Final Results

Tan Delta (AIM:TAND), a leading provider of intelligent real time sensor based monitoring and maintenance systems for commercial and industrial equipment, announces its audited results for the twelve months ended 31 December 2025.

FINANCIAL HIGHLIGHTS

• Revenue of £1.22 million (2024: £1.22 million)
• Gross profit margin of 60% (2024: 62%)
• Adjusted loss before tax* of £1.55 million (2024: £1.14 million)
• Cash balances of £1.49 million as at 31 December 2025 (31 December 2024: £3.08 million), with no bank debt at either year end.

COMMERCIAL HIGHLIGHTS

• Commercial opportunity pipeline increased to over £75 million (2024: £35 million)
• Multiple paid-for customer evaluations progressing towards potential fleet-wide rollouts
• Strategic agreement signed with global oil producer
• Second phase evaluation initiated with the world's largest online retailer
• Continued engagement with major global OEMs and industrial operators

* Adjusting costs of £0.04 million (2024: £0.04 million) comprising share options costs.

This year has seen continued solid progress towards largescale rollouts and widescale market adoption. Multiple customers are progressing paid-for evaluations of our real time oil analysis solutions with a view to future fleet rollouts and long term adoption. We currently have visibility of future prospects potentially worth more than £75 million.

Revenue for 2025 was £1.22 million (2024: £1.22 million) with a gross profit margin of 60% (2024: 62%), resulting in an adjusted loss for the period of £1.55 million (2024: £1.14 million). The increased loss reflects increased overheads to support expanding customer trial support activities. As at 31 December 2025, the Company has no bank debt and cash balances were £1.49 million.

Industrial and commercial equipment operators are understandably cautious when adopting technologies that may become embedded within their maintenance and operational practices for many years. As a result, the path to full deployment typically involves a structured process of evaluation, technology validation, operational testing, and rollout planning. While this creates longer sales cycles, it also establishes a robust foundation for long-term customer relationships and large-scale adoption.

Against this backdrop, I am pleased to report that Tan Delta Systems plc has continued to make significant progress. Market awareness of our technology is increasing, the number of active customer evaluations continues to grow, and we have a healthy pipeline of prospects at various stages of the assessment and deployment process. This momentum is reflected in the value of visible rollout opportunities, where customers are engaged in paid evaluation programmes, which increased from approximately £35 million in 2024 to more than £75 million in 2025.

Supporting these opportunities has required increased operational focus and customer engagement. Our teams have dedicated considerable effort to ensuring customers receive the technical and commercial support necessary to successfully evaluate our technology and build confidence for wider deployment. This increased activity is reflected in our overhead costs during the year.

Several notable milestones were achieved during the period. These included a major global e-commerce operator progressing to a second phase of evaluation across multiple sites, the commencement of a programme with one of the world's leading baggage handling companies to monitor gear motors used in conveyor systems, and the signing of a strategic agreement with Shell Marine. Together, these initiatives demonstrate the broad applicability of our technology across multiple industrial sectors and asset types.

As customer engagement has expanded, our principal operational challenge has been ensuring that we have sufficient resources to support the growing number of evaluations and prepare for anticipated future rollouts. Accordingly, we have prioritised investment in customer support, deployment readiness, and operational capability, while moderating expenditure on new product development activities during the period.

The long-term fundamentals underpinning our business remain highly attractive. Equipment operators across industries continue to face increasing pressure to reduce operating costs, improve reliability, extend asset life, and meet sustainability objectives. Our strategy remains focused on supporting customers through evaluation, validation, and deployment, while building a growing base of reference customers that can accelerate wider market adoption. As real-time oil condition monitoring becomes increasingly recognised as a critical component of predictive maintenance programmes, we expect customer references and successful deployments to contribute to shorter sales cycles and broader commercial adoption over time.

While the timing of customer deployment decisions remains difficult to predict with precision, we expect a number of ongoing evaluations to progress towards commercial rollout decisions during late 2026, with adoption expected to build thereafter.

Finally, I would like to express my sincere gratitude to our employees, shareholders, customers, suppliers, and fellow Board members. Their continued support, commitment, and belief in our vision have been instrumental in the progress achieved to date. Together, we remain focused on building a sustainable, scalable business that delivers long-term value for all stakeholders.

STRATEGIC REPORT

The directors present their strategic report for the year ended 31 December 2025.

BUSINESS REVIEW

The principal activity of Tan Delta Systems plc is the development and supply of oil condition monitoring equipment into a diverse range of global markets, delivering services that enable operators of rotating equipment, from trucks and ships to generators and wind turbines, to reduce oil consumption, maintenance costs, breakdowns and carbon footprint.

The Key Performance Indicators (KPIs) used by the Board to monitor performance are revenue growth, gross profit margin, adjusted profit margin and cash conversion. These measures are in line with the Company's strategic objectives of delivering profitable growth which in turn drive shareholder value.

MARKET REVIEW

Industrial operators are increasingly adopting predictive maintenance and real-time condition monitoring technologies to improve reliability, reduce maintenance costs and support operational efficiency objectives.

Across industrial sectors there is a growing focus on reducing downtime, extending equipment life and improving sustainability outcomes through better use of operational data and real-time monitoring solutions.

The Company continues to focus on sectors where the operational and commercial benefits of condition monitoring are most compelling, including power generation, mining, industrial equipment, marine and transportation.

Tan Delta Systems plc has strategically targeted key sectors, including Power Generation, Mining, Commercial Marine, Agriculture, and Transportation. Our product offering is continuously refined to address the specific needs and challenges of these markets, delivering clear and compelling value propositions that drive the adoption of our sensing technology.

Section 172 and Stakeholder Engagement

Ensuring meaningful engagement with stakeholders is crucial for our achievements, enabling the Board and management to enhance decision-making. The Board acknowledges its duty to comprehend and weigh stakeholder perspectives in its decision-making framework, steadfast in cultivating productive business connections. Tan Delta Systems plc's strategy regarding stakeholder engagement and our Section 172 Statement can be found on page 13.

FINANCIAL REVIEW

Whilst revenue was consistent (2025: £1.22 million, 2024: £1.22 million), the Company saw a significant improvement in convertible pipeline opportunities. Although conversion in 2025 was lower than anticipated, the opportunities still exist and we remain focused on order acquisition in 2026.

Revenue

Revenue in the year was generated by sales of oil condition monitoring equipment from a wide range of customers and sectors.

We saw a decrease in revenue achieved in the UK due to a slower than expected roll out with a number of customers. Annual revenue for Europe and Rest of the World increased by 6% on average in 2025.

Gross profit

Gross profit margin decreased from 62% in 2024 to 60% in 2025, whilst ensuring that our product offering has an attractive return for our customers. Inflation on supply was reduced compared to previous years and any future cost pressure is expected to be passed on through pricing and mitigated by good supply chain management. Since year end, there has been a comprehensive review of all price lists which will help maintain margins at historical levels.

Operating expenses

Operating expenses grew (2025: £2.40 million, 2024: £2.09 million) due to the full year effect of additional costs incurred during 2024 as the business established the right structure to support growth plans.

Reported loss/profit before tax

The reported loss before tax was £1.59 million in 2025 (2024: £1.17 million). During the year, operating expenses increased because of investments in sales, marketing, and product development. Interest income was £0.09 million lower than 2024.

Finance income and expenses

Cash reserves were invested in interest earning bank accounts generating interest income of £0.08 million (2024: £0.17 million).

Interest expense was accounted for on the right of use asset in accordance with IFRS 16.

Cash

The year-end cash balance for 2025 was £1.49 million (2024: £3.08 million).

Accounting policies

The financial information has been prepared consistently in accordance with the UK adopted International Accounting Standards.

Use Of Non-GAAP Financial Performance Measures

This Annual Report and Financial Statements include certain alternative performance measures that are not defined by UK‑adopted International Financial Reporting Standards ('IFRS'). The directors consider that these measures, when presented alongside the most directly comparable IFRS measures, provide useful additional information to shareholders and enhance an understanding of the Group's financial performance. Management uses these measures, together with the related IFRS measures, to monitor and assess the Group's operational performance. Alternative performance measures should not be considered in isolation or as a substitute for information presented in accordance with IFRS.

The following table provides a reconciliation of the alternative performance measures to the most directly comparable IFRS measures.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2025

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2025

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2025

Segmental reporting

The Chief Operating Decision Maker ("CODM") has been identified as the directors. The CODM reviews the Company's internal reporting in order to assess performance and allocate resources. The CODM has determined that there is one single operating segment, being the manufacture and sale of oil sensors.

Administrative expenses by nature

Included in Administrative expenses is auditors' fees of £67,850 (2024: £59,631). There are no non audit fees in either year. Employee benefits and expenses (including directors) were £1,592,593 in 2025 (2024: £1,261,265). During the year ended 31 December 2025, the Company capitalised staff costs of £nil (2024: £20,003). This amount has been included within intangibles in the statement of financial position. Research and development expenditure recognised as an expense in 2025 is £53,405 (2024: £25,757).

Directors' remuneration

Directors' remuneration continued

In 2025 the highest paid director received £157,500 (2024: £136,500). There was no compensation for loss of office for the directors that resigned during the year.

In 2023, the Company granted 1,253,745 share options to two Executive directors, in line with the disclosures set out in the Company's Admission Document. The options have an exercise price of 26p. Steve Johnson's options (250,749 shares) were cancelled on 5 July 2024.

Interest expense

12 months ended 12 months ended 31-Dec-25 31-Dec-24 £ £ Interest on finance leases 1,778 2,612 1,778 2,612 8. Interest income 12 months ended 12 months ended 31-Dec-25 31-Dec-24 £ £ Interest Income 76,125 166,261

Taxation

The total charge for the year can be reconciled to the accounting profit as follows:

In 2025 Tan Delta Systems plc used 25% (2024: 25%) as the corporate effective tax rate. The Company was not liable for corporation tax during the past two years due to taxable losses being sustained in each of the years reported. A deferred tax asset has not been recognised in respect of such losses due to uncertainty of future profit streams. The Company will recognise a deferred tax asset when there is clear visibility of profits. Accumulated tax losses carried forward were £3.3 million (31 Dec 2024: £1.7 million)

Earnings per share

The calculations of basic and diluted earnings per share are based upon:

The calculation of basic earnings per share is based on the results attributable to ordinary shareholders divided by the number of ordinary shares outstanding as if the bonus issue and share split had occurred at the beginning of the earliest period presented. The earnings per share calculations for the period and prior period presented are based on the new number of shares.

The number of shares in issue at the end of the period is used as the denominator in calculating basic earnings per share. As the Company is loss making the effect of instruments that convert into ordinary shares is considered anti-dilutive, hence there is no difference between the diluted and non-diluted loss per share.

Intangible assets

Intangible assets

£

2025

Cost

Intangible assets comprise the costs incurred during the development of Tan Delta Systems plc products and software. They are amortised on a straight-line basis over their estimated useful lives from the date they are available for use.

An amortisation period of three years has been adopted based on the expected period of commercial advantage of the technology. Useful lives are reconsidered if circumstances relating to the asset change or if there is an indication that the initial estimate requires revision. Impairment assessments are performed regularly to identify whether any internal or external indicators of impairment exist. Based on these reviews, the carrying value of assets does not exceed their recoverable amounts.

Right of use asset

Right of use asset

£

2025

Cost

The Company leases one property for commercial use with a lease term of 10 years (remaining lease term is 1 year and 6 months). All lease payments, in substance, are fixed over the term and are capitalised as part of the right-of-use asset. All expected future cash out flows are reflected within the measurement of the lease liabilities at each year end.

Impairment assessments are performed regularly to identify whether any internal or external indicators of impairment exist. Based on these reviews, the carrying value of assets does not exceed their recoverable amounts.

Property, plant and equipment

Impairment assessments are performed regularly to identify whether any internal or external indicators of impairment exist. Based on these reviews, the carrying value of assets does not exceed their recoverable amounts.

Inventories

The cost of inventories recognised as an expense in the year ended 31 December 2025 amounted to £407,598 (2024: £360,554). This is included in cost of sales in the statement of profit or loss and comprehensive income. During the year ended 31 December 2025, the Company wrote off a total stock value of £nil (2024: £nil). Prior year provision of £8k was released through cost of sales in 2025.

Trade and other receivables

Refer Note 22 to the financial statements for further details on expected credit losses.

Cash and cash equivalents

Included in cash and cash equivalents are balances held either in instant access accounts or in accounts where funds can be accessed when giving the bank thirty-two days' notice. These balances have accordingly been classified as cash and cash equivalents.

• Trade and other payables 12 months ended 12 months ended 31-Dec-25 31-Dec-24 £ £ Trade payables 147,157 380,324 Other payables 23,207 30,778 Other Taxation and social security 39,544 29,789 Accruals 72,544 64,414 Deferred Income 8,623 9,631 291,075 514,936 18. Borrowings and liabilities 12 months ended 12 months ended 31-Dec-25 31-Dec-24 £ £ Current: Bank loans - - Lease liability 29,080 28,221 29,080 28,221 Non-current: Bank loans - - Lease liability 14,869 43,949 14,869 43,949
• Share capital

Called up share capital represents the nominal value of shares that have been issued. All classes of shares have full voting, dividends, and capital distribution rights.

Share Premium

Share premium account

This represents the excess value recognised from the issue of ordinary shares above nominal value.

Share Based Payments

When the Company listed on AIM in August 2023, it instituted an EMI share options scheme. The Company granted 1,253,745 share options in line with the disclosures made in the Company's Admission Document. The options have an exercise price of 26p. These options are granted in five equal tranches and will vest annually over five years. The fair value of each option granted was estimated on the grant date using the Black Scholes option pricing model with the following assumptions:

On 5 July 2024 250,749 shares granted to Steve Johnson were cancelled.

Other reserve

This represents the cumulative fair value of share options charged to the statement of comprehensive income net of the transfers to the profit and loss reserve on exercised and cancelled/lapsed options.

Financial instruments and risk management

The Company has exposure to the following risks from its use of financial instruments;

• Market risk
• Liquidity risk
• Credit risk
• Foreign exchange risk

This note presents information about the Company's exposure to each of the above risks, objectives, policies and processes for measuring and managing risk as well as the Company's management of capital. The Board of directors has the overall responsibility for the establishment and oversight of the Company`s risk management framework.

The table below sets out the Company's classification of financial assets and liabilities in the statement of financial position. There were no financial assets and liabilities in the following category in 2025 and 2024 financial periods;

• Financial assets and liabilities at fair value through profit and loss.

Fair value of financial instruments continued

Fair value of financial instruments continued

The estimated net fair values as at 31 December 2025 have been determined using available market information as outlined below. This value is indicative of the amounts the Company could realise in the normal course of business.

The fair value of receivables, bank balances, and payables approximate their carrying amount due to the short-term maturities of these instruments. The fair value of finance lease liabilities is not significantly different to their carrying values, as the carrying values approximate their fair values.

Financial assets and liabilities disclosures require the measurement of fair values which differ from the carrying values of these financial assets and liabilities. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

use of inputs that are unobservable in the market. As such the fair value hierarchy of the entity's financial instruments is a level 3.

Fair value hierarchy

All financial instruments measured at fair value must be classified into one of the levels below:

• Level 1: Quoted prices in active markets;
• Level 2: Level 1 quoted prices are not available, but fair value is based on observable market data; and
• Level 3: Inputs that are not based on observable market data.

Market risk

Market risk is the risk that changes in market prices such as interest rates will affect the Company's income or expenses. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return on risk.

Fair value of financial instruments continued

Interest rate risk management

Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates. The Company is exposed to fluctuations in interest rates (i.e. cash flow interest rate risk) on its bank balances and finance leases. It does not at present hedge its exposure to adverse interest rate movements.

At the reporting date the interest rate profile of the Company's interest-bearing financial instruments was:

Cash flow sensitivity analysis for variable rate instruments:

A change of 100 basis points in interest rates at the reporting date would have increased/ (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables in particular foreign currency rates remain constant:

Fair value of financial instruments continued

Liquidity risk

Liquidity risk arises when there are insufficient liquid assets (cash and readily convertible securities) available to meet financial obligations. There were no material changes in the exposure to liquidity risk and its objectives, policies and processes for managing and measuring the risk during the current financial year.

The Company's approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Company's reputation.

The Company ensures that it has sufficient cash on demand to meet expected operational expenses in the short-term including the servicing of financial obligations this excludes the potential impact of extreme circumstances that cannot reasonably be predicted such as natural disasters.

The following liquid resources are available:

The table below analyses the Company's financial liabilities which will be settled on a gross basis into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.

Fair value of financial instruments continued

Credit risk

This risk represents the risk that the borrower or counterparty fails to meet an obligation when it falls due. The exposures may arise, for instance from deterioration in the borrower's financial position, from a reduction in the value of securities held as collateral and from entering into contracts under which counterparties have an obligation to repay. In order to minimise the risk, the Company endeavours only to deal with companies which are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously monitored.

IFRS 9 requires the use of forward-looking information to recognise expected credit losses - the 'expected credit loss model'. Recognition of credit losses is not dependent on the Company first identifying a credit loss event, instead the Company considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current economic conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

When the Company becomes aware of a financial asset that is irrecoverable, the Company writes off the financial asset through the profit and loss. The Company considers its maximum exposure per class to be as follows:

Fair value of financial instruments continued

Credit risk continued

Cash and cash equivalents

The Company determines appropriate internal credit limits for each counterparty. In determining these limits, the Company considers the counterparty's credit rating established by an accredited ratings agency and performs internal risk assessments.

The Company holds its cash balances in financial institutions with a rating of A+ and BBB+.

Given these credit ratings, management does not expect any counterparty to fail to meet its obligations. While cash and cash equivalents are subject to the impairment requirements of IFRS9, no impairment losses were identified.

Trade receivables

The Company has adopted a simplified approach for determining expected credit losses which considers the lifetime of assets. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. The expected credit losses are calculated based on the probable defaults which are considered on the historic payment trends of the customer, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Company assesses impairment regularly of trade receivables on a collective basis as they possess shared credit risk characteristics based on grouping debt by days overdue. On that basis the expected credit loss allowance was determined to be immaterial.

Fair value of financial instruments continued

Credit risk continued

Trade receivables continued

The ageing of trade receivables and credit loss allowances at the reporting date were:

Foreign exchange risk

Foreign exchange risk arises when the Company enters into transactions in a currency other than its functional currency. The Company's policy is, where possible, to settle liabilities denominated in a currency other than its functional currency with cash already denominated in that currency.

Related party transactions

During the year, the key management personnel remuneration included within staff costs are as follows:

Key management personnel are considered to be the directors of Tan Delta Systems plc.

Events after reporting period

No adjusting or significant non-adjusting events have occurred between reporting date and the date of authorisation.