Transense Technologies plc
Annual report and financial
statements
Registered number 01885075
For the year ended 30 June 2019
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Contents
Directors and advisers
Highlights
Chairman’s statement
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
12
15
18
21
22
28
29
30
31
32
33
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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
20 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
Steelpark Road
Halesowen
B62 8HD
Registration Number 01885075
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
3
Highlights
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Revenue up 9% to £2.23m (2018: £2.05m)
iTrack II subscription revenue up 58% to £0.98m (2018: £0.62m)
Major commercial breakthroughs achieved in each business unit:
o Licensee GE Aviation’s T901-GE-900 engine incorporating a Transense Surface Acoustic
Wave (SAW) sensor selected by the U.S. Army
o
Initial iTrack II order from Bridgestone Corporation, Japan
o Global collaboration and financial support agreements signed with Bridgestone post
year end
Net loss after taxation, ahead of expectations at £1.47m (2018: £1.89m)
Net cash used in operations reduced by 62% to £0.43m (2018: £1.11m)
Equity fund raise of £2.56m completed in April 2019
Net cash at end of period of £2.65m (2018: £1.59m)
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Chairman’s statement
In a transformational year for the Group, financial results are improved and major breakthrough
announcements have been made relating to the commercialisation of each of our core technologies. The
balance sheet has been strengthened by an equity fundraise which, together with the interest free
Bridgestone loan received in August 2019, will provide a secure platform to support exciting future growth
prospects.
The Chairman wishes to thank the whole Transense team for its contribution towards achieving the
breakthroughs in both iTrack and SAWSense during the year.
Strategy
The business strategy of the Group continues to be the development of innovative sensing solutions
across a range of applications, which are commercialised either through the launch of products and
services to customers or by forming strategic alliances with partner organisations. Value is realised
through a combination of commercial income, royalties, licensing income and capital gains on disposals.
Commercial developments
SawSense
SAWSense is a leader in the development of Surface Acoustic Wave ("SAW") wireless, batteryless,
sensor systems that offer significant advantages over legacy systems in common use. The business
continues to be involved in several projects in conjunction with major global industrial companies.
In July 2016, SAWSense entered into a significant licensing agreement with General Electric Company
(“GE”) for the non-exclusive use of our patented, wireless, passive SAW technology. Initial license fees of
US$0.75m were received following the agreement, and we are entitled to receive further significant royalty
payments from GE in respect of unit sales anticipated in the future.
The likelihood of receiving future royalty payments took a step forward with the announcement in February
2019 that GE’s engine, incorporating our SAW sensor, had been selected by the US Army for the
Engineering and Manufacturing Development (“EMD”) phase of the Improved Turbine Engine Program
(“ITEP”), the U.S. Army's endeavour to re-engine its Boeing AH-64 Apaches and Sikorsky UH-60 Black
Hawks.
The U.S. Army intends to replace more than 6,000 engines installed in their current fleet of these two
aircraft. The wider market for the T901 engine includes replacement engines for these aircraft in military
forces outside of the U.S., as well as other military and commercial medium sized vertical take-off aircraft
globally. This provides the prospect of an expected growing revenue stream as volumes of engines
installed builds over time, this selection both demonstrates the ability of our SAW sensors to operate in
extreme testing environments and that they can be manufactured in volume. Our relationship with GE
continues to deepen, with further applications being evaluated.
Progress continues with several other applications. Our Torque sensor is part of an innovative steering
system which is due to start vehicle trials on off road sports vehicles in 2020. Our Joint Development
Agreement with McLaren is exploring opportunities in other race formats and our participation in a Strain
& Temperature related project with University of Southampton & Lloyds Register which began earlier this
year is progressing on schedule.
5
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Chairman’s statement (continued)
Translogik
Important advancements were made with the market traction of our iTrack II mining tyre monitoring
systems. The number of mine haul trucks fitted with the system increased during the year by more than
50% to 396, with annualised revenues at the end of the year exceeding £1.2m covering installations in 4
countries across 3 continents.
In February 2019, an initial order for 50 iTrack II units was received from Bridgestone Corporation, Japan
(“Bridgestone”) for installation in mines in North America. Bridgestone are a leading supplier of tyres to
the mining off-the-road (OTR) marketplace and their decision to offer the iTrack system is a testament to
the capabilities of Translogik and the iTrack system.
More recently in August 2019, the Company entered into a joint collaboration agreement with Bridgestone
in respect of the iTrack II system and its future generations (“iTrack system”) for an initial 18-month period
with ability to extend.
Based on this joint collaboration agreement, Bridgestone has agreed to offer the iTrack system exclusively
as a mining tyre monitoring system for tyres 57 inches and above for its OTR customers. In addition, the
Company has agreed that it will not contract with any other tyre manufacturer for the provision of the iTrack
system for tyres 57 inches and above for the term of the agreement, nor will it for a period of six months
have discussions with any other party in relation to any transaction of a merger, acquisition or joint venture
nature in respect of its iTrack business.
Since the year end, the total number of mine haul trucks fitted or agreed to be fitted with iTrack now
exceeds 500. This includes 25 units being added at South Walker Creek in Australia. Pleasingly, Kal Tire,
a corporation based in Canada and a substantial retailer and service provider in mining and OTR, has
become a reseller for iTrack in Africa, and in August 2019 won a contract to supply 85 iTrack II mining
tyre monitoring systems for haul trucks into a large multi-national mining company operating in
Mozambique.
The selection of the iTrack system was the outcome of a competitive trial between iTrack and a number
of other TPMS systems with the end user concluding that iTrack was the best overall solution, satisfying
both Kal Tire, and the end user’s very specific operational and information reporting requirements. Kal
Tire has a large installed customer base throughout Africa and will be seeking to introduce additional
iTrack systems into a number of their current and future on-site service operations.
Sales of tyre tread depth probes reduced by 46% to £0.45m (2018: £0.84m). This followed a year of
particularly strong growth in 2017/18, when the probe was selected by Goodyear USA for their new tyre
management system called 'Tire Optix' which incorporates the Translogik tyre probe. The take up rate
has been somewhat slower than we had anticipated.
Our probes are also specified for use in Bridgestone’s corresponding ‘Toolbox’ and ‘Total Tyre Care’
systems as well as Continental’s ‘Fleetfox’ system, underpinning our belief that they represent an industry
standard.
It is likely that the revenue reduction during the year was partly a result of reduced marketing effort,
especially on-line. We have recently recommenced advertising in this way, and are beginning to see a
corresponding increase in sales orders, which is encouraging.
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Chairman’s statement (continued)
Financial results and condition
Revenues for the year increased by 9% to £2.23m (2018: £2.05m). Recurring subscription revenues
generated by Translogik from users of the iTrack II system increased by 58% to £0.98m (2018: £0.62m).
We anticipate these revenues will continue to grow significantly over the coming year as the iTrack
installed base increases.
Gross margin increased to 80.5% of revenues (2018: 62.9%) reflecting the higher proportion of income
from subscriptions, and also ad hoc fees to support new trials. The associated costs of the subscription
income is included in depreciation charges, included within administrative expenses, which totalled
£0.31m in the year (2018: £0.16m).
Net operating expenses were £3.60m (2018: £3.21m) and the net loss before taxation from continuing
operations reduced to £1.73m (2018: £1.91m).
The total comprehensive loss for the period reduced to £1.47m (2018: £1.89m), reflecting a tax credit of
£0.27m (2018: £0.03m).
Net cash used in operations reduced by 62% to £0.43m (2018: £1.11m). Offering iTrack II to customers
on a subscription basis results in a short-term cash outlay and requires investment in the initial months of
each contract. The net investment in fixed assets for such contracts in the period amounted to £0.38m
(2018: £0.42m) and as Translogik’s iTrack II installed base increases there will continue to be a need to
invest in fixed assets.
In March and April 2019, the Company issued additional equity to new and existing shareholders raising
£2.56m to provide additional working capital and fund further product development costs for the iTrack II
system.
The Group closed the year with net cash and cash equivalents of £2.65m (2018: £1.59m). In August 2019
the Company received an interest free loan of $0.75m (£0.62m) from Bridgestone as part of the Joint
Collaboration Agreement with them to be used to support the accelerated rate of growth that is anticipated
from this relationship.
Prospects
The breakthrough successes achieved in recent months have been the culmination of several years of
technical and commercial development activity. Each of the Group’s business units are now closely
aligned with global companies that are acknowledged to be leaders in their respective fields.
There remains much to be done to ensure that we, together with our commercial partners, are able to fully
exploit the opportunities made possible by our technologies. We are firmly committed, and well positioned,
to provide the resources required to unlock potential for very exciting future growth.
David M Ford
Chairman
25 September 2019
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Strategic Report
Financial Review
Results for the year
Revenues totalled £2.23m (2018: £2.05m). The pre-tax loss totalled £1.73m (2018: £1.91m).
Translogik revenues grew by 11% to £2.11m, and SAWSense generated £0.12m of revenues (2018:
£0.15m). Gross margin improved to 80.5% (2018: 62.9%) reflecting the continual increase in the
subscription base. The depreciation on capitalised iTrack kit, included in administrative expenses,
increased to £0.31m (2018: £0.16m).
Administrative expenses for the year, before depreciation, amortisation and interest, amounted to £2.84m
compared with £2.65m in the prior year.
The increase in Translogik revenues reflects the good growth in new iTrack subscription services following
the launch of iTrack II in September 2016 and despite a 46% reduction in Probe sales during the period
following a record year of sales in 2018.
The Earnings per share (EPS) are set out below (in Pence):
EPS (Loss)
Taxation
2019
2018
(11.11)
(19.68)
The Company has UK tax losses available to carry forward at 30 June 2019 of approximately £21m,
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. During the year the Company received R & D tax credits totalling £283,000 in respect
of the two years ended 30 June 2018.
Cash flow and financial position
There was a net cash inflow of £1.06m (2018: outflow of £0.93m) during the year, arising from trading and
£2.34m of net proceeds arising from the issue of equity share capital during 2019 (2018: £0.92m).
Net cash used in operations amounted to £0.43m (2018: £1.11m).
At 30 June 2019 the Group had net cash balances of £2.65m (2018: £1.59m).
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 note that part of the effect
of increased demand for iTrack services has been funded by Bridgestone after the year end.
8
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 £1.47m (2018: loss of £1.89m). The Group has accumulated losses of £3.36m (2018:
£1.89m). The balance of cash and cash equivalents at 30 June 2019 is £2.65m (2018: £1.59m).
The Group’s cash used in operations during the year was £0.43m (2018: £1.11m).
The Group meets its day to day working capital requirements through existing cash reserves and does
not currently have an overdraft facility. The directors have prepared cash flow forecasts for the period
to 31 December 2020. These forecasts indicate that the Group should continue to be able to operate
within its current cash resources for the foreseeable future.
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
Turnover
EBITDA
EBT
FY 19
£000's
FY 18
£000's
£2,226
£2,050
(£968)
(£1,360)
(£1,731)
(£1,914)
EPS (Including Discontinued Operations) - Pence
(11.11)
(19.68)
Share Price - Pence
Cash used in operations
Cash
Cash/Share - Pence
Net Assets
Net Assets/Share - Pence
65.50
36.50
(£427)
(£1,106)
£2,647
£1,592
16.23
13.21
£4,748
£3,876
29.12
32.17
Market Capitalisation
£10,681
£4,398
Shares in issue (adjusted for 50:1 reduction)
16,307,282 12,048,948
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Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Strategic Report (continued)
Principal risks and uncertainties
Risk management is essential as part of the management process. Regular reviews are undertaken to
assess the nature and magnitude of risks faced and the manner in which they may be mitigated. Where
controls are in place, their adequacy is monitored.
Risk and Uncertainty
Details of Risk & Impact
Mitigation
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 IP element of the iTrack II product
is based entirely on copyright and know-
how. There are no applicable patents.
The risk exists that our intellectual
property may be infringed by third
parties or that we may inadvertently
infringe third party rights. The impact
resulting in loss of profitability and cash
flow and loss of market share.
The decision making process for the
development of new and existing
products requires an assessment of the
potential return, which is generally
uncertain at the early stage of
development. A changing and evolving
market place will always present
challenges to produce marketable
products.
Procedures are in place to ensure we
monitor new third party patent
applications, in order to ensure
adequate protection for our key
intellectual property including
registration and avoid infringing third
party rights.
Although the functionality of iTrack II is
public knowledge, none of the elements
of know-how or copyright are published
thereby making copying the technology
far more difficult. The ongoing
development of the product also makes
it more difficult to copy.
Development spend is regularly planned
and reviewed. The Groups
understanding of customer needs and
expectations is greatly enhanced by
working closely with customers on
extensive product trials.
An experienced and knowledgeable
team is essential to continually develop
complex products for 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.
Providing the existing team with good
training and incentives is a key priority
for the business and has been
instrumental in retaining key staff. The
recruitment and development of new
employees, when required, is done so
by experienced staff to ensure the
correct calibre of individual is identified.
Intellectual Property
Product Development
People
EU Membership
In June 2016 the UK electorate voted to
discontinue its membership of the EU.
The Directors still 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 40 only 9% 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 on the UK element of
manufacturing and assembly of product
and will consider whether moving to an
EU environment is preferable. In the
event that the GBP will be impacted by
the outcome of Brexit the mitigation will
be as disclosed on the foreign currency
fluctuation risk note.
10
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Strategic Report (continued)
Principal risks and uncertainties (continued)
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Global Companies
Liquidity
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 the time from initial
discussions to receiving a PO can be
far longer than the usual business
transaction cycle between SME's. On
the competition side the Group can be
disadvantaged by not having substantial
cash and/or human resources of far
larger entities.
The Group 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. The Group is also planning
on ramping up its human resources to
facilitate the growth in iTrack business.
With regards the competition the far
smaller size of Transense ensures we
are able to move far more swiftly to
adapt technology to customer
requirements and we have in place a
very specialised team of technicians to
ensure 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 and
lack of human resources.
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 new
business will require working capital to
fund the approximate 7 month cash flow
negativity resulting from the
subscription model. The failure to raise
additional funds for working capital, if
required, could threaten the going
concern status of Transense.
During the course of FY 19 the cash
resources were improved by a fund raise
producing £2.34m net of costs. Cash
resources remain relatively strong
moving into FY20. Following the signing
of the "Joint Collaboration" agreement
with Bridgestone the latter have
provided loan funding of $750k to fund
working capital requirements arising
from accelerated growth.The Board also
exert tight controls on overheads and
monitor cash flow regularly and do not
presently forsee any immediate
requirement for raising further funds.
Foreign currency
fluctuation
Approximately 49% 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.
Transense's biggest exposure is with
regards the USD and during the course
of the last year the USD has
strengthened against GBP by 1.3%
producing insignificant Forex
adjustments. Since the year end the
GBP has weakened further. Should the
movement markedly reverse the Group
will consider forward purchases as an
effective hedge.
By order of the board
Melvyn Segal
Finance Director
25 September 2018
11
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Corporate Governance Statement
In accordance with AIM rule 26 the Company has adopted the Quoted Companies Alliance’s (QCA)
Governance Code. The statement of compliance with the QCA’s Governance Code can be found on our
website. The Board is committed to high standards of corporate governance as appropriate to the
Company’s size and activities and set out below key areas of Corporate Governance.
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 63
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 62
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 64
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 58
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 Chairman of AIM listed Surgical Innovations
Group Plc and was recently appointed as a Non Exececutive Director of AIM listed Solid State plc.
Rodney Westhead (Non-Executive Director **) Age 75
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
appointments as Chairman of Carter and Carter Group plc, Chairman of Clean Air Power Limited 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
12
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Corporate Governance Statement (continued)
The main features of the Group’s corporate governance arrangements are:
Throughout the financial year the Board schedule regular monthly 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 10-11, 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. 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.
13
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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.
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.
14
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 Remuneration Committee is responsible for determining the remuneration arrangements of the
Executive Directors, and advising the Board on the remuneration policy for senior executives and
participation in the Company’s long term incentive share schemes.
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, Bonuses and Benefits
The base salaries for the executive directors are reviewed annually, but not necessarily increased, by
the Remuneration Committee.
The executive directors are eligible to be considered for an annual bonus entitlement based on the
overall performance of the company and its financial position. Annual bonus entitlements may be based
upon the achievement of pre-agreed objectives or declared at the end of the year based solely on the
discretion of the Remuneration Committee.
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 2019 they did not choose to participate (2018:
£nil).
15
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Remuneration report (continued)
Service Contracts
The service contracts provide for the following notice periods:
12 months: Graham Storey, David Ford and Melvyn Segal.
3 months: Nigel Rogers
No notice period: Rodney Westhead
If the Company terminates without notice, the individual is entitled to a payment in lieu of notice being the
value of the maximum notice period in his contract.
In the event of termination for unsatisfactory performance (if necessary decided by an independent
tribunal) or for reasons of misconduct, no compensation is payable.
Directors’ Emoluments
Information on directors’ emoluments is as follows:
This table excludes the fair value of directors’ share based payment options as defined by International
Financial Reporting Standard (IFRS) 2. Details of all options granted to directors are shown on the next
page.
Information on directors' emoluments is as follows:
Bonus
Benefits
Pension
Total emoluments
12 months
12 months
ended
30 June 2019
ended
30 June 2018
£
£
£
£
£
Basic
salary
£
Executive
directors
G Storey
M Segal
D Ford
Non-executive
directors
N Rogers
R Westhead
158,400
35,000
7,243
83,250
35,000
3,698
109,050
35,000
6,019
30,800
12,900
-
-
-
-
-
-
-
-
-
200,643
165,632
121,948
87,280
150,069
113,616
30,800
12,900
30,800
12,900
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Total 2019
394,400
105,000
16,960
-
516,360
Total 2018
394,400
-
15,828
-
410,228
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
==============================================
16
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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:
G Storey
G Storey
D Ford
D Ford
M Segal
M Segal
At 1 July
2018
At 30 June
2019
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
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 19.
17
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Directors’ report
The directors present their annual report and audited financial statements for the year ended 30 June
2019.
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 statement and Strategic
report on pages 5 to 11.
Results and Dividends
The results for the year ended 30 June 2019 show a loss of £1.47m (2018: £1.89m). The directors do
not recommend the payment of a dividend (2018: £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 2019, the following substantial shareholdings of 3% or more of the Company’s share capital
have been notified to the Company:
CriSeren *
Seneca
WB Nominees
J P Lobbenberg
Spreadex
Legal & General
Harwood Capital LLP
Gerald Oury
Ordinary shares of
10p each
1,532,924
1,250,000
1,132,986
968,979
695,949
540,000
500,000
493,333
%
9.40
7.67
6.95
5.94
4.27
3,31
3.07
3.03
*Deemed to be ‘shares not in public hands’ in accordance with the AIM rules, amounting to 11.90 per cent
of the issued share cap as at the date of the information. Information correct at 25 September 2019.
18
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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
2019
78,687
5,655
5,555
22,888
80,000
Ordinary
shares of
50p each
1 July
2018
78,687
5,655
5,555
22,888
60,000
==============================================
==============================================
The mid-price of the shares in the Company at 30 June 2019 was 65.5p (2018: 36.5p) and the range
during the period was 29p to 73p (2018: 34.5p to 80p).
Share based payment option schemes
The Remuneration Committee is responsible for the operation and administration of the Company’s
UDSOS and EMI Schemes. In an increasingly competitive market the Committee regards the provision of
options as an important incentive for other members of staff as well as directors.
Details of share based payment options granted to directors are disclosed in the Remuneration Report on
page 17.
Financial Instruments
The directors adopt a low risk financial objective. The financial instruments are denominated in sterling,
euros, Australian dollars and US dollars and the Group does not trade in derivative instruments (see note
25 to the financial statements).
Post balance sheet events
On 26 August 2019 the group received an interest free loan of $0.75m from Bridgestone Corporation,
Japan as part of the announced Joint Collaboration Agreement.
Research and Development
In order to maintain and improve upon its market position, each of the Groups trading divisions actively
engage in research and development activities. This ensures the Group continually improves its product
offerings and technical abilities. Research and development expenditure of £0.05m was expensed to the
Statement of Comprehensive Income in the year (2018: £0.05m).
Further development expenditure on the iTrack product of £0.25m was capitalised in the year (2018:
£0.20m)
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 2018/19.
19
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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
25 September 2019
1 Landscape Close
Weston on the Green
Oxon
OX25 3SX
20
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Statement of directors’ responsibilities in respect of the Strategic Report,
Directors’ Report, Remuneration Report and the Financial Statements
The directors are responsible for preparing the Strategic Report, the Remuneration 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.
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 and 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 and
Remuneration Report 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; and,
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.
21
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 2019 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 their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
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 2019 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.
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.
22
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Overview of our audit approach
Overall Group materiality: £67,000, which represents 3% of the group’s
revenue
Key audit matters were identified as revenue recognition 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
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 - Group and parent
How the matter was addressed in the audit - Group and
parent
Revenue recognition
Our audit work included, but was not restricted to:
Revenue is recognised to the extent that
economic benefits will flow to the Group and the
revenue can be reliably measured.
Under International Standard on Auditing (UK)
240 ‘The auditor’s responsibilities relating to
fraud in an audit of financial statements’, there is
a presumed risk of fraud in revenue recognition.
Whilst the group determines that it has two
operating segments in line with IFRS 8, there are
7 revenue streams as described in the revenue
recognition policy within note 4 of the financial
statements with related disclosure included in
note 5.
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.
Documenting our understanding of management’s process
for evaluating revenue recognition and assessing the design
effectiveness of related key controls
Assessing the Group’s accounting policies for recognition of
revenue for appropriateness in accordance with the
requirements of IFRS 15 ‘Revenue from Contracts with
Customers’ and IAS 17 ‘Leases’.
Agreeing whether revenue has been recognised in
accordance with these policies.
An overview of our audit approach for each of the seven
identified revenue streams is provided in the table below. We
have tested and relied on the operating effectiveness of key
controls in the revenue recognition process for UK product
sales, verifying a sample of revenue transactions to
documents evidencing the implementation of key controls
including the matching process between shipping and
invoicing documents and the monthly reconciliation
performed between shipments and invoices.
For engineering support and product sales we have tested a
statistical sample of the population of transactions throughout
the year to supporting documentation including proof of
delivery.
For subscription income we have tested 100% of the
population of transactions throughout the year to supporting
documentation including cash receipt and proof of delivery.
For Bridgestone support we have tested the solitary
transaction in the year to supporting documentation including
cash receipt.
No revenue was recognised in respect of the remaining three
streams.
23
Key audit matters (continued)
Key Audit Matter - Group and parent
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
How the matter was addressed in the audit - Group and
parent
Type of revenue
Sawsense segment
Royalty income
Engineering support
License income
Translogik segment
Product sales
- UK
- Chile
- South Africa
Finance lease sales
Subscription income
Bridgestone support
£'000
Test of controls
Testing
population
-
120
-
659
170
33
-
982
262
j
j
j
a
j
j
j
j
j
N/A *
Sample
N/A *
Sample
Sample
N/A *
N/A *
100%
100%
Total
* Immaterial revenue stream and therefore not tested.
2,226
Key observations
Our testing did not identify any material misstatements in the
revenue recognised during the year in accordance with stated
accounting policies and with IFRS 15 and IAS 17.
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
Group
Parent
Financial statements as a
whole
£67,000 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 2018 to reflect higher
revenues in the year.
£51,000 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 higher
than the level that we determined for the
year ended 30 June 2018 to reflect higher
revenues in the year for the parent
company only.
Performance materiality
used to drive the extent
of our testing
Based on our risk assessment, including
the group’s overall control environment,
we determined a performance materiality
of 75% of the financial statement
materiality.
Based on our risk assessment, including
the company’s overall control
environment, we determined a
performance materiality of 75% of the
financial statement materiality.
Specific materiality
We determined a lower level of materiality
for directors’ remuneration and related
party transactions.
We determined a lower level of materiality
for directors’ remuneration and related
party transactions.
Communication of
misstatements to the
audit committee
£3,400 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£2,600 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
24
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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%
25%
75%
75%
Tolerance for potential uncorrected mis-statements
Performance materiality
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. The components of the group were identified by the group audit team based on a
measure of materiality, considering each as a percentage of the group's total assets, revenues and profit before
taxation, to assess the significance of the component and determine the planned audit response.
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
Percentage
of group
revenue
Percentage
of group
profit/(loss)
Percentage
of group
assets
Audit
approach
Transense Technologies
Plc
77%
(97%)
95.5%
Transense Technologies
Chile Spa
22%
(5%)
3.5%
Individually
financially
significant to the
group
Likely to include
group
significant risks
Translogik South Africa Ptd
Ltd
1%
2%
1%
Not significant
25
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the statement of directors’ responsibilities set out on page 21, 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.
26
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members
as a body, for our audit work, for this report, or for the opinions we have formed.
Rebecca Eagle
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountant
Birmingham
25 September 2018
27
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2019
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Financial income
Other income
Loss before taxation
Taxation
Loss from continuing operations
Loss for the year
Year ended
30 June
2019
Year ended
30 June
2018
Note
£'000
£'000
5
7
10
2,226
(435)
2,050
(761)
----------------------------------------------
----------------------------------------------
1,791
1,289
(3,603)
(3,208)
----------------------------------------------
----------------------------------------------
(1,812)
(1,919)
2
79
5
-
----------------------------------------------
----------------------------------------------
(1,731)
266
(1,914)
26
----------------------------------------------
----------------------------------------------
(1,465)
(1,888)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(1,465)
==============================================
(1,888)
==============================================
Basic and fully diluted loss per share (pence)
24
(11.11)
(19.68)
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
There are no other recognised income or expenses in either period.
Notes to the financial statements are from pages 33 to 58.
==============================================
==============================================
(1,465)
(1,888)
----------------------------------------------
----------------------------------------------
2
-
----------------------------------------------
----------------------------------------------
2
-
(1,463)
==============================================
(1,888)
==============================================
28
Consolidated Balance Sheet
at 30 June 2019
Non current assets
Property, plant and equipment
Intangible assets
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)/profit
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Year ended 30 June
Year ended 30 June
Note
2019
£'000
2019
£'000
2018
£'000
2018
£'000
11
13
15
16
18
19
20
22
529
946
474
909
----------------------------------------------
----------------------------------------------
1,475
1,383
566
-
789
2,647
685
-
698
1,592
----------------------------------------------
----------------------------------------------
4,002
----------------------------------------------
5,477
2,975
----------------------------------------------
4,368
(604)
(55)
(70)
(316)
(66)
(100)
----------------------------------------------
----------------------------------------------
(729)
----------------------------------------------
4,748
==============================================
5,451
2,591
23
41
(3,358)
----------------------------------------------
4,748
==============================================
(482)
----------------------------------------------
3,876
==============================================
5,025
682
21
41
(1,893)
----------------------------------------------
3,876
==============================================
These financial statements were approved by the board of directors and authorised for issue on 25 September 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 33 to 58.
29
Company Balance Sheet
at 30 June 2019
Non current assets
Property, plant and equipment
Intangible assets
Investments
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
Loss after tax
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Year ended 30 June
Year ended 30 June
Note
12
13
14
15
16
18
2019
£'000
502
946
61
----------------------------------------------
562
-
938
2,585
----------------------------------------------
2019
£'000
2018
£'000
2018
£'000
444
909
61
----------------------------------------------
1,509
1,414
659
-
824
1,494
----------------------------------------------
4,085
----------------------------------------------
5,594
2,977
----------------------------------------------
4,391
19
20
(551)
(41)
(70)
----------------------------------------------
(236)
(42)
(100)
----------------------------------------------
22
(662)
----------------------------------------------
4,932
==============================================
5,451
2,591
41
(3,151)
----------------------------------------------
4,932
==============================================
(378)
----------------------------------------------
4,013
==============================================
5,025
682
41
(1,735)
----------------------------------------------
4,013
==============================================
(1,416)
(1,763)
==============================================
==============================================
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006. The loss
after tax of the parent Company is presented above.
These financial statements were approved by the board of directors and authorised for issue on 25 September 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 33 to 58.
30
Statement of Changes in Equity
Group
Balance at 1 July 2017
Comprehensive income for the year:
Loss for the year
Total comprehensive income for the year
Share based payments
Share
capital
£'000
4,766
-
-
-
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Share
premium
£'000
Translation
reserve
£'000
Share based
payments
£'000
Cumulative
losses
£'000
22
21
-
-
-
-
-
-
-
-
-
-
41
-
(5)
(1,888)
(1,888)
-
-
Total
equity
£'000
4,804
(1,888)
(1,888)
41
919
Shares issued and share premium
259
660
Balance at 30 June 2018
5,025
682
21
41
(1,893)
3,876
------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Comprehensive income for the year:
Loss for the year
Other comprehensive income for the year:
Currency movement on subsidiary reserves
Total comprehensive income for the year
-
-
-
-
-
-
-
2
2
Shares issued and share premium
426
1,909
-
-
-
-
(1,465)
(1,465)
-
(1,465)
-
2
(1,463)
2,335
Balance at 30 June 2019
5,451
2,591
23
41
(3,358)
4,748
=========================================
==============================================
==============================================
==============================================
==============================================
==============================================
------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Company
Balance at 1 July 2017
Comprehensive income for the year:
Loss for the year
Total comprehensive income for the year
Share based payments
Shares issued and share premium
Share
capital
£'000
4,766
-
-
-
Share
premium
Share based
payments
Cumulative
losses
£'000
22
-
-
-
£'000
-
-
-
41
-
£'000
28
(1,763)
(1,763)
-
-
259
660
Total
equity
£'000
4,816
(1,763)
(1,763)
41
919
Balance at 30 June 2018
5,025
682
41
(1,735)
4,013
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Comprehensive income for the year:
Loss for the year
Total comprehensive income for the year
Shares issued and share premium
-
-
426
-
-
1,909
-
-
-
(1,416)
(1,416)
-
(1,416)
(1,416)
2,335
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Balance at 30 June 2019
5,451
2,591
41
(3,151)
4,932
==============================================
==============================================
==============================================
==============================================
==============================================
Notes to the financial statements are from pages 33 to 58.
31
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2019
Loss from operations
Adjustments for:
Taxation
Financial income
Depreciation
Amortisation of intangible assets
Share based payments
Operating cash flows before movements in
working capital
Increase in receivables
Decrease/(Increase) in payables
Decrease in inventories
Decrease in trade lease receivables
Cash used in operations
Taxation recovered/(paid)
Group
Company
Year ended
30 June
2019
Year ended
30 June
2018
Year ended
30 June
2019
Year ended
30 June
2018
Note
£'000
£'000
(1,465)
(1,888)
£'000
(1,416)
£'000
(1,763)
10
7
11,12
13
21
16
19
15
17
(266)
(2)
369
396
-
-
(5)
227
332
41
(283)
(2)
362
396
-
-
(5)
222
332
41
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(968)
(1,293)
(943)
(1,173)
(91)
247
119
-
(203)
(169)
300
266
(114)
284
97
-
(190)
(376)
308
266
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(693)
266
(1,099)
(7)
(676)
283
(1,165)
(28)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Net cash (used)/generated in operations
(427)
(1,106)
(393)
(1,193)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Investing activities
Interest received
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Net cash used in investing activities
Financing activities
7
11,12
13
2
(424)
(433)
5
(443)
(303)
2
(420)
(433)
5
(437)
(303)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
(855)
(741)
(851)
(735)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Proceeds from issue of equity share capital
22
2,335
919
2,335
919
Net cash from financing activities
Net increase/(decrease) in cash and cash
equivalents
Unrealised Currency translation gain
Cash and equivalents at the beginning of
year
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
2,335
919
2,335
919
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
1,053
2
(928)
-
1,091
-
(1,009)
-
1,592
2,520
1,494
2,503
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Cash and equivalents at the end of year
18
2,647
1,592
2,585
1,494
==============================================
==============================================
==============================================
==============================================
Notes to the financial statements are from pages 33 to 58.
32
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 2019 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 18.
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 2019 the group had net cash balances of £2.65m (2018: £1.59m). Whilst it is anticipated that the
Company will continue to consume cash to finance on-going activities in the short term, the directors have prepared
cash flow forecasts to December 2020 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.
International Financial Reporting Standards (IFRS) adopted for the first time in 2018
There were no new standards or amendments to standards adopted for the first time this year that had a material
impact on the results of the group. The prior year comparatives have not been restated for any changes in
accounting policies that were required due to the adoption of new standards this year.
IFRS 15 ‘Revenue from Contracts with Customers’ and the related ‘Clarifications of IFRS 15 Revenue from
Contracts with Customers’ (hereinafter referred to as ‘IFRS 15’) replace IAS 18 ‘Revenue’, and several revenue-
related interpretations.
In the period ending 30 June 2019, 44% (2018: 30%) of the revenues of the Group were in relation to the
subscription model of the iTrack solution on short term leases, which is out of the scope of IFRS 15. The remaining
turnover relating to the sale of goods and services, which is treated in a consistent manner under IFRS 15 with
revenue continuing to be recognised at a point in time when the transfer of risks and rewards occurs, all
arrangements are deemed to constitute one performance obligation.
Engineering support revenue, which derives from short-term contracts, are recognised at a point in time when the
service is performed which is in accordance with IFRS 15.
The group has adopted IFRS 15 through the modified retrospective approach and determined that, due to the
revenue split detailed above, there was no material impact on the financial statements of the group hence no
cumulative catch up adjustment has been booked to the opening balance sheet at 1 July 2018.
33
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
4
Accounting policies (continued)
IFRS 9 ‘Financial Instruments’ replaces IAS 39 ‘Financial Instruments: Recognition and measurement’. It makes
changes to the previous guidance on the classification and measurement of financial assets and introduces an
‘expected credit loss’ model for the impairment of financial assets.
When adopting IFRS 9, the group has applied transitional relief and opted not to restate prior periods. There were
no material differences arising from the adoption of IFRS 9 in relation to the classification, measurement and
impairment of financial assets and there have been no changes to the classification or measurement of financial
liabilities as a result of the application of IFRS 9.
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
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
Annual Improvements to IFRS Standards 2015-2017
Cycle
1 January 2019
Not yet endorsed
Amendments to IAS 19: Plan amendment, Curtailment
or Settlement
1 January 2019
Not yet endorsed
Amendments to IFRS 9: Prepayment features with
negative compensation
1 January 2019
1 January 2019
Amendments
Associates and Joint ventures
to
IAS 28: Long-term
Interests
in
1 January 2019
Not yet endorsed
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, management has assessed the impact of the Standard. The Group believe that the
most significant impact will be that the need to recognise a right of use asset and a lease liability for the Head
Office, currently treated as an operating lease. At 30 June 2019 the future minimum lease payments amounted
to £73,000. This will mean that the nature of the expense of the above cost will change from being an operating
lease expense to depreciation and interest expense.
The Group is planning to adopt IFRS 16 on 1 July 2019 using the Standard’s modified retrospective approach.
Under this approach the cumulative effect of initially applying IFRS16 is recognised as an adjustment to equity
at the date of the initial application. Comparative information is not restated.
IFRS 16 has not made any significant changes to the accounting for lessors, and therefore the Group does not
expect any changes for leases where they are acting as a lessor.
34
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 dividend rights, it is managements judgement that they are to be considered 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 concluded that the ongoing development cost of the iTrack II system is for iTrack II rather than the
next iteration and that this continues to have a useful life. Therefore, management have judged it reasonable
that the cost should be amortised over 3 years, from the date the cost has been incurred.
Measurement convention
The financial statements are prepared on the historical cost basis.
Basis of consolidation
Subsidiaries
The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 30 June
2019.
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.
35
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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, based on usage;
● 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.
● Subscription contracts revenue is recognised on a monthly basis when the service is provided to the customer
in accordance with IFRS 15.
● License revenue is recognised in accordance with the contractual agreement for each deal.
● The Bridgestone support fee income Is recognised at the point the cash is received as at that point it is deemed
there are no future obligations to be settled.
Contracts are entered into with customers to provide one of the above goods or services on a standalone basis.
The standalone selling price of the related performance obligation is therefore clearly determined from the contract.
The total transaction price is estimated as the amount of consideration to which the group expects to be entitled in
exchange for the transferring the promised goods or services.
Payment terms are generally between 30 and 90 days for all types of sale and therefore the impact of the time
value of money is minimal.
Revenue represents sales to external customers at invoiced amounts net of VAT and other sales related taxes.
Grant income
Grant monies received, classified as other income in the Statement of Comprehensive Income, has been
recognised as an appropriate percentage of the deliverables that have been carried out as per the terms of the
Grant.
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.
36
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
4
Accounting policies (continued)
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.
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 relation to iTrack in the year has been capitalised.
The amortisation of this expenditure was previously amortised over a fixed 3 year period to August 2019 however
the development of iTrack II is ongoing the policy has been changed to write off all expenditure over 3 years from
the date of the expenditure.
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.
Where patents have been enhanced, and this improvement results in an increase in the life of the patent, the
amortisation period for that patent is updated accordingly to reflect the increased lifespan of the patent.
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.
37
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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.
38
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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 arising 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.
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
recognised 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.
39
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
4
Accounting policies (continued)
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.
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.
Finance leases
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.
5
Revenue and segmental reporting
The tables below set out the Group’s revenue split and operating segments.
Revenue
North America
Chile
Australia
UK & Europe
Japan
Rest of the World
Year ended
30 June 2019
£'000
743
670
398
192
31
192
----------------------------------------------
2,226
=============================================
Year ended
30 June 2018
£'000
322
660
400
362
160
146
----------------------------------------------
2,050
=============================================
40
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
Segments
Year ended 30 June 2019
Sales
Gross profit
Other Income
Overheads
Profit/(loss) before taxation
Taxation
Translogik
£'000
SAWSense
£'000
Admin
£'000
2,106
120
-
Total
£'000
2,226
===================== ===================== ===================== ====================
1,678
-
(1,227)
113
79
(472)
-
-
1,791
79
(1,902)
(3,601)
-----------------------------
------------------------------
------------------------------
-----------------------------
451
108
(280)
(1,902)
(1,731)
158
266
------------------------------- ------------------------------- ------------------------------- -------------------------------
Profit/(loss) for the year
559
(122)
(1,902)
(1,465)
Year ended 30 June 2018
Sales
Gross profit
Overheads
Profit/(loss) before taxation
Taxation
====================== ====================== ====================== ======================
Translogik
£'000
SAWSense
£'000
Admin
£'000
1,903
147
-
Total
£'000
2,050
===================== =====================
=====================
====================
1,173
(978)
116
(482)
-
(1,743)
1,289
(3,203)
-----------------------------
------------------------------
------------------------------
-----------------------------
195
26
(366)
(1,743)
(1,914)
-
-
26
------------------------------- ------------------------------- ------------------------------- -------------------------------
Profit/(loss) for the year
221
(366)
(1,743)
(1,888)
====================== ====================== ====================== ======================
41
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
During the year ended 30 June 2019 there were 3 (2018: 3) customers whose turnover accounted for more than
10% of the Group’s total revenue as follows:
Year ended 30 June 2019
Customer A
Customer B
Customer C
Year ended 30 June 2018
Customer A
Customer B
Customer C
Revenue
£'000
Percentage
of total
466
429
397
21%
19%
18%
Revenue
£000
Percentage
of total
400
365
262
20%
18%
13%
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 (2018: £0.04m) which is held in China and Chile.
6
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 for payable for tax advisory services
Fees payable for tax research and development services
7
Finance income and expense
Recognised in profit or loss
Finance income
Total finance income
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
369
396
66
(12)
=============================================
227
332
63
-
=============================================
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
36
4
8
4
=============================================
35
3
-
5
=============================================
Year ended
30 June 2019
Year ended
30 June 2018
£'000
£'000
2
----------------------------------------------
2
5
----------------------------------------------
5
=============================================
=============================================
42
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
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:
Number of employees
Management and technical
Administration
Non-executive directors
Group
Company
Year ended
30 June 2019
Year ended
30 June 2018
Year ended
30 June 2019
Year ended
30 June 2018
17
9
2
----------------------------------------------
28
=============================================
18
9
2
----------------------------------------------
29
=============================================
14
2
2
----------------------------------------------
18
=============================================
16
4
2
----------------------------------------------
22
=============================================
The aggregate payroll costs including directors of these persons were as follows:
Wages and salaries
Share based payments (note 21)
Social security costs
Contributions to defined contribution pension
plan
Group
Company
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
1,599
-
174
31
1,489
41
153
26
1,290
-
156
31
1,173
41
137
26
----------------------------------------------
1,804
=============================================
----------------------------------------------
1,709
=============================================
----------------------------------------------
1,477
=============================================
----------------------------------------------
1,377
=============================================
The potential share based payment charge in respect of share options in the year was £4,000 however due to
the small size of the charge no expense was included in these accounts. The charge made in the 2018 accounts
was £41,000.
9
Directors’ remuneration
Directors’ emoluments
Directors’ bonuses
Directors’ benefits
Employers national insurance
Share based payments (note 21)
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
394
105
17
394
-
16
----------------------------------------------
----------------------------------------------
516
410
64
-
=============================================
49
22
=============================================
The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid
director was £200,643 (2018: £165,632). No company pension contributions were made to a money purchase
scheme on his behalf (2018: 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 (2018: nil).
The number of directors accruing retirement benefits under money purchase schemes in the year was nil (2018:
nil).
The number of directors who exercised share options in the year was nil (2018: nil).
43
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
9
Directors’ remuneration (continued)
The number of directors in respect of whose services were received or receivable under long term incentive
schemes was nil (2018: nil).
The potential share based payment charge in respect of Directors share options in the year was £3,000 however
due to the small size of the charge no expense was included in these accounts. The charge made in the 2018
accounts was £22,000.
10
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 before tax
Tax calculated at the average standard UK corporation tax rate of 19.00%
(2018: 19:00%)
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Current year losses for which no deferred tax asset was recognised
Adjustment to deferred tax average rate of 19%
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 and other timing differences
Year ended
30 June 2019
£'000
Year ended
30 June 2018
£'000
-
(266)
----------------------------------------------
(266)
=============================================
-
(26)
----------------------------------------------
(26)
=============================================
Year ended
30 June 2019
Year ended
30 June 2018
£'000
(1,731)
£'000
(1,914)
======================= =======================
(329)
12
(120)
391
46
-
(364)
3
-
357
-
4
(266)
-------------------------------
(26)
-------------------------------
(26)
======================= =======================
(266)
3,760
3,345
======================= =======================
The applicable UK corporation tax rate is 19% throughout the reporting period.
The Group has tax losses, subject to agreement by HM Revenue and Customs, in the sum of £20.7m (2018:
£19.7m), 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.
The effective tax rate used to calculate the current tax for the period ended 30 June 2019 was 19.00% (2018:
19.00%).
44
Notes to the financial statements (continued)
11
Property, plant and equipment – Group
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Cost
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Balance at 30 June 2019
Depreciation and impairment
Balance at 1 July 2017
Depreciation charge for the year
Disposals
Balance at 30 June 2018
Balance at 1 July 2018
Depreciation charge for the year
Balance at 30 June 2019
Net book value
At 1 July 2017
At 1 July 2018
At 30 June 2019
iTrack
Equipment
£’000
Plant and
Equipment
£'000
Fixtures and
Fittings
£'000
Motor
Vehicles
£'000
116
423
(47)
----------------------------------------------
492
=============================================
492
376
----------------------------------------------
868
=============================================
72
158
(47)
----------------------------------------------
183
=============================================
183
307
----------------------------------------------
490
=============================================
44
=============================================
309
=============================================
378
=============================================
683
20
(193)
----------------------------------------------
510
=============================================
510
44
----------------------------------------------
554
=============================================
587
50
(193)
----------------------------------------------
444
=============================================
444
41
----------------------------------------------
485
=============================================
96
=============================================
66
=============================================
69
=============================================
164
-
(57)
----------------------------------------------
107
=============================================
107
4
----------------------------------------------
111
=============================================
60
17
(57)
----------------------------------------------
20
=============================================
20
18
----------------------------------------------
38
=============================================
104
=============================================
87
=============================================
73
=============================================
26
-
-
----------------------------------------------
26
=============================================
26
-
----------------------------------------------
26
=============================================
12
2
-
----------------------------------------------
14
=============================================
14
3
----------------------------------------------
17
=============================================
14
=============================================
12
=============================================
9
=============================================
Total
£'000
989
443
(297)
----------------------------------------------
1,135
=============================================
1,135
424
----------------------------------------------
1,559
=============================================
731
227
(297)
----------------------------------------------
661
=============================================
661
369
----------------------------------------------
1,030
=============================================
258
=============================================
474
=============================================
529
=============================================
Note: All depreciation is charged to administrative expenses
45
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
12
Property, plant and equipment – Company
Cost
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Balance at 30 June 2019
Depreciation and impairment
Balance at 1 July 2017
Depreciation charge for the year
Disposals
Balance at 30 June 2018
Balance at 1 July 2018
Depreciation charge for the year
Balance at 30 June 2019
Net book value
At 1 July 2017
At 1 July 2018
At 30 June 2019
iTrack
Equipment
£’000
Plant and
equipment
£'000
116
423
(47)
----------------------------------------------
492
=============================================
492
376
----------------------------------------------
868
=============================================
72
158
(47)
----------------------------------------------
183
=============================================
183
307
----------------------------------------------
490
=============================================
44
=============================================
309
=============================================
378
=============================================
672
14
(193)
----------------------------------------------
493
=============================================
493
41
----------------------------------------------
534
=============================================
587
47
(193)
----------------------------------------------
441
=============================================
441
39
----------------------------------------------
480
=============================================
85
=============================================
52
=============================================
54
=============================================
Fixtures
and
fittings
£'000
159
-
(57)
----------------------------------------------
102
=============================================
102
3
----------------------------------------------
105
=============================================
60
16
(57)
----------------------------------------------
19
=============================================
19
16
----------------------------------------------
35
=============================================
99
=============================================
83
=============================================
70
=============================================
Motor
vehicles
£'000
10
-
-
----------------------------------------------
10
=============================================
10
-
----------------------------------------------
10
=============================================
9
1
-
----------------------------------------------
10
=============================================
10
-
----------------------------------------------
10
=============================================
1
=============================================
-
=============================================
-
=============================================
Total
£'000
957
437
(297)
----------------------------------------------
1,097
=============================================
1,097
420
----------------------------------------------
1,517
=============================================
728
222
(297)
----------------------------------------------
653
=============================================
653
362
----------------------------------------------
1,015
=============================================
229
=============================================
444
=============================================
502
=============================================
Note: All depreciation is charged to administrative expenses
46
Notes to the financial statements (continued)
13
Intangible assets
Group and company intangible assets
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Cost
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Balance at 30 June 2019
Amortisation and impairment
Balance at 1 July 2017
Amortisation for the year
Balance at 30 June 2017
Balance at 1 July 2017
Amortisation for the year
Balance at 30 June 2019
Net book value
At 1 July 2017
At 1 July 2018
At 30 June 2019
Goodwill
£'000
50
-
----------------------------------------------
50
=============================================
50
-
----------------------------------------------
50
=============================================
-
-
----------------------------------------------
-
=============================================
-
-
----------------------------------------------
-
=============================================
50
=============================================
50
=============================================
50
=============================================
Patents
rights and
trademarks
£'000
Development
costs
£'000
1,647
108
----------------------------------------------
1,755
=============================================
1,755
92
----------------------------------------------
1,847
=============================================
1,123
82
----------------------------------------------
1,205
=============================================
1,205
100
----------------------------------------------
1,305
=============================================
524
=============================================
550
=============================================
542
=============================================
1,467
195
----------------------------------------------
1,662
=============================================
1,662
254
----------------------------------------------
1,916
=============================================
1,103
250
----------------------------------------------
1,353
=============================================
1,353
284
----------------------------------------------
1,637
=============================================
364
=============================================
309
=============================================
279
=============================================
Licences
-
-
----------------------------------------------
-
=============================================
-
87
----------------------------------------------
87
=============================================
-
-
----------------------------------------------
-
=============================================
-
12
----------------------------------------------
12
=============================================
-
=============================================
-
=============================================
75
=============================================
Total
£'000
3,164
303
----------------------------------------------
3,467
=============================================
3,467
433
----------------------------------------------
3,900
=============================================
2,226
332
----------------------------------------------
2,558
=============================================
2,558
396
----------------------------------------------
2,954
=============================================
938
=============================================
909
=============================================
946
=============================================
Amortisation and impairment charge
The amortisation is recognised in the following line items in the statement of comprehensive income:
Administrative expenses
2019
£'000
2018
£'000
396
----------------------------------------------
396
=============================================
332
----------------------------------------------
332
=============================================
All new expenditure on research and development activities in relation to iTrack is capitalised. The amortisation of
this expenditure has previously been amortised over a fixed 3 year period to August 2019, however, as the
development of iTrack is ongoing the policy has been changed to write off all expenditure over 3 years from the
date of that expenditure.
47
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
13
Intangible assets (continued)
Development Costs
Development expenditure of the new iTrack II was capitalised in the year amounting to £0.25m (2018: £0.20m).
These development costs have been deemed to have a useful economic life of 3 years. There were Research and
Development costs expensed to the Statement of Comprehensive Income in the year of £0.05m (2018: £0.05m).
Impairment testing
Impairment testing has been performed in accordance with the provisions of IAS36, and in such circumstances
the aggregate carrying value of the intangible asset is compared against the expected recoverable amount.
The recoverable amount of goodwill is determined from operating cashflow projections for 18 months to December
2020 which are currently contracted to support goodwill.
14
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
Ownership
2019
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
48
Notes to the financial statements (continued)
14
Investments in subsidiaries (continued)
The following investments are included in the Company balance sheet at 2019 and 2018
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Transense K.K.
Transense Technologies Chile SPA
Translogik South Africa Pty Ltd
Company
Year ended
30 June 2019
£'000
3
53
5
Year ended
30 June 2018
£'000
3
53
5
----------------------------------------------
61
=============================================
----------------------------------------------
61
=============================================
The Group carries out impairment reviews of its subsidiaries, evaluating the financial position of the entity and
future performance by producing forecasts. Regarding the debt owed by Transense Technologies Chile SPA to
the parent company, the forecasts show that the liability should be capable of being repaid by the anticipated
increased level of business.
15
Inventories
Raw materials
Finished goods
30 June 2019
£'000
Group
30 June 2018
£'000
30 June 2019
£'000
Company
30 June 2018
£'000
176
390
----------------------------------------------
566
=============================================
120
565
----------------------------------------------
685
=============================================
176
386
----------------------------------------------
562
=============================================
120
539
----------------------------------------------
659
=============================================
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in
the year ended 30 June 2019 amounted to £0.43m (2018: £0.76m). The impairment was reduced by £0.01m in
cost of sales against inventories in the year (2018: £0.01m).
16
Trade and other receivables
Amounts falling due within one year
Trade receivables
Expected credit losses
Other receivables
Amounts due from group undertakings
Trade finance lease receivables
Accrued income
Prepayments
30 June 2019
£'000
Group
30 June 2018
£'000
30 June 2019
£'000
Company
30 June 2018
£'000
511
(30)
----------------------------------------------
481
99
-
-
64
145
----------------------------------------------
789
=============================================
423
(18)
----------------------------------------------
405
108
-
58
30
97
----------------------------------------------
698
=============================================
397
(30)
----------------------------------------------
367
95
308
-
23
145
----------------------------------------------
938
=============================================
265
(18)
----------------------------------------------
247
83
332
58
7
97
----------------------------------------------
824
=============================================
As at 30 June 2019 there were no past due but not impaired trade receivables (2018: no past due but not
impaired).
49
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
17
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 2019
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
-
-
-
-
-
-
Total
£'000
-
-
Net present values
-
-
-
-
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
=============================================
=============================================
=============================================
=============================================
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
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
=============================================
=============================================
=============================================
=============================================
18
Cash and cash equivalents
30 June 2019
£'000
Group
30 June 2018
£'000
30 June 2019
£'000
Company
30 June 2018
£'000
Cash and cash equivalents per balance sheet
2,647
----------------------------------------------
1,592
----------------------------------------------
2,585
----------------------------------------------
1,494
----------------------------------------------
Cash and cash equivalents per cash flow
statements
2,647
=============================================
1,592
=============================================
2,585
=============================================
1,494
=============================================
50
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
19
Trade and other payables
Current
Trade payables
Non-trade payables and accrued expenses
Deferred grant income
20
Provisions
Group
Year ended
30 June 2019
£'000
Year ended 30
June 2018
£'000
Year ended
30 June 2019
£'000
205
379
20
----------------------------------------------
111
205
-
----------------------------------------------
604
=============================================
316
=============================================
201
330
20
----------------------------------------------
551
=============================================
Company
Year ended
30 June 2018
£'000
96
140
-
----------------------------------------------
236
=============================================
At 1 July 2018
Credited to Statement of comprehensive income
At 30 June 2019
Group and Company
Provisions
Warranty
£'000
100
(30)
Total
£'000
100
(30)
----------------------------------------------
----------------------------------------------
70
70
=============================================
=============================================
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 2017
At 30 June 2018
Group and Company
Provisions
Warranty
£'000
100
Total
£'000
100
----------------------------------------------
----------------------------------------------
100
100
=============================================
=============================================
51
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
21
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 2019 was £0.03 (2018: £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.
The potential share based payment charge in respect of share options in the year was £4,000 however due to
the small size of the charge no expense was included in these accounts. The charge made in the 2018 accounts
was £41,000.
Unapproved Discretionary Share Option Scheme
At 30 June 2019 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/
Option
Price
Date of
Grant
Date of Exercise
First
Last
1 July 2018
150,447
1,800
5,000
5,000
Granted
Expired
Exercised
30 June 2019
-
-
-
-
(23,162)
-
-
-
-
-
-
-
127,285
£3.75 15.08.13 15.08.13 06.03.22
1,800
£3.75 31.01.14 31.01.17 31.01.24
5,000
£3.75 27.10.14 31.01.17 27.10.24
5,000
£3.75 09.10.15 31.01.18 09.10.25
52
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
21
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%
1.50
1.50
1.50
1.50
%
0.65%
0.65%
0.65%
0.65%
%
Nil
Nil
Nil
Nil
At 30 June 2019, 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
2019
-
-
-
-
-
-
-
-
-
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
2018
375,000
270,000
20,000
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
53
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
22
Share Capital
Issued Share Capital
On issue at 1 July 2018
Share reorganisation 22 June 2018
Issued for cash Ordinary Shares at £0.10 on 22 June 2018
Issued for cash Ordinary Shares at £0.10 on 19 March 2019
Issued for cash Ordinary Shares at £0.10 on 2 April 2019
Issued for cash Ordinary Shares at £0.10 on 10 April 2019
On issue at 30 June 2019– fully paid
Ordinary shares of 10 pence
Deferred shares of 40 pence
each
each
30 June 2019
30 June 2018
30 June 2019
30 June 2018
12,048,948
-
-
2,384,953
1,606,715
266,666
-
9,548,948
2,500,000
-
-
-
9,548,948
-
-
-
-
-
-
9,548,948
-
-
-
-
-----------------------------
-----------------------------
-----------------------------
-----------------------------
16,307,282
=====================
12,048,948
=====================
9,548,948
=====================
9,548,948
=====================
Allotted, called up and fully paid
Ordinary shares of £0.10 each
Deferred shares of £0.40 each
Shares classified in shareholders’ funds
23
Operating leases
Non-cancellable operating lease rentals are payable as follows:
30 June
2019
£'000
1,631
3,820
30 June
2018
£'000
1,205
3,820
----------------------------------------------
5,451
----------------------------------------------
5,025
=============================================
=============================================
Less than one year
Between one and five
More than five years
Land &
Buildings
30 June 2019
£'000
73
-
-
---------------------------------
73
========================
Group and Company
Other Lease
30 June 2019
£'000
-
-
-
---------------------------------
-
Land &
Buildings
30 June 2018
£'000
69
73
-
---------------------------------
142
Other Lease
30 June 2018
£'000
-
-
-
---------------------------------
-
========================
========================
========================
The operating lease relates to the lease of premises which is used by the Group and Company. During the period
£0.07m was recognised as an expense in the statement of comprehensive income in respect of operating leases
(2018: £0.06m).
54
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
24
Basic and fully diluted earnings/(loss) per share
Basic loss per share is calculated by dividing the loss after taxation of £1.47m (2018: loss of £1.89m) by the
weighted average number of ordinary shares in issue during the year of 13,184,581 (2018: 9,595,825).
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 2019
Year ended
30 June 2018
Number
Number
13,184,581
9,595,825
-
------------------------------
-
------------------------------
13,184,581
======================
9,595,825
======================
Year ended
30 June 2019
Year ended
30 June 2018
£'000
£'000
Loss from continuing operations
(1,465)
(1,888)
Basic loss per share
Earnings attributable to shareholders
Basic loss per share
------------------------------
------------------------------
(11.11)
(19.68)
====================== ======================
(11.11)
(19.68)
====================== ======================
There are 665,000 share options at 30 June 2019 (2018: 665,000) that are not included within diluted earnings per
share because they are anti-dilutive.
55
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
25
Financial instruments
Financial risk management overview
The Group has exposure to the following risks, to varying degrees, from its use of financial instruments:
● Credit risk;
● Liquidity risk; and
● Market risk.
This note presents information about the Group’s exposure to liquidity and market risks, the companies’ objectives,
policies and processes for measuring and managing risk, and the companies’ management of capital.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation. The Group has a cash balance at period end totalling £2.65m
(2018: £1.59m). Note 3 states that the Directors consider there to be sufficient cash resources to reach a break
even level and that the Group remains a going concern. 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 2019 or 2018.
The directors consider that the Group’s exposure to interest rates is low (2018: 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.
56
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
25
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
Chilean Peso
South African Rand
At 30 June 2019
Sterling
At 30 June 2018
Euro
£'000
115
-
-
115
158
158
US Dollar
£'000
643
Australian
Dollar
£'000
(39)
49
-
692
623
623
-
-
(39)
(1)
(1)
British Pound
£’000
-
-
5
5
-
-
The Group has analysed the effects of both a 10% increase and decrease in each of the currencies the Group
uses in its operations and has determined there would be no material impact on the consolidated operating profit.
At the reporting date the profile of the Group’s financial instruments was:
Financial assets held at amortised cost
Trade receivables
Accrued income
Amounts receivable under long term contracts
Cash and cash equivalents
Financial liabilities held at amortised cost
Trade payables
Accruals
Financial liabilities at amortised cost
30 June
2019
£000
481
63
-
2,647
30 June
2018
£000
405
30
58
1,592
----------------------------------------------
----------------------------------------------
3,191
2,085
=============================================
=============================================
205
319
111
205
----------------------------------------------
----------------------------------------------
524
316
=============================================
=============================================
There was £nil gross trade finance lease assets held on the balance sheet at the year end date (2018: £0.06m).
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.
57
Transense Technologies plc
Annual report and financial statements
For the year ended 30 June 2019
Notes to the financial statements (continued)
25
Financial Instruments (continued)
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 £0.48m (2018: £0.46m) 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 2019 the Group’s cash was divided between current accounts £0.47m (2018: £0.67m) and £2.18m in
fixed rate monthly deposits (2018: £0.93m) with a weighted average interest rate for the year of 0.25% (2018:
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.
Maturity Analysis
All financial liabilities are due to or have the facility to mature within 12 months.
26
Contingencies and commitments
Group
The Group had no capital commitments or contingent liabilities as at 30 June 2019 (2018: £nil).
Company
The Company has no capital commitments or contingencies as at 30 June 2019 (2018: £nil).
27 Warrants
No warrants were outstanding as at 30 June 2019. (2018: Nil).
28
Post balance sheet events
On 26 August 2019 the group received an interest free loan of $0.75m from Bridgestone Corporation, Japan as
part of the announced Joint Collaboration Agreement.
29
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 2019
£000
Year ended
30 June 2018
£000
-
-
----------------------------------------------
-
===========================================
-
-
----------------------------------------------
-
=============================================
58