Good afternoon and welcome to the Transense Technologies plc Final Results Investor presentation. Throughout this recorded presentation, investors will be in listen- only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to Executive Chairman Nigel Rogers. Good afternoon to you.
Hello and hello to everybody who's listening. Thank you for joining us today. I think we've got quite a full crowd in, so that's great. You will see alongside me Ryan Maughan, the Managing Director, and Melvyn Segal, the CFO, and they will be supporting the presentation today. The order of the presentation, I'm just going to sort of talk and tail it. Melvyn will take you through the financials and Ryan will take you through both SAWsense and Translogik with an update on trading during the year and prospects and pipeline. I think we've got plenty of content for you, so we'll take it fairly briefly. We've got one pre-submitted question, but we certainly welcome them as we go along and we'll hopefully leave plenty of time for Q&A at the end.
If I might start, a very quick refresher of the businesses that we're going to be talking about today. We have two operating businesses within the company: SAWsense, which is a designer and supplier of advanced sensor solutions, primarily measuring torque and temperature, so particularly applicable to rotating shaft applications across a number of very high growth industries. Then we have Translogik, the supplier of smart connected tire inspection and data collection tools which are used primarily in the truck and bus market. Again, we'll have a lot more details of those two businesses to come. I'm just going to cover the overview of the financial year FY 2025. At 7:00 A.M. this morning, we announced the published results. The audited results for the year ended 30th of June.
They included financial highlights which showed the trading was in line with a pretty aggressive growth plan and that we're investing in the business for future. The revenue was up by 1/3 . Profits were up as well. Cash conversion was particularly high. The conversion of operating profit into cash was very good, generated a couple of million pounds worth of free cash flow which was invested in the business, primarily in SAW but also in Translogik for future growth. Within SAWsense, there's a real sense of traction within the business now and the scale up is well underway. Revenues grew by 149% during the year, largely from the depth of relationships with two existing customers that are already progressing towards production relationships, but also with the increased onboarding of a number of new customers through the development phase. We've got quite a lot to talk about on that today.
To support that scale up. We're now investing in a production line at Weston-on-the-Green and on the sourcing of next- generation electronic components. Those programs are quite capital intensive. Melvyn will take you through the figures, but they are on schedule and on budget, which is obviously pleasing. We've been able to take the opportunity to also deepen our resources within SAWsense, in fact, within both businesses, in both engineering and business development. We have a lot more depth and resilience and bench strength within the management team than we had a year ago. Within Translogik, we've built some very firm foundations for revenue growth and are seeing an improvement in visibility of future sales.
Translogik historically has been quite a transactional business and we're at the stage now we're able to build a pipeline, particularly with the switch of the business towards a subscription-based model where we're improving the visibility of earnings. Revenues in the year were up 18%, but there's a story to tell there which Melvyn and Ryan can tell between them. The tire majors were up overall despite some weakness with one particular customer, which we'll talk about. We added some new territory distributors and software partners in order to open up new routes to market. The sales organization was revamped towards the end of the year and that improved further the pipeline visibility for FY 2026 in which we also expect to do some new product launches. I think an exciting program today and I shall now pass you on to Melvyn to take you through the figures.
Thank you, Nigel. As Nigel mentioned, we have achieved a 33% increase in revenues. However, if you exclude iTrack revenues, we've actually experienced a year-on-year growth of 55%, which affirms our goal for steep growth in both SAWsense and Translogik revenues. The overall gross profit for the year has improved, as you will see, to just under 90%, reflecting an underlying increase in Translogik GP from 54% to 62%. This follows our decision to bring production in-house last September. This move not only increased efficiencies in production, it has also enabled us to achieve much improved component costs. In FY 2026, we will have a full year of in-house production, and margins may increase further depending on how large the subscription element of our income becomes. Operating expenses have risen, reflecting the increased headcount.
With last year's average headcount of 21 rising to 31 this year, we currently have a headcount of 35, including the Board. Other costs have risen, as you would expect from the higher headcount. Following the commitment made in FY 2024 to increase capital expenditure, which includes a new pilot line and the design of next-generation components, the charge for depreciation and amortization has risen in the year. Finally, you will see at the bottom of the page, EBT is up 12% despite the substantial increase in running costs. In summary, whilst each year we strive to beat market expectations, we have now consistently produced results in line with expectations. Despite the challenging market conditions, we are, as I mentioned, achieving improved margins and investing for the future. Finally, we still have GBP 19 million of tax losses, which effectively saved us in the current year a tax charge of about GBP 350,000.
Looking to the next page, this is our revenues graphically. If we look on the left, we can see from the chart the global nature of our business, reducing risk of reliance on any one territory. iTrack, as you'll see from the green shade, has made up 58% of our revenues. Whilst it is paid from a Bridgestone U.K. subsidiary, the income is actually derived from all the large mining territories, being Australasia, Africa, and North and South America. The U.K. income in orange is mainly derived from work with McLaren Applied, now called Motion Applied, and this suggests that there is still a large U.K. market to attack in both SAW and particularly Translogik. Looking at the chart on the right, this demonstrates the consistent growth achieved in the past five years.
The breakdown into half year snippet shows the growth enjoyed each year from H1 to H2, with that increase rising yearly to 30% in recent years. In summary, we have a truly global business. We have limited U.K.- market exposure but large potential in the U.K. market and revenue sustaining a positive momentum over five years. Moving on to the next slide, which is the segmental results. Looking at these results, you can see the growth achieved in revenues in each segment, with SAW at 149% and Translogik and iTrack at 18% and 19% respectively.
This is actually an appropriate point to pause and actually look back at what we've achieved in the last five years since the Bridgestone deal saw revenues have gone from less than GBP 100,000 to over GBP 1.1 million, Translogik revenues from GBP 500,000 to GBP 1.3 million and iTrack royalties have increased from an initial run rate of GBP 600,000 to a closing run rate in 2025 of over GBP 3 million. Whatever the annual numbers have been each year since 2020, the numbers in the market, our five- year numbers, we've certainly exceeded our expectations that we would have had in June 2020. The changes in EBT year- on- year for each segment show improvements in all segments and the increase in central overheads reflects the higher charges relating to increased headcount and depreciation and amortization.
In summary, we are enjoying high growth in our operating businesses and importantly we now have in place an overhead base which can support a much larger business. Potentially GBP 5 million revenues for each of SAW and Translogik, which is our short to medium- term goal. Looking at the next graph, what has changed from FY 2024 to FY 2025? This graph demonstrates the bridge with commencing with an EBT of GBP 1.26 million through to GBP 1.4 million, with the main changes being SAW's improved contribution of over GBP 250,000 and the added GBP 500,000 from iTrack set against the additional central cost of GBP 650,000. In summary, volumes and margins up and investment in people in place to deliver future growth. Looking at the cash flow statement, operating cash flow has improved by over 30% at GBP 2 million.
I want to highlight the CapEx of just over GBP 2 million which is part of the strategy that I mentioned earlier. Commenced in FY 2024 and is expected to be completed mostly in FY 2026, which is the year we are currently in, and I would expect a further spend of over about GBP 1 million. The net movement in the year is a small reduction in cash of GBP 140,000, but we are still maintaining cash balances in excess of GBP 1 million. We have also secured but not yet used asset financing of GBP 1 million to fund the tangible element of CapEx, which has over around GBP 500,000 already expended.
Looking at the balance sheet, this remains strong with net assets up at GBP 0.47 a share, and as I've already covered the fixed assets, the only points I want to pick up on with regards to the balance sheet are trade debtors, as it's worth mentioning that the quality of our customer base has meant we don't face any issues recovering debt where we might have in the past. Deferred tax, as you will see, remains unchanged at GBP 1.47 million, which at the current corporation tax recognizes losses of around GBP 6 million. As I mentioned, we currently have losses of around GBP 19 million, so we have a further GBP 13 million of unrecognized losses, which represents an additional deferred tax asset of GBP 3.25 million, which is not on the balance sheet. Net assets have increased by GBP 1.5 million, with distributable reserves standing at GBP 4.8 million.
Treasury shares not shown on this table are static at GBP 1.03 million, as no investment was made in the year. Summarizing, we anticipate a similar level of CapEx in FY 2026, as I've mentioned, to complete projects in progress, and we have a strong balance sheet. Finally, moving on to the iTrack chart, which is a chart that should be familiar to most people if you've seen it before. The light green shading on the chart represents the actual receipts, which ended the year over GBP 3 million for FY 2025, and in total in the first five years is now worth GBP 10 million. As you may recall, royalties are earned based on the number of trucks using iTrack technology, and the two darker shades of green illustrate the level of royalties that would be earned by applying the average incremental increase in truck numbers experienced in the first five years.
The lighter green being a prudent 50% of the average rate and the darker green using the average rate. As you'll see from this, in years six to 10, we could produce a further GBP 10 million worth of income from the iTrack deal, broadly averaging at about GBP 2 million per year, even taking into account the royalty rate changes and producing an income not too dissimilar from that we enjoyed in FY 2023 and FY 2024. I will now hand over to Ryan.
Thanks, Melvyn. Starting off with the SAW business. SAW is the Surface Acoustic Wave technology. It's a patented sensor technology and it's used in performance and safety critical applications, normally for measuring torque or temperature, but also forces and pressures and things like that as well. It's a very novel sensing principle. Transense is one. Is the only company in the world that does it for torque measurement and one of a very small number of companies that uses SAW for a sensor of any kind. The business has changed the business model in the last couple of years in order to make SAW more accessible to new customers and help them de-risk adoption because it's a novel technology, there's a lot of risks or perceived risks from a large company in bringing this into a product. We've been working very hard to de-risk that.
That's really delivered for us, increasing customer engagement, revenue growth, as Melvyn's explained, and long-term business value, creating a very credible business and platform for growth for the future. This slide shows the current torque sensor market segmented into our different industries that we're operating in. You can see from this slide that the market today for known torque sensor applications is very, very large. This market research has it at $9.6 billion per year revenue. Some of the applications that we're working on wouldn't be included in this market because they're things that you can't currently do with a torque sensor, such as in the eDrives market. Even without that, it's a huge market and we are, you know, we're a very small part of this today. There's a very big upside for us to find the applications where SAW has a clear differentiator in the market.
I'll talk a bit more about the specific markets on the next few slides. What you can see here, the Automotive obviously is the biggest market here and it's got very big forecast growth. The applications are things like in electric power steering systems which use torque sensors. Today the eDrive application that we've been working on for SAW wouldn't be included here because it's not something that people do today. The Aerospace market where GE are, this is torque sensors for helicopter engines like our program with GE , but also turboprop engines and actuation systems and other things on aircraft. The Humanoid Robotics market is a market that's really quite interesting and forecast to grow very sharply over the next few years. Essentially, humanoid robots rely on force and torque sensors to be able to operate.
That's what allows them to stand up and to walk and to have the dexterity of movement. In addition to humanoid robots, in conventional robotics, force and torque sensors are used today, particularly in a type of robot called cobots. They're becoming more and more common and deployed more frequently in robots. Where a few years ago you might have had one sensor in a robot, we're starting to see multiples of sensors coming through. That market is also showing some very interesting growth. The Motorsport market, which you know, we've talked about a lot before, we have good growth in the motorsport market, but I think there's an awful lot more that we could be going for. We're operating in a very large marketplace and we've got some key differentiators that we can bring.
In the Robotics market, that is a place where we're seeing some very good growing traction with some really key global technology leaders. We have in the robotics market three projects running today. Two are with very large global companies and one is with a specialist business of much smaller company. The two larger projects are with very big kind of globally renowned technology companies. One is more towards the industrial robotics end of things and the other is a higher volume, lighter application. Both really interesting programs. We've got a number of discussions ongoing with other robotics businesses and expect to see this sector grow for us very strongly over the next few months and years. The Aerospace markets, our cornerstone client there has been GE Aerospace for a number of years. That's given us a good presence in the market.
We have added in the last year or two a number of very strong new names in this space, so some very good Tier 1s and aircraft makers that unfortunately we're not allowed to share the names of. The one project that is in the public domain is with Airbus, which I think gives a sense of the quality of some of the other companies that we're working within in the aerospace market. Obviously, the production projects for aerospace are much, much longer term than they are in robotics. We're earning money from NRE and engineering income. Just starting to get towards component sales now with GE and the projects that they're on as the new engines go into production. It's a very good market for us with very long term growth prospects. The eDrives market is a little bit different to the other two.
In eDrive, as I mentioned before, we're developing new applications where today you can't currently have sensors.
So.
That's in typically inside an electric motor, either in an e- bike system or in an electric or hybrid vehicle drive system. We've got some good programs running with some leading OEMs, Tier 1s. We've got some new programs coming through that we should be starting in this sector. It's a really interesting market for us and very good, strong longer- term growth prospect in this market. Motorsport market, we've got an excellent route into that market with Motion Applied. They are, I think without doubt, the leader for control electronics in motorsport. They supply engine ECUs to many championships, every F1 team, IndyCar, NASCAR, etc. They're a very, very successful business in the motorsport industry.
We've gone from having one race series that was using SAW sensors on their cars a couple of years ago to now having multiple vehicles in multiple different championships running the SAW technology and a really strong pipeline for growth. Motorsport's never going to be as big as robotics or eDrives or aerospace, but it can be a very significant contributor in the near term for us. Unlocking some more applications for SAW in the motorsport industry is really key to our growth on that side. A slide gives some analysis of where the revenue has come from in the last couple of years. The chart on the left, we've got production, so production is low volume. Production inside Transense, where we're making shafts for motorsport and some other applications, but predominantly motorsports.
You can see that's grown very significantly from 2024 to 2025 and is really a significant part of our business component sales. That is where a customer has designed our system into their product, their vehicle, their system. That didn't exist as a revenue line in 2024, it's come in in 2025 and we actually have a very strong pipeline and order book there for this new financial year. Some good growth there. The NRE is non-recurring engineering revenue. That's where we're working with a customer to design SAW into their application and we'll look at the phases of that on the later slide. Very good growth there for us. One thing to bear in mind is that this column to the right, the grant income.
The grant income all relates to additional NRE projects with two key customers, Protean and Airbus, where they are leveraging government grants to support their ongoing product development. These grant programs, if you're looking at this, really would be included in the NRE. The NRE programs developing our technology into customers' products for the future. Looking across at the chart on the right, revenue by sector, you can see the growth in the aerospace side of things. That's been incredibly significant and really made that a very significant part of our revenue. Most boards growing strongly as well. EDrive systems, very strong growth as a sector there. Robotics, we're just getting started in robotics, we're just getting started with engagement but pretty much non-existent in 2024. Very significant percentage growth, but there's still a small, small proportion of our revenue. This should grow very significantly.
We've got now some quite large PO coverage for delivery of next phases of projects with some key customers in the robotics market. We're expecting that to grow in 2026. The business is all about scale up at the moment and talking about pipeline. We're developing those engagements with customers and developing the markets that we operate in, we've got very strong pipeline, we'dve got very strong customer engagement and we continue to work on that and increase our presence within our key markets. The parts development that we've been doing refers to our investment in the fundamental core technology. The SAW sensor systems consist of three, four key components and we've been investing, getting those ready for scaled up production, making sure that we've got the right suppliers, that we can deliver them at the right scales and quality and cost. That's a really key part of our business.
It's generating an asset on the balance sheet. There's investing in those next- generation designs of these components as well as actually just working in a normal way with suppliers and supply chain. We're also investing in the processes. I mentioned earlier, a key part of SAW technology, the actual process by which you apply SAW sensors onto the part that you want to measure, is unusual. An obstacle to growth in the past, or an obstacle to customers even engaging with Transense in the past, was lack of an ability to demonstrate a high volume, capable, repeatable process that could be used. We've made the investment in the machinery that Melvyn referred to, so buying the pilot line assets, working with key equipment suppliers. That equipment's nearly all installed.
We're waiting for one key machine which should be with us very soon to get that pilot line finished, and then our process development will continue from there. A really key building block in making the technology accessible for production at scale in the future. Those three areas of focus have really been underpinned by developing the people within the business and the team. The team has grown very significantly. We've made a number of key hires in the management side of the business and the delivery side of the business, growing the engineering team as well as the operational team and the key leaders within the business. We really have been preparing the business for growth and making those investments across the board and getting the business ready for substantial scale up in the coming years.
Just to look at the pipeline, we've shown this in various different ways in the last updates. This shows us the column on the left hand side, our customers, potential customers that we're talking to about programs, but where we're not yet on contract, it's pre-contract discussion. Typically that's us looking at an application, coming up with a proposal, working out timeline, costings, etc., of how we would embed the technology into the customer's particular application and then negotiating a project. Customers do move from that pre-contract discussion into being on contract on a regular basis and then would start to progress through the pipeline where we're working with the customer. It goes from a feasibility study where we're doing an initial investigation to see if the technology will work in the application to more advanced prototype development, actual product development, and then into pre-production and production.
The success rate, when we get to the point of quoting a customer, is pretty high in terms of quotes turning into actual projects. Estimating off the top of my head, about 75%. The progress through, some customers do drop out along the way, but in general again the success rate of projects progressing through the pipeline is pretty strong as well. It's at least 75% if not more. The pipeline's developing really nicely and you know, we're continuing to move projects through to the right hand side. I touched on this on the earlier slides, but the SAW technology we've got, typical system, it consists of a couple of key components. Up here is our AQP. That's the sensing element. That's a unique Transense Surface Acoustic Wave sensing element that's made to our design in a supply chain.
That's one of our key components that would typically be installed on the customer's part. In this case, this is a shaft for motorsport. It's a gearbox input shaft. It's a very special process needed to install the sense element on the shaft. That's what we're developing the pilot production line for. The other component on the shaft is what we call a rotary coupler, an RF rotary coupler. That's basically a small antenna. It's a fairly simple part, but again it's Transense's design. Off the moving part we've got another RF coupler. This part would be stationary so that bolts into the gearbox in the front of the transmission and it has an RF connection to some electronics. The key part on the electronics is our ASIC. That is Transense's own design. We're on our first generation of ASIC still.
We started the development of next- generation of ASIC to make sure we've got a part that's going to continue to support us into the future. That's the other key part of the system. Fundamentally there's a lot of technicalities and complexity in these parts, but overall it's a relatively simple system. We've been working very hard to make these components available and our typical projects that we do with customers, we look at how these are designed into the customer system working with a common component set. The actual process for installing the sensing elements can kind of set out here with the pilot AQP installation line. We've been making the investment. A lot of these pictures are actually taken on our site now of equipment that's been installed. We've got the preparation of shafts coming into the business. This is installed equipment now on site.
The machine we're still waiting for is a die bond so that it will pick and place the AQPs into precision dispensed adhesive and the RF coupler. Installation and assembly is a more manual process. Then we've got wire bonding and finally calibration. You can see from the ticks on the bottom of this slide, a good chunk of this equipment is available already within the business. Once we've got the pilot line fully installed, we'll then be able to start using it in anger, partly from a process development point of view. I think one of the questions that came in has been to do with the payback on this line. Just to be clear, really the main justification for investing in the pilot line is all about demonstrating high- volume capable processes as opposed to using it for production.
In and of itself, we will use this line for our low- volume production, but that's not specifically why we bought it. We bought it to be able to show higher- volume customers that there is a capable process available that you can use and put in a production plant to make these things in high volumes. Moving on now to Translogik. The Translogik part of the business, we make tire inspection equipment. The handheld inspection tool that you see there is part of an ecosystem. We can't sell tools to customers that don't have the apps and mobile devices and cloud management software. It's really a key part of that overall ecosystem. The customers use our tools to reduce operating costs, to collect better data from vehicle inspections, to help them improve road safety from their fleets.
It's a really important tool to the customers that use it as part of that overall ecosystem. We've had a growth plan running now for some time within Translogik based on these five key steps. We've been making very good progress with building our relationship with existing tire industry customers, expanding sales within that industry. Over the last year or so, we have added at least one new tire manufacturer that we're now supplying. We're talking to some other new tire manufacturers as well. We have kept up the business on that side of things within tire manufacturers. Typically, that's where premium- tire suppliers are using the tools as part of their managed tire business, where they're supplying to large fleets on a pay per mile or pay per kilometer basis tires. That has been the historic main route to market for Translogik. Obviously, there are risks with that.
Not every truck fleet does pay per mile or pay per kilometer. We recognized in order to grow the business we were going to need to move beyond that. We have been working to establish new partnerships with tire companies and suppliers, particularly with fleet management software developers. With companies developing software specifically for tires on commercial vehicles or on passenger cars, we've had some good success on that front. We've also been developing a new direct sales route. In order to do that, we made the deal with TIRETASK to be able to resell their software into the commercial vehicle market. We announced the first deal at the beginning of this year. We've been working with the customer to get that to the point where they can deploy it into their technician group, and we're pretty much there with that now.
We expect that to start being able to be invoiced in the coming weeks. That is going to really open up a new market for us with the direct sales and with the bundled software and solutions. We are really excited about how that's going to develop this year. Fourth on the list is new distribution partnerships. We announced at the beginning of this calendar year a new partnership with Haltech, a distributor in the U.S. We've made a couple of other announcements to do with distributors in other territories. Those are starting to really come into effect now. We are also working on some other new distribution partnerships as well. There is plenty coming through on that side. Finally, the Translogik business has really been a one product business until now. We have the TLGX inspection tool; there are four versions of it.
We've been working to develop new complementary products that we can bring into the market and develop our products. We recently made an announcement about reduction in cost of the higher- spec versions of the tool. That's a result of fantastic work the team have done looking at cost down opportunities and new componentry to reduce the costs of the TLGX 3 and TLGX4. That's a great upsell for us in the future to make those tools more accessible. In addition to that, we've also been looking at other products. We've got a product launch coming which is really exciting. Obviously, we're now putting the software out into the market as well.
All these extra revenue lines are coming where we've got, you know, we do have a good route into market already where we can sell effectively more things to the same customers that we already have, as well as working to try and find new customers for those existing products. The growth plan is really working well. When you look at how the revenue splits down between types of customer, you'll see. The first column there is tire majors. We actually increased sales slightly from 2024 to 2025 to tire majors, and that's really as a result of growth with new tire majors and some of the existing. One of our tire majors has had a pretty tough year restructuring their business, and they reduced significantly what they were buying from us. We do expect that to come back in the future.
We haven't lost them as a customer, just they've been restructuring as a result of headwinds in their overall business. We still managed to actually maintain and increase slightly sales to tire majors because of the work that we've done elsewhere with other customers. The next column is the fleets and service providers. You can see that was a tiny part of our business in 2024, increased a bit in 2025. We expect this to increase a lot more in 2026. Where you can see some impressive growth already is with software partners. This is where we are supplying hardware to third party software companies. We almost doubled that from 2024 to 2025, so been very successful there with a few really key new key accounts in that space.
Actually, one in particular has opened up a completely new market in the passenger car sector for us with a really smart AI tire inspection tool that they've developed. Really strong progress there. New distributors are just starting to take effect and they'll start to contribute a lot more. Really tangible results and a lot more to come for this part of the business. Back to Nigel now, just to summarize.
Thank you very much, Ryan. That's prompted plenty of questions, which is good. Thanks everybody. To wrap up for FY 2025, I'll actually look at the start of FY 2026, where in current trading in the first two months, revenue from the two operating businesses was up a total of 23% on the prior year, so started off in the right direction with some good growth. iTrack revenues in the first two months of the year were 30% down on the prior year, which, bearing in mind there was a 40% unit rate reduction in the royalty, suggests some strong volume increase, which was indeed the case despite a bit of FX headwind compared to the prior year also. The year started well. The SAWsense order book has doubled again since the beginning of the year. During FY 2025, the open order book for SAW doubled from GBP 0.1 million to GBP 0.2 million.
It's doubled to GBP 0.5 million again since the 1st of July , 2025. Really starting to convert that pipeline into tangible purchase orders now. Similarly, Translogik has entered the year actually for the first time with an order book from subscriptions. As I said, this is a business which has previously been very transactional, purchase orders fulfilled very quickly and little visibility. That business model is now changing and we're starting to see tangible order book coming into FY 2026. Overall, current trading is satisfactory this financial year. It's all about maintaining that momentum in gathering sales opportunities across the business and turning them into revenue. Between SAWsense and Translogik together, there was something like GBP 1 million added in revenue, FY 2025 over FY 2024.
In order to maintain the momentum in profitability for the business, looking at the FY 2026 forecast market expectation in Cavendish's latest note, that would suggest that we need to add at least another GBP 1 million this year in order to keep momentum going. We see plenty of opportunities for that to be done. We are always cautious with our forecasting narrative in that we are still a business which has two operating divisions that are in scale up phase and we don't have full granularity and the ability that a mature business might have to forecast with confidence over the short term. However, we have a very healthy pipeline. We have a great level of incoming inquiries and a good order book to go at. We're approaching this year with confidence, despite the fact that we recognize it's challenging. We are also, as always, managing our cash headroom very carefully.
We're investing for success in building, building strategic value in these businesses, but we're doing that by eating our own kale. We're not resorting to the market for additional money, and that means that we have to manage our cash resources carefully, which we do. We've also given ourselves additional headroom by looking at the possibility of financing the purchase of tangible assets rather than paying for them directly out of cash flow. We have a facility of GBP 1 million in place to be able to do that for tangible fixed assets. Putting that all together, we think that the company is actually in a really good place. We are where we expected to be at this point and very much looking forward to the future. I'm now going to suggest if we could bring cameras back up and take away the presentation, please. Thank you.
We're going to open up for any further questions. We've got a good string of questions here, and I'm going to try and just share these and group them together a bit. I'm going to first of all turn to you if I could, Ryan, and I'm going to try and group together the questions which are related to sales within SAW first. I'm looking at, first of all, question five. On May 20th, you updated the market on a licensing and supply agreement with ISI with a closing statement expecting to generate substantial new revenue streams. What's the progress and what revenue can we expect? I'm going to group that together with question 13. You state that you've established a deeper engagement with GE . You expect significant revenue contribution from this sector in the financial year. Can you specify this expectation and the basis for it?
Yeah. The two things are linked, as Nigel has alluded to there. ISI is a semiconductor packaging house. We put in place a contracted arrangement with them to do final packaging of our ASICs for the aerospace market in North America earlier in the year. Obviously we have a key customer in the North American aerospace market in GE. Supply of finished ASICs into GE is a key part of what ISI would be doing, although not limited just to that one customer. The work with ISI has progressed very, very well. We have contracted business that we're delivering against in conjunction with them. Actually, I'm missing a call with them right now and the team, they're on that running program.
That relates directly back with GE in that we've got now contracted business with them to deliver significant levels of technical support and component supply, etc., relating to their engine programs. We've also got pipeline of opportunities sitting with them as well, where we've got quotes sitting with them that we've not yet got onto contracts as well. We've gone from having sort of no invoice business basically at all from GE since the original license was signed. In this financial year, it will be significant chunk of our revenue with the related businesses to the GE programs.
Thanks, Ryan. I'm going to jump to David B's question, question 10, which is an interesting one. Would you consider entering into exclusivity agreements for particular applications in SAW, or is it the intention to be open to any party?
The overarching intention isn't. It is to be open to any party. I think exclusivity things would depend on if a customer wanted it enough. We're certainly not looking to do that. If someone wanted to do that, we'd have to consider it, depending on what we felt it offered the business and shareholders in the longer term.
Thank you. I'm going to now cut across to the operational side of source, so we'll have question eight. I think this was mostly answered during the presentation, but you might want to expand on it a bit. In the cash flow statement, there's a large figure for purchase of intangibles. Please describe what was purchased and what is the expected CapEx spend for this year. I'm just going to tie that together with question 17 from Dion. What was the GBP 1.25 million increase in intangible assets represented by?
Apologies, Melvyn, you were just meeting Theresa. Please continue.
Okay, would you like me to answer? The initial part of that with regards to spend? Most of that initial spend, probably around about GBP 1 million, is with respect to the new ASIC that we are developing. There's also some spend on the new AQP, which is just under GBP 200,000. There is also some spend on developing the new Translogik tool and various other tools for Translogik. That basically makes up the GBP 1.25 million. Looking forward, there's probably another GBP 1 million or so spend to be done with regards to completing the new ASIC and the AQP. That's the only bits in intangibles. There is a little bit more on tangible assets to be spent, although a big chunk of that has already been spent.
Thank you. I'm just going to swing back to sales because another question come in if I could please. Ryan, can you give an update on SAWsense's involvement with the LANDOne project? For example, how long will it take, scale of the potential revenues if successful, etc.
LANDOne is our project with Airbus where we're developing a new application for SAW in the landing gear, hence the project name. The project's running really well. We're making good progress on the technical delivery side of it, good working relationship with Airbus and really good opportunity to be working with them because of the nature of the project. It's a long- term deal, you know, it's a long term development project in the first place, which would get us to fairly low TRL, technology readiness level, in terms of Airbus's view. You know that getting a technology like that through into production will take several years from here on in. Progress so far is really good.
Thank you. We have a couple of questions from Bojan here. It's kind of a mixture of a bit of Melvyn, a bit of Ryan, and I'm happy to take them myself also. We'll see if we can get it tease out answers between us. What would the likely operating margin be for SAW now that we've moved away from licensing and into a full service solution? As a follow up question, what level of revenue do we expect in the next two or three years in SAW? Clearly that's not a question that we can answer with too much precision, bearing in mind we don't want to put a forecast into the market that we would be bound by outside of what's already there. The follow up question says would it be in the GBP 2 million- GBP 5 million range or the GBP 10 million-GBP 20 million range?
Yes, I think. The first question, it's sort of the operating margin is what it is now. We've moved away from the licensing model already. All of the new revenues that we've got coming in are with the new model. It is what it is now. You can say if some higher volume programs convert into production business then, you know, the margin on those will come down in terms of the nature of what we'll be doing. If we move from doing engineering design in with a customer to supplying them components in really high volumes, we'll be taking a margin on the components which are made outside. If we're supplying ASICs and sensing elements to a customer, we won't have tied up capital in that because it's made in a supply chain to our design.
Other than the intangible asset in the design of that part, the margins will be reduced from what they are now. We are in the operating mode of the new business now. You can go from that in terms of the levels of revenue. I think what I said before, if you look at the different markets that we're operating in, in the robotics market, there's some really interesting opportunities where they're talking about very significant hundreds of thousands, millions of units a year production requirements. Some of the other markets that we're in are similar. Aerospace is not. Aerospace is low volume, but high engineering revenues. Motorsport, there's a lot more potential in motorsport than I think I realized certainly a couple of years ago. That's a lot about how motorsport is changing. The potential for SAW within that industry I think is bigger than it was before.
The motorsport market could be into the millions for us as well. I probably should leave it at that.
Yeah, I mean I think it's a good answer to the question. I think that our current overhead base is set to take the business into the next level, which is, you know, GBP 2 million-GBP 5 million turnover. That is a range that we would have within our sights now. We have a pipeline of NRE business and development business that will propel us into and through that level. The business today is around break even. It's covering that cost base from a level of revenue of, you know, GBP 1.1 million in FY 2025. The operating margin impact of taking that through GBP 2 million-GBP 5 million would certainly take the operating margin into the 10%- 15% range. I personally think that is sustainable through GBP 10 million-GBP 20 million of revenue. I think that a 12%- 15% operating margin target is certainly doable for the SAW business.
Perhaps we should pivot into Translogik and take a couple of questions as I suspect we might run out of time before we run out of questions. I'm going to pivot to questions three and four from David B. I think you've probably dealt with this actually. Has the pause in Translogik sales to the major tire manufacturer passed? Have they resumed and do you expect to, you know, have they been lost or do you expect a degree of catch up?
It's not that the customer is still with us. They haven't got away, they are still there. We have regular contact with them, been a lot of change going on in their business. They're not lost as a customer. Whether the sales are lost or the catch up, that's not really how their business works. Like I said before with the major tire manufacturers, they're using it as part of their managed tire services business. They're taking tools, either themselves or their service providers, to their service providers and they're using them to deliver PPM and PPK contracts. When they win new contracts and add new technicians, they buy more tools. When they're not, then they don't buy more tools. It's not so much whether the business was lost or not.
When they're running in normal mode, they would have a certain amount of uptake of, I mean, even replacement tools as well, you know, as tools get to the end of their useful, serviceable life, that comes into play. They're still with us, a good relationship with them as a customer. I think some interest from them in some of the new products that we're bringing online. Yeah, definitely been a bump in the road in their sort of running business and an element of restructuring that's gone on.
Thank you. I'm going to go to question 12 again from David. Could you outline how you expect customers to respond to the price reductions on the TLGX 3 and TLGX4 tools?
We immediately saw an uptick in demand for TLGX3 and TLGX4 tools. It delivered on expectations, basically. You know, we've had the four versions of the TLGX for a long time, the TLGX1, TLGX2, TLGX3, and TLGX4. The way that it works is it's all modular. You get the TLGX3. The TLGX3 has got all the features of the TLGX1 and the TLGX2, plus an extra, and the TLGX4's got all the features of the TLGX3, plus an extra. There's a really big jump in cost from a TLGX2 to a TLGX3. Actually, the difference in price between a TLGX3 and a TLGX4 was fairly small, but there was a really big, like double the price, basically. That was driven by some key components that we were using and approaching the electronics as part of our product development program.
We were able to get that out and really narrow the gap. RFID tags are very common now in tires in Europe. Basically every premium tire has got an RFID tag in it for commercial vehicles and an awful lot for passenger vehicles. Being able to read the RFID tags makes it a lot easier for technicians who are doing the inspections on trucks, because rather than having to try and read what it says on the side of the tire and type it into a tablet, they just go up and scan the tire. There's a really good use case for it. The problem with where we were, the price differential was just too big. If customers are buying 100 tools or 50 tools, it was a really big difference in the investment for twos as it was to threes and fours.
We were able to get the cost down. Really the plan is that customers who would have bought, who really wanted a three but couldn't quite make the business case for it, so were buying twos, will now start to buy threes or fours. Our revenue should increase per unit sale as a result.
Thank you. I'm going to switch now to the corporate big picture. I've got a couple of questions I have. Sorry, I'm trying to find the one I'm after. Question nine. The share price year to date performance is -37%. Despite your constant positive updates, why is the market so skeptical of your performance? Would share purchases not provide a higher internal rate of return than spending on CapEx for SAW? Associated with that, I have Mike's question, which I'll find in a second. Thank you, Mike. He goes on to say, I'm not a finance person. I wonder why the stock market hasn't liked your results and presentation. People will have probably heard me say this before, but a stock market in the short term is a voting machine, not a weighing machine.
In the long term, it weighs how big the bag of gold is, but in the short term, it's a voting machine. Markets have been very, very difficult for all AIM listed companies. The AIM index has struggled, and most AIM- listed businesses have struggled over the last 12 years to maintain positive momentum on the share price. The share price reflects the marginal supply and demand of a very small number of shares sold on any given day. There are times when it can be quite demotivating for management to see that the hard work that they're putting in, and I'm particularly looking at Ryan and Melvyn here, the hard work that they and their teams are putting into the business are not always rewarded by short term results in the share price.
However, we're in this business to build long- term strategic value, and regardless of short- term imperfections in the market, eventually value finds its way out, and we're absolutely confident that that's what's going to happen here. We try not to be demotivated by the share price. I'm mindful that investors from time to time must get very frustrated as well, and I'm sorry for that, but I think it's outside our control. We just have to keep doing the right things, keep calm and carry on. I think we're just about out of time. I'm mindful that there are some questions that haven't been answered, but we will circle back and answer those in documentary form, which should be available within the next 24- 48 hours.
I'll wrap up by saying thank you very much again for your attention, and thank you to Ryan and Melvyn for a great contribution, and enjoy the weekend when it comes.
Bye.
Fantastic. Nigel, Melvyn, Ryan, thank you once again for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Transense Technologies plc, we would like to thank you for attending today's presentation and good afternoon to you.