TRANSENSE TECHNOLOGIES PLC — Interim / Quarterly Report 2016

Mar 29, 2017

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RNS Number : 8148A

Transense Technologies PLC

29 March 2017

29 March 2017

Transense Technologies Plc

("Transense" or "the Company")

Interim results for six months ended 31 December 2016

Transense Technologies Plc (AIM: TRT), the provider of sensor systems for the transportation and industrial markets, report the results for the six months ended 31 December 2016.

Financial Highlights:

·     Revenues were unchanged from prior year at £1.04m (Dec 2015: £1.04m*)

·     Operating expenses increased to £1.61m (Dec 2015: £1.32m) in support of launch of iTrack II

·     Loss before tax from continuing operations of £0.95m (Dec 2015: loss of £0.62m*)

·     Net loss for the period of £0.97m (Dec 2015: profit of £1.70m)

·     Net cash used in operations of £0.15m (Dec 2015: £1.46m net cash generated)

·      Net cash at end of period of £3.31m (Jun 2016: £3.65m)

·      Capital restructuring completed to facilitate distributable reserves

* from continuing operations and adjusted to exclude licence fee income associated with the disposal of intelliSAW in 2015.

Operational Highlights

·     GE sign initial licensing agreement for use of SAWSense technology in specialised application

·     GE confirm SAW technology has passed prescribed tests and agree to pay second instalment in H2

·     Continued market recognition of value in SAW technology

·     Successful launch of the iTrack II system at MINExpo 2016

·     Increased penetration of iTrack system

Executive Chairman of Transense, David Ford, said:

"Although the mining sector is still in the process of recovering from a very difficult period, we are pleased with the progress made in 2016. We attended MINExpo in September to showcase iTrack II which was very well received with high levels of interest from large potential customers across a broad geographical range. Trial operations are now ongoing at several sites.

"We are also very pleased to secure a significant licensing agreement with GE for the use of our patented, wireless, passive Surface Acoustic Wave technology, a major milestone for the Company which was announced separately today.

"We do not yet have sufficient transparency on timing or volume of new iTrack business and we have increased the running costs of our overseas iTrack offices. Consequently our expectations for H2 (excluding the GE licence fee in H1 ($0.5m) and GE fee in H2 ($0.25m)) are that the results will be marginally down on H1.

"We remain convinced of the strength of our market offer, and the underlying value of the associated technology in each of our core businesses. Accordingly, we continue to look to the future with confidence."

For further information please visit www.transense.co.uk or contact:

Transense Technologies Plc Graham Storey, Chief Executive	Tel: +44 1869 238380
finnCap Ed Frisby, Giles Rolls (Corporate Finance) Tony Quirke, Alice Lane (Corporate Broking)	Tel: +44 20 7220 0500
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.

Transense's shares are admitted to trading on AIM, a market operated by the London Stock Exchange (AIM: "TRT").

www.transense.co.uk

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014

Transense Technologies Plc

Chairman's statement

The business strategy of the Group is 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.

Financial results

Revenues for the six months were unchanged at £1.04m (Dec 2015: £1.04m excluding the licence fee on sale of IntelliSaw of £3.04m).

Operating expenses increased to £1.61m (Dec 15: £1.32m), reflecting the additional overheads incurred in Translogik on the development and launch of iTrack II.  The increase in operating expenses of £0.29m principally related to the costs incurred on the launch of iTrack II at MINExpo, the funding of greater head count in Chile, Australia and North America and increased global travel; these increases accounted for £0.22m of the year on year increase.

The net loss before taxation from continuing operations was £0.95m (Dec 2015: loss £0.62m - excluding the net effect of the intelliSAW fee). The total comprehensive loss for the period was £0.97m (Dec 2015: profit of £1.70m) and earnings per share, reflecting the 50:1 share capital reduction, was a loss of 10.30 pence per share (Dec 2015: profit of 19.12 pence, and excluding the net effect of the intelliSAW fee, an underlying loss of 6.50 pence per share).

Financial position and cash flow

Net cash used in operations was £0.15m (Dec 2015: £1.46m generated from operations). The 2016 and 2015 figures reflect £0.32m and £2.48m respectively of net cash received in respect of the licence fee received on the sale of IntelliSAW. The adjusted cash consumption for 2016 was £0.47m (2015: £1.02m).

The Company remains in a strong financial position with net cash and cash equivalents at the end of the period of £3.31m (30 June 2016: £3.65m).

Following the Capital Reduction approved by the courts in December 2016 the Shareholders' funds totalled £5.91m and comprised a reduced share capital of £4.72m and positive accumulated reserves of £1.20m.

Operational review

SAWSense

SAWSense is a leader in the development of Surface Acoustic Wave ("SAW") wireless, battery-less, sensor systems that offer significant advantages over legacy systems in common use. The business continues to be involved in several live projects in conjunction with major global industrial companies.  In the short to medium term, the primary source of ongoing revenue is dependent upon the level of customer chargeable engineering activity, which was slightly reduced when compared with the first half of the prior year. 

However, in July 2016, SAWSense entered into a significant licensing agreement with General Electric Company ("GE") for the use of our patented, wireless, passive SAW technology in certain specific torque applications. The Company received a non-refundable licence fee of $0.50m on completion, with a further $0.25m payable shortly thereby securing the ongoing licence. In addition to the fee, GE would pay to Transense a perpetual sales royalty in respect of unit sales upon commercialisation, although this is not scheduled to take place for several years.

Further progress has also been made in collaboration with a major European group for the use of our technology in an industrial application. This project relates to high value capital equipment, and is currently in operational use in low volume as proof of concept.

We continue to develop potential applications in other sectors, most notably automotive, although commercialisation in these areas is not considered to be imminent.

Translogik

Translogik has developed a range of products and services for tyre pressure and temperature monitoring of mining haul trucks and markets under the name iTrack. The division also markets a range of tread depth probes and associated monitoring systems for use in the passenger car, bus, truck and OTR sectors.

Translogik - iTrack

In September 2016, Translogik launched the iTrack II system at MINExpo 2016.  This updated version of iTrack has numerous additional features, including a six axis accelerometer and an on board operating system, and we have received very positive feedback from the marketplace.

In the period since launch, the level of customer engagement has exceeded our early expectations, as a broad range of mine owners, operators and service providers have opted to explore the additional benefits the updated system provides. In order to meet this increase in demand for further information and trials, additional personnel have been taken on in Chile and North America. We are also in the process of evaluating potential local channel partners in a number of territories.

Live trials are now underway in Australia (5), Peru (2), Ghana (2), Namibia (1), New Guinea (1) and Chile (1). The board anticipates that the conversion of a number of those trials into sales will take place in due course.

Our data analytics control room in Chile has been expanded and is now operating on a 24/7 basis. From here we can provide live analytics to mine control rooms around the world. This can be anything from a simple warning that a driver is speeding, to grading the various haul routes in a mine according to how much heat they generate in the tyres. By using these "heat maps" and monitoring real-time temperatures we can ensure tyres do not reach critical heat thresholds thereby reducing the risk to people while extending the life of the tyre, minimizing alerts and reducing breakdowns. Feedback from customers has been positive and we are hopeful the provision of this service will add a further source of revenue in future.

Translogik - probes

Probe sales continue on a steady basis but have still not achieved the traction in the marketplace that we had anticipated. However, we continue to expand our relationships with important channel partners. As well as the previously announced relationship with Continental, the tread depth probe has now been incorporated as the tool of choice in many other tyre management systems, including Michelin iManage, Bridgestone Toolbox and Goodyear Europe FOS. If these systems are successful then we would expect increased numbers of probe sales to follow as they are rolled out globally.

Outlook and prospects

Market conditions in the mining sector are improving, and there is greater appetite for adopting new technology where the benefits in productivity, efficiency and safety are clearly demonstrated. Whilst customer engagement and live trials are continuing to indicate widespread interest in iTrack II, it is as yet still too early to forecast the speed or scale of take up in coming months. We continue to build inventory and develop our capabilities to respond to customer demand as it firms up.  Being mindful of the need to preserve our resources, the rate at which this can be accelerated further will be dependent upon firm orders. We anticipate being in a stronger position to determine this by the end of the financial year.

We do not yet have sufficient transparency on timing or volume of new iTrack business and we have increased the running costs of our overseas iTrack offices. Consequently our expectations for H2 (excluding the GE licence fee in H1 ($0.5m) and GE fee in H2 ($0.25m)) are that the results will be marginally down on H1.

We remain convinced of the strength of our market offer, and the underlying value of the associated technology in each of our core businesses. Accordingly, we continue to look to the future with confidence.

David M Ford

Chairman

29 March 2017

Transense Technologies plc
Condensed Consolidated Statement of Comprehensive Income
		Half year to		Half year to		Full Year
		31 Dec 16		31 Dec 15		30 Jun 16
		(Unaudited)		(Unaudited)		(Audited)
		£'000		£'000		£'000
Continuing operations
Revenue		1,040		4,077		5,122
Cost of sales		(395)		(668)		(1,036)
Gross profit		645		3,409		4,086
Administrative expenses		(1,607)		(1,318)		(2,541)
Operating (loss)/profit		(962)		2,091		1,545
Financial income		15		28		51
(Loss)/profit before taxation		(947)		2,119		1,596
Taxation		(20)		20		29
(Loss)/profit from continuing operations		(967)		2,139		1,625
Discontinued operations
Loss from discontinued operation		(5)		(441)		(472)
Total comprehensive income for the period		(972)		1,698		1,153

Transense Technologies plc
Condensed Consolidated Statement of Financial Position
		31 Dec 16		31 Dec 15		30 Jun 16
		(Unaudited)		(Unaudited)		(Audited)
		£'000		£'000		£'000
Non current assets
Property, plant and equipment		284		273		313
Intangible assets		919		741		894
Trade lease receivables		181		597		383
		1,384		1,611		1,590
Current assets
Inventory		788		500		571
Corporation tax receivable		-		68		74
Trade and other receivables		1,169		1,233		1,742
Cash and cash equivalents		3,310		4,560		3,654
		5,267		6,361		6,041
Total assets		6,651		7,972		7,631
Current liabilities
Trade and other payables		(686)		(397)		(667)
Current tax liabilities		(54)		(46)		(41)
Total liabilities		(740)		(443)		(708)
Net assets		5,911		7,529		6,923
Capital and reserves
Share capital		4,724		11,546		11,546
Share premium		-		17,219		17,218
Translation reserve		(15)		-		-
Accumulated reserve/(deficit)		1,202		(21,236)		(21,841)
Shareholders' funds		5,911		7,529		6,923

Transense Technologies plc
Condensed Consolidated Statement of Changes in Equity (Unaudited)
		Issued share capital	Share premium account	Translation Reserve	Accumulated (deficit)/reserve	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2015		9,779	16,523		(22,994)	3,308
Profit for the period		-	-	-	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
Loss for the period		-	-	-	(972)	(972)
Translation of foreign entity		-	-	(15)	15	-
Capital Restructure		(6,822)	(17,218)	-	24,000	(40)
Balance at 31 December 2016		4,724	-	(15)	1,202	5,911

Transense Technologies plc
Condensed Consolidated Statement of Cash Flows
		Half year to		Half year to		Full year to
		31 Dec 16		31 Dec 15		30 Jun 16
		(Unaudited)		(Unaudited)		(Audited)
		£'000		£'000		£'000
Cash flow from operating activities
(Loss)/profit for the period		(947)		2,119		1,596
Adjustments for
Financial income		(15)		(28)		(51)
Depreciation of property, plant and equipment		58		51		111
Amortisation and impairment of intangible assets		114		87		170
Equity settled share based payment		-		60		-
Loss on discontinued operation		(5)		(473)		(472)
Profit on disposal of discontinued operation		-		32		32
Operating cash flows before movements in working capital		(795)		1,848		1,386
Change in receivables		775		(212)		(802)
Change in payables		32		(69)		249
Change in inventories		(217)		(101)		13
Cash (used in)/generated from operations		(205)		1,466		846
Taxation recovered/(paid)		51		(3)		(7)
Net cash (used in)/generated from operations		(154)		1,463		839
Cash flows from investing activities
Interest received		15		28		51
Acquisition of property, plant & equipment		(27)		(29)		(130)
Acquisition of intangible assets		(138)		(22)		(258)
Proceeds from sale of fixed assets		-		186		-
Assets/Liabilities held for sale		-		-		218
Net cash (used in)/generated from investing activities		(150)		163		(119)
Cash flows from financing activities
Proceeds from issue of equity share capital		-		2,462		2,462
Capital restructure costs		(40)
Net cash (used in)/generated from financing activities		(40)		2,462		2,462
Net (decrease)/increase in cash and cash equivalents		(344)		4,088		3,182
Cash and cash equivalents at beginning of period		3,654		472		472
Cash and cash equivalents at end of period		3,310		4,560		3,654

Notes to the Interim results for the six months to 31 December 2016

1	Accounting Policies

The Condensed Consolidated Financial Statements for the half yearly report for the 6 months ended 31 December 2016 have been prepared using accounting policies and methods of computation consistent with those set in Transense Technologies Plc's Annual Report and Financial Statements for the year ended 30 June 2016.

2	# Reporting Entity

Transense Technologies Plc. ("the Company") is a company incorporated in the United Kingdom under the Companies Act 2006. These condensed consolidated interim financial statements of the Company as at and for the six months ended 30 December 2016 comprises the Company and its subsidiaries (together referred to as "the Group" and individually as "Group entities"). These condensed consolidated interim financial statements are presented in pounds sterling, rounded to the nearest thousand.

The consolidated financial statements of the Group are available upon request from the Company's registered office or at www.transense.co.uk

These condensed consolidated interim financial statements are unaudited.

3	# Earnings per share

	31 December 2016	31 December 2015	30 June        2016
	Shares	Shares	Shares
Weighted average number of shares
Issued at start of period	9,446,289	5,913,422	5,913,422
Effect of shares issued in period	-	2,966,181	3,248,748
Weighted average number of shares at end of period	9,446,286	8,879,603	9,162,170
Basic Earnings per share	(10.30p)	19.12p	12.58p
Basic Earnings per share excluding license fee and discontinued operations	(10.24p)	(6.37p)	(11.80p)

Note: The Earnings Per Share for the comparatives are adjusted for the 50:1 share consolidation.

4	# Revenue

# Revenue	6 Months       31 Dec 2016	6 Months       31 Dec 2015	12 Months       30 Jun 2016
	£'000	£'000	£'000
North America	394	3,180	3,506
Chile	330	286	576
United Kingdom & Europe	180	181	541
Australia	84	379	409
Rest of the World	52	51	90
Total	1,040	4,077	5,122

5	# Sale of IntelliSAW

Transense allocation of proceeds & costs	6 Months     31 Dec 2015
	Proceeds	Costs	Net
£'000	£'000	£'000
Sale of Goodwill	32	-	32
IntelliSAW Net Assets	186	-	186
License Fees	3,037	300	2,737
Total	3,255	300	2,955

On 20 October 2015 an agreement was signed with Emerson regarding the disposal of the IntelliSAW business and assets and the granting of an exclusive license of Transense IP relating to the IntelliSAW business.

6	# Going Concern

The interim financial information has been prepared on a going concern basis, which assumes that the Company will have adequate resources to continue in operational existence for the foreseeable future.

7	# Corporation tax and Deferred tax

The Company is entitled to a Corporation Tax credit in respect of expenditure on Research and Development. No deferred tax asset is recognised in these financial statements in respect of trading losses to date.

8	# Consolidated Accounts

These accounts reflect the trading of IntelliSAW Inc as discontinued operations following the disposal of the business on 20 October 2015.

This information is provided by RNS

The company news service from the London Stock Exchange

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