REG - Transense Technlgy - Trading Update

Transense TechnologiesAnnouncement

22/01/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250122:nRSV1876Ua&default-theme=true

RNS Number : 1876U  Transense Technologies PLC  22 January 2025

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

22 January 2025

 

Transense Technologies plc

("Transense" or the "Company")

 

Trading update,

Change of Nomad and broker, and

Notice of Interim results

 

Trading update

Transense Technologies Plc (AIM: TRT), the provider of specialist sensing
solutions and measurement systems, announces a trading update for the six
months ended 31 December 2024 (the "Period").

The Directors are pleased to report that the Company continues to trade
in-line with market expectations for the full year ending 30 June 2025.
Strong revenue growth for the Period provided opportunities to invest in
operational capabilities in anticipation of further growth whilst protecting
prospects for current year earnings.

Financials

Total revenue for the Period was 37 per cent ahead of the corresponding period
last year (the "Prior Period" or "FY24H1") at £2.41m (FY24H1: £1.81m)
compared with expected growth of around 30 per cent for the full year.
Segmental revenues from SAWsense and Bridgestone iTrack royalties increased
ahead of expected rates at 330 per cent and 28 per cent respectively.
Revenues from Translogik increased year on year by 7 per cent, which was
consistent with the expected growth from existing customers, although new
business conversion was slightly slower than anticipated.  This is expected
to accelerate in the second half of the financial year.

Gross profit margin was maintained at more than 87 per cent of revenue.
Operating expenditure has increased in the Period reflecting planned
investment in the business.  The total headcount of the Company has increased
from 19 people at 31 December 2023 to 30 people in January 2025, and this
increase includes key appointments in engineering, operations and sales &
marketing to build capacity to fulfil pipeline opportunities.  This process
is now largely complete, and the team is now in place to deliver future growth
without significant incremental salary costs.

Accordingly, net earnings for the Period are expected to be approximately 20
per cent below the Prior Period, reflecting this investment incurred ahead of
the associated payback anticipated in the second half of the financial year
and beyond, and the temporary cost compression due to re-organisation in the
Prior Period.

Net cash at 31 December 2024 stood at £1.19m (30 June 2024:  £1.28m).
Quarterly royalty income receivable from Bridgestone iTrack at the end of
January is estimated to be £0.84m (30 June 2024: £0.70m), further
strengthening the net cash position.

SAWsense

The business is beginning to benefit from deeper relationships with
established customers, aiding the delivery of a higher level of revenue per
customer; a key metric for the future.

The two grant funded projects are running well.  Work is progressing in both
programmes to develop new applications for SAW technology in automotive eDrive
systems and aircraft landing gear.  These include sensor application
engineering, materials and performance development as well as the associated
requirements for scaled up manufacture and supply chain development.

Aerospace demand remains buoyant.  SAWsense engaged a new aerospace engine
torque sensing project in the Period to add to the base of leading global
aerospace customers. Pipeline activity is healthy, including additional work
on running projects with existing aerospace customers, and some significant
new projects in aerospace, robotics and off-road vehicles launching in the
second half.

The process of building engineering and customer-facing operational
capabilities has continued in the Period, with the appointment of six
additional engineers and technicians.  This included the key appointment of
an Operations Director for SAWsense at the Period end, enabling the separation
of engineering responsibilities from ongoing customer support in project and
production delivery.  This is expected to contribute to further increases in
output per head, and revenue per customer in future periods.

In view of the substantial pipeline of future demand, the time is now right to
expand the operational capability at Weston to include a pilot production line
and to update the design of key unique components.  The Board has approved
total capital expenditure of more than £2m over the next twelve to eighteen
months to fulfil these requirements, of which more than £1m will comprise
production equipment.  The remaining investment will fund the redesign of the
custom Application Specific Integrated Circuit (ASIC) and All Quartz Package
(AQP) to bring their architecture in line with contemporary wafer production
techniques, increasing longevity and reducing unit costs.

These investments can be funded from existing resources, although asset backed
funding may also be appropriate for the production equipment to maximise
headroom and flexibility, and is being explored.

Translogik

Revenue in the Period grew by 7 per cent compared with the Prior Period,
reflecting good progress in run rate business from existing customers.  The
pipeline of new business in negotiation and on enquiry is also building
well.  The conversion of these opportunities to revenue is currently slightly
behind target, however momentum is building.

Progress has been made in penetrating new markets, most notably the
appointment of a distributor in Southeast Asia and the conclusion of a
software partnership with TIRETASK GmbH to facilitate the launch of sale by
subscription service.  The first UK fleet contract under this model is in the
final stages of negotiation and completion is anticipated soon.

Translogik also expects, subject to contract, to appoint at least one
distributor in North America before the end of the financial year.

The transition of production from an outsourced model to in-house at Weston is
complete without any significant disruption, generating the expected
improvements in product quality, customer service and unit costs.  This also
offers the flexibility to increase production capacity and improve lead times
to cope with future increases in demand.  Engineering resource has also been
added to progress new product development ideas to improve and extend the
current product range.  These developments have resulted in an increase in
headcount for Translogik from one to four over the last twelve months, which
will be sufficient to deliver substantially increased revenue in future
without incurring further fixed overhead.

Bridgestone iTrack royalty income

Royalty revenue from Bridgestone iTrack was 28 per cent ahead of the Prior
Period at £1.57m (FY24H1: £1.23m) which reflected stronger than expected
conversion of the commercial pipeline.  The annual run rate of royalty at the
end of the Period was £3.34m at the current exchange rate of £1 = US$1.22.
Approximately 30 per cent of the royalty income due in the second half of the
year has been hedged at US$1.27, however in view of the current weakness of
sterling against the US dollar no further hedging has taken place for the last
quarter of FY25 or beyond.

As previously indicated, and in accordance with the terms of the agreement
with Bridgestone, the unit rate of royalty income per installation reduces by
40 per cent with effect from 1 July 2025, however the pipeline indicates
continuing healthy growth in volume.

Outlook

All three business segments have increased the level of new business
opportunities during the Period, and are well placed to continue expanding in
line with the expected growth trajectory.  Conversion to revenue in both
SAWsense and from Bridgestone iTrack is well underway, and there are clear
indications that Translogik will deliver significant additional customer
accounts in the second half of the financial year.

The Directors consider that this is an opportune time to invest in the people
and infrastructure required to fulfil the evident strategic growth
potential.  The recruitment process is largely complete, and work is well
underway in specifying the production equipment and supply chain activity
needed to support long term volume prospects.

 

Change of Nomad and broker

The Company also announces the appointment of Cavendish Capital Markets as its
nominated adviser and sole broker with immediate effect.

 

 

Notice of Interim results and Investor presentation

Transense expects to announce Interim results for the Period on Tuesday 18
February 2025.

Nigel Rogers (Executive Chairman), Ryan Maughan (Managing Director) and Melvyn
Segal (Chief Financial Officer) will provide a live presentation relating to
the Interim Results via Investor Meet Company on 18 February 2025 at 4pm GMT.

The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
17 Feb 2025, 09:00 BST, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet
Transense via:

https://www.investormeetcompany.com/transense-technologies-plc/register-investor
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investormeetcompany.com%2Ftransense-technologies-plc%2Fregister-investor&data=05%7C02%7Cnigel.rogers%40transense.co.uk%7C52fcadd6dcae4adf9c8e08dd374085cd%7Cea618bf6e2574581814621766335df4b%7C0%7C0%7C638727472454141442%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=m4w%2FW%2FlpPYXoXTt9jlBF0MCVq1w%2Fc0mA9sOO3BvmPPQ%3D&reserved=0)

 

Investors who already follow the Company on the Investor Meet Company platform
will automatically be invited.

 

Commenting on the trading update, Nigel Rogers, Executive Chairman, said,

"The first six months of the financial year has seen us continue the strong
underlying growth, whilst successfully recruiting a team that can take the
business to the next level of performance. We remain in line with market
expectations in the current year, and the opportunities ahead of us give us
significant optimism for the future. SAWsense is making excellent progress and
the pipeline for Translogik is also very encouraging.

The Bridgestone iTrack licence is  approaching its fifth anniversary in June
2025, marking the half way point of its duration.  Although unit royalty
rates per installation will decrease next year, there is momentum behind the
installed base indicating continued strong income flow for the next five
years.  We will continue to reinvest some of this in the two operating
businesses, both in people and infrastructure, to support our long term growth
expectations."

 

For further information please visit www.transense.com or contact:

 

 Transense Technologies plc                                       Via Investor Relations

 Nigel Rogers (Executive Chairman)                                (see below)

 Ryan Maughan (Managing Director)

 Melvyn Segal (Chief Financial Officer)
 Cavendish Capital Market Limited (Nominated Adviser and Broker)

 Adrian Hadden / Callum Davidson (Corporate Finance)

 Jasper Berry (Sales)
 Investor Relations                                               Tel: +44 (0)1869 238380 investor.relations@transense.co.uk

                                                                (mailto:investor.relations@transense.co.uk)
 Anice McNamee

Notes to Editors:

Transense is headquartered in Oxfordshire, UK and its shares are traded on
AIM, a market operated by the London Stock Exchange (AIM: TRT). The Company
develops and supplies advanced sensor technology and measurement solutions
used by some of the world's leading companies to improve performance,
efficiency, and safety in demanding, mission critical applications. Transense
currently operates through two active business segments:

 

·    SAWsense - designs, supplies and licences advanced sensor solutions
based on proven, patent protected Surface Acoustic Wave (SAW) technology to
world leading companies in aerospace, automotive, and industrial machinery
(including robotics), enabling improved efficiency and performance of their
products. Key customers include GE Aerospace, Parker Meggitt, McLaren Applied,
Airbus and several other confidential Tier One automotive, aerospace and
industrial machinery suppliers.

 

·    Translogik - develops smart, connected commercial vehicle tyre
inspection equipment to many of the world's leading tyre suppliers, fleet
operators and service centres. Enabling accurate measurement and digital
capture of safety-critical tyre condition data, used to reduce operating
costs, improve safety and provide audit records for regulatory compliance. Key
customers include Bridgestone, Goodyear, Continental and Prometeon (Pirelli),
and leading independent providers of vehicle fleet maintenance management
software.

 

In addition, Transense earns residual royalty income from Bridgestone iTrack -
a tyre monitoring system for off-highway vehicles that was developed by
Translogik. The associated sales, support and development infrastructure were
sold to Bridgestone Corporation, the world's largest tyre producer, in June
2020, and the intellectual property was licensed exclusively to Bridgestone
under a ten-year deal expiring in 2030.

 

Find out more at: https://www.transense.com/ (https://www.transense.com/)

 

 

 

 

 

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTPKDBQOBKDBDB