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(Sharecast News) - Transense Technologies reported strong revenue growth in an update on Wednesday, of 37% to £2.41m for the six months ended 31 December, exceeding the company's full-year growth expectations of 30%.
The AIM-traded firm said the performance was driven by significant increases in revenues from SAWsense and Bridgestone iTrack royalties, which grew by 330% and 28%, respectively.
Revenue from Translogik increased 7%, reflecting steady growth from existing customers, though new business conversion was slower than anticipated.
Gross profit margins remained robust at over 87%, despite increased operating expenditure related to planned investments.
The company said its headcount rose from 19 to 30 over the period, with key appointments made in engineering, operations, and sales to support future growth without further significant salary cost increases.
As a result, net earnings for the period were expected to be about 20% lower than the prior year, reflecting the strategic investments ahead of anticipated returns in the second half of the financial year.
Net cash as at 31 December stood at £1.19m, compared to £1.28m at the end of June.
The company said it expected a further cash inflow of £0.84m from Bridgestone iTrack royalties by the end of January, strengthening its financial position.
Transense said SAWsense had continued to deepen relationships with existing customers, leading to higher revenue per client.
Two grant-funded projects in the automotive and aerospace sectors were progressing well, with new aerospace engine torque sensing projects added to the pipeline.
The segment was expanding its operational capacity with an approved capital expenditure of over £2m over the next 12 to 18 months, which the board said would fund a pilot production line and updates to key components.
Those investments were expected to enhance product longevity and reduce unit costs, supporting future scalability.
Translogik revenues meanwhile grew 7% year-on-year, with strong run-rate business from existing customers.
Although new business conversion had been slower than expected, momentum was building, supported by the appointment of a distributor in Southeast Asia and a software partnership with Tiretask to launch a subscription-based service in the UK.
The in-house production transition at Weston had been completed, leading to improvements in product quality and cost efficiency.
Bridgestone iTrack royalty income was ahead 28% at £1.57m, which the board said reflected stronger-than-expected commercial pipeline conversion.
The annual royalty run rate now stood at £3.34m, with 30% of second-half income hedged at an exchange rate of $1.27 to sterling.
However, the unit rate of royalty income per installation was set to decrease by 40% from 1 July, in line with the existing agreement with Bridgestone.
The firm said it remained optimistic about volume growth to offset the impact of the lower rate.
Looking ahead, Transense said all three business segments had shown a strong pipeline of new business opportunities, and were well-positioned for continued expansion.
It said it remained focussed on delivering long-term growth, with investments in personnel and infrastructure largely complete.
The company said it expected further revenue growth in the second half of the financial year, supported by ongoing customer demand and operational improvements.
"The first six months of the financial year has seen us continue the strong underlying growth, whilst successfully recruiting a team that can take the business to the next level of performance," said executive chairman Nigel Rogers.
"We remain in line with market expectations in the current year, and the opportunities ahead of us give us significant optimism for the future.
"SAWsense is making excellent progress and the pipeline for Translogik is also very encouraging."
Rogers said the Bridgestone iTrack licence was approaching its fifth anniversary in June, marking the halfway point of its duration.
"Although unit royalty rates per installation will decrease next year, there is momentum behind the installed base indicating continued strong income flow for the next five years.
"We will continue to reinvest some of this in the two operating businesses, both in people and infrastructure, to support our long term growth expectations."
Transense said it would public its interim results for the period in March.
At 1339 GMT, shares in Transense Technologies were down 3.91% at 153.75p.
Reporting by Josh White for Sharecast.com.
