Trading update

Tan Delta Systems PLC

02 January 2024

 

Tan Delta Systems plc

("Tan Delta" or the "Company")

Trading update

Tan Delta Systems plc (AIM:TAND), a leading provider of intelligent monitoring and maintenance systems for commercial and industrial equipment announces a trading update for the year ended 31 December 2023 ("FY 2023").

Revenue for FY 2023 is expected to be approximately £1.44 million (FY 2022: £1.6 million). Whilst this is below original management expectations, the timing of the year end has ultimately straddled a number of mature trials that had been expected to commence roll out towards the end of H2 2023, but due to customer logistics, are now expected to commence in H1 2024. The Board is keen to emphasise that good and comprehensive progress has been made on these mature trials and alongside these, numerous other trials and roll outs have progressed as expected.

A key operational focus for H2 2023 was to hire talented people to support and enable our rapid scaling plans with a particular focus on sales, customer support and production. Pleasingly, good progress has been made including with the appointment of a head of business development for the US, marketing manager, product manager and customer support engineer. The recruitment of the right people is taking time and longer than originally anticipated for certain positions and resulted in a cost saving to that originally budgeted. Accordingly, the Board expects that the Group's adjusted net loss for FY23 will be broadly in line with original management expectations at circa £0.4 million.

Cash remains healthy and is approximately £4.5 million as at the year end. 

Progress on our strategy

Following our successful AIM IPO in August 2023, our objectives were to continue to support existing customer trials and evaluations and for the first time commence global product marketing to pro-actively introduce our existing solutions to new customers in the global heavy-commercial and industrial rotating equipment markets, where reliability, cost reduction and ESG are critical success factors.

In terms of customers, we are progressing discussions with a number of new potential customers including one of the world's largest ship engine manufacturers with 15,000 active engines each requiring ten sensors. Elsewhere we are developing solutions for one of the world's leading oil and gas producers seeking to optimise their use of oil and decrease their maintenance costs both of which contribute towards their ESG targets. More recently, we signed an evaluation agreement with Siemens to trial our sensors on their baggage handling equipment, which could open a new vertical with the potential for significant sensor volumes.

In October, we rolled out our first ever marketing program through selected digital channels, which was also complemented by two new sales hires. This successfully generated a significant number of enquiries across multiple market segments and product groups as the global market learns about our technology and products for the first time. A Tan Delta system is a considered purchase by substantial companies and thus we expect to see these enquiries begin converting into sales from the end of Q1 2024 and then continue to grow strongly as we continue to ramp up marketing activities and attend the first of a series of exhibitions as an exhibitor.

Additional non-executive director search

As set out in the Company's Admission Document, the Company remains committed to appointing a second independent non-executive director.  The Company is in active discussions to fill this position, although no formal offer has yet been made. However, the Board are optimistic that an appropriate candidate will be appointed in due course, and further updates will be made as appropriate and as soon as practicable.

Outlook

Whilst a little slower than originally envisaged, the Company has gained significant momentum since its AIM IPO in August 2023 which continues to accelerate. We are deploying our investment capital diligently and have seen a significant increase in sales pipeline, in part due to our successful initial marketing efforts. Accordingly, we look forward to 2024 with great optimism as we continue to implement our business plan and introduce commercial and industrial operators of equipment with intelligent monitoring and management systems that enable them to reduce costs, improve reliability and hit their ESG targets.

For enquiries, please contact:

Tan Delta Systems plc	[phone]
Chris Greenwood, CEO
Steve Johnson, CFO
Zeus (Nominated Adviser and Broker)	[phone]
David Foreman, James Hornigold, Ed Beddows (Investment Banking)
Nick Searle (Sales)

 

END