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Final Results – Year ended 30 June 2016

Directors and advisers

Directors

D M Ford (Chairman)

G Storey (Chief Executive)

M Segal (Finance Director)                                          

R J Westhead (1, 2, 3)

N F Rogers (Deputy Chairman) (appointed 28/07/2015) (1, 2, 3)

1      Non-executive
2      Member of the Audit and Risk Committee
3      Member of the Remuneration Committee


Secretary and Registered Office

M Segal
1 Landscape Close

Weston Business Park

Weston on the Green

Oxfordshire

OX25 3SX

Auditor

Grant Thornton UK LLP

The Colmore Building
Colmore Circus
Birmingham B4 6AT

Bankers

HSBC Bank plc
1 Sheep Street
Bicester
Oxon OX26 7JA

Nominated Adviser & Broker

FinnCap

60 New Broad Street

London

EC2M 1JJ

Registrars

Neville Registrars
Neville House

Laurel Lane

Halesowen

B63 3DA

Registration Number   1885075


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.


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.


Chairman’s statement (continued)

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.


Chairman’s statement (continued)

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.


Chief Executive’s report (continued)

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 countries namely 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.


Chief Executive’s report (continued)

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.


Strategic Report (continued)

Capital Structure

The Chairman’s Statement refers to proposed changes in the Company’s capital structure and a pro forma Balance Sheet as at 30June 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.

Key Performance Indicators

The following KPI’s are some of the tools used by management to monitor the performance of the operating business. In addition to the KPI’s the statement of financial position and cash flow analysis are reviewed at monthly Board meetings.

KPI's (Excluding Discontinued Operations)

 

FY 16

FY 15

 

£'000's

£'000's

Revenue

5,122

1,248

EBITDA

1,826

(1,945)

EBT

1,628

(2,127)

EPS (Including Discontinued Operations) - Pence

0.258

1.060

EPS (Ex Discontinued Operations) - Pence

0.361

0.700

Share Price - Pence

1.110

0.016

Cash

3,654

472

Cash/Share - Pence

0.774

0.099

Net Assets/Share - Pence

1.479

0.700

 

 

 

Staff Turnover

13%

9%

The positive movement from FY 15 to FY 16 in revenues, EBITDA, EBT and EPS reflects the licence fee income generated in the year and the increase in other revenues. The positive movement in the cash reflects the profitability in the year and the fund raising completed in July 2015.

Strategic Report (continued)

Principal risks and uncertainties

Risk management is essential as part of the management process. Regular reviews are undertaken to assess the nature and magnitude of risks faced and the manner in which they may be mitigated. Where controls are in place, their adequacy is monitored.

By order of the board

Melvyn Segal

Finance Director

20 September 2016

Statement of corporate governance

The Company is quoted on the AIM Market of the London Stock Exchange and is therefore not required to comply with the provisions of the UK Corporate Governance Code.  We do not comply with the UK Corporate Governance Code. However, we have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code we consider relevant to the Group and best practice.

A statement of the Directors’ responsibilities in respect of the financial statements is set out on page 22. Below is a brief description of the role of the Board and its Committees.

The Board

The Board, which presently consists of three executive and two non-executive directors, meets regularly throughout the year and receives timely information in a form and of a quality appropriate to enable it to discharge its duties.

Non-executive directors are not appointed for specified terms nor have an automatic right of reappointment.

Directors are subject to election by shareholders at the first AGM after their appointment and to retirement by rotation and re-election by shareholders in accordance with the Articles of Association whereby one third of the directors retire every year or, where there is not a multiple of three, the number nearest to but not exceeding one third retire from office.

Audit and Risk Committee

The Audit and Risk Committee is under the Chairmanship of Rodney Westhead, with Nigel Rogers also sitting. The Committee meets at least twice a year and has adopted terms of reference which give it responsibility for reviewing a wide range of financial matters. The Committee advises the Board on the appointment of external auditors and it discusses the nature and scope of their work.

Nomination Committee

Given its relatively small size, the Board as a whole fulfils the function of the Nomination committee.

Remuneration Committee

The policy on directors’ remuneration is formulated by the Remuneration Committee, which consists of Nigel Rogers as Chairman and Rodney Westhead. The Committee is responsible for determining the contract terms, remuneration and other benefits of the executive directors. The non-executive directors’ salaries are reviewed and set by the Board.

The report of the Remuneration Committee is set out on pages 16 to 18 below.

Accountability, Internal Control and Risk Management

The directors consider that these financial statements, reports and supplementary information present a fair and accurate assessment of the Company’s position and prospects.


Statement of corporate governance (continued)

Going Concern

The financial report has been prepared on the going concern basis. The Group has made a profit for the year of £1.15m (2015: Loss of £3.12m). The Group has Accumulated Losses of £21.84m (2015: Accumulated Losses of £22.99m). The balance of cash and cash equivalents at 30 June 2016 is £3.65m (2015: Cash and cash equivalents £0.47m).

 

The Group meets its day to day working capital requirements through existing cash reserves and does not currently have an overdraft facility. The directors have prepared cash flow forecasts for the period to 31 December 2017. These forecasts indicate that the Group will continue to be able to operate within its current cash resources for the foreseeable future.

Internal Financial Control

The Board is responsible for the Group’s system of internal control including financial, operational and compliance controls and risk management, and for reviewing its effectiveness. The Board has introduced procedures designed to meet the particular needs of the Group in managing the risks to which it is exposed, consistent with the guidance provided by the Turnbull Committee. These procedures include an annual review of the significant risks faced by the Group and an assessment of their potential impact and likelihood of occurrence. The Board is satisfied with the effectiveness of internal controls but, by their very nature, these procedures can only provide reasonable, but not absolute, assurance against material misstatement or loss.

The Board has reviewed the need for an internal audit function. The Board has decided that, given the nature of the Group’s business and assets and the overall size of the Group, the systems and procedures currently employed provide sufficient assurance that a sound system of internal control, which safeguards shareholders’ investment and the Group’s assets, is in place. An internal audit function is therefore considered unnecessary.


Remuneration report

Remuneration Policy

The remuneration policy is to ensure that all staff, including the executive directors, are adequately motivated and rewarded in relation to companies of similar size and type.

The directors salaries paid compare adequately with the salaries of directors and senior executives in public companies in similar development situations. Although a bonus scheme was in place during the year no bonuses were awarded to the directors.

The Remuneration Committee can also grant options over ordinary shares under its Enterprise Management Incentive Option Schemes (EMI) and options granted outside Company schemes, but approved by shareholders. These schemes potentially offer long term incentives to directors and key personnel.

In addition to the vote to be held on this Remuneration Report, shareholders will be given the opportunity to question the Remuneration Committee Chairman, Nigel Rogers, on any aspect of the Company’s remuneration policy.

The Board as a whole sets the remuneration of the non-executive directors, which consists of fees for their services in connection with Board and Board Committee meetings. The non-executive directors are not eligible for pension scheme membership, but they are eligible to participate in the Company’s Unapproved Directors Share Option Scheme (UDSOS).

Each element of remuneration paid to all directors is shown in detail below.

Base Salary and Benefits                                                                                   

The base salaries for the executive directors are reviewed annually, but not necessarily increased, by the Remuneration Committee. Salary increases based on performance may be made.

Executive Share Option Schemes

The Committee considers that potential for share ownership and participation in the growing value of the Group increases the commitment and loyalty of directors and senior executives. 

Directors’ Pension Policy

Executive directors are entitled to participate in the Company’s pension scheme on the same basis as other full time employees, but during the year ended 30 June 2016 they did not choose to.

Remuneration report (continued)

Service Contracts

The service contracts provide for the following notice periods:

12 months: Graham Storey, David Ford and Melvyn Segal.

3 months: Nigel Rogers

No notice period: Rodney Westhead

If the Company terminates without notice, the individual is entitled to a payment in lieu of notice being the value of the maximum notice period in his contract.

In the event of termination for unsatisfactory performance (if necessary decided by an independent tribunal) or for reasons of misconduct, no compensation is payable.

Directors’ Emoluments

Information on directors’ emoluments is as follows:

This table excludes the fair value of directors’ share based payment options as defined by International Financial Reporting Standard (IFRS) 2. Details of all options granted to directors are shown on the next page.

Information on directors' emoluments is as follows:

Total emoluments

Basic

salary

Fees

Benefits

Pension

12 months

ended

30 June 2016

12 months

ended

30 June 2015

£

£

£

£

£

£

Executive directors

 

 

 

 

 

 

G Storey

158,400

-

4,617

-

163,017

161,998

M Segal

106,250

-

1,809

-

108,069

108,093

D Ford

109,050

-

3,098

-

112,148

111,800

 

 

 

 

 

 

Non-executive directors

 

 

 

 

 

 

D Kleeman*

-

-

-

-

-

10,000

N Rogers

27,500

-

-

-

27,500

-

R Westhead

12,600

-

-

-

12,600

12,600

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

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

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

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

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

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

Total 2016

413,800

-

9,534

-

423,334

 

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

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

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

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

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

Total 2015

386,300

-

8,191

-

404,491

 

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

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

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

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

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

*resigned 31 December 2014

Remuneration report (continued)

Share based payment options have been granted under EMI for executive directors and under the Unapproved Directors Share Option Scheme (UDSOS) for non-executives. The details of these are set out below:

The options can only be exercised once the share price has met or exceeded the hurdle price at any point since the date of grant of the option.


At 1 July 2015


At 30 June 2016

Earliest

exercise

date

Exercise

price per

share

Hurdle

price per

share

Directors' interests in the UDSOS were:

 

 

 

 

 

 

 

 

 

 

 

G Storey

805,000

805,000

22/12/12

4p

9p

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

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

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

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

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

Directors' interests in the EMI were:

 

 

 

 

 

 

 

 

 

 

 

G Storey

3,195,000

3,195,000

22/12/12

4p

9p

G Storey

2,000,000

2,000,000

01/03/14

4p

9p

D Ford

3,195,000

3,195,000

22/12/12

4p

9p

D Ford

305,000

305,000

01/03/14

4p

9p

M Segal

1,500,000

1,500,000

02/08/14

10.25p

20p

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

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

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

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

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

Share price performance

The share price performance is disclosed in the Directors’ Report on page 20. 

On behalf of the Board

N F Rogers
Remuneration Committee

20 September 2016

Directors’ report

The directors present their annual report and audited financial statements for the year ended 30 June 2016.

Business activities, review of the business and future developments                       

Translogik, a trading division of Transense, was formed in April 2009 and the principal activities of this division includes the provision of tyre management solutions for the truck and OTR markets, by developing, manufacturing and selling of specialist Tyre probes and TPMS monitoring solutions and associated technologies.

The Company continues the development of non-­contact batteryless sensors and their electronic interrogation systems for measuring pressure, temperature and torque in automotive applications and extending that to various, non-automotive, industrial applications with regards the electronic interrogation.  These activities continue to be carried out by our SAWsense division.

Following the disposal of IntelliSAW, a trading division of Transense, the principal activities of the group no longer include the manufacture of electrical switchgear management systems.

A review of the Company’s business, and research and development activities for the year, together with developments since the year end and for the future, is included in the Chairman’s statements, Chief Executives report and Strategic report on pages 5 to 13.

Results and Dividends

The results for the year ended 30 June 2016 show a profit of £1.15m (30 June 2015: £3.12m loss).  The directors do not recommend the payment of a dividend (30 June 2015: £nil).

Directors

The present directors are listed on page 3. 

There are no contracts of significance in which the directors had a material interest during the year.

Substantial Shareholdings                            

At 30 June 2016, the following substantial shareholdings of 3% or more of the Company’s share capital have been notified to the Company:

 

Ordinary shares of 1p each

 

 

%

 

 

 

John Peter Lobbenberg

43,449,023

9.2

CriSeren Investments

23,968,645

5.1

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

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

Directors’ report (continued)

Directors’ interests

The number of shares in the Company in which the current directors were deemed to be interested at the beginning and end of the period, all of which are beneficially held, were as follows:

 

Ordinary shares of 1p each

 

30 June 2016

1 July

2015

 

 

 

G Storey

3,934,353

3,934,353

R J Westhead

282,777

282,777

D Ford

277,777

277,777

M Segal

1,144,444

1,144,444

N Rogers

3,000,000

-

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

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

Share price

The mid price of the shares in the Company at 30 June 2016 was 1.10p (30 June 2015: 1.55p) and the range during the period was 1.10p to 1.68p (30 June 2015: 0.90p to 6.50p).

Share based payment option schemes

The Remuneration Committee is responsible for the operation and administration of the Company’s UDSOS and EMI Schemes. In an increasingly competitive market the Committee regards the provision of options as an important incentive for other members of staff as well as directors.

Details of share based payment options granted to directors are disclosed in the Remuneration Report on page 18. 

Financial Instruments

The directors adopt a low risk financial objective.  The financial instruments are denominated in sterling, euros and US dollars and the Group does not trade in derivative instruments, (see note 26 to the financial statements).

Indemnification of Directors

Qualifying third party indemnity provisions (as defined in Section 413 of the Companies Act 2006) are in force for the benefit of the directors who held office during 2015/16.

Disclosure of information to auditor

The directors confirm that:

·       So far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware;

·       The directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information.


Directors’ report (continued)

Auditors

In accordance with Section 489 of the Companies Act 2006, a resolution to appoint Grant Thornton UK LLP as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.

By order of the board

D M Ford                                                    G Storey

Chairman                                        Chief Executive

20th September 2016

1 Landscape Close

Weston on the Green

Oxon

OX25 3SX


Statement of directors’ responsibilities in respect of the Strategic Report, Directors’ Report and the Financial Statements 

The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. 

Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with IFRS as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to:

 

·         select suitable accounting policies and then apply them consistently; 

·         make judgements and estimates that are reasonable and prudent; 

·         state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 

·         prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. 

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


Grant Thornton UK LLP

The Colmore Building

Colmore Circus

Birmingham

B4 6AT

United Kingdom

Independent Auditor’s report to the members of Transense Technologies plc

We have audited the financial statements of Transense Technologies plc for the year ended 30 June 2016 which comprise the consolidated statement of comprehensive income, the consolidated and company balance sheet, the consolidated and company statements of changes in equity, the consolidated and company cash flow statements and the related notes set out on pages 25 to 55. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of directors and auditor
 

As explained more fully in the Directors’ Responsibilities Statement set out on page 22, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

 

Scope of the audit of the financial statements 

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements 

In our opinion: 

·       the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 30 June 2016 and of the group’s profit for the year then ended; 

·       the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·       the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

·       the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006 

In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Independent Auditor’s report to the members of Transense Technologies plc (Continued)

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: 

·       adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or 

·       the parent company financial statements are not in agreement with the accounting records and returns; or 

·       certain disclosures of directors’ remuneration specified by law are not made; or 

·       we have not received all the information and explanations we require for our audit. 

Rebecca Eagle

(Senior Statutory Auditor) 

for and on behalf of Grant Thornton UK LLP, Statutory Auditor 

Chartered Accountants 

The Colmore Building

Colmore Circus

Birmingham

B4 6AT

                                 

20th September 2016


Consolidated Statement of Comprehensive Income

For the year ended 30 June 2016

Year ended

30 June

Year ended

30 June

2016

2016

2015

2015

Note

£'000

£'000

£'000

£'000

Continuing operations

 

 

 

 

 

Revenue

5

 

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

11

 

51

 

74

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

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

 

 

 

 

 

Profit/(loss) before taxation

 

 

1,596

 

(2,127)

Taxation

12

 

29

 

48

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

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

Profit/(loss) from continuing operations

 

 

1,625

 

(2,079)

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

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

Discontinued operations

 

 

 

 

 

Loss from discontinued operation

6

 

(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

25

 

0.26

 

(1.06)

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

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

There are no other recognised income or expenses in either period.

Notes to the financial statements are from pages 30 to 55.


Consolidated Balance Sheet

at 30 June 2016

Year ended 30 June

Year ended 30 June

2016

2016

2015

2015

Note

£'000

£'000

£'000

£'000

Non current assets

Property, plant and equipment

13

313

316

Intangible assets

15

894

806

Trade lease receivables

19

383

668

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

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

1,590

1,790

Current assets

Inventories

17

571

584

Corporation tax

74

45

Trade and other receivables

18

1,742

655

Cash and cash equivalents

20

3,654

472

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

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

6,041

1,756

Assets of disposal group held for sale

7

-

307

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

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

6,041

2,063

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

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

Total assets

7,631

3,853

Current liabilities

Trade and other payables

21

(667)

(418)

Current tax liabilities

(41)

(48)

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

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

(708)

(466)

Liabilities of disposal group held for sale

7

-

(79)

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

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

Total liabilities

(708)

(545)

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

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

Net assets

6,923

3,308

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

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

Equity

Issued share capital

23

11,546

9,779

Share premium

17,218

16,523

Accumulated loss

(21,841)

(22,994)

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

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

6,923

3,308

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

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

These financial statements were approved by the board of directors and authorised for issue on 20th September 2016 and were signed on its behalf by:



D M Ford                                                               G Storey
Chairman                                                              Chief Executive
Company registered number:
STYLEREF "Cover SubTitle" \# "0"1885075          
Notes to the financial statements are from pages 30 to 55.


Company Balance Sheet

at 30 June 2016

Year ended 30 June

Year ended 30 June

2016

2016

2015

2015

Note

£'000

£'000

£'000

£'000

Non current assets

Property, plant and equipment

14

295

291

Intangible assets

15

894

806

Investments

16

3

3

Trade lease receivables

19

383

668

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

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

1,575

1,768

Current assets

Inventories

17

571

584

Corporation tax

74

45

Trade and other receivables

18

1,689

641

Cash and cash equivalents

20

3,641

415

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

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

5,975

1,685

Assets of disposal group held for sale

7

-

249

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

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

5,975

1,934

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

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

Total assets

7,550

3,702

Current liabilities

Trade and other payables

21

(802)

(408)

Current tax liabilities

(46)

(40)

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

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

(848)

(448)

Liabilities of disposal group held for sale

7

-

(102)

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

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

Total liabilities

(848)

(550)

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

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

Net assets

6,702

3,152

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

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

Equity

Issued share capital

23

11,546

9,779

Share premium

17,218

16,523

Accumulated loss

(22,062)

(23,150)

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

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

6,702

3,152

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

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

These financial statements were approved by the board of directors and authorised for issue on 20th September 2016 and were signed on its behalf by:

D M Ford                                              G Storey
Chairman                                              Chief Executive

Company registered number: STYLEREF "Cover SubTitle" \# "0"1885075   

Notes to the financial statements are from pages 30 to 55.


Statement of Changes in Equity

Group

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

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

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

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

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

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

Company

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

(19,981)

6,321

Loss for the year

-

-

-

(3,177)

(3,177)

Transfer between reserves

55

194

(249)

-

-

Share based payments

-

-

-

8

8

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

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

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

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

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

Balance at 30 June 2015

9,779

16,523

-

(23,150)

3,152

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

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

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

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

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

Profit for the year

-

-

-

1,088

1,088

Shares issued and share premium

1,767

695

-

-

2,462

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

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

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

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

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

Balance at 30 June 2016

11,546

17,218

-

(22,062)

6,702

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

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

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

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

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


Consolidated and Company Cash Flow Statement

For the year ended 30 June 2016

 

   

Group

Company

Year ended

30 June

2016

Year ended
30 June

2015

Year ended

30 June

2016

Year ended
30 June

2015

Note

£'000

£'000

£'000

£'000

Profit/(loss) before taxation from continuing operations


1,596

(2,217)


1,368


(3,267)

Adjustments for:

Financial income

11

(51)

(74)

(51)

(74)

Depreciation

13,14

111

88

107

67

Amortisation of intangible assets

15

170

160

170

160

Share based payment

22

-

8

-

8

(Loss)/profit on discontinued operation

6

(472)

(1,041)

(309)

42

Profit on Disposal of discontinued operation

32

-

32

-

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

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

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

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

Operating cash flows before movements in working capital


1,386


(2,986)


1,317


(3,064)

Decrease/(increase) in receivables

18

(802)

754

(763)

778

(Decrease)/increase in payables

21

249

(216)

407

(238)

Decrease /(increase) in inventories

17

13

154

13

154

Decrease in trade lease receivables

19

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

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

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

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

Cash generated/(used) in operations

846

(2,284)

974

(2,370)

Taxation (paid)/recovered

(7)

139

(7)

139

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

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

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

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

Net cash generated/used in operations

839

(2,145)

967

(2,231)

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

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

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

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

Investing activities

Interest received

11

51

74

51

74

Acquisitions of property, plant and equipment

13,14

(130)

(251)

(111)

(235)

Acquisitions of intangible assets

15

(258)

(60)

(258)

(63)

Assets/liabilities held for sale

7

218

(228)

115

(147)

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

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

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

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

Net cash used in investing activities

(119)

(465)

(203)

(371)

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

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

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

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

Financing activities

Proceeds from issue of equity share capital

23

2,462

-

2,462

-

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

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

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

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

Net cash from financing activities

2,462

-

2,462

-

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

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

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

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

Net increase/(decrease) in cash and cash equivalents


3,182


(2,610)


3,226


(2,602)

Cash and equivalents at the beginning of year


472


3,082


415


3,017

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

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

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

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

Cash and equivalents at the end of year

20

3,654

472

3,641

415

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

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

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

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


Notes to the financial statements

1        General Information    

Transense Technologies plc (the “Company”) is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 3. The consolidated financial statements of the Company as at and for the year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as “the Group” and individually as “Group entities”). The nature of the Group’s operations and its principal activities are discussed in the business review on page 19.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.

2        Basis of preparation

Both the Parent Company financial statements and the Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU (“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 Group 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.

3        Going Concern

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.

4        Accounting policies

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements.

There were no new standards, amendments to standards or interpretations that were mandatory for the first time for the financial year beginning 1 July 2015 that resulted in any material impact on the Groups 2016 consolidated financial statements.


Notes to the financial statements (continued)

4        Accounting policies (continued)

The following Adopted IFRSs have been issued but have not been applied in these financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:

Standard

IASB effective date

EU effective date

IFRS 9 Financial instruments

1 January 2018 

Not yet EU endorsed

IFRS 14 Regulatory Deferral accounts

1 January 2016

EU is not intending to endorse

IFRS 15 Revenue from contracts with customers

1 January 2018

Not yet EU endorsed

Amendments to IFRS1 11: Accounting for Acquisitions of Interests in Joint Operations

1 January 2016

1 January 2016

Clarification of Acceptable Depreciation and Amortisation – Amendments to IAS 16 and IAS 38

1 January 2016

1 January 2016

Annual Improvements to IFRSs 2012-2014 Cycle

1 January 2016

1 January 2016

Amendments to IAS 16 and IAS 41: Bearer Plants

1 January 2016

1 January 2016

Amendments to IAS 27: Equity Method in Separate Financial Statements

1 January 2016

1 January 2016

Amendments to IFRS 10. IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception Disclosure Initiative

1 January 2016

Not yet EU endorsed

Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements

1 January 2016

1 January 2016

IFRS 16 Leases

1 January 2019

Not yet EU endorsed

Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses

1 January 2017

Not yet EU endorsed

Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions

1 January 2018

Not yet EU endorsed

Amendments to IAS 7: Disclosure Initiative

1 January 2017

Not yet EU endorsed


Notes to the financial statements (continued)

 

4        Accounting policies (continued)

Significant accounting judgements and sources of estimation uncertainty

Certain estimates and judgements need to be made by the directors which affect the results and position of the Group as reported in the financial statements. Estimates and judgements are required if, for example, there are intangible assets which are required to be amortised over their useful lives. The following judgements and estimates have been identified by the Group:

 

·       Determining when intangible assets are impaired is a judgement which requires an estimate of the value in use of the asset based on management’s best estimate of the future cash flows that the assets are expected to generate. This also requires significant judgement as there are limited historic cash flows on which to base the future cash flows on.  Discussions are held within the Group between the relevant technical, commercial and finance employees on the expected future cash flows of patents in individual territories;

·       Judgement is also applied when patent costs are reviewed in particular when considering patents in products and territories that are not integral to the future business plans.

·       Distinguishing the research and development phases of new products and determining whether the recognition requirements for the capitalisation of development costs are met and their subsequent amortisation period requires judgement. After capitalisation management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

·       Exceptional items are identified separately on the face of the statement of comprehensive income when they have a significant impact on the trading performance. A judgement exists as to what items may be classified as exceptional.

Measurement convention                                                                                                                     

The financial statements are prepared on the historical cost basis. Non-current assets and disposal groups held for sale are stated at the lower of previous carrying amount and fair value less costs to sell.

Basis of consolidation

Subsidiaries

The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 30 June 2016.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, applicable.

The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.


Notes to the financial statements (continued)

4        Accounting policies (continued)

Revenue recognition

Revenue is recognised to the extent that economic benefits will flow to the Group and the revenue can be reliably measured:

      Royalty income is recognised in the year in which the royalties have been earned;

      Engineering support income, being payments for support work to assist third parties in the development of the Group’s technology for their own use, is recognised as work is completed; and

      Product sales to customers are recognised on customer acceptance of the goods.

      Revenue generated under finance lease agreements are recognised in full as the risks and rewards of the goods are transferred to the lessee. The interest element of the deal is spread over the life of the lease.

      Revenue generated under operating lease agreements is recognised in the month that the service is provide to the end user.

      License revenue is recognised in accordance with the contractual agreement for each deal.

Revenue represents sales to external customers at invoiced amounts net of VAT and other sales related taxes.

Segment reporting

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.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairment.

Depreciation of property, plant and equipment

Depreciation is charged to the statement of comprehensive income on a straight line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Plant and Equipment 3 – 5 years; and

Fixtures and Fitting 3 – 10 years; and

Motor Vehicles 4 years

The assets’ estimated residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.


Notes to the financial statements (continued)

4        Accounting policies (continued)

Research and development

Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

·       Completion of the intangible asset is technically feasible so that it will be available for use or sale

·       The Group intends to complete the intangible asset and use or sell it

·       The Group has the ability to use or sell the intangible asset

·       The intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output form the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits

·       There are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and

·       The expenditure attributable to the intangible asset during its development can be measure reliably.

All new expenditure on research and development activities in the year has been capitalised. The amortisation of this expenditure will be over 3 years to align with the products anticipated life.

Historic expenditure on development activities has been capitalised and is being amortised over 10 years on a straight line basis.

Patent fees

Externally acquired patent fees are capitalised at cost and treated as an intangible asset. Amortisation is charged to administrative expenses in the statement of comprehensive income over the period to which the patent relates which is generally 15 to 20 years.

In the event that a patent is superseded and the original intellectual property is embedded in a new patent, the costs of that patent and the later patents are regarded as the costs of the original patent and amortised over the life of the new patent.

Patents are reviewed annually, reviewing their strategic and commercial value on a territory by territory basis. Any impairment that is identified is recognised immediately in the statement of comprehensive income.

Intangible assets and goodwill

All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries and is the difference between the consideration transferred and the fair value of the identifiable assets, liabilities and contingent liabilities acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.


Notes to the financial statements (continued)

4        Accounting policies (continued)

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its net selling price and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the asset does not generate cash flows that are largely independent from other assets, the recoverable amount is assessed by reference to the cash generating unit to which the asset belongs.

Whenever the carrying amount of an asset, or its cash generating unit, exceeds its recoverable amount, an impairment loss is recognised as an expense in the statement of comprehensive income.

Investments in subsidiary undertakings

In the company’s financial statements, investments in subsidiary undertakings are stated at cost unless, in the opinion of the directors, there has been an impairment to their value in which case they are immediately written down to their estimated recoverable amount.

Pension costs

Contributions to the Company’s defined contribution scheme are charged to the statement of comprehensive income in the year to which they relate.

Operating lease agreements

Rental payments under operating leases are charged to the statement of comprehensive income on a straight line basis over the term of the lease.

Current taxation

The tax currently payable is based on taxable profit for the year. Taxable profit may differ from the net profit shown in the statement of comprehensive income because it excludes income or expenses that are taxable or deductible in other years and furthermore it might exclude other items that are never taxable or deductible.

Current tax is provided at amounts expected to be paid or recovered using tax rates and laws enacted or substantially enacted at the balance sheet date.

Deferred taxation

Deferred tax is provided in full, using the liability method. It represents the tax payable on temporary differences between the carrying amounts of assets and liabilities in the financial statements as compared to corresponding tax values used in the computation of taxable profit.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Deferred tax assets and liabilities are measured using tax rates and laws enacted or substantially enacted at the balance sheet date.


Notes to the financial statements (continued)

4        Accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purposes only of the statement of cash flows.

Foreign currencies

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arise on consolidation, are translated to the Group’s presentational currency Sterling at foreign exchange rates ruling at the balance sheet date.

The revenues and expenses of foreign operations are translated into Sterling upon consolidation. Where significant exchange differences arising from this translation of foreign operations these are reported as an item of other comprehensive income and accumulated in the translation reserve or non-controlling interest, as the case may be.

Foreign currency transactions are translated into the functional currency of the respective group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in profit or loss.

Share-based payment transactions

The Company issues equity settled share based payments to certain employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value so determined is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting.

The fair value of services received in return for share options granted is measured by reference to the fair value of the share options. The estimate of the fair value of the services received is measured based on the Black-Scholes Option Pricing Model. This model takes into account the following variables: exercise price, share price at date of grant, expected term, expected share price volatility, risk free interest rate and expected dividend yield. 

Provisions

Provisions are recognised when the Group has a present obligation as result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure. Provisions are discounted if the effect of doing so is material. A pre-tax rate that reflects risks specific to the liability is applied to the expected cash flows.

Trade receivables

Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

Trade payables

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.


Notes to the financial statements (continued)

4        Accounting policies (continued)

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.

Leasing

Leases are classified as finance leases whenever the terms of the contract transfers substantially all the risk and rewards of ownership to the lessee. All other contracts are classified as operating leases.

In accordance with IAS 17 the Company is considered to be a lessor for its arrangements with customers. The Company provides asset finance to its customers under finance lease and hire purchase arrangements.

Lease contracts with customers are recognised as finance lease receivables which are included within trade and other receivables at the Company’s net investment in the lease which equals the net present value of the future minimum lease payments. Finance lease income is recognised as revenue in the period to reflect a constant periodic rate of return on the Company’s remaining net investment in respect of the lease.

Short term deposit

The short term deposit shown within other debtors represents funds held in escrow in relation to the disposal of IntelliSAW fee and the associated license fee income. These funds mature in October 2016 with no expected impairment.

5        Revenue and segmental reporting

The tables below set 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

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

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


Notes to the financial statements (continued)

5        Revenue and segmental reporting (continued)

          Segments

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)

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


Notes to the financial statements (continued)

5        Revenue and segmental reporting (continued)

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%

All non-current assets are held in the UK, with the exception of some property, plant and equipment, and a motor vehicle of £0.04m (year ended 30 June 2015: £0.04m) which is held in China and Chile.  

6        Discontinued operation

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)


Notes to the financial statements (continued)

6        Discontinued operation (continued)

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

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

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

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

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

 

7        Assets held for sale

Assets classified as held for sale

Group

Company

30 June 2016

30 June 2015

30 June 2016

30 June 2015

£'000

£'000

£'000

£'000

Inventories

-

170

-

170

Trade and other receivables

-

137

-

79

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

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

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

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

-

307

-

249

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

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

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

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

Liabilities classified as held for sale

Group

Company

30 June 2016

30 June 2015

30 June 2016

30 June 2015

£'000

£'000

£'000

£'000

Trade and other payables

-

79

-

102

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

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

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

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

-

79

-

102

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

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

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

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

8        Expenses and auditor’s remuneration

Included in the profit are the following:

Year ended

30 June 2016

Year ended

30 June 2015

£'000

£'000

Depreciation of property, plant and equipment

         111    

88

Amortisation of intangible assets

170

160

Operating lease rentals payable – Land & Building

82

129

Gain on foreign exchange transactions

(160)

(45)

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

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


Notes to the financial statements (continued)

8        Expenses and auditor’s remuneration (continued)

Auditors’ remuneration for the Group and Company:

Year ended

30 June 2016

Year ended

30 June 2015

£'000

£'000

Audit of these financial statements

35

35

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

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

9        Staff numbers and costs

The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

Number of employees

Year ended

30 June 2016

Year ended

30 June 2015

Management and technical

21

25

Administration

5

5

Non-executive directors

2

2

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

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

28

32

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

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

The aggregate payroll costs including directors of these persons were as follows:

 

 

 

 

 

 

 

 

Year ended

30 June 2016

Year ended

30 June 2015

 

 

 

£'000

£'000

 

 

 

 

 

Wages and salaries

1,653

1,968

Share based payments (note 22)

-

8

Social security costs

162

194

Contributions to defined contribution pension plans

16

16

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

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

1,831

2,186

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

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

10      Directors’ remuneration

Year ended

30 June 2016

Year ended

30 June 2015

£'000

£'000

Directors’ emoluments

414

386

Directors benefits

          10

            8

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

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

424

394

Employers national insurance

52

49

Share based payments (note 22)

-

-

Fees payable for consulting services

-

10

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

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

The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid director was £163,017 (2015: £161,998). No company pension contributions were made to a money purchase scheme on his behalf (2015: nil).  During the year, the highest paid director did not receive any additional share options awards. The highest paid director did not exercise share options under long term incentive schemes and no shares were received or receivable by the director in respect of qualifying services under a long term incentive scheme (2015: nil).


Notes to the financial statements (continued)

10      Directors’ remuneration

The number of directors accruing retirement benefits under money purchase schemes in the year was nil (2015: nil).

The number of directors who exercised share options in the year was nil (2015: nil)

The number of directors in respect of whose services were received or receivable under long term incentive schemes was nil (2015: nil).

11      Finance 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

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

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

12      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

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

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


Notes to the financial statements (continued)

12      Taxation (continued)

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%). 

 


Notes to the financial statements (continued)

13      Property, plant and equipment – Group

Plant and

 Equipment

Fixtures and Fittings

Motor Vehicles

Total

£'000

£'000

£'000

£'000

Cost

Balance at 1 July 2014

591

34

10

635

Additions

113

136

-

249

Currency adjustment on non UK assets

7

-

-

7

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

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

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

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

Balance at 30 June 2015

711

170

10

891

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

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

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

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

Balance at 1 July 2015

711

170

10

891

Additions

105

9

16

130

Disposal

(77)

(18)

-

(95)

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

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

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

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

Balance at 30 June 2016

739

161

26

926

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

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

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

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

Depreciation and impairment

Balance at 1 July 2014

478

2

2

482

Depreciation charge for the period

52

34

2

88

Currency adjustment on non UK assets

5

-

-

5

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

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

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

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

Balance at 30 June 2015

535

36

4

575

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

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

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

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

Balance at 1 July 2015

535

36

4

575

Depreciation charge for the period

87

21

3

111

Disposal

(55)

(18)

-

(73)

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

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

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

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

Balance at 30 June 2016

567

39

7

613

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

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

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

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

Net book value

At 1 July 2014

113

32

8

153

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

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

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

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

At 1 July 2015

176

134

6

316

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

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

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

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

At 30 June 2016

172

122

19

313

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

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

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

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


Notes to the financial statements (continued)

14      Property, plant and equipment – Company

Plant and

 equipment

Fixtures and

fittings

Motor

vehicles

Total

£'000

£'000

£'000

£'000

Cost

Balance at 1 July 2014

526

26

10

562

Additions

110

125

-

235

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

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

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

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

Balance at 30 June 2015

636

151

10

797

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

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

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

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

Balance at 1 July 2015

636

151

10

797

Additions

103

8

-

111

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

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

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

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

Balance at 30 June 2016

739

159

10

908

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

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

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

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

Depreciation and impairment

Balance at 1 July 2014

436

1

2

439

Depreciation charge for the period

47

18

2

67

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

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

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

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

Balance at 30 June 2015

483

19

4

506

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

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

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

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

Balance at 1 July 2015

483

19

4

506

Depreciation charge for the period

84

20

3

107

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

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

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

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

Balance at 30 June 2016

567

39

7

613

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

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

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

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

Net book value

At 1 July 2014

90

25

8

123

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

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

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

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

At 1 July 2015

153

132

6

291

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

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

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

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

At 30 June 2016

172

120

3

295

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

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

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

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


Notes to the financial statements (continued)

15      Intangible assets

Group and company intangible assets

Goodwill

Patents

rights and

trademarks

Development

costs

Total

£'000

£'000

£'000

£'000

Cost

Balance at 1 July 2014

50

1,435

1,079

2,564

Additions

-

63

-

63

Adjustment

-

(3)

-

(3)

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

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

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

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

Balance at 30 June 2015

50

1,495

1,079

2,624

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

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

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

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

Balance at 1 July 2015

50

1,495

1,079

2,624

Additions

-

82

176

258

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

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

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

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

Balance at 30 June 2016

50

1,577

1,255

2,882

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

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

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

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

Amortisation and impairment

Balance at 1 July 2014

-

939

719

1,658

Amortisation for the period

-

52

108

160

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

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

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

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

Balance at 30 June 2015

-

991

827

1,818

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

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

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

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

Balance at 1 July 2015

-

991

827

1,818

Amortisation for the period

-

62

108

170

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

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

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

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

Balance at 30 June 2016

-

1,053

935

1,988

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

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

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

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

Net book value

At 1 July 2014

50

496

360

906

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

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

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

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

At 1 July 2015

50

504

252

806

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

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

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

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

At 30 June 2016

50

524

320

894

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

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

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

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

Amortisation and impairment charge

The amortisation is recognised in the following line items in the statement of comprehensive income:

 

2016

2015

£'000

£'000

Administrative expenses

    170       

160

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

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

170  

160

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

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


Notes to the financial statements (continued)

15      Intangible assets (continued)

Development Costs

Development expenditure of the new iTrack II was capitalised in the year was £0.18m (2015: £nil).  It has been determined that this will have a useful economic life of 3 years. The amount of research and development expenditure expensed in the Income Statement for the year was £nil (2015: £0.12m)

Impairment testing

Impairment testing has been performed over the total balance of intangible assets which are allocated to the one cash generating unit of the Group, that of the development and sales of SAWsense.

The recoverable amount of goodwill is determined from value-in-use calculations, which use budgeted cash flows for year one and cash flow projections for years 2 to 5, an average growth rate of 8% has been applied to these.  For cash flow after year 5 and up to the useful life of the goodwill, a steady state based on year 5 cash flow has been assumed.

The key assumptions forming inputs to cash flows are revenues and margins. The forecasts have been discounted at a pre-tax discount rate of 10%.

16      Investments in subsidiaries

The Group and Company have the following investments in subsidiaries:

Status

Country of

Incorporation

Class of

shares held

Ownership

 

 

 

 

2016

2015

Translogik RFID Ltd

Dormant

UK

Ordinary Shares

100%

100%

IntelliSAW Inc.

Dormant

USA

Ordinary Shares

100%

100%

Translogik Ltd (Formerly Cranwick Ltd)

Dormant

UK

Ordinary Shares

100%

100%

Transense K.K.

Dormant

Japan

Ordinary Shares

100%

100%

Transense Technologies Chile SPA

Trading

Chile

Ordinary Shares

100%

N/A

Transense Electronics Technology (Shanghai) Co. Ltd

Dormant

China

Ordinary Shares

100%

N/A

The following investments are included in the Company balance sheet at £3k. (2015: £3k).

Company

Year ended

30 June 2016

Year ended

30 June 2015

£'000

£'000

Transense KK

3

3

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

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

       3

3

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

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

           


Notes to the financial statements (continued)

17      Inventories

Group & Company

30 June 2016

30 June 2015

£'000

£'000

Raw materials

224

174

Finished goods

347

410

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

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

571

584

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

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

Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in the year ended 30 June 2016 amounted to £0.76m (2015: £0.64m). The write-down of inventories to net realisable value amounted to £nil (2015: £nil).

18      Trade and other receivables

Group

Company

30 June 2016

30 June 2015

30 June 2016

30 June 2015

£'000

£'000

£'000

£'000

Amounts falling due within one year

Trade receivables

508

200

478

188

Allowance for doubtful debts

(8)

(75)

(8)

(75)

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

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

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

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

500

125

470

113

Other receivables

176

94

168

92

Trade finance lease receivables

539

304

539

304

Short term deposit

301

-

301

-

Accrued income

32

-

32

-

Prepayments

194

132

179

132

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

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

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

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

1,742

655

1,689

641

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

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

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

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

As at 30 June 2016 there were no past due but not impaired trade receivables.

 

19      Trade leases and unearned finance income

The group offers its iTrack solution to be sold via a finance lease, in which a significant portion of the risks and rewards of ownership are transferred to the lessee. The amount due after one year is shown as a non-current asset in the Group and Company Balance sheet.

Group and Company

Minimum lease payments due

Within 1 year

1 to 5 years

after 5 years

Total

30 June 2016

£'000

£'000

£'000

£'000

Lease payments

539

383

-

922

Unearned finance income

(23)