TIDMTRT
RNS Number : 3167A
Transense Technologies PLC
28 September 2015
28 September 2015
Transense Technologies plc
("Transense" or the "Company")
Preliminary unaudited results for year ended 30 June 2015
Transense Technologies plc (AIM: TRT), the provider of sensor
systems for the transportation and industrial markets, is pleased
to announce its preliminary results for the year ended 30 June
2015. The audited accounts will be published as soon as reasonably
practicable.
Financial highlights
-- Revenue* of GBP1.2m (FY14: GBP3.4m) in line with revised expectation
-- Overheads* maintained at GBP2.4m (FY14: GBP2.5m)
-- Adjusted EBITDA* loss of GBP1.6m (FY14: profit of GBP0.0m)
-- Loss before taxation* of GBP1.8m (FY14: GBP0.1m)
-- Loss on discontinued activity (IntelliSAW) after taxation of GBP1.0m (FY14: GBP1.0m)
-- Net closing cash balance GBP0.5m (FY14: GBP3.1m)
-- Post year-end fund raise of GBP2.5m (net of expenses) through
placing and offer for subscription
* denotes from continuing operations and before bad debt
charge
EBITDA is the Earnings Before Interest, Taxation, Depreciation
& Amortisation, and is calculated by taking operating loss and
adding back depreciation & amortisation.
Overheads are calculated by taking Administrative Expenses and
deducting depreciation & amortisation
Operational highlights
-- Increased iTrack market penetration in major geographic markets
-- Launched lease rental financing option for iTrack customers
-- Created wholly owned sales and service support centre for Latin American region
-- Signed up new iTrack channel partner in Australia
-- Post year end discussions are ongoing with potential new partners in the USA and Japan
-- SawSense entered MoU with GE for multiple applications
-- Discussions regarding the Sale of IntelliSAW are ongoing
For further information, please contact:
Transense Technologies
plc
Graham Storey, Chief Executive Tel: +44 1869 238 380
finnCap
Ed Frisby, Giles Rolls
(Corporate Finance) Tel: +44 20 7220 0500
Tony Quirke, Alice Lane
(Corporate Broking)
IFC Advisory
Tim Metcalfe, Graham Herring,
Heather Armstrong Tel: +44 20 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, respectively.
Transense's sensors are also being used in the wind turbine
monitoring industry. The Company is part of a consortium of nine
companies ("IntelWind") that has begun development on a major EU
funded project to improve the efficiency and reliability of wind
turbines.
Transense's shares are admitted to trading on AIM, a market
operated by the London Stock Exchange (AIM: "TRT").
www.transense.co.uk
Chairman's statement
Transense is pleased to report results in line with the revised
expectations set out towards the end of a challenging year for the
Company. As previously stated, these results were disappointing,
with revenues reducing significantly compared with the prior year.
Whilst we broadly maintained overheads at a steady level in order
to continue developing products and sales channels, inevitably this
led to an increase in operating losses.
Financial results and condition
Revenue from continuing activities reduced to GBP1.2m from
GBP3.4m in the prior year, and the loss before taxation from
continuing activities (before bad debt) was GBP1.8m (FY14:
GBP0.1m).
The total loss attributable to shareholders was GBP3.1m (FY14:
GBP1.0m) resulting in a loss per ordinary share of 1.06 pence
(FY14: 0.38 pence). The board do not recommend payment of a
dividend.
Net cash balances at 30 June 2015 were GBP0.5m (30 June 2014:
GBP3.1m).
In July 2015, we were encouraged by shareholder support when the
company raised GBP2.5m (net of attributable expenses) by a placing
and offer of ordinary shares at a price of 1.5 pence each.
Accordingly, the Company now has access to adequate financial
resources to consider future investment in further product
development, opening of new sales channels, and offering more
flexible financing solutions to customers. Our goal is to ensure
that our existing business activities become financially
self-sufficient in the near term, and that investment in longer
term projects with high levels of potential return is provided from
internal resources.
Market conditions
As we have previously reported, there was a sharp downturn in
demand for commodities and consequent contraction in capital
expenditure in the mining sector in the early part of the financial
year. This had an adverse effect on revenues for iTrack, which came
after such promising momentum had been generated in the prior
year.
We have now repositioned the sales proposition and offer a lease
rental solution for customers, allowing them to achieve a short
payback when lease rental costs are measured against the savings in
operating costs and increased production yields that iTrack
delivers.
Throughout the year commodity prices have been falling and this
weakness has continued into the new financial year , and the effect
on mining companies has been well documented. We continue to have
confidence that gains in productivity and reductions in overall
operating costs offered by iTrack provide a compelling case when
the marginal profitability of mining operations falls under close
scrutiny.
Our Translogik tyre related products are primarily delivered
into the automotive aftermarket through a range of OEM tyre
producers, channel partners, and value added resellers. This sector
has until recently been relatively conservative in the adoption of
new technology, but there are signs of a more progressive approach
by a number of leading companies within our current reach.
Meanwhile, our key markets for surface acoustic wave ("SAW")
sensor technology in industrial, automotive and green energy have
shown steady growth, and our focus is on gaining traction for
market acceptance of new volume applications in these areas.
Disposal of IntelliSAW
The company is in discussions with a preferred bidder regarding
the possible sale of IntelliSaw. A further announcement will be
made in due course.
Board composition
Following seven years of service to the Company as Chairman and
then Deputy Chairman, David Kleeman decided to step down from the
Board on 31 December 2014. I would like to take this opportunity to
thank David for his contribution to the Company during his time as
a Director which was much appreciated.
In July 2015, Nigel Rogers joined the board as Non-Executive
Deputy Chairman. Nigel began his career as a Chartered Accountant,
and has had many years experience as CEO of AIM listed industrial
companies. We welcome him to the Board, and look forward to working
together on the development and implementation of our commercial
strategy.
Prospects
We anticipate that market conditions in mining will continue to
be challenging in the current financial year. As a result our sales
proposition into this sector is now closely aligned with the
pressing need to maximise output and minimise costs. We have
continued to see successful implementation of our equipment in
response to these pressures as companies seek optimal deployment of
assets including mine trucks. Our initial focus will be to increase
penetration of geographical markets in which we have an established
presence, namely Chile, Australia and Southern Africa. We believe,
however, that the strong relationships we are building in these
markets can act as a bridgehead into new territories in which our
current customers are already active.
We also aim to build on the progress made with the new probe
products and the launch of our new Passenger Car Audit System
(PCAS) into the passenger car tyre inspection market. Entry into
this large new market presents new opportunities and we believe we
are adopting the right strategy of partnering with companies that
already have a strong presence in this market.
SAWSense's many projects are progressing well, with one
particular industrial partner expected to launch a commercial
torque solution product in 2016. It is anticipated that going
forward, income received from the commercialised torque project and
other ongoing engineering work should start to exceed the
division's costs.
Overall, the board is satisfied with the progress made in recent
months having overcome some difficult challenges. The company has
developed valuable technology, a growing reputation, and an
enviable customer base across multiple geographic and industry
sectors. With the financial resources now available, we believe
that the company is well placed to capitalise on these exciting
opportunities and we view the future with renewed confidence.
David M Ford
Group Chairman
28 September 2015
Chief Executive's Report
After a difficult 2014 and early 2015 due to the continuing
downturn in the global mining industry, a key market for
Translogik's iTrack Mining Tyre Monitoring System, a positive
market response to the systems new finance lease and rental pricing
models has resulted in the aggregate sale or rental of 131 iTrack
systems during the last six months of the financial year and a
further 47 ITrack systems due to be despatched.
Additionally, the emergence of a valuable new market for the
division's range of tyre inspection probes in the passenger car
space, offers new opportunities for updated versions of the tyre
inspection probe, and a complementary new software system built
around it, that we refer to as Passenger Car Audit System
(PCAS).
Translogik
iTrack
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Australia
The first success with the new iTrack pricing model was a
contract win through our Australian distributor, Brownfield, to
supply 23 iTrack mining tyre monitoring systems for large haul
trucks to the Glencore Ravensworth mine and its entire fleet of
Caterpillar vehicles. It is of additional significance that this
win was achieved after iTrack was selected as the preferred system
against those offered by Translogik's competitors. This confirms
our belief that the iTrack system has several significant
advantages over competing products. Glencore is one of the largest
miners in Australia and we look forward to their use of iTrack
expanding further during the coming years.
In August, Translogik secured a second contract in Australia,
with agreement to supply 47 iTrack systems to the Saraji coal mine
in the Bowen Basin, Queensland, owned by the BHP Billiton
Mitsubishi Alliance (BMA). The contract includes the sale of
equipment on a finance lease. In addition to the sale there will be
income from service and rental for a minimum period of two years.
The important role of tyre monitoring as part of a total safety and
performance monitoring strategy within the mining sector is an
increasingly major focus in Australia as the large mining companies
seek to extract the maximum possible productivity from their
existing asset base.
Chile
In April we secured a contract to supply iTrack to the entire
fleet of 46 large haul trucks at the Spence copper mine in Chile,
owned by BHP Billiton. This deployment was supported by
Translogik's new Chile based technical sales staff. Chile is a key
market for iTrack, with over 2,000 large haul trucks currently
operating. Having local technical sales expertise available to
provide rapid customer support has been very important in building
strong client relationships with the major mining and mine service
companies and has been a significant factor in closing this deal
with BHP Billiton.
iTrack was deployed much more rapidly at the Spence mine than we
have seen achieved previously, with in excess of forty trucks
fitted in a month, as BHP were keen to start gaining the proven
benefits of ITrack. BHP have several large mine fleets in the
region and we are hopeful that the productivity and safety benefits
provided by having real-time tyre data will open up further
opportunities for us.
Another large mine in Chile, maintained by Otraco, is now
operating more than 100 live iTrack systems. It has taken
approximately twelve months to deploy this number of systems as
vehicles are fitted as they come in for maintenance and servicing.
This mine is continuing to expand and adding further large mine
haul trucks.
Probes
As well as targeting the mining and commercial vehicle tyre
markets, Translogik is now directly addressing the much larger
passenger car tyre market through a variety of new automated
inspection systems that use the Translogik tyre inspection probe as
their key component.
The Opti-Tread system developed by Translogik's North American
partner, Squarerigger Software, is being marketed in the USA by
Snap-on Equipment through its John Bean brand. An initial order of
220 systems was supplied to Snap-on Equipment to serve as product
demonstrators and initial inventory for its North American sales
network and early feedback is that the system has been well
received. However, follow-on orders have not yet been received,
although Squarerigger remain confident that they will materialise
later this year.
In May Translogik had its Wireless Tyre Inspection Probe
integrated into the new 'Connected Workshop' system from Bosch
Automotive Service Solutions. The system was launched at the
Automechanika Show in Germany. The cloud-based, tablet driven
system, has two components, 'Entrance Check' and 'Connected
Repair', which are linked to allow vehicle information and test
results to be shared across workshop equipment, workshop users and
the customer. The probe will be used at the 'Entrance Check' level,
a 5-minute vehicle health check which includes tread depth and tyre
pressure measurements. The system supports OEM and Aftermarket
customers globally.
In March Translogik signed an exclusive agreement to supply its
tyre inspection probe to Rema Tip Top Holdings UK Limited ('Rema')
for use in Rema's new passenger car tyre inspection system, 'Tip
Top Tread'. The system is based on Translogik's proprietary tyre
probe technology, provides a quick, efficient and accurate wireless
car tyre inspection system to the tyre sales and fitment
industry.
Rema's exclusivity applies only to use of the probes in
conjunction with the Tip Top Tread system, which is focused on the
passenger car market and is contingent upon achieving agreed,
rising quarterly minimum levels of UK sales totalling at least
GBP1.1m in aggregate over the next three years.
Rema have a powerful market position both in the UK and in
Europe. We believe their established sales network and market
expertise is capable of driving probe sales into the car tyre
market much faster than would otherwise be achievable, and supports
our strategy of diversifying into the substantial passenger vehicle
market.
Translogik recently launched its own Passenger Car Audit System
(PCAS). This system uses the the existing tyre inspection probe in
conjunction with our new proprietory software system for desktop
and iOS to offer a complete rapid car tyre inspection system to the
tyre retail and car servicing market.
SAWSense
A major recent development, is the signing of a memorandum of
understating with GE, a provider of products to the global Power
and Water, Oil and Gas, Energy Management, Aviation, Healthcare,
and Transportation industries. It is developing new instrumentation
applications utilising its core wireless, passive Surface Acoustic
Wave (SAW) measurement technology in association with SAWSense.
This development aligns the Transense SAW technology expertise with
GE's proficiency in large scale production and product delivery, to
open up new global opportunities.
Working with an industry leading developer of world-class
technology applications is exactly the right platform for
Transense's SAW technology to enter the commercial environment. We
look forward to working further with GE to strengthen their product
offerings, bringing the benefits of our technology to the
infrastructure markets GE serves.
Progress continues in partnership with one of the largest
European industrial electronic system manufacturers on a SAW
application as part of a condition monitoring system. The project
has been underway for two years developing prototypes with SAWSense
providing paid engineering support. The customer has started the
industrialisation process with production expected to follow in the
first half of 2016. The customer has a global interest in SAW
technology for multiple applications.
The two existing automotive flexplate projects continue to
progress, and have recently been joined by a further US based
automotive OEM, taking the total number of projects to three.
We have recently received initial EU funding (Horizon 2020) to
assess the feasibility of torque sensors for tidal power
generation. Work continues on a diverse range of applications of
Transense's SAW technology for measuring torque (electric power
assisted steering and driveline), temperature and pressure with new
companies. This entails different periods of paid engineering
support and application development work and the Board is hopeful
that in a number of cases this will lead in the medium term to
industrialisation with the consequential grant of intellectual
property licences by the Company, subject to the satisfactory
conclusion of commercial discussions in each case.
Graham Storey
Group CEO
28 September 2015
Finance Director's Report
The financial results for the year ended 30 June 2015 may be
summarised as follows:
Year 2014/15 2013/14
-------------------------
GBP000 GBP000
-------- --------
Revenue * 1,248 3,370
------------------------- -------- --------
Gross Profit * 839 2,510
------------------------- -------- --------
Gross margin % * 67% 74%
------------------------- -------- --------
LBT ** (1,770) (118)
------------------------- -------- --------
Loss from Discontinued
Operations (1,041) (993)
------------------------- -------- --------
EBITDA Adjustments:
------------------------- -------- --------
Net Interest (74) (62)
------------------------- -------- --------
Depreciation * 67 42
------------------------- -------- --------
Amortisation 160 162
------------------------- -------- --------
EBITDA ** (1,617) 24
------------------------- -------- --------
Share-based payments 8 8
------------------------- -------- --------
Adjusted EBITDA ** (1,609) 32
------------------------- -------- --------
Loss per Share 1.06p 0.38p
------------------------- -------- --------
Adjusted Loss per Share
** 0.58p 0.02p
------------------------- -------- --------
Bad Debt Charge 357 0
------------------------- -------- --------
* Excludes Discontinued
Operations
** Excludes Discontinued Operations and
bad debt charge
Results for the year
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Revenue (excluding Discontinued Operations) reduced by 63%
compared with the prior year as core mining markets contracted
sharply during the summer of 2014. Approximately 69% of revenues in
the prior year were derived from the sale of iTrack equipment in
large individually significant contracts based on capital
expenditure by our customers. During the period under review,
equipment was also offered on more flexible lease rental terms,
which generated some GBP0.06m of revenues in the current year. This
arrangement involves an increased working capital commitment by the
company to fund the initial outlay, but offers the benefits of
accelerating market penetration and giving greater visibility of
future revenue streams.
Gross margins reduced from 74% in 2014 to 67% . The reduction is
due to the change in mix of Sales being heavily weighted to iTrack
Kit Sales as referred to above. Going forward the mix will change
further as the rental income stream grows and as this income has no
Cost of Sales charge as the costs of rented kit is capitalised and
depreciated over the asset life (the depreciation charge being
included in Overheads).
As a result of the reduced level of activity, gross profit
reduced to GBP0.83m (FY14 GBP2.5m), and the board carefully
considered the approach to maintaining overhead spend at previous
levels in order to support product and sales channel development.
Overheads were generally stable over the two years at GBP2.4m
(excluding Discontinued Operations and Bad Debt charge) (FY14
GBP2.5m).
The resulting loss before taxation from continuing activities
and before exceptional item amounted to GBP1.8m (FY14 GBP0.1m).
Underlying adjusted EBITDA was a loss of GBP1.6m (FY14 profit
GBP0.0m), and it is the aim of the group to generate underlying
profits against this measure as soon as practicable.
After taking account of the bad debt charge, taxation and the
loss on discontinued activity, the total loss attributable to
shareholders was GBP3.12m (FY14 GBP1.03m), equivalent to 1.06 pence
per share (FY14: 0.38 pence). The loss attributable to shareholders
from continuing activities before the exceptional bad debt charge
was 0.58 pence per share (FY14: 0.02 pence).
Taxation
The group had UK tax losses carried forward at 30 June 2015 of
approximately GBP17.7m.
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 2014 and 2013 the Company has received Tax
Credits of GBP0.07m and GBP0.06m respectively.
Cash flow and financial position
There was a net cash outflow of GBP2.61m (FY14 GBP1.09m inflow)
during the year, most of which was the result of losses set out
above.
At 30 June 2015 the group had net cash balances of GBP0.47m
(FY14 GBP3.08m) and had embarked upon a fundraising exercise
resulting in the raising of GBP2.5m of additional equity capital
(net of attributable expenses) in a placing and offer for
subscription approved by the shareholders on 27 July 2015.
The financial position of the group has been strengthened
significantly as a result of the successful fund raising.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2015
Year ended Year ended
30 June 30 June
2015 2014
Restated*
GBP000 GBP000
Continuing operations
Revenue 1,248 3,370
Cost of sales (409) (860)
Gross profit 839 2,510
Administrative expenses (3,040) (2,690)
Operating loss (2,201) (180)
Financial income 74 62
Loss before taxation (2,127) (118)
Taxation 48 75
Loss from continuing
operations (2,079) (43)
Discontinued operations
Loss from discontinued
operation (1,041) (993)
Loss for the year (3,120) (1,036)
Basic and fully diluted
loss per share (pence) (1.06) (0.38)
Consolidated Balance Sheet
at 30 June 2015
Year ended Year ended
30 June 30 June
2015 2015 2014 2014
GBP000 GBP000 GBP000 GBP000
Non current
assets
Property, plant
and equipment 316 153
Intangible
assets 806 906
1,122 1,059
Current assets
Inventories 584 738
Corporation
tax 45 136
Trade and other
receivables 1,323 2,087
Cash and cash
equivalents 472 3,082
2,424 6,043
Assets held 307 -
for sale
2,731 6,043
Total assets 3,853 7,102
Current liabilities
Trade and other
payables (418) (638)
Current tax
liabilities (48) (44)
Total liabilities (466) (682)
Liabilities (79) -
held for sale
(545) (682)
Net assets 3,308 6,420
Equity
Issued share
capital 9,779 9,724
Shares to be
issued - 249
Share premium 16,523 16,329
Accumulated
loss (22,994) (19,882)
Total equity 3,308 6,420
Statement of Changes in Equity
Shares
Share Share to Warrant Cumulative Total
be
Capital premium issued reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1 July 2013 9,102 13,144 - 378 (19,232) 3,392
Loss for the
year - - - - (1,036) (1,036)
Shares and
warrants issued
and share premium 622 3,185 249 - - 4,056
Transfer between
reserves - - - (378) 378 -
Share based
payments - - - - 8 8
Balance at
30 June 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
Consolidated Cash Flow Statement
for the year ended 30 June 2015
Group
Year ended Year
30 ended
June 2015 30
June
2014
GBP000 GBP000
Loss before taxation (2,127) (118)
Adjustments for:
Financial income (74) (62)
Depreciation 88 58
Amortisation of
intangible assets 160 162
Share based payment 8 8
(Loss)/profit
on discontinued
operation (1,041) (993)
Operating cash
flows before movements
in
working capital (2,986) (945)
Decrease/(increase)
in receivables 764 (1,647)
(Decrease)/increase
in payables (216) 150
Decrease /(Increase)
in inventories 154 (423)
Cash used in operations (2,284) (2,865)
Taxation recovered 139 (7)
Net cash used
in operations (2,145) (2,872)
Investing activities
Interest received 74 62
Acquisitions of
property, plant
and equipment (251) (74)
Acquisitions of
intangible assets (60) (79)
Assets/Liabilities (229) -
held for sale
Net cash used
in investing activities (466) (91)
Financing activities
Proceeds from
issue of equity
share capital
and warrants - 4,056
Net cash from
financing activities - 4,056
Net (decrease)/increase
in cash and cash
equivalents (2,611) 1,093
Cash and equivalents
at the beginning
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