REG - Tan Delta Systems - Trading Update

Tan Delta SystemsAnnouncement

31/07/2024 07:00

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RNS Number : 4517Y  Tan Delta Systems PLC  31 July 2024

Tan Delta Systems plc

("Tan Delta", or the "Company")

 

Trading Update

Tan Delta (AIM:TAND), a leading provider of intelligent monitoring and
maintenance systems for commercial and industrial equipment, announces an
update on its trading for the six months to 30 June 2024 ("H1-24") as well as
its outlook for the six months to 31 December 2024 ("H2-24").

The Board is pleased with progress achieved in H1-24, with investment
completed to increase production capacity, which alongside increased sales
activity which has resulted in a significant pipeline of prospects with an
aggregate value of over £14.0m, up from £2.5m at the end of December 2023.
We look forward to commercialising these prospects during H2-24 and beyond and
note the Company is currently in active negotiations with prospects valued at
nearly £6.0m (of the £14.0m).

The Company expects to report unaudited revenues of £0.65m in H1-24, with
gross margin of 61%, generating operating losses of approximately £0.5m. Cash
remained healthy with £3.6m as at 30 June 2024. Increasing levels of trading,
together with the substantially increased pipeline of prospects, provide the
Board confidence to reaffirm market expectations for FY-24, including revenue
of £2.8m.

Operationally, our primary focus has been to complete the expansion of our
existing production facility, a process which is now complete and enables us
to manufacture and supply up to 1,500 units per month, translating into
revenue in excess of £12.0m. Additionally, we have started on the path to
migrate production to a much larger external sub-contract facility which will
allow us to assemble much larger volumes as well as support the production of
new high-volume sensors in the future, targeting smaller equipment in both
industrial and automotive markets.

Management has purposely kept marketing lean during the period, as the Company
continues to organically generate a very healthy level of enquiries as
knowledge and reputation of our systems has spread alongside pre-existing
opportunities under discussion and/or testing. However, we have continued to
expand our sales resources and activities, resulting in the increased pipeline
of over £14.0m. The value of individual opportunities within this pipeline
range from £20k up to £3.0m, and include:

·      a leading, large ship engine manufacturer with approximately
15,000 engines in the field, each with at least 10 cylinders, and each
cylinder requiring a sensor;

·      a significant global oil major who is promoting our sensors to
their customers and has provided an initial sales pipeline forecast of £8.0m
across 15 projects, over the next 2 years; and

·      a global logistics company with a fleet of critical conveyor
gearboxes with a potential initial requirement valued at nearly £3.0m.

In addition to these original equipment manufacturers and end user
opportunities, Tan Delta has an active value added reseller program, adding 17
new distributors and resellers during H1-24, bringing the total to 208. This
network of distributors and resellers are promoting and selling our products
to smaller local businesses as well as giving us a global installation
capability.

The nature of the large commercial and industrial markets are that they are
cautious adopters of new technologies and thus sales cycles are extended and
at this early market maturity stage, difficult to accurately forecast.
However, many of our opportunities have been in progress for some months and
in some cases well over a year, and are now at or nearing their conclusion.
Accordingly, whilst precise timings remain challenging we expect to see a
trend of growing conversion of these opportunities into revenues as well as
growth in the prospect pipeline itself. This is all supported by our increased
production capacity, sales and customer support resources.

Chris Greenwood, CEO of Tan Delta said: "We have experienced a considerable
increase in enquiries and the size and quality of our new prospects pipeline
during the period. This is indicative of the global trend to actively monitor
and manage commercial and industrial equipment to reduce cost. The advent of
AI also means that with the right data the possibilities for these benefits
are even greater. Given the capabilities of our core oil analysis
technologies, our blue-chip customer references, and quality of our current
pipeline of prospects, we look forward with confidence to the remainder of
this financial year and the years ahead."

For enquiries, please contact:

 

 Tan Delta Systems plc                                            Tel: +44 (0) 845 094 8710
 Chris Greenwood, CEO

 Zeus (Nominated Adviser & Broker)                                Tel: +44 (0) 203 829 5000
 David Foreman, James Hornigold, Ed Beddows (Investment Banking)
 Nick Searle (Sales)

 

Notes to editors:

Tan Delta Systems PLC provides equipment monitoring technologies and
solutions that use real time oil analysis to enable material reductions in
maintenance costs, improve reliability and reduce carbon footprint.

 

 

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