TIDMTRT
RNS Number : 5447C
Transense Technologies PLC
20 October 2020
20 October 2020
Transense Technologies plc
("Transense", or "the Company")
Final results for the year ended 30 June 2020
Transense Technologies plc (AIM: TRT), the provider of
specialist sensor systems, reports final results for the year ended
30 June 2020 and sets out strategic plans for future growth:
Commercial Highlights
-- Transense complete licence agreement with Bridgestone Corporation for iTrack IP
-- iTrack operating business transferred to Bridgestone and
royalty income to commence in July 2020
-- Breakthrough deal - reduces risk profile by moving Transense
towards financial self-sufficiency
-- US Army & GE Aviation Improved Turbine Engine Program
("ITEP"); three critical design reviews completed on schedule, with
first engine to test due in third quarter 2021
-- New TLGX Series of tyre inspection tools launched
-- New leadership and management focus in both SAW and Translogik
Financial Highlights
-- Transfer of iTrack operating business and assets to
Bridgestone realises net cash of GBP1.04m (after repayment of
loans, but before costs). Transaction eliminates future net trading
losses on discontinued activities, which amounted to GBP1.45m in
year ended 30 June 2020
-- Revenues from continuing operations in line with prior year at GBP0.60m (2019: GBP0.60m)
-- EBITDA loss from continuing operations reduced to GBP0.68m (2019: GBP0.70m)
-- Net loss after taxation from continuing operations of GBP1.09m (2019: GBP0.84m)
-- Net loss after taxation for the year of GBP2.54m (2019: GBP1.47m)
-- Cash and cash equivalents at year end of GBP1.19m (2019: GBP2.65m)
Post period end highlights
-- iTrack royalty, SAW and Translogik probe all showing signs of growth
-- Breakeven in unaudited Q1 FY21 profit before tax v GBP0.60m
loss in Q1 FY20, future profitability now visible
-- Formed Commercial Advisory Panel for SAW to provide sector insights
-- P roposals to change capital structure at AGM to facilitate future distributions
Executive Chairman of Transense, Nigel Rogers, said:
"It has been an exciting year for Transense. The licensing of
existing and future iTrack technology to ATMS Technology Limited, a
subsidiary of Bridgestone Corporation Japan, was completed towards
the end of the year and will achieve a transformation of the
Company's future prospects. This transaction should put Transense
in the unprecedented position of being financially self-sufficient
and in turn enable management to increase their focus on the
commercialisation of our Surface Acoustic Wave technology, and
development of our tyre probe business, Translogik.
We believe that our technical leadership offers an exceptional
approach to problem solving for customers seeking improved
performance, efficiency and safety. Our challenge now is to
generate additional enquiries in order to derive the full benefit
of these core strengths.
Trading in the first quarter of the current financial year was
in line with expectations and reflects the substantial reduction in
overheads. The unaudited pre-tax result in Q1 FY 21 shows the
business trading around break-even level compared to a loss of
GBP0.6m incurred in Q1 FY 20.
Early indications are that royalty income on iTrack deployment
during the current financial year has significant growth potential,
although caution is clearly applicable in view of the global risks
associated with the broader economic and practical effects of the
Covid-19 pandemic.
Meanwhile, with a fresh management grip on the commercial
development of SAW, and a range of new products for Translogik we
look forward with enhanced confidence."
For further information please visit www.transense.com or
contact:
Transense Technologies plc Tel: +44 (0) 1869 238380
Nigel Rogers (Executive Chairman)
Melvyn Segal (CFO)
Allenby Capital (Nomad and Broker) Tel: +44 (0)20 3328
Jeremy Porter/James Reeve (Corporate Finance) 5656
Tony Quirke (Equity Sales)
About Transense
Based in Oxfordshire, UK, Transense has developed
patent-protected sensor systems and supporting technology for use
in a variety of diverse high growth markets. The directors believe
that Transense's Surface Acoustic Wave (SAW), wireless,
battery-less, sensor systems offer significant advantages over
legacy wireless sensor systems. Transense is targeting the torque,
temperature and pressure sensing markets with its SAW technology.
Translogik offers a range of tyre testing equipment aimed at fleet
managers and tyre service providers.
Transense's shares are admitted to trading on AIM, a market
operated by the London Stock Exchange (AIM: "TRT").
www.transense.com
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Chairman's statement
I am very pleased to report the final results of the Company for
the year ended 30 June 2020, following my appointment as Chairman
in February 2020, and subsequently as Executive Chairman in June
2020.
It has been an exciting year for Transense. The completion of
the licensing of existing and future iTrack technology to ATMS
Technology Limited ("ATMS"), a subsidiary of Bridgestone
Corporation, Japan ("Bridgestone") towards the end of the year
marked the delivery of a transformation in the Company's prospects.
This will put Transense in the unprecedented position of being
financially self-sufficient and will in turn facilitate increased
management focus on the commercialisation of our Surface Acoustic
Wave ("SAW") technology, and development of our tyre probe
business, Translogik.
We are determined to take this opportunity to deliver further
commercial success with SAW. We fully recognise the trend towards
more highly automated machinery and robotics and the continuous
need to improve the efficiency, diagnostics and control of
equipment and vehicles and by doing so achieving global targets for
emissions reduction.
We believe that our patented SAW sensor technology can help our
customers to achieve these goals, through the accurate non-contact
measurement of torque and other key parameters in their products
and systems that has been rigorously tested in the most demanding
of environments and applications.
Strategy
The business strategy of the Group continues to be the
development of innovative sensing solutions across a range of
applications, which are commercialised either through the launch of
products and services to customers or by forming strategic
alliances with partner organisations. Value is realised through a
combination of commercial income, royalties, licensing income and
capital gains on disposals .
In recent years, the Company has devoted significant time and
financial resources into the development of the iTrack system, a
comprehensive tyre monitoring system used by mine operators to help
optimise operations for increased productivity and profitability.
In August 2019, the Company entered into a Joint Collaboration
Agreement with Bridgestone, to offer the iTrack system exclusively
to its global customer base.
The success of this arrangement led in June 2020 to Transense
granting a ten year worldwide exclusive licence over current and
future iTrack technology to ATMS, a subsidiary of Bridgestone, in
exchange for a royalty payment based on the number and
classification of vehicles with iTrack fitted. At the end of the
ten year period, ATMS will have an option to purchase the iTrack
technology for a nominal sum. The operating business and net
trading assets relating to iTrack were also transferred to ATMS for
a gross consideration of US$3.26m facilitating the repayment of all
Bridgestone's loans of $1.95m. At the year end outstanding
consideration of $1.62m was due and loans of $1.2m were still
outstanding. Both of these were settled in full by the end of
September. The initial royalty receivable from ATMS in respect of
vehicles using the iTrack system at completion was at a run rate of
approximately GBP0.60m per annum.
Under these arrangements, the Company will continue to derive a
significant and growing royalty income stream from the vastly
enhanced commercial opportunities and resources contributed by
Bridgestone/ATMS. Furthermore, our partnership eliminates the
investment risk that would have been associated with continuing to
build the sales & marketing, customer service and product
development infrastructure that would have been required as an
independent participant in a large and geographically diverse
global market.
Consequently, we go forward with a significantly lower strategic
risk profile from which to explore opportunities for our continuing
technology interests, both in SAW and in Translogik tyre monitoring
equipment.
SAW technology
Revenues from SAW technology (including grant income) were
steady at GBP0.21m (2019: GBP0.21m), and this segment generated a
trading loss of GBP0.58m (2019: GBP0.28m), which included increased
amortisation and one-off impairment charges relating to intangible
patent assets.
T ransense aims to be the world's first choice provider of SAW
sensor solutions. We will achieve this by continuing to identify
innovative methods to apply our patented technology, and by the
subsequent transfer of know-how to major corporate partners in
carefully selected target industry sectors. We seek to strengthen
the presence of our technology in a broader range of applications
by actively marketing the provision of technical, engineering
consultancy and proto-typing services. Our goal is to commercialise
at scale by establishing licensees, joint ventures or other
strategic alliances with the support of a secure supply chain.
The credentials of our SAW technology have been validated by its
selection after rigorous testing by GE Aviation for use in the GE
T901 Improved Turbine Engine Program ("ITEP"), under which the US
Army will re-engine its Boeing AH-64 Apaches and Sikorsky UH-60
Black Hawk helicopters. Over a period of years, the US Army intends
to replace more than 6,000 engines installed in their current fleet
of these two aircraft. The wider market for the T901 engine
includes replacement engines for these aircraft in military forces
outside of the US, as well as other military and commercial medium
sized vertical take-off aircraft globally. During 2020, the ITEP
successfully completed each of three Critical Design Review events
and is on schedule to execute the First Engine To Test assembly of
all subcomponents in the second half of calendar year 2021. We have
continued to work in close co-operation with GE's specified first
tier system supply partners to support these activities.
Our sensors are also installed on drive input shafts supplied to
the NTT IndyCar series by McLaren, to provide encrypted torque data
used to regulate the power rating permitted to individual race
teams. There are further opportunities to expand the use of this
technique into alternative race formats.
There is now a clear focus on the need to expand the commercial
reach of this technology. Towards the end of the financial year
Nick Hopkins was appointed to lead our SAW team as Managing
Director, reporting to the Board. Nick has previously worked with
Anthony and Bryan Lonsdale who were instrumental in developing the
SAW applications used by Transense and will be supported by Chief
Technology Officer, Victor Kalinin. Since his appointment, the
Board has approved plans to further develop the business. Our short
term aim is to generate additional commercial and grant support
income to ensure that SAW makes a positive contribution to the
Company's financial results.
Beyond this relatively modest ambition, we have formulated plans
to develop our network in carefully selected market sectors in
which we anticipate growth opportunities, including all forms of
transport, both on- and off-road, to include the leisure,
commercial and domestic markets, avionics, industrial turbines and
green energy. We have made significant progress in forming a
Commercial Advisory Panel (CAP); a group of senior industrialists
with knowledge, experience and insight into these key sectors. It
is now our intention to implement plans to increase our market
engagement, including direct referrals, as well as enhanced
website(s), social media presence and participation in technical
webinars and symposiums.
We believe that our technical leadership offers an exceptional
approach to problem solving for customers seeking improved
performance, efficiency and safety. Our challenge now is to
generate additional commercial opportunities in order to derive the
full benefit of these core strengths.
Translogik tyre inspection probes
Revenues from Translogik probes increased by 7% to GBP0.51m
(2019: GBP0.48m), and this segment generated a trading profit of
GBP0.12m (2019: GBP0.19m), primarily as a consequence of increased
marketing and product development expenditure.
Our product range comprises accurate and reliable inspection
gauges for car and commercial truck and bus tyres, allowing
effortless and rapid reading of tread depth, tyre pressure, radio
frequency identification ("RFID") and tyre pressure monitoring
system ("TPMS") data. This data can be transferred via Bluetooth to
a smart device and stored and displayed on the customers' tyre
management software system. Translogik probes are specified for use
in the Goodyear Tire Optix system, the Bridgestone 'Toolbox' and
'Total Tyre Care' systems, and the Continental 'Fleetfox' system,
underpinning our belief that they represent an industry
standard.
During the year, product development was underway to support the
recent market launch of the new TLGX Series, a modular range of
four new gauges offering a broad variety of features at competitive
prices. These have been developed primarily for system integrators
and fleet management software providers, and early indications of
interest are encouraging.
Capital Structure
The Board considers it important that the Company has the
flexibility to pay dividends and make other returns of capital to
shareholders when appropriate and desirable to do so. This will,
however, require certain actions relating to the current capital
structure of the Company. Accordingly, the Board will bring forward
proposals at the forthcoming Annual General Meeting to cancel all
outstanding deferred shares, and the amount standing to the credit
of the share premium account.
Financial results and condition
Revenues for the year from continuing operations were steady at
GBP0.60m (2019: GBP0.60m). Subscription revenues generated from
users of the iTrack system were accounted for as part of
discontinued activities and increased by 50% to GBP1.47m (2019:
GBP0.98m). In the current and subsequent financial years, royalty
income from iTrack will be accounted for as part of continuing
operations and will commence at the rate of GBP0.60m per annum,
increasing in line with the growth in the installed base.
Gross margin was 55.1% of revenues from continuing operations
(2019: 63.1%).
Administrative expenses were slightly increased at GBP1.70m
(2019: GBP1.58m), mainly as a result of increased amortisation and
one-off impairment charges relating to intangible SAW patent
assets. The net loss before taxation from continuing operations was
GBP1.27m (2019: GBP1.12m).
The total comprehensive loss for the year was GBP2.54m (2019:
GBP1.47m), reflecting the loss on discontinued activities of
GBP1.45m (2019: GBP0.62m) and an R&D tax credit of GBP0.18m
(2019: GBP0.28m).
Net cash used in operations increased to GBP1.86m (2019:
GBP0.43m), which includes the cash resources absorbed by iTrack
operating activities during the year of GBP1.33m up to the date of
the transfer of the business to ATMS on 24 June 2020 (2019:
GBP0.33m). The Company closed the year with net cash and cash
equivalents of GBP1.19m (2019: GBP2.65m). The completion balance
sheet relating to the iTrack business was agreed between the
Company and ATMS after the end of the financial year on 10
September 2020, at which time the balance of the consideration
monies was settled. Including the Bridgestone loan repayment and
payment of related fees, there was no significant net effect on
post year end cash.
Board and advisor changes
It is clear that the business has changed over the course of the
year under review, and particularly as a consequence of the
transactions with ATMS/Bridgestone. As a key part of these
arrangements, David Ford and Graham Storey-Macintosh (formerly
Chairman and Chief Executive respectively) left the Transense board
and transferred to lead ATMS as Chief Executive and Director of
Global Sales respectively. On behalf of the board and shareholders,
I would like to take this opportunity to express our gratitude for
their major contribution to the development of the Group's
businesses over several years. I also wish them a bright future,
not least because of our continuing financial interest in the
success of their new venture.
It has been a very enjoyable challenge to Chair the Board since
February and lead the negotiations with Bridgestone. On completion,
I was also happy to commit additional time capacity to the Company
by accepting the role as Executive Chairman. I have been very ably
supported throughout by Melvyn Segal as Chief Financial Officer and
Rodney Westhead, our Senior Independent Non-Executive Director. We
are mindful that it may be beneficial to add to the board in due
course, however we are currently satisfied that we have the
requisite knowledge and experience to fully discharge the
responsibilities of the Board.
We have also taken the opportunity afforded by this major change
in the structure of the Company's business to review our advisory
and compliance support arrangements. Accordingly, we have appointed
Cooper Parry as Auditors, and Allenby Capital as Nominated Advisor
and Broker. We consider that these new arrangements provide the
correct blend of scale and skills to meet the needs of the Company
and its shareholders at the current time, and for the foreseeable
future.
Current trading and prospects
Trading in the first quarter of the current financial year is in
line with expectations and reflects the substantial reduction in
overhead. Revenues from SAW and Probes have increased compared to
the same period last year and early indications are that royalty
income on iTrack deployment during the year has significant growth
potential, although caution is clearly applicable in view of the
global risks associated with the broader economic and practical
effects of the Covid-19 pandemic. The unaudited pre-tax result in
Q1 FY 21 shows the business trading around break-even level
compared to the loss of GBP0.6m incurred in Q1 FY 20.
The iTrack licence deal has both simplified and de-risked the
business going forward, and moves Transense closer to the original
model of developing and licensing technology. We now have a
reasonable expectation that the Company will be financially
self-sufficient for the foreseeable future.
Meanwhile, we have a fresh management grip on the commercial
development of SAW, and a range of new products for Translogik.
Accordingly, we look forward with renewed confidence.
Nigel Rogers
Executive Chairman
20 October 2020
Strategic Report
Financial Review
Results for the year
Revenues for the year from continuing operations were steady at
GBP0.60m (2019: GBP0.60m).Subscription revenues generated from
users of the iTracksystem were accounted for as part of
discontinued activities and increased by 50% to GBP1.47m (2019:
GBP0.98m). In the current and subsequent financial years, royalty
income from iTrack will be accounted for as part of continuing
operations and will commence at the rate of GBP0.60m per annum,
increasing in line with the growth in the installed base.
Gross margin was 55.1% of revenues from continuing operations
(2019: 63.1%).
Administrative expenses were slightly increased at GBP1.70m
(2019: GBP1.58m), mainly as a result of increased amortisation and
one-off impairment charges relating to intangible SAW patent
assets. The net loss before taxation from continuing operations was
GBP1.27m (2019: GBP1.12m).
The total comprehensive loss for the year was GBP2.54m (2019:
GBP1.47m), reflecting the loss on discontinued activities of
GBP1.45m (2019: GBP0.62m) and an R&D tax credit of GBP0.18m
(2019: GBP0.28m).
The Earnings per share (EPS) are set out below (in Pence):
2020 2019
EPS (loss from continuing operations) (6.7) (6.4)
EPS (total loss) (15.6) (11.1)
Taxation
The Company has UK tax losses available to carry forward at 30
June 2020 of approximately GBP23m, subject to HMRC agreement.
Certain elements of development expenditure undertaken by the
Company are eligible for enhanced research and development tax
relief which generally relates to salary costs of technical staff.
The accounting treatment adopted is to recognise the R&D tax
credits on a cash basis due to the uncertain nature of the claim.
Following the year end, the Company received R&D tax credits
amounting to GBP0.18m in respect of the year ended 30 June
2019.
Cash flow and financial position
Net cash used in operations increased to GBP1.86m (2019:
GBP0.43m), which includes the cash resources absorbed by iTrack
operating activities during the year of GBP1.33m up to the date of
the transfer of the business to ATMS on 24 June 2020 (2019:
GBP0.33m). During the year, the Company received the benefit of
interest-free working capital loans from Bridgestone of GBP1.59m,
GBP0.61m of which was repaid in June on completion of the transfer,
and the remaining balance was settled after the year end out of the
consideration monies.
The Company closed the year with net cash and cash equivalents
of GBP1.19m (2019: GBP2.65m). The completion balance sheet relating
to the iTrack business was agreed between the Company and ATMS
after the end of the financial year on 10 September 2020, at which
time the balance of the consideration monies was settled. Including
the Bridgestone loan repayment and payment of related fees, there
was no significant net effect on post year end cash.
The forward looking cash flow forecasts based on the anticipated
level of activity indicates that the Group should have sufficient
funds available for the foreseeable future.
Going Concern
The financial statements have been prepared on the going concern
basis.
The Group meets its day to day working capital requirements
through existing cash reserves and does not currently have an
overdraft facility. The Directors have prepared cash flow forecasts
for the period to 30 June 2023. These forecasts indicate that the
Group should continue to be able to operate within its current cash
resources for this period.
Melvyn Segal
Finance Director
20 October 2020
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2020
Year ended Year ended
30 June 30 June
2020 2019
restated
GBP'000 GBP'000
Continuing
operations
Revenue 603 596
Cost of sales (271) (220)
---------------------------------------------- ----------------------------------------------
Gross profit 332 376
Administrative
expenses (1,703) (1,581)
---------------------------------------------- ----------------------------------------------
Operating loss (1,371) (1,205)
Financial income 5 2
Financial expense (17) -
Other income 118 79
---------------------------------------------- ----------------------------------------------
Loss before
taxation (1,265) (1,124)
Taxation 175 283
---------------------------------------------- ----------------------------------------------
Loss for the year
from continuing
operations (1,090) (841)
---------------------------------------------- ----------------------------------------------
Discontinued
operations
Loss for the year
from
discontinued
operations (1,452) (624)
---------------------------------------------- ----------------------------------------------
Loss for the year (2,542) (1,465)
============================================== ==============================================
Basic and fully
diluted loss
per share
(pence)
From continuing
operations (6.68) (6.38)
============================================== ==============================================
From total loss
for the year (15.59) (11.11)
============================================== ==============================================
Loss for the year (2,542) (1,465)
---------------------------------------------- ----------------------------------------------
Other
comprehensive
income:
Exchange
difference on
translating
foreign
operations - 2
---------------------------------------------- ----------------------------------------------
Other
comprehensive
income for the
year - 2
---------------------------------------------- ----------------------------------------------
Total
comprehensive
expense for the
year
attributable to
the equity
holders of the
parent (2,542) (1,463)
============================================== ==============================================
The comparative Statement of Comprehensive Income has been
restated in order to present the results of continuing operations
and discontinued operations separately with no change in the
overall loss for the year.
Consolidated Balance Sheet
at 30 June 2020
30 June 30 June
2020 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
Non current
assets
Property,
plant and
equipment 290 529
Intangible
assets 844 946
---------------------------------------------- ----------------------------------------------
1,134 1,475
Current
assets
Inventories 63 566
Corporation
tax 175 -
Trade and
other
receivables 1,677 789
Cash and cash
equivalents 1,193 2,647
---------------------------------------------- ----------------------------------------------
3,108 4,002
---------------------------------------------- ----------------------------------------------
Total assets 4,242 5,477
Current
liabilities
Trade and
other
payables (854) (604)
Borrowings (976) -
Lease
liabilities (61) -
Current tax
liabilities - (55)
Provisions - (70)
---------------------------------------------- ----------------------------------------------
(1,891) (729)
Non current
liabilities
Lease
liabilities (168) -
---------------------------------------------- ----------------------------------------------
Total
liabilities (2,059) (729)
---------------------------------------------- ----------------------------------------------
Net assets 2,183 4,748
============================================== ==============================================
Equity
Issued share
capital 5,451 5,451
Share premium 2,591 2,591
Translation
reserve - 23
Share based
payments 41 41
Accumulated
loss (5,900) (3,358)
---------------------------------------------- ----------------------------------------------
Total equity 2,183 4,748
============================================== ==============================================
Consolidated Statement of Changes in Equity
Share Share Translation reserve Share based payments Cumulative Total
capital premium losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
July 2018 5,025 682 21 41 (1,893) 3,876
Comprehensive
income for the
year:
Loss for the
year - - - - (1,465) (1,465)
Other
comprehensive
income for the
year:
Currency
movement on
subsidiary
reserves - - 2 - - 2
Total
comprehensive
income for the
year - - 2 - (1,465) (1,463)
Shares issued
and share
premium 426 1,909 - - - 2,335
------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Balance at 30
June 2019 5,451 2,591 23 41 (3,358) 4,748
------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Comprehensive
income for the
year:
Loss for the
year - - - - (2,542) (2,542)
Other
comprehensive
income for the
year:
Currency - - - - - -
movement on
subsidiary
reserves
Total
comprehensive
income for the
year - - - - (2,542) (2,542)
Translation
reserve
recycled on
disposal - - (23) - - (23)
------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Balance at 30
June 2020 5,451 2,591 - 41 (5,900) 2,183
========================================= ============================================== ============================================== ============================================== ============================================== ==============================================
Consolidated Cash Flow Statement
For the year ended 30 June 2020
Year ended Year ended
30 June 30 June
2020 2019
GBP'000 GBP'000
Loss from operations (2,542) (1,465)
Adjustments for:
Taxation (171) (266)
Loss on disposal of
trade and assets 72 -
Net financial
expense/(income) 9 (2)
Depreciation 538 369
Loss on disposal of
fixed assets 18 -
Impairment of - -
investments
Amortisation and
impairment of
intangible
assets 504 396
---------------------------------------------- ----------------------------------------------
Operating cash flows
before movements
in working capital (1,572) (968)
(Increase)/decrease in
receivables (177) (91)
Increase in payables 477 247
(Increase)/decrease in
inventories (582) 119
---------------------------------------------- ----------------------------------------------
Cash used in operations (1,854) (693)
Taxation
(paid)/received (4) 266
---------------------------------------------- ----------------------------------------------
Net cash (used
in)/generated from
operations (1,858) (427)
---------------------------------------------- ----------------------------------------------
Investing activities
Interest received 8 2
Acquisitions of
property, plant and
equipment (764) (424)
Acquisitions of
intangible assets (513) (433)
Investment in - -
subsidiary
Proceeds from disposal
of trade and
assets (net of cash
disposed of) 772 -
---------------------------------------------- ----------------------------------------------
Net cash used in
investing activities (497) (855)
---------------------------------------------- ----------------------------------------------
Financing activities
Proceeds from issue of
equity share
capital - 2,335
Loans advanced 1,585 -
Loans repaid (609) -
Interest paid (17) -
Payment of lease
liabilities (58) -
---------------------------------------------- ----------------------------------------------
Net cash from financing
activities 901 2,335
---------------------------------------------- ----------------------------------------------
Net (decrease) /
increase in cash and
cash equivalents (1,454) 1,053
Unrealised currency
translation gain - 2
Cash and equivalents at
the beginning
of year 2,647 1,592
---------------------------------------------- ----------------------------------------------
Cash and equivalents at
the end of year 1,193 2,647
============================================== ==============================================
NOTES RELATING TO THE GROUP FINANCIAL STATEMENTS
BASIS OF PREPARATION
The group financial statements have been prepared and approved
by the Directors in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the EU and with those
parts of the Companies Act 2006 applicable to companies reporting
under adopted IFRS.
IFRS and IFRIC are issued by the International Accounting
Standards Board (the IASB) and must be adopted into European Union
law, referred to as endorsement, before they become mandatory under
the IAS Regulation.
1 SEGMENT INFORMATION
The Group had two reportable segments being the unique trading
divisions, SAWSense and Translogik, which make use of technology
developed by the Group to measure and record temperature, pressure
and torque. In prior year financial statement disclosures, the
Translogik segment included the material iTrack results. A decision
was made to sell the iTrack trade to Bridgestone and enter into a
licence agreement to receive future royalties. As a consequence of
the focus on the impact of this, Translogik now includes only
continuing activity and the discontinued iTrack activity has been
shown as a separate segment.
The revenues include royalties, engineering support and sale of
product in relation to this technology.
Information regarding the Group's segments is included in the
notes to the financial statements. Revenue and EBITDA are the
Group's key focus and in turn is the main performance measure
adopted by management.
The tables below set out the Group's revenue split and operating
segments. These disclose information for continuing operations and
in view of their relative size, information for discontinued
operations. The disposal of iTrack operations will result in future
royalty income replacing direct sales income and costs.
Revenue
Year ended Year ended Year ended Year ended
30 June 2020 30 June 2020 30 June 2019 30 June 2019
Continuing Discontinued Continuing Discontinued
GBP'000 GBP'000 GBP'000 GBP'000
North
America 282 235 274 469
South
America 83 793 54 616
Australia 5 479 1 397
UK and
Europe 148 - 192 -
Rest of
the World 85 201 75 148
---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
603 1,708 596 1,630
============================================= ============================================= ============================================= =============================================
Segments
Translogik SAWSense Discontinued Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 30
June 2020
Sales 510 93 1,708 - 2,311
===================== ===================== ===================== ===================== ====================
Gross profit 249 83 1,380 - 1,712
Other income - 118 - - 118
Overheads (121) (783) (2,759) (799) (4,462)
----------------------------- ------------------------------ ------------------------------ ------------------------------ -----------------------------
Operating
profit/(loss) 128 (582) (1,379) (799) (2,632)
Net financial
expense - - 3 (12) (9)
Loss on
disposal - - (72) - (72)
Taxation - - (4) 175 171
------------------------------- ------------------------------- ------------------------------- ------------------------------- -------------------------------
Profit/(loss)
for the year 128 (582) (1,452) (636) (2,542)
====================== ====================== ====================== ====================== ======================
EBITDA Discontinued Continuing Total
reconciliation GBP'000 GBP'000 GBP'000
Operating loss (1,379) (1,253) (2,632)
Depreciation,
amortisation
and impairment 470 572 1,042
------------------------------- ------------------------------- -------------------------------
EBITDA (909) (681) (1,590)
====================== ====================== ======================
Translogik SAWSense Discontinued Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 30
June 2019
Sales 476 120 1,630 - 2,226
===================== ===================== ===================== ===================== ====================
Gross profit 263 113 1,415 - 1,791
Other income - 79 - 79
Overheads (72) (472) (2,022) (1,037) (3,603)
----------------------------- ------------------------------ ------------------------------ ------------------------------ -----------------------------
Operating
profit/(loss) 191 (280) (607) (1,037) (1,733)
Net financial
income - - - 2 2
Taxation - - (17) 283 266
------------------------------- ------------------------------- ------------------------------- ------------------------------- -------------------------------
Profit/(loss)
for the year 191 (280) (624) (752) (1,465)
====================== ====================== ====================== ====================== ======================
EBITDA Discontinued Continuing Total
reconciliation GBP'000 GBP'000 GBP'000
Operating loss (607) (1,126) (1,733)
Depreciation,
amortisation
and impairment 339 426 765
------------------------------- ------------------------------- -------------------------------
EBITDA (268) (700) (968)
====================== ====================== ======================
During the year ended 30 June 2020 there were 2 ( 2019 : 1)
customers whose turnover accounted for more than 10% of the Group's
total continuing revenue as follows:
Year ended 30 June 2020 Revenue Percentage
GBP'000 of total
Customer A 93 15%
Customer B 66 11%
Year ended 30 June 2019 Revenue Percentage
GBP000 of total
Customer A 169 28%
Customer B 35 6%
Discontinued revenue includes Bridgestone as a customer, who
have now acquired the iTrack business and which is expected through
royalties to contribute in excess of 10% of future revenues.
2 FINANCIAL INCOME AND EXPENSE
Recognised in the statement of comprehensive income
Year ended Year ended
30 June 30 June
2020 2019
GBP'000 GBP'000
Financial income 5 2
============================================= =============================================
Financial expense (17) -
============================================= =============================================
3 TAXATION
Recognised in the statement of comprehensive income in respect
of continuing operations
Year ended Year ended
30 June 30 June 2019
2020
restated
GBP'000 GBP'000
Current tax expense
Current year - -
Adjustment for
previous year (175) (283)
---------------------------------------------- ----------------------------------------------
Tax credit in
statement of
comprehensive income (175) (283)
============================================= =============================================
Reconciliation of effective tax rate
Year ended Year ended
30 June 30 June
2020 2019
restated
GBP'000 GBP'000
Loss before tax
from continuing
operations (1,265) (1,124)
============================================= =============================================
Tax calculated at
the average
standard UK
corporation tax
rate of 19.00%
(2019: 19:00%) (240) (214)
Expenses not
deductible for tax
purposes 2 12
Additional
deduction for R&D
expenditure (145) (120)
Current year losses
for which no
deferred
tax asset was
recognised 383 288
Adjustment to
deferred tax
average rate of
19% - 34
Prior year
adjustment (175) (283)
---------------------------------------------- ----------------------------------------------
Total tax credit (175) (283)
============================================= =============================================
A deferred tax
asset has not been
recognised
in respect of the
following item:
Tax losses and
other timing
differences 4,416 3,760
============================================= =============================================
The applicable UK corporation tax rate is 19% throughout the
reporting period.
The Group has tax losses, subject to agreement by HM Revenue and
Customs, in the sum of GBP23.2m (2019: GBP20.7m), which are
available for offset against future profits of the same trade.
There is no expiry date for tax losses. An appropriate asset will
be recognised when the Group can demonstrate a reasonable
expectation of sufficient taxable profits to utilise the temporary
differences.
The Finance Act 2020 maintained the rate of UK Corporation Tax
at 19%.
The effective tax rate used to calculate the current tax for the
year ended 30 June 2020 was 19.00% (2019: 19.00%). Unrecognised
deferred tax balances at 30 June 2020 have been calculated using a
rate of 19% (2019: 17%) as this is now the enacted rate for future
periods.
4 EARNINGS PER SHARE
Basic loss per share is calculated by dividing the loss by the
weighted average number of ordinary shares in issue during the year
of 16,307,282 ( 2019 : 13,184,581). Unexercised options over the
ordinary shares are not included in the calculation of diluted loss
per share as they are anti-dilutive.
Year ended Year ended
30 June 30 June
2020 2019
Number Number
Weighted average number of shares - basic 16,307,282 13,184,581
Share option adjustment - -
------------------------------ ------------------------------
Weighted average number of shares - diluted 16,307,282 13,184,581
====================== ======================
Year ended Year ended
30 June 30 June
2020 2019
GBP'000 GBP'000
Loss from continuing operations (1,090) (841)
Loss from discontinued operations (1,452) (624)
------------------------------ ------------------------------
(2,542) (1,465)
------------------------------ ------------------------------
Basic loss per share from continuing operations (6.68) (6.38)
Basic loss per share from discontinued operations (8.91) (4.73)
------------------------------ ------------------------------
Basic loss per share (15.59) (11.11)
====================== ======================
There are 1,544,085 share options and 226,850 warrants in place
at 30 June 2020 (2019: 804,085) that are not included within
diluted earnings per share because they are anti-dilutive.
5 CASH AND CASH EQUIVALENTS
30 June 2020 30 June 2019
GBP000 GBP000
Cash and cash equivalents per balance
sheet 1,193 2,647
Cash and cash equivalents per cash
flow
statements 1,193 2,647
------------ ------------
6 DISPOSAL OF SUBSIDIARIES, TRADE AND ASSETS OF ITRACK BUSINESS
On 24 June 2020, the Company granted an exclusive worldwide
licence (the "Licence") to ATMS Technology Limited ("ATMS"), a
newly-formed wholly owned subsidiary of Bridgestone, covering all
current and future iTrack technology for a period of ten years. In
order to capitalise fully on the market potential of the use of the
technology, the operational business and trading assetsrelating to
the iTrack system, including the shareholdings in the Company's
subsidiaries in Chile and South Africa, have been transferred to
ATMS at a fair value which largely equated to the net asset value.
Approximately 50 % of the consideration was received at completion
by the Company with the remaining GBP1.24m included in other
receivables and all received in August and September 2020. The
Company also repaid $0.75m of the loan previously advanced by
Bridgestone in June 2020 with the remaining $1.2m repaid post year
end in August 2020.
The assets and liabilities disposed of were as follows:
GBP'000
Property plant and equipment 720
Intangible assets 111
Inventories 1,085
Trade and other receivables 508
Cash (held by subsidiaries) 361
Trade and other payables (320)
----------------------------------------------
Net assets 2,465
=============================================
Consideration in cash at completion 1,313
Consideration on agreement of completion accounts 1,237
Foreign exchange reserve recycled through Statement
of Comprehensive Income 23
----------------------------------------------
2,573
Net assets disposed of (2,465)
Legal and professional fees in respect of the
sale (180)
----------------------------------------------
Loss on disposal of trade and assets (72)
=============================================
The cash flows from the discontinued operations were:
Year ended Year ended
30 June 30 June
2020 2019
GBP'000 GBP'000
Operating cash flows (1,333) (332)
Investing cash flows (560) (401)
Financing cash flows 976 -
------------- ------------
Total net cash outflows (917) (733)
======= =======
7 OPERATING LEASES AND TRANSITION TO IFRS 16
The operating lease relates to the lease of premises which is
used by the Group and Company. Following the adoption of IFRS16
these commitments are now included in lease liabilities at 30 June
2020.
On transition to IFRS 16 at 1 July 2019, the Group has adopted
the modified approach whereby the net present value of the
remaining property lease payments at this date of GBP287,000 are
recognised as the opening liability with an equal
right-of-use-asset of GBP272,000 as adjusted for prepaid rent and
unamortised lease incentives depreciated over the remaining lease
period. This represents the remaining 54 months of the lease
amounting to GBP329,000 discounted by GBP42,000 at the assessed
incremental borrowing rate of 6% (compared to the minimum
contractual commitment at 30 June 2019 of GBP73,000 with the
benefit of a potential break option which was not exercised).
Depreciation of GBP57,000 has been charged in respect of the asset
for the year and finance charges of GBP16,000 compared with
GBP67,000 of rent that would have been charged under the previous
basis, an increase of GBP6,000 in the total charges included in the
Statement of Comprehensive Income. The comparatives for the year
ended 30 June 2019 have not been adjusted and are prepared in
accordance with IAS17.
8 STATUTORY ACCOUNTS
The Financial information set out in this preliminary
announcement does not constitute the Company's Consolidated
Financial Statements for the financial years ended 30 June 2020 or
30 June 2019 but are derived from those Financial Statements.
Statutory Financial Statements for 2019 have been delivered to the
Registrar of Companies and those for 2020 will be delivered
following the Company's AGM. The auditors Cooper Parry Group
Limited have reported on the 2020 financial statements and Grant
Thornton LLP on the 2019 financial statements. Their reports were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006 in
respect of the Financial Statements for 2020 or 2019.
The Statutory accounts are available on the Company's website
and will be posted to shareholders who have requested a copy and
thereafter by request to the Company's registered office.
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END
FR FFSEFUESSELS
(END) Dow Jones Newswires
October 20, 2020 02:00 ET (06:00 GMT)
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