Year End Trading Update

The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.

11 July 2023

Transense Technologies plc

("Transense" or the "Company")

Year end trading update

Transense Technologies plc, the provider of specialist sensor technology and measurement systems, is pleased to provide a trading update for the financial year ended 30 June 2023 based on unaudited management information.

Highlights

· Adjusted EBITDA* for the year expected to be around £1.4m, in line with market expectations (FY22: £0.6m)

· Total revenue for the year increased by more than 35% to in excess of £3.5m, in line with market expectations (FY22: £2.6m)

o Revenues excluding iTrack royalty income ahead of management expectations, up by 41% to exceed £1.5m (FY22: £1.1m) 

o SAWsense revenue ahead of management expectations, more than doubled to £0.5m (FY22: £0.2m)

o ITrack royalty up 30% to £2.0m (FY22: £1.6m), which was lower than management expectations, but exit annual run rate exceeds £2.3m (FY22: £1.9m)

· Cash balance maintained at £1.0m, despite outgoings of £0.4m on share buyback programme and £0.2m of non-recurring reorganisation costs

o The post year end quarterly iTrack royalty receivable in July is around £0.6m

Revenue, Adjusted EBITDA* & Cash

Total revenue for the year increased by more than 35% to over £3.5m, which is in line with market expectations (FY22: £2.6m). 

The increase in the number of installed units generating royalty income was consistent with each of the two previous years, however, most of the growth in the current year arose in Q4 leaving the overall total iTrack royalty income for the year short of expectations. Significantly, far stronger than expected growth was generated from both SAWsense and Translogik which outweighed the royalty shortfall.

Adjusted EBITDA* is expected to be around £1.4m, also in line with market expectations, and more than double the prior year level (FY22: £0.6m). Profit after tax may exceed market expectations as a consequence of an increased tax credit arising from extending the recognition of deferred tax assets arising from prior years' losses.

Net cash balances at 30 June 2023 amounted to £1.0m (FY22: £1.0m). Trading continued to be cash generative, enabling the Company to invest a further £0.4m in the ongoing share buyback programme (FY22: £0.3m). Royalties for the final quarter of the financial year receivable at the end of July 2023 are expected to be around £0.6m, further strengthening the available cash position of the Company.

SAWsense

Revenues were more than double those of the prior year at £0.5m (FY22: £0.2m) from increased sales of motorsport equipment, combined with significant new income from customer funded feasibility and applications development projects in aerospace and automotive electric motors and drives. In addition, the Company realised income from claims under the Technology Developer Accelerator Programme ("TDAP") grant announced in May 2022 of £0.1m (FY22: £ 0.0m).

Business development activities have continued to generate a healthy pipeline of new incoming enquiries, and the conversion of these into chargeable feasibility and applications development projects is accelerating. Recent changes in management structure, repositioning the cost base towards customer-facing engineering and project management specialists, gave rise to non-recurring reorganisation costs of £0.2m towards the end of the financial year. It is anticipated that these changes will deliver productivity gains in future, enabling the business segment to generate sufficient income to cover its own costs more quickly.

Translogik

Revenues continued to deliver annual growth above 17% and have exceeded £1m for the first time (FY22: £0.9m). Much of this success is attributable to our market leading product range generating increased demand from established blue-chip customers, reacting to market factors such as greater call for digitisation of data and vehicle safety regulatory compliance. This leads us to believe that increased overhead investment in business development and marketing infrastructure, planned for FY24, will deliver rapid results in further acceleration of market penetration through both current and new channels to market.

iTrack Royalties

Royalty income for the financial year from iTrack in Sterling terms increased by 30% to £2.0m (FY22: £1.6m), which was below the expected growth rate of around 45%. This had been signalled during the year and was primarily due to new installations converting late in our financial year rather than uniformly, and most strongly in the final quarter. 

The annualised run rate of royalty income exceeded £2.3m by the end of FY23, an increase of 23% over the FY23 opening rate of £1.9m per annum.

Outlook and Audited Results

The Board is pleased with the momentum in the ongoing commercial pipeline, both for SAWsense and Translogik, which provides confidence in the prospects for the current financial year.

Final audited results for the year ended 30 June 2023, and a more detailed update on trading and outlook, are expected to be announced around the end of September 2023.

*Adjusted EBITDA refers to net earnings before interest, taxation, depreciation and amortisation adjusted for the cost of share based payments of £0.1m and non-recurring reorganisation costs of £0.2m.

** iTrack Royalties are based on the closing rate at 7 July 2023, however this may vary if there is a material change in rates at the end of July 2023 when the quarterly royalties are invoiced and paid.

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

Notes to Editors:

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

· SAWsense - designs, supplies and licences advanced sensor solutions based on proven, patent protected Surface Acoustic Wave (SAW) technology to world leading companies in aerospace, electric motors and drives, industrial machinery (including robotics) and motor sport. Key customers include GE Aerospace, Parker Meggitt, McLaren Applied and several other confidential Tier One automotive and aerospace suppliers.

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

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

For further information please contact [email protected]