TIDMTRT
RNS Number : 5336D
Transense Technologies PLC
20 February 2020
20 February 2020
Transense Technologies plc
("Transense", the "Company" or the "Group")
I nterim results for six months ended 31 December 2019
Transense Technologies plc, the provider of sensor systems for
the industrial, mining and transportation markets, reports the
results for the six months ended 31 December 2019.
Highlights:
-- Group revenues of GBP0.97m (Dec 2018: GBP0.93m)
-- iTrack subscription revenue up 50% to GBP0.66m (Dec 2018: GBP0.44m)
-- iTrack subscription revenue run rate at period end up 24% to
GBP1.40m (Jun 2019: GBP1.12m, Dec 2018: GBP0.87m)
-- Joint Collaboration Agreement ("JCA") signed with Bridgestone
Corporation in August 2019 by which the iTrack system is offered
exclusively by Bridgestone to their customers for large mine haul
trucks
-- Significant working capital, R&D and overhead investment
made in preparation for strong growth potential, funded partly by
drawdown of US$0.75m (GBP0.58m) loan under the JCA
-- Net loss after taxation for the period of GBP1.19m (Dec 2018:
GBP0.78m) reflecting additional overhead spend
-- Cash used in operations of GBP0.54m (Dec 2018: GBP0.50m)
-- Net Cash* at end of period of GBP1.52m (30 June 2019: GBP2.65m)
-- Minimum duration of JCA extended post period end until 12 February 2022 at the earliest
* Excludes the impact of IFRS 16 and the Bridgestone Loan of
$0.75m
Non Executive Chairman of Transense Technologies, Nigel Rogers,
said:
"I am pleased to be taking responsibility as Chairman of
Transense at a pivotal time in the commercialisation of our leading
technologies. The results for the first half of the financial year
reflect the substantial investment in infrastructure, working
capital and overhead costs required to take full advantage of our
technical excellence, with the financial and commercial support of
market leading partners.
There has been a transformational change in the scope and
commercial reach of the iTrack system, and the business has the
potential to deliver a significant breakthrough in market
penetration. Our relationships with Bridgestone are strong at all
levels, and we anticipate that our collaboration will continue to
provide a firm basis for mutual success.
As this success becomes apparent, our leading technologies in
Surface Acoustic Wave and tyre tread depth probes will increasingly
come into focus, as we evaluate investment priorities. There are
clear opportunities for technology led growth in each of these
areas, and accordingly we look forward with growing
confidence."
For further information please visit www.transense.co.uk or
contact:
Transense Technologies plc Tel: +44 (0) 1869 238380
Nigel Rogers, Chairman
Melvyn Segal, Finance Director
finnCap (Nomad and Joint Broker) Tel: +44 (0)20 7220
Ed Frisby, Giles Rolls (Corporate Finance) 0500
Tim Redfern, Tim Harper (ECM)
About iTrack
The iTrack Mining system provides real-time data on the
condition of the tyres, combined with live tracking of vehicle
location and status. Our 24/7 Control Room monitors the pressures
and temperatures live, and this information can, for example, be
used to ensure tyres do not exceed critical heat thresholds, to
detect incorrect load distributions, predict suspension failures
and eliminate manual tyre pressure checks. The Directors believe
that these benefits maximise the hours a truck is working (Truck
Uptime) and improve productivity by minimising maintenance
requirements and using data to identify underperforming trucks.
www.trans-logik.com/itrack-2/
About Transense Technologies
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 advantages over legacy wireless
sensor systems. Transense is targeting the transport and mining
industries, and the global torque, temperature and pressure sensing
markets, via its trading divisions, Translogik and SAWSense.
www.transense.co.uk
Transense's shares are admitted to trading on AIM (AIM:
TRT).
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Transense Technologies plc
Chairman's Statement
I am pleased to be taking responsibility as Chairman of
Transense at a pivotal time in the commercialisation of our leading
technologies in iTrack and Surface Acoustic Wave sensing. The
results for the first half of the financial year reflect the
substantial investment in infrastructure, working capital and
overhead costs required to take full advantage of our technical
excellence, with the financial and commercial support of market
leading partners.
Business strategy
The business strategy of the Group remains to develop 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.
Operational review
SAWSense
SAWSense is a leader in the development of Surface Acoustic Wave
("SAW") wireless, batteryless, sensor systems that offer
significant advantages over legacy systems in common use.
In July 2016, SAWSense entered into a significant licensing
agreement with General Electric Company ("GE") for the use of
patented, wireless, passive SAW technology in GE Aviation's
T901-GE-900 engine. This has been selected by the U.S. Army for the
Engineering and Manufacturing Development ("EMD") phase of the
Improved Turbine Engine Program ("ITEP"), the U.S. Army's programme
to replace more than 6,000 engines in its current fleet of Boeing
AH-64 Apache and Sikorsky UH60 Black Hawk helicopters, expected to
commence around 2023 reaching full volume in 2026.
This project has now been extended into the GE supply chain,
where we are engaged with first tier global manufacturing partners
of GE to support the production process, and this work is
progressing on schedule.
Our relationship with GE continues to develop, with several new
applications under review in co-operation with GE Research in
Niskayuna, New York. These extend beyond avionics into marine,
industrial and power generation technologies.
The agreement we have with GE is not exclusive and we have the
opportunity to enter into other similar relationships. During the
period under review, work continued in partnership with the
Electronic Materials and Devices Group of the University of
Southampton to develop SAW technology for the real time monitoring
of temperature and strain on the inner and outer shells of Liquid
Nitrogen Gas tanks in situ. This project is funded by Lloyd's
Register Foundation, and is intended to pave the way towards
providing early warnings of structural defects, predicting
failures, and thus obviating unnecessary dry dock inspections that
are both costly and dangerous. The project is anticipated to have a
duration of two and a half years, and during the period grant
funding of GBP0.12m was received to support this activity.
During the period there was further activity on projects in the
automotive field, covering recreational vehicles, Indy car and
Formula 1, although no significant breakthrough into full
production vehicles is evident at the current time.
Translogik
Translogik has developed a range of products and services for
tyre pressure and temperature monitoring of mining haul trucks
marketed under the name iTrack. The division also markets a range
of tread depth probes and associated monitoring systems for use in
the passenger car, bus, truck and OTR sectors.
Translogik - iTrack
iTrack has continued to achieve increased market penetration as
a stand alone system in the period, with a 50% increase in monthly
subscription revenues compared with the first half of last
year.
Even more significant, however, was the signing of the Joint
Collaboration Agreement ("JCA") with Bridgestone Corporation
("Bridgestone") in August 2019, for an initial eighteen month
period. Bridgestone is the world's largest producer of tyres and
other rubber products with annual revenues in excess of GBP24bn and
is the global market leader in the manufacture and sale of
tyres.
Under the JCA, Bridgestone has agreed to offer the iTrack system
exclusively as a mining tyre monitoring system for the largest mine
haul trucks, and the Company has agreed that it will not contract
with any other tyre manufacturer for this category of tyres.
Since the commencement of the JCA, Bridgestone affiliate
agreements have been signed in many key territories, facilitating
pre-sales engagement with major clients worldwide. This activity
has produced sales opportunities at an unprecedented level, and
many new trials are underway. The typical sales cycle in this
marketplace extends for a number of months prior to adoption, and
accordingly the JCA has not yet generated significant subscription
income. There are considerable costs associated with the generation
of client engagement, however, including building our sales,
customer support and technical teams, opening a new London office
to co-ordinate these activities, and extensive overseas travel.
These additional costs have been part funded by direct support and
loans from Bridgestone under the terms of the JCA, and the impact
on reported earnings in the current period was approximately
GBP0.40m.
Customer reaction has been very positive, indicating scope to
increase iTrack adoption significantly in the second half of the
year and beyond. Furthermore, the minimum term of the JCA was
recently extended by a further twelve months until not earlier than
February 2022.
The JCA also contains an undertaking by Transense not to have
discussions with any other party in relation to any transaction of
a merger, acquisition or joint venture nature in respect of the
iTrack business and this undertaking was recently extended to
expire on 30 April 2020.
Translogik - probes
Our range of tyre tread depth probes is compatible with the tyre
management systems of a number of the world's leading tyre
producers. Revenues from this range reduced in the second half of
the last financial year, which was believed to have been a
consequence of reduced marketing activity at that time. This was
addressed in the early months of this financial year, and a return
to modest growth is evident, with revenues of GBP0.25m recovering
to a similar level as the first half of last year, and importantly
a noticeable increase in enquiries.
Work is ongoing to make further enhancements to the current
probes and provide a modular version.
Financial results
Revenues for the six months were broadly in line with the
corresponding period last year at GBP0.97m (Dec 2018: GBP0.93m),
with subscription revenues generated by users of the iTrack system
increased by 50% to GBP0.66m (Dec 2018: GBP0.44m). The annualised
subscription run rate at the end of the period was GBP1.4m
representing an increase of 24% since the financial year end and a
60% increase compared with the run rate at last year's H1 period
end (Jun 19: GBP1.1m and Dec 18: GBP0.9m). There were further units
in the field awaiting deployment by customers and with all units
deployed the annualised run rate increases to GBP1.7m.
We anticipate these revenues have the potential to grow strongly
over the remainder of 2020 and throughout 2021 as the iTrack
installed base expands, especially as a result of the JCA.
Operating expenses in the period were GBP2.08m (Dec 2018:
GBP1.69m) as a consequence of the incremental overheads associated
with the ramp up of iTrack. The resulting net loss before taxation
from continuing operations was slightly higher than the comparative
period at GBP1.19m (Dec 2018: GBP0.91m).
The total comprehensive loss for the period amounted to GBP1.19m
(Dec 2018: GBP0.78m), reflecting a tax credit of GBPnil (Dec 2018:
GBP0.12m).
The board continues to keep under careful review the expected
outturn for the financial year ending 30 June 2020, and, in
particular, the likely timing of conversion of an unprecedented
level of customer enquires into deployed units that will be the
subject of sale or subscription agreements. It is increasingly
likely that units will be deployed solely on a subscription model,
with significant longer term benefits, but to the detriment of
short term income recognition. Furthermore, the directors consider
that it would be inappropriate to cut back overhead expenditure at
an expected inflexion point in the conversion of customer
demand.
Accordingly, the board has revised downwards its expectations
for the current financial year to reflect these market dynamics,
whilst being committed to delivering increases in the future growth
trajectory in the following financial periods.
Financial position and cash flow
Operating cash outflow before movements in working capital
increased slightly to GBP0.76m compared to the corresponding period
in the last financial year (Dec 2018: GBP0.52m). Cash used in
operations for the period increased marginally to GBP0.54m (Dec
2018: GBP0.50m).
The net investment in fixed assets for iTrack contracts in the
period amounted to GBP0.26m (December 2018: GBP0.20m) and as the
iTrack installed base increases there will continue to be a need to
invest in fixed assets. During the period there was further fixed
asset investment of GBP0.06m in the fit out and equipping of a new
London office to co-ordinate worldwide activities on iTrack.
The Company also capitalised ongoing development expenditure on
iTrack totaling GBP0.18m (Dec 2018: GBP0.11m).
The Company closed the period with net cash of GBP1.52m (30 June
2019: GBP2.65m) which excludes the impact of IFRS 16 and the
Bridgestone Loan of $0.75m.
The board has assessed the financial and operational needs of
the business over the forthcoming twelve months covering a broad
range of potential outcome scenarios. In each case, the directors
are satisfied that the Company has access to adequate sources of
finance.
Accordingly, the Board consider we will have sufficient
resources to continue in operational existence for the foreseeable
future.
Outlook and prospects
The financial year thus far has seen transformational change in
the scope and commercial reach of the iTrack system, and the
business has the potential to deliver a significant breakthrough in
market penetration. Whilst the board has revised downwards its
expectations for the current financial year to reflect our current
market dynamics, the board remains committed to delivering
increases in growth trajectory in the following financial periods.
Our relationships with Bridgestone are strong at all levels, and we
anticipate that our collaboration will continue to provide a firm
basis for mutual success.
As this success becomes apparent, our leading technologies in
Surface Acoustic Wave and tyre tread depth probes will increasingly
come into focus, as we evaluate investment priorities. There are
clear opportunities for technology led growth in each of these
areas, and accordingly we look forward with growing confidence.
Nigel Rogers
Chairman
20 February 2020
Transense Technologies plc
Condensed Consolidated Statement of Comprehensive Income
Half year Half year
to to Full Year
31 Dec 30 Jun
31 Dec 19 18 19
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ----------
Continuing operations
Revenue 965 933 2,226
Cost of sales (193) (202) (435)
------------ ------------ ----------
Gross profit 772 731 1,791
Administrative expenses (2,080) (1,686) (3,603)
Operating loss (1,308) (955) (1,812)
Interest receivable 4 - 2
Interest payable (4) - -
Other income 118 49 79
------------ ------------ ----------
Loss before taxation (1,190) (906) (1,731)
Taxation - 124 266
Loss for the year (1,190) (782) (1,465)
------------ ------------ ----------
Other comprehensive income:
Exchange difference on translating
foreign operations 18 2 2
Other comprehensive income
for the year 18 2 2
Total comprehensive income
for the year attributable to
the equity holders of the parent (1,172) (780) (1,463)
============ ============ ==========
Transense Technologies plc
Condensed Consolidated Statement of Financial Position
30 Jun
31 Dec 19 31 Dec 18 19
(Unaudited) (Unaudited) (Audited)
-------------------------------- ------------ ------------ ----------
GBP'000 GBP'000 GBP'000
Non current assets
Property, plant and equipment 909 510 529
Intangible assets 1,033 860 946
1,942 1,370 1,475
------------ ------------ ----------
Current assets
Inventory 730 575 566
Corporation tax receivable - 129 -
Trade and other receivables 988 729 789
Cash and cash equivalents 1,519 843 2,647
------------ ------------ ----------
3,237 2,276 4,002
------------ ------------ ----------
Total assets 5,179 3,646 5,477
------------ ------------ ----------
Current liabilities
Trade and other payables (1,286) (412) (604)
Current tax liabilities (63) (68) (55)
Provisions (50) (70) (70)
------------ ------------ ----------
Total liabilities (1,399) (550) (729)
Non current liabilities (204) - -
Net assets 3,576 3,096 4,748
------------ ------------ ----------
Capital and reserves
Share capital 5,451 5,025 5,451
Share premium 2,591 682 2,591
Share based payments 41 41 41
Translation reserve 41 23 23
Accumulated reserve/(deficit) (4,548) (2,675) (3,358)
Shareholders' funds 3,576 3,096 4,748
------------ ------------ ----------
Transense Technologies plc
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Share Share
Issued share premium Translation based Accumulated
capital account Reserve payments deficit Total 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 period - - - - (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 period:
L oss for the period - - - (1,190) (1,190)
Other comprehensive income for the period:
Translation of foreign
entity - - 18 - 18
Total Comprehensive
income for the
period: - - 18 - - 1,172
Balance at 31 December
201 9 5,451 2,591 41 41 (4,548) 3,576
-------- ---------------- ------------ ---------- ------------ -------------
Transense Technologies plc
Condensed Consolidated Statement
of Cash Flows
Half year Half year Full year
to to to
31 Dec 31 Dec 30 Jun
19 18 19
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Loss for the period (1,190) (782) (1,465)
Adjustments for
Taxation - (124) (266)
Interest receivable (4) - (2)
Interest payable 4 - -
Depreciation of property, plant and
equipment 211 178 369
Amortisation and impairment of intangible
assets 216 211 396
Share based payments - - -
Operating cash flows before movements
in working capital (763) (517) (968)
--------------- ------------- -------------
Change in receivables (199) (160) (91)
Change in payables 583 68 247
Change in inventories (164) 110 119
--------------- ------------- -------------
Cash used in operations (543) (499) (693)
Taxation recovered - 124 266
--------------- ------------- -------------
Net cash used in operations (543) (375) (427)
--------------- ------------- -------------
Cash flows from investing activities
Interest received 4 - 2
Interest paid (4) - -
Acquisition of property, plant &
equipment (300) (215) (424)
Acquisition of intangible assets (303) (161) (433)
Net cash used in investing activities (603) (376) (855)
--------------- ------------- -------------
Cash flows from financing activities
Proceeds from issue of equity share
capital - - 2,335
Net cash used for financing activities - - 2,335
--------------- ------------- -------------
Net (decrease)/increase in cash and
cash equivalents (1,146) (751) 1,053
Unrealised currency translation gain 18 2 2
Cash and cash equivalents at beginning
of period 2,647 1,592 1,592
Cash and cash equivalents at end
of period 1,519 843 2,647
--------------- ------------- -------------
Notes to the Interim results for the six months to 31 December
2019
1 Reporting Entity
Transense Technologies plc ("the Company") is a company
incorporated in the United Kingdom under the Companies Act 2006.
These condensed consolidated interim financial statements of the
Company as at and for the six months ended 30 December 2019
comprises the Company and its subsidiaries (together referred to as
"the Group" and individually as "Group entities"). These condensed
consolidated interim financial statements are presented in pounds
sterling, rounded to the nearest thousand.
The consolidated financial statements of the Group are available
upon request from the Company's registered office or at
www.transense.co.uk
These condensed consolidated interim financial statements are
unaudited.
2 Accounting policies
The Condensed Consolidated Financial Statements for the half
yearly report for the 6 months ended 31 December 2019 have been
prepared using accounting policies and methods of computation
consistent with those set in Transense Technologies plc's Annual
Report and Financial Statements for the year ended 30 June 2019.
There has been no change to any accounting policy from the date of
that repot, except for the Group has now implemented IFRS 16 -
Leases.
The Group has transitioned to IFRS 16 as at 1 July 2019 and it
has transitioned the leases previously accounted for as operating
leases under IAS 17 using the Modified Retrospective Approach.
The Group has assessed its leases that were previously accounted
for under IAS 17, recognising the discounted asset at the date of
transition as a Right of Use asset within tangible fixed assets and
the associated liability within trade and other payables.
Following the transition to IFRS 16, a right of use asset (and
associated liability) of GBP0.29m (GBP0.20m in non current
liabilities and GBP0.09m in current liabilities) was recognised. In
H1 2020, there has been GBP0.03m of depreciation against the assets
and approximately GBP4,000 of interest incurred associated with the
unwind of the discount on the liability.
3 Earnings per share
31 December 31 December 30 June
2019 2018 2019
Shares Shares Shares
------------ -----------
Weighted average number of shares
Issued at start of period 16,307,282 12,048,948 12,048,948
Effect of shares issued in period - - 1,135,633
Weighted average number of shares
at end of period 16,307,282 12,048,948 13,184,581
Basic Earnings per share (7.30p) (6.49p) (11.11p)
4 Revenue
Revenue Half year Half year Full year
to to to
31 Dec 19 31 Dec 18 30 Jun 19
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------ ------------ ----------
Chile 325 373 670
------------ ------------ ----------
Australia 237 186 398
------------ ------------ ----------
Rest of the World 212 76 192
------------ ------------ ----------
North America 129 203 743
------------ ------------ ----------
UK & Europe 62 95 192
------------ ------------ ----------
Japan - - 31
Total 965 933 2,226
5 Trade and other payables
Included in trade and other payables is a loan from Bridgestone
of $0.75m (GBP0.58) which could become repayable in the next 12
months.
6 Going concern
The interim financial information has been prepared on a going
concern basis, which assumes that the Company will have adequate
resources to continue in operational existence for the foreseeable
future.
7 Corporation tax and deferred tax
The Company is entitled to a Corporation Tax credit in respect
of expenditure on Research and Development and this is recognised
in the accounts on the basis that the credit is received before
finalising the accounts.
The Group has tax losses, in the sum of GBP22m which, subject to
agreement by HM Revenue and Customs, are available for offset
against future profits of the same trade. There is no expiry date
for tax losses however there is an annual restriction of GBP5m plus
half of the surplus above GBP5m. An appropriate asset will be
recognised when the Group can demonstrate a reasonable expectation
of sufficient taxable profits to utilise the temporary
differences.
Accordingly, no deferred tax asset is recognised in these
financial statements in respect of trading losses to date.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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