REG - Transense Technlgy - Final Results <Origin Href="QuoteRef">TRT.L</Origin> - Part 1
RNS Number : 3860KTransense Technologies PLC21 September 201621 September 2016
Transense Technologies Plc
("Transense" or "the Company")
Final results for the year ended 30 June 2016
Transense Technologies Plc (AIM: TRT), the provider of sensor systems for industrial, mining and transportation markets, is pleased to report audited results for the year ended 30 June 2016 in line with the board's expectations, and significant progress in the development of each of the two core business activities.
Highlights
Revenues including licence fees 5.12m (2015: 1.25m)
Disposal of loss making IntelliSAW division in October 2015
Licence fees from Emerson of 3.04m following disposal of IntelliSAW business
Profit from continuing operations 1.63m (2015: Loss 2.08m)
Net profit for the year of 1.15m (2015: net loss of 3.12m)
Net cash generated from operations of 0.84m (2015: 2.15m net cash consumed)
Net cash at end of period of 3.65m (2015: 0.47m)
Increased market recognition of value in SAW technology
Imminent launch of iTrack II system for mining productivity
Proposed new capital structure
Executive Chairman of Transense Technologies, David Ford, said:
"The Company has made a great deal of progress over the last year in positioning each of the two core businesses for future success. The Company is now in a robust financial condition and has the resources available to commit to building two distinct businesses with high growth potential.
The board is confident that the longer term prospects for the Company are promising, whilst maintaining a cautiously optimistic view of prospects for short term revenue growth and the achievement of break even."
For further information please visit www.transense.co.ukor contact:
Transense Technologies Plc
Graham Storey, Chief Executive
Tel: 01869 238380
finnCap
Ed Frisby, Giles Rolls (Corporate Finance)
Tony Quirke, Alice Lane (Corporate Broking)
Tel: 020 7220 0500
IFC Advisory
Tim Metcalfe, Graham Herring, Heather Armstrong, Miles Nolan
Tel: 020 3053 8671
About Transense Technologies
Based in Oxfordshire, UK, Transense has developed patent-protected sensor systems and supporting technology for use in a variety of diverse high growth markets. Transense's Surface Acoustic Wave (SAW), wireless, battery-less, sensor systems offer significant advantages over legacy wireless sensor systems. Transense is targeting the transport and mining industries, and the global torque, temperature and pressure sensing markets, via its trading divisions, Translogik and SAWSense.
Transense's shares are admitted to trading on AIM, a market operated by the London Stock Exchange (AIM: "TRT").
Chairman's statement
The Company has made a great deal of progress over the last year in strengthening financial resources and positioning each of the two core businesses for future success. Revenue from continuing operations was strongly ahead of the low base set in the prior year, and net profits came in line with the board's expectations.
Financial results and condition
Revenue from continuing activities totalled 5.12m. Revenues, before the IntelliSAW related license fee, increased by 67% to 2.08m (2015: 1.25m). The pre tax profit (before discontinued operations) totalled 1.60m, which included the licence fee of 3.04m before associated costs and 2.76m after costs (2015: loss 2.13m).
The total profit attributable to shareholders was 1.15m (2015: loss of 3.12m) resulting in earnings per ordinary share of 0.26 pence (2015: loss of 1.11 pence). The board do not recommend payment of a dividend.
Net cash balances at 30 June 2015 were 3.65m (2015: 0.47m).
Strategy
The Company provides innovative sensor systems for complex applications and operates two principal businesses, SAWSense and Translogik. A third operating business, IntelliSAW, was sold in October 2015.
The Company intends to continue to commercialise sensor technologies by working closely with global partners in order to build value for shareholders through the generation and distribution of net income, and/or the return of capital on realisation.
SAWSense designs and develops Surface Acoustic Wave (or "SAW") sensor devices that can be used to measure torque, pressure and/or temperature in harsh, restricted or demanding environments to very high accuracy. This world leading technology has a broad range of potential uses ranging from premium value custom applications through to high volume mass markets such as passenger cars.
Translogik designs and manufactures a range of Tyre Pressure Monitoring Systems ("TPMS"), products and services for heavy duty off road vehicles (particularly mine-haul trucks), commercial and passenger transport vehicles. These comprise the iTrack system, which provides real-time tyre temperature and pressure measurements for mine-haul trucks in service, and a range of tyre probes and other offerings for the road transport sector.
The Translogik product offerings are continually evolving with the focus on providing a comprehensive service to clients in the mining and truck industry and this strategy has resulted in the development of the new iTrack II kit which is set to be launched in September 2016 at MINExpo.
In the early part of the financial year the board decided to market the IntelliSAW division, in part due to concerns over the ongoing financial commitment to this loss making business. This decision resulted in the successful sale of the business to Emerson in October 2015, and the receipt of a one off licence fee for the use of the valuable intellectual property owned by the Company and required to operate the IntelliSAW division in future. The licence was restricted to the relatively narrow field of temperature monitoring in electrical switchgear in which IntelliSAW operates.
Our markets
SAW sensing in global industries
Sensor technology is widely used in virtually every industrial application across a broad range of industries, contributing to many billions of dollars in revenue. Sensors using SAW technology are powered by radio frequency ("RF"), do not require a battery and are wireless. This means that the sensor has significant benefits, as the package can be extremely small and light and is suited to harsh environment or remote locations, and does not require regular maintenance. Being wireless enables the sensor to be used in rotating components, other moving parts, or environments where electrical wiring would pose a safety risk.
These benefits are particularly appropriate in drives, motors, gearboxes, valves and couplings, which are in common use in the industrial equipment, energy generation, oil & gas, aviation, military and automotive sectors.
As Original Equipment Manufacturers (OEMs) seek ever more data on a real-time basis to optimise the performance of their products, accurate and frequent measurement becomes increasingly important. The world's largest and most successful companies in these fields are recognising SAW as one of the enabling technologies in developing the "Internet of Things" in this arena, contributing to a vision by which machines are networked with embedded sensors to optimise performance using real time analytical tools, algorithms and interactive controls.
TPMS in Mining
The original iTrack system was developed to provide tyre pressure and temperature monitoring data to mine haul-truck operators, primarily to reduce or eliminate the incidence of tyre failure. The associated benefits in tyre life management were evident, and were initially viewed as a means of payback for the improved safety performance achieved.
Over recent years the collection of pressure and temperature data has become increasingly sophisticated, and our systems for measuring, monitoring and reporting tyre conditions are seen by key customers as a management tool to optimise asset utilisation and productivity, whilst continuing to make a key contribution to mine safety.
Since the end of the commodities boom in 2012, the world's major mining groups have come under relentless pressure to reduce debt and operating costs. The initial impact of dramatically reduced capital spending programmes had a seriously adverse effect on the roll out of our iTrack system in previous years, and despite offering flexible finance options, decision timescales to adopt any new technology have continued to be elongated in this difficult climate.
In the meantime, working closely with a select group of individual mines, our product and service offering has been developed to provide compelling real time information which can be used to optimise haul truck dispatch operations, minimise down-time, and increase tyre life and mine productivity. These exciting developments work in conjunction with complementary third party IT platforms to provide invaluable insight into mine operations, and will be launched as iTrack II later this month.
Whilst these product range improvements have been under development, we have maintained a fairly cautious approach to geographical expansion, focusing attention on markets in Chile, Australia and South Africa in which we have highly effective teams and channel partners. We are now ready to consider increasing resources in additional territories such as the US, Canada and other territories in the Latin America region in the coming year.
Capital structure
The board recognises that the capital structure of the Company, which currently includes valueless Deferred Shares and a substantial Share Premium Account, is no longer fit for purpose. The Board are therefore bringing forward proposals at the forthcoming AGM for a reduction in share capital by the cancellation of the deferred shares and the share premium account. This will result in the Company having distributable reserves enabling the payment of dividends from income or return of capital to shareholders from major licensing transactions or partial disposals in future. Additionally, it is proposed that the ordinary share capital is subject to a 50:1 consolidation to mitigate the effect of prior dilutions on the unit price per share and to reduce trading spreads and transaction costs for shareholders in future dealings.
Prospects
The Company is now in a robust financial condition and has the financial resources available to commit to building two distinct businesses with high growth potential. The latent value of our core SAW technology is becoming recognised, and addresses the increasing information demands of our global partners, who are leaders in industrial equipment, automotive, aerospace and other high volume markets.
The imminent launch by Translogik of iTrack II into the mining sector is timely, meeting the needs of increased productivity, cost control, asset management and safety. It is envisaged that customer trials will commence towards the end of 2016, and adoption by customers will arise by the early part of 2017. Meanwhile, revenues from the sale of tread depth probes are building momentum, although a major breakthrough in high volume has yet to be achieved.
Accordingly, the board is confident that the longer term prospects for the Company are promising, whilst maintaining a cautiously optimistic view of prospects for short term revenue growth and the achievement of break even.
David M Ford
Group Chairman
20 September 2016
Chief Executive's report
During the year the Company reached a turning point in which revenues returned to growth from a low base and trading losses excluding the licence fees were reduced by half. The Company delivered a positive profit attributable to shareholders and an increase in cash reserves following a successful fundraising, grant of licence and disposal of the IntelliSAW business.
Meanwhile, background work and investment in our core technologies has positioned the Company well to deliver success in the longer term.
SAWSense
The grant of a licence and sale of the IntelliSAW business to Emerson for aggregate consideration of US$5m in October 2015 marked a significant achievement in gaining validation of the inherent value of our core technology. The business was actively commercialising the use of SAW sensing for temperature measurement and control in electrical switchgear, but at the time of sale revenues had not reached break-even level.
The board determined that realisation of value for this activity by sale to a major global switchgear OEM was appropriate given the extent to which further commercialisation may deplete resources. By granting an exclusive licence to Emerson in this relatively narrow field, the Company has demonstrated the validity and value of the underlying technology and associated Intellectual Property ("IP").
Technical and commercial engagement with select global partners for other high volume applications are ongoing, with more than 20 live projects across multiple divisions of six major companies. These projects are generating sufficient short term revenue to cover internal R&D costs.
In the second half of the year, pilot production commenced of sensor kits to measure temperature, vibration and torque on a new range of industrial equipment recently launched by a large European OEM. Ramp up is expected to be gradual over a two to three year period as the new technology is taken up by end users. Several other applications are under evaluation with the same customer.
We continue to explore mass market automotive applications with a select group of global passenger car manufacturers, and believe that SAW sensors have unique capabilities to provide performance improvements in several areas. The disruptive nature of the technology does, however, give rise to understandable caution in the rate of adoption.
The relationship with General Electric Company ("GE"), as signalled previously by the completion of a Memorandum of Understanding announced in May 2015, has continued to flourish. We are actively collaborating on several development projects that are progressing towards commercialisation projects, covering multiple divisions of GE. One of these projects resulted in the completion of a licensing agreement, announced in July 2016, for non-exclusive use of Transense IP in certain specific torque applications for an initial fee rising to US$0.75m and a perpetual royalty on future production.
Overall, we are pleased with progress in this business and confident of future prospects.
Translogik
iTrack
Our iTrack products provides a range of features that allow mine operators to track their vehicles' tyre temperature and pressure, speed, braking and location in real-time and receive early warning of potential problems, hazards or opportunities.
During the year, all of our major customers experienced some degree of retrenchment and were subject to restrictions on capital and operational expenditure. In this climate, and despite the significant cost savings and productivity benefits that are evident from our systems, decision making timescales have been elongated.
Australia
We have opened a new iTrack dedicated data analytics control room in Mackay NSW, which has been very well received by service providers and mine owners. The control room allows us to provide critical tyre related alerts as well as performance related analytics. Trials are continuing with major mining companies with further trials expected following the introduction of iTrack II.
Chile
We have opened a new office in Antofagasta, which is considered the mining capital of Chile, and the same analytics service is also being offered there. Chile is also being used as a base to expand into other Latin American countriesnamely Brasil and Peru where we expect trials to be underway in the new financial year.
North America
We have appointed a consultant who is in the process of establishing a network of agents to include iTrack alongside other products they are already supplying into a range of mines.
New Product Innovations
Whilst market conditions have been subdued, we have taken the opportunity to design many more features and benefits into a brand new, iTrack II system, which is ready for launch at MINExpo 2016 in Las Vegas on 26-28 September 2016. Our intention is to maximise functionality and connectivity in a single comprehensive system, comprising rugged and reliable hardware, unparalleled connectivity with other technologies, and meaningful real-time output.
The control unit is mounted in each truck, and transmits live data across various protocols to iTrack servers at one of three global control centres. Dedicated iTrack experts are on hand to analyse live and historic data, determine trends and create custom reports and warnings. Mine operations will have access to tyre temperature, pressure, sensor function, GPS and speed data on easy to read, customisable screens. This data can provide invaluable signals, not only to avoid tyre failures and increase life, but also to increase truck speeds, availability and productivity. Our offer will be to provide the equipment on finance or operating lease although our preference will be towards operating leases with additional charges for data provision and monitoring services.
Early indications are positive and we await the outcome of the MINExpo and subsequent orders.
Probe
The Probe is now being used in 43 different countries and sales in the last financial year were 60% ahead of the previous year. The number of System Integrators, Value Added Resellers and Service Providers using the probe would suggest 2017 will be another good year. Integration of the probe within the commercial bus and truck market has been completed by Goodyear with their ControlMax system, Bridgestone with Fleet Alalyser2, ContiTrade with Fleetfox and Michelin with iManage. The UK's Garage Equipment Association has recently granted approval which allows the probe to be used as an MOT audit device and our distributors Rema Tip Top in the UK and Squarerigger in the USA are both focusing on the passenger car market which is showing some potential.
Graham Storey
Chief Executive
20 September 2016
Strategic Report
Financial Review
Results for the year
Revenues from continuing activities totalled 5.12m and after excluding the licence fee, other revenues increased by 67% to 2.08m (2015: 1.25m). The pre-tax profit (before discontinued operations) totalled 1.60m, which included the licence fee of 3.04m before costs and 2.76m after costs (2015: loss 2.13m).
Translogik revenues grew by 79% to 1.63m, and SAWSense generated 0.45m of revenues (2015: 0.33m) from design, development and low volume production activities. SAWSense also produced a further 3.04m of revenues generated from the licensing of IP to Emerson following the sale of the IntelliSAW business. Gross margins excluding the licence fee were 64% (2015: 67%) reflecting a slight change in the mix between business activities.
Administrative overheads for the year amounted to 2.54m compared with 3.04m in the prior year.
The Earnings per share (EPS) are set out below (in Pence):
2016
2015
EPS (including discounted operations)
0.258
(1.060)
EPS (excluding discounted operations)
0.361
(0.700)
Taxation
The Company has UK tax losses available to carry forward at 30 June 2016 of approximately 16.7m, 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. As a result of claims in 2015 and 2014 the Company has received tax credits of 0.08m and 0.07m respectively.
Cash flow and financial position
There was a net cash inflow of 3.18m (2015: outflow of 2.61m) during the year, arising from trading and 2.46m of proceeds arising from the share issue in July 2015.
Net cash generated by operations amounted to 0.84m, which included the benefit of the majority of the licence fee received from Emerson. The balance of the licence fee totalling 0.30m (USD0.40m), is being held in escrow due for release in October 2016 and is included in other receivables.
At 30 June 2016 the group had net cash balances of 3.65m (2015: 0.47m). A further US$0.50m (or approximately 0.38m) was received in licensing revenue in August 2016.
Whilst it is anticipated that the Company will continue to consume cash to finance on-going activities in the short term, the directors consider that there are sufficient cash resources available to reach a break-even level of revenues, and accordingly are satisfied that the Company can continue trading as a going concern for the foreseeable future.
Capital Structure
The Chairman's Statement refers to proposed changes in the Company's capital structure and a pro forma Balance Sheet as at 30 June 2016 reflecting the restructuring is set out below:
Pro Forma
2016
Audited
2016
m
m
Net Assets
6.92
6.92
Capital and Reserves
Share Capital
4.72
11.55
Share Premium
-
17.22
Accumulated Reserves/(Deficit)
2.20
(21.85)
Shareholder's funds
6.92
6.92
A more detailed review of the financial year is provided in the Chairman's statement and the Chief Executives report.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2016
Year ended
30 June
Year ended
30 June
2016
2016
2015
2015
'000
'000
'000
'000
Continuing operations
Revenue
5,122
1,248
Cost of sales
(1,036)
(409)
----------------------------------------------
----------------------------------------------
Gross profit
4,086
839
Administrative expenses
Bad debt
-
(357)
Other administrative expenses
(2,541)
(2,683)
----------------------------------------------
----------------------------------------------
-
-
(2,541)
(3,040)
----------------------------------------------
----------------------------------------------
Operating profit/(loss)
1,545
(2,201)
Financial income
51
74
----------------------------------------------
----------------------------------------------
Profit/(loss) before taxation
1,596
(2,127)
Taxation
29
48
----------------------------------------------
----------------------------------------------
Profit/(loss) from continuing operations
1,625
(2,079)
----------------------------------------------
----------------------------------------------
Discontinued operations
Loss from discontinued operation
(472)
(1,041)
----------------------------------------------
----------------------------------------------
Profit/(loss) and total comprehensive income/(loss) for the year
1,153
(3,120)
==============================================
==============================================
Basic and fully diluted profit/(loss) per share (pence)
Continuing operations
0.36
(0.70)
Discontinued operations
(0.10)
(0.36)
----------------------------------------------
----------------------------------------------
Total operations
0.26
(1.06)
==============================================
==============================================
Consolidated Balance Sheet
at 30 June 2016
Year ended 30 June
Year ended 30 June
2016
2016
2015
2015
'000
'000
'000
'000
Non current assets
Property, plant and equipment
313
316
Intangible assets
894
806
Trade lease receivables
383
668
----------------------------------------------
----------------------------------------------
1,590
1,790
Current assets
Inventories
571
584
Corporation tax
74
45
Trade and other receivables
1,742
655
Cash and cash equivalents
3,654
472
----------------------------------------------
----------------------------------------------
6,041
1,756
Assets of disposal group held for sale
-
307
----------------------------------------------
----------------------------------------------
6,041
2,063
----------------------------------------------
----------------------------------------------
Total assets
7,631
3,853
Current liabilities
Trade and other payables
(667)
(418)
Current tax liabilities
(41)
(48)
----------------------------------------------
----------------------------------------------
(708)
(466)
Liabilities of disposal group held for sale
-
(79)
----------------------------------------------
----------------------------------------------
Total liabilities
(708)
(545)
----------------------------------------------
----------------------------------------------
Net assets
6,923
3,308
==============================================
==============================================
Equity
Issued share capital
11,546
9,779
Share premium
17,218
16,523
Accumulated loss
(21,841)
(22,994)
----------------------------------------------
----------------------------------------------
6,923
3,308
==============================================
==============================================
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Group
Share
capital
Share
premium
Shares to
be issued
Cumulative
losses
Total
equity
'000
'000
'000
'000
'000
Balance at 1 July 2014
9,724
16,329
249
(19,882)
6,420
Loss for the year
-
-
-
(3,120)
(3,120)
Transfer between reserves
55
194
(249)
-
-
Share based payments
-
-
-
8
8
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Balance at 30 June 2015
9,779
16,523
-
(22,994)
3,308
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Profit for the year
-
-
-
1,153
1,153
Shares issued and share premium
1,767
695
-
-
2,462
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Balance at 30 June 2016
11,546
17,218
-
(21,841)
6,923
==============================================
==============================================
==============================================
==============================================
==============================================
Consolidated Cash Flow Statement
For the year ended 30 June 2016
Group
Year ended
30 June
2016
Year ended
30 June2015
'000
'000
Profit/(loss) before taxation from continuing operations
1,596(2,217)
Adjustments for:
Financial income
(51)
(74)
Depreciation
111
88
Amortisation of intangible assets
170
160
Share based payment
-
8
(Loss)/profit on discontinued operation
(472)
(1,041)
Profit on Disposal of discontinued operation
32
-
----------------------------------------------
----------------------------------------------
Operating cash flows before movements in working capital
1,386
(2,986)Decrease/(increase) in receivables
(802)
754
(Decrease)/increase in payables
249
(216)
Decrease /(increase) in inventories
13
154
Decrease in trade lease receivables
----------------------------------------------
----------------------------------------------
Cash generated/(used) in operations
846
(2,284)
Taxation (paid)/recovered
(7)
139
----------------------------------------------
----------------------------------------------
Net cash generated/used in operations
839
(2,145)
----------------------------------------------
----------------------------------------------
Investing activities
Interest received
51
74
Acquisitions of property, plant and equipment
(130)
(251)
Acquisitions of intangible assets
(258)
(60)
Assets/liabilities held for sale
218
(228)
----------------------------------------------
----------------------------------------------
Net cash used in investing activities
(119)
(465)
----------------------------------------------
----------------------------------------------
Financing activities
Proceeds from issue of equity share capital
2,462
-
----------------------------------------------
----------------------------------------------
Net cash from financing activities
2,462
-
----------------------------------------------
----------------------------------------------
Net increase/(decrease) in cash and cash equivalents
3,182
(2,610)Cash and equivalents at the beginning of year
472
3,082
-------------------------------------------
----------------------------------------------
Cash and equivalents at the end of year
3,654
472
==============================================
==============================================
NOTES RELATING TO THE GROUP FINANCIAL STATEMENTS
BASIS OF PREPARATION
The group financial statements have been prepared and approved by the Directors in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under adopted IFRS.
IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law, referred to as endorsement, before they become mandatory under the IAS Regulation.
1 SEGMENT INFORMATION
As referred to in the Chairman's statement the Group, with the successful sale of IntelliSAW, now has two reportable segments being the unique trading divisions, SAWsense and Translogik, which make use of technology developed by the group to measure and record temperature, pressure and torque.
The business revenues include royalties, engineering support and sale of product in relation to this technology.
Information regarding the Group's segments is included in the primary statements and notes to the financial statements. Revenue and EBITDA are the Group's key focus and in turn is the main performance measure adopted by management.
The tables below sets out the Group's revenue split and operating segments.
Revenue
Year ended
30 June 2016
Year ended
30 June 2015
'000
'000
North America
3,506
316
Chile
576
454
United Kingdom & Europe
541
301
Australia
409
85
Rest of the World
90
92
----------------------------------------------
----------------------------------------------
5,122
1,248
=============================================
=============================================
Translogik
'000
SAWsense
'000
Total
'000
Year ended 30 June 2016
Sales
1,633
3,489
5,122
=============================================
=============================================
=============================================
Gross profit
936
3,150
4,086
Allocated overheads
(955)
(329)
(1,284)
----------------------------------------------
----------------------------------------------
----------------------------------------------
Contribution
(19)
2,821
2,802
----------------------------------------------
----------------------------------------------
----------------------------------------------
Group overheads
(1,206)
Loss from discontinued operations
(472)
----------------------------------------------
Profit before taxation
1,124
Taxation
60
----------------------------------------------
Profit for the year
1,184
=============================================
Translogik
'000
SAWsense
'000
Total
'000
Year ended 30 June 2015
Sales
922
326
1,248
=============================================
=============================================
=============================================
Gross profit
562
277
839
Allocated overheads
(578)
(644)
(1,222)
----------------------------------------------
----------------------------------------------
----------------------------------------------
Contribution
(16)
(367)
(383)
----------------------------------------------
----------------------------------------------
----------------------------------------------
Group overheads
(1,743)
Loss from discontinued operations
(1,042)
----------------------------------------------
Profit before taxation
(3,168)
Taxation
48
----------------------------------------------
Profit for the year
(3,120)
=============================================
During the year ended 30 June 2016 there was 1 (year ended 30 June 2015: 1) customer whose turnover accounted for more than 10% of the Group's total revenue as follows:
Year ended 30 June 2016
Revenue
'000
Percentage of total
Customer A
3,037
59%
Year ended 30 June 2015
Revenue
000
Percentage of total
Customer A
391
31%
2 DISPOSAL OF INTELLISAW
On 21 October 2015 the company disposed of the IntelliSAW division to Emerson Electrical Co. The division was classified as held for sale and as a discontinued operation in the June 2015 financial statements
At the date of disposal, the carrying amounts of the divisions' net assets were as follows
'000
Property plant and equipment
22
Inventories
152
Trade and other recoverable
45
Trade and other payables
(33)
Total net assets
186
Cash consideration received
218
Profit on disposal
32
The profit on disposal is included in the loss for the year from discontinued operations in the consolidated statement of comprehensive income. The division was previously reported in the IntelliSAW segment
The results of the IntelliSAW division until the date of disposal were as follows:
2016
2015
'000
'000
Revenue
51
389
Expenses
(555)
(1,430)
Loss before tax
(504)
(1,041)
Tax expense
-
-
Loss for the year
(504)
(1,041)
Profit before tax on disposal as above
32
Related tax expense
-
Net loss on disposal
(472)
Loss for the year from discounted operations
(472)
(1,041)
The carrying amount of the disposal group in the prior year was summarised as follows:
Group
2016
2015
'000
'000
Inventories
-
170
Trade and other recoverable
-
137
Trade and other payables
-
(79)
-
228
Cash flows from (used in) discontinued operations
Group
Company
2016
2015
2016
2015
'000
'000
'000
'000
(Debt)/cash used in operating activities
(472)
(1,041)
(309)
42
(Debt)/cash used in investing activities
218
-
115
-
(Debt)/cash from financing activities
-
-
-
-
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(Debt)/cash from discontinued operations
(254)
(1,041)
(194)
42
=============================================
=============================================
=============================================
=============================================
3 FINANCIAL INCOME AND EXPENSE
Recognised in profit or loss
Year ended
30 June 2016
Year ended
30 June 2015
000
000
Finance income
45
65
Interest income on cash on deposit
6
9
Total finance income
51
74
4 TAXATION
Recognised in the statement of comprehensive income
Year ended
30 June 2016
Year ended
30 June 2015
'000
'000
Current tax expense
Current year
1
45
Adjustment for previous year
(30)
3
----------------------------------------------
----------------------------------------------
Tax credit in statement of comprehensive income
(29)
48
=============================================
=============================================
Reconciliation of effective tax rate
Year ended
30 June 2016
Year ended 30 June 2015
'000
'000
Profit/(loss) for the year
1,124
(3,120)
Total tax credit
-
(48)
----------------------------------------------
----------------------------------------------
Profit/(loss) before tax
1,124
3,168
=============================================
=============================================
Tax calculated at the average standard UK corporation tax rate of 20.00% (2014: 20.75%)
225
(657)
Expenses not deductible for tax purposes
36
59
Current year losses for which no deferred tax asset was recognised
-
550
Adjustment for overseas profits
(14)
-
Research and development tax relief/tax credit
(70)
(48)
Losses surrendered for research and development credit
-
48
Utilisation of capital losses
(6)
-
Utilisation of trading losses
(170)
-
Prior year adjustment
(30)
-
----------------------------------------------
----------------------------------------------
Total tax credit
(29)
(48)
=============================================
=============================================
A deferred tax asset has not be recognised in respect of the following item:
Tax Losses
3,361
3,671
=============================================
=============================================
Reductions in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) has been enacted. This will reduce the company's future current tax charge accordingly. Deferred tax has been calculated at the rate of 20% substantively enacted at the balance sheet date. The effect of this change is that profits arising in 2016 are taxable at a rate of approximately 20.00%. The deferred tax asset as at 30 June 2016 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.
The Group has tax losses, subject to agreement by HM Revenue and Customs, in the sum of 16.76m (2015: 17.66m), 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 June 2015 Budget announced that the rate will further reduce to 19% by 2017 and a further reduction to 18% by 2020 which was reduced further to 17% in the 2016 Budget. These further reductions in the main UK corporation tax rate have yet to be enacted.
As a result the effective tax rate used to calculate the current tax for the period ended 30 June 2016 was 20.00% (2015: 20.75%).
5 EARNINGS PER SHARE
Basic loss per share is calculated by dividing the profit after taxation of 1.15m (2015: loss of 3.12m) by the weighted average number of ordinary shares in issue during the year of 458,108,483 (2015: 295,534,513). Unexercised options over the ordinary shares are not included in the calculation of diluted loss per share as they are anti-dilutive.
Year ended 30 June 2016
Year ended 30 June 2015
Number
Number
Weighted average number of shares - basic
458,108,483
295,534,513
Share option adjustment
-
-
Weighted average number of shares - diluted
458,108,483
295,534,513
Year ended 30 June 2016
Year ended
30 June 2015
000
000
Earnings/(loss) from continuing operations
1,656
(2,079)
From continuing operations
Basic earnings per share
0.36
Loss from discontinued operations
(472)
(1,041)
From discontinued operations
Basic earnings per share
(0.10)
(0.36)
Earnings attributable to shareholders
Basic earnings per share
0.26
(1.06)
There are 20,095,000 share options at 30 June 2016 (2015: 18,445,000) that are not included within diluted earnings per share because they are anti-dilutive.
6 CASH AND CASH EQUIVALENTS
Group
Company
30 June 2016
30 June 2015
30 June 2016
30 June 2015
000
000
000
000
Cash and cash equivalents per balance sheet
3,654
472
3,641
415
Cash and cash equivalents per cash flow
statements
3,654
472
3,641
415
7 STATUTORY ACCOUNTS
The Financial information set out in this preliminary announcement does not constitute the company's Consolidated Financial Statements for the financial years ended 30 June 2016 or 30 June 2015 but are derived from those Financial Statements. Statutory Financial Statements for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the company's AGM. The auditors Grant Thornton UK LLP have reported on those 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 2016 or 2015.
The Statutory accounts are available on the Company web site and will be posted to shareholders who have requested a copy and thereafter by request to the company's registered office.
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR URUORNOAKUUR
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