Transense Technologies plc (TRT) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the Transense Technologies plc Interim Results Investor Presentation. [Operator Instructions] I'd now like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to Executive Chairman, Nigel Rogers. Good afternoon.

Good afternoon, Mark, and good afternoon, everybody, who's attending. Thank you for joining us. Those who haven't seen us before, I'm Nigel Rogers, Executive Chairman. I have with me Ryan Maughan, Managing Director; and Melvyn Segal, who's CFO of the company. We're going to work on the assumption today that most people have seen the company before. We've got 4 or 5 introductory slides, which I'm going to take very quickly. And then I'm going to lead into the highlights from the RNS that we announced this morning with our interim results for the period to 31st of December 2024. And then Melvyn will go through those interim results in a bit more detail from a financial perspective. And then Ryan is going to put some meat on the bones of what's been happening within Translogik and within SAWsense during the 6-month period and look at sort of current activities and outlook towards the end. Presentation has been running at around half an hour, slightly more maybe when we've been doing it earlier today. So I would imagine that we'll be able to have plenty of time for your questions at the end. We've got about a dozen questions pre-submitted, but do feel free to keep them coming, and we'll try and compare that at the end. So moving, first of all, into an introduction. This might be a bit of a recap for some. It might be an introduction for others. But as I said, I'm going to take it fairly quickly. We've been listed on the Alternative Investment Market since 1991. Current market cap is around about GBP 27 million, slightly lower than that at the moment, and I'll talk about that a little bit more on the share price graph there on the bottom right-hand corner. We have a number of significant shareholders, the largest ones being CriSeren and Dowgate and the Board itself holds about 3% of the shares in the company. The Board of Directors, myself, Ryan and Melvyn, you'll meet today. Steve Parker and Craig Wilson are nonexecutive directors, who've joined the business in the last couple of years and both have a wealth of experience in industrial engineering. The headcount of the company, as you're about to hear, has increased quite significantly over the last 12 months, around 30 now, so slightly more. Strong financial track record of good growth in revenue, adjusted EBITDA and profit before tax, as you can see there. And the share price after having had a really good run over the last few months, where the company has had something of a reevaluation, I think, on the stock market has come off a little bit of late. As many people will have heard me say before, the stock market is a weighing machine in the long term, but it's a voting machine in the short term. And over the short term, certainly this morning, we had slightly more votes against. Does that give us any cause for concern? Well, yes, but only on the days when we are buying or selling in the rest of the time, we try and run the business for long-term value and let the share price take care of itself over time. The company controls 2 operating businesses: SAWsense, which is a specialist design and supply in of advanced sensor solutions, for the accurate measurement of torque force, pressure and temperature. Put simply, we have a very advanced sensor system, which is able to take measurements on a very rapid basis and use those to control industrial equipment, airplanes, machinery, motor vehicles and the like. Ryan will talk more about how that works and the progress that we're making on commercial penetration later in the presentation. We also own Translogik, which is the developer and supplier of smart connected tire inspection tools. So these are tools which are used to measure tire tread depth and tire pressure, mainly used by large fleet users of commercial vehicles. Again, more of that to come. A third leg to our business was a part of the business called iTrack, which was sold to Bridgestone in 2020. And the consideration for that deal was in the form of a 10-year royalty on their revenue on the sale of the iTrack product. This graph here shows the success that, that has had in the marketplace. In the first 5 years, the royalty revenue has grown from less than GBP 1 million to more than GBP 3 million in the current financial year. You can see there that over the next 5 years, that graph flattened slightly because the unit rate of royalty per installation starts to reduce in FY '26 and then again in FY '28. But there is still a significant amount of money to be collected from that transaction. Broadly speaking, we're probably about halfway there. By the end of this calendar year, we'll have collected about GBP 13 million, GBP 14 million. And arguably, it will be the same again to collect over the second half. That's important to us because it provides the backdrop of financial stability for us to be able to work really hard on developing SAWsense and Translogik into businesses which we think have very significant long-term financial value. They have some very interesting characteristics. We are in very dynamic global markets. We have very high-quality blue-chip customers. They're mostly household names, some of the market leaders in some of the biggest and highest growth industries around, particularly, as I've said, aerospace, electric vehicles, robotics. We've got some lots of very interesting positions in some very high-growth markets. We also have innovative and highly engineered products, which command premium margins and also provide us with the opportunity for sticky business. Once our products are specified in on design, then it's unlikely that they will be designed back out again. So that gives us very long-term visibility of earnings, particularly in SAWsense. We also meet the green agenda. Our products are consistent with sustainability. They tend to work to improve efficiency and to improve the longevity of products and consequently do meet with the green agenda. And put all that together with our value focus and the strength of our people, we think we've got a very long-term valuable business model. Let me move into the current presentation now then on the highlights. So these are the highlights for the first half of the financial year, in which you'll see strong revenue growth. You'll see an investment in our team to provide customer-facing people on both sides of the business, who will be around to resource future growth in revenue. You'll see that despite that investment, our EBITDA and our PBT are virtually unchanged since the prior year. So we've been able to make that investment without sacrificing current profitability. Within SAWsense, the conversion of our sales pipeline is well underway, lots of interesting development projects and also some good progress within the motorsport sector, where you're about to hear about a record order book as at the 1st of January this year. We're also well advanced now in planning the introduction of our pilot production line at Weston on the Green. You're about to see a schematic of that and an explanation of the benefits that it's going to bring to our business. And within Translogik, we've seen some very good growth from revenue from our existing run rate customers, particularly the global tire majors, but also the completion of a software partnership to enable us to bundle our hardware together with software and sell on a subscription model with the first deal under that model, as we said in the RNS this morning, imminent. We've also been working hard on the development of an international distribution network and closed 2 deals during the period and one very important landmark deal post period end in North America. Again, Ryan will be able to fill you in on much more of that. So I will now, if I may, pass over to Melvyn. Melvyn, the CFO, will take you through the interim financial results.

Thank you, Nigel. There is a positive year-on-year increase in total revenues up by 36% from GBP 1.8 million to nearly GBP 2.5 million. Gross profit has risen by 40%. And in the current period, excluding iTrack, the margins have moved up from 61% to 72%, reflecting the change in sales mix. In this case, the large increase in SAW revenues in this half year. I should also note that following the successful move bringing Translogik production in-house, Translogik margins on product sales should improve in H2 by around 10%. Operating expenses are up 73%, with a major part of that increase going towards building the Transense team from a headcount of 18 to 31 and also providing the facilities to support that enhanced team. Profit before tax is slightly down year-on-year, and operating margin has moved -- dropped from 34% to 22%, reflecting the buildup of operating costs in H1. I just saw the headline today on Alliance News in ADVFN that says Transense Technology profits fall as costs outpace revenue growth. The statement is correct, but also misleading as the step-up in operating costs is in response to the accelerated growth we are seeing in both actual sales and sales pipeline. And importantly, the point they miss, which makes it misleading is that the new cost base should be broadly sufficient to support the anticipated growth in revenues over the next few years. In other words, it's more of a one-off increase. Finally, I should always mention, we have valuable tax losses of around GBP 20 million available to carry forward, which in tax terms is worth about GBP 5 million. On to the next slide, the graph on the left shows the geographical breakdown of revenues. Setting aside the blue sway on the left -- sorry, on the right, representing iTrack income and looking at the rest of the business, overseas sales represent 70% of those revenues across all continents, which in times of economic uncertainty means the risk of any single market reliance is greatly reduced. The balance of 30%, which is the green part at the top of the bagel is substantially U.K. motorsport income. Therefore, there is a large domestic market still to be addressed, particularly in terms of Translogik. With regards to the iTrack share of revenues at 63%, this probably represents a peak level, and I would expect it to be around 55% at the year-end and in the next 2 years as the royalty rate drops in the 30s. The graph on the right shows a 5-year history of total revenues in half yearly bites. Two points arise from this. Firstly, the fact that we have nearly achieved continuous growth throughout the 5 years and 10 half yearly periods; and secondly, and importantly, the impact that H2 has on our full year results. Extracting iTrack from these numbers, in FY '23 and FY '24, we experienced strong growth in H2. In fact, FY '24 H2 came in 75% ahead of H1. This gives us confidence in the current year, we could achieve a near doubling of our H1 numbers for SAWsense and Translogik numbers. Looking now at the segmental analysis, Translogik has grown by 7% to over GBP 0.5 million. iTrack has increased by a healthy 26% to just under GBP 1.6 million and demonstrating the increased traction in SAW that segment enjoyed growth of 360% at GBP 380,000, representing over 83% of FY '24's full year number. Since iTrack was rebranded to incorporate Bridgestone's name, we have seen an average monthly incremental truck increase in H1. This clearly bodes well for next year when the royalty rate drops. Looking at segmental contributions with the exception of iTrack, you will see some reductions year-on-year, representing the buildup of human resources in both SAW and Translogik, as I've already covered. Addressing now the cash flow, there was a small fall in cash at the end of H1, ending at just under GBP 1.2 million and rising to nearly GBP 1.9 million at the end of January following receipt of the quarterly royalty. The reduction in December reflects increased investment in working capital, including a rise in inventory levels of about GBP 120,000. Additionally, there was CapEx spend of about GBP 280,000. There is further CapEx spend planned, which is not yet finalized, but is likely to be around GBP 2 million split broadly 50-50 between plant and machinery, producing a working production line and intangibles relating to the next-generation ASIC and AQP. The new CapEx spend could be funded from cash resources. However, to leave cash headroom, I have opted to seek asset finance for the plant and machinery element and a clear sign of how far Transense has moved forward and the confidence that exists in our future performance, we have had no issue in securing 100% funding for this expenditure. Appointing Cavendish as our new broker has provided an opportunity for their research team to issue a research note, which is certainly an important read for both investors and potential investors alike. From when I joined Transense in 2007 through 9 fundraises in 12 years, Transense today is unrecognizable. We are a profitable, cash-generating, financially secure business working with numerous blue-chip customers. The new offices and equipment already in situ and with new machinery to come has changed the office appearance from a cotted industry look to a highly professional respected organization, which is augmented by the strong team that has been put together. We have been confident enough to support a new research note covering 3 years from FY '25 through to FY '27, including the 2 years when we experienced a fall in the iTrack royalty rates. FY '25 was revised following the known upward changes in both revenues and overheads and FY '26 and '27 are, in our view, very achievable numbers culminating in research numbers for FY '27 showing revenues in excess of GBP 7 million and PBT at GBP 2 million. Finally, as a Board, our focus goes well beyond FY '27 and an important part of today's presentation is listening to the narrative from both Nigel and Ryan, understanding how far our company has progressed even in the last few years and even more so how far we can progress in the short to medium term with both the SAW and Translogik business segments continuing to mature. On that note, I will pass over to Ryan.

Thank you, Melvyn. So first off, we'll take a look at the Translogik business. So the Translogik business sells tire inspection equipment. And to date, we've been very concentrated on the handheld Bluetooth connected tire inspection tool, we call the TLGX. That tool is connected to a mobile device like a tablet or a mobile phone, which is running software, which then connects to cloud software. Now up until now, our main customers have been big tire manufacturers like Bridgestone and Goodyear, who have their own mobile apps and their own cloud software. And those businesses have been buying our hardware, and that's great. And the problem for us finding new markets and new customers has been not everyone has a suitable software in order to use our hardware. And that's why we did the deal with TIRETASK last year to become a formalized reseller of their software so that we could offer that complete solution and actually start to take the product to a much wider customer base and provide the hardware and the software to people to be able to use and get the most out of the tool for inspecting their tires, which helps them to reduce costs, reduce downtime and greatly improves vehicle fleet safety and compliance. So we now have a complete offer for the full ecosystem, hardware and software, which will be on a subscription basis. And we continue also to support existing customers and key accounts with hardware only where they have their own software. So we had a big plan to grow this part of the business. And we've been executing on that plan, building relationships with existing customers. So we now deal with 5 out of the top 10 global tire manufacturers. And a year ago, that was 4 out of the top 10. So we've added a major tire manufacturer. And we're talking to several other companies in this top 10 and actually outside of the top 10. So we do plan to continue to build that traditional business within the tire industry with tire manufacturers, where they can use this in their businesses. We're working on expanding and establishing new partnerships with new software companies. So that will go beyond TIRETASK into other areas, and that can work both ways with us selling other people's software, but also us working with software providers in other territories. We've been working to develop direct sales to service centers and fleets. We've got some things that are very close to coming through on that. And building new distribution partnerships is also key. So until now, Transense has not had any formal distributors in the overseas territories despite the fact that most of our sales were actually export sales overseas. So putting in place formal distributors who can work much more closely with us, who can strategically hold stock that can allow us to reduce shipping costs and improve support and service to customers has been a really key thing. And finally, developing the product and developing our offering into the market, talking to our customers and talk to the market to work out what people want and what will be useful features to add to the product and how we might adapt the product to open up new areas of the market. The current tool is very focused on commercial vehicle tire inspection. There are tires on lots of other types of vehicles and machines. So how can we enter some new markets. The plan has gone very well so far. So we have launched that software partnership that I mentioned before with TIRETASK, a fantastic company and a really great software package, very aimed at the commercial vehicle space. We really -- we're not going to stop there, and we are very close to signing an agreement with another software provider, which will allow us to enter into another market sector and offer a complete solution into another market sector. We have expanded that global network. So we added 2 distributors, one in Southeast Asia, one in South America earlier in the year. We just announced last week a new distributor in Haltec Corporation. Haltec are a huge company in the U.S. who specialize in hardware for commercial vehicle tires. They also supply aerospace industry, but they're mainly focused on commercial vehicles, heavy-duty vehicles. So Haltec have an existing customer base across the whole of North America, very well entrenched with fleet operators and with tire service centers across the U.S. They've integrated our product into some of their software solutions, and we expect this to bring dividends really quickly in terms of additional sales. We've brought the production in-house. That's fully bedded in now. Doing that has given us the margin headroom to be able to appoint formal distributors and give them some good margin to play with, without negatively impacting on ours. It's also allowed us to really improve the service level and the quality that we're able to provide. So taking control of that is paying dividends. We created a long-term product road map, and that is now in play. We're looking at the next-generation products and where we can take the tool and the technology that we've got to bring benefits in other applications. So an awful lot has been achieved in the last 6 months. The next half, really the key next steps for us are to secure some subscription business directly with a fleet operator. We're very close to that. We're literally in contract negotiation at the moment, a company that have run a trial for a long period of time. This is a business that we expect to be able to formally announce in the very near future. We will continue to add some software partners and also expand our global distribution network. So we are in active discussions with more distributors that would be significant distributors with stock holdings and very big companies with big distribution networks that we can leverage. So there is a lot of work going on, on that to strengthen and expand our distribution network. And then finally, really pushing forward on the development of the new products. So I can't really go too much into detail about it. We do have a very exciting new product variant that we're working on now that will open up a very significant high-value new market for us, and that's progressing very nicely. So there's an awful lot has been achieved in the Translogik business in the first half of the year. Obviously, the growth was behind what we would have liked. The business did grow by 7%. We ended the second half of the year with a good order book and a strong pipeline of opportunities. So still confident about hitting the full year number and delivering the growth from there on. So really exciting time for the Translogik business. Okay. So next, just to talk through the SAWsense business and where we are on that. It's a very different business. SAWsense, deep sensor technology, which enables measurements not possible with other sensors, used to improve the performance, efficiency and safety of things from helicopters to robots to electric drives for vehicles. We have 4 key markets that we're focused on: aerospace, electric motors and drives, motorsport and industrial machinery. So these are very significant markets in their own right. Some people will know that we arrived on these 4 key markets after a very long process of trying to work through the areas where there was the most commercial potential for SAW technology. Aerospace has been a market that we had a fantastic marquee customer in GE Aerospace on one of their major new engine programs. We've built from that. So we -- the relationship with GE is really developing, and they're growing into a significant key account. The lead engine, the T901 is progressing. We have some other programs with them, very significant customer moving forward. Long lead times, but we're now -- we've been working with GE for something like 10 years. So very close to full production. That's an excellent platform in terms of winning other business. So we mentioned in these results, we've secured another aircraft engine manufacturer. We've got a running program with a major aero Tier 1 for non-propulsion system application. And of course, we've got the Airbus project as well. So some really significant stuff happening in the aerospace sector, and it's almost half of our revenue at the moment is coming out of Aero. Electric motors and drives is another strong market for us in the near term. We've got a fantastic running project with Protium, where we're designing our sensor into their in-wheel motor systems to help them improve the performance and control in those. We also have some other projects with some other very blue-chip customers, where we're designing the sensor into their electric motors, either for torque measurement or temperature measurement in those systems. We're at a project phase, where we are doing sort of feasibility and prototyping and that design in work. And I think it is important that the aerospace world, the projects are very long gestation periods. There's a lot of engineering work upfront, but there's an opportunity for us for that to be revenue generating for us. With the electric drives, the projects are shorter. So we should start to see things going into production in the next couple of years in that market. The upfront engineering is lower value, but the production values of these programs are very, very high in the order of millions per year in component supply once we're into production in the electric motor world. And then finally, in terms of the growth markets of industrial machinery and particularly robotics, we've got some key projects that we've just started where we have now supplied prototypes to customers and they're testing those with a view to integrating them into their robotic systems. So I think a lot of people are aware that the robotics market has grown massively in the last few years, but a lot of robotics in industrial manufacturing where people are used to seeing them, but also a huge amount of robotics going into warehouse and distribution operations and all sorts of applications like that. There's a huge potential for SAW in that market to improve the performance of robots and machines that are being used in a very wide range of applications. So again, like the automotive market, many millions of pounds per year in terms of production values, should we get some of these things through to that point. And then finally, the motorsport markets, our partnership with McLaren Applied is really working very well. They have delivered some significant growth in this period. They've won a number of new championships. So we've started this half with a record order book from them. And we see that business growing quite significantly. So the aerospace, electric motors and drives and industrial machinery, the market potential in those spaces is vast, tens of millions per year in each one. So very huge potential. Motorsport, I'd be quite happy if we were doing GBP 1 million a year in sensors, up from where we are now. So it's significant, but it's certainly not as big as the other 3, but it's a very good proving ground for us and it gives production running through the business and so on. So motorsport is performing well today, and it's giving us a good base to move forward from. So in terms of the 4 key markets, I think I've probably covered most of this. I've tried not to, but I've slipped into covering most of this slide on the previous slide. So I won't go through that in too much detail again. Moving on to just sort of look at the SAW technology. So we're often asked about the business model, and there's some questions that have come in on the pilot production line and some of the things that we're doing. So I thought it was worth just kind of running through what a SAW system actually looks like. So what we can see here, there's 3 shafts in this picture. And in the middle of each of the shaft is a SAW torque measurement system. So these are motorsport shaft. It's actually an engine output gearbox input shaft. To give you an idea, the diameter of the main part of the shaft is about 30 millimeters. It's transmitting about 2,000 Nm of torque. It's quite a high-performance shaft application. So in the middle of the shaft, there are actually 2 sensors, one on either side of the shaft. And these are what we call our AQPs, so our sensing elements and they -- the sensing elements themselves are made to our design, but they're made by a specialist semiconductor foundry. So we don't have to get involved in the manufacturing of those parts, although we own the design and the IP around that. So in the industry, that's what's known as a fabless business model, and it's quite normal and that will allow us to scale up in the future as volume comes through. So the sensing elements are mounted on the shafts with a very special process that's very tightly controlled, and I'll come back to that later. So our customers' part has to have our part attached to it to make a sensing system. There's then a much simpler component, the RF coupler, which is also attached to the shaft. And then off the shaft, we've got a stationary RF coupler and then some electronics that make it all work. So the magic kind of happens in the ASIC. So that's an application-specific integrated circuit, so a little microchip. That does all the clever stuff to drive the sensor system to make the sensor work and then read back the values. And again, that ASIC is made in a specialist semiconductor fab. So in production, we don't have to make those parts. They're made to our design. It's our IP in that part. But again, we are what would be termed in the industry, a fabless business in that sense. So in production, if a customer wanted to make 1 million shafts a year, we would be able to supply the key components from the supply chain that we've developed. But one really important missing link has been the process that you need to do to attach the sensing element onto the shaft. So it's a very specialized process. It's a sort of unusual combination of electronics assembly and mechanical engineering. And you can't just go out and buy a standard production line for that. So we've been working on the development of a pilot installation line to allow our higher volume customers to get confidence and to derisk the process of adopting our technology. So if you go to Transense today and saw the way that, that assembly is done, it's a very manual process. And for a major manufacturing company, it's hard to imagine how that would translate into your production plant. So we are developing this line. We're starting to receive some of the key parts. We've got, I think, most of the things on here, at least on order. This month, the first main delivery will happen. And then we'll start to build the lineup inside Transense, get it commissioned. And it really -- it gives us 3 things. First of all, our motorsport production will start to go down this line. So that's great. I mentioned before, it might get that up to about GBP 1 million a year in revenue. So this is a bit overkill in terms of the level of investment for that sort of revenue. But what it will also allow us to do is prove out production for higher volume projects and customers. So that's a really important part of this is being able to take a higher volume program and do representative production to get customers confident. And then thirdly, finally, it gives us effectively something that we can provide to people. So in the future, if a customer was setting up a high-volume production for a sensor system, we'd expect them to buy our sensors and our ASICs, but they could also buy from us a production line. So completely derisk it, a turnkey production line, I can put that into customers' plant and it can install the sensing elements on their part. They know it's going to work. It's going to do exactly what it needs to do, and we'll stand behind that and make sure that it does everything they needed to do. So this is a really important transition for Transense as a business. And it answers one of the key things that we're often challenged with when we are talking to high-volume customers in terms of how we can deliver this in a repeatable and reliable way in volumes of tens, hundreds of thousands or even millions of units a year. And we do have a number of projects that we're working on at the moment where when the product that our sensor is being designed into goes into production, the customer is planning to build hundreds of thousands or millions of units a year. So we have a need to be able to use this equipment now with some of the projects that we're working on. It's not a speculative requirement. So this is a major thing for the business. So just to -- very quickly, for SAWsense, we -- again, we had a growth plan. In the last 6 months, we've achieved some really key things for the business. So we got that commercial traction. We mentioned in the results, 14 customers now and something like 18 projects. So some customers who have more than project running with where they're looking at putting SAW technology into 2 or 3 different products. We've built the team out, so we've got the capability to deliver the engineering, the application support and work with the customers. We've got the building refurb complete, so ready for that production line. We've created the space, created the space for the people and for the production line to go in. We've got the supply chain secure now for the key components. So that was a major risk. Could the suppliers for the AQP and the ASIC deliver what we needed in high volumes. That's something that we've really been working on. We've got this high-volume capable installation process, which I touched on. There's a huge amount of work had to go into specifying the correct machinery, how that needs to work, running trials and doing testing to prove that it's going to do what we wanted to do before we put orders down for those very significant investments. And we've also started the development of our next-generation ASIC. So that's a really key part. But looking out into 2 or 3 years' time, how do we supply lower cost, higher performance ASICs at much, much higher volumes than we can currently do. So that's a significant program that started for us. There's a lot of work still to do, completing out on these things, I won't run through every bullet point there, but it's effectively finishing off and delivering on a lot of projects have started. But the other really key thing, we've got some great commercial traction today. We've got some good customers we're dealing with. But we do still have a very strong pipeline of new opportunities with -- some are with those existing customers as projects continue or the customer kind of realizes, oh, it's working great in this engine. We've got other engine project starting. We'd like to use it there. So there's a good pipeline with existing customers. But we are still -- we're still fielding demand from new customers. There's a good pipeline with new customers in our key markets as well. So there's a lot of business development potential to close out on in the next few months. And that's it from me. So back to Nigel.

Thank you, Ryan. That's it for now, but I doubt some of the questions will be coming your way as well. So just to summarize that and get into the questions, I see we've got 20 minutes left for Q&A. Essentially, from a current trading point of view, since the end of the period, which was 31st of December, first couple of months of 2025, we've seen revenue accelerating from the conversion of the existing pipeline. We're looking for very strong revenue growth in the second half of the year. I'm going to make reference to the Cavendish research note when we get into Q&A. And what you will see from that is an almost doubling of revenue coming out of SAWsense and Translogik in the second half of the year compared to the first, and we feel very well placed to deliver that. The cost base that we have built in the first half of the year is reflected in the first half numbers. We won't see a big increase in the second half. That recruitment is pretty much complete now. So our internal focus is now all about generating output from the resource that we've put in place. We've closed some new business wins already since the end of the year. You've heard from Ryan closing out the Haltec deal, which is an important one. And we have others, which we expect to be announcing in the next few weeks. So looking to the longer-term outlook, the investment that we're making in production equipment and supply chain will enable us much more smoothly to take SAWsense customers from development phase into production phase because they will be able to actually see and touch a production line working in that they will want to replicate in their own facilities. So we are very happy with the strategic long-term value creation in both Translogik and SAWsense and happy with the growth trajectory that we're delivering now in terms of revenue and will be delivering starting in the second half in terms of profitability. So overall, scorecard for where the company is now relative to where we were 12 months ago, I think we've made some very rapid strides forward. And I think we're in a really comfortable and strong position to springboard from here. I'm now going to suggest that we move to questions.

We've got about 20-odd questions. I'm going to try and group them together and just chair this session and take them in groups. So I'm going to take the first group myself, which is question 7, what does the medium-term outlook look like for Transense? Will the focus continue to be Translogik and SAWsense or are there intentions to expand into new product areas? I'm also going to take question #18 from Dion. How does one access the Cavendish research note? And I'm going to answer question 21. Given the impending date for the drop in Bridgestone iTrack royalties, how soon do you expect to be able to replicate this loss of revenue? So the answer to one of those questions is very easy. You access the Cavendish research note. There's a link from the Transense investor website. If you go on to transense.com, you'll then find a link in the Investors section of that website through to investment research, and there's a very simple sign-up there, free of charge to be able to access the research note. What you will see in that is market estimate forecasts for FY '25 through to FY '27 as well as some very interesting analysis and narrative. So to take Ben's question, by the time you look at the FY '27 forecast, you'll see there, if you delve far enough into the detail at the back of the note that the revenue from iTrack is forecast in FY '27 to be GBP 2.5 million and the company profitability as a whole, GBP 2.3 million. So at the moment, market estimates are that the company moves into profit, excluding iTrack at the end of FY '27 and enters FY '28 at that run rate, giving us 3 full years before the royalty expires in FY '30. If I move then sort of towards medium-term outlook more generally and focus, we are very focused on developing SAWsense and Translogik. We're not looking for a third leg to the business. I wouldn't rule out investing in expanding within those 2 areas, but we feel that we have sufficient market spread from the businesses that we're currently operating that we don't need to look outside of that. Ryan, I'm just going to queue you up for a couple of questions, please, if I may. Looking at question. Are any of the end applications for SAW progressing more quickly or more slowly than you may have anticipated a couple of years ago? And allied to that, SAWsense, a lot of activity seems to be a new product development. Will this lead to more sales if they move to actual production?

Yes. So yes, in terms of the markets, probably the surprise, I guess, is aerospace, like we've actually grown more quickly in aerospace and got more traction with quite sort of pinch yourself amazing roster of customers in that market than I thought we would have. So aerospace has been the surprise in terms of -- it's traditionally thought of as a very slow-moving industry, but we've got some excellent traction there. I think we're -- I'm pretty happy actually in terms of -- I wouldn't say anything else is behind. It's -- we're very much on track in the other markets. So there's a lot of good work going on with existing customers, but also strong good pipeline with other places. All of the programs that we're working on have the potential to go into production. So up until now, Transense hasn't done sort of test and measurement type work really. We've done design in of sensor systems into production products. So obviously, the product has to go through a period of being developed and tested and then launched by our customer. But once it is launched, goes through that cycle, we should start to see component revenues and other revenues. I think in the last year or 2, what we've done is changed the business model so that we're not totally reliant on the production end. We're doing a lot more work with customers upfront partly to help them get stuff into production to overcome some of the hurdles and challenges and derisk it for them. But also it's a revenue opportunity for us to provide that as an engineering service and kind of nurse it through. But yes, everything at present is production orientated. That might change in the future, but certainly, everything that's in our current projects is a production -- potential for production program. I think actually maybe extending out a little bit on that, not all of them will make it into production. That's for sure. Not all of them are in production. But on the flip side of that, not all of them won't make it into production either. So the yes. And we've seen it already for some reasons, some customers slow down programs or pause them or whatever. But consistently, the SAW technology does what we wanted to do in those customer programs and genuinely surprises people in terms of the level of performance it delivers. I think we consistently outperformed what people are expecting from us. So it's good.

Outline for our listeners, the timing for the introduction of the pilot production line, Ryan?

Yes. So there's a lot of months of effort have gone into specking the machines out. We've been running some tests and trials as well in a university facility where they had some similar equipment. So we're able to kind of do some advanced work. The key -- the calibration rig has been in development and on order for probably over a year now and actually was supposed to have been installed before Christmas. That slipped with the supplier, but we are literally today running around booking transport and stuff to get that rig delivered next week. So that's a really significant event and that comes in. The 2 other big investments are the placement machine and the wire bond machine, they've both been ordered, being ordered -- sorry, I should say. And we're looking at sort of between 6 and 9 months lead time for those. So we should start to see them towards the end of this year and early in next financial year. But there's lots of other things that go alongside them that we'll be bringing in the meantime, around the preparation part of the process and the RF coupler assembly and build. So it's effectively continuous work from now over the next sort of 6, 9 months of getting that production line.

Great. I think if we could stick with SAWsense, there's a question around what the sort of competitive environment is like and what the competitor technologies are, which I think would be a useful one to take. And you might just ally that with a bit of an outline of what we work with that is underway now on new patent applications and how we sort of secure our IP position for the advances that we make.

Yes. So in terms of -- in the application itself, so there's a really good video on our website, which compares different SAW -- different types of sensing technology for measuring toque. And there's sort of 4 or 5 ways you can measure torque. We don't -- things like strain gauges and things are not direct competition for what we do. In a typical application, it's normally either the other technology that you could use to measure torque doesn't work at all. So for some reason, you can't make a conventional sensor work in that application. There's not enough space or packaging or the performance isn't right. So quite often, we are enabling a measurement that isn't possible with conventional technology. But where we are coming up against other technologies, it's normally either magnetostrictive sensors or what we call displacement sensors, so where you twist angle sensors. Twist angle is very traditional. Torque measurements have been done that way for a long time. They're quite big. They're quite bulky. They're not very accurate. The advantage we bring over them, particularly in aerospace, we're much smaller, much lighter, literally saving kilos out of the system and percentage points more accurate and more reliable. Against the magnetostrictive, magnetostrictive is very clever technology. It uses magnetic fields and they're sort of changing magnetic field properties on a shaft to measure torque. And in some applications, that's very, very good. But it can't be used near other magnetic fields. So you can't use it inside an electric motor, for example, because you've got lots of magnetic fields inside the motor. And it's quite susceptible to being sort of interfered with by external magnetic fields, which you're seeing more and more now with people want to put hybrid systems in and put motors and things with magnets in or even it's also affected by temperature as well, which -- so the magnetostrictive, our selling point over that tends to be to do with the reliability, like performance reliability. Magnetostrictive sensor they have, maybe it delivers torque measurement, which is accurate, but it's good at room temperature, but if you get it hot, it doesn't like it. If you put it near another magnetic field or a powerful electrical cable, it doesn't like it. And we would be given a reliability advantage in those scenarios.

Yes. Okay. And just segueing that into patent applications. Obviously, there was the one that we did earlier this year for the use in most control for electric drives.

Yes. So we're continuing to try and put new patents down. So we've got 2 or 3 applications in process now with a patent attorney that we start to use and there'll be more, the more things.

And of course, another key part of protecting our IP is in the design of the components that we'll be putting into the system. So having the unique ASIC and the unique AQP will themselves give us a strong degree of intellectual property protection.

Yes, exactly.

Okay. Perhaps we should flip over into Translogik briefly. We've got about 10 minutes left. So we're okay to take a couple more questions. I have -- allow me to navigate for a second. Find the question, but I have a question. The progression in revenue in Translogik seems a little slow given the size of the market. And Ryan, could you comment on that?

Yes. So it would have been great. Obviously, it would be great if it progressed a bit faster. It is a huge market. But like I said before, our tools need software and that environment to work within. So without being able to offer a software solution alongside, that restricts the market that we could open up to people that have already got software and other software partners. So putting that building block in place was really key, and it took some time to do that. Getting then our complete solution in front of customers, we've done a lot of testing with some really significant customers. They've been -- their technicians have been using it. We've been making improvements based on feedback and kind of adapting. So that process takes some time as well. And yes, we're a relatively small business. So putting the distribution agreements in place and our current sales team of 2 is quite insignificant compared to an organization like Haltec has. So being able to leverage that kind of global sales network. And again, those relationships take some time. So there's been a lot of building work done that should accelerate now.

Yes, absolutely. And is forecast to do so looking at the research note, absolutely. Okay. I'm going to group together a few questions on the sort of share price, share performance and markets. So I have a question, what prompted the change of broker? I have a question, how would you respond to somebody who said, this is a jam tomorrow stock. Another one, prospects seem very promising. So why are the shares down 35% from the top? Another one, would you consider moving on the main market since AIM is so difficult? And another one, given where the price is, can we expect to see more director buying? I think if we group all of those together, we can all acknowledge that AIM is not an easy market to be on. Being brutally honest, if we weren't listed on AIM now, would we be seeking a listing on AIM? The honest answer to that is probably not. It's probably not the optimal place for us to be. But having said that, I think we get a lot of benefit out of the AIM market as well relative to the main market, particularly. It is still relatively light touch. Believe it or not, there is still a strong investment community out there if you do the work to go and meet them. And we have actually got a lot of very interesting meetings over the next few days lined up through our new working partner in Investor Relations, Cavendish. And that was one of the reasons that prompted a change in nomad in broker. RMB Capital did a great job for us, and they were a great team. They were on board for 5 years. We signed them up as Nomad and broker very shortly after the Bridgestone deal, and they've been excellent working alongside us. But there are times when it makes sense to make a change. Cavendish have some extremely talented people, and they have the breadth of distribution and the depth of resources to be able to offer us the next level of service in our view, and they've made an excellent start. I think the research note, which has been published, which, as I've said, you can access via our website, is a really good read, and it provides the figures that put down the investment fundamentals for you to be able to answer a lot of the questions which have been asked as far as the financial performance of the business is concerned. So is it a chance to borrow stock? Well, yes, I'm sure it is. I do genuinely believe that the fundamental underlying value of the business is higher than its current market capitalization. That motivates me to buy shares from time to time, including today, alongside of the directors. And you will have noticed that Ryan has been repeatedly buying parcels of shares over the last few weeks, again, including today. So the share price really matters on the day that you buy and on the day that you sell. If you're an institutional fund manager, it really matters at the end of the quarter when you measure your performance as well. So we don't ignore it for the rest of the time. But we're not preoccupied on a daily basis by the share price. We are preoccupied on building a long-term, very valuable business, and that's what we believe that we're doing. And with that, I think we've dealt with the main points on the Q&A. There's actually one which probably warrants more than there is 3 minutes left, but I'm going to let you have a stab at it, Ryan, which is what advantages do you think that AI will have in our technologies over the next couple of years? And potentially threats, I guess?

Yes. So it's an interesting question. On the Translogik side of the business, there's a couple of sort of areas where AI is having an impact. We talked about one of those earlier. So if you're a truck fleet operator these days in pretty much all of Europe, you are being encouraged to and in fact, mandated to keep all of your records digitally. And the reason for that is that the certification bodies or the approvals bodies are basically -- they don't send a little man out anymore to inspect your trucks. They use AI tools to scrape your data and look for trends and things in there. And those tools are becoming more and more powerful and the requirement to keep digital records is becoming stronger and stronger as a result. So that mandates and the ability to capture tire data digitally and put it into some sort of system that AI can play with. So that's one end. The other part of that is we have been working with some companies who are using some AI tools to improve the tire inspection and to improve the data analytics. So you start to gather tire inspection data, what are the sort of things I can do with it in terms of predicting when I'm going to need to change tires, predicting demand and sort of patterns of behavior. So there's a lot coming through that. AI needs data. It eats data and Translogik products create data. We're turning higher physical parameters into the digital data that then you can use with AI tools. So the Translogik side quite a bit. On the source and side of the business, I think it's probably more down to autonomy. So I would use the sort of autonomy rather than AI, but they're obviously very linked. If I want a smart robot that can function on its -- by itself, whether it's in a warehouse or doing some tasks somewhere, that robot needs to be aware of the environment around it. It needs to be able to touch and feel and the AI needs to be able to interface with physical things. And our sensors come into play there to improve control in the system to allow it to be aware of the physical world around it. So part of the suite of sensors, but more kind of robotic systems, more autonomous systems require more sensors.

Thanks, Ryan. I'm sorry, but we're out of time. If your questions weren't answered, do look out on the platform, we'll try and answer them later. Meanwhile, thank you very much for your attention, everybody. I hope you found the session informative, and we'll look forward to updating you the next time around. Thanks, guys.

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