REG - Transense Technlgy - Final Results & Investor Presentation
27/09/2022 07:00
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RNS Number : 7175A Transense Technologies PLC 27 September 2022
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596/2014 which is part of UK law by virtue of the European Union (withdrawal)
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27 September 2022
Transense Technologies plc
("Transense" or the "Company")
Final results for the year ended 30 June 2022
& notice of investor presentation
Transense Technologies plc (AIM: TRT), the provider of specialist sensor
systems, reports another year of strong financial results. The directors are
pleased with the solid progress made in each of the Company's three business
segments, and are confident of expanding on this in the current financial
year. Accordingly, they propose to invest a portion of internally generated
cash flow in a new £650,000 share buy-back programme announced today.
Financial highlights:
• Revenue up 49% to £2.63m (FY21: £1.77m)
• iTrack royalty increased 88% to £1.56m (FY21: £0.83m)
• Translogik probe revenue up 16% to £0.88m (FY21: £0.76m)
• SAW revenue up 11% to £0.20m (FY21: £0.18m) with
substantially increased customer engagement
• Profit before taxation of £0.27m (FY21: loss of £0.16m)
• Earnings per share up more than fivefold to 5.36 pence
(FY21: 0.96 pence)
• Cash and cash equivalents at year end of £1.06m (FY21:
£1.05m)
• Completed share buybacks of £0.30m (FY21: £Nil)
• Distributable reserves at year end of £1.20m (FY21:
£0.63m)
Executive Chairman of Transense, Nigel Rogers, said:
"The annualised rate of iTrack royalty income now exceeds £2m, which more
than covers the fixed overhead costs of the Company, and Translogik probes
revenues are approaching £1m per annum with ample scope for further growth.
We are now also achieving real traction with SAW technology across our target
industry sectors, illustrated most recently with the collaboration with
Meggitt in aerospace, supported by a growing pipeline of new potential
customer engagements.
"The directors are confident that the Company's business model is resilient,
that further increases in profitability and cash flow are deliverable, and
that the long term prospects for the Company continue to build."
Investor Presentation: 4pm today, Tuesday 27 September 2022
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 Tuesday 27 September 2022. The presentation will be hosted through the
online 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
(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
(mailto: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 Tel: Via Walbrook PR
Nigel Rogers (Executive Chairman)
Melvyn Segal (CFO)
Allenby Capital (Nominated Adviser and Broker) Tel: +44 (0)20 3328 5656
Jeremy Porter/George Payne (Corporate Finance)
Tony Quirke (Sales& Corporate Broking)
Walbrook PR Tel: +44 (0)20 7933 8780
Tom Cooper/Nick Rome Transense@walbrookpr.com
Notes to Editors:
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 aerospace, electric motors &
drives, industrial machinery and performance automotive.
The Company'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 (http://www.transense.com/)
For further information please contact transense@walbrookpr.com
(mailto:transense@walbrookpr.com) .
Chairman's statement for the year ended 30 June 2022
I am pleased to report another year of strong financial results and good
further progress in the development of each of the company's three business
segments. The latest post year end monthly iTrack royalty income has an
annualised rate of in excess of £2m, Translogik probes revenues are
approaching £1m per annum with ample scope for further growth, and increased
business development activities for Surface Acoustic Wave (SAW) sensor
technology are building a pipeline of potential customers in our key target
market sectors.
Business strategy
The business strategy of the Company 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.
There are currently three business segments comprising royalty income from
iTrack, Translogik tyre monitoring equipment, and the commercialisation of
Surface Acoustic Wave (SAW) sensor technology.
Progress in the development of each of these segments during the year, and
plans for the future, are set out in the Operating and Financial Review.
The directors set out mid-term strategic goals for the Company's businesses in
June 2020, immediately following the completion of the iTrack licence with
Bridgestone. Since that time, financial results have been in line with or
ahead of expectations, and the directors continue to be pleased with progress.
Financial overview
Growth in revenue, profitability and cash generation were each delivered at
rates consistent with those set in the strategic goals in June 2020. This
resulted in net earnings of 5.36 pence per share; a fivefold increase on the
prior year level of 0.96 pence.
Net cash generation (before financing activities) in the year of £0.30m was
re-invested in the purchase of Company shares (which were put into treasury)
under the buy-back programme announced in February 2022. At the end of the
financial year, the Company had net assets of £3.09m (FY21: £2.34m),
reserves stood at £1.50m, of which £1.20m are distributable (FY21: £0.63m),
and net cash and cash equivalents of £1.06m (FY21: £1.05m). The directors
are confident of further progress in the upcoming financial year and propose
to continue to re-invest a portion of internally generated cash flow in a new
share buy-back programme of £0.65m announced today.
Corporate Governance, board structure and composition
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 the scale
of the Company and the relatively low risk profile of its operations.
The three directors who have served throughout the year each have many years'
experience as both executive and non-executive directors of fully listed and
AIM-quoted companies, and recognise the broader needs of shareholders and
other stakeholders in all of their dealings. During the year the Board was
further strengthened by Nick Hopkins joining as Chief Operating Officer and
Ryan Maughan (in a part time capacity) as Business Development Director. At
the time of their appointment in December 2021 it was also announced that the
Board intends to appoint an additional independent non-executive director, and
this process is currently underway.
The directors maintain constructive dialogue with major shareholders on the
development of the business and associated governance matters and will
continue to ensure that any feedback is addressed promptly and effectively.
Furthermore, there are opportunities for regular engagement with all
shareholders with full details set out on the Company's website.
Share buyback programme
In February 2022, the Company announced the commencement of a programme to
conduct market purchases of ordinary shares of 10 pence each in the Company up
to maximum aggregate purchase value of £0.30m. This programme was completed
on 26 May 2022 with the Company having acquired 434,000 ordinary shares for
treasury at an average price of 70 pence each.
During the financial year the share price fluctuated between 58.0 pence and
122.5 pence and averaged approximately 85 pence. The directors consider that
recent weakness in the share price reflects macro-economic and stock market
driven concerns which are unrelated to the performance and prospects for the
business. Accordingly, the directors continue to view the Company's shares
as undervalued and have today announced a new programme of market purchases on
similar terms to the previous programme but with a maximum aggregate value of
£0.65m, of which £0.50m is subject to the renewal of shareholder approval
for such market purchases at the upcoming Annual General Meeting.
Current trading and outlook
In the first two months of trading since the end of the financial year the
total revenues have increased year on year by 19%.
The royalty income stream from iTrack is proving reliable and continuing to
grow strongly with the post year annualised royalty run rate now comfortably
exceeding the fixed overheads of the whole Company. In addition,
our commercial relationships in Translogik are continuing to strengthen and
offer further growth potential as fleet managers seek to make cost savings.
Finally, we are achieving real traction with SAW technology across a range of
high growth industry sectors, illustrated most recently with the collaboration
with Meggitt in aerospace, which provide a sound basis for optimism for the
future.
Accordingly, the directors are confident that the Company's business model is
sufficiently resilient to withstand the current challenging global economic
outlook and look to the future with confidence.
Nigel Rogers
Executive Chairman
27 September 2022
Strategic Report
Operating and Financial Review
Results for the year
Revenues for the year increased by nearly 50% to £2.63m (FY21: £1.77m),
driven primarily by gathering momentum on royalty income from iTrack. Gross
margin improved to 84.9% of revenue (FY21: 78.3%) amounting to £2.23m (FY21:
£1.39m).
Administrative expenses underwent a planned increase to £1.97m (FY21:
£1.58m), mainly as a result of additional headcount and travel to support
development of the SAW business. The Earnings before Interest, Taxation,
Depreciation and Amortisation adjusted for the charge for share-based payments
was £0.62m (FY21: £0.10m), and the net profit before taxation was £0.27m
(FY21: net loss of £0.16m).
There was a credit for taxation of £0.61m (FY21: £0.31m) arising from the
increase in the deferred taxation asset relating to the use of previous years'
tax losses in future. As the Board has growing confidence in the future
profitability, the deferred taxation asset now reflects a forecast period of
two years rather than the use of one year previously. In total, the Company
has UK tax losses available to carry forward at 30 June 2022 in excess of
£22m, which are available for offset against future profits subject to HMRC
agreement, of which approximately £2.58m is currently recognised for deferred
taxation purposes (FY21: £0.19m).
The resulting net total comprehensive income attributable to equity
shareholders was £0.88m (FY21: £0.16m) resulting in earnings per share of
5.36 pence (FY21: 0.96 pence).
Segmental review
iTrack royalty income
Royalty income from iTrack generated income of £1.56m during the year,
representing an increase of 88% over the level in the first year of the
licence to 30 June 2021 (FY21: £0.83m). By the end of the year, the
installed base had risen to more than 2.75 times that which prevailed at the
outset of the licence, and the annualised royalty run rate had increased to
£1.88m, compared with £1.12m at 30 June 2021, and £0.64m at inception in
June 2020.
Royalty income is denominated in United States Dollars (US$). The rate of
exchange changed adversely in the first year of the licence as Sterling
strengthened against the US$, however in the year to 30 June 2022 this
reversed to close in the Company's favour. During the year the directors
implemented a policy of hedging forward around 80% of estimated future income
by up to one year to take advantage of this opportunity and achieved an
average rate around USD1.20 to GBP1 which compared very favourably with the
opening rate at the time of the deal being USD1.25 and the peak rate during
the financial year being just under USD1.4. However since securing these rates
the directors note that GBP has fallen by a further 10% against USD.
Bridgestone Corporation, Japan, continues to indicate that iTrack is a key
strategic component of their mobility solutions business and expresses
confidence in the future growth potential for this technology.
Translogik tyre monitoring
Our range of tyre monitoring equipment marketed under the Translogik brand
generated revenue of £0.88m; an increase of almost 16% over the prior year
(FY21: £0.76m), and the segmental result was up by a third to £0.36m (FY21:
£0.27m).
The modular TLGX range is now firmly established and this has facilitated the
decision to phase out the TL-G1 range which is now well underway. This
process has provided many opportunities to up-sell products with more
sophisticated features, which together with favourable exchange rates
increased gross margins in this segment from 50.4% of revenue in FY21 to 55.7%
in FY22.
The Directors believe that working closely with the leading global tyre
manufacturers has resulted in the Translogik probe becoming a tool of choice
to diagnose mandatory commercial vehicle tyre safety and condition inspection
data for their fleet management systems, and this has substantially increased
sales opportunities. The technology has been shown to deliver reduced costs
and improved collection of data which helps commercial vehicle fleets comply
with safety inspection regulations and manage the significant costs of their
tyres more effectively, again, key objectives for the future. As market
penetration continues to build, we are also becoming increasingly aware of
opportunities for additional features and enhanced software compatibility to
maintain leadership in this market sector. This process further cements our
relationships with major tyre manufacturers. The business has continued to
expand beyond these important clients, and has new relationships in the fleet
management arena, including software developers and manufacturers of
complementary hardware products.
Surface Acoustic Wave (SAW)
SAW generated revenue of £0.20m (FY21: £0.18m) and operating overheads for
the segment increased slightly from £0.92m to £1.14m, reflecting increased
headcount adding new senior people to both business and technical
development. Revenue was derived mainly from low volume production of
instrumented shafts either for motorsport or for customer evaluation projects,
whilst increased headcount was required to manage new business opportunities
and technical support which are yet to deliver revenue.
There is a broad range of potential market applications for SAW technology
which have been explored fully, especially over the past two years with the
support of the commercial advisory panel (SAWCAP). Our market focus for SAW
technology has now settled on four sectors in which there are applications
with clear differentiated benefits.
Target market sectors for SAW technology:
Aerospace
The measurement of torque is common practice in all types of aerospace
engines, and is used to improve safety, pilot control and engine
reliability. Our SAW technology offers advantages in these applications due
to its accuracy over other technologies. Our sensor system is robust, and
compact in size and weight. Its ability to measure or compensate for
temperature fluctuations, and immunity from background electromagnetic
interference, make it the ideal choice.
The case for using SAW in aerospace applications was proven in 2016 by the
specification of SAW sensor technology under licence from Transense on the GE
ITEP programme to re-engine Apache and Blackhawk helicopters for the US
Army. The First Engine to Test under this programme was built successfully
earlier this year, and low volume production is planned to commence in
2024/25.
In May 2022, an amending agreement was signed between Transense and GE
Aviation to extend the scope of the field of use of their licence to encompass
work for the Hybrid Electric Altitude Testbed flight demonstrator (HEAT)
Programme. This programme covers the build of a SAW torque measurement system
for evaluation in both test laboratory and flight test conditions. Although
there is no current intention for this programme to directly enter commercial
production, Transense is involved in the development phase over the period to
2024 to provide technical know-how, limited supply of critical components and
the provision of calibration services at agreed commercial rates.
More recently, in September 2022, the Company entered into an important
collaboration with Meggitt SA, the leading designer and manufacturer of
complete condition monitoring, vibration monitoring and measurement solutions
for the aerospace and energy markets. Under a new Memorandum of
Understanding, the Company will support Meggitt's evaluation of potential
future market opportunities in the aerospace sector. Meggitt has indicated
that our SAW technology has the potential to become a great addition to its
Engine Sensing portfolio as part of its strategy to support global engine OEM
customers. There is a shared aim to enter into a licensing agreement prior
to 31 December 2023 covering one or more fields of use in aerospace.
Electric Motors and Drives (EMD)
As the market for electrified vehicle powertrain develops rapidly, the quest
to deliver improved efficiency and performance in electric drive systems is
paramount. Maximising vehicle range for a given battery capacity is a key
target of every powertrain development programme, alongside maintaining and
improving the safety integrity of the powertrain system.
The present state of the art is to use advanced torque estimation techniques
based on electrical current and rotational speed measurements. Accurate
torque measurement is desirable but has not been possible using competing
torque measurement systems. Using SAW sensors eliminates the need for
estimation and gives reliable torque and temperature measurement from the
motor rotor that can be used to improve both motor efficiency and safety.
In May 2022, the Company secured a place on the Advanced Propulsion Centre
(APC) Technology Developer Accelerator Programme (TDAP) in a competitive
process. Alongside grant funding of up to £0.13m, this programme provides
access to advice and support from the APC and their delivery partners focusing
on product development, market strategy, intellectual property management and
networking. The initial phase of this work is underway and it will progress
through the current financial year. Grant income of £0.02m was recognised
in the year ended 30 June 2022, and the remaining available funding is
expected to be realised in the year to 30 June 2023 and 2024.
EMD also has links into the other sectors with increasing electrification in
aerospace and industrial machinery.
Industrial Machinery (including Off-Highway Vehicles, Heavy Industrial Engines
and Robotics)
Industrial Machinery provides the backbone of many sectors, from mining and
construction to agriculture, materials handling and logistics. Industrial
machines are becoming increasingly complex with more features and controls and
are being developed to do more work for a given amount of power. There is
also a clear drive to partly or fully automate machinery and deploy more
robotics in industry.
The propulsion systems in off-highway vehicles and other machines transmit
drive forces through a rotating shaft to drive the wheels or other systems
such as hydraulic pumps and gas turbines. The demanding nature of these
heavy-duty applications means that implementing traditional torque sensor
technology is difficult and it is more common to rely on shaft speed data as
an alternative.
The use of SAW sensing of torque and/or temperature can improve accuracy,
efficiency and power distribution, all of which can also contribute to the
ability to operate such machines remotely or on a fully autonomous basis.
Transense SAW sensor technology is under ongoing trial by a major producer of
agricultural machinery. The project is progressing on schedule and is
expected to strengthen the business case for the use of SAW in this sector.
The global market for industrial robotics is expanding rapidly and is
accelerated by the advent of lower cost collaborative robots that are easier
and less costly to deploy. These robots have a position and torque sensing
system embedded into every joint to allow automated control and safe
operation, which are generally reliant on strain gauge or displacement
sensors. Whilst these sensors are low cost and suitable for simple
applications, they lack the robustness required in some harsh environments and
can be susceptible to electromagnetic interference. Furthermore, each of
these existing technologies requires an element of twist or flex in the
robot's joints, which means that the robotic arm will flex in operation,
limiting performance and repeatability, yet increasing safety and reliability.
Transense SAW sensor technology can provide an improved way to measure torque,
rotation and temperature in a robotic system, virtually eliminating flex and
creating high performing and more repeatable robots with more compact joints
than has been possible previously.
Motorsport and high-performance vehicles
Transense SAW technology has been in use for several years in premium motor
sport driveline applications to measure delivered torque in race vehicle
drivetrain for monitoring and regulatory compliance purposes. In September
2021, the Company entered into a five-year Joint Collaborative Agreement (JCA)
with McLaren Applied Ltd to further develop non-contact torque products for
this sector. Under the JCA. McLaren has exclusive access to the technology
for the premium motor sport market in exchange for meeting minimum target
revenues on an annual basis over five years. Progress under the JCA has been
in line with our initial expectations and a number of new customer
opportunities are in development.
The motorsport market offers limited scale as a consequence of the relatively
low number of vehicles in operation but is a proving ground for new automotive
technology which may subsequently be adopted in mainstream vehicles. There is
strong overlap with EMD as high volume performance vehicles are increasingly
being developed using electric drivetrain.
Business development activities
In view of the positive indications for the development of applications in
which SAW offers benefits over other methods of torque measurement, and with
clear target market sectors in view, it became appropriate during the year to
inject additional business development resource. Ryan Maughan joined the
Board in a part-time role as Business Development Director in December 2021,
and his involvement has generated a growing pipeline of potential customer
engagements which can be summarised as follows:
Number of potential customers by sector as at 26 September 2022 (July 2021)
Electric Motors & Drives Industrial Machinery Performance Automotive
Aerospace Total
Stage 4 - Contracted 1 (1) 0 (0) 0 (0) 1 (1) 2 (2)
Stage 3 - Contract under negotiation 1 (0) 0 (0) 0 (0) 0 (0) 1 (0)
Stage 2 - In development 1 (0) 1 (0) 1 (1) 0 (1) 3 (2)
Stage 1 - Active enquiry 4 (3) 10 (0) 4 (0) 0 (0) 18 (3)
Total 7 (4) 11 (0) 5 (1) 1 (2) 24 (7)
There is now a healthy and growing pipeline of active customer engagement,
where the minimum requirements for an enquiry to be considered active are
met. These include pre-qualification that the project is technically
feasible, and is known to be supported by decision makers and budget holders
in the customer organisation.
There will normally be a significant time lag in progressing enquiries from
stage 1 to stage 4, and much more work to be done. It is also more than
likely that timescales can be extended, and that some will not mature into
revenue. Nevertheless, the progress made in recent months provides
indication of future growth potential, and a number of projects are close to
moving from enquiry stage to some form of paid engineering project, which will
increase the revenue of this segment with no significant additional costs.
Operations and engineering activities
Nick Hopkins, who joined the Company to lead the SAW business during the
reorganisation phase in 2020, became Chief Operating Officer and joined the
Board in December 2021.
In parallel with the opening up of new commercial opportunities, resources
have been applied in developing the technical and operational capabilities
that will be required to satisfy increasing customer demand for chargeable
development projects, leading into engineering support for transfer of SAW
into production.
Unlike some alternative torque and temperature sensing devices, SAW components
require a degree of customisation in order to unlock their unique benefits
specific to each application and are therefore not sold "out of the box".
This calls for detailed application engineering, covering for example the
methods for bonding components to OEM equipment, and calibrating the output
signal for accuracy and repeatability across the temperature cycle.
To advance our knowledge and experience in these areas, Andy Bullock joined
the Company in July 2022 in the newly created role of Technical Director. He
brought a proven record of leading the design and development of complex
electronic solutions and associated manufacturing processes. The primary
focus is to build the engineering capability of the business to meet customer
demand for practical support in application of SAW technology, both in-house
for proto-typing, development and pilot production, and through the provision
of technology transfer to potential licencees.
Working in partnership
It has been an important feature of the Company's business model to work
closely with some of the world's largest and most respected companies in
collaborative partnerships to facilitate market access that would otherwise
challenge the financial resources of a specialist innovator. This has led to
the successful licensing of SAW technology to GE and Emerson, and the iTrack
licence granted to Bridgestone in 2020.
This approach is maintained in our recent announcement of the new
collaboration with Meggitt in the aerospace sector. The directors consider
that working alongside a company of Meggitt's stature will expand our capacity
to develop customers in this rapidly changing sector and will continue to
support this partnership approach in other segments where suitable
opportunities arise to increase access to markets, customers, supply chain
and/or engineering and production capabilities.
Prospects for SAW
Taken as a whole, there has been much progress during the year and clear signs
of traction across high value growth markets. The level and quality of
customer engagement has increased substantially, and the engineering tasks
required to enable customers to apply our technology in a more accessible
manner are underway.
It will remain a time consuming process to convert qualified enquiries into
development projects, and transition these through to full production, and
doubtless not all will mature. The directors consider, however, that the
prospects of future commercial success for SAW are building.
Financial position and cash flow
The Company's financial position strengthened further during the year with net
assets increasing to £3.09m (FY21: £2.34m) as a result of the retention of
net profits after taxation. Net available cash balances amounted to £1.06m
(FY21: £1.05m), and the final quarter royalty income on iTrack receivable on
31 July 2022 stood at £0.47m (FY21: 0.26m).
Net cash generated from operations amounted to £0.41m (FY21: net cash used of
£0.25m). This was re-invested in capital expenditure of £0.10m (FY21:
£0.05m) and in the share buy-back programme during the final quarter of the
year totaling £0.30m, leaving net cash balances unchanged over the year.
The directors anticipate that the Company will continue to be cash generative
for the foreseeable future and will accumulate further cash balances well in
excess of the buy-back programme currently proposed.
Going concern
The Company meets its day to day working capital requirements through existing
cash reserves and does not currently require an overdraft or other borrowing
facility. The directors have prepared cash flow forecasts for the period to
30 June 2024 which indicate that there is a reasonable expectation that the
Company will continue to operate within current and future cash resources
throughout this period Accordingly, these financial statements have been
prepared on the going concern basis.
Nigel
Rogers
Melvyn Segal
Executive
Chairman
Chief Financial Officer
27 September
2022
27 September 2022
Consolidated Statement of Comprehensive Income
For the year ended 30 June 202
Year ended Year ended
30 June 30 June
2022 2021
£'000 £'000
Continuing operations
Revenue 2,632 1,773
Cost of sales (398) (385)
---------------------------------------------- ----------------------------------------------
Gross profit 2,234 1,388
Administrative expenses (1,970) (1,581)
---------------------------------------------- ----------------------------------------------
Operating loss 264 (193)
Financial expense (12) (12)
Other income 16 48
---------------------------------------------- ----------------------------------------------
Profit/(Loss) before taxation 268 (157)
Taxation 609 313
---------------------------------------------- ----------------------------------------------
Profit and total comprehensive income for the year attributable 877 156
To the equity holders of the parent ---------------------------------------------- ----------------------------------------------
Basic profit per share for the year (pence) 5.36 0.96
============================================== ==============================================
Diluted profir per share for the year (pence) 5.22 0.96
============================================== ==============================================
Consolidated Balance Sheet
At 30 June 2022
At 30 June At 30 June
2022 2022 2021 2021
£'000 £'000 £'000 £'000
Non current assets
Property, plant and equipment 167 211
Intangible assets 671 770
Deferred tax 645 47
---------------------------------------------- ----------------------------------------------
1,483 1,028
Current assets
Inventories 88 73
Corporation tax - 60
Trade and other receivables 1,133 564
Cash and cash equivalents 1,055 1,046
---------------------------------------------- ----------------------------------------------
2,276 1,743
---------------------------------------------- ----------------------------------------------
Total assets 3,759 2,771
Current liabilities
Trade and other payables (560) (260)
Lease liabilities (65) (65)
---------------------------------------------- ----------------------------------------------
(625) (325)
Non current liabilities
Lease liabilities (42) (104)
---------------------------------------------- ----------------------------------------------
Total liabilities (667) (429)
---------------------------------------------- ----------------------------------------------
Net assets 3,092 2,342
============================================== ==============================================
Equity
Issued share capital 1,644 1,631
Share premium 65 -
Treasury Shares (303)
Share based payments 180 82
Retained earnings/(accumulated loss) 1,506 629
---------------------------------------------- ----------------------------------------------
Total equity 3,092 2,342
============================================== ==============================================
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Share Share Share based payments Retained earnings Treasury Shares Total
capital premium Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 July 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
------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Comprehensive income for the year:
Profit for the year - - - 877 - 877
Share based payment - - 98 - - 98
Warrants exercised 13 65 - - - 78
Treasury shares - - - - (303) (303)
------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Balance at 30 June 2022 1,644 65 180 1,506 (303) 3,092
========================================= ============================================== ============================================== ============================================== ============================================== ==============================================
Consolidated Cash Flow Statement
For the year ended 30 June 2022
Year ended 30 June Year ended 30 June
2022 2021
£'000 £'000
Profit/(loss) from operations 877 156
Adjustments for:
Taxation (609) (313)
Net financial expense 12 12
Share based payment 98 41
Depreciation 88 85
Amortisation and impairment of intangible assets 155 121
---------------------------------------------- ----------------------------------------------
Operating cash flows before movements in working capital 621 102
(Iincrease) in receivables (569) (124)
Increase/(Decrease) in payables 300 (594)
(Increase) in inventories (15) (10)
---------------------------------------------- ----------------------------------------------
Cash generated/(used) in operations 337 (626)
Taxation received 71 381
---------------------------------------------- ----------------------------------------------
Net cash generated/(used) in operations 408 (245)
---------------------------------------------- ----------------------------------------------
Investing activities
Acquisitions of property, plant and equipment (44) (6)
Acquisitions of intangible assets (56) (47)
Proceeds from disposal of trade and assets - 1,237
---------------------------------------------- ----------------------------------------------
Net cash (used in)/generated from investing activities (100) 1,184
---------------------------------------------- ----------------------------------------------
Financing activities
Capital reduction expenses - (38)
Treasury shares (303) -
Warrants exercised 78 -
Loans repaid - (976)
Interest paid (12) (12)
Payment of lease liabilities (62) (60)
---------------------------------------------- ----------------------------------------------
Net cash used in financing activities (299) (1,086)
---------------------------------------------- ----------------------------------------------
Net increase/(decrease)in cash and cash equivalents 9 (147)
Cash and equivalents at the beginning of year 1,046 1,193
---------------------------------------------- ----------------------------------------------
Cash and equivalents at the end of year 1,055 1,046
============================================== ==============================================
NOTES RELATING TO THE COMPANY FINANCIAL STATEMENTS
BASIS OF PREPARATION
Both the Parent Company financial statements and the Company financial
statements have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the United Kingdom
("Adopted IFRSs") and those parts of the Companies Act 2006 that are relevant
to companies preparing accounts under IFRS. On publishing the Parent Company
financial statements here together with the Company financial statements, the
Company is taking advantage of the exemption in s408 of the Companies Act 2006
not to present its individual statement of comprehensive income and related
notes that form a part of these approved financial statements.
1 SEGMENT INFORMATION
The Company had three reportable segments being the unique trading divisions,
SAW and Translogik, which make use of technology developed by the Company to
measure and record temperature, pressure and torque, and the iTrack royalty
activity in respect of income from licensed technology.
Revenue and EBITDA are the Company's key focus and in turn is the main
performance measure adopted by management.
The tables below set out the Company'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
30 June 2022 30 June 2021
Continuing Continuing
£'000 £'000
North America 323 244
South America 123 83
Australia 41 28
Europe 387 228
UK 92 90
Rest of the World 109 268
---------------------------------------------- ----------------------------------------------
1,075 941
============================================= =============================================
iTrack
Royalty
1,557 832
Note: comparatives are restated as they were shown
incorrectly last year.
Segments
Translogik SAW iTrack royalties Unallocated Total
£'000 £'000 £'000 £'000 £'000
Year ended 30 June 2022
Sales 875 200 1,557 - 2,632
===================== ===================== ===================== ===================== ====================
Gross profit 484 193 1,557 - 2,234
Overheads (126) (1,142) (44) (658) (1,970)
------------------------------ ------------------------------ ----------------------------- ------------------------------ -----------------------------
Operating profit/(loss) 358 (949) 1,513 (658) 264
Other income - 16 - - 16
Net financial expense - (12) - - (12)
Taxation - - - 609 609
------------------------------- ------------------------------- ------------------------------- ------------------------------- -------------------------------
Profit/(loss) for the year 358 (945) 1,513 (49) 877
========== =========== =========== =========== ===========
EBITDA reconciliation
Operating loss 264
Other income 16
Depreciation and amortisation 243
------------------
EBITDA 523
===========
Note: Adjusted EBITDA (excluding share based
payments)
621
Translogik SAW iTrack royalties Unallocated Total
£'000 £'000 £'000 £'000 £'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
===================== ===================== ===================== ===================== ====================
During the year ended 30 June 2022 there were 2 customers (2021: 2) whose
turnover accounted for more than 10% of the Company's total continuing revenue
as follows:
Year ended 30 June 2022 Revenue Percentage of total
£'000
Customer A 1,557 59
Customer B 339 13
Year ended 30 June 2021 Revenue Percentage of total
£000
Customer A 915 52
Customer B 200 11
2 TAXATION
Recognised in the statement of comprehensive income in respect of continuing
operations
Year ended Year ended
30 June 2022 30 June 2021
£'000 £'000
Current tax credit
Current year - (60)
Adjustment for previous year (11) (206)
Deferred tax credit
Current year (598) (47)
---------------------------------------------- ----------------------------------------------
Tax credit in Statement of Comprehensive Income (609) (313)
============================================= =============================================
Reconciliation of effective tax rate
Year ended Year ended 30 June 2021
30 June 2021
£'000 £'000
Profit/(loss) before tax 268 (157)
============================================= =============================================
Tax calculated at the average standard UK corporation tax rate of 19.00% 51 (30)
(2021: 19:00%)
Expenses not deductible for tax purposes 19 8
Additional deduction for R&D expenditure - (38)
Utilisation of losses brought forward for which no deferred tax asset was (23) -
recognised
Recognition of deferred tax in respect of prior year losses (645) (47)
Prior year adjustment (11) (206)
---------------------------------------------- ----------------------------------------------
Total tax credit (609) (313)
============================================= =============================================
Corporation tax receivable - 60
Deferred tax assets are
Recognised - in respect of tax losses 645 47
Unrecognised - in respect of tax losses and other timing differences 4,900 5,670
============================================= =============================================
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 £22.8m (2021: £23.1m), which are available for offset against
future profits of the same trade. There is no expiry date for tax losses. An
appropriate deferred tax asset is being recognised as the Group is able to
demonstrate a reasonable expectation of sufficient future taxable profits
arising in order to utilise the losses.
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. Recognised and unrecognised deferred tax balances at 30
June 2022 have been calculated using a rate of 19% for reversals expected in
the period to April 2023 and 25% for reversals after that date (2021: 25%) as
this was the substantively enacted rate at the year end date. The recent
budget on 23 September 2022, the Chancellor of the Exchequer announced that
the corporation tax rate would not increase to a maximum of 25% however this
has not been enacted as at year end nor at the time of signing the financial
statements.
3 EARNINGS PER SHARE
Year ended 30 June 2022 Year ended 30 June 2021
Number Number
Weighted average number of shares - basic 16,365,640 16,307,282
Share option adjustment for potentially dilutive shares 431,808 30,206
------------------------------ ------------------------------
Weighted average number of shares - diluted 16,797,448 16,337,488
====================== ======================
Basic profit per share is calculated by dividing the profit by the weighted
average number of ordinary shares in issue during the year of 16,365,640
(2021: 16,307,282). This excludes treasury shares held by the Company.
Year ended 30 June 2022 Year ended 30 June 2021
£'000 £'000
Proft/(loss) 877 156
------------------------------ ------------------------------
Basic profitper share 5.36 0.96
Diluted profit per share 5.22 0.96
There are 1,594,500 share options and no warrants in place at 30 June 2022
(1,435,085 share options and 130,458 warrants at 30 June 2021).
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 2022 or 30 June 2021 but are derived from those Financial Statements.
Statutory Financial Statements for 2021 have been delivered to the Registrar
of Companies and those for 2022 will be delivered following the Company's
AGM. The auditors Cooper Parry Group Limited have reported on the 2021 and
2022 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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