Transense Technologies plc
Annual report and financial
statements
Registered number 01885075
For the year ended 30 June 2018
1
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Contents
Directors and advisers
Highlights
Chairman’s statement
Chief Executive’s report
Strategic Report
Corporate Governance Statement
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
21
24
27
28
36
37
38
39
40
41
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 & Brokers
FinnCap
60 New Broad Street
London
EC2M 1JJ
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 2018
3
Highlights
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Revenues increased marginally to £2.05m (2017: £2.00m)
Translogik revenues increased by 60% to £1.90m (2017: £1.19m)
Gross margin increased to 62.9% of revenues (2017: 56.8%)
Administrative expenses reduced by 3% to £3.21m (2017:£3.32m)
Administrative expenses (excluding depreciation and amortisation) reduced by 11% to
£2.65m (2017: £2.96m)
Pre-tax loss from continuing operations reduced to £1.91m (2017: £2.16m)
Successful equity fund raise of £0.92m (net of costs) in June 2018
Significant increase in recurring iTrack II revenue on subscription model; improving visibility
Significant increase in probe sales from adoption by multiple outlets
Continuing applications development for SAWSense showing positive results
4
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Chairman’s statement
The Group has made steady progress over the last year in both of its core businesses. Revenue
generated by Translogik increased by 60% compared with the prior year, with iTrack II producing an
increased proportion of revenue from subscription services which are expected to recur in future years.
It should be noted that in previous reports we have referred to revenues derived from iTrack II as rental
income however as the revenue from the customer is substantially derived from providing a service we
now more accurately refer to this income as a subscription service.
Increased traction in the commercialisation of probes and iTrack II have resulted in gaining increased
market share. We are confident that further opportunities will arise in the current financial year to build on
this traction through new routes to market and partnerships.
Whilst SAWSense has seen a reduction in current revenues, the level of activity and live projects continues
to increase.
Financial results and condition
Revenues grew marginally by 2% to £2.05m (2017: £2.00m). Gross margins improved to 62.9% from
56.8%, and administrative expenses reduced by 3% to £3.21m (2017: £3.32m). Administrative expenses
excluding depreciation and amortisation reduced by 11% to £2.65m (2017: £2.96m).
Whilst the Company has produced a pre-tax loss from continuing operations for the year, excluding share
based payments, of £1.87m this does reflect a 16% improvement on the previous year’s pre-tax loss of
£2.16m. The total loss attributable to shareholders was £1.89m (2017: £2.17m) resulting in a net loss per
ordinary share of 19.68 pence (2017: 22.84 pence). The Board do not recommend payment of a dividend
(2017: Nil).
Net cash used in operations amounted to £1.11m (2017: £0.87m). With overheads under close control
and starting FY19 at a reduced cost base, and an increasing proportion of revenues on a recurring
subscription service model, the net cash requirement to fund ongoing operations continues to fall. In June
2018, additional equity of £0.92m (net of associated costs) was raised in a placing with existing
shareholders. Net cash balances at 30 June 2018 were £1.59m (2017: £2.52m).
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
businesses and where appropriate entering into partnership arrangements in order to build a profitable
business that generates value for shareholders through both capital appreciation and, in due course,
distributions to shareholders.
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”) and tools to
facilitate tyre management. These products and services are for heavy duty off road vehicles (particularly
mine-haul trucks), commercial trucks, buses 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.
5
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Chairman’s statement (continued)
The Translogik product offerings are continually evolving with the focus on providing a comprehensive
data service to clients in the mining and truck industry. The data captured by our latest product offering,
iTrack II, provides an invaluable insight into the location, condition and performance of haul trucks in live
operation. This provides mine operators with multiple opportunities to deliver substantial cost savings and
productivity gains.
Our markets
SAWSense 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, are wireless, and do not require batteries. 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 on rotating
components, other moving parts, or environments where electrical wiring would not be feasible.
These benefits are particularly appropriate in drives, motors, gearboxes, valves and couplings, which are
in common use in the industrial equipment, energy generation, oil & gas, aviation, military and automotive
sectors.
As Original Equipment Manufacturers (OEMs) seek ever more data on a real-time basis to optimise the
performance of their products, accurate and frequent measurement becomes increasingly important. The
world’s largest and most successful companies in these fields are recognising SAW as one of the enabling
technologies in developing the “Internet of Things” in this arena, contributing to a vision by which machines
are networked with embedded sensors to optimise performance using real time analytical tools, algorithms
and interactive controls.
TPMS in Mining
The original iTrack system was developed to provide tyre pressure and temperature monitoring data to
mine haul-truck operators, primarily to reduce or eliminate the incidence of tyre failure. The associated
benefits in tyre life management were evident and were initially viewed as a means of payback for the
improved safety performance achieved.
Over recent years the collection of pressure and temperature data has become increasingly sophisticated,
and our systems for measuring, monitoring and reporting tyre conditions are seen by key customers as a
management tool to optimise asset utilisation and productivity, whilst continuing to make a key contribution
to mine safety.
iTrack II, which was launched at MINExpo in September 2016, collects live tyre performance data from
sensors, and transmits this instantly to an optional in-cab display and web based applications readable in
real time by the Translogik Global Control Centre as well as the 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.
6
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Chairman’s statement (continued)
The Board remains of the opinion that our system is the most technologically advanced mining truck TPMS
technology available, offering specific benefits in cost savings and operating efficiency that are not
delivered by competitors in the market to the same degree. We continue to provide iTrack II primarily as
a subscription service model, which enables users to recognise the monthly cost in operating overheads,
alongside the substantial savings in tyre operating costs and the productivity gains that are evident when
in use. We are also continually developing additional features and capabilities, such as the provision of
accelerometer data and improved connectivity, in order to maintain our technology leadership over
potential competitors.
Tyre tread depth probes
Our tyre tread depth probes offer a fast and reliable way for mining and on-road truck service providers,
as well as passenger car tyre fitters, to record and automatically transmit tread depth data by Bluetooth.
Our product range has been manufactured for over 15 years, during which time it has earned a reputation
in the market place as a rugged and reliable solution. Coupled with software developed in-house, we also
offer a Passenger Car Audit System (“PCAS”), which captures tread depth data and provides a clear visual
display of tyre conditions to the end customer to aid decision making.
Our range is uniquely compatible with the product management systems of a number of the world’s leading
tyre producers, including Bridgestone, Continental, Goodyear and Michelin.
Equity fund raise
In June 2018, shareholders approved a proposal that the Company issue an additional 2,500,000 shares
at a price of 40 pence each to existing institutional investors to support marketing, product development
and working capital requirements of the Group. The net proceeds of the placing amounted to £0.92m net
of associated costs and were included in the net cash balances at the year end.
Prospects
The Board continues to believe that the technology and products developed by the Group along with the
services provided in the mining sector ensure that the Group is extremely well positioned in all key areas
of the businesses and as a result the current level of optimism for future prospects is at a high level.
David M Ford
Group Chairman
8 October 2018
7
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Chief Executive’s report
The Group has made solid progress this year with increased traction for both iTrack II and probes with
growing commercial revenues from both 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 is
actively involved in several 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 licensing fees, both of which reduced in the current year as
a consequence of the more advanced stage of development of key projects. Recharged engineering
costs were £0.15m in 2018, compared with £0.29m in 2017, licensing fees were £0.00m in 2018,
compared to £0.58m in 2017.
In the prior year, SAWSense entered into a significant licensing agreement with GE for the use of our
patented, wireless, passive SAW technology in a specific torque application. The Group received a non-
refundable license fee of £0.58m following successful technical validation. In the current year, a
manufacturing partner has been selected and significant technical progress has been made.
Commercialisation cannot be considered certain, but the likelihood is increasing through time. 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.
We are currently in discussions with GE on three further industrial projects. We also have two current
projects in the automotive sector which are progressing and we continue to provide instrumented torque
shafts for US Motor Sport through our Joint Development Agreement with McLaren. In addition to our on-
board marine torque prop shaft trial, which continues, we have also, shortly after the year end, received
funding in conjunction with one UK university from a charity connected to a major financial institution, with
the aim of developing a SAW based solution focussed on improving health and safety in the maritime
transportation of fluids.
Translogik
iTrack II
Commercialisation of iTrack II has seen steady progress throughout the year, with the system live on a
substantial number of trucks at the year end and covering eight mines in three continents. This generated
a threefold increase in monthly subscription service income since the start of the financial year.
At the end of the year there were active prospects with realistic expectations of success at a further ten
sites. Much of the existing business is with world leading mine owners such as Glencore and BHP;
companies which operate many thousands of trucks across hundreds of sites world-wide, and recognise
the benefits of data provided by our system.
We continue to believe that our product range demonstrates substantial superiority in capabilities and
reliability to those of our rivals.
The strength of our product offering and the iTrack brand reputation has resulted in Translogik moving
from “opportunities to work more closely with selected partners” as stated in the interim report to the
current state of play whereby we are holding discussions on collaborative arrangements with major global
companies in this sector.
8
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Chief Executive’s report (continued)
We are firmly of the view that progressing opportunities to work closely with one or more major partners
could substantially accelerate market penetration, in turn producing increased recurring revenues.
Probe
Translogik revenues derived for the sale of our range of tyre tread depth probes increased by 83% to
£0.84m (2017: £0.46m).
Goodyear USA, which alone operates 2,300+ Truck and Bus tyre service centres, launched their new tyre
management system in March 2018 called 'Tire Optix' which incorporates the Translogik tyre probe. We
have subsequently seen a significant increase in Goodyear orders and this is a trend we expect to continue
as adoption of their system expands within the USA and worldwide. In addition to this, we are seeing
further rollout of Bridgestone’s corresponding ‘Toolbox’ and ‘Total Tyre Care’ systems as well as
Continental’s ‘Fleetfox’ system, all of which adopt the Translogik probe.
Current trading and outlook
Trading in the first two months of the current year has seen an increase in revenues and a reduction in
pre-tax losses compared to the first two months of the year ended 30 June 2018 (FY18) and the cash
burn in the first two months of the financial year 2019 (FY19) has run at the monthly rate of £0.11m which
is half the rate of the first two months in FY18.
The ongoing success of ITrack II and the results of recent trials is anticipated to produce further adoption
of the system in H1 of the financial year 2019. The potential collaboration with major global companies in
the mining sector could lead to an acceleration in the growth rate of mines adopting iTrack II.
The interest in the different versions of the probe with the major tyre suppliers has grown considerably
during the year and the prospects in FY 19 remain positive as the majors continue to integrate the probe
into their tyre management systems.
The engagement with GE has moved from the non-recurring engineering stage through to licensing and,
in the medium term, we look towards the final project stage, being the receipt of royalties
Graham Storey
Chief Executive
8 October 2018
9
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Strategic Report
Financial Review
Results for the year
Revenues from continuing activities totalled £2.05m (2017: £2.00m). The pre-tax loss (before discontinued
operations) totalled £1.91m (2017: £2.16m).
Translogik revenues grew by 60% to £1.90m, and SAWSense generated £0.15m of revenues (2017:
£0.81m which included the GE license fee of £0.58m). Gross margins improved to 62.9% (2017: 56.8%
reflecting the change from selling iTrack to providing it on a subscription basis. The depreciation on
capitalised iTrack kit, included in administrative expenses, increased to £0.16m (2017: £0.07m)
Administrative expenses for the year, before depreciation, amortisation and interest, amounted to £2.65m
compared with £2.96m in the prior year.
The increase in Translogik revenues reflects the good growth in the new iTrack subscription services
following the launch of iTrack II in September 2016 and an 80% increase in Probe sales during the period.
During the previous year overheads rose as a result of a bad debt, additional professional fees and the
launch of iTrack II in the current year we experienced a reduction in administrative overheads both pre
and post depreciation and amortisation.
The Earnings per share (EPS) are set out below (in Pence):
EPS (including discontinued operations)
EPS (excluding discontinued operations)
Taxation
2018
2017
(19.68)
(19.68)
(22.84)
(22.78)
The Company has UK tax losses available to carry forward at 30 June 2018 of approximately £19.8m,
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. The
accounting treatment adopted is to recognise the R & D tax credits on a cash basis due to the uncertain
nature of the claim. Subject to HMRC approval, the expected tax credit to be received in June 2019 in
relation to 2017 and 2018 is approximately £0.27m.
.
Cash flow and financial position
There was a net cash outflow of £0.93m (2017: £1.13m) during the year, arising from trading and £0.92m
of proceeds arising from the issue of equity share capital in June 2018.
Net cash used in operations amounted to £1.11m (2017: £0.88m).
At 30 June 2018 the Group had net cash balances of £1.59m (2017: £2.52m).
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 effect of increased demand for iTrack services 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 2018
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 £1.89m (2017: loss of £2.17m). The Group has Accumulated Losses of £1.89m (2017:
Accumulated Losses of £0.01m following the Share Capital reorganisation). The balance of cash and
cash equivalents at 30 June 2018 is £1.59m (2017: Cash and cash equivalents £2.52m).
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 30 September 2019. These forecasts indicate that the Group should continue to be able to operate
within its current cash resources for the foreseeable future.
Capital Structure
The Company Share Capital reduction and reorganisation was completed during the previous year.
A more detailed review of the financial year is provided in the Chairman’s statement and the Chief
Executive’s report.
Key Performance Indicators
The following KPI’s are some of the tools used by management to monitor the performance of the
operating business. In addition to the KPI’s the statement of financial position and cash flow analysis are
reviewed at monthly Board meetings.
KPI's (Excluding Discontinued Operations)
Turnover
EBITDA
EBT
FY 18
£000's
FY 17
£000's
£2,050
£2,003
(£1,360)
(£1,829)
(£1,914)
(£2,157)
EPS (Including Discontinued Operations) - Pence
EPS (Ex Discontinued Operations) - Pence
(19.68)
(19.68)
(22.84)
(22.78)
Share Price - Pence
Cash
Cash/Share - Pence
Net Assets
Net Assets/Share - Pence
Market Capitalisation
36.50
77.50
£1,592
£2,520
13.21
26.44
£3,876
£4,804
32.17
50.40
£4,398
£7,388
Shares in issue (adjusted for 50:1 reduction)
12,048,948
9,532,435
11
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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
Intellectual
Property
Product
Development
Details of Risk & Impact
Mitigation
The SAWSense business is focused on the design
and manufacture of
technologically advanced
products and applications. Major investment is made
in Development and we have 40 granted patents and
significant in house know how. The risk exists that
our intellectual property may be infringed by third
parties or that we may inadvertently infringe third
loss of
party rights. The
profitability and cash flow and loss of market share.
impact resulting
in
requires
constant
Developing new product and improving existing
products
of
investments and potential returns which can be
uncertain. Changing customer requirements and
technological
innovation will always present a
challenge to developing market leading product.
assessment
Procedures are in place to
ensure we monitor new third
ensure
applications,
party
adequate protection for our key
intellectual property including
registration and avoid infringing
third party rights. We litigate
any IP breaches.
Development spend is regularly
planned and reviewed. The
of
Groups
customer
and
greatly
expectations
enhanced by working closely
with customers on extensive
product trials.
understanding
needs
is
People
An experienced and knowledgeable team is essential
for
to continually 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.
key
Providing the existing team with
good training and incentives is
a key priority for the business
and has been instrumental in
retaining
The
recruitment and development
of new employees, when
is done so by
required,
experienced staff to ensure the
correct calibre of individual is
identified.
staff.
12
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Strategic Report (continued)
Principal risks and uncertainties (continued)
Risk and
Uncertainty
Details of Risk & Impact
Mitigation
EU
Membership
In June 2016 the UK electorate voted to discontinue
its membership of the EU. The Directors await
clarification of the terms of the exit (referred to as
Brexit) to assess the impact, if any, on the Group
As is evident in the Segmental
review on page 48 only 15% of
the group’s income arise from
UK & Europe and a far lesser
percentage of supplied goods &
services are from Europe. The
Directors will take any action
necessary to mitigate the effect
of Brexit but consider that at
this point in time the exposure
is minimal.
Global
Companies
the
time
initial discussions
Many of the customers and competitors of Transense
are major international companies .The impact on
Transense dealing with customers of this size is that
invariably
to
from
receiving a PO can be far longer than the usual
business transaction cycle between SME's. On the
competition side the Company can be disadvantaged
by not having the financial strength of far larger
entities which can enable those organisations to
achieve a foothold in those markets by using
techniques such as loss leaders.
Liquidity
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 II continues to incur development costs as
the system evolves. Future increases in rate of
system installations may cause the business to
require additional working capital funding and/or
alter payment terms with end user customers and/or
channel partners. Failure to secure such changes
may constrain the ability of the Company to achieve
its growth potential.
far
industries
The Company
regularly
monitors cash flow to ensure
that we are sufficiently funded
to endure the long lead times
between initial discussions and
PO's with Global businesses.
With regards the competition
the
size of
smaller
Transense ensures we are able
to adapt
to move swiftly
technology
customer
to
requirements and we have in
place a very specialised team
of technicians to ensure that in
the
in which we
operate our products are best
in class. There will also be
opportunities to partner global
companies to mitigate the cash
flow effects of long lead times.
During the course of FY 18 the
have
resources
cash
decreased by £0.93m . The
cash resources were however
bolstered by a
raise
producing £0.92m net of costs.
Cash
remain
resources
relatively strong moving into
FY19. The Board also exert
tight controls on overheads and
monitor cash flow regularly and
do not presently foresee any
immediate
for
funds unless
raising
to
required
funds
iTrack kit
manufacture new
following a
in
demand.
further
are
large upturn
requirement
fund
13
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Strategic Report (continued)
Principal risks and uncertainties (continued)
Risk and
Uncertainty
Details of Risk & Impact
Mitigation
Foreign
currency
fluctuation
Approximately 35% 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.
1.4%
Transense's biggest exposure
is with regards the USD and
during the course of the last
year the USD has decreased
by
against GBP
producing insignificant Forex
adjustments. Since the year
end
the GBP has only
marginally weakened further by
0.3%, however should
the
movement become material the
Group will consider
forward
purchases as an effective
hedge.
By order of the board
Melvyn Segal
Finance Director
8 October 2018
14
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement
The group aims to operate to high standards of moral and ethical behaviour. All members of the board
fully support the value and importance of good corporate governance and in our accountability to all of the
company’s stakeholders,
including shareholders, employees, customers, distributors, suppliers,
regulators and the wider community.
The corporate governance framework set out, including board leadership and effectiveness, remuneration
and internal control, is based upon practices which the board believes are proportionate to the risks
inherent to the size and complexity of group operations.
The board considers it appropriate to adopt the principles of the Quoted Companies Alliance Corporate
Governance Code (“the QCA Code”) published in April 2018. The extent of compliance with the ten
principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and
any steps taken or intended to move towards full compliance, are set out below:
Principle
Extent of
current
compliance
Commentary
Further disclosure(s)
Establish a strategy
and business model
which promote long
term value for
shareholders.
Seek to understand
and meet shareholder
needs and
expectations
Fully compliant Group business strategy is set
out in the Chairman’s
statement above.
Strategic issues, and the
appropriate business model to
exploit opportunities and
mitigate risks, are under
continuous review by the
board, and reported
periodically.
Fully compliant Regular meetings are held
with shareholders at the
release of interim and final
results, the AGM and a
number of additional ad hoc
meetings, any structured
feedback given at these
meetings is considered by the
Board and acted on as
appropriate.
Go to
www.transense.co.uk
and follow About Us
then Our Business
Activities
Strategic Report section
of the Annual Report
Go to
www.transense.co.uk
and follow Shareholder
Presentations
Reflect wider
stakeholder and social
responsibilities and
their implications for
long term success
Fully compliant Directors and employees
adopt a broad view during
decision making to take
meaningful account of the
impact of our business on all
key stakeholder groups.
Go to
www.transense.co.uk
and follow Company
then Company Profile.
15
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement (continued)
Principle
Extent of
current
compliance
Commentary
Further disclosure(s)
Principal Risks and
Uncertainties section of
Annual Report
Board section of Annual
Report.
Embed effective risk
management,
considering both
opportunities and
threats, throughout the
organisation
Maintain the board as
a well-functioning,
balanced team led by
the chair
Fully compliant The group operates a system
of internal controls designed
(to the extent considered
appropriate) to safeguard
group assets and protect the
business from identified risks,
including risk to reputation.
Financial risks, including
adequacy of funding and
exposure to foreign currencies,
are identified and subject to
examination during the annual
external audit process.
Fully compliant The board comprises five
directors; two non-executive
directors and three executive
directors. The two non-
executive directors are
considered to be fully
independent (Nigel Rogers
and Rodney Westhead).
The board is supported by
appropriate board committees
which are each chaired by one
of the independent non-
executive directors.
An annual record of
attendance at board meetings
is included in the Annual
Report at the conclusion of
each year.
Board section of Annual
Report.
Ensure that between
them the directors
have the necessary
up-to-date experience,
skills and capabilities
Fully compliant The board is satisfied that the
current composition provides
the required degree of skills,
experience, diversity and
capabilities appropriate to the
needs of the business. Steps
are taken to challenge the
status quo and encourage
proper consideration of any
dissenting opinion. Board
composition and succession
planning are subject to
continuous review taking
account of the potential future
needs of the business.
16
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement (continued)
Extent of
current
compliance
Partially
compliant
Principle
Evaluate board
performance based on
clear and relevant
objectives, seeking
continuous
improvement
Commentary
Further disclosure(s)
N/A
Board evaluation has not been
carried out as part of a formal
process, although the
Chairman has actively
encouraged self-evaluation by
all board members, and
feedback on the conduct and
content of board meetings.
The board will consider
whether a more structured
approach is required in future.
Promote a corporate
culture that is based
on ethical values and
behaviours
Maintain governance
structures and
processes that are fit
for purpose and
support good decision-
making by the board
Communicate how the
company is governed
and is performing by
maintaining a dialogue
with shareholders and
other relevant
stakeholders
Fully compliant The board promotes high
N/A
ethical and moral standards.
The board and all employees
expect to be judged by, and
accountable for, their actions
and compliance with the
Company handbook.
Employees are encouraged to
attend training courses and
maintain CPD.
Fully compliant The board as a whole share
responsibility for sound
governance practices. The
roles and responsibilities of
each of the directors (including
committee memberships) are
clearly set out in their job
descriptions and any particular
responsibilities communicated
and understood.
Fully compliant Regular meetings with
shareholders and other key
representative groups provide
a specific opportunity for
raising any concerns related to
corporate governance,
including any significant votes
cast against or abstaining from
shareholder resolutions. A
record of meetings held to
engage with shareholders will
be included in each Annual
Report.
Go to
www.transense.co.uk
and follow Company and
Director’s profiles.
Board section of Annual
Report.
Board section of Annual
Report.
17
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement (continued)
Below is a brief description of the role of the Board and its committees, including a statement regarding
the Company’s system of internal financial control.
The Board of Directors
The following is a list of the full names, positions and ages of the current members of the Board: The
business address of each Director is 1 Landscape Close, Weston-on-the-Green, Bicester, OX25 3SX.
David Ford (Chairman) Age 62
David is a qualified lawyer who specialised in IP law. In 1990 he became Tarlo Lyons’ first Managing
Partner and in 1998 he led the management buyout of the consumer debt recovery department of his
old firm, Tessera Group, where he was the non-executive chairman until it was acquired by Arrow Group
in December 2014.
Graham Storey (Group Chief Executive Officer) Age 61
Previously CEO of The Moyses Stevens Group, following a management buyout. Through a
combination of organic growth and acquisitions, the group grew to become the biggest commercial and
retail florist in the UK. Graham carried out a successful sale of the business in 2004 to a venture capital
fund and, prior to joining Transense was involved in investing in several businesses one of which was
Transense Technologies plc.
Melvyn Segal (Finance Director) Age 63
Melvyn is a chartered accountant and during his career of 22 years as a senior partner of mid-sized
accountancy firm Arram Berlyn Gardner he specialised in business advice, audit and taxation and was
involved in the successful sale of the firm’s financial services arm. On leaving the profession Melvyn has
been active as company finance director and Non-Executive director of successful SME’s
Nigel Rogers (Deputy Chairman and Non-Executive Director *) Age 57
Nigel qualified as a Chartered Accountant in 1983, spending eight years with PwC before moving into
industry. He has over twenty years’ experience as a director of listed businesses, including thirteen
years as Group CEO of both AIM listed Stadium Group Plc (2001-2011) and 600 Group Plc (2012-
2015). Nigel serves on both the Audit and Remuneration committees.
In addition to his responsibilities at Transense, he is also Executive Chairman of AIM listed Surgical
Innovations Group Plc.
Rodney Westhead (Non-Executive Director **) Age 74
Rodney qualified as a Chartered Accountant in 1967 spending time with PWC and Grant Thornton, the
latter including a term as managing partner of the London office. His experience in Industry commenced
in 1992 at Ricardo Group plc, a major automotive consulting engineering group with sales of £200 million
a year, where he was finance director and subsequently CEO. After leaving Ricardo in 2005 he has had
the following appointments, became Chairman of Carter and Carter plc, Chairman of Clean Air Power plc
and a non-executive director of AEA Technology plc, Mouchel Plc and ACTA spa. Rodney was a member
of council at Brunel University.
* Member of Audit & Risk committee and chair of Remuneration committee
** Chair of Audit & Risk committee and member of Remuneration committee
18
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement (continued)
The main features of the Group’s corporate governance arrangements are:
The Board intends to meet monthly for formal Board meetings. It will approve financial statements and
significant changes in accounting practices and key commercial matters, such as decisions to be taken
on whether to take forward or to cancel a material collaboration project or commercial agreement. There
is a formal schedule of matters reserved for decision by the Board in place.
Currently, the Board includes two Non-Executive Directors who are considered by the Directors to be
independent for the purposes of the QCA Code, Nigel Rogers and Rodney Westhead. Nigel and Rodney
joined the Board in July 2015 and April 2007 respectively, and prior to this neither had any association
with the Company.
As noted in the Strategic and Business Review of Activities on pages 12-14, the Board has in place a risk
management policy and a risk management register for identifying, assessing and mitigating the
Company’s principal risks and uncertainties.
Internal Financial Control
The Board is responsible for establishing and maintaining the Company’s system of internal financial
controls. Internal financial control systems are designed to meet the particular needs of the Company and
the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute, assurance
against material misstatement or loss. During the period, the Directors enhanced the Group’s finance
function with a new hire, including the appointment of an Office Manager and Assistant Finance Manager
who is responsible for the day to day management of the office and assisting on all finance aspects of the
business. The Directors have reviewed the effectiveness of the procedures presently in place and consider
that they are appropriate to the nature and scale of the operations of the Company. The Directors will
continue to reassess internal financial controls as the Company expands further.
Board Committees
Audit Committee
The Audit Committee’s principal functions include ensuring that the appropriate accounting systems and
financial controls are in place, monitoring the integrity of the financial statements of the Company,
reviewing the effectiveness of the Company’s accounting and internal control systems, reviewing reports
from the Group’s auditors relating to the Company’s accounting and internal controls, and reviewing the
interim and annual results and reports to Shareholders, in all cases having due regard to the interests of
Shareholders. The Audit Committee meets at least two times a year, with regard to the reporting and audit
cycle. Rodney Westhead has recent and relevant financial experience through his role as senior partner
in a large firm of Chartered Accountants and CEO of other UK listed companies and acts as Chairman.
Nigel Rogers the other member of the Audit Committee is a Fellow of the ICAEW and has several years
experience of listed company financial reporting.
Remuneration Committee
The Remuneration Committee is responsible for determining and agreeing with the Board the framework
for the remuneration packages for Directors. The Remuneration Committee considers all aspects of the
Executive Directors’ remuneration, including pensions, bonus arrangements, benefits, incentive payments
and share option awards, and the policy for, and scope of any termination payments. The remuneration
of the Non-Executive Directors is a matter for the Board. The Remuneration Committee meets at least
twice a year and at such other times as may be deemed necessary. No Director may be involved in
discussions relating to their own remuneration. Nigel Rogers acts as Chairman of the Remuneration
Committee and Rodney Westhead is the other member of the Remuneration Committee.
19
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Corporate Governance Statement (continued)
Nomination Committee
The Nomination Committee is responsible for reviewing the structure, size and composition of the Board
based upon the skills, knowledge and experience required to ensure the Board operates effectively. The
Nomination Committee is expected to meet when necessary to do so. The Nomination Committee also
identifies and nominates suitable candidates to join the Board when vacancies arise and makes
recommendations to the Board for the re-appointment of any Non-Executive Directors. The full Board
make up the Nomination Committee.
Directors Responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law the Directors have elected to prepare the Group and Company financial statements in accordance
with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union. Under
company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the
Group and Company for that period. The Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European
Union, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made
available on a website. Financial statements are published on the Company’s website in accordance with
legislation in the United Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s
website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
20
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 director’s 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, set 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 2018 they did not choose to. (2017: £3,000)
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.
21
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Remuneration report (continued)
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 2018
ended
30 June 2017
Benefits
Pension
£
£
£
£
Basic
salary
£
158,400
7,232
83,250
4,030
109,050
4,566
30,800
12,900
-
-
-
-
-
-
-
165,632
164,528
87,280
101,583
113,616
112,960
30,800
12,900
30,400
12,750
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Executive
directors
G Storey
M Segal
D Ford
Non-executive
directors
N Rogers
R Westhead
Total 2018
394,400
15,828
-
410,228
Total 2017
409,183
10,038
3,000
422,221
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
22
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Remuneration report (continued)
Share based payment options have been granted under EMI for executive directors. 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.
Directors' interests in the EMI were:
At 1 July
2017
At 30 June
2018
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
G Storey
G Storey
D Ford
D Ford
M Segal
M Segal
120,000
120,000
01/07/18
100,000
70,000
100,000
30,000
50,000
100,000
30/06/20
70,000
01/07/18
100,000
30/06/20
30,000
01/07/18
50,000
30/06/20
£0.75
£1.00
£0.75
£1.00
£0.75
£1.00
£1.50
£2.00
£1.50
£2.00
£1.50
£2.00
==============================================
==============================================
==============================================
==============================================
==============================================
Share price performance
The share price performance is disclosed in the Directors’ Report on page 25.
23
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Directors’ report
The directors present their annual report and audited financial statements for the year ended 30 June
2018.
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 2018 show a loss of £1.89m (30 June 2017: £2.17m). The
directors do not recommend the payment of a dividend (30 June 2017: £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 2018, the following substantial shareholdings of 3% or more of the Company’s share capital
have been notified to the Company:
CriSeren Investments
John Peter Lobbenberg
Ordinary
shares of
50p each
%
1,241,258
868,980
==============================================
10.3
7.2
==============================================
24
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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
2018
Ordinary
shares of
50p each
1 July
2017
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 2018 was 36p (30 June 2017: 77.5p) and the
range during the period was 34.5p to 80p (30 June 2017: 50p to 118.75p). As p art of t h e Ju n e 2 0 18
f un d r a is e th e O r d in ar y sh ar es wer e r e des ig na t ed as 1 0p O r d in ar y sh a r es a n d at th e
sam e t im e n e w 4 0 p D ef err ed s ha res wer e a ls o iss u ed . T h is is r ef e r re d t o in more detail
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 23.
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 2017/18.
25
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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
8 October 2018
1 Landscape Close
Weston on the Green
Oxon
OX25 3SX
26
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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.
27
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 2018 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 2018 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
28
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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.
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: £61,500, which represents 3% of the
Group’s revenue.
Key audit matters were identified as revenue recognition and
intangible asset impairment for the Group and parent company.
We performed full scope audit procedures on UK based
operations (Transense Technologies plc) and performed targeted
procedures on its significant component Transense Technologies
Chile Spa which is consistent with the approach taken in the
previous year.
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 management judgement.
High
Low
Low
High
29
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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.
Key Audit Matter
How the matter was addressed in the
audit
Revenue recognition - Group and
Parent
Revenue is recognised to the extent
that economic benefits will flow to the
Group and the revenue can be reliably
measured.
The key revenue streams have been
identified as the direct shipment of
goods to customers, and the associated
revenue recognised on delivery and
the recognition of revenue under lease
agreements.
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 a
significant risk, which was one of the
most significant assessed risks of
material misstatement.
Impairment of intangible assets –
Group and Parent
Our audit work included, but was not
restricted to:
Evaluating the Group’s accounting policies
for recognition of revenue for
appropriateness in accordance with the
requirements of International Accounting
Standard (IAS) 18 ‘Revenue’ and IAS 17
‘Leases’.
Agreeing whether revenue has been
recognised in accordance with these
policies.
For revenue recognised on delivery to
customers, agreeing, on a sample basis,
amounts recognised in revenue in the
financial statements to supporting
documents including proof of shipment
documents.
For revenue recognised under operating
lease contracts, agreement of the total
revenue recorded in the financial
statements to signed lease agreements.
Agreeing, on a sample basis, amounts of
revenue recorded in the last quarter of the
financial year supporting documents
including proof of shipment documents to
ensure that 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:
Our testing did not identify any material
misstatements in the revenue recognised
during the year in accordance with stated
30
Key Audit Matter
Intangibles assets relating to the
development of a specific product is
recognised to the extent that
expenditure is directly attributable to
product development and is expected
to result in future economic benefits.
The parent company has invested
significant amounts in developing this
product that is now available for sale.
The potential impairment of this was
deemed an area of key audit focus, as
there is a risk that the intangible asset
carrying value exceeds its recoverable
amount.
On the acquisition of the Translogik
division in a previous year, goodwill
was recognised by the parent
company. The potential impairment of
this was deemed an area of key audit
focus, as there is a risk that the
intangible asset carrying value exceeds
its recoverable amount.
We therefore identified impairment of
intangible assets including goodwill as
a significant risk, which was one of
the most significant assessed risk of
material misstatement.
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
How the matter was addressed in the
audit
accounting policies and. with IAS 18 and
IAS 17.
Our audit work included, but was not
restricted to:
A review of management’s forecasts and
subsequent impairment review
calculations in relation to specific products
and the division, including an assessment
of the reasonableness of the significant
assumptions used in these forecasts.
Sensitivity analysis on the projected future
cashflows of the products and the division.
The Group's accounting policy on
intangible assets is shown in note 4 to the
financial statements and related disclosures
are included in note 14.
Key Observations:
Based on our audit work, we concur with
management’s assessment that there is no
impairment of goodwill or development
cost assets.
31
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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.
Materiality was determined as follows:
Materiality
Measure
Financial
statements as a
whole
Performance
materiality used to
drive the extent of
our testing
Communication of
misstatements to
the audit
committee
Group
Parent
£61,500 which is 3% of the
Group’s revenue. This
benchmark is considered
the most appropriate due to
the loss making nature of
the group and because the
Group deems revenue
growth to be its key
indicator when assessing
the performance of the
Group.
Materiality for the current
year is higher than the level
that we determined for the
year ended 30 June 2017 to
reflect higher revenues in
the year.
75% of financial statement
materiality
£42,000 which is 3% of the
Company’s revenue. This
benchmark is considered the
most appropriate due to the loss
making nature of the Company
and because the Company deems
revenue growth to be its key
indicator when assessing the
performance of the Company.
Materiality for the current year is
slightly lower than the level that we
determined for the year ended 30 June
2017 to reflect lower revenues in the
year for the parent company only.
75% of financial statement materiality
£3,050 and misstatements
below that threshold that, in
our view, warrant reporting
on qualitative grounds.
£2,100 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%
32
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 operations in Chile, Transense Technologies Chile Spa, and South Africa,
Translogik South Africa Pty Ltd. The summary of our approach to the operations can be seen
below.
Operation
Transense
Technologies
Plc
Transense
Technologies
Chile Spa
Translogik
South Africa
Ptd Ltd
Percentage
of group
revenue
68%
Percentage
of group
profit/(loss)
(102%)
Percentage
of group
assets
93.6%
Audit
approach
Comprehensive
32%
1.9%
6.4%
Targeted
0%
0.1%
0%
Analytical
We performed specified audit procedures on the material balances of Transense Technologies
Chile Spa. Our current year audit approach on Transense Technologies Chile Spa is consistent
with that of the prior year.
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.
33
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 *****, 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.
34
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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
8 October 2018
35
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2018
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Financial income
Loss before taxation
Taxation
Loss from continuing operations
Discontinued operations
Loss from discontinued operation
Loss for the year
Basic and fully diluted loss per share (pence)
Continuing operations
Discontinued operations
Total operations
Loss 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
2018
Year ended
30 June
2017
Note
£'000
£'000
5
10
11
2,050
(761)
2,003
(865)
----------------------------------------------
----------------------------------------------
1,289
1,138
(3,208)
(3,318)
----------------------------------------------
----------------------------------------------
(1,919)
5
(2,180)
23
----------------------------------------------
----------------------------------------------
(1,914)
26
(2,157)
(4)
----------------------------------------------
----------------------------------------------
(1,888)
(2,161)
----------------------------------------------
----------------------------------------------
6
-
(5)
----------------------------------------------
----------------------------------------------
(1,888)
==============================================
(2,166)
==============================================
(19.68)
-
25
----------------------------------------------
(19.68)
(22.78)
(0.06)
----------------------------------------------
(22.84)
==============================================
==============================================
(1,888)
(2,166)
----------------------------------------------
----------------------------------------------
-
21
----------------------------------------------
----------------------------------------------
-
21
(1,888)
==============================================
(2,145)
==============================================
There are no other recognised income or expenses in either period.
Notes to the financial statements are from pages 41 to 68.
36
Consolidated Balance Sheet
at 30 June 2018
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
Share based payments
Accumulated loss
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Year ended 30 June
Year ended 30 June
Note
2018
£'000
2018
£'000
2017
£'000
2017
£'000
12
14
18
16
17
19
20
21
23
474
909
-
258
938
59
----------------------------------------------
----------------------------------------------
1,383
1,255
685
-
698
1,592
985
-
702
2,520
----------------------------------------------
----------------------------------------------
2,975
----------------------------------------------
4,358
4,207
----------------------------------------------
5,462
(316)
(66)
(100)
(511)
(47)
(100)
----------------------------------------------
----------------------------------------------
(482)
----------------------------------------------
3,876
==============================================
5,025
682
21
41
(1,893)
----------------------------------------------
3,876
==============================================
(658)
----------------------------------------------
4,804
==============================================
4,766
22
21
-
(5)
----------------------------------------------
4,804
==============================================
These financial statements were approved by the board of directors and authorised for issue on 8 October 2018 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 41 to 68.
37
Company Balance Sheet
at 30 June 2018
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
Share based payments
Accumulated (loss)/profit
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Year ended 30 June
Year ended 30 June
Note
2018
£'000
2018
£'000
2017
£'000
2017
£'000
13
14
15
18
16
17
19
20
21
23
444
909
61
-
229
938
56
59
----------------------------------------------
----------------------------------------------
1,414
1,282
659
-
824
1,494
967
-
686
2,503
----------------------------------------------
----------------------------------------------
2,977
----------------------------------------------
4,391
4,156
----------------------------------------------
5,438
(236)
(42)
(100)
(481)
(41)
(100)
----------------------------------------------
----------------------------------------------
(378)
----------------------------------------------
4,013
==============================================
5,025
682
41
(1,735)
----------------------------------------------
4,013
==============================================
(622)
----------------------------------------------
4,816
==============================================
4,766
22
-
28
----------------------------------------------
4,816
==============================================
These financial statements were approved by the board of directors and authorised for issue on 8 October
2018 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 41 to 68.
38
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Statement of Changes in Equity
Group
Share
capital
£'000
Share
premium
£'000
Translation
Reserve
£'000
Share based
payments
£'000
Cumulative
losses
£'000
Total
equity
£'000
Balance at 1 July 2016
11,546
17,218
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
-
-
-
-
-
-
(21,841)
6,923
(2,166)
(2,166)
24,041
(39)
-
-
-
(39)
65
21
Balance at 30 June 2017
4,766
22
21
-
(5)
4,804
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Loss for the year
Share based payments
-
-
-
-
Shares issued and share premium
259
660
-
-
-
-
41
-
(1,888)
(1,888)
-
-
41
919
Balance at 30 June 2018
5,025
682
21
41
(1,893)
3,876
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
Company
Balance at 1 July 2016
Loss for the year
Share reorganisation
Costs of share reorganisation
Shares issued and share premium
Share
capital
£'000
Share
premium
£'000
Share based
payments
£'000
Cumulative
losses
£'000
11,546
17,218
-
-
(6,823)
(17,218)
-
43
-
22
-
-
-
-
-
(22,062)
(1,912)
24,041
(39)
-
Total
equity
£'000
6,702
(1,912)
-
(39)
65
Balance at 30 June 2017
4,766
22
-
28
4,816
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Loss for the year
Share based payments
Shares issued and share premium
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
-
-
259
-
-
660
-
41
-
(1,763)
(1,763)
-
-
41
919
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Balance at 30 June 2018
5,025
682
41
(1,735)
4,013
==============================================
==============================================
==============================================
==============================================
==============================================
Notes to the financial statements are from pages 41 to 68.
39
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2018
Loss from operations
Adjustments for:
Financial income
Depreciation
Amortisation of intangible assets
Share based payments
Unrealised currency translation gain
Cost of capital restructure
Operating cash flows before movements in
working capital
(increase)//decrease in receivables
(Decrease)/increase in payables
Decrease)/(increase) in inventories
Decrease in trade lease receivables
Cash (used)/generated in operations
Taxation (paid)/recovered
Group
Company
Year ended
30 June
2018
Year ended
30 June
2017
Year ended
30 June
2018
Year ended
30 June
2017
Note
£'000
£'000
(1,888)
(2,166)
£'000
(1,763)
£'000
(1,912)
10
12,13
14
22
17
20
16
18
(5)
227
332
41
-
-
(23)
118
238
-
21
(39)
(5)
222
332
41
-
-
(24)
115
238
-
-
(39)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,293)
(1,851)
(1,173)
(1,622)
(203)
(169)
300
266
766
(57)
(414)
598
(190)
(376)
308
266
730
(222)
(396)
598
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,099)
(7)
(958)
81
(1,165)
(28)
(912)
69
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Net cash (used)/generated in operations
(1,106)
(877)
(1,193)
(843)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Investing activities
Interest received
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Investments in associated companies
10
12,13
14
5
(443)
(303)
-
23
(63)
(282)
-
5
(437)
(303)
-
24
(49)
(282)
(53)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Net cash used in investing activities
(741)
(322)
(735)
(360)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Financing activities
Proceeds from issue of equity share capital
23
919
65
919
65
Net cash from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and equivalents at the beginning of
year
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
919
65
919
65
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(928)
(1,134)
(1,009)
(1,138)
2,520
3,654
2,503
3,641
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Cash and equivalents at the end of year
19
1,592
2,520
1,494
2,503
==============================================
==============================================
==============================================
==============================================
40
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 2018 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 24.
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 2018 the group had net cash balances of £1,59m (2017: £2,52m). 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 September 2019 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 17 Insurance Contracts
1 January 2021 Not yet endorsed
IFRS 16 Leases
1 January 2019
1 January 2019
IFRIC Interpretation 22 Foreign currency transactions
and advance considerations (issued 8 December 2016)
1 January 2018
1January 2018
IFRS 15 Revenue from contracts with customers
1 January 2018
1 January 2018
IFRS 9 Financial Instruments
1 January 2018
1 January 2018
IFRS 14 Regulatory deferral accounts
1 January 2016
Deferred until final standard
released
IFRIC Interpretation 23 Uncertainty over Income Tax
Treatments
1 January 2019
Not yet endorsed
41
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
4
Accounting policies (continued)
Standard
Annual Improvements to IFRS Standards 2015-2017
Cycle
IASB effective
date
EU effective date
1 January 2019
Not yet endorsed
Amendments to IAS 19: Plan amendment, Curtailment or
Settlement
1 January 2019
Not yet endorsed
IAS 40: Transfers of investment property
1 January 2018
1 January 2018
Amendments to IFRS 2: Classification and Measurement
of Share-based Payment Transactions
1 January 2018
1 January 2018
Amendments to IFRS 9: Prepayment features with
negative compensation
Amendments to IAS 28: Long-term Interests in
Associates and Joint ventures
Amendments to IFRS 4: Applying IFRS 9 financial
instruments with IFRS 4 Insurance Contracts
Amendments to References of the Conceptual
Framework in IFRS Standards
Annual improvements to IFRS 2014-2016 Cycle –
Relating to IFRS 1 First time adoption of IFRS and IAS
28 Investment in associates and joint ventures
Clarifications to IFRS 15 Revenue from Contracts with
Customers
1 January 2019
1 January 2019
1 January 2019
Not yet endorsed
1 January 2018
1 January 2018
1 January 2020
Not yet endorsed
1 January 2018
1 January 2018
1 January 2018
1 January 2018
Other than in respect of IFRS 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
16, the group has commenced an assessment of the impact likely from adopting the standards, and the initial
view is that this will not have any material impact on 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.
42
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
4
Accounting policies (continued)
Significant accounting judgements and sources of estimation uncertainty
Certain estimates and judgements need to be made by the directors which affect the results and position of the
Group as reported in the financial statements. Estimates and judgements are required if, for example, there are
intangible assets which are required to be amortised over their useful lives. The following judgements and
estimates have been identified by the Group:
Determining when intangible assets are impaired is a judgement which requires an estimate of the value in use
of the asset based on management’s best estimate of the future cash flows that the assets are expected to
generate. This also requires significant judgement as there are limited historic cash flows on which to base the
future cash flows on. Discussions are held within the Group between the relevant technical, commercial and
finance employees on the expected future cash flows of patents in individual territories;
Judgement is also applied when patent costs are reviewed in particular when considering patents in products
and territories that are not integral to the future business plans.
Distinguishing the research and development phases of new products and determining whether the recognition
requirements for the capitalisation of development costs are met and their subsequent amortisation period
requires judgement. After capitalisation management monitors whether the recognition requirements continue
to be met and whether there are any indicators that capitalised costs may be impaired. iTrack II has required
and continues to require a substantial amount of developments costs as the new iTrack is a significant
improvement on the original iTrack model.
As the deferred shares have a dividend right they have been judged to be equity rather than debt.
A judgement has been made in regard to the share volatility when calculating the IFRS2 share based payments
charge
It has been judged that the ongoing development cost of the iTrack II system is for iTrack II rather than the next
iteration and as such the cost is being amortised to the same end date as the initial development cost that was
capitalised.
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
2018.
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.
43
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 is 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.
● Subscription service fees are 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 is 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; and
iTrack equipment 1 – 3 years
The assets’ estimated residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
44
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 charged to a fixed end date of 30 September 2019 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.
45
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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
Subscription 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.
46
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 considers 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.
47
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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.
5
Revenue and segmental reporting
The tables below set out the Group’s revenue split and operating segments.
Revenue
Chile
North America
United Kingdom & Europe
Australia
Japan
Rest of the World
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
660
322
362
400
160
146
----------------------------------------------
2,050
=============================================
659
703
313
104
108
116
----------------------------------------------
2,003
=============================================
48
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
Segments
Year ended 30 June 2018
Sales
Gross profit
Allocated overheads
Contribution
Group overheads
Loss before taxation
Taxation
Loss for the year
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
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Translogik
£'000
SAWSense
£'000
1,903
147
Total
£'000
2,050
===================== ===================== ====================
1,173
(978)
116
(482)
1,289
(1,460)
----------------------------- ------------------------------ -----------------------------
195
(366)
(171)
----------------------------- ----------------------------- -----------------------------
(1,743)
-------------------------------
(1,914)
26
-------------------------------
(1,888)
======================
Translogik
£'000
SAWSense
£'000
Total
£'000
1,193
=============================================
810
=============================================
2,003
=============================================
376
(1,304)
----------------------------------------------
762
(482)
----------------------------------------------
1,138
(1,786)
----------------------------------------------
(928)
----------------------------------------------
280
----------------------------------------------
(648)
----------------------------------------------
(1,509)
(5)
----------------------------------------------
(2,162)
(4)
----------------------------------------------
(2,166)
=============================================
49
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
During the year ended 30 June 2018 there were 3 (year ended 30 June 2017: 3) customers whose turnover
accounted for more than 10% of the Group’s total revenue as follows:
Year ended 30 June 2018
Customer A
Customer B
Customer C
Year ended 30 June 2017
Customer A
Customer B
Customer C
Revenue
£'000
Percentage
of total
400
365
262
20%
18%
13%
Revenue
£000
Percentage
of total
624
380
221
31%
19%
11%
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
50
Notes to the financial statements (continued)
6
Discontinued operation (continued)
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
Loss for the year from discounted operations
Cash flows from (used in) discontinued operations
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
2018
£’000
2017
£'000
-
-
-
-
-
-
-
-
-
-
(5)
(5)
-
(5)
-
-
-
(5)
2018
£'000
Group
2017
£'000
2018
£'000
(Debt)/cash used in operating activities
(Debt)/cash from discontinued operations
-
----------------------------------------------
-
=============================================
(5)
----------------------------------------------
(5)
=============================================
-
----------------------------------------------
-
=============================================
Company
2017
£'000
(5)
----------------------------------------------
(5)
=============================================
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
Fees payable for tax research and development services
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
227
332
63
-
=============================================
118
238
63
(66)
=============================================
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
35
3
5
=============================================
35
3
-
=============================================
51
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 2018
Year ended
30 June 2017
18
9
2
----------------------------------------------
29
=============================================
19
7
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 2018
£'000
Year ended
30 June 2017
£'000
1,489
41
153
26
----------------------------------------------
1,709
=============================================
1,439
-
151
27
----------------------------------------------
1,617
=============================================
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
394
16
----------------------------------------------
410
409
10
----------------------------------------------
419
49
22
=============================================
51
-
=============================================
The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid
director was £165,632 (2017: £164,528). No company pension contributions were made to a money purchase
scheme on his behalf (2017: 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 (2017:
nil).
The number of directors who exercised share options in the year was nil (2017: nil)
The number of directors in respect of whose services were received or receivable under long term incentive
schemes was nil (2017: nil).
52
Notes to the financial statements (continued)
10
Finance income and expense
Recognised in profit or loss
Finance income
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 for the year
Total tax credit
Loss before tax
Tax calculated at the average standard UK corporation tax rate of 19.00%
(2017: 19.75%)
Expenses not deductible for tax purposes
Current year losses for which no deferred tax asset was recognised
Adjustment for overseas profits
Prior year adjustment
Total tax (credit)/charge
A deferred tax asset has not been recognised in respect of the following item:
Tax Losses
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
5
----------------------------------------------
5
=============================================
23
----------------------------------------------
23
=============================================
Year ended
30 June 2018
£'000
Year ended
30 June 2017
£'000
-
(26)
----------------------------------------------
(26)
=============================================
4
-
----------------------------------------------
4
=============================================
Year ended
30 June 2018
Year ended
30 June 2017
£'000
(1,914)
£'000
(2,157)
-
------------------------------
(1,914)
-
-------------------------------
(2,157)
======================= =======================
(364)
3
357
4
(426)
48
378
4
(26)
-------------------------------
-
-------------------------------
(26)
4
======================= =======================
3,345
3,561
======================= =======================
53
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
11
Taxation (continued)
Reductions in the UK corporation tax rate 20% to 19% (effective from 1 April 2017) has been enacted. This will
reduce the Company's future current tax charge accordingly. Deferred tax has been calculated at the rate of 19%
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 £19.7m (2017:
£18.1m), 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 rate of Corporation Tax will reduce to 17% with effect from 1 April 2020.
As a result, the effective tax rate used to calculate the current tax for the period ended 30 June 2018 was 19.00%
(2017: 19.75%).
54
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
12
Property, plant and equipment – Group
Cost
Balance at 1 July 2016
Additions
Reclassification
Balance at 30 June 2017
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Depreciation and impairment
Balance at 1 July 2016
Depreciation charge for the year
Reclassification
Balance at 30 June 2017
Balance at 1 July 2017
Depreciation charge for the year
Disposals
Balance at 30 June 2018
Net book value
At 1 July 2016-
At 1 July 2017
At 30 June 2018
iTrack
Equipment
£’000
Plant and
Equipment
£'000
Fixtures and
Fittings
£'000
Motor
Vehicles
£'000
-
-
116
----------------------------------------------
116
=============================================
116
423
(47)
----------------------------------------------
492
=============================================
-
-
72
----------------------------------------------
72
=============================================
72
158
(47)
----------------------------------------------
183
=============================================
-
=============================================
44
=============================================
309
=============================================
739
60
(116)
----------------------------------------------
683
=============================================
683
20
(193)
----------------------------------------------
510
=============================================
567
92
(72)
----------------------------------------------
587
=============================================
587
50
(193)
----------------------------------------------
444
=============================================
172
=============================================
96
=============================================
66
=============================================
161
3
-
----------------------------------------------
164
=============================================
164
-
(57)
----------------------------------------------
107
=============================================
39
21
-
----------------------------------------------
60
=============================================
60
17
(57)
----------------------------------------------
20
=============================================
122
=============================================
104
=============================================
87
=============================================
26
-
-
----------------------------------------------
26
=============================================
26
-
-
----------------------------------------------
26
=============================================
7
5
-
----------------------------------------------
12
=============================================
12
2
-
----------------------------------------------
14
=============================================
19
=============================================
14
=============================================
12
=============================================
Total
£'000
926
63
-
----------------------------------------------
989
=============================================
989
443
(297)
----------------------------------------------
1,135
=============================================
613
118
-
----------------------------------------------
731
=============================================
731
227
(297)
----------------------------------------------
661
=============================================
313
=============================================
258
=============================================
474
=============================================
Note: All depreciation is charged to administrative expenses
55
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
13
Property, plant and equipment – Company
Cost
Balance at 1 July 2016
Additions
Reclassification
Balance at 30 June 2017
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Depreciation and impairment
Balance at 1 July 2016
Depreciation charge for the year
Reclassification
Balance at 30 June 2017
Balance at 1 July 2017
Depreciation charge for the year
Disposals
Balance at 30 June 2018
Net book value
At 1 July 2016
At 1 July 2017
At 30 June 2018
iTrack
Equipment
£’000
Plant and
equipment
£'000
-
-
116
----------------------------------------------
116
=============================================
116
423
(47)
----------------------------------------------
492
=============================================
-
-
72
----------------------------------------------
72
=============================================
72
158
(47)
----------------------------------------------
183
=============================================
-
=============================================
44
=============================================
309
=============================================
739
49
(116)
----------------------------------------------
672
=============================================
672
14
(193)
----------------------------------------------
493
=============================================
567
92
(72)
----------------------------------------------
587
=============================================
587
47
(193)
----------------------------------------------
441
=============================================
172
=============================================
85
=============================================
52
=============================================
Fixtures
and
fittings
£'000
159
-
-
----------------------------------------------
159
=============================================
159
-
(57)
----------------------------------------------
102
=============================================
39
21
-
----------------------------------------------
60
=============================================
60
16
(57)
----------------------------------------------
19
=============================================
120
=============================================
99
=============================================
83
=============================================
Motor
vehicles
£'000
10
-
-
----------------------------------------------
10
=============================================
10
-
-
----------------------------------------------
10
=============================================
7
2
-
----------------------------------------------
9
=============================================
9
1
-
----------------------------------------------
10
=============================================
3
=============================================
1
=============================================
-
=============================================
Total
£'000
908
49
-
----------------------------------------------
957
=============================================
957
437
(297)
----------------------------------------------
1,097
=============================================
613
115
-
----------------------------------------------
728
=============================================
728
222
(297)
----------------------------------------------
653
=============================================
295
=============================================
229
=============================================
444
=============================================
Note: All depreciation is charged to administrative expenses
56
Notes to the financial statements (continued)
14
Intangible assets
Group and company intangible assets
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Cost
Balance at 1 July 2016
Additions
Balance at 30 June 2017
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Amortisation and impairment
Balance at 1 July 2016
Amortisation for the year
Balance at 30 June 2017
Balance at 1 July 2017
Amortisation for the year
Balance at 30 June 2018
Net book value
At 1 July 2016
At 1 July 2017
At 30 June 2018
Goodwill
£'000
50
-
----------------------------------------------
50
=============================================
50
-
----------------------------------------------
50
=============================================
-
-
----------------------------------------------
-
=============================================
-
-
----------------------------------------------
-
=============================================
50
=============================================
50
=============================================
50
=============================================
Patents
rights and
trademarks
£'000
Development
costs
£'000
1,577
70
----------------------------------------------
1,647
=============================================
1,647
108
----------------------------------------------
1,755
=============================================
1,053
70
----------------------------------------------
1,123
=============================================
1,123
82
----------------------------------------------
1,205
=============================================
524
=============================================
524
=============================================
550
=============================================
1,255
212
----------------------------------------------
1,467
=============================================
1,467
195
----------------------------------------------
1,662
=============================================
935
168
----------------------------------------------
1,103
=============================================
1,103
250
----------------------------------------------
1,353
=============================================
320
=============================================
364
=============================================
309
=============================================
Total
£'000
2,882
282
----------------------------------------------
3,164
=============================================
3,164
303
----------------------------------------------
3,467
=============================================
1,988
238
----------------------------------------------
2,226
=============================================
2,226
332
----------------------------------------------
2,558
=============================================
894
=============================================
938
=============================================
909
=============================================
Amortisation and impairment charge
The amortisation is recognised in the following line items in the statement of comprehensive income:
Administrative expenses
Development Costs
2018
£'000
2017
£'000
332
----------------------------------------------
332
=============================================
238
----------------------------------------------
238
=============================================
Development expenditure of the new iTrack II was capitalised in the year amounting to £0.20m (2017: £0.21m).
These development costs have been deemed to have a fixed useful economic life ending in September 2019.
There were Research and Development costs expensed to the Statement of Comprehensive Income in the year
of £0.05m (2017: £nil).
57
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 cash
generating units of the Group, that of the development and sales of SAWSense and Translogik.
The recoverable amount of goodwill is determined from operating cashflow projections for 12 months to June 2019
which are currently contracted to support goodwill.
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
Translogik South Africa Pty Ltd
Trading
South Africa
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
The following investments are included in the Company balance sheet at 2018 and 2017
Ownership
2018
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
N/A
100%
N/A
100%
N/A
Transense KK
Transense Technologies Chile SPA
Translogik South Africa Pty Ltd
Year ended
30 June 2018
£'000
Company
Year ended
30 June 2017
£'000
3
53
5
3
53
-
----------------------------------------------
61
=============================================
----------------------------------------------
56
=============================================
58
Notes to the financial statements (continued)
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
16
Inventories
Raw materials
Finished goods
30 June 2018
£'000
Group
30 June 2017
£'000
30 June 2018
£'000
Company
30 June 2017
£'000
120
565
----------------------------------------------
685
=============================================
225
760
----------------------------------------------
985
=============================================
120
539
----------------------------------------------
659
=============================================
225
742
----------------------------------------------
967
=============================================
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in
the year ended 30 June 2018 amounted to £0.76m (2017: £0.87m). The impairment was reduced by £0.01m in
cost of sales against inventories in the year (2017: £0.13m).
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
Accrued income
Prepayments
30 June 2018
£'000
Group
30 June 2017
£'000
30 June 2018
£'000
Company
30 June 2017
£'000
423
(18)
----------------------------------------------
405
108
-
58
30
97
----------------------------------------------
698
=============================================
122
(39)
----------------------------------------------
83
181
-
265
7
166
----------------------------------------------
702
=============================================
265
(18)
----------------------------------------------
247
83
332
58
7
97
----------------------------------------------
824
=============================================
82
(39)
----------------------------------------------
43
148
57
265
7
166
----------------------------------------------
686
=============================================
As at 30 June 2018 there were no past due but not impaired trade receivables.
59
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
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 2018
Lease payments
Unearned finance income
Group and Company
Minimum lease payments due
Within 1 year
1 to 5 years
after 5 years
£'000
£'000
£'000
58
-
-
-
-
-
Total
£'000
58
-
Net present values
58
-
-
58
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
=============================================
=============================================
=============================================
=============================================
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
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
=============================================
=============================================
=============================================
=============================================
19
Cash and cash equivalents
Cash and cash equivalents per balance
sheet
Cash and cash equivalents per cash flow
statements
30 June 2018
£'000
Group
30 June 2017
£'000
30 June 2018
£'000
Company
30 June 2017
£'000
1,592
2,520
1,494
2,503
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
1,592
=============================================
2,520
=============================================
1,494
=============================================
2,503
=============================================
60
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
20
Trade and other payables
Current
Trade payables
Non-trade payables and accrued expenses
Group
Year ended
30 June 2018
£'000
Year ended 30
June 2017
£'000
Year ended
30 June 2018
£'000
111
205
----------------------------------------------
316
=============================================
280
231
----------------------------------------------
511
=============================================
96
140
----------------------------------------------
236
=============================================
Company
Year ended
30 June 2017
£'000
278
203
----------------------------------------------
481
=============================================
21
Provisions
At 1 July 2017
At 30 June 2018
Group and Company
Provisions
Warranty
£'000
100
Total
£'000
100
----------------------------------------------
----------------------------------------------
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.
At 1 July 2016
Additional provisions
At 30 June 2017
Group and Company
Provisions
Warranty
£'000
53
47
Total
£'000
53
47
----------------------------------------------
----------------------------------------------
100
100
=============================================
=============================================
61
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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 2018 was £0.03m (year ended 30 June
2017: £0.03m).
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 2018 the charge to the profit and loss for the year was £41,000 (2017: £nil)
Unapproved Discretionary Share Option Scheme
At 30 June 2018 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
Cancelled/
30 June
Granted
Expired
Exercised
2018
Option
Price
Date of
Grant
Date of Exercise
First
Last
-
-
-
-
-
-
-
-
-
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
1 July 2017
150,447
1,800
5,000
5,000
62
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
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%
1.50
1.50
1.50
1.50
%
Nil
Nil
Nil
Nil
At 30 June 2018, the following shares remained outstanding under an Enterprise Management Incentive Option
Scheme.
Number of Options
Option
Price
Date of
Grant
Date of Exercise
First
Last
30 June
Granted
Cancelled
Exercised
2018
-
-
-
(5,000)
-
(5,000)
-
-
-
375,000
270,000
£0.75
26.06.17
30.06.18
30.06.21
£1.00
26.06.17
30.06.20
30.06.27
20,000
£0.75
26.06.17
30.06.20
30.06.27
1 July
2017
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
£0.0834
£0.0388
£0.0834
£0.715
£0.715
£0.715
£0.75
£1.00
£0.75
%
28.08%
28.08%
28.08%
%
1.00%
1.00%
1.00%
3
3
3
%
Nil
Nil
Nil
63
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
23
Share Capital
Issued Share Capital
30 June 2018
30 June 2017
30 June 2018
30 June 2017
30 June 2018
30 June 2017
Ordinary shares of 10 pence
Deferred shares of 40 pence
Ordinary shares of 50 pence
each
each
each
On issue at 1 July 2017
Issued for cash Ordinary Shares at
£0.50 on December 2017
Share reorganisation 22 June 2018
Issued for cash Ordinary Shares at
£0.10 on 22 June 2018
On issue at 30 June 2018– fully paid
-
-
9,548,948
-
-
-
-
-
9,548,948
-
-
-
9,532,435
9,532,435
16,513
(9,548,948)
-
-
2,500,000
---------------------------
-
-----------------------------
-
-----------------------------
-
-----------------------------
-
-----------------------------
-
-----------------------------
12,048,948
=====================
-
=====================
9,548,948
=====================
-
=====================
-
=====================
9,532,435
=====================
Allotted, called up and fully paid
Ordinary shares of £0.50 each
Ordinary shares of £0.10 each
Deferred shares of £0.40 each
Shares classified in shareholders’ funds
30 June
2018
£'000
-
1,205
3,820
----------------------------------------------
5,025
=============================================
5,025
30 June
2017
£'000
4,766
-
-
----------------------------------------------
4,766
=============================================
4,766
=============================================
=============================================
During the year ended 30 June 2018 a share reorganisation approved by the shareholders at the GM on 21 June
2018, took place, resulting in the creation of 40p Deferred Shares and the Ordinary Shares of 10 pence each
being created.
24
Operating leases
Non-cancellable operating lease rentals are payable as follows:
Group and Company
Land &
Buildings
30 June 2018
£'000
Other Lease
30 June 2018
£'000
Land &
Buildings
30 June 2017
£'000
Other Lease
30 June 2017
£'000
Less than one year
Between one and five
More than five years
69
73
-
-
-
-
--------------------------------- --------------------------------- --------------------------------- ---------------------------------
-
======================== ======================== ======================== ========================
63
252
110
-
-
-
142
425
-
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 2017: £0.06m).
64
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
25
Basic and fully diluted earnings/(loss) per share
Basic loss per share is calculated by dividing the loss after taxation of £1.89m (2017: loss of £2.17m) by the
weighted average number of ordinary shares in issue during the year of 9,595,825 (2017: 9,483,815). 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 2018
Year ended
30 June 2017
Number
Number
9,595,825
9,483,815
-
------------------------------
-
------------------------------
9,595,825
======================
9,483,815
======================
Year ended
30 June 2018
Year ended
30 June 2017
£'000
£'000
Loss from continuing operations
(1,888)
(2,160)
From continuing operations
Basic loss per share
------------------------------
------------------------------
(19.68)
(22.78)
====================== ======================
Loss from discontinued operations
-
(5)
From discontinued operations
Basic loss per share
Earnings attributable to shareholders
Basic loss per share
------------------------------
------------------------------
(0.06)
====================== ======================
-
(19.68)
(22.84)
====================== ======================
There are 665,000 share options at 30 June 2018 (2017: 675,000) that are not included within diluted earnings per
share because they are anti-dilutive.
65
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
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 £1.59m
(2017: £2.52m). Note 3 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.
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 2018 or 2017.
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.
66
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
26
Financial instruments (continued)
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.
Functional currency of Group operation
Sterling
At 30 June 2018
Sterling
At 30 June 2017
Euro
£'000
158
158
122
122
US Dollar
Australian
Dollar
Canadian
Dollar
£'000
623
623
259
259
£'000
£’000
(1)
(1)
7
7
-
-
(2)
(2)
At the reporting date the profile of the Group’s financial instruments was:
Financial assets
Loans and receivables comprising:
Trade receivables
Amounts receivable under long term contracts
Cash and cash equivalents
Financial liabilities
Other financial liabilities at amortised cost
Trade payables
Accruals
Financial liabilities at amortised cost
30 June
2018
£000
30 June
2017
£000
405
58
1,592
----------------------------------------------
2,055
=============================================
111
205
----------------------------------------------
316
=============================================
83
324
2,520
----------------------------------------------
2,927
=============================================
280
231
----------------------------------------------
511
=============================================
There was £0.06m of gross trade finance lease assets held on the balance sheet at the year end date. (2017:
£0.32m).
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.
67
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2018
Notes to the financial statements (continued)
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 £0.46m (2017: £0.41m) 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 2018 the Group’s cash was divided between current accounts £0.67m (2017: £0.60m) and £0.93m in
fixed rate monthly deposits (2017: £1.92m) with a weighted average interest rate for the year of 0.25% (2017:
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.
28
Contingencies and commitments
Group
The Group had no capital commitments or contingent liabilities as at 30 June 2018 (2017: £nil).
Company
The Company has no capital commitments or contingencies as at 30 June 2018 (2017: £nil).
29 Warrants
No warrants were outstanding as at 30 June 2018. (2017: Nil).
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
Group and Company
Year ended
30 June 2017
£000
Year ended
30 June 2016
£000
-
-
----------------------------------------------
-
=============================================
-
-
----------------------------------------------
-
=============================================
68