REG - Transense Technlgy - Final Results & Investor Presentation

Transense TechnologiesAnnouncement

28/09/2021 07:00

RNS Number : 1422N
  
Transense Technologies PLC
  
28 September 2021
  
 

The information communicated in this announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.
 
Transense Technologies plc 
("Transense", or the "Company")
Final results for the year ended 30 June 2021
& Investor Presentation
 
Transense Technologies plc (AIM: TRT), the provider of specialist sensor systems, reports final results for the year ended 30 June 2021 in line with recently upgraded market expectations.  The business model has been substantially de-risked and the Company reports progress in all three of its current business streams:
 
Financial highlights:
·      Revenues from continuing operations up threefold to £1.77m (2020: £0.60m)
·      iTrack Royalty Income annualised run rate up 97% in USD terms from initial annual rate
·      Gross margin increased to 78.3% (2020: 55.1%)
·      Loss before taxation from continuing operations of £0.16m (2020: £1.27m)
·      Profit for the year of £0.16m (2020: loss of £2.54m)
·      Earnings per share of 0.96 pence (2020: loss of 15.6 pence)
·      Cash and cash equivalents at year end of £1.05m (2020: £1.19m)
·      Distributable reserves at year end of £0.63m (2020: deficit of £5.90m)
·      Corporation tax losses available for future offset of £23m (2020: £23m) 
 
Executive Chairman of Transense, Nigel Rogers, said:
"We are pleased with the progress made this year in building firm foundations for future success.  With royalty income from iTrack gathering momentum, and new products in Translogik driving increased market penetration in tyre probes, the Company has delivered strong revenue growth.
 
"The additional management focus on the commercialisation of our patented SAW technology is now yielding tangible opportunities, as we better understand the applications in which SAW torque measurement techniques can offer our customers unique and effective solutions.  As we enter a period of rapid technological change driven by increased connectivity and the need for sustainable energy and transportation, there are exciting opportunities ahead.
 
"With a strong balance sheet and cash position, the Company is well placed to embark on a controlled programme of investment to further develop its engineering and operational capabilities  Furthermore, with a demonstrable track record of success in building enduring partnerships, the directors believe that the Company can work collaboratively to bring its technology to new markets more effectively.
"Trading since the period end is well ahead of prior year, and the directors continue to be optimistic about the outlook and prospects for the Company."
 
Investor Presentation: 4pm, Wednesday 29 September 2021
Nigel Rogers (Executive Chairman) and Melvyn Segal (Chief Financial Officer) will provide a presentation to review the Company's results and prospects at 4pm on Wednesday 29 September 2021. The presentation will be hosted through the digital platform Investor Meet Company.
To attend the presentation, investors can sign up to Investor Meet Company for free and select to meet Transense Technologies plc via the following link: https://www.investormeetcompany.com/transense-technologies-plc/register-investor. Investors who have already registered and selected to meet the Company will automatically be invited to the presentation.
Questions can be submitted before the event to transense@walbrookpr.com or in real time during the presentation via the "Ask a Question" function.
 
For further information please visit www.transense.com or contact:
 




Transense Technologies plc
Nigel Rogers (Executive Chairman)
Melvyn Segal (CFO) 
 


Tel: Via Walbrook PR




Allenby Capital (Nominated Adviser and Broker)
Jeremy Porter/George Payne (Corporate Finance)
Tony Quirke (Sales & Corporate Broking)


Tel: +44 (0)20 3328 5656




Walbrook PR
Tom Cooper/Nick Rome


Tel: +44 (0)20 7933 8780
Transense@walbrookpr.com




About Transense
Transense is a developer of specialist wireless sensor systems used to enable real-time data gathering and monitoring. Products include the patent protected Surface Acoustic Wave (SAW) sensor technology, used to improve equipment power, performance, reliability and efficiency; iTrack, Transense 's Tyre Pressure Monitoring System, licensed to Bridgestone Corporation, the world's largest tyre producer, under a ten-year deal in June 2020; and a range of intelligent tyre monitoring equipment under the Translogik brand. Target sectors include automotive, aerospace, industrial, green energy, rail and marine. 
 
The Group's strategy is to maximise shareholder value through the delivery of sustained revenue growth from all three principal technologies - SAW, iTrack and Translogik probes - through leveraging excellence in innovation, know-how in commercialising technologies, industry partnerships and exposure to global growth markets. 
 
Transense is headquartered in Oxfordshire, UK, and was admitted to trading on AIM, a market operated by the London Stock Exchange (AIM: TRT), in 1999. www.transense.com 
 
For further information please contact transense@walbrookpr.com. 
 
 
 
 
Chairman's statement for the year ended 30 June 2021

 
I am pleased to report on considerable progress made at Transense following the transformational changes brought about by the licensing of our iTrack technology and the disposal of the iTrack operational business to Bridgestone Corporation in June 2020. In many respects this represented a fresh start for the Company, and has given us the opportunity to build firm foundations for future growth. 
Financial overview 
Revenue from continuing operations increased almost threefold over the prior year, which taken together with a net performance just above breakeven resulted in Transense closing the year in line with the upgraded expectations set at the time of our interim results release in February 2021.  This favourable outcome, coupled with improved prospects, has enabled the Company to begin to recognise deferred tax assets in respect of prior years' losses.  In consequence, earnings per share and distributable reserves at the end of the year each exceeded expectations. 
Cash generation from operations was broadly in line with profits, and the closing net cash position provides ample headroom to meet the future needs of the business. 
Strategic overview 
The overarching strategy of the Company is to develop innovative solutions for niche applications, using our range of technologies. These are guided through early stage commercial startup, achieving realisation by forging relationships with market leading partners as customers, licensees or acquirers.
This business model led to the successful exit from our iTrack business with an associated licence to Bridgestone Corporation in June 2020.  The growth in royalties achieved in the first year confirms our view that this transaction structure optimises our return on the investment madein iTrack, whilst substantially de-risking the continuing business model.
The commercialisation of our Translogik range of hand-held tyre measurement tools has been accelerated by the launch of the modular TLGX range during the year, generating strong revenue growth and upgrades in our expectations. This business segment delivers healthy gross margins and, with a lean overhead structure, it is both profitable and cash generative. We are committed to continued development of this business stream, working closely with a number of major customers to refine the product road map and further increase market penetration through integration into their fleet tyre management systems. 
Our patented Surface Acoustic Wave (SAW) technology is well proven in meeting the demanding requirements of low volume high reliability applications.  Renewed commercial focus has been aimed towards new market sectors, where our technology satisfies unmet needs that provides customers with technical superiority and in turn giving them a competitive advantage.  In order to broaden our commercial reach, the Company has sought input from a select group of experienced industrialists covering a broad range of market sectors by forming a Commercial Advisory Panel (which we refer to as the "SAWCAP").  This initiative has proved invaluable allowing us to gain insights into differentiation and the benefits of our technology over alternative techniques, targeting our approach to sales and marketing, and enabling access at a senior level to commercial networks through the SAWCAP's relationships and knowledge.  
The industrial landscape is entering a period of rapid technological change, driven by real-time connectivity (Internet of things, 5G etc) and the recognition that climate change demands behavioural changes now, rather than in future.  Governments in developed economies are keen to invest in infrastructure as they plan for the aftermath of the global pandemic, and find sustainable solutions to the challenges presented in energy, transport and food production.  This opens up exciting opportunities for companies with enabling technologies.  The directors believe that our SAW technology can provide meaningful data for enhanced control, efficiency, safety and maintenance routines which offer substantial benefits to users in such fields. 
Business Review
Royalty income from iTrack technology
This is the first full year of royalty income since the inception of the ten year licence of iTrack technology to ATMS Limited, a subsidiary of Bridgestone Corporation ("Bridgestone"), on 24 June 2020. Royalty income is generated by reference to the number and classification of vehicles upon which iTrack is deployed.  In the year ended 30 June 2021, this royalty income amounted to £0.83m, whilst the Sterling equivalent of the annualised rate of royalty increased by 76% from £0.64m at inception to a year end rate of £1.12m.  Royalties are designated in US dollars, and the rate of growth is based on the volume increase, which, excluding the effects of foreign exchange fluctuations was 97%.
 
iTrack system capabilities continue to be enhanced under Bridgestone ownership as it becomes further embedded into their mining solutions business and, as referenced in their mid-term update in May 2021, a number of global long term contracts have been committed and are in the roll out stage. This process is expected to accelerate following completion of Bridgestone's proposed acquisition of Otraco International PTY Limited, a leader in tyre management solutions with an extensive service network in key markets such as Australia, Chile and South Africa and with many years experience of working with iTrack technology in Latin America.
 
This business segment now bears no cash costs, with the only overhead being the amortisation of intangible development costs relating to iTrack in prior years. Accordingly, the segmental operating result was a profit of £0.79m compared with a loss from the discontinued operational business of £1.38m in the prior year. 
 
Translogik tyre inspection probes
Revenues from Translogik probes increased by 50% to £0.76m (2020: £0.51m), and this segment generated a trading profit of £0.27m (2020: £0.12m), which was comfortably above the annual budget.
 
Last year we reported that our product range was expanded in May 2020 to include the TLGX Series, being a modular range of four new probes offering a broad variety of features at competitive prices.  These have been developed primarily for system integrators and OEM fleet management systems, and offer longer life using a lithium battery, a USB charging facility and a greater range of usage, including the reading of RFID tags and tyre pressure sensors.  These new products generated more than 27% of the total sales value during the year. 
 
In the second half of the financial year, a number of major tyre OEMs and fleet management software providers undertook trials of the new range. This process temporarily diminished demand for the first generation probe, as the customers evaluated the benefits of switching to the new TLGX range.  By the end of the year, and into the current trading year, it has become evident that these trials were successful with the switch to the new range being well underway. This has also prompted commercial discussions to secure mutual longer term commitment and the prospect of further customisation of our products to customers' fleet management solutions. 
 
Surface Acoustic Wave technology (SAW)
Revenues generated by SAW almost doubled to £0.18m (2020: £0.09m) supplemented by grant income of £0.05m (2020: £0.12m).  The net loss attributable to this segment was virtually unchanged at £0.53m (2020: £0.58m). As the only part of the business that requires some bespoke business premises, the allocation of the cost of running these premises is allocated to the SAW segment along with other associated costs. The R & D tax credit relating to FY20 is evenly split between work on SAW projects and the development of iTrack prior to the licence being granted. The introduction of the R & D tax credit for the current year is solely relating to SAW. 
 
Although our technology is well advanced from an engineering standpoint, commercialisation for higher volume applications remains at a relatively early stage.  More than half of revenue was derived from providing components and engineering support for projects expected to mature in future years, with the remainder from ongoing activities, primarily motorsport.  Revenue during the year also included chargeable engineering support on behalf of first tier suppliers to GE's Improved Turbine Engine Program ("ITEP"), which  is scheduled to execute the First Engine To Test  (FETT) by the end of this calendar year. FETT will be the next critical milestone for the programme which is planned to provide the next-generation turbine engine power to the chosen Future Attack Reconnaissance Aircraft (FARA) aircraft and the enduring Apache and Black Hawk fleets.
 
With new management in place in our SAW business, buttressed by the resources and expertise of SAWCAP, the commercial activities and profile of the Company have been re-invigorated. There has been meaningful engagement with multiple well known international companies across a broad range of target sectors, providing opportunities to showcase our capabilities and gain valuable feedback on potential applications. These have deepened our understanding, not only of the unique benefits of SAW technology, but also of some technical and commercial barriers in certain markets, especially in relatively heavy engineering such as wind turbines. 
This additional applications experience is now assisting greatly in better targeting our sales and marketing efforts. On 14 September we announced that the Company has entered a Joint Collaboration Agreement ("JCA")with McLaren Applied Limited which builds on from the previous agreement that has been in force since 2011. The JCA sets out a shared objective of developing non-contact torque products for specific motorsport applications and target customers in other sectors using our SAW technology.  The new agreement is initially for five years and will continue development of the Transense Torque Measurement System using SAW technology, extending McLaren Applied exclusivity in elite motorsport drivetrain applications in exchange for minimum target revenues on an annual basis over a five year period.  
Although elite motorsport is a market with limited potential in absolute terms, McLaren anticipate significant growth in the adoption of SAW technology for torque sensing. This will apply at theregulatory body level as a control sensor both for rules compliance and for performance optimisation in accredited race series, which is how it has been used for many years in a regulatory role for the IndyCar series. SAW technology lends itself to motorsport applications in particular because of the low mass of the applications components, coupled with the frequency, accuracy and reliability of measurement. This is a valuable proving ground for our technology and showcases our capabilities in a premium and highly regulated environment.
A significant target sector where SAW technology offers true competitive advantages is in the growing aerospace sector.  The fast responses, small size and mass of the SAW sensor together with digital outputs from our electronics is aptly suited to build upon the rigorous testing and implementation from the GE ITEP into other programmes and other types of power units.  Such areas of growth in the aerospace sector are with the revolutionary hybrid electrical engines for regional commercial aircraft.  During the year, we engaged on a confidential technology transfer program with a major participant in this field to explore the use of SAW torque measurement technology.  There is also initial interest in our capabilities from companies in the fast-growing Advanced Air Mobility sector which uses multiple electric power units for vertical lift rotors. 
In addition, we have gained interest from the agricultural sector where again the suitability of SAW technology for medium volume, high value units has a value in improving agricultural machines with many rotating parts to gain competitive advantages over rivals in providing easier to use plant that has greater up time use.   
In view of these opportunities, there is sufficient confidence in the outlook to justify further modest investment in people and equipment to continuing building our engineering and operational capabilities. In recent weeks we have expanded the engineering team with three key additional members. In addition, evaluation of potential capital expenditure in the region of £0.15m is ongoing to facilitate increased test and production volumes to meet potential demand.
Overall, we are satisfied both with progress during the year and the pipeline of potential opportunities. We continue to pursue a short term objective of SAW being financially self-sufficient as a contributor to the Company's financial results, whilst seeking applications that can deliver further substantial streams of licensing income over the long term.
Board, governance and investor relations
The directors are committed to the framework and principles of the QCA Corporate Governance Code ("the Code"), and seek to apply these wherever this is practicable.  Full application of the Code, with the implications that this may have on board and compliance costs, is counterbalanced by scale of the Company and the relatively low risk profile of its operations.
Accordingly, the Board is satisfied that the overall board structure and balance of independent input into board decision making is appropriate to the circumstances. In particular, the directors are all shareholders whose interests are well aligned with shareholders as a whole.  Furthermore, the involvement of highly qualified and experienced independent advisers via SAWCAP provides an additional layer of scrutiny and oversight over the commercial activities of the Company.  
 
There have also been significant efforts to improve our investor relations programme for private and retail shareholders, including frequent engagement via online investor presentations.  This has been supplemented by a major redesign of the Company's website (www.transense.com) and associated social media platforms.  The directors actively encourage regular engagement with all shareholders, and details of how investors can engage are set out on the website. 
 
The Board fully recognise the importance of Enviromental, Social & Governance (ESG) issues and have introduced a new statement in this report to emphasise how our technology is supporting the environment, and how we operate in a collaborative and ethical manner seeking to apply high moral standards in accordance with the QCA code referred to above.
 
Distribution policy
In December 2020 the shareholders approved a resolution to reduce the capital of the Company, which was subsequently approved by the Court resulting in the availability of distributable reserves. At 30 June 2021, the total reserves available for distribution amounted to £0.63m.
The directors are committed to delivering sustainable improvement in investment returns to shareholders in the form of both income and capital growth. As the net income and prospects of the Company continue to build momentum, the Board will maintain dialogue with shareholders, and seek to optimise the balance between dividends, share buybacks and reinvestment in the business.  As a component of overall policy, it is anticipated that commencement of progressive dividend payments will be considered in respect of the financial year ending 30 June 2023.
Current trading and prospects 
There has been a further increase in royalty income in the period since the year end to 31 August 2021 such that the annualised rate at constant currency had increased by 8% to US$1.67m since inception, with the Sterling equivalent up by 9% to £1.21m.  Revenues from Translogik tyre inspection probes and SAW were also substantially higher.  Overall, the total revenues for the first two months of the current year were 98% ahead of the corresponding period last year. 
There is a groundswell of momentum behind the potential for growth in royalty income, and the positive market response to new products for Translogik indicating the likelihood of further success. 
The recent agreement relating to the use of our technology in motorsport applications underpins an element of short term revenue for SAW, with further potential in off-road vehicles, agriculture and aerospace in the development pipeline, and GE ITEP production on the horizon. 
Accordingly, the directors continue to be optimistic about the outlook and future prospects for the Company.
 
Nigel Rogers
Executive Chairman
 
 
Financial Review
Results for the year
Revenues for the year from continuing operations increased nearly threefold to £1.77m (2020: £0.60m).  Royalty income from iTrack was £0.83m for the first year of the new licence agreement and will increase in line with the growth in the installed base.In the previous year revenues of £1.47m were generated from users of the iTracksystem and accounted for as part of discontinued activities in 2020 following the sale of the iTrack operating business in June 2020.
Gross margin was78.3% of revenues from continuing operations (2020: 55.1%). 
Administrative expenses were£1.59m (2020: £1.70m). In 2020 there were increased amortisation costs and a one-off impairment charge relating to intangible SAW patent assets.  The net loss before taxation from continuing operations was £0.16m (2020: £1.27m). 
The total comprehensive profit for the yearwas £0.16m (2020: loss of £2.45m), reflecting the restructured business and licence income in FY21 (2020: loss on discontinued activities of £1.45m) and an R&D tax credit of £0.27m for the first time including the current years credit £0.06m and a deferred tax credit of £0.05m (2020: R & D Tax Credit £0.18m). 
The Earnings per share (EPS) are set out below (in Pence):




 


2021


2020






 


 


 




EPS (profit/(loss) from continuing operations)


0.96


(6.7)




EPS (total profit/(loss))


0.96


(15.6)




 
Taxation 
The Company has UK tax losses available to carry forward at 30 June 2021 of approximately £23m, 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. In the year R&D tax credits are recognised on an accruals basis and not as in previous years on a cash basis, as the track record on claims has now removed some of the uncertainty. 
 
Cash flow and financial position 
Net cash used in operations decreased to £0.25m following the sale of the  iTrack operational business (2020: £1.86m, which includes the cash resources absorbed by iTrack operating activities during the year of £1.33m up to the date of the transfer of the business to AMTS on 24 June 2020).  During the prior year, the Company received the benefit of interest-free working capital loans from Bridgestone of £1.59m, £0.61m of which was repaid in June on completion of the transfer, and the remaining balance was settled in September 2020 out of the consideration monies. Included in the opening creditors were £0.32m relating to the discontinued operations that were settled by Transense in the year.
The Company closed the year with net cash and cash equivalents of £1.05m (2020: £1.19m).  The completion Balance Sheet relating to the iTrack business was agreed between the Company and ATMS  on 10 September 2020, at which time the balance of the consideration monies was settled, together with the settlement of the Bridgestone loan and the payment of related fees. 
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
 
 
 
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021




 


 


Year ended
30 June


Year ended
30 June




 


 


 


2021


 


2020




 


 


 


£'000


 


£'000




Continuing operations


 


 


 


 


 






Revenue


 


 


1,773


 


603




Cost of sales


 


 


(385)


 


(271)




 


 


 


----------------------------------------------


 


----------------------------------------------




Gross profit


 


 


1,388


 


332




 


 


 


 


 


 




Administrative expenses


 


 


(1,581)


 


(1,703)




 


 


 


----------------------------------------------


 


----------------------------------------------




Operating loss


 


 


(193)


 


(1,371)




Financial income


 


 


-


 


5




Financial expense


 


 


(12)


 


(17)




Other income


 


 


48


 


118




 


 


 


----------------------------------------------


 


----------------------------------------------




Loss before taxation


 


 


(157)


 


(1,265)




Taxation


 


 


313


 


175




 


 


 


----------------------------------------------


 


----------------------------------------------




Profit/(loss)for the year from continuing operations


 


 


156


 


(1,090)




 


 


 


----------------------------------------------


 


----------------------------------------------




Discontinued operations


 


 


 


 


 




Loss for the year from discontinued operations


 


 


-


 


(1,452)




 


 


 


----------------------------------------------


 


----------------------------------------------




Profit/(loss)and total comprehensive income/(loss) for the yearattributable to the equity holders of the parent


 


 


156


 


(2,542)




 


 


 


==============================================


 


==============================================




Basic and fully diluted profit/(loss) per share (pence)


 


 


 


 


 




From continuing operations


 


 


0.96


 


(6.68)




 


 


 


==============================================


 


==============================================




From total profit/(loss) for the year


 


 


0.96


 


(15.59)




 


 


 


==============================================


 


==============================================




 
 
 
Consolidated Balance Sheet
At 30 June 2021




 


 


30 June


30 June




 


 


2021


2021


2020


2020




 


 


£'000


£'000


£'000


£'000




Non current assets


 


 


 


 


 






Property, plant and equipment


 


211


 


290


 




Intangible assets


 


770


 


844


 




Deferred tax


 


47


 


-


 




 


 


----------------------------------------------


 


----------------------------------------------


 




 


 


 


1,028


 


1,134




Current assets


 


 


 


 


 




Inventories 


 


73


 


63


 




Corporation tax


 


60


 


175


 




Trade and other receivables


 


564


 


1,677


 




Cash and cash equivalents


 


1,046


 


1,193


 




 


 


----------------------------------------------


 


----------------------------------------------


 




 


 


 


1,743


 


3,108




 


 


 


----------------------------------------------


 


----------------------------------------------




Total assets


 


 


2,771


 


4,242




 


 


 


 


 


 




Current liabilities


 


 


 


 


 




Trade and other payables


 


(260)


 


(854)


 




Borrowings


 


-


 


(976)


 




Lease liabilities


 


(65)


 


(61)


 




 


 


----------------------------------------------


 


----------------------------------------------


 




 


 


 


(325)


 


(1,891)




Non current liabilities


 


 


 


 


 




Lease liabilities


 


 


(104)


 


(168)




 


 


 


----------------------------------------------


 


----------------------------------------------




Total liabilities


 


 


(429)


 


(2,059)




 


 


 


----------------------------------------------


 


----------------------------------------------




Net assets


 


 


2,342


 


2,183




 


 


 


==============================================


 


==============================================




Equity


 


 


 


 


 




Issued share capital


 


 


1,631


 


5,451




Share premium


 


 


-


 


2,591




Share based payments


 


 


82


 


41




Retained earnings/(accumulated loss)


 


 


629


 


(5,900)




 


 


 


----------------------------------------------


 


----------------------------------------------




Total equity


 


 


2,342


 


2,183




 


 


 


==============================================


 


==============================================



 
 
 
 
 
 
 
 
 



 
 
 
Consolidated Statement of Changes in Equity




 
 


Share
capital


Share
premium


Translation reserve


Share based payments


Retained earnings


Total
equity




 


 


£'000


£'000


£'000


£'000


£'000


£'000




Balance at 1 July 2019


5,451


2,591


23


41


(3,358)


4,748




Comprehensive income for the year:


 


 


 


 


 


 




Loss 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




 


------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------




Comprehensive income for the year:


 


 


 


 


 


 




Profit for the year


-


-


-


-


156


156




 


 


 


 


 


 


 




Share based payment


-


-


-


41


-


41




Share capital reduction


(3,820)


(2,591)


-


-


6,411


-




Expenses of capital reduction


-


-


-


-


(38)


(38)




 


------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------




Balance at 30 June 2021


1,631


-


-


82


629


2,342




 


=========================================


==============================================


==============================================


==============================================


==============================================


==============================================



 
 
 
 
 
 
 
 



 
 
 
Consolidated Cash Flow Statement
For the year ended 30 June 2021




 


 


 




 


 


 


 




 


 


Year ended 30 June
2021


Year ended 30
June
2020




 


 


£'000


£'000




Profit/(loss) from operations


 


156


             (2,542)




Adjustments for:


 


 


 




Taxation 


 


(313)


(171)




Loss on disposal of trade and assets


 


-


72




Net financial expense


 


12


9




Share based payment


 


41


-




Depreciation


 


85


538




Loss on disposal of fixed assets


 


-


18




Impairment of investments


 


-


-




Amortisation and impairment of intangible assets


 


121


504




 


 


----------------------------------------------


----------------------------------------------




Operating cash flows before movements in working capital 


 


102


(1,572)




(Iincrease) in receivables 


 


(124)


(177)




(Decrease)/increase in payables


 


(594)


477




(Increase) in inventories 


 


(10)


(582)




 


 


----------------------------------------------


----------------------------------------------




Cash used in operations


 


(626)


(1,854)




Taxation received/(paid)


 


381


(4)




 


 


----------------------------------------------


----------------------------------------------




Net cash used in operations


 


(245)


(1,858)




 


 


----------------------------------------------


----------------------------------------------




Investing activities


 


 


 




Interest received


 


-


8




Acquisitions of property, plant and equipment


 


(6)


(764)




Acquisitions of intangible assets


 


(47)


(513)




Investment in subsidiary


 


-


-




Proceeds from disposal of trade and assets (net of cash disposed of)


 


1,237


772




 


 


----------------------------------------------


----------------------------------------------




Net cash generated from/(used in) investing activities


 


1,184


(497)




 


 


----------------------------------------------


----------------------------------------------




Financing activities


 


 


 




Capital reduction expenses


 


(38)


-




Loans advanced


 


-


1,585




Loans repaid


 


(976)


(609)




Interest paid


 


(12)


(17)




Payment of lease liabilities


 


(60)


(58)




 


 


----------------------------------------------


----------------------------------------------




Net cash (used in)/from financing activities


 


(1,086)


901




 


 


----------------------------------------------


----------------------------------------------




Net (decrease)in cash and cash equivalents 


 


(147)


(1,454)




Cash and equivalents at the beginning of year


 


1,193


2,647




 


 


----------------------------------------------


----------------------------------------------




Cash and equivalents at the end of year 


 


1,046


1,193




 


 


==============================================


==============================================




 
 
 
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 United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under adopted IFRS.
 
1        SEGMENT INFORMATION
The Group had three reportable segments being the unique trading divisions, SAW and Translogik, which make use of technology developed by the Group to measure and record temperature, pressure and torque, and the iTrack royalty activity in respect of income from licensed technology. 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 continuing royalty income and discontinued iTrack activity have been shown as separate segments. The revenues include royalties, engineering support and sale of product in relation to this technology. 
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
30 June 2021


Year ended
30 June 2021


Year ended
30 June 2020


Year ended
30 June 2020




 


Continuing


Discontinued


Continuing


Discontinued




 


£'000


£'000


£'000


£'000






North America


1,150


-


282


235




South America


244


-


83


793




Australia


28


-


5


479




UK and Europe


83


-


148


-




Rest of the World


268


-


85


201




 


----------------------------------------------


----------------------------------------------


----------------------------------------------


----------------------------------------------




 


1,773


-


603


1,708




 


=============================================


=============================================


=============================================


=============================================




          Segments
         




 


Translogik
£'000


SAW
£'000


iTrack royalties
£'000


Unallocated
£'000


Total
£'000




Year ended 30 June 2021


 


 


 


 


 






Sales


764


177


832


-


1,773




 


=====================


=====================


=====================


=====================


====================




Gross profit


385


171


832


-


1,388




Overheads


(114)


(917)


(47)


(503)


(1,581)




 


------------------------------


------------------------------


-----------------------------


------------------------------


-----------------------------




Operating profit/(loss) 


271


(746)


785


(503)


(193)




Other income


-


48


-


-


48




Net financial expense


-


-


-


(12)


(12)




Taxation


-


164


102


-


266




Deferred Tax


-


-


-


47


47




 


-------------------------------


-------------------------------


-------------------------------


-------------------------------


-------------------------------




Profit/(loss) for the year


271


(534)


887


(468)


156




 


======================


======================


======================


======================


======================




EBITDA reconciliation


 


 


 


 


 
£'000




Operating loss 


 


 


 


 


(193)
 




Other income


 


 


 


 


48




Depreciation and amortisation 


 


 


 


 


206




 


 


 


 


 


-------------------------------




EBITDA


 


 


 


 


61




 


 


 


 


 


======================



 
 
 
 
 
 
 



 
 




 


Translogik
£'000


SAW
£'000


Discontinued
£'000


Unallocated
£'000


Total
£'000




Year ended 30 June 2020


 


 


 


 


 






Sales


510


93


1,708


-


2,311




 


=====================


=====================


=====================


=====================


====================




Gross profit


249


83


1,380


-


1,712




Overheads


(121)


(783)


(2,759)


(799)


(4,462)




 


-----------------------------


------------------------------


------------------------------


------------------------------


-----------------------------




Operating profit/(loss) 


128


(700)


(1,379)


(799)


(2,750)




Other income


-


118


-


-


118




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 reconciliation


 


 


Discontinued
£'000


Continuing
£'000


Total
£'000




Operating loss 


 


 


(1,379)


(1,371)


(2,750)




Other income


 


 


 


118


118




Depreciation, amortisation and impairment


 


 


470


572


1,042




 


 


 


-------------------------------


-------------------------------


-------------------------------




EBITDA


 


 


(909)


(681)


(1,590)




 


 


 


======================


======================


======================




 
 
During the year ended 30 June 2021 there was 1 customer (2020: 2) whose turnover accounted for more than 10% of the Group's total continuing revenue as follows:




Year ended 30 June 2021


Revenue
£'000


Percentage of total




 


 


 




Customer A


915


52




Customer B


200


11




 


 


 




Year ended 30 June 2020


Revenue
£000


Percentage of total




 


 


 




Customer B


93


15




Customer C


66


11




Discontinued revenue in FY20 included Bridgestone as a customer, who have now acquired the iTrack business and from which all the royalty income now arises within continuing revenue. 
 
2        TAXATION
Recognised in the statement of comprehensive income in respect of continuing operations
 




 


Year ended
30 June 2021


Year ended
30 June 2020




 


 


 




 


£'000


£'000




Current tax credit


 


 




Current year


(60)


-




Adjustment for previous year


(206)


(175)




 


 


 




Deferred tax credit


 


 




Current year


(47)


-




 


 


 




 


----------------------------------------------


----------------------------------------------




Tax credit in Statement of Comprehensive Income


(313)


(175)




 


=============================================


=============================================




Reconciliation of effective tax rate




 


Year ended
30 June 2021


Year ended
30 June 2020




 


 


 




 


£'000


£'000




Loss before tax from continuing operations


(157)


(1,265)




 


=============================================


=============================================




Tax calculated at the average standard UK corporation tax rate of 19.00% (2020: 19:00%)


(30)


(240)




Expenses not deductible for tax purposes


8


2




Additional deduction for R&D expenditure


(38)


(145)




Current year losses for which no deferred tax asset was recognised


-


383




Recognition of deferred tax in respect of prior year losses


(47)


-




Prior year adjustment


(206)


(175)




 


----------------------------------------------


----------------------------------------------




Total tax credit


(313)


(175)




 


=============================================


=============================================




Deferred tax assets are


 


 




Recognised - in respect of tax losses


47


-




 


 


 




Unrecognised - in respect of tax losses and other timing differences


5,670


4,416




 


=============================================


=============================================




 
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 £23.1m (2020: £23.2m), 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% and in May 2021 the Finance Act 2021 was substantively enacted with a rate of 25% to apply from April 2023. The effective tax rate used to calculate the current tax for the year ended 30 June 2021 was 19.00% (2020: 19.00%).Unrecognised deferred tax balances at 30 June 2021 have been calculated using a rate of 25% (2020: 19%) as this was the substantively enacted rate at the year end dates.

 
3        EARNINGS PER SHARE




 


Year ended 30 June 2021


Year ended
30 June 2020




 


Number 


Number




Weighted average number of shares - basic


16,307,282


16,307,282




Share option adjustment


30,206


-




 


------------------------------


------------------------------




Weighted average number of shares - diluted


16,337,488


16,307,282




 


======================


======================




Basic loss per share is calculated by dividing the lossby the weighted average number of ordinary shares in issue during the year of 16,307,282 (2020: 16,307,282). Unexercised options and warrants over the ordinary shares results in a highly immaterial number of dilutive shares included in the calculation of diluted loss per share as the exercise price of most options exceeds the average share price during the year.
 




 


Year ended 30 June 2021


Year ended
30 June 2020




 


£'000


£'000




Proft/(loss) from continuing operations


156


(1,090)




Loss from discontinued operations


-


(1,452)




 


------------------------------


------------------------------




 


156


(2,542)




 


------------------------------


------------------------------




Basic profit/(loss) per share from continuing operations


0.96


(6.68)




Basic loss per share from discontinued operations


-


(8.91)




 


------------------------------


------------------------------




Basic profit/(loss) per share


0.96


(15.59)




 


======================


======================




 
There are 1,435,085 share options and 130,458 warrantsin place at 30 June 2021 (1,544,085 share options and 226,850 warrants at 30 June 2020).  
 
4        STATUTORY ACCOUNTS
 
The Financial information set out in this announcement does not constitute the Company's Consolidated Financial Statements for the financial years ended 30 June 2021 or 30 June 2020 but are derived from those Financial Statements.  Statutory Financial Statements for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the Company's AGM.  The auditors Cooper Parry Group Limited have reported on the 2020and 2021 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 2020or 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
 
 
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