Transense Technologies plc
Annual report and financial
statements
Registered number 01885075
For the year ended 30 June 2017
1
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Contents
Directors and advisers
Highlights
Chairman’s statement
Chief Executive’s report
Strategic Report
Statement of corporate governance
Remuneration report
Directors’ report
Statement of directors’ responsibilities in respect of the Strategic Report, Directors’ Report and the
Financial Statements
Independent Auditor’s report to the members of Transense Technologies plc
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Company Balance Sheet
Statement of Changes in Equity
Consolidated and Company Cash Flow Statement
Notes to the Financial Statements
3
4
5
8
10
15
17
20
23
24
30
31
32
33
34
35
2
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) (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 Advisers & Joint Brokers
FinnCap
60 New Broad Street
London
EC2M 1JJ
Joint Brokers
Beaufort Securities Ltd
63 St Mary Axe
London
EC3A 8AA
Registrars
Neville Registrars
Neville House
Laurel Lane
Halesowen
B63 3DA
Registration Number 01885075
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
3
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Highlights
• Revenues steady at £2.00m (2016 : £2.08m*)
•
• Pre tax loss from continuing operations for the year of £2.16m (2016: Pre tax profit of £1.59m,
Increased opex investment in product support and commercialisation
adjusted pre tax loss of £1.17m**)
• Net cash used in operations of £0.88m (2016: net cash generated £0.84m)
• Net cash at end of period of £2.52m (2016: £3.65m)
• Signed significant, non-exclusive, license with General Electric ("GE") for single specialist
application using SAW technology
• Market launch of iTrack II system for mining productivity with system now demonstrating
commercial successes following the adoption by major global mining companies
• Probe sales gaining traction and first significant PCAS order in July 2017
* the comparative revenue of £2.08m is calculated after deducting the gross license fee of
£3.04m which arose from the disposal of the IntelliSAW division in October 2015
** the net adjusted pre tax loss of £1.17m is calculated by reference to the pre tax profit of £1.59m
less the license fee (net of costs) of £2.76m
4
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Chairman’s statement
The Group has made further significant progress over the last year in positioning each of the two core
businesses for future success. Revenue from continuing operations was steady compared with the prior
year, and the net loss for the year came in line with the Board’s expectations.
Financial results and condition
Revenues for the current year amounted to £2.00m, compared with £2.08m in the prior year (stated before
the IntelliSAW related license fee of £3.04m). Administrative expenses increased to £3.32m from £2.54m
in the prior year. This increase in expenditure reflects new product support and the commercial and
marketing activity within Translogik to launch iTrack II and deliver effective pre-contract engagement with
a number of key customers for this system.
The pre tax loss from continuing operations for the year was £2.16m compared with a profit of £1.59m
and loss in the prior year adjusted for the effects of the net IntelliSAW licence fee of £1.17m. The total
loss attributable to shareholders was £2.17m (2016: profit of £1.15m) resulting in a net loss per ordinary
share of 22.84 pence (2016: earnings of 12.90 pence). The Board do not recommend payment of a
dividend (2016: Nil).
Net cash balances at 30 June 2017 were £2.52m (2016: £3.65m).
Strategy
The Group provides innovative sensor systems for various complex applications and operates two
principal businesses, SAWSense and Translogik.
The Group 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.
Translogik designs and markets a range of Tyre Pressure Monitoring Systems (“TPMS”), products and
services for heavy duty off road vehicles (particularly mine-haul trucks), commercial truck and bus as well
as passenger cars. 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 successful launch
of the iTrack II system in September 2016.
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 and 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 environments 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.
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Chairman’s statement (continued)
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.
This work culminated in the September 2016 launch of the iTrack II system. iTrack II collects live tyre
performance data from sensors, and transmits this instantly to an optional in-cab display, and to web
based applications readable in real time by the Translogik Global Control Centre, and by individual mine
operators in their own operational control rooms. This valuable data can be utilised to minimise truck
down time, extend tyre life, and improve safety. Crucially, it can also be used to increase mine productivity
by identifying opportunities to optimise routings, loadings, and even road architecture.
During earlier stages of commercialisation, we were met with resistance to financing the outright purchase
of equipment by mine operators under severely constrained capital budgets during what has been a
cyclically challenging few years for the industry. Accordingly, we are now offering implementation of iTrack
II on an operating lease financing model, which enables users to generate additional revenues and save
costs, against which they are able to meet the ongoing operating costs associated with using the system
at a net gain.
During the launch and market engagement phase, we have focused most of our attention on our more
developed markets in Chile, Australia and Southern Africa, in which we have highly effective teams and
channel partners. We have also begun to increase resources in additional territories such as the US,
Canada and other countries in the Latin America region during the year. Results have been very
encouraging, with several mine operators running successful trials and choosing to adopt iTrack II toward
the end of the financial year. The gestation period for widespread adoption, and the lead time to translate
positive trial outcomes and orders into revenue, have been slower than we originally may have hoped,
however we are confident that there are encouraging signs of commercial traction with a number of major
global mining companies.
Tyre pressure probes
Our tyre tread depth probes offer a fast and reliable way for mining and on the road truck service providers
as well as passenger car tyre fitters to record and automatically transmit tread depth data by bluetooth.
The tool has been manufactured for over 15 years during which time it has earned a reputation in the
market place as a rugged and reliable tool. Coupled with software developed in-house we also offer a
Passenger Car Audit System (“PCAS”), which has recently received its first significant order.
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Chairman’s statement (continued)
New Joint Brokers
The Company announced the appointment of Beaufort Securities Limited ("Beaufort") as joint broker to
the Company to improve the service available to the large group of private investors interested in
Transense. Beaufort have a large network of UK retail and High Net Worth investors and will provide retail
tailored research on Transense as part of its ongoing services to the Company.
Capital structure
During the year, the Company undertook a reduction in share capital by the cancellation of the deferred
shares and the share premium account. This action should provide a better base to facilitate the Company
having distributable reserves and in turn enabling the payment of dividends from income or return of capital
to shareholders from major licensing transactions or partial disposals from profits arising in future.
Additionally, the ordinary share capital was 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 Board believes that the technology and products developed by the Group are now well positioned in
their marketplaces. It anticipates that the market traction demonstrated to date will continue to build and
is accordingly cautiously optimistic of future prospects.
David M Ford
Group Chairman
25 September 2017
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Chief Executive’s report
Towards the latter part of this breakthrough year, the Group has commenced generating commercial
revenues from products and services that are well placed to offer unique solutions over a sustained period
of competitive advantage in the future.
SAWSense
SAWSense is a leader in the development of Surface Acoustic Wave ("SAW") wireless, battery-less,
sensor systems that offer significant advantages over legacy systems in common use. The business
continues to be involved in several live projects in conjunction with major global industrial companies. In
the short to medium term, the primary source of ongoing revenue is dependent upon the level of customer
chargeable engineering activity and royalties, which was £0.29m in 2017 (2016: £0.42m).
In the prior year, pilot production had commenced of sensor kits to measure temperature, vibration and
torque on a new range of industrial equipment recently launched by a large European OEM. Whilst the
technology continues to be under commercial evaluation, the customer has yet to determine how the
benefits it offers are to be monetised. Accordingly, there can be no certainty of future income from this
source.
We continue to develop potential applications in other sectors, most notably automotive, although
commercialisation in these areas is not considered to be imminent.
In July 2016, SAWSense entered into a significant licensing agreement with GE for the use of our
patented, wireless, passive SAW technology in a certain specific torque application. The Group received
a non-refundable license fee of $0.50m on completion in July 2016, with a further $0.25m received in
March 2017 following successful technical validation. In addition to the fee, GE will pay to Transense a
perpetual sales royalty in respect of unit sales upon commercialisation, although this is not likely to arise
for several years. More recently the Group has been involved in discussions with a number of other
divisions within GE regarding further projects and the relationship between the Group and GE continues
to progress well.
Translogik
iTrack
Our iTrack products provide a range of features that allow mine operators to track their vehicles’ tyre
temperature, pressure, speed, braking and location in real-time and receive early warning of potential
problems, hazards or opportunities.
In September 2016, we successfully launched the new iTrack II system, a combination of sensor and
transmission technology which we believe offers unparalleled features and benefits to mine operators
across the world. We set out to maximise functionality and connectivity in a single comprehensive system,
comprising rugged and reliable hardware, 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 provides the equipment on finance or operating lease
although our preference will be towards operating leases with additional charges for data provision and
monitoring.
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Chief Executive’s report (continued)
The market response to launch has been very encouraging and we have subsequently generated live
trials on 14 sites covering 3 continents/territories. Trials have generally been successful, and whilst the
rate of adoption meets our high expectations, the trial duration and lead times to roll out and revenue
generation are often extended by understandable bureaucratic and operational delays.
Probe
During the year, several multinational tyre manufacturers have commenced the implementation of new
software platforms that have been integrated with the probe and it has become clear that our product is
the tread depth tool of choice for Bridgestone, Goodyear and Continental, amongst others and as a result
our probe revenue in the final quarter of the year experienced a marked upturn.
In addition to this we have, since the year end, received our first significant order for our PCAS, from Tiger
Wheel in South Africa. PCAS is a software system coupled with our tread depth probe which enables a
tyre fitter to complete a fast, accurate tread depth audit of a passenger car and produce a customer friendly
report which acts as a visual aid for the garage to sell tyres and additional services such as alignments.
We are hopeful this initial order will lead to further sales in South Africa and elsewhere.
Current trading and outlook
Since the beginning of the new financial year on 1 July 2017, revenues have shown a significant increase
on the run rate of the prior year. iTrack II was adopted by two Glencore mines in Australia during June
2017, and in early August 2017, a further Australian mine operated by BHP. These systems are now in
implementation, and revenues have commenced. Several other opportunities are at a reasonably
advanced stage, and we expect further order activity in Australia, Latin America and Southern Africa in
coming weeks.
Furthermore, as indicated above, order intake for probes has started to build momentum, and has already
reached a level comparable with nearly 60% of the aggregate order intake for last year.
We continue to engage with GE and others on commercialisation of SAW projects in a variety of
applications, although we do not anticipate strong growth in revenues in this area in the short term.
Accordingly, we consider that the outlook for the next financial year is satisfactory.
Graham Storey
Chief Executive
25 September 2017
9
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Strategic Report
Financial Review
Results for the year
Revenues from continuing activities totaled £2.00m (2016: £5.12m and after excluding the IntelliSAW
license fee resulting in revenue of £2.08m). The pre-tax loss (before discontinued operations) totalled
£2.16m (2016: profit £1.60m which included the license fee of £3.04m before costs and £2.76m after costs
and an adjusted loss of £1.16m before the net license fee).
Translogik revenues fell by 27% to £1.19m, and SAWSense generated £0.81m of revenues, including the
GE license fees of £0.58m, from the design, development and low volume production activities (2016:
£0.45m excluding the IntelliSAW license fee of £3.04m). Gross margins were 57% (2016: 64% excluding
the IntelliSAW license fee) reflecting the change in the mix between business activities.
Administrative overheads for the year amounted to £3.32m compared with £2.54m in the prior year.
The fall in Translogik revenues reflected the slow down in sales during the period of upgrading iTrack from
the original version to iTrack II (IT2). IT2 was launched in September 2016 and the additional support
costs (including staffing overseas offices in South America, Australia and Africa) and marketing
represented over £0.40m of the increased administrative costs. The other principal costs contributing to
the increase were the provision for a potential bad debt of £0.09m, one off professional costs £0.09m and
a reduction in the forex gain of £0.08m.
The Earnings per share (EPS) are set out below (in Pence):
EPS (including discounted operations)
EPS (excluding discounted operations)
2017*
2016*
(22.84)
(22.78)
18.05
12.90
The EPS numbers are calculated after rebasing the old 1p shares reflecting the 50:1 share reduction
carried out in November 2016.
Taxation
The Company has UK tax losses available to carry forward at 30 June 2017 of approximately £18.7m,
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.
Cash flow and financial position
There was a net cash outflow of £1.13m (2016: inflow of £3.18m) during the year, arising from trading and
£0.06m of proceeds arising from the exercise of warrants in January 2017.
Net cash used in operations amounted to £0.88m (2016: inflow of £0.84m).
At 30 June 2017 the group had net cash balances of £2.52m (2016: £3.65m).
The forward looking cash flow forecasts based on the anticipated level of activity indicates that the Group
should have sufficient funds available for the short to medium term. The Board are however aware that
the affect of increased demand for iTrack rentals will put pressure on working capital due to the timeline
between investment and recoupment.
10
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Strategic Report (continued)
Going Concern
The financial statements have been prepared on the going concern basis. The Group has made a loss
for the year of £2.17m (2016: profit of £1.15m). The Group has Accumulated Losses of £0.01m (2016:
Accumulated Losses of £21.84m before the Share Capital reorganisation). The balance of cash and
cash equivalents at 30 June 2017 is £2.52m (2016: Cash and cash equivalents £3.65m).
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 2018. These forecasts indicate that the Group will continue to be able to operate within
its current cash resources for the foreseeable future.
Capital Structure
The Company Share Capital reduction and reorganisation were completed during the year.
A more detailed review of the financial year is provided in the Chairman’s statement and the Chief
Executives report.
11
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Strategic Report (continued)
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)
Turnover
EBITDA
EBT
FY 17
£000's
FY 16
£000's
£2,003
£5,122
(£1,829)
£1,826
(£2,157)
£1,628
EPS (Including Discontinued Operations) - Pence
EPS (Ex Discontinued Operations) - Pence
(22.84)
(22.78)
12.90
18.05
Share Price - Pence **
77.50
55.00
Cash
£2,520
£3,654
Cash/Share - Pence **
26.44
38.68
Net Assets
£4,804
£6,923
Net Assets/Share - Pence **
50.40
73.29
Market Capitalisation
£7,388
£5,195
Shares in issue (adjusted for 50:1 reduction)
9,532,435 9,446,289
* FY 16 numbers reflect the licence fee following the sale of IntelliSAW of £3.04m gross and
£2.76m net of costs.
** All these calculations reflect the rebase shares in issue shown above
12
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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.
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Intellectual Property
Product Development
People
Economic
Debtor Recoverability
and manufacture
The Group is focussed on the
design
of
technologically advanced products
and applications. Major investment
is made in Development and we
have 35 granted patents and
significant in house know how. The
intellectual
that our
risk exists
property may be infringed by third
parties or that we may inadvertently
rights. The
infringe
of
loss
impact
profitability and cash flow and loss
of market share.
third party
resulting
in
Developing new product and
improving
products
existing
requires constant assessment of
investments and potential returns
which can be uncertain. Changing
customer
and
technological innovation will always
present a challenge to developing
market leading product.
requirements
An experienced and knowledgeable
team is essential to continually
for
develop complex products
customers to be used in demanding
environments. The market
for
skilled staff is extremely competitive
and a failure to recruit and retain
suitably qualified staff could impact
the Groups ability to develop and
deliver services and product.
Procedures are in place to ensure
we monitor
third-party
adequate
applications,
protection for our key intellectual
property including registration and
avoid infringing third party rights.
new
ensure
Development spend
is regularly
planned and reviewed. The Groups
understanding of customer needs
and
greatly
enhanced by working closely with
customers on extensive product
trials.
expectations
is
Providing the existing team with
good training and incentives is a key
priority for the business and has
been instrumental in retaining key
staff.
and
development of new employees,
when required,
is done so by
experienced staff to ensure the
correct calibre of
is
identified.
recruitment
individual
The
The mining Industry experienced a
major contraction in activity and
expenditure following major falls in
commodity prices as part of a global
reduction in demand. Whilst the
recovery in commodity prices has
levels of
seen much
activity in the mining industry this
continued stability is important to
the success of
the Translogik
division.
improved
The development of iTrack has
been designed to achieve greater
efficiencies in mining and in turn
produce substantial cost savings for
mine owners/operators. The original
iTrack is now being replaced by
iTrack II which will build further on
the achievement of both meaningful
savings and crucial data which in
turn will drive demand
the
product.
for
The Group has £59k (2016: £383k)
of debtors that are payable greater
than 12 months. The risk of default,
whilst small, would still have an
impact on our future results.
The
long-term debt has been
diligently managed by the finance
department and as a result they
remain up to date.
13
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Strategic Report (continued)
Principal risks and uncertainties (continued)
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Transense is continually striving to
achieve
the point of consistent
profitability and cash generation
however until that point in time is
reached the Group will be exposed
to squeezes in liquidity. The new
iTrack 2 has required a great deal of
development costs and future new
business will require working capital
to fund the approximate 7 month
cash flow negativity resulting from
the rental model. The failure to raise
additional funds for working capital,
if required, would threaten the going
concern status of Transense.
Approximately 45% of purchases
and sales are transacted in foreign
currency, principally USD and to a
smaller extent Euro's and Chilean
Peso. Significant fluctuations could
have an impact on results.
Liquidity
Foreign currency fluctuation
By order of the board
Melvyn Segal
Finance Director
25 September 2017
During the course of FY 17 the cash
resources have decreased by
£1.13m. The cash resources do
however remain strong moving into
FY18 and the Board exert tight
controls on overheads and monitor
cash flow regularly and do not
presently foresee any immediate
requirement
further
funds.
raising
for
Transense's biggest exposure is
with regards the USD and during
the course of the last year the USD
has increased by 11% against GBP
producing foreign exchange gains.
Should the movement reverse the
forward
Group will
purchases as an effective hedge.
consider
14
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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 23.
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 independent and 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 17 to 19 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.
15
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Statement of corporate governance (continued)
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.
16
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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 2017 they did not choose to. The company did
match a one off contribution made into a personal pension scheme for Melvyn Segal during the year.
(2016: £nil)
17
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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:
12 months
Total emoluments
12 months
ended
30 June 2017
ended
30 June 2016
Benefits
Pension
£
£
£
£
Basic
salary
£
158,400
6,128
-
164,528
163,017
98,583
-
3,000
101,583
108,069
109,050
3,910
112,960
112,148
30,400
12,750
-
-
-
-
30,400
12,750
27,500
12,600
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Executive
directors
G Storey
M Segal
D Ford
Non-executive
directors
N Rogers
R Westhead
Total 2017
409,183
10,038
3,000
422,221
Total 2016
413,800
9,534
-
423,334
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
18
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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.
The previous year’s Options have been adjusted to reflect the 50:1 consolidation
Directors' interests in the UDSOS were:
At 1 July
2016
At 30 June
2017
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
G Storey
16,100
-
22/12/12
£2.00
£4.50
Directors' interests in the EMI were:
==============================================
==============================================
==============================================
============================================== ==============================================
G Storey
G Storey
G Storey
G Storey
D Ford
D Ford
D Ford
D Ford
M Segal
M Segal
M Segal
63,900
40,000
-
-
22/12/12
01/03/14
-
-
120,000
26/06/17
100,000
26/06/17
63,900
6,100
-
-
22/12/12
01/03/14
-
-
70,000
26/06/17
100,000
26/06/17
30,000
-
02/08/14
-
-
30,000
26/06/17
50,000
26/06/17
£2.00
£2.00
£0.75
£1.00
£2.00
£2.00
£0.75
£1.00
£5.13
£0.75
£1.00
£4.50
£4.50
£1.50
£2.00
£4.50
£4.50
£1.50
£2.00
£10.00
£1.50
£2.00
==============================================
==============================================
==============================================
==============================================
==============================================
Share price performance
The share price performance is disclosed in the Directors’ Report on page 21.
19
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Directors’ report
The directors present their annual report and audited financial statements for the year ended 30 June
2017.
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.
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 14.
Results and Dividends
The results for the year ended 30 June 2017 show a loss of £2.17m (30 June 2016: £1.15m profit). The
directors do not recommend the payment of a dividend (30 June 2016: £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 2017, the following substantial shareholdings of 3% or more of the Company’s share capital
have been notified to the Company:
John Peter Lobbenberg
CriSeren Investments
Ordinary
shares of
50p each
%
868,980
599,492
==============================================
9.1
6.3
==============================================
20
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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:
G Storey
R J Westhead
D Ford
M Segal
N Rogers
Share price
Ordinary
shares of
50p each
30 June
2017
Ordinary
shares of
50p each
1 July
2016
78,687
5,655
5,555
22,888
80,000
78,687
5,655
5,555
22,888
60,000
==============================================
==============================================
The mid-price of the shares in the Company at 30 June 2017 was 77.5p (30 June 2016: 55p) and the
range during the period was 50p to 118.75p (30 June 2016: 55p to 84p). The prior year share price has
been adjusted to reflect the 50:1 share consolidation referred to in note 23.
Share based payment option schemes
The Remuneration Committee is responsible for the operation and administration of the C om pa n y’ 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 19.
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 2016/17.
21
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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
25th September 2017
1 Landscape Close
Weston on the Green
Oxon
OX25 3SX
22
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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. Under that law the directors have to prepare the group financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The
directors 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 their profit or loss of the group and parent
company for that period. In preparing these 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 applicable IFRSs as adopted by the European Union have been followed, subject to
any material departures and explained in the Financial Statements;
• 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 the financial statements comply
with the Companies Act 2006. They have general responsibility for safeguarding the assets of the group
and parent company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
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.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
23
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Transense Technologies plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 30 June 2017 which comprise the consolidated statement of
comprehensive income, the consolidated and company balance sheets, the statement of changes in
equity, the consolidated and company cash flow statements and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been
applied in the preparation of the Group financial statements 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.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 30 June 2017 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Who we are reporting to
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.
24
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us
to report to you where:
•
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the Group’s or the parent Company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date when
the financial statements are authorised for issue.
Overview of our audit approach
• Overall Group materiality: £60,000, which represents 3% of the
Group’s revenue.
• Key audit matters were identified as revenue recognition for the
Group and parent.
• We performed full scope audit procedures on UK based operations
(Transense Technologies plc) and performed specified audit
procedures on its significant component Transense Technologies
Chile Spa which was a change from the previous year where we
undertook analytical audit procedures.
Key audit matters
The graph below depicts the audit risks identified and their relative significance based on the extent of the
financial statement impact and the extent of Directors’ judgement.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those that
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
25
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Key Audit Matter
How the matter was addressed in the
audit
Revenue recognition
Revenue is recognised to the extent that
economic benefits will flow to the Group
and the revenue can be reliably measured.
Our audit work included, but was not restricted
to:
• Evaluating the Group’s accounting policies
Revenue is a key driver of the business and
is also a significant amount in the financial
statements. We therefore identified revenue
recognition (focussing on occurrence) as
one of the most significant assessed risks of
material misstatement (whether or not due
to fraud).
for recognition of revenue for
appropriateness in accordance with the
requirements of International Accounting
Standard (IAS) 18 ‘Revenue’ and IAS 17
‘Leases’.
• Agreeing as to whether revenue has been
recognised in accordance with these policies.
• Agreeing, on a sample basis, amounts
recognised in revenue in the financial
statements for each revenue stream to source
and supporting documents including proof
of shipment documents to support the
sampled transaction.
• Agreeing, on a sample basis, amounts of
revenue recorded in the last quarter of the
financial year to test revenue has been
recorded in the correct period.
The Group's accounting policy on revenue is
shown in note 4 to the financial statements and
related disclosures are included in note 5.
Key Observations:
Based on our audit work, we found the Group’s
revenue recognition policy was consistently
applied. There are no findings in relation to
revenue recognition.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality in determining the nature, timing and extent of our audit work and in evaluating the results of
that work.
26
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Parent
£47,000 which is 3% of the
Company’s revenue. This benchmark
is considered the most appropriate
because the Company deems revenue
growth to be its key indicator when
assessing the performance of the
Company.
Materiality for the current year is lower than
the level that we determined for the year
ended 30 June 2016 to reflect lower
revenues in the year.
75% of financial statement materiality
Materiality was determined as follows:
Materiality Measure Group
Financial statements
as a whole
£60,000 which is 3% of the
Group’s revenue. This
benchmark is considered the
most appropriate because the
Group deems revenue growth
to be its key indicator when
assessing the performance of
the Group.
Materiality for the current year
is lower than the level that we
determined for the year ended
30 June 2016 to reflect lower
revenues in the year.
75% of financial statement
materiality
Performance
materiality used to
drive the extent of
our testing
Communication of
misstatements to the
audit committee
£3,000 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
£2,300 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the
tolerance for potential uncorrected misstatements.
Overall materiality - Group
Overall materiality - parent
25%
75%
Tolerance for
potential uncorrected
mistatements
Performance
materiality
25%
75%
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the Group's
business, its environment and risk profile. We performed full scope audit procedures on UK based
operations (Transense Technologies plc).
The Group has an operation in Chile, Transense Technologies Chile Spa, which makes up 22% of revenue,
4% of loss before tax and 2% of total assets and we determined this a significant component. We performed
specified audit procedures on the material balances of Transense Technologies Chile Spa. Our current year
audit approach on Transense Technologies Chile Spa represents a change from the prior year where an
analytical audit approach was taken. This is because materiality for the group has decreased in the current
year to reflect lower revenues during the year. As a result certain balances in Transense Technologies Chile
Spa are material to the group and specified audit procedures have been performed on these balances.
27
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the annual report set out on pages 3 to 23, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
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; and
the strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the Group and the parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the Directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which 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.
Responsibilities of Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement set out on page 23, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or
the parent Company or to cease operations, or have no realistic alternative but to do so.
28
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Rebecca Eagle
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountant
Birmingham
25 September 2017
29
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Financial income
Profit/(loss) before taxation
Taxation
Profit/(loss) from continuing operations
Discontinued operations
Loss from discontinued operation
(Loss)/profit for the year
Basic and fully diluted profit/(loss) per share (pence)
Continuing operations
Discontinued operations
Total operations
(Loss)/profit for the year
Other comprehensive income:
Exchange difference on translating foreign operations
Other comprehensive income for the year
Total comprehensive income for the year attributable to the
equity holders of the parent
Year ended
30 June
2017
Year ended
30 June
2016
Note
£'000
£'000
5
10
11
2,003
(865)
5,122
(1,036)
----------------------------------------------
----------------------------------------------
1,138
4,086
(3,318)
(2,541)
----------------------------------------------
----------------------------------------------
(2,180)
23
1,545
51
----------------------------------------------
----------------------------------------------
(2,157)
(4)
1,596
29
----------------------------------------------
----------------------------------------------
(2,161)
1,625
----------------------------------------------
----------------------------------------------
6
(5)
(472)
----------------------------------------------
----------------------------------------------
(2,166)
==============================================
1,153
==============================================
(22.78)
(0.06)
25
----------------------------------------------
(22.84)
18.05
(5.15)
----------------------------------------------
12.90
==============================================
==============================================
(2,166)
1,153
----------------------------------------------
----------------------------------------------
21
-
----------------------------------------------
----------------------------------------------
21
-
(2,145)
==============================================
1,153
==============================================
There are no other recognised income or expenses in either period.
Notes to the financial statements are from pages 35 to 60.
30
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Year ended 30 June
Year ended 30 June
Note
2017
£'000
2017
£'000
2016
£'000
2016
£'000
*restated
*restated
12
14
18
16
17
19
20
21
23
258
938
59
313
894
383
----------------------------------------------
----------------------------------------------
1,255
1,590
985
-
702
2,520
571
74
1,742
3,654
----------------------------------------------
----------------------------------------------
4,207
----------------------------------------------
5,462
6,041
----------------------------------------------
7,631
(511)
(47)
(100)
(614)
(41)
(53)
----------------------------------------------
----------------------------------------------
(658)
----------------------------------------------
4,804
==============================================
4,766
22
21
(5)
----------------------------------------------
4,804
==============================================
(708)
----------------------------------------------
6,923
==============================================
11,546
17,218
-
(21,841)
----------------------------------------------
6,923
==============================================
Consolidated Balance Sheet
at 30 June 2017
Non current assets
Property, plant and equipment
Intangible assets
Trade lease receivables
Current assets
Inventories
Corporation tax
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Total liabilities
Net assets
Equity
Issued share capital
Share premium
Translation reserve
Accumulated loss
*see note 21
These financial statements were approved by the board of directors and authorised for issue on 25th September 2017
and were signed on its behalf by:
D M Ford
Chairman
G Storey
Chief Executive
Company registered number: 01885075
Notes to the financial statements are from pages 35 to 60.
31
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Year ended 30 June
Year ended 30 June
Note
2017
£'000
2017
£'000
2016
£'000
2016
£'000
*restated
*restated
13
14
15
18
16
17
19
20
21
23
229
938
56
59
295
894
3
383
----------------------------------------------
----------------------------------------------
1,282
1,575
967
-
686
2,503
571
74
1,689
3,641
----------------------------------------------
----------------------------------------------
4,159
----------------------------------------------
5,438
5,975
----------------------------------------------
7,550
(481)
(41)
(100)
(749)
(46)
(53)
----------------------------------------------
----------------------------------------------
(622)
----------------------------------------------
4,816
==============================================
4,766
22
28
----------------------------------------------
4,816
==============================================
(848)
----------------------------------------------
6,702
==============================================
11,546
17,218
(22,062)
----------------------------------------------
6,702
==============================================
Company Balance Sheet
at 30 June 2017
Non current assets
Property, plant and equipment
Intangible assets
Investments
Trade lease receivables
Current assets
Inventories
Corporation tax
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Total liabilities
Net assets
Equity
Issued share capital
Share premium
Accumulated profit/(loss)
*See note 21
These financial statements were approved by the board of directors and authorised for issue on 25th
September 2017 and were signed on its behalf by:
D M Ford
Chairman
G Storey
Chief Executive
Company registered number: 01885075
Notes to the financial statements are from pages 35 to 60.
32
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Statement of Changes in Equity
Group
Share
capital
£'000
Share
premium
£'000
Translation
Reserve
£'000
Cumulative
losses
£'000
Balance at 1 July 2015
9,779
16,523
Profit for the year
Shares issued and share premium
-
1,767
-
695
-
-
-
(22,994)
1,153
-
Total
equity
£'000
3,308
1,153
2,462
Balance at 30 June 2016
11,546
17,218
-
(21,841)
6,923
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Loss for the year
Share reorganisation
Costs of share reorganisation
Shares issued and share premium
Currency movement on subsidiary
reserves
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
-
-
(6,823)
(17,218)
-
43
-
-
22
-
-
-
-
-
21
(2,166)
(2,166)
24,041
(39)
-
-
-
(39)
65
21
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Balance at 30 June 2017
4,766
22
21
(5)
4,804
==============================================
==============================================
==============================================
==============================================
==============================================
Company
Balance at 1 July 2015
Profit for the year
Shares issued and share premium
Share
capital
£'000
9,779
-
1,767
Share
premium
£'000
Translation
reserve
£'000
Cumulative
losses
£'000
16,523
-
695
-
-
-
(23,150)
1,088
-
Total
equity
£'000
3,152
1,088
2,462
Balance at 30 June 2016
11,546
17,218
-
(22,062)
6,702
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Loss for the year
Share reorganisation
Costs of share reorganisation
Shares issued and share premium
-
-
(6,823)
(17,218)
-
43
-
22
-
-
-
-
(1,912)
24,041
(39)
-
(1,911)
-
(39)
65
Balance at 30 June 2017
4,766
22
-
28
4,816
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
==============================================
==============================================
==============================================
==============================================
==============================================
Notes to the financial statements are from pages 35 to 60.
33
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2017
(Loss)/profit before taxation from
continuing operations
Adjustments for:
Financial income
Depreciation
Amortisation of intangible assets
Loss on discontinued operation
Profit on disposal of discontinued operation
Unrealised currency translation gain
Cost of capital restructure
Operating cash flows before movements in
working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
(Increase)/decrease in inventories
Decrease in trade lease receivables
Cash (used)/generated in operations
Taxation recovered/(paid)
Group
Company
Year ended
30 June
2017
Year ended
30 June
2016
Year ended
30 June
2017
Year ended
30 June
2016
Note
£'000
£'000
£'000
£'000
(2,157)
1,596
(1,907)
1,368
10
12,13
14
6
(23)
118
238
(5)
-
21
(39)
(51)
111
170
(472)
32
-
-
(24)
115
238
(5)
-
-
(39)
(51)
107
170
(309)
32
-
-
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,847)
1,386
(1,621)
1,317
17
20
16
18
1,040
(50)
(414)
324
(802)
249
13
1,003
(226)
(396)
324
(763)
407
13
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(947)
70
846
(7)
(917)
74
974
(7)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Net cash (used)/generated in operations
(877)
839
(843)
967
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Investing activities
Interest received
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Investments in associated companies
Assets/liabilities held for sale
10
12,13
14
Net cash used in investing activities
Financing activities
23
(63)
(282)
-
-
51
(130)
(258)
-
218
24
(49)
(282)
(53)
-
51
(111)
(258)
-
115
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(322)
(119)
(360)
(203)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Proceeds from issue of equity share capital
23
65
2,462
65
2,462
Net cash from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and equivalents at the beginning of
year
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
65
2,462
65
2,462
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,134)
3,182
(1,138)
3,226
3,654
472
3,641
415
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Cash and equivalents at the end of year
19
2,520
3,654
2,503
3,641
==============================================
==============================================
==============================================
==============================================
34
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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 2017 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 20.
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 2017 the group had net cash balances of £2.52m (2016: £3.65m). Whilst it is anticipated that the
Company will continue to consume cash to finance on-going activities in the short term, the directors have prepared
cash flow forecasts to December 2018 and consider that there are sufficient cash resources available to reach a
break-even level of revenues, and accordingly are satisfied that the Group 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.
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 1 January 2018
IFRS 14 Regulatory Deferral accounts
1 January 2016
Deferred until final standard
released
IFRS 15 Revenue from contracts with customers
1 January 2018
1 January 2018
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
Clarifications to IFRS 15 Revenue from Contracts with
Customers
1 January 2018
Not yet EU endorsed
35
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
4
Accounting policies (continued)
Other than in respect of IFRS 15 and 16, the Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the Financial Statements of the Group. With
regards to IFRS 15 and 16, the group has commenced an assessment of the impact likely from adopting the
standards, but it is not yet in a position to state whether the impact will be material to the Group’s reported results
or financial position. Certain other new standards and interpretations have been issued but are not expected to
have a material impact on the Group’s Financial Statements.
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
2017.
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.
36
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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 provided
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
The Group 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.
37
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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.
38
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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.
39
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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.
Warranty provisions are made for specific product issues based on an estimate of the likely cost arising. It has
been deemed prudent to provide for an amount based on historical information.
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.
40
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
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 in the prior year represents funds held in escrow in relation to
the disposal of IntelliSAW fee and the associated license fee income. These funds matured in October 2016 with
no impairment.
5
Revenue and segmental reporting
The tables below set out the Group’s revenue split and operating segments.
Revenue
North America
Chile
United Kingdom & Europe
Australia
Rest of the World
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
703
659
313
104
224
----------------------------------------------
2,003
=============================================
3,506
576
541
409
90
----------------------------------------------
5,122
=============================================
41
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
Segments
Year ended 30 June 2017
Sales
Gross profit
Allocated overheads
Contribution
Group overheads
Loss from discontinued operations
Loss before taxation
Taxation
Loss for the year
Year ended 30 June 2016
Sales
Gross profit
Allocated overheads
Contribution
Group overheads
Loss from discontinued operations
Profit before taxation
Taxation
Profit for the year
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Translogik
£'000
SAWsense
£'000
1,193
810
Total
£'000
2,003
=============================================
=============================================
=============================================
376
(1,304)
762
(482)
1,138
(1,786)
----------------------------------------------
----------------------------------------------
----------------------------------------------
(928)
280
(648)
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,509)
(5)
----------------------------------------------
(2,162)
(4)
----------------------------------------------
(2,166)
=============================================
Translogik
£'000
SAWsense
£'000
Total
£'000
1,633
=============================================
3,489
=============================================
5,122
=============================================
936
(955)
----------------------------------------------
3,150
(329)
----------------------------------------------
4,086
(1,284)
----------------------------------------------
(19)
----------------------------------------------
2,821
----------------------------------------------
2,802
----------------------------------------------
(1,206)
(472)
----------------------------------------------
1,124
60
----------------------------------------------
1,184
=============================================
42
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
During the year ended 30 June 2017 there were 3 (year ended 30 June 2016: 1) customers whose turnover
accounted for more than 10% of the Group’s total revenue as follows:
Year ended 30 June 2017
Customer A
Customer B
Customer C
Year ended 30 June 2016
Customer A
Revenue
£'000
Percentage
of total
624
380
221
31%
19%
11%
Revenue
£000
Percentage
of total
3,037
59%
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 2016: £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
Property plant and equipment
Inventories
Trade and other recoverable
Trade and other payables
Total net assets
Cash consideration received
Profit on disposal
£'000
22
152
45
(33)
----------------------------------------------
186
----------------------------------------------
218
----------------------------------------------
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:
Revenue
Expenses
Loss before tax
Tax expense
Loss for the year
Profit before tax on disposal as above
Related tax expense
Net loss on disposal
2017
£’000
2016
£'000
-
(5)
(5)
-
(5)
51
(555)
(504)
-
(504)
-
-
-
32
-
(472)
Loss for the year from discounted operations
(5)
(472)
43
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
6
Discontinued operation (continued)
Cash flows from (used in) discontinued operations
2017
£'000
(5)
-
-
----------------------------------------------
(5)
=============================================
Group
2016
£'000
(472)
218
-
----------------------------------------------
(254)
=============================================
2017
£'000
(5)
-
-
----------------------------------------------
(5)
=============================================
Company
2016
£'000
(309)
115
-
----------------------------------------------
(194)
=============================================
(Debt)/cash used in operating activities
(Debt)/cash used in investing activities
(Debt)/cash from financing activities
(Debt)/cash from discontinued operations
7
Expenses and auditor’s remuneration
Included in the loss are the following:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals payable – Land & Building
Gain on foreign exchange transactions
Auditors’ remuneration for the Group and Company:
Audit of these financial statements
Fees payable for tax compliance services
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
118
238
63
(66)
=============================================
111
170
82
(160)
=============================================
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
35
3
=============================================
35
-
=============================================
44
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
8
Staff numbers and costs
The average number of persons employed by the Group (including directors) during the year, analysed by
category, was as follows:
Management and technical
Administration
Non-executive directors
Number of employees
Year ended
30 June 2017
Year ended
30 June 2016
19
7
2
----------------------------------------------
28
=============================================
21
5
2
----------------------------------------------
28
=============================================
The aggregate payroll costs including directors of these persons were as follows:
Wages and salaries
Share based payments (note 22)
Social security costs
Contributions to defined contribution pension plans
9
Directors’ remuneration
Directors’ emoluments
Directors benefits
Employers national insurance
Share based payments (note 22)
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
1,439
-
151
27
----------------------------------------------
1,617
=============================================
1,653
-
162
16
----------------------------------------------
1,831
=============================================
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
409
10
----------------------------------------------
419
414
10
----------------------------------------------
424
51
-
=============================================
52
-
=============================================
The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid
director was £164,528 (2016: £163,017). No company pension contributions were made to a money purchase
scheme on his behalf (2016: 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 (2016: nil).
The number of directors accruing retirement benefits under money purchase schemes in the year was nil (2016:
nil).
The number of directors who exercised share options in the year was nil (2016: nil)
The number of directors in respect of whose services were received or receivable under long term incentive
schemes was nil (2016: nil).
45
Notes to the financial statements (continued)
10
Finance income and expense
Recognised in profit or loss
Finance income
Interest income on cash on deposit
Total finance income
11
Taxation
Recognised in the statement of comprehensive income
Current tax expense
Current year
Adjustment for previous year
Tax credit in statement of comprehensive income
Reconciliation of effective tax rate
(Loss)/profit for the year
Total tax credit
(Loss)/profit before tax
Tax calculated at the average standard UK corporation tax rate of 19.75%
(2016: 20.00%)
Expenses not deductible for tax purposes
Current year losses for which no deferred tax asset was recognised
Adjustment for overseas profits
Research and development tax relief/tax credit
Utilisation of capital losses
Utilisation of trading losses
Prior year adjustment
Total tax charge/(credit)
A deferred tax asset has not be recognised in respect of the following item:
Tax Losses
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
23
-
----------------------------------------------
23
=============================================
45
6
----------------------------------------------
51
=============================================
Year ended
30 June 2017
£'000
Year ended
30 June 2016
£'000
4
-
----------------------------------------------
4
=============================================
1
(30)
----------------------------------------------
(29)
=============================================
Year ended
30 June 2017
Year ended
30 June 2016
£'000
(2,157)
£'000
1,124
-
----------------------------------------------
(2,157)
=============================================
-
----------------------------------------------
1,124
=============================================
(426)
48
378
4
-
-
-
225
36
-
(14)
(70)
(6)
(170)
-
----------------------------------------------
4
=============================================
(30)
----------------------------------------------
(29)
=============================================
3,561
3,361
=============================================
=============================================
46
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
11
Taxation (continued)
Reductions in the UK corporation tax rate from 21% to 20% (effective from 01 April 2015) has been enacted
with a further reduction to 19% with effect from 01 April 2017. This will reduce the Company's future current
tax charge accordingly. Deferred tax has been calculated at the rate of 19% substantively enacted at the
balance sheet date. The effect of this change is that the deferred tax asset as at 30 June 2017 has been
calculated based on the rate of 19% substantively enacted at the balance sheet date.
The Group has tax losses, subject to agreement by HM Revenue and Customs, in the sum of £18.74m
(2016: £16.76m), 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 reduce further to 18% by 2020.
As a result, the effective tax rate used to calculate the current tax for the period ended 30 June 2017 was
19.75% (2016: 20.00%)
12
Property, plant and equipment – Group
Cost
Balance at 1 July 2015
Additions
Disposal
Balance at 30 June 2016
Balance at 1 July 2016
Additions
Balance at 30 June 2017
Depreciation and impairment
Balance at 1 July 2015
Depreciation charge for the period
Disposal
Balance at 30 June 2016
Balance at 1 July 2016
Depreciation charge for the period
Balance at 30 June 2017
Net book value
At 1 July 2015
At 1 July 2016
At 30 June 2017
Plant and
Equipment
£'000
Fixtures and
Fittings
£'000
711
105
(77)
----------------------------------------------
739
=============================================
739
60
----------------------------------------------
799
=============================================
535
87
(55)
----------------------------------------------
567
=============================================
567
92
----------------------------------------------
659
=============================================
176
=============================================
172
=============================================
140
=============================================
170
9
(18)
----------------------------------------------
161
=============================================
161
3
----------------------------------------------
164
=============================================
36
21
(18)
----------------------------------------------
39
=============================================
39
21
----------------------------------------------
60
=============================================
134
=============================================
122
=============================================
104
=============================================
Motor
Vehicles
£'000
10
16
-
----------------------------------------------
26
=============================================
26
-
----------------------------------------------
26
=============================================
4
3
-
----------------------------------------------
7
=============================================
7
5
----------------------------------------------
12
=============================================
6
=============================================
19
=============================================
14
=============================================
Total
£'000
891
130
(95)
----------------------------------------------
926
=============================================
926
63
----------------------------------------------
989
=============================================
575
111
(73)
----------------------------------------------
613
=============================================
613
118
----------------------------------------------
731
=============================================
316
=============================================
313
=============================================
258
=============================================
47
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
13
Property, plant and equipment – Company
Cost
Balance at 1 July 2015
Additions
Balance at 30 June 2016
Balance at 1 July 2016
Additions
Balance at 30 June 2017
Depreciation and impairment
Balance at 1 July 2015
Depreciation charge for the period
Balance at 30 June 2016
Balance at 1 July 2016
Depreciation charge for the period
Balance at 30 June 2017
Net book value
At 1 July 2015
At 1 July 2016
At 30 June 2017
Plant and
equipment
£'000
Fixtures and
fittings
£'000
636
103
----------------------------------------------
739
=============================================
739
49
----------------------------------------------
788
=============================================
483
84
----------------------------------------------
567
=============================================
567
92
----------------------------------------------
659
=============================================
153
=============================================
172
=============================================
129
=============================================
151
8
----------------------------------------------
159
=============================================
159
-
----------------------------------------------
159
=============================================
19
20
----------------------------------------------
39
=============================================
39
21
----------------------------------------------
60
=============================================
132
=============================================
120
=============================================
99
=============================================
Motor
vehicles
£'000
10
-
----------------------------------------------
10
=============================================
10
-
----------------------------------------------
10
=============================================
4
3
----------------------------------------------
7
=============================================
7
2
----------------------------------------------
9
=============================================
6
=============================================
3
=============================================
1
=============================================
Total
£'000
797
111
----------------------------------------------
908
=============================================
908
49
----------------------------------------------
957
=============================================
506
107
----------------------------------------------
613
=============================================
613
115
----------------------------------------------
728
=============================================
291
=============================================
295
=============================================
229
=============================================
48
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
14
Intangible assets
Group and company intangible assets
Cost
Balance at 1 July 2015
Additions
Balance at 30 June 2016
Balance at 1 July 2016
Additions
Balance at 30 June 2017
Amortisation and impairment
Balance at 1 July 2015
Amortisation for the period
Balance at 30 June 2016
Balance at 1 July 2016
Amortisation for the period
Balance at 30 June 2017
Net book value
At 1 July 2015
At 1 July 2016
At 30 June 2017
Goodwill
£'000
50
-
----------------------------------------------
50
=============================================
50
-
----------------------------------------------
50
=============================================
-
-
----------------------------------------------
-
=============================================
-
-
----------------------------------------------
-
=============================================
50
=============================================
50
=============================================
50
=============================================
Patents
rights and
trademarks
£'000
Development
costs
£'000
1,495
82
----------------------------------------------
1,577
=============================================
1,577
70
----------------------------------------------
1,647
=============================================
991
62
----------------------------------------------
1,053
=============================================
1,053
70
----------------------------------------------
1,123
=============================================
504
=============================================
524
=============================================
524
=============================================
1,079
176
----------------------------------------------
1,255
=============================================
1,255
212
----------------------------------------------
1,467
=============================================
827
108
----------------------------------------------
935
=============================================
935
168
----------------------------------------------
1,103
=============================================
252
=============================================
320
=============================================
364
=============================================
Total
£'000
2,624
258
----------------------------------------------
2,882
=============================================
2,882
282
----------------------------------------------
3,164
=============================================
1,818
170
----------------------------------------------
1,988
=============================================
1,988
238
----------------------------------------------
2,226
=============================================
806
=============================================
894
=============================================
938
=============================================
Amortisation and impairment charge
The amortisation is recognised in the following line items in the statement of comprehensive income:
Administrative expenses
Development Costs
2017
£'000
2016
£'000
238
----------------------------------------------
238
=============================================
170
----------------------------------------------
170
=============================================
Development expenditure of the new iTrack II was capitalised in the year amounting to £0.21m (2016: £0.18m).
These development costs have been deemed to have a useful economic life of 3 years. There were no Research
and Development costs expensed to the Statement of Comprehensive Income in the year (2016: £nil).
49
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
14
Intangible assets (continued)
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 1% 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%.
15
Investments in subsidiaries
The Group and Company have the following investments in subsidiaries:
Status
Country of
Incorporation
Class of
shares held
Translogik RFID Limited
Dormant
UK
Lanesra Inc (Formerly IntelliSAW Inc.)
Dormant
USA
Translogik Ltd (Formerly Cranwick Ltd)
Dormant
UK
Transense K.K.
Dormant
Japan
Transense Technologies Chile SPA
Trading
Chile
Transense Electronics Technology
(Shanghai) Co. Ltd
Dormant
China
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
The following investments are included in the Company balance sheet at 2017 and 2016
Ownership
2017
2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
N/A
100%
N/A
Transense KK
Transense Technologies Chile SPA
Year ended
30 June 2017
£'000
Company
Year ended
30 June 2016
£'000
3
53
3
-
----------------------------------------------
56
=============================================
----------------------------------------------
3
=============================================
50
Notes to the financial statements (continued)
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
16
Inventories
Raw materials
Finished goods
30 June 2017
£'000
Group
30 June 2016
£'000
30 June 2017
£'000
Company
30 June 2016
£'000
225
760
----------------------------------------------
985
=============================================
224
347
----------------------------------------------
571
=============================================
225
742
----------------------------------------------
967
=============================================
224
347
----------------------------------------------
571
=============================================
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in
the year ended 30 June 2017 amounted to £0.87m (2016: £0.76m). An impairment loss of £0.13m was recognised
in cost of sales against inventories in the year (2016: £0.03m).
17
Trade and other receivables
Amounts falling due within one year
Trade receivables
Allowance for doubtful debts
Other receivables
Amounts due from group undertakings
Trade finance lease receivables
Short term deposit
Accrued income
Prepayments
30 June 2017
£'000
Group
30 June 2016
£'000
30 June 2017
£'000
Company
30 June 2016
£'000
122
(39)
----------------------------------------------
83
181
-
265
-
7
166
----------------------------------------------
702
=============================================
508
(8)
----------------------------------------------
500
176
-
539
301
32
194
----------------------------------------------
1,742
=============================================
82
(39)
----------------------------------------------
43
148
57
265
-
7
166
----------------------------------------------
686
=============================================
478
(8)
----------------------------------------------
470
168
-
539
301
32
179
----------------------------------------------
1,689
=============================================
As at 30 June 2017 there were no past due but not impaired trade receivables.
18
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.
30 June 2017
Lease payments
Unearned finance income
Group and Company
Minimum lease payments due
Within 1 year
1 to 5 years
after 5 years
£'000
265
(5)
£'000
£'000
59
-
-
-
Total
£'000
324
(5)
Net present values
260
59
-
319
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
=============================================
=============================================
=============================================
=============================================
51
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
19
Cash and cash equivalents
Cash and cash equivalents per balance
sheet
Cash and cash equivalents per cash flow
statements
20
Trade and other payables
Current
Trade payables
Amounts due to group undertakings
Non-trade payables and accrued expenses
30 June 2017
£'000
Group
30 June 2016
£'000
30 June 2017
£'000
Company
30 June 2016
£'000
2,520
3,654
2,503
3,641
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
2,520
=============================================
3,654
=============================================
2,503
=============================================
3,641
=============================================
Group
Year ended
30 June 2017
£'000
Year ended 30
June 2016
£'000
Year ended
30 June 2017
£'000
280
-
231
----------------------------------------------
511
=============================================
327
-
287
----------------------------------------------
614
=============================================
278
-
203
----------------------------------------------
481
=============================================
Company
Year ended
30 June 2016
£'000
320
157
272
----------------------------------------------
749
=============================================
21
Provisions
At 1 July 2016
Additional provisions
At 30 June 2017
Group and Company
Provisions
Warranty
£'000
53
47
Total
£'000
53
47
----------------------------------------------
----------------------------------------------
100
100
=============================================
=============================================
The warranty provision represents management’s best estimate of the Group’s liabilities under warranties
granted on its products. The timing of the utilisation of this provision is uncertain but it is expected to be used
within the next year. These financial statements have been restated as this was disclosed in the Trade and Other
payables for the year ended 30 June 2016.
At 1 July 2015
Additional provisions
At 30 June 2016
Group and Company
Provisions
Warranty
£'000
-
53
Total
£'000
-
53
----------------------------------------------
----------------------------------------------
53
53
=============================================
=============================================
52
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
22
Employee benefits
Defined contribution plans
The Group operates a defined contribution pension plan.
The total expense relating to these plans in the year ended 30 June 2017 was £0.03m (year ended 30 June
2016: £0.02m).
Share-based payments – Group and Company
The Group and Company has two share option plans, the Unapproved Discretionary Share Option Scheme
and Enterprise Management Incentives (EMI) Share Option scheme the principal provisions of which are
summarised below: Options to subscribe for Ordinary Shares of the Company may be granted (at the
discretion of the Board and with regards executive directors the remuneration committee) to selected
employees or directors of the Company. No consideration is payable for the grant of an option. Options
are not transferable or assignable.
The fair value of share options granted is recognised as an employee expense, within administrative
expenses, with a corresponding increase in reserves. All options are settled by the physical delivery of
shares.
The fair value of services rendered in return for share-based payments granted is measured by reference
to the fair value of those share-based payments. The estimate of the fair value of services received is
measured with reference to the Black-Scholes options pricing model. The Black-Scholes model considers
the exercise price, share price at grant date, expected term and expected share price volatility. The volatility
level depends on the date of grant and for the current live options has been calculated at 69%. The risk-
free interest rate adopted was 5% and an expected dividend yield of nil pence. The key variable is share
price volatility. For the year ended 30 June 2017 the charge to the profit and loss for the year was £nil
(2016: £nil)
Unapproved Discretionary Share Option Scheme
At 30 June 2017 the following share options remained outstanding under the Company’s Unapproved Discretionary
Share Option Scheme. The new Share Options granted on 27 October 2014 were in respect of an US employee.
.
Number of Options
1 July 2016
Granted
Expired
Exercised
2017
Cancelled/
30 June
Option
Price
Date of
Grant
Date of Exercise
First
Last
16,100
150,447
1,800
5,000
5,000
-
-
-
-
-
(16,100)
-
-
-
-
-
-
-
-
-
-
£2.00 22.12.11 22.12.12 22.12.17
150,447
£3.75 15.08.13 15.08.13 06.03.22
1,800
5,000
5,000
£3.75 31.01.14 31.01.17 31.01.24
£3.75 27.10.14 31.01.17 27.10.24
£3.75 09.10.15 31.01.18 09.10.25
53
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
22
Employee benefits (continued)
Unapproved Discretionary Share Option Scheme (continued)
The assumptions used in the valuation of the old share options are as follows, the value attributable to the
older options has been accounted in earlier periods:
Date of
grant
Estimated fair
value
Share price
Option
price
Expected
volatility
Expected
Life –
Years
Risk free
rate
Expected
dividends
15.08.13
31.01.14
27.10.14
09.10.15
£0.5725
£0.5725
£0.5725
£0.5725
£3.75
£1.5850
£3.1250
£0.6125
£3.75
£3.75
£3.75
£3.75
Enterprise Management Incentive Option Scheme
%
72.26%
72.26%
72.26%
72.26%
%
0.65%
0.65%
0.65%
0.65%
%
Nil
Nil
Nil
Nil
1.50
1.50
1.50
1.50
At 30 June 2017, the following shares remained outstanding under an Enterprise Management Incentive Option
Scheme.
1 July 2016
254,800
20,000
30,000
8,000
46,100
Number of Options
Option
Price
Date of
Grant
Date of Exercise
First
Last
30 June
Granted
Cancelled
Exercised
2017
-
-
-
-
-
(254,800)
(20,000)
(30,000)
(8,000)
(46,100)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
380,000
270,000
25,000
£2.00
£3.13
£5.13
£3.63
£2.00
£0.75
£1.00
£0.75
22.12.11
22.12.12
22.12.17
10.05.12
25.12.12
10.05.22
02.08.12
02.08.13
02.08.22
09.07.13
09.07.16
09.07.23
05.02.14
01.03.14
31.01.18
26.06.17
30.06.18
30.06.21
26.06.17
30.06.20
30.06.27
26.06.17
30.06.20
30.06.27
-
-
-
380,000
270,000
25,000
The assumptions used in the valuation of the current share options are as follows:
Date of
grant
Estimated fair
value
Share price
Option
price
Expected
volatility
Expected
Life –
Years
Risk free
rate
Expected
dividends
26.06.17
26.06.17
26.06.17
£0.2990
£0.2662
£0.2990
£0.715
£0.715
£0.715
£0.75
£1.00
£0.75
%
69.00%
69.00%
69.00%
%
5.00%
5.00%
5.00%
%
Nil
Nil
Nil
5
5
5
54
Notes to the financial statements (continued)
23
Share Capital
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Issued Share Capital
On issue at 1 July 2016
Issued for cash Ordinary Shares
at £0.01 on 28 July 2015
Issued for cash Ordinary Shares
at £0.01 on 7 August 2015
Share consolidation and
reorganisation on 24 November
2016
Issued for cash Ordinary Shares
at £0.50 on 31 January 2017
On issue at 30 June 2016– fully
paid
Ordinary shares of 50 pence
Deferred shares of 9 pence
each
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
Ordinary shares of 1 pence
each
each
-
-
-
9,446,289
86,146
-----------------------------------------
----- ------------------------------
- 472,314,428
295,671,094
75,807,138
75,807,138
-
-
-
-
135,063,334
41,580,000
-
-
(472,314,428)
-
-----------------------------------------
-
-
(75,807,138)
-
-----------------------------------------
-----------------------------------------
--------------------------------------------
-
-
-
-
9,532,435
========================================
-
========================================
-
========================================
472,314,428
=========================================
-
========================================
75,807,138
=========================================
Allotted, called up and fully paid
Ordinary shares of £0.50 each
Ordinary shares of £0.01 each
Deferred shares of £0.09 each
Shares classified in shareholders’ funds
30 June
2017
£'000
4,766
-
-
----------------------------------------------
4,766
=============================================
4,766
=============================================
30 June
2016
£'000
-
4,723
6,823
----------------------------------------------
11,546
=============================================
11,546
=============================================
During the year ended 30 June 2017 a share consolidation and reorganisation approved by the shareholders at
the AGM on 23 November 2016, took place, resulting in the Deferred Shares and the Share premium account
being cancelled, and the Ordinary Shares of 1 pence each being consolidated at a rate of 50:1. Shareholders
holdings immediately before and after the consolidation were, save for fractional entitlements and those holding
fewer than 50 Ordinary shares of 1pence each, remained relatively unchanged, as per last year’s AGM circular
on ‘The Share Consolidation’.
55
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
24
Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five
More than five years
Group and Company
Land &
Buildings
30 June 2017
£'000
Other Lease
30 June 2017
£'000
Land &
Buildings
30 June 2016
£'000
Other Lease
30 June 2016
£'000
63
252
110
----------------------------------------------
425
=============================================
-
-
-
----------------------------------------------
-
=============================================
63
252
173
----------------------------------------------
488
=============================================
-
-
-
----------------------------------------------
-
=============================================
The operating lease relates to the lease of premises which is used by the Group and Company. During the period
£0.06m was recognised as an expense in the statement of comprehensive income in respect of operating leases
(year ended 30 June 2016: £0.08m).
25
Basic and fully diluted earnings/(loss) per share
Basic loss per share is calculated by dividing the loss after taxation of £2.17m (2016: profit of £1.15m) by the
weighted average number of ordinary shares in issue during the year of 9,483,815 (2016: 9,162,170). These
weighted share figures have been adjusted to reflect the 50:1 consolidation that took place in the year.
Unexercised options over the ordinary shares are not included in the calculation of diluted loss per share as they
are anti-dilutive.
Weighted average number of shares – basic
Share option adjustment
Weighted average number of shares – diluted
Year ended
30 June 2017
Year ended
30 June 2016
Number
Number
9,483,815
9,162,170
-
----------------------------------------------
9,483,815
=============================================
-
----------------------------------------------
9,162,170
=============================================
56
Notes to the financial statements (continued)
25
Basic and fully diluted loss per share (continued)
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Year ended
30 June 2017
Year ended
30 June 2016
£'000
£'000
(Loss)/earnings from continuing operations
(2,160)
1,656
From continuing operations
Basic (loss)/earnings per share
----------------------------------------------
----------------------------------------------
(22.78)
=============================================
18.05
=============================================
Loss from discontinued operations
(5)
(472)
From discontinued operations
Basic loss per share
Earnings attributable to shareholders
Basic (loss)/earnings per share
----------------------------------------------
----------------------------------------------
(0.06)
=============================================
(5.15)
=============================================
(22.84)
12.90
=============================================
=============================================
There are 675,000 share options at 30 June 2017 (2016: 20,095,000) that are not included within diluted
earnings per share because they are anti-dilutive.
26
Financial instruments
Financial risk management overview
The Group has exposure to the following risks, to varying degrees, from its use of financial instruments:
● Credit risk;
● Liquidity risk; and
● Market risk.
This note presents information about the Group’s exposure to liquidity and market risks, the companies’ objectives,
policies and processes for measuring and managing risk, and the companies’ management of capital.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation. The Group has a cash balance at period end totalling £2.52m
(2016: £3.65m). Note 2 describes the potential uncertainties relating to the liquidity risk. The Group has no external
borrowing and finances its operations by raising equity finance on the Alternative Investment Market (AIM).
Financial Assets and Liabilities
The carrying value and fair value for each of the trade and other payables, trade leases and unearned
finance income and trade and other receivables are the same.
57
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
26
Financial instruments (continued)
Cash flow sensitivity analysis for variable rate instruments
Due to the current unprecedented low rates of interest a change of 100 basis points in interest rates at the
reporting date would not have created any material change in the profit or loss for 2017 or 2016.
The directors consider that the Group’s exposure to interest rates is low (2016: low). Cash is invested in
deposits with UK high street banks. Low and falling interest rates will reduce returns on these balances.
This note is in relation to the company’s compliance with IFRS 7.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, equity price and interest
rate risk will affect the Group's income or the value of its holdings of financial instruments.
The table below shows the net un-hedged monetary assets/(liabilities) of the Group that are not denominated
in the functional currency of the operating unit and which therefore give rise to exchange gains and losses in
the income statement.
US
Dollar
Australian
Dollar
Japanese
Yen
Canadian
Dollar
Chinese
Yuan
Functional currency of
Group operation
Sterling
Chilean Peso
US Dollar
Euro
£'000
122
-
-
£'000
259
-
-
At 30 June 2017
122
259
Sterling
Chilean Peso
US Dollar
215
729
-
-
-
-
At 30 June 2016
215
729
£'000
£'000
£’000
£'000
7
-
-
7
5
-
-
5
-
-
-
-
(3)
-
-
(3)
(2)
-
-
(2)
-
-
-
-
-
-
-
-
(1)
-
-
(1)
58
Notes to the financial statements (continued)
26
Financial instruments (continued)
At the reporting date the profile of the Group’s financial instruments were:
Financial assets
Loans and receivables comprising:
Trade receivables
Amounts receivable under long term contracts
Short term deposit
Cash and cash equivalents
Financial liabilities
Other financial liabilities at amortised cost
Trade payables
Payments on account
Accruals
Financial liabilities at amortised cost
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
30 June
2017
£000
30 June
2016
£000
83
324
-
2,520
----------------------------------------------
2,927
=============================================
280
-
125
----------------------------------------------
405
=============================================
500
922
301
3,654
----------------------------------------------
5,377
=============================================
326
46
161
----------------------------------------------
533
=============================================
The short term deposit account was realised in the year £nil (2016: £0.30).
There was £0.32m of gross trade finance lease assets held on the balance sheet at the year end date. (2016:
£0.92m).
Management of capital
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. In order to do this the group may issue new shares in the future.
There were no changes to the Group’s approach to capital management during the year. The Group is not subject
to externally imposed capital requirements.
27
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations.
Financial instruments that may subject the Group to credit risk consist of cash, cash equivalents, and trade and
other receivables. The maximum credit exposure was £0.41m (2016: £1.42m) which is the respective carrying
amounts (which is not significantly different to their fair value and contractual cash flow). There were no material
financial assets that were past due at the period end.
At 30 June 2017 the Group’s cash was divided between current accounts £0.60m (2016: £0.63m) and £1.92m in
fixed rate monthly deposits (2016: £3.02m) with a weighted average interest rate for the year of 0.25% (2016:
0.25%). Cash and cash equivalents are held only in high street banks.
The Group offers trade credit to customers, who are well established and major companies, in the normal course
of business. The Group operates stringent credit control procedures on potential customers before allowing credit.
The Group continually monitors its position with, and the credit quality of, the financial institutions, which are
counterparts to its financial instruments, and does not anticipate non-performance or that there is a concentration
of credit risk. Credit risk is considered to be low given the cash position of the Group and that there is a low
exposure level in the trade and other receivables.
59
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2017
Notes to the financial statements (continued)
28
Contingencies and commitments
Group
The Group had no capital commitments or contingent liabilities as at 30 June 2017 (2016: £nil).
Company
The Company has no capital commitments or contingencies as at 30 June 2017 (2016: £nil).
29 Warrants
No warrants were outstanding as at 30 June 2017. (2016: 4,307,344).
30
Related parties
Group
Transactions with key management personnel who are defined as the directors of the Company and their
immediate relatives control 1% of the voting shares of the Company.
The compensation of key management personnel (being the directors) holding more than 1% is as follows:
Key management emoluments
Social security costs
Year ended
30 June 2017
£000
Group and Company
Year ended
30 June 2016
£000
-
-
----------------------------------------------
-
=============================================
-
-
----------------------------------------------
-
=============================================
60