Transense Technologies (LSE:TRT) Q4 2026 Earnings Call

0:00 Good afternoon and welcome to the Translux Technologies plc investor presentation. Throughout this recorded presentation investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. Before we begin I'd like to submit the following poll. I'd like to hand you over to Nigel Rogers, Executive Chairman. Good afternoon sir.

0:20 Good afternoon and good afternoon to everybody listening online and those who join this chat later. You're very welcome. We are here to present the financial results and the trading update for Transense for the year ended 30th of June. And those of you who've been following the RNS news announcements will know that there's been a few announcements of new business since then, which we'll also cover. I'm co-presenting today with Ryan, Ryan Maughan. Melvin was going to present the financial part of this presentation today however he's had some IT problems today and I have agreed to deputise for him Hopefully that means we can get through the numbers nice and quickly and understandably and I'm more than happy to take questions on them as well so I will start with a bit of an overview and we present these results today with the appropriate degree of humility having had to downgrade against the expectations that were set at the start of the year we set some very ambitious targets for the business way back in January 2026 when we first picked up on January 2025 when we appointed Cavendish and expectations were set at that time and they were very aggressive targets to hit and in many respects a lot of things in

1:51 the business have gone very well But like a football manager, I'm a Sunderland supporter, our manager had to stand up and give a post-match analysis having lost 5-3. There were a lot of positives in the Sunderland Man City game and these results are exactly the same. Having missed the headlines and had some difficult things to talk about, we've also got a lot of very strong positives in the business which we can present today. Let me start then with the performance overview for FY26 and put that to bed. Firstly SAW since our revenues were up by 20% Ryan's going to show you a graph of the five year growth rate in SAW the revenue growth rate this year was 20% and that was a little off target and Ryan will talk about the reasons why mostly that was to do with the motorsport segment of our business being fairly flat in that a lot of the new business activity has not yet come through to the top line so he will be talking about that There are also positives outside of our traditional aerospace and motorsport customers that are now very well established and building nicely. Within EV we have been working on a demo unit project with Cummins Engines which is UK government grant funded in the automotive EV space and within robotics we have some new business wins to talk about which are progressing towards production hopefully in FY28.

3:14 Within Translogic, again, overall, the revenue was fairly flat. It was actually slightly down, but that masked a lot of strong new business growth amongst the new channels that we've opened to market for Translogic, masked because once again, the sales into tyre majors for our legacy product was slightly disappointing, down some 34%. And we're more than happy to take questions and Ryan will talk a little bit about what has happened with our two major tyre customers primarily. However, within the Tyre Majors, we've also got a very substantial new business win to talk about for FY27 and beyond. Meanwhile, we've launched new products for Translogic to complement the existing product range and post-period, we've won some other new customers alongside the Continental account, which Ryan will be talking about.

4:04 Within iTrack, the Bridgestone Royalty, everybody will know that the Royalty rate reduced by 40% and that new rate prevails for FY26, FY27. The volume growth in this year was slightly behind our initial expectation at 7%. I think high single digits is a sensible long-term run rate and that's likely to be prevailing for the rest of the 10-year period up to FY13 so revenue this year was down by 34% that had an impact on revenue and profits of about a million pounds adverse post period actually Bridgestone have been very busy and there are some good new installs going in for FY27 so I'm hopeful that the revenue volume growth rate will return more to the trend rate and I'll talk about that a little later in the presentation so that's an overview of what we're going to talk about today in terms of the financials I'll just quickly go through the KPIs and then later on I'll go through the detailed financial statements in a little more depth but total revenue was 4.63 million down from 5.55 and as I've said broadly a million pounds of that was attributable to the royalty Gross margin continued to be a very healthy 88%, 89.9% last time around.

5:26 So the margin mix of the business continues to be extremely strong. The adjusted EBITDA, which is a proxy for cash generation, cash profit was 0.66 million. And the adjusted PBT was just on the right side of breakeven. so importantly you know the board had a lot of focus on cash generation and particularly having recognized that the revenue targets were falling were falling behind and operating cash flow was more than one and a third times EBITDA at 880k which gave us a closing cash balance gross of one and a half million. So plenty of cash buffer there compared with our normal target of a million approximately of cash buffer available. So the business has the resources to be able to continue to invest and also to weather any unexpected storms.

6:21 With that, I shall pass over to Ryan and he'll talk through firstly SourceSense and then Translogic. And then I'll take you through the financials and talk a bit about the ITRAC royalty and the outlook.

6:35 Thank you, Nigel. So first to talk about SourceSense, just looking at the revenue, where that's come from and the four key markets that we operate in. So starting at the top there, Motorsport, obviously still working very closely with Motion Applied in that market. The revenue is slightly down this year, but they have a very big pipeline of new business and new business opportunities. So we can see into the future, you know, some good growth in the motorsport sector. It's just a little bit delayed in terms of it hasn't hit the numbers this year, but there is a lot of activity around that motion applied continue to be a good partner to us.

7:23 Aerospace has grown well, and that's mostly driven by increased component sales and work with GE Aerospace or within the supplier constellation. We're doing a lot of work with Airbus as well on NRE projects, but also some commercial work. And we do have some other customer programs outside of those two. They are progressing, I think, characteristically with aerospace market. They are progressing slowly, but they are progressing normally for the aerospace market. So again, we can see continued growth coming in aerospace, and we've done well in that sector this year. The eDrive market also has grown very well for us this year, so up by 39%.

8:14 There's a great project running with Cummins very big diesel engine manufacturer. that's that's that's going very well and we've got another number of other opportunities as well, some of which are potentially quite fast moving as they work through into production, but you know. A lot of projects there where we're going beyond the sort of proof of concept now and more into. know production intent designs and starting to ramp up the activity levels with those customers and finally in the robotics market so i think people probably know this is one that's fairly new to us um but you know huge growth in percentage terms there 268 percent um actually a very healthy pipeline sitting behind that so i'm not quite sure if we'll grow by 268 percent um over the next months but it would we definitely have Good growth coming in in the robotics market and we're dealing with some of the most sort of well known prestigious companies in that space.

9:19 The initial work that's been done with saw on on prototypes and sort of proof of concepts to show that it's all works well in that application can be made to work very well. and meets the requirements so. Now we are moving into more production intent development phases with customers in that market. Obviously a very big market with very big growth forecasts over the next few years. So in general, I think some good progress through those different sectors. And then this is the graph that Nigel was alluding to. Obviously, if you look at SourceSense over the last five years, the business has grown very substantially.

10:09 So some pretty big jumps there. It's not always in a straight line. I think that's kind of the nature of the beast when you're doing these things. But, you know, my view is that we are starting to build some real strong momentum behind the business. And, you know, we've got a good proposition for the market and the customers. which were able to deliver value to them and generate revenues for us as we move forwards in those key markets. So very, you know, very good indicator of progress. Finally on SOAR and part of that, you know, Proposition for customers where we're helping them de-risk it has been the pilot line So I think a lot of people know we've invested quite substantially in this pilot production line in order to develop assembly process methods for saw sensors onto on the components like shafts for customers that could be scaled to high volumes so help the customer kind of de-risk their setup and help us improve our um repeatability and um and all that good stuff with saw the the equipment is all in place now on site in in um in western on the green uh we've been using it in anger um actually

11:39 in in some cases customer facing work accelerating past the um the actual work to kind of prove out the base processes and things so There's a lot of activity around this equipment both from our sort of fundamental production process development but then also doing work for customer facing elements of projects on there so really key resource and we'll see that start to ramp up and be used more in routine production for us as we go on. This line, the principal purpose of it is to develop pilot production processes but it does also give us the ability to make product for the motorsport market for example or the aerospace or other markets through this line that's sort of lowish volume but up to you know several thousand pieces per year we could do the assembly of on this production line and still also have capacity for our the pilot production development work that we're doing on it as well so it's a it's a really great resource for us as a business and and a game changer in terms of how we can communicate the technology and that route into high volume production to customers.

12:56 Okay, so moving on to TransLogic. Like Nigel said, news is a football analogy, a game of two halves. we've got our established business in Translogic with the global tyre majors so you know we deal at the moment with predominantly with four out of the five biggest tyre manufacturers we have a little bit of business with the fifth now but dealing with those large tyre companies one or two of them in particular have had a pretty difficult time and have been going through some restructuring and changing their businesses so our base underlying business to those global tie companies is down by about 30%. And we do still see opportunities for growth in that market with other tire majors.

13:53 And also with changing business models and changing use cases for our equipment within those within those time ages. And I think that's best sort of explained with the the Conti deal that we announced recently and and that moves Conti from being a relatively small customer of ours into you know certainly one of our top three customers in the next year year or two um the the business case behind that is is a drive for more digitalization entire inspection uh within their fleet services and actually them deploying um Tyre management services into a wider range of customer operations. So it's a it's a great bit of business with with Conti.

14:38 And we do have some other really strong opportunities like retire majors. But unfortunately, in this year, the actual running revenue has been down with with some of the bigger customers in that space. However, like Nigel said, it's offset with increased sales down in the other routes to market. So direct with fleets, software partners, distribution partners, subscription sales and other kind of routes to market that we've been working on and setting up. people that follow the company will know we've made a number of announcements this year on new distribution partners and you know we do have some some really exciting new programs running with them where we should you know start to deliver you know significant revenue in in the coming months we've got some new products coming into the market as well which is also start to shift the needle with with new sales of those happening as well so There's a lot going on in the market, and I'm not too concerned about this year's numbers being flat.

15:40 I think if I look back at this business two or three years ago, the pipeline that we've got now and the routes to market and the customer relationships, there's a huge amount of development happened under the hood, and we're really, really well positioned now as that market is in itself about to grow with all the new requirements around tire management and tire inspection. As I mentioned some new products, so the couple that we've we've announced already being the TLGI so the inflator product We've we've just started to put the first tools out to customers for them to do the development work to bring it into their software Ecosystems, so, you know, that's an important next step with key customers and get a lot of interest in this as a product It seems to really answer key need in the market.

16:31 So I have a lot of high hopes for where that's going to go. We did a high pressure version of the TLGX. So it's actually took the standard tool and increase the pressure measuring capability of that into 350 psi 24 bar, the standard tool works up to 150 psi, which is okay for trucks and buses and cars, but it's not enough off highway machinery, and aircraft. So the that that increased operating pressure does open up some new markets for the TLGX. And then in addition to that, we do have some some further product launches coming. So, you know, broadening the product range, we are, you know, we are still working on that inside the business. And there's more to come on this on that side.

17:20 We were really pushing the trans logic business forward. You know, I think the plan is to be the standard for tire management equipment so tire inspections you know for commercial vehicles we are pretty much becoming the standard but we want to sort of really cement ourselves into that position as being the standard so very close relationships with those big vehicle tire manufacturers but then also very strong routes to market outside of that And a key part of that is is bringing that SAS model more into the revenue lines you saw the previous slide it's already starting to make a bit of a difference. And we again we've got a very strong pipeline of opportunities with some very, very big fleets will be providing their full software and hardware solution and that gets us into. a better recurring revenue model as well for the business so it's a very well positioned for very strong growth in the Translogic side of the business okay back to you Nigel thank you good I'll now just take you through the financial summary again obviously this is FY26

18:42 So, as I said before, the total revenue of 4.63 million was approximately a million down on the prior year, a million of that being attributable to the reduction in the ITRAC royalty. Gross profit was very strong, margins 88, 89%. um which is a sustainable go forward rate there was a significant increase in opex around 10 and that might surprise um some people in in fact it's the full year effect of the opex increase that went in in f by 25 primarily the infrastructure around the whole engineering and pilot line build for SAW was a capability that was built in the early part of FY25 and through the year and similarly the sales capability for Translogic was a significant overhead investment in FY25 the head count in FY25 went from around 20 to 35 and there is a full year impact of that in the payroll bill for FY26 without any large significant individually significant recruitments or a significant increase in headcount numbers it's just the tail end of that coming through and the other two key items of OPEX which were higher in 26 than 25 was firstly IT which I don't think will come as a great surprise.

20:05 You know, we've had to make a significant investment in IT infrastructure in order to both future proof the business, but also to cyber secure the business where you look at some of the sensitive nature of much of the work that we do. We've had to make a significant investment in IT infrastructure to be able to support that. and then secondly in our sales and marketing activities where we've had a very busy fy26 in um exhibition attendance you'll have probably seen a lot of that on social media and that's really been uh you know a a great filler in boosting the awareness in the marketplace of the existence both of translogic and of source sense and it's not something that we need to do every year so i think you would expect to see a reduction in that level of expense for fy27 that leaves us with an adjusted EBITDA of 660k that was more or less matched with interest depreciation amortization is a tiny interest charge it's primarily depreciation and amortization and you can see there an increase because of the increased asset base overall broadly break even at PVT level Within cash flow, you know, importantly that 660K of EBITDA was turned into 880K of cash generated from operations.

21:26 We do keep a very close control of short term cash forecasting and cash generation. We were able to continue to invest in the business, however, with investment activities there, capex both tangible and intangible totaling about 1.3 million, roughly three quarters of a million of intangible investment. which is primarily origination of component sets for the replacement ASIC and new suite of AQP parts and then about half a million on tangible capex to complete the spend on the pilot production line and out of that capex about 800k was financed net of the repayments that were made during the year so we were able to take an asset back loan which is secured on the tangible fixed assets that we acquired at 100% financing and that enabled us to maintain that program whilst not losing cash headroom so with a net cash increase of 360k that took closing cash to one and a half million comfortable buffer and net cash 0.57 after the impact of asset financing quick look at the balance sheet you can see there the asset financing balance of 0.93 million cash and cash equivalents as I've said at one and a half networking capital was around a million so pretty competitively managed our grant income on SOAR and our Bridgestone Royalty income are all collected quarterly.

22:58 So in fact, the networking capital is relatively high at the end of June compared to a normal quarterly. It's a high point within the quarter. I don't propose to say anything more on the balance sheet. So let me now start looking to the future. First of all, Bridgestone and iTRAC Bridgestone have been extremely successful with the ITRAC product. It's taken time to build, but their market share has increased substantially. And you may remember those who followed this story for some considerable time that at the outset, I think the market share for ITRAC that Bridgestone inherited from us was about three or 4%. And their market share of large haul truck tires was around 40%.

23:48 So our aspiration over the 10 year period was that they would be able to increase their market share of TPMS systems um to be able to achieve the same sort of penetration as they have in tires and they're well on the way to doing that in year six they have a six-fold increase in installations um the unit rate uh you know as we've as we've said has reduced in fy27 but nevertheless the absolute revenue number is still north of 2 million and expected to increase to sort of 2.1 2.2 in the current financial year This illustration assumes that the average incremental increase is broadly the same in terms of truck numbers rather than percentages.

24:34 So I think it's relatively conservative as an illustration and suggests that there is still a further seven and a half million to collect over the next four years. uh you know as I've said Bridgestone have actually had a lot of success in the marketplace over the last few months which is yet to translate fully into ramping up truck numbers so I I think if there is a surprise on that this year then my expectation is that it would be surprised on the upside rather than a disappointment So if I then round off current trading and the outlook, what's happened since the end of the year, then we continue to be ambitious with our growth targets. The market expectation in the latest brokers research note shows a roughly 25% uplift on revenue from FY27.

25:24 Bridgestone iTrack certainly won't contribute that sort of growth rate so we need to over perform that both in SOAR and in Translogic and we have internal targets that are significantly higher than that so we have left ourselves some headroom but nevertheless they are ambitious targets and we would say that from the outset uh in terms of what's happened since the end of the year we've got two months nearly three months of trading under our belt which is in line with our plans there is some half two waiting to our plans we uh you know we have more to deliver in half two than we have in half one but uh we've made a very good start In terms of SourceSense then there are very good prospects for growth with our mature customers in motorsport and I've seen on the question bar there there's a few questions about what's happening with Motion Applied and I'll put those to Ryan in a few minutes and we can get some depth on that but also within aerospace the depth of our relationship particularly with GE Aerospace and with Airbus is getting ever stronger and allowing us opportunities to earn increasing amounts of non-recurring engineering development revenue but also component sales and we have a number of other aerospace clients where we expect to move into development phase on a funded basis So in terms of the sort of bedrock of that business revenue in the short term, we're well placed.

26:51 But then we have a number of funded projects underway, moving towards higher volume markets, where we expect to be able to talk about that as the year progresses in terms of moving towards production. Within Translogic, there's a certain uptick in the underlying run rate business. Over the first couple of months of the year, the business is performing well. But the post year end customer wins will really prime the business for growth in the second half and beyond. We've talked about Continental. Again, I've seen a few questions on that, which Ryan and I will answer soon. in terms of how that's likely to progress into revenue and what other similar opportunities there are around it. But I also wouldn't underestimate the two post year end announcements that we've made in terms of our alignment with independent TPMS providers, both Bartek and Hamilton as potential future channels for sales.

27:53 also we have the new products which are already launched and out with customers awaiting demand and further product launches to be announced during this year which would expect to accelerate the prospects within Translogic so I think that business is very well set I won't repeat myself on Bridgestone so I will close that you know the overall strategic objective of the company is to position SourceSense and to position Translogic in strong defendable positions in high growth markets where they each have something to offer to clients in terms of enabling technology which will enable those clients to be more competitive and more successful in their own markets and offer very high growth potential for us and i think that even in a world where r d budgets are tight Our products tend to promote efficiency and therefore there is a cost justification for them rather than purely a revenue growth justification in a difficult world. And as the world adapts to the use of AI, then I think again, in both sides of our business where data is the new oil, then our ability to develop large volume data sets to be used in AI applications will increasingly be recognized for value.

29:18 I'm going to pause now and curate some questions. Just before I do, this slide offers you some further resources. Do feel free to visit our website. There's some very interesting stuff on there, both in the business pages themselves, but then also in the investor relations pages. There's plenty of history and foundation there and some forward-looking information. We also have a YouTube channel with a lot of short explainer videos about various applications that our products are used in and what makes them so special. And last but not least, please feel free to email us at investor.relations at transense.co.uk. We have an increasing direct contact with our private shareholder base. where we now maintain an investor community and make sure that we communicate with those investors directly and give them the opportunity to both ask us questions including a session that we're running tomorrow evening but then also from time to time to visit the site so if you're interested in that sort of activity please feel free to join our community I'm going to move to questions now and I think I'll start if I may with Translogic we have a few questions grouped together here Ryan you might want to make a couple of notes because I think it would probably help if I give you all of the questions and you can answer them you know in a logical manner as a story rather than individually

30:53 so first of all sort of overarching Question 4. Will Translogic Revenue fully replace the Bridgestone Royalty income by 2030 in your opinion? If all goes to plan. So I think that's sort of an overarching question, but underneath that there's a bit of a drill down into the tyre majors relationships. Firstly, do you expect to announce other deals with tyre majors like Conti? Secondly, how long will it take to reach the 700k forecast? with Conti and then I'm just going to look at Ben's questions 13 14 and 15 is the problem with tyre majors a minor blip or a trend 14 does the board expect to replicate the Conti deal with other tyre majors and 15 is a repeat of the question I've already given you so I think that's sort of an overarching group of questions there about our relationships with the tyre majors and the opportunities to develop the business there

31:58 yeah um so the general overarching question about Translogic uh replacing Bridgestone revenues in in my view yes uh and you know and better than uh there's a lot of growth opportunity for the Translogic business where we've definitely been laying the foundations for that growth for the future with um people like Conti and and others so I mentioned before that's a The Conti deal is a big shift. It moves them from being a pretty small customer to being one of our larger customers. We expect that to get up into sort of run rate revenue over the next 12 months. So it should start to have an impact next calendar year. Once we've got the custom version of the products launched for them.

32:46 So, you know, it's not a particularly long program and they have need to get moving with it as much as we want to get moving with it. We are in detailed discussions with other tier majors about similar programs and also quite some quite different programs to be honest relating to you know hardware supply for them some of those are some of our existing established customers but we do also have some some new tire major business on the horizon and we continue to develop that and I think the the downturn that we've seen in that market I would characterize it as a blip I mean I think we've had this sort of discussion previously you can go and you know you can find news about this outside of of us it's one of our particularly customers who was a very big customers had a pretty difficult year or so.

33:48 There's a lot of different factors that have caused that. I think they're through the worst of that now and are looking forward much more optimistically. We've done quite a bit of restructuring on their business and there's also some, they're getting some other things working properly for them now. So yeah, it's a blip rather than a major trend and we are successfully developing business with others. I think in general, the market's going to get a lot bigger for us with tyre majors, because up until now, tyre majors have really used our product in their managed tyre businesses. And that's been a fairly small segment of what they do.

34:33 The use case now for our product and tyre management software is getting much bigger than that, particularly in Europe because of new legislation.

34:41 um so you know potentially there's a very large increase in the the potential market for our tools with um with customers like like that so yeah i think that covers all the points follow-up questions then um a few years ago we said the addressable market for trans and for trans logic actually that should read um was 25 million has that figure changed and i think uh Since the end of the year, we've actually made three announcements on TransLogic, although the continental one was a full blooded RNS, had numbers in it and therefore inevitably got more attention. there's actually two rns reach announcements about new deals that were struck with Bartek and Hamilton I think it would be interesting to just explore that part of the marketplace and where the TPMS independence fit into the market and then maybe comment on the total available market as well yeah um so I mean the total available market is is much much bigger than 25 million I think what the way we positioned that before was you know you

35:55 you could envisage business like Translogic being 25 million revenue and I think that the market is getting bigger and bigger as there's more tyre management coming in both regulatory required Europe but commercially required in the rest of the world because tyres are such a big operating cost to fleets so the market is growing I think it's a good time for us to be in you know working in that market and and as we're expanding our offer we're increasing the size of of market that we can access you know it's not that long ago that we didn't have a software package we could offer so we could only sell to customers that already had their own software now we're able to complement you know talk directly to fleets that don't have software solutions and to other companies um we only had the inspection tool not that long ago we've now got um the inflation tool as well and the high pressure version of the inspection tool so the the overall business is broadening um and i think some you know there's more growth prospects as a result of that but also i would say improved resilience as a result of that as well where we're very concentrated in the past on one uh two customers and uh one product so um that's the sort of market yes absolutely you know i'd be happy i think everyone would be happy if we get Translogic to a 25 million revenue business um it is a much bigger market than that though that we're in so it's it's not an unrealistic

37:25 um thing to be wanting to try and do um yeah okay the the other announcements Yeah, you're right. I think it was one of the questions that said we'd only made one announcement, but we we'd made three. So we did two new distribution, two new distribution deals. So one focused around the US with Bartek. So Bartek USA is an American subsidiary of a UK based company. Fantastic bunch of guys, you know, very, very strong supplier in the aftermarket TPMS market. They've got some great routes to market for that product in the US. Very, very strong customer side relationships.

38:10 So we're working with them to access a whole new group of customers compared to our other existing routes to market and distribution channels in the US. So it's quite exciting and there's a lot of activity with them around putting new programs in place. The second relationship was with Hamilton. So also a market leader in the TPMS industry, but this time focused on the European market and that the purpose of the deal with Hamilton. So they're a little bit different to Bartek, although similar on the surface, but they have a different route to market. Obviously aimed at the European market this time for us. and very sort of specific types of customers and applications for the for the tool. So we expect that to bring some significant new business through as well. And I think, you know, in addition, it's fair to say that we are also working on some other very significant bits of business.

39:10 So that's certainly not it in terms of news flow. And they're at the, you know, watch this space, there's, there's more stuff coming.

39:19 Thank you. I think we'll flip over to SourceSense now then. So the first question on SourceSense is around the pivot of the business model away from licensing and towards becoming a component manufacturer or a component supplier, I should say. Perhaps you could just talk about that a little. The question is, do you envisage SourceSense becoming principally a component manufacturer, an IP licensing business, or a combination of the two? Which model generates the best margin and return on capital?

39:55 So the actual, it's a bit nuanced, but the answer is none of the above. So really the business model for SourceSense is we are what is known in the industry as a fabless manufacturer. so we're not really a true component manufacturer we're we're a fabulous company which so what does that mean it doesn't mean that we are not excellent um you know without fabulous um it means that we don't have a manufacturing in-house manufacturing capability for our key components being the ASIC and the sensing elements so in the past and this is a bit of a nuance i think the model was that those the manufacturers in our supply chain would act as a tier one and sell to customers the various reasons why that didn't work in the past so now the model is that we will be the tier one and be making those sales directly to the customers but we're not manufacturing the components that's still being made in our supply chain so we're a fabulous sensor company supplying components made in our supply chain to others and you know benefiting from that in terms of taking the revenue from that and it means we're in control of what we do so The majority of our revenue should come from component sales.

41:15 There should also be significant revenue from application engineering and validation support. And then to a lesser extent, we will still earn revenue from instrumenting components such as shafts with taut measurement systems. And I talked about that when we were going through SAW. The pilot line is there principally to help us develop processes we transfer to other people, but it's also there and it gives us capacity to manufacture in-house up to a certain volume ceiling should we choose to do so for the right sort of project so things like the shafts for motorsport for motion applied have always been made inside at Transense they'll continue to be made inside but they'll be made on that semi-automated production line in the future and will as will other parts into sort of similarly specialist market so there's not there is no Plc IP licensing business envisaged all of the future revenue is linked to either that product supply component supply or the provision of a service for the customer absolutely that's perhaps an opportunity just to expand a bit on the relationship with motion applied then please the JDA expired in September

42:27 Is it being renewed? Will the scope be extended? Are you actively exploring new license applications for other areas? Do you anticipate new terms being signed with Motion Applied?

42:41 Yeah, so the Motion Applied JDA, it's not a license, it's a joint development agreement, which is slightly unusual title, in my view, given what we actually do with them. But, you know, effectively, motion applied act as our distributor into motorsport. They're a value added distributor. So you know, they hold the customer relationships, they do all the trackside support, maybe other stuff as well. But effectively, we're, you know, developing the sensor systems, manufacturing them and they're doing the distribution into Motorsport. So we absolutely are working on a new license agreement with them. The existing agreement did have some rollover provisions so it hasn't expired as such but we are working on renewing that mutually with Motion Applied to get a good agreement in place for both of us.

43:38 Their scope isn't changing under that new agreement. It's still very focused on um you know it's professional motorsports and it's on vehicle applications then they are um they are focused on as a as a business um i saw a mention of this new deal that motion applied have done outside of motorsports um that doesn't have an impact on us that's not something that we're we're involved with uh with them yeah okay thank you um there's a cluster of questions ryan um around the disclosures of the saw pipeline

44:11 I think it's fair to say that you and I have had three or four different attempts over the last five or six sets of results to find a succinct way of being able to map what the pipeline looks like for users. and I don't think we've come up with the perfect solution yet but it seems that four or five people asking questions like different formats and everybody wants to see one somehow I think for the purposes of this discussion it would be very useful for you to just talk through how the pipeline is progressing I think there seems to be questions around whether things are disappearing whether they're simply progressing more slowly than we thought or whether they're you know progressing as we expected but perhaps spending a bit less money with us directly rather than on their own internal development and validation can you just talk a little bit about the whole evolution of the sales pipeline over the sort of last 12 months and the next 12 months yeah um so you know opportunities continue to progress through the pipeline um

45:21 We are making progress there and the initial, you know, those initial projects where we're doing a proof of concept study and then delivering initial prototypes and then moving on to the next phase, which is more of a production intent development. Now we do have a number of projects going through that journey. Some of them are going through it very quickly and the customer is spending a lot of money on their side doing work and we're, we're doing a lot of work on our side. Some of them are progressing less quickly. And we do have one or two that have ended up getting stalled. Because of things outside of our control. You know, we've had a one of our customers was acquired, and that slowed things down with them as they're sort of settling in their new new group structure.

46:15 Actually, two of our customers have gone through acquisitions in the last 12 months, which has slowed slow development projects down so you know they're yeah some some of them haven't gone as quickly as we would expect it to but I think you know where projects have come to um where projects have slowed down or or paused it's not because of a problem with saw and you know it's been sort of issues outside of of our our scope you know in in general what we can see is that we're managing to make good progress with SAW applications and and we do still have you know sufficient projects progressing through the business they give us a lot of confidence I personally also think that some of the ones that have slowed down a little bit in the last 12 months will begin to gather momentum in the next 12 months as that changes so the work becomes more involved the more we do the You know we're learning a lot in terms of those scale that production processes and the things that we need to do with the pipeline is there's a lot of activity.

47:22 Around all of that, in terms of how we make the this talk measurement systems, in particular, sometimes temperature measures measurement systems more scalable so yeah.

47:33 Thank you. There's an interesting question on opportunities in the fitness market Ryan I think we sort of treat that internally as a subset of the eDrive market and obviously it's potentially very high volume but it's very cost competitive as well could you just expand a little bit on some of the opportunities that we've seen obviously you know there are one or two that I'm very well aware of where we can't name names but perhaps you could just talk about

48:01 areas where there is a use case and the likelihood of us being able to hit the sort of competitive cost targets that make something which is a premium high-end consumer product feasible yeah um so the effectively yeah we have a couple of opportunities that fall under what we call the fitness market so that is distinct from we have talked in about the health market on and then you know we do have separately some health medical um applications as well so what we mean by fitness and why does it come under the eDrive so basically you know you have a product which is using an electric motor um to power the product or to um provide a load a resistance load for the for the user um this sort of equipment that is it's covered by that you know anyone's been in the gym recently You'll see they're full of smart gym equipment where it tracks and monitors what you're doing and shares it with your friends and all that kind of thing. So this is the era of new smart connected gym equipment and providing those machines with improved power measurement for the users. So that's the application. It's a growing market.

49:20 It's a huge market actually today. It grew very quickly in this COVID era, but then had a bit of a dip. But now it's going well. And the fundamental thing they're doing is trying to accurately measure how much input power the user is putting into the machine. And we're working on those. The products are high end. They're not cheap. We're talking about premium items. And there's a big demand in that industry to make the make that power input data more accurate.

49:57 Excellent. Thank you. I'm going to pivot away from the sole business now towards sort of corporate matters. So we have a question from David B. You mentioned some time ago you were unable to buy shares when they were around the current price due to the closed period. Did you expect to see this level again? I think when it comes to the share price It's it's fair to say nothing surprises me You know, it's the end market is an extremely difficult place to be and even in a mature company with pretty reliable slow-moving earnings growth nevertheless the share price and the valuation driven from its Pe ratio can be extremely volatile There are more people selling in the AIM market than there are buying.

50:54 That's a fact. And so the marketplace is an extremely difficult place to navigate if you want to try and manage the share price short term. The truth is we don't. It's disappointing for shareholders to see the share price where it is today based on the performance of the business. But all we can do is continue to run the company in the best way that we can. to communicate with the market what we're trying to achieve and why we believe that we're building substantial long-term value and then accept that there will be timing differences between the market recognizing that value and where the price is today that does create buying opportunities the company has taken advantage of those in the past when it was generating more cash than it was able to invest at the time and that was the the drive behind the buyback program in the early part of the Bridgestone license income more recently as we've stepped up our investment in the business then we think that's going to produce a higher return than buying the shares even at this price if the question is directed more at us as individuals then you will recognise from the news flow that there is a lot of information available to us on things which are not yet in the public domain and most of the time over the course of the 12 month period you would find that the directors are likely to be inside on one thing or another so there are not always windows where we can buy and but when there are you know both both of the people you see before you

52:28 today have been consistent buyers of the stock and have skin in the game and a little bit of hair not so I hope that answers your question on on both directors buying and perhaps company buying as well do you consider that the low share price makes the company vulnerable to a bid value always finds a way out that's a fact we believe that the shareholders in Transense are solidly behind the board in terms of our execution of strategy but every public company is for sale all the time if somebody wants to stump up and buy it so I suppose the straight answer to that question is yes but you know we believe that the quality of our communication with shareholders you know both formally and informally as such that that does not make us vulnerable to being bought at the wrong price I'm going to shift to question two and I'll put it to you Ryan just to for contrast well I think it's disappeared I'm just going to put it in just let's try and find it I think it's been curated out of the list on account of having been answered.

53:54 I'm not sure it was. Just one second. What does a successful Transense look like in 2030 immediately after the ITRAC royalties ended? What are the measurable milestones between now and then to give shareholders confidence that you're on course to achieve it?

54:14 So the business will be growing. and it will be able to be profitable from saw and trans logic without the eye track royalty income um trans logic will have significant growth uh expanded its customer base um and also its product offering really be you know leading the way in that tire management um tools market source sense will you know it'll have sufficient revenue to cover its own costs um but it'll just i think be starting to enter the phase of significant revenue scale up as higher volume projects start to come into production so we're slightly trailing behind i think on that that scale up even though it's it's jumped ahead a little bit at the moment yeah i think that's uh that's absolutely right this is this is a business in which both of our

55:11 Principal businesses are capable of being financially self-sufficient and scaling at a rate which will leave us not vulnerable to the reduction and then eventual disappearance of the iTrack royalty. Some of that iTrack royalty will most certainly appear in residual cash in the FY 2030 balance sheet in my opinion. Right, I think that's just about it for the Q&A Ryan, so I think we'll wrap up there. Thank you very much everybody who's attended. I hope that your questions were answered and you got what you wanted. for those that are registered on investor.relations.transense.co.uk then invitations will be coming out to attend the Microsoft Teams live Q&A tomorrow evening at 5pm and if anybody would like to join that community then please email us and we'll make sure that that happens thank you very much everybody and have a nice evening bye bye Perfect, thank you Nigel and Ryan for updating those investors today.

56:15 Please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Transcendence Technologies plc, we would like to thank you for attending today's presentation.