Results for the year ended 31 December 2010

Management Review

Chairman’s Statement

It has been a year of considerable, if slower than expected, development.  By December 2010, Transense was working on more active and customer-led projects than ever before in its history. The loss for the year was £1,454,000 (2009 - £1,472,000 loss).

Included amongst the highlights for the year were:

●     a material growth in sales. In 2009 our work on the KERS (Kinetic Energy Recovery System) project accounted for more than 60% of revenues. We did not budget for, nor receive any income from this source in 2010, yet Group sales in 2010 nonetheless increased over 2009 levels, despite not having the one-off income from the KERS project.

●     the successful £2m fundraising in June 2010;

●     Translogik’s product offering and customer interest expanded;

●     the growth in the potential of the original Transense technology for the automotive industry and the increase in number of revenue earning projects, both of which continue; and

●     the reorganisation of our staffing to reflect the change in our business model, and the consequent substantial reduction in costs.

Whilst the mid and long-term goal of generating significant recurring income from our licensees, for our patented torque, temperature and pressure sensors, continues to be our primary objective, these are currently insufficient to sustain the Company in the near-term.  Our strategy has been therefore to seek income from alternative sources to provide additional revenue streams in the meantime, and the creation of the Translogik business has been an important step in filling this gap.  The development of Translogik’s products has taken time, and this is reflected in sales for the first quarter of 2011.  However, Translogik’s range of tyre probes and RFID tags and patches has demonstrated significant savings to customers both in time and money, and in reductions in vehicle down-time. 

For us to take advantage of this growing potential, additional sales and specialist engineering staff have been recruited in recent months, and the employment of high quality scientists and engineers remains important to the Company.

With these staff changes in place, the Board are now confident that we have overcome the issues that have delayed progress. We are also more confident than ever about the attractiveness of our technology to potential customers, however, this is tempered by the relatively long development cycles and the lack of sales visibility this brings. We look forward to updating you on developments over the coming months.   

DG Kleeman
Chairman

Chief Executive’s report

 Overview

2010 was another year of progress for the Group. Transense has been extremely busy, with an increasing number of projects, both automotive and also, increasingly, non-automotive, and record levels of engineering consultancy work being undertaken.  A new Joint venture (JV) company was created, Bulldog Innovations, in partnership with Sengenuity, an existing licensee, to generate additional near term market opportunities for Transense’s patented Surface Acoustic Wave (SAW) sensor technology.

Translogik, the wholly-owned subsidiary of Transense, established to provide near-term revenues for the Group in order to support the medium and long term strategic goals of the IP licensing business, has continued to develop into a global tyre management technology provider to the OTR (Off-the-Road) truck and bus markets, expanding its distribution and support networks, developing strategic relationships with major regional service providers, and expanding its range of products to meet the needs of its expanding customer base.

Significant progress was made during the period in commercialising the Company’s patented SAW sensor technology for the wireless, battery-less measurement of torque, temperature and pressure. Due to the increased level of activity, engineering consultancy income increased during the year, and is anticipated to grow further in 2011.

Torque

A long-term project with a major US automotive OEM for drive-line torque sensing has continued to gather pace, and the Company is increasingly involved in supplying, paid for, development engineering to them as potential commercialisation approaches. In addition, three new transmission opportunities are currently under discussion with customers.

Since reporting last year about a surge of new interest in the application of SAW torque sensing technology in the Electrical Power Assisted Steering (EPAS) arena, the Company has now entered into development relationships with several leading players involved in EPAS torque sensing which have significant potential. Prototype shafts, paid for by the customers, have been built and shipped for evaluation.

Following Transense’s decision last year to pursue non-automotive torque sensor projects, the Company is currently engaged in a project using its sensors within the gearbox of a high-powered transformer tap-changer, an essential device in power-transmission systems, as well as in advanced discussions in relation to two separate wind turbine gearbox projects. Transense are now working with a group of companies that have applied for European funding to improve wind turbine reliability.

Two new projects to supply driveline/transmission torque sensors for electric vehicles are under discussion.

An additional potential new torque application for use in aircraft landing gear is under discussion with a major aircraft manufacturer.

Temperature & Pressure

Mesnac is continuing to progress with its Truck TPMS (Tyre Pressure Monitoring System) project, and Transense is supplying SAW sensors for integration into Mesnac’s tyre patches.

Stack, a licensee for TPMS in Motorsport, continues to deliver increasing quantities of its award-winning system based on Transense’s patented IP.

A potential new application for Transense’s Temperature & Pressure sensors in aircraft tyres is under discussion with a major aircraft manufacturer.

After working closely with Sengenuity, the sensor trading division of Vectron, as a licensee for Transense’s temperature and pressure sensor technology since 2008, this relationship was developed further with the formation of a JV company, Bulldog Innovations Limited, in September 2010. The JV provides for even closer cooperation between the two companies and was established to accelerate the development of new applications for Transense’s existing sensor and sensor reader technologies both for specific applications and the markets in which they operate. As anticipated, royalty revenues from these agreements have started to grow and this growth is expected to continue in the coming years.

While having to cope with some slower than expected developments in terms of new product releases and product trials, Translogik managed to compensate for last year’s loss of income from the KERS project.  The Board remain optimistic that Translogik can fulfil its key role in generating near-term revenues in support of the Group’s overall strategy.

iTrack

Targeted primarily at the mining industry, the iTrack OTR TPMS allows real-time remote tracking of key tyre performance parameters, allowing the mining truck operators to maximise tyre life and performance, and subsequently increase the productivity and load-carrying ability of their truck fleets. The trucks used in these mines can weigh up to 600-tonnes fully laden, and each tyre can cost a hundred thousand dollars or more. Given the enormous running costs, having accurate tyre data is absolutely vital. The Board believes that the business case for the iTrack system in terms of cost savings and ROI to mine operators is compelling, and that the Translogik system is currently the best available, and this belief has been borne out during discussions with various mine operators around the globe over the last year. Translogik has continued to develop and refine the system based on feedback from the various trials that have, and are continuing, to take place. However, the Company underestimated the barriers to entry for a new entrant to the marketplace and this has resulted in slower than anticipated adoption. Lessons learned have resulted in some minor changes to the sales strategy and focus for iTrack, and the Company has developed closer relationships with local mine service providers in many of the key global mining regions in order to gain important local expertise and on-the-ground support to resolve technical and installation issues. Additionally, the nature of these huge mines is such that they are owned and run by some of the world’s biggest multi-nationals, and consequently, the testing, trials and regulatory validation procedures for new products are both stringent and lengthy.

It is anticipated that within a few months iTrack pilots will be running in six mines, on three different continents, so while sales have been slower than anticipated to date, the Company remains hopeful that one of more of these will result in a successful conclusion and that Translogik will become a major profit centre in its own right.

iProbe

Translogik recently launched the new ‘iProbe’ all-in-one tyre inspection tool. This new probe is a development of the existing Truck Tyre Inspection Probe, adding a UHF Radio Frequency Identification (RFID) reader and an optional Tyre Pressure Monitoring System (TPMS) reader, plus various other design improvements, providing a single, lightweight, hand-held device to the tyre inspection market. By adding RFID and TPMS reader capabilities to the existing tread depth and direct pressure reading functionality, the iProbe brings the functionality previously only available by using multiple devices into a single convergent product. Developed in close cooperation with existing customers of the previous probe, this new version has been eagerly anticipated and the first batch has been sold to the world’s three largest tyre manufacturers plus several fleet management companies. The iProbe is designed to integrate with vendor’s own software and to sit at the very hub of their tyre inspection and maintenance systems. The iProbe was originally intended for launch in Q4 of 2010, but slipped to Q2 of 2011 due to technical issues in achieving sufficient RFID tag read-range from such a small antenna. This delay has impacted sales but the Company believe the new iProbe is now the best tyre inspection device available and that sales will increase during the remainder of 2011.

 Operations

During the year Translogik has gained several new distribution partners in Europe, Africa, Asia, North America, Central America and Australia. Sales of the existing Truck and OTR Probe are continuing, as not all customers require the advanced features of the iProbe, and Translogik continues to work with various fleet service providers to integrate these existing products into their tyre management systems.

The road to full commercialisation of the Transense SAW IP patent portfolio continues. A growing pipeline of active new projects and encouraging acceleration of progress in drive-line torque provides grounds for optimism. Overall progress in 2010 has been somewhat below the Board’s expectations due to delays from Translogik, but the causes for these have now been remedied and a successful conclusion to any of a number of on-going commercial negotiations would have a material impact on revenues. However, it remains difficult to predict the timing of agreements and subsequent revenue recognition with any certainty.

Senior members of the management team recently returned from a seven week trip encompassing visits to many of the Company’s key partners around the globe, in an effort to cement existing relationships and drive new commercial activity. The Company remains confident in the quality of its technology, the strength of these relationships and value of its products to its customers.

Graham Storey

CEO

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2010

There is no other recognised income or expenses in either year.

The activities are from continuing activities. Consolidated Balance Sheet at 31 December 2010

Consolidated Balance Sheet

Company Balance Sheet at 31 December 2010

Consolidated Cash Flow Statement for the year ended 31 December 2010

Notes to the results for the year 2010

1. The financial information set out above is an extract of the company’s statutory accounts for the financial year ending 31 December 2010, and were prepared in accordance with Adopted IFRS as adopted by the EU. The statutory accounts have been finalised by the directors and will be delivered to the Registrar of Companies in due course.

2. Basic  loss per share  is calculated by  dividing the loss  after taxation of£1,454,000  (2009: £1,472,000) by the weighted average number of ordinary shares in  issue  during  the  year  of  132,207,136 (2009: 75,408,000).  Options over4, 140,000ordinary shares (2009: 3,905,000) are not included in the calculation of diluted loss per share as their effect is anti-dilutive.

3. In July 2010 the Company raised net funds of £2.3million with 56,399,998 new share capital attached to each was a warrant for one ordinary share with a subscription period of up to 30 June 2014 was attached at no further cost to the subscriber issue. 

4. The financial statements have been prepared on a going concern basis, which The Directors believe to be appropriate for the following reasons. The Group meets its day to day working capital requirements through existing Cash reserves and does not have any overdraft facility. The Directors have prepared base case and sensitised cash flow forecasts for the Period to 31 December 2012. These forecasts make a number of operational Assumptions. The Directors do not have any plans to arrange bank facilities. The base and sensitised forecast indicate that, assuming the current cost base The Group will continue to have positive cash reserves to at least 31 December 2012.

5. The Annual Report and Accounts will be posted to shareholders on the 6th June and the Annual General Meeting will be held on 29 June 2011. A copy of the Company’s results is available on the Company website www.transense.co.uk

For more information, please contact: 

 

Transense Technologies PLC                    Tel: +44 (0) 1869 238 380 

 

Graham Storey, Chief Executive 

 

 

 

Brewin Dolphin - Nomad 

 

Neil Baldwin                                  Tel: +44 (0) 845 213 4726 

 

 

 

Hybridan LLP - Broker 

 

Claire Noyce                                  Tel: +44 (0) 207 947 4350 

 

 

Notes to Editors

About Transense

Transense Technologies is a technology transfer company based in Upper Heyford, Oxfordshire,  UK. 

Transense  develops  Surface  Acoustic  Wave (SAW), wireless, battery-less,  sensor  systems  in  partnership  with its licensees and partners, Honeywell,  Melexis,  Michelin,  SenGenuity,  Stack, Tai-Saw, Texas Instruments, SCHOTT, McLaren Electronic Systems and Carbon Motors.

Current applications include Tyre Pressure Monitoring Systems (TPMS) and torque systems for Electrical Power Assisted Steering (EPAS) and driveline management.

Transense is listed on the Alternative Investment Market of the London Stock Exchange (TRT)

For more information visit www.transense.co.uk

About Translogik

Translogik  provides  a  range  of  hardware  and  software  solutions for asset management  and tracking,  data collection  and fleet  management focused on the tyre industry.

The  product portfolio includes  wireless tread depth  data collection tools for truck  and off-the-road (OTR ) vehicle  tyre inspections,  RFID (Radio Frequency Identification)  tags and  patches for  tyres and  general asset tracking, and a range of temperature and pressure monitoring systems (TPMS) for bus, truck & OTR applications in mining, earth-moving and construction.

Translogik Limited is a wholly owned subsidiary of Transense Technologies plc.

www.trans-logik.com