fuel usage. Within this business, we've seen double digit revenue growth against the first half of FY twenty twenty two.

12:28 And in fact, the comparative period itself was pretty strong because that was at the time of the changeover from the TLG range to the TLGX range. And so the first half of last year was actually particularly strong, and yet we've done double digit revenue growth over it. And you'll see there from the chart that actually the half year revenue in the right hand side of that chart more or less matches f y twenty. So the revenues have pretty much doubled over the last three years in this business, and we think there's still plenty of room to improve them further. We're also seeing an increase in gross margins in the business from 54% of sales to 57% of sales. That's partly the benefit of favorable foreign exchange on export sales, where we've seen a weakening of the pound against overseas currencies, but also product mix as the new TLGX range is fully adopted, then that opportunity to upsell into the new range is margin enhancing for us.

13:26 A lot of our sales come from close partnerships with the global tire majors. The brand names there of our three biggest customers in this business are shown on the slide there. And those customers typically sell into the managed tire market where they have large fleets who have managed tire contracts where they have exclusive sales of their own brand tires and are selling in mobility solutions and digital tools to support those contracts. They've all really been focusing very much on mobility solutions and full tire management rather than simply being sellers of rubber, and that's certainly given us opportunities through them to use them as a channel for a big sales push into big fleets where they have, managed contracts. But outside of those managed contracts, you know, that's a relatively small part of the truck and bus fleet market and is on managed contracts exclusively with one manufacturer.

14:20 So there's actually a very large available market outside of that, which as yet, we've not fully exploited. We're now in a position to start approaching those fleets through fleet management software providers as new channel to market. But also, we've started in a a relatively modest way to test direct marketing through cold calling using an external agency to engage directly with fleet end users, And we're starting to see some interesting inquiries coming for direct sales rather than selling through channel. So I think all of those things combine, especially as RFID tags in tires to improve

15:00 audit trail come into more common usage. I think we're going to see more and more opportunities to sell our products and particularly to upsell into the higher end of our range, the TLGX4. Next slide, please.

15:15 Turning to iTrack. Again, many people on this forum will be familiar with this graph, which now traces back to July June, July 2020 from the inception of the iTrack license with Bridgestone, this traces the annualized run rate of the royalty income. And as you can see, still on a pleasing uptrend, the compound annual growth rate of that trend since inception is about 50%. And you'll see that in calendar year f y '22, that has been slightly more subdued at around 25%. So the so the, you know, the obvious question is why is that? And looking at the really strong growth period during 2021, sort of in the middle of this graph, if you will, then there were a number of large contract wins in North America, and they fueled very high growth during that period.

16:08 And the sales focus has largely moved into the Latin American Australian markets, both of which are actually larger than the North American market in mining in 2022. But those territories have been much more affected by post COVID travel restrictions, especially Australia, which is the world's largest mining market. And also within Australia, Bridgestone have been integrating the Otroco acquisition, which was a large tire service provider business bought by Bridgestone in the early part of 2022. And that integration has taken some time before they can push that through into a sales push into Australian mines. So 2022 has actually been characterized by very high activity in terms of converting trials, which are obviously relatively low volume test markets.

16:57 And some of those trials have been competitive against other systems. And and so that's actually served to slow down the conversion rate into high volume royalty on on full contracts. However, those trials have gone very well and they've met with success. Particularly late in the year, there was two major trials converted, which are both very large mines. And those new business wins are now in implementation phase, and they give us every confidence that we'll return to a higher growth rate on royalty income during 2023. So I think the next time you see this graph in six months' time, you can expect to see the slope of the graph moving, in an upward direction more dramatically. Next slide, please.

17:42 Again, those listening and watching will probably have seen this slide before from the last presentation six months ago. Or for those seeing it for the first time, I'll just describe it. In in the middle layer are really the key drivers, key market drivers that are the characteristics that we have looked at as a means of selecting target market sectors for our surface acoustic wave technology.

18:07 Surface acoustic wave technology, particularly in torque sensing, but also in in pressure and temperature sensing has an almost limitless scope for new applications and it would be very easy to chase down every inquiry that we've ever received. But if they don't contain these features that are they're in the middle of that wheel, you know, for example, the ability to justify the cost of the sensor equipment either by adding value to an end product or by saving money elsewhere in the engineering of a product, then it's not worth pursuing. And and so, you know, all of those features which are described in more detail in appendix 15.1 to this presentation, which you're more than happy to go and have a look at and come back to us with questions if you wish. All of these features have led us towards targeting our efforts in these four market sectors, aerospace, electric motors and drives, industrial machinery, which includes off highway and robotics, and performance automotive.

19:07 So I think that's enough for me on this whole business. I'm sure you'd like to hear from the horse's mouth now about our business development activities. So I'll hand over to our Business Development Director in this business, Ryan Maun. Thanks, Nigel. Next slide, please.

19:25 So we spent a considerable amount of time, really understanding the markets. And as Nigel said, looking for particular, attributes and, in particular, really trying to understand where SAW can bring benefits compared to conventional technology. We identified that there's four key, target markets for us, the focus markets, and two different kinds of opportunity within those, marketplaces. The first being where talk sensing is already used, and there's a potential to deliver some

19:57 sort of improvement by converting from an existing technology to SAW. And then, for example, in aerospace, there's a lot of torque sensing applications already, in play and in industrial robots. And what we're able to do now is describe what the benefit is of converting those, applications across to, SAW technology, and that's partly come from talking to customers who've already applied it

20:22 and and from looking at the the engineering in the markets themselves. The other kind of opportunity are for applications where actually it's it's not possible to measure torque of all the force or temperature with current conventional sensing technology and and really where SAW then becomes an enabler in terms of opening up new applications in the market. And and the really the key opportunity there is is in the electric motors and drive space where really there isn't another way of embedding a a force torque and temperature sensor in the motor of an in the rotor of an electric motor other than with SAW technology because of its, its performance benefits over conventional sensing. So we've we've spent a lot of time on on that side of of it. We've implemented a really, a strong pipeline management, process to give us clear visibility of all of the opportunities and the ability to manage them closely, through from inquiry to closed business.

21:25 And we've established some really clear qualification criteria for the opportunities, which Nigel alluded to, before. Unlike in in some businesses, where you have a very flat pipeline and it's difficult to see what stage an opportunity is at, we we now understand very clearly what the pipeline looks like, and we're able to effectively work with customers and help them develop their internal business case and and sort of understand the time and the the actions that need to happen in order to progress through into into the completed business. And what all this reflects in is is a very strong pipeline now. So we've seen excellent growth from September last year, you know,

22:04 only in a few months, 66% growth in the pipeline of very well qualified opportunities. So these are not just any, you know, any any old inquiry. These are very well qualified opportunities, and we're we are managing carefully the progression of these through the business. So we do expect to see significant numbers of these start to convert into feasibility study trial NRE type projects and then progress on into other deals. Next slide, please. So in terms of some key milestones that we've achieved in the business, you know, the revenue growth, as mentioned earlier, yes, it was from a low base. But the 100% increase, I think, is really significant in the almost all of it is is revenue, which is linked to, higher value longer term programs. So we're starting to see now, opportunities closing out, which delivering, initial, smaller studies and, smaller upfront engineering fees, but they would lead to longer term opportunities.

23:10 That pipeline increase is is really strong, like I just said, 66% since September last year. But actually, if you go back to February 22, so in the last year, it's increased fourfold. So absolutely, you know, massive increase in pipeline and, like I said, very well qualified opportunities. We have closed out recently a new tier one aerospace customer program. So that's in addition to the Parker Meggitt, which was announced in in the public domain. So there is a new aerospace customer now on the board that we're working with very closely, and that's a major aero tier one. We're working very closely with Park and Meggitt progressing under the terms of the MOU, and that's being very positive, and we're very well engaged at a very senior level in that business.

24:00 GE is progressing their engine program. You'll start to see lots about that in the public domain, but I I think what's really interesting about GE is they're also looking now to apply the technology in other areas. So we extended the license, to allow them to use the technology in the HEAT program, which is a hybrid electric demonstration program. And we're also talking to them about other, other programs within their business. So that's significant in that they've got a lot of experience using it, and they like it enough to start applying it in other areas. McLaren Applied is also starting to make very good progress. So they're now in a number of cars in the Le Mans Daytona Hybrid championship and as well as the IndyCar that's been around for a long time. There's a big focus in McLaren Applied on the telematics, part of the business, which is is what the SOAR technology falls under. And they're really pushing hard to win new sales and new business,

24:59 under that, and that's really starting to benefit, to benefit TRANSENSE. The TDAP program, which we announced previously, so that's, an advanced propulsion center, so government funded program. We, we passed an independent gateway way review through to phase two of that project, which was again very significant because the gateway reviewers were all industry experts. So they were looking at what we've achieved to date under that program and looking at our plans for for what we're going to do, and they gave us the the okay to progress through to the next phase. So we're on that. And part of that program has been looking at electric motors and looking at that application, that new application in electric motors, and trying to verify the potential improvement that we can achieve in a motor drive system, in terms of performance and efficiency. So we've been doing quite a big chunk of work on that. And then we've also been looking at product and process industrialization.

25:59 So we've got a really clear plan now, that we are implementing to deliver near term benefits, but but also very clear pathway to higher volume, production. So we're able we're in a position to we're getting ourselves into a position where we're able to say to customers who want to take higher volumes than the business as as as traditionally done. This is how you would do it. This is how you would implement it. Next slide, please. So in in terms of the plan, for the next few months, moving forward for the next twelve months, from a revenue perspective, we fully expect to meet and exceed, the the projections that have have been put out already. The pipeline is gonna grow, so, new opportunities are are being added to the pipeline.

26:47 And we also expect to accelerate the conversion rate. So we sort of passed through an initial period of of building up those contacts and and the qualification of opportunities, and now starting to accelerate in terms of how they're converting through into development programs. And, like, that should lead on into licensing opportunities. We do expect to progress, an aerospace license and develop some similar opportunities in some of the other key focus sectors. The TDAP program will complete during this next period. So we'll complete phase two and meet all of the deliverables that we've set out that we're going to achieve in that, which includes looking at the electric motor control side, extending the external verification of that so that we've got, some real solid simulation data that we can put in front of customers to show them the the benefits of applying SAW, and then also, progress the products and process industrialization, activity. We plan to complete the initial phase of the industrialization project,

27:57 and that's gonna give us some really good benefits immediately in terms of improving the the throughput and the efficiency of the low volume production and the prototyping that we're doing, with customers at the moment. But more critically, it'll give us a really clear pathway to be able to demonstrate to people how they can implement the technology in higher volumes and what that looks like. So it's a really important part of the work that we're doing at the moment. So I'll hand you back to Nigel now who'll continue. Thank you, Ryan. Great. And I think listeners will certainly see and understand that there's been a radical shift in gear in the SOAR business over the last twelve months, and I'm sure find that very exciting.

28:46 If we could now just move on back up to corporate level, I wanted to say a few words on capital allocation. We're looking at a table here, which shows the movement in distributable reserves in each of the last three six month periods. So on the left hand column, the first half of FY '23, middle column, second half of FY '22, right hand column, first half f y twenty one. And we're looking there at the availability of distributed reserves, the amount of profits for the period going in, which is the net profit after tax attributed to shareholders, which is labeled row a. And then below that, row rows b and c, the amount which has been allocated to share buyback programs. And c, notably, you know, three zeros at the moment, the amount that's been allocated to dividends.

29:34 You know, however, you know, the board are already on the record of saying that we are going to review dividend policy towards the end of f y twenty three. And we've repeated that commitment today, and we expect that together with our financial results for the full year in September, we'll be making some more statements about future capital allocation and distribution policy. What you'll see from this chart, if you take b plus c divided by a, is that in each of the last two six monthly periods, we've essentially used approximately 40% of the profit for the period to fund share buybacks, which would would you know, were their dividends rather than buybacks would represent two and a half times covered dividend. We've held investor events at Western on the Green for both larger and institutional shareholders and also for private investors towards the back end of last year. And we've listened very carefully to the feedback of all sorts of shareholders with different aspirations and diff different personal circumstances or institutional circumstances.

30:37 And we've heard a lot about the preference for share buybacks from some and the preference for dividends from others. We've listened and evaluated that very carefully, and we will be ready to say something more publicly in a few months' time. So watch this space. Next slide, please. I'd like to finish this part of the presentation just by looking at the outlook. I mean, let's start off with post period end trading. It's actually been particularly strong since the end of our financial period. So we had an extremely strong January and February is going extremely well too. So particularly in SOAR and TRANSENSE TECHNOLOGIES, we've seen a further acceleration in revenue growth rate and, you know, very satisfactory results coming from those two businesses. Again, as I've already said, we're expecting to see higher growth rates for the iTrack business in f y twenty three as those new accounts that were converted towards the end of twenty two start their implementation.

31:33 So all of that leads us to be confident of the outlook for f y twenty three and beyond. I mean, we've we've reaffirmed as a board that we expect to meet market expectation for f y twenty three, which in itself is a significant uplift in, both revenues and profits. The I'm sure you'll be able to access through the company's website, the research which is published by Allanby. And, you know, I would certainly recommend you to go and read the report written by the brokers analyst in German, which was published this morning, and it's a it's a very good read. We are very encouraged by the market engagement with so I mean, Ryan's spoken a lot about how the pipeline has developed, but I think one of the things that's most encouraging for me personally is that a lot of those inquiries are now coming to us rather than being rooted out from our existing networks as an outreach.

32:28 We're now fielding inquiries from people who have become aware of our technology either by word-of-mouth or from our social media channels and website, particularly some of the video shorts which have been produced outlining specific benefits of SOAR in our target market sectors. So we're getting a a a lot of very high quality encouraging feedback from the marketplace and an increasing level of incoming inquiries. And so, yes, our store business is still taking net investment. As Melvin said, you know, we're very mindful of the cost base in that business, but but we are expecting it to move towards breakeven. And in the meantime, I'm absolutely confident that we are building a very tangible strategic value proposition in our SOAR business, which at the moment is still underlying the surface in terms of the reporting the reported numbers historically, but I'm I'm very confident that we're building a very high value business there.

33:28 I shall now pause. I'd like to invite Tom back in. I think we'll put cameras back on now so you can see the whites of our eyes. And Tom, perhaps you could compare the questions, please. Super. Indeed. Yep. Thank you, Nigel. Thank you, Melvin. Thank you, Ryan. Very comprehensive. Now we do have a number of questions that have been presubmitted, but please do continue to submit your questions using the q and a tab situated on the top right hand corner of your screen. Additionally, your feedback is important to the company. So immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback. A number of these questions you have touched on in part, but what we might do is group a couple of them together, and and maybe you could just add a little bit more color. And and, Ryan, we we might start with you if if that's okay. Two questions brought together. The MOU with Meggitt was signed in September.

34:17 Can you give an update on how that is progressing? As far as SOAR is concerned, apart from Meggitt, how are discussions with other companies progressing, and when is a deal likely? Yeah. Okay. So so the taking the Meggitt first, the MOU was signed. There's been a sort of period of, technical exchange and, deep diving work done. It's progressed very, very well. Obviously, I can't say too much because of confidentiality is on their sides, but, we have an incredibly high level of engagement within our business. And I think there's there's an exceptionally good fit for some of the things that they plan to do in the in the future, with that that business. So, I think that is is is very, very positive.

35:16 In terms of other customers, I think so significant. We've we've added in another, aerospace tier one, to the customer book, and that is a business that TRANSENSE hadn't previously worked with. So, you know, that is is very significant. So we're increasing in that area. There's a number of others that are fairly close to closing out. And in in general, you know, we we are seeing a very strong level of engagement with with customers. I think the in the beginning, the the TRANSENSE, in the beginning for me, is that the technology was relatively unknown.

36:02 You know, not many people have come across it before. It is it is a very specialist, technology. So getting the message out into the market and and really helping people understand what it is, what it can do, how it's different to other technologies out there has has been a really key, a really key task to get people thinking about it. Because a lot of engineers working in these big companies hadn't, know, you wouldn't have even heard of surface acoustic wave, technology. It hasn't made it onto the, the engineering syllabus yet. So, you know, getting the message out there has has been a really key part of of what we're doing. But, you know, it's it's really impressive to see the the effect of that now that, we are starting to get to get that out of there and people understand how they could use it and and and what you know, why, like, why why would I use this instead of a conventional piece of tech sensing technology. So it's, it's very good.

37:03 If I if I may just interject, Tom, as well, I've seen a follow-up question on Park and Mega, which was when do you know, how how long do we expect the trial to take? I mean, it's not actually a trial. It's a it's an engagement on a under a memorandum of understanding, which allows them a period of exclusivity in which to negotiate a license. And the duration of that memorandum is up to 12/31/2023, and we have the shared aim that by the end of that period, we will be in a position to agree specific a specific field of use or fields of use within the aerospace sector and and obviously negotiate the value of that license. So we would expect to see an update on that towards the end of twenty twenty three.

37:50 Right. Okay. Just one one I meant to ask right at the beginning, which is cracking an acronym. Nigel asked, what does NRE stand for? Which I guess is important to understand. It's nonrecurring engineering. So essentially, it's a it's a funded project where the customer is wanting us to do some application engineering, but they're willing to pay for it. And I think it's, you know, it's it's quite an interesting point because at at, you know, the previous time in its life when TRANSENSE was, you know, more anxious about trying to win customers than we are now. We're in a much more confident position now. In common with many, many technology businesses, we would have probably done a lot of that work for nothing to try and improve the technology. Whereas now, we're in a position to ask customers to pay for it, and they're willing to do so. And I think that's an indication of both our confidence in the bill, so our customers' interest in the technology.

38:45 And your maturity in those relationships as well. Yeah. Great. Okay. So just a quick one on Bridgestone. Bridgestone are targeting 90% of two thousand and twenty three sixty three inches tire revenues coming from Mastercard. If Bridgestone is successful in reaching this goal, would this be of particular benefit to the company? Yes. I think it would. I mean, there's there's not a direct link between MasterCore and iTrack. It's possible to run MasterCore with other TPMS systems or with no TPMS system at all. But to get the full benefits of MasterCore as a range of tires and for for the benefit of people who aren't familiar with it, MasterCore is a tire which can be fitted to mining trucks, which can be varied in terms of its characteristics in order to optimize it on the condition of the mine. So for example, the ambient temperature in the mine might be one of the variables which would make you want to change the characteristics of the tire to optimize it.

39:44 And so having live tire pressure and tire temperature monitoring data enables you to get the maximum benefit out of MasterCore. So whilst there's not a direct linear relationship between penetration of MasterCore and penetration of iTrack, they are very closely linked. If I can just add on on the Bridgestone website where they advertise their MasterCore, they also do refer to iTrack. So the the link is they make the link as well. Yes. Indeed. Great. Super. Melvin, while we've got you, I I'd just like to to put some a question or two to you from Dion, if I could. Yeah. Now now Dion has asked various questions. I'm not gonna read them all out, but but they are all in relation to adding some color to the inventory position.

40:35 Now could you possibly just expand a little on where we find ourselves with inventory and the changes in the inventory over the course of of the last little while, particularly since the announcement of the results? Yeah. Absolutely. At the end of last year, we we got to a point where we nearly actually ran out of inventory for the probe business. So virtually all of the stock at the end of the year related to the saw business. We then replenished quite quickly on the TRANSLOGIES stock, which is why the the numbers jumped up quite a bit, and that reflected the pipeline that we we were looking at going forward. I I I think having seen some of the the the question also, you talk about finished goods, raw materials. With regards to TRANSLOGIES, it's basically finished goods.

41:24 There are a couple of occasions where we might buy raw materials where there is a shortage, and we can act quicker than our manufacturer. They're not really a matter of fact. They're more an assembly business than manufacturing, but we we we can sometimes act quicker, and therefore, we might jump in and and buy some relevant more materials. But, generally, it is finished goods that we hold for the pro business. I think I also saw was a question whether we hold any iTRAQ stock. We certainly don't hold any iTRAQ stock. That was passed across to iTRAQ, obviously, when we did the deal with Bridgestone. Okay. Super. And another financials question, if I could just pop this in, from Hugh.

42:13 Is EPS number for h one correct given that PBT was about the same for the prior, and there are slightly fewer shares? I certainly hope it it's it's a weighted number of shares. It's tax it's the it's the tax impact. The The EPS is driven by profit after tax, and there was a bigger tax credit in the second half of last year than the first half of this year. Right. Okay. Super. So the PBT was the same, but the profit after tax was higher because there was a bigger tax credit. Yes. Great. Okay. Two questions. Actually, one which we've already addressed on this capital allocation. So one question was, what is the company's position on dividends? I think we've answered that. But Nigel, at the AGM in December, approval was given for £550,000 share buyback. Since then, only 60,000 shares have been bought. Why is the company reluctant to buy shares?

43:09 The company is not reluctant to buy shares. I I wouldn't want that impression to be created, but but obviously, we're judged by our actions as well. So I think it's worth just outlining what our approach to share buybacks has been. I mean, first of all, the the day to day dealings in share buybacks are delegated on a discretionary basis to shard capital as our brokers in that regard. So because for quite a lot of the time, we are in closed period because the directors are in possession of price sensitive information, We can only change our instructions to shard capital when we are not in closed period. And so, you know, I would want to, first of all, make that point. I think it's then worth just giving an outline as to two of the guidelines that we've given shard capital as as part of their implementation of our policy.

44:00 The the first of those is that it just feels wrong for the company to bid the price up. So at a time when the market is short shares and there is plenty of buying interest and the price is rising, you should generally expect to see the company sit on its hands. That doesn't mean always, but that and as a generalization, the company is not interested in bidding the price up. That's not purpose. However, when periods arise in which the market is overweight and some of those gains are being lost, then you may well see the company stepping in to provide liquidity to prevent a slump in the share price when there is nothing in the fundamentals suggesting that that ought to be the case.

44:45 So that's the first point. The second point is, the board do from time to time set an absolute maximum price that chart capital are willing to pay. Again, we can only change that number when we are not in possession of price insensitive information. But from time to time, the board will give Shard Capital a maximum price that we're willing to pay. And and so I think, you know, armed with those two pieces of general tactical guideline, if you like, then shareholders who want to go back and look at when we've bought shares and at what price might see a little bit more logic than they would have otherwise understood. Understood. Yep. Excellent. So a couple more questions. One from Steven.

45:31 Who owns the patents for acoustic wave technology? We have about 32 patents in the name of TRANSENSE TECHNOLOGIES PLC. Charlie, good. And one from Nick. What are you seeing in terms of new technologies coming to market that may compete with TRANSENSE? I think we might invite Ryan to have first crack at that one, please. Yes. So I think if you looked at the sort of two product areas, obviously, you've got the probe business and the saw sensing technology. So with the saw technology, it it is a very specialized method of measuring force, torques, pressures, and and temperatures.

46:28 You know, that's quite a large domain and and there there are other sensing technologies in in that space. And there are new technologies coming into that space, Not not on a super regular basis, but there are things coming into the space. In general, I don't see anything that competes with the USPs of SOAR technology. So there's some particular attributes of SAW that we've identified that are real key enablers in terms of of what it allows you to do. And and and we haven't seen anything new coming into the market that would be be competitive against those and and and potentially cause us to a problem. There are, of course, you know, like I said, lots of other sensing technologies out there and and and that are in the market, but they they have different attributes.

47:22 You'd use them in a different way. And I think that's something you know, SAURA is a very special technology. It's not the sensing technology you'd use in every application. But where the those particular special attributes, are required, it's a very, very strong, proposition. I I think on the on the probe side, you know, there there is, really, you know, that that is a a unique product in the market as well. I think it's it it leads the market in in the space that it's in. And and, again, we we don't see a competitive product, coming to the market that has all the same, attributes. There are much simpler tire reader products that just basically read the ID codes from the tires, but having it all incorporated into a single robust unit that can integrate with the fleet telematics system is a unique product in the market, and we don't see anything else coming through that can do that.

48:22 Right. Super. Thank you. Question from Richard. What do you see as the biggest risk or risks to the company and performance over the next two to three years? Yeah. That's that's always an interesting question, Richard. Good one. If if I look at, you know, what what are the things that would worry me most? You know, I I suppose, you know, we we have already highlighted in these figures that if if if there's any one number that is relatively speaking disappointed compared to the others, then the slowdown in the delivery of new installations on iTrack, which is, you know, something that we only have passive control of rather than active control of the other two businesses, you know, is perhaps one of the softer spots in our numbers.

49:10 But we have every reason to believe that that'll return to high growth, so it it doesn't worry me unnecessarily. You know, and in fact, in the very long term, it doesn't worry me at all because, ultimately, the long term value of the company is going to be driven by the results in our SOAR and our TRANSLOGIES businesses, and that is just, a residual income stream from a business that we've actually divested. So the overall value that we achieve for that business over the ten year period will be what it will be. What else worries me? Well, you know, I would have loved to have had this whole business back to breakeven by now. It does involve you know, developing a business like this does involve adding cost. And in and in doing so, recognize that it's difficult to generate short term revenue. So the business is still still loss making, and that's not part of my DNA.

50:05 And so know, I I suppose, you know, a risk to the business would be a continuation of those losses without being able to convert the very high level of inquiries that we have into a very high level of revenue to justify the the money that we've spent. You know, again, not an undue worry, but, you know, I I I guess if you were looking for risks to the business, then that would be one of them. I mean, I I think it's also worth saying that there have been enormous risks to the business over the last three years, like a global pandemic, very volatile foreign exchange rates, a dramatic shortage of electronic components, difficulties in recruiting and retaining high quality staff across engineering businesses as a result of Brexit.

50:56 Now there have been 1,000,000 things to worry about over the last three years, and our record speaks for itself in terms of how the business has been able to ride those and I think we have an extremely resilient business model. Yeah. Okay. And then I guess evidence of that is in part. James asked a question twelve months ago on this forum. Nigel said about store. I'll be disappointed if we don't announce at least one breakthrough transaction in twenty in twenty two. Was this achieved, and how many years is SOAR from breakeven realistically? Yeah. Yes. It was achieved. I mean, I think the relationship that we have now been able to talk about openly with Parker Meggitt offers an extremely exciting prospect for the company. I think there's a very strong likelihood that we'll be able to bring that partnership more closely together and and and consummate it if you like. If, know, we're engaged now, I think there's a decent chance that we'll be able to turn that into, you know, a very robust long term income stream for the business.

51:55 But if we can't, we have a lot of other very interesting and exciting opportunities in aerospace, and it's partly within our control to be able to determine the value that we place on our exposure in the aerospace sector as part of those conversations. But we've we've established an extremely warm personal relationship with people at a very senior level within Park and Meggitt. And we have a shared aim of bringing this technology to the aerospace market in a very effective way with the the the credibility and the muscle and the engineering skill of a $36,000,000,000 market capitalization business. So would I have been happy with that a year ago was being my breakthrough deal for 2022? Hell, yes. Pardon my language.

52:42 I think, leading to the second part of the company, that's a question I beg your pardon, when will the saw business break even? I'm afraid there's a very simple answer. The answer to that is when its revenue exceeds its costs, then we're doing everything we can to grow the one and we're doing everything that we can to manage the other. And I'm not gonna hand myself on a hook to say when the line will cross, but it's getting ever closer. Yeah. Super. And right. So final question, which is a very simple one, and and it's just a technical answer, I guess. But may maybe you want to just summarize after that. But Robert has just sent one in saying, seeing his ownership of patents was raised, what is the projected lifetime of the patents? And and that's the last question. Yeah. And and it it's a it's a good question, and it's well asked.

53:28 And thank you for that. I mean, you know, the patents do have a finite life and some of the existing patents only do have three or four years to run. But that's not an undue concern once again because it's it's very often the applications know how around the patents, which is where the real value of those patents lie. And also in the, in the source code for, you know, the Coca Cola syrup if you like as to what makes us all device work. So some of some of those patents, you know, will expire in the ordinary course of business. We're also constantly working on ways of developing our product in order to create both patentable technology and know how and applications knowledge, which will underpin the value of our business in in addition to the hard IP.

54:20 Okay. So I I I think we're there. So if if you'd like to to give a brief summary, then we've got time for that. Alternatively, we can move to close. Yes. I mean, I think I've sort of summarized the presentation at the start of the Q and A. So I think all it remains for me to do is just to thank everybody once again for listening. I hope you found it interesting and you've got what you want, particularly to people whose questions we couldn't answer more fully. And I'm thinking particularly of this one or two of Dion's questions on the financials. Dion, feel free to engage with us and we'll give you a more detailed response if that's required. But meanwhile, thanks, everybody, for taking part, and we look forward to seeing you next time. Yeah. Super. Great. That is great. Thank you, Nigel. Thank you, Melvin. Thank you, Ryan. Thank you. Ryan, I hope you enjoyed your first experience. Could I ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback? If anyone has further questions, and Nigel has obviously mentioned a couple there, would like additional information on TRANSENSE TECHNOLOGIES, please do get in touch via TRANSENSE@WarburgPR.com.

55:25 Many thanks for attending today's presentation.