Interim Results & Management Statement - For the half year ended 30 June 2011
Highlights
- Increased activity with GM
- Joint Development Agreement ("JDA") with McLaren
- Establishment of new trading division, IntelliSAW
Chairman's Statement
Sales in the 6 months to 30 June 2011 amounted to GBP249,000 [2010:- GBP243,000] resulting in a pre-tax loss for the period of GBP793,000 [2010:- GBP825,000].
During the first 6 months of the year Transense made significant progress in transforming itself from a company dependent for its revenues upon royalties from licensees to a company having five revenue generating channels; Licensee royalty income, engineering consultancy, McLaren JDA, Translogik and IntelliSAW.
We continue to make progress in the automotive industry. In this context, we have varied our agreement with Honeywell, which has ceded its exclusivity for torque applications. This, in turn, enabled us to open a dialogue with a Tier 1 supplier who will manufacturer the flexplate sensor on behalf of the end-user; these Tier 1 discussions are at a relatively early stage, and no decision has yet been taken by GM as to whether the torque technology will be incorporated in future vehicles. Nevertheless, the re-negotiation of the Honeywell licence has undoubtedly opened up opportunities for us.
After lengthy negotiations, we have recently entered into a joint development agreement with McLaren Electronic Systems Limited ('McLaren Electronics') for the development of a product for specific motorsport applications, and it is anticipated that further use of Transense's Surface Acoustic Wave ("SAW") Sensor technology will follow.
Translogik has extended the marketing of its tyre testing systems and probes. Orders have been received from major tyre manufacturers. Testing continues with our iTrack system for monitoring tyre pressure, tread and temperatures, and which is of direct benefit to major mine operators worldwide, having regard to the extensive delays they experience in securing replacement tyres for their equipment.
Finally, we have re-negotiated our licensing arrangement with Vectron, which has enabled us to open a new trading division, IntelliSAW. IntelliSAW has received conditional orders and sales should shortly commence within the electrical distribution market.
Much remains to be done to secure the orders needed to achieve the breakthrough we envisage, but we are making important progress.
David Kleeman
Non-Exec Chairman
30(th) September 2011
CEO's Report
Transense
GM has been identified as the end-customer for the torque drive-line 'flexplate' sensor, using the Company's patented SAW technology. The Flexplate project for evaluation of Transense's SAW torque sensor technology began in 2004. Originally developed for use in eight-cylinder engines, GM has expanded the project to also include its four and six-cylinder family of engines. As part of this process Transense has successfully negotiated a variation of the otherwise exclusive licence to Honeywell, permitting Transense to deal directly with various named companies including GM preferred Tier 1 suppliers.
The flexplate is an integral part of the vehicle powertrain control system and has the potential to improve vehicle driveability, reduce fuel consumption and improve transmission shift quality. This will be the first time a propulsion system has been able to measure engine torque 'live', enabling optimal control to be maintained throughout a vehicle's life. Current torque management systems rely on simulated models derived from production engine testing which can differ from the actual engine torque output over time. The new flexplate technology provides continuous real-time torque measurement allowing actual torque measurement on a per-vehicle basis for maximisation of engine efficiency.
GM is currently evaluating further applications of the technology for real-time vehicle control.
McLaren
The recent signing of the new Joint Development Agreement ("JDA") with McLaren Electronics provides a new route to market for the Company's range of SAW sensing IP. It is also a resounding endorsement of the sensing technology. The initial project is for use in a major US motorsport series and the Board are hopeful that the JDA will provide a series of joint projects over the coming years.
Wind Turbine Project
In a further new application of Transense's torque sensing solutions, the Company is now part of a consortium of nine companies ("IntelWind") that has begun development on a major EU funded project to improve the efficiency of wind turbines. Transense will receive a grant to develop SAW torque sensors for the large diameter shafts required for this project and the work required to integrate these sensors into the newly developed wind turbine designs. Involvement in this project came about as a result of work already underway with a major wind turbine gearbox design house. There is an increasing demand for wind turbine monitoring systems and Transense is positioning itself to exploit this emerging high value market as it develops. Additionally, the expertise gained during the technical development work on these much larger shafts has applications in many other markets, such as marine and power generation. The IntelWind consortium projects turnover accruing to Transense of GBP700k for the year commencing Q4 2013 rising to GBP2.1m in 2017.
IntelliSAW
Transense has established a new trading division, IntelliSAW. The new business has been established to develop and market SAW based wireless sensor systems for Smart-Grid applications.
Smart-Grid is the broad term used to describe technologies that provide intelligent control and monitoring of the electrical power grid. IntelliSAW leverages existing Transense IP and R&D investment and uses the Company's patented SAW interrogation electronics to provide a state-of-the art wireless temperature monitoring system, initially targeted at the Electrical Switchgear market. Having accurate, continuous, real-time temperature data instantaneously available at key points in the power transmission network provides power companies with early warning of potential problems. Failures within the network can have catastrophic consequences, causing significant damage, power outages and potentially fatal accidents.
Currently available switchgear monitoring solutions, whether wired, infrared or RF based, all have inherent drawbacks such as the potential for arcing or flashover, lack of continuous monitoring or the requirement for batteries or other direct power sources in an inherently unsuitable environment. The IntelliSAW system addresses all these drawbacks and offers a uniquely versatile, scalable and low maintenance solution that is easier to install and commission. The currently estimated annual global spend on power transmission and distribution projects is $20 billion, and anticipated to rise to $30 billion by 2015.*
The Board believes that the market opportunity for IntelliSAW is significant, and in line with the Company's revised strategy of seeking out new routes to market for its wireless & battery-less sensing technology to generate additional near-term income, IntelliSAW will provide another complementary revenue stream. In order for Transense to sell IntelliSAW products directly and increase its potential revenues significantly over and above those available as royalties, Transense has varied its licensing arrangements with Vectron.
As a key aspect of the IntelliSAW business the Company has been able to engage several experts in the SAW sensing field who were previously employed by Vectron, as members of the IntelliSAW team. These individuals bring strong application expertise specific to industrial markets such as Smart-Grid which will greatly assist the scalability of this business.
Translogik
iTrack
Field trials of the iTrack tyre temperature and pressure monitoring system for OTR vehicles, targeted at the mining and earthmover markets are continuing. Feedback from these trials proves the value of the system to operators, and several new uses of the system for managing vehicles have been identified. We have continued to customise and improve the system at the request of our trial partners and look forward to updating shareholders on progress in due course.
Further development has also been undertaken on the iTrack tyre sensors. The new sensor is an in-house design and offers an improved level of environmental resilience by being fully vapour proof.
Tyre Inspection tools
Sales of the Translogik range of tyre inspection tools have continued to grow, with several repeat orders from major customers such as Goodyear Dunlop, Bridgestone Europe and Pirelli.
A new version of the iProbe, the iProbe+ is now available, including a TPMS sensor reader as standard. The iProbe+ has the ability to "wake" third party TPMS sensors, greatly expanding its potential market.
As well as broadening the product range, Translogik has been developing its partner network, and in conjunction with Budini Incorporated, a South American tyre management software developer, has developed an Apple approved application for iOS devices that integrates with all versions of the tyre inspection probe. This development work was undertaken at the request of a major tyre manufacturer, and required Translogik to attain Apple approved hardware developer status. Budini supplies its tyre management systems to all the major tyre manufacturers in South America and provides Translogik with a major new distribution partner in the region.
Outlook
By broadening the range of markets and applications for our technology and establishing our own trading companies, the Transense Group has transformed itself from being a company reliant solely upon licensee royalty revenue with little control over the timing of commercial adoption and limited earnings visibility, into a company with much greater control over its own future and selling products utilising the Company's technology and IP directly into the market. We believe this more diversified base puts the Company on a much sounder commercial footing and allows considerably more scope for future growth.
...
Graham Storey
CEO
30 September 2011
* According to market research conducted by Morgan Stanley
Transense Technologies plc
Condensed Consolidated Statement of Comprehensive Income
Half year Half year
to to Year to
30 Jun 11 30 Jun 10 31 Dec10
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ----------
Continuing operations
Revenue 249 243 656
Cost of sales (108) (135) (301)
------------ ------------ ----------
Gross profit 141 108 355
Administrative expenses (957) (936) (1,878)
Operating loss (816) (828) (1,523)
Financial income 23 3 14
------------ ------------ ----------
Loss before taxation (793) (825) (1,509)
Taxation 28 25 55
Total comprehensive income for
the period (765) (800) (1,454)
------------ ------------ ----------
Basic loss per share (1.1p) (1.1p) (1.4p)
Fully diluted loss per share (1.1p) (1.1p) (1.1p)
Transense Technologies plc
Condensed Consolidated Statement of Financial Position
30 Jun 30 Jun 31 Dec
11 10 10
(Unaudited) (Unaudited) (Audited)
-------------------------------- ------------ ------------ ----------
GBP'000 GBP'000 GBP'000
Non current assets
Property, plant and equipment 147 131 114
Intangible assets 1,323 1,471 1,420
Available for sale investments 0 90 58
1,470 1,692 1,592
------------ ------------ ----------
Current assets
Inventory 116 37 41
Corporation tax receivable 31 92 55
Trade and other receivables 419 405 400
Cash and cash equivalents 1,355 437 2,066
1,921 971 2,562
------------ ------------ ----------
Total assets 3,391 2,663 4,154
------------ ------------ ----------
Current liabilities
Trade and other payables (367) (582) (367)
Current tax liabilities (25) (23) (23)
Total liabilities (392) (605) (390)
------------ ------------ ----------
Net assets 2,999 2,058 3,764
------------ ------------ ----------
Capital and reserves
Share capital 8,145 7,580 8,145
Share premium 9,666 7,856 9,666
Accumulated deficit (14,812) (13,378) (14,047)
Shareholders' funds 2,999 2,058 3,764
------------ ------------ ----------
Transense
Technologies
plc
Condensed Consolidated Statement of Changes in
Equity (Unaudited)
Issued Share
share premium Warrant Accumulated
Total
capital account Reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2010 7,580 7,856 - (12,608) 2,828
Loss for the
year - - - (1,454) (1,454)
Shares issued
and share
premium 565 1,100 710 - 2,375
Share based
transactions - - - 15 15
As at 31
December
2010 8,145 8,956 710 (14,047) 3,764
Loss for the
period - - - (765) (765)
Balance at 30
June 2011 8,145 8,956 710 (14,812) 2,999
------------ ----------- -------- ------------ --------
Transense Technologies plc
Condensed Consolidated Statement
of Cash Flows
Half year Half year Year
to to to
30 Jun 30 Jun 31 Dec
11 10 10
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Loss for the period (793) (800) (1,509)
Adjustments for
Financial income (23) (3) (14)
Depreciation of property, plant and
equipment 23 20 42
Amortisation and impairment of
intangible assets 113 150 262
Equity settled share based payment 8 30 15
------------ ------------ ----------
Operating cash flows before
movements in working capital (672) (603) (1,204)
Change in receivables (19) (293) (263)
Change in payables 0 82 (101)
Change in Inventories (75) (4) (8)
------------ ------------ ----------
Cash used in operations (766) (818) (1,576)
Taxation recovered 45 102 169
------------ ------------ ----------
Net cash used in operations (721) (716) (1,407)
------------ ------------ ----------
Cash flows from investing
activities
Interest received 23 3 14
Acquisition of property, plant &
equipment (41) 0 (5)
Acquisition of intangible assets (31) (127) (188)
Proceeds from sale of investments 59 0 0
Net cash used in investing
activities 10 (124) (179)
------------ ------------ ----------
Cash flows from financing
activities
Proceeds from issue of equity share
capital 0 0 565
Share premium refund of issuance
fees 0 0 1,810
Net cash used for financing
activities 0 0 2,375
------------ ------------ ----------
Net (decrease)/increase in cash and
cash equivalents (711) (840) 789
Cash and cash equivalents at
beginning of period 2,066 1,277 1,277
Cash and cash equivalents at end
of period 1,355 437 2,066
------------ ------------ ----------
Notes to the Interim results for the six months to 30 June 2011
1 Accounting Policies
The accounting policies and presentation applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2010, except as noted below.
2 Reporting Entity
Transense Technologies plc ("the Company") is a company incorporated in the United Kingdom under the Companies Act 2006. These condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2011 comprise the Company and its subsidiary (together referred to as "the Group" and individually as "Group entities"). These condensed consolidated interim financial statements are presented in pounds sterling, rounded to the nearest thousand.
The consolidated financial statements of the Group as at and for the year ended 31 December 2010 are available upon request from the Company's registered office or at www.transense.co.uk.
These condensed consolidated interim financial statements are unaudited and also available on the Company's website.
3 Going Concern
The interim financial information has been prepared on a going concern basis, which assumes that the Company will have adequate resources to continue in operational existence for the foreseeable future.
4 Corporation tax and Deferred tax
The Company is entitled to a Corporation Tax credit in respect of expenditure on Research and Development. No deferred tax asset is recognised in these financial statements in respect of trading losses to date.
5 Consolidated Accounts
These accounts reflect the trading of Translogik for the six months to 30 June 2011
For more information, please contact:
Transense Technologies plc Tel: +44 (0) 1869 238 380
Graham Storey, Chief Executive
Brewin Dolphin - Nomad
Neil Baldwin Tel: 0845 213 4726
Hybridan LLP - Broker
Claire Noyce Tel: +44 (0) 207 947 4350 |
