Registered number 01885075
Annual report and financial
statements
For the year ended 30 June 2022
1
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Contents
Directors and advisers
Financial Highlights
Chairman’s Statement for the year ended 30 June 2022
Strategic Report
Environmental, Social and Governance
Corporate Governance Statement
Remuneration report
Directors' report
Statement of Directors’ responsibilities in respect of the Annual Report
Independent auditor’s report to the members of Transense Technologies plc
Consolidated Statement of Comprehensive Income
Consolidated and Company Balance Sheet
Statement of Changes in Equity
Consolidated and Company Cash Flow Statement
Notes to the financial statements
3
4
5
7
15
16
19
22
25
26
31
32
33
34
35
2
Directors and advisers
Directors
N F Rogers (Executive Chairman) (1)
M Segal (Chief Financial Officer)
N S Hopkins (Chief Operating Officer) (2)
R E Maughan (Business Development Director) (2)
R J Westhead (Non-Executive Director) (1, 3)
1 Member of the Audit and Risk Committee
2 Appointed 1 December 2021
3 Member of the Remuneration Committee
Company Secretary and Registered Office
M Segal
1 Landscape Close
Weston-on-the Green
Bicester
Oxfordshire
OX25 3SX
Auditor
Cooper Parry Group Limited
Chatered Accountants & Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Castle Donnington
Derby
DE74 2SA
Bankers
HSBC Bank plc
1 Sheep Street
Bicester
Oxfordshire
OX26 7JA
Nominated Adviser & Broker
Allenby Capital Limited
5th Floor
5 St Helen’s Place
London
EC3A 6AB
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Registration Number 01885075
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
3
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Financial Highlights
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Revenue up 49% to £2.63m (FY21: £1.77m)
iTrack royalty increased 88% to £1.56m (FY21: £0.83m)
Translogik probe revenue up 16% to £0.88m (FY21: £0.76m)
SAW revenue up 11% to £0.20m (FY21: £0.18m) with substantially increased customer
engagement
Profit before taxation of £0.27m (FY21: loss of £0.16m)
Earnings per share up more than fivefold to 5.36 pence (FY21: 0.96 pence)
Cash and cash equivalents at year end of £1.06m (FY21: £1.05m)
Completed share buybacks of £0.30m (FY21: £Nil)
Distributable reserves at year end of £1.20m (FY21: £0.63m)
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Chairman’s statement for the year ended 30 June 2022
I am pleased to report another year of strong financial results and good further progress in the
development of each of the company’s three business segments. The latest post year end monthly iTrack
royalty income has an annualised run rate of in excess of £2m, Translogik probes revenues are
approaching £1m per annum with ample scope for further growth, and increased business development
activities for Surface Acoustic Wave (SAW) sensor technology are building a pipeline of potential
customers in our key target market sectors.
Business strategy
The business strategy of the Company remains to develop 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.
There are currently three business segments comprising royalty income from iTrack, Translogik tyre
monitoring equipment, and the commercialisation of Surface Acoustic Wave (SAW) sensor technology.
Progress in the development of each of these segments during the year and plans for the future are set
out in the Operating and Financial Review on pages 7 to 12. The directors set out mid-term strategic
goals for the Company’s businesses in June 2020, immediately following the completion of the iTrack
licence with Bridgestone. Since that time, financial results have been in line with or ahead of expectations,
and the directors continue to be pleased with progress.
Financial overview
Growth in revenue, profitability and cash generation were each delivered at rates consistent with those
set in the strategic goals in June 2020. This resulted in net earnings of 5.36 pence per share; a fivefold
increase on the prior year level of 0.96 pence.
Net cash generation (before financing activities) in the year of £0.30m was re-invested in the purchase of
Company shares (which were put into treasury) under the buy-back programme announced in February
2022. At the end of the financial year, the Company had net assets of £3.09m (FY21: £2.34m), reserves
stood at £1.50m, of which £1.20m are distributable (FY21: £0.63m), and net cash and cash equivalents
of £1.06m (FY21: £1.05m). The directors are confident of further progress in the upcoming financial year
and propose to continue to re-invest a portion of internally generated cash flow in a new share buy-back
programme of £0.65m announced today.
Corporate Governance, board structure and composition
The directors are committed to the framework and principles of the QCA Corporate Governance Code
(“the Code”), and seek to apply these wherever this is practicable. Full application of the Code, with the
implications that this may have on board and compliance costs, is counterbalanced by the scale of the
Company and the relatively low risk profile of its operations.
The three directors who have served throughout the year each have many years’ experience as both
executive and non-executive directors of fully listed and AIM-quoted companies, and recognise the
broader needs of shareholders and other stakeholders in all of their dealings. During the year the board
was further strengthened by Nick Hopkins joining as Chief Operating Officer and Ryan Maughan (in a part
time capacity) as Business Development Director. At the time of their appointment in December 2021 it
was also announced that the board intend to appoint an additional independent non-executive director,
and this process is currently underway.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Chairman’s Statement for the year ended 30 June 2022 (continued)
The directors maintain constructive dialogue with major shareholders on the development of the business
and associated governance matters, and will continue to ensure that any feedback is addressed promptly
and effectively. Furthermore, there are opportunities for regular engagement with all shareholders with
full details set out on the company’s website.
Share buyback programme
In February 2022 the Company announced the commencement of a programme to conduct market
purchases of ordinary shares of 10 pence each in the Company up to maximum aggregate purchase price
of £0.30m. This programme was completed on 26 May 2022 with the Company having acquired 434,000
ordinary shares for treasury at an average price of 70 pence each.
During the financial year the share price fluctuated between 58.0 pence and 122.5 pence, and averaged
approximately 85 pence. The directors consider that recent weakness in the share price reflects macro-
economic and stock market driven concerns which are unrelated to the performance and prospects for
the business. Accordingly, the directors continue to view the Company’s shares as undervalued and have
today announced a new programme of market purchases on similar terms to the previous programme but
with a maximum aggregate purchase value of £0.65m, of which £0.50m is subject to the renewal of
shareholder approval for such market purchases at the upcoming Annual General Meeting.
Current trading and outlook
In the first two months of trading since the end of the financial year the total revenues have increased year
on year by 19%.
The royalty income stream from iTrack is proving reliable and continuing to grow strongly with the post
year annualised royalty run rate now comfortably exceeding the fixed overheads of the whole Company.
In addition, our commercial relationships in Translogik are continuing to strengthen and offer further
growth potential as fleet managers seek to make cost savings. Finally, we are achieving real traction with
SAW technology across a range of high growth industry sectors, illustrated most recently with the
collaboration with Meggitt in aerospace, which provide a sound basis for optimism for the future.
Accordingly, the directors are confident that the Company’s business model is sufficiently resilient to
withstand the current challenging global economic outlook and look to the future with confidence.
Nigel Rogers
Executive Chairman
26 September 2022
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report
Operating and Financial Review
Results for the year
Revenues for the year increased by nearly 50% to £2.63m (FY21: £1.77m), driven primarily by gathering
momentum on royalty income from iTrack. Gross margin improved to 84.9% of revenue (FY21: 78.3%)
amounting to £2.23m (FY21: £1.39m).
Administrative expenses underwent a planned increase to £1.97m (FY21: £1.58m), mainly as a result of
additional headcount and travel to support development of the SAW business. The Earnings before
Interest, Taxation, Depreciation and Amortisation adjusted for the charge for share-based payments was
£0.62m (FY21: £0.10m), and the net profit before taxation was £0.27m (FY21: net loss of £0.16m).
There was a credit for taxation of £0.61m (FY21: £0.31m) arising from the increase in the deferred taxation
asset relating to the use of previous years’ tax losses in future. As the Board has growing confidence in
the future profitability, the deferred taxation asset now reflects a forecast period of two years rather than
the use of one year previously. In total the Company has UK tax losses available to carry forward at 30
June 2022 in excess of £22m, which are available for offset against future profits subject to HMRC
agreement, of which approximately £2.58m is currently recognised for deferred taxation purposes (FY21:
£0.19m).
The resulting net total comprehensive income attributable to equity shareholders was £0.88m (FY21:
£0.16m) resulting in earnings per share of 5.36 pence (FY21: 0.96 pence).
Segmental review
iTrack royalty income
Royalty income from iTrack generated income of £1.56m during the year, representing an increase of
88% over the level in the first year of the licence to 30 June 2021 (FY21: £0.83m). By the end of the year,
the installed base had risen to more than 2.75 times that which prevailed at the outset of the licence, and
the annualised royalty run rate had increased to £1.88m, compared with £1.12m at 30 June 2021, and
£0.64m at inception in June 2020.
Royalty income is denominated in United States Dollars (US$). The rate of exchange changed adversely
in the first year of the licence as Sterling strengthened against the US$, however in the year to 30 June
2022 this reversed to close in the Company’s favour. During the year the directors implemented a policy
of hedging forward around 80% of estimated future income by up to one year to take advantage of this
opportunity and achieved an average rate around USD 1.20 to GBP 1 which compared very favourably
with the opening rate at the time of the deal being USD 1.25 and the peak rate during the financial year
being just under USD 1.4. However since securing these rates the directors note that GBP has fallen by
a further 10% against USD.
Bridgestone Corporation, Japan, continues to indicate that iTrack is a key strategic component of their
mobility solutions business and express confidence in the future growth potential for this technology.
Translogik tyre monitoring
Our range of tyre monitoring equipment marketed under the Translogik brand generated revenue of
£0.88m; an increase of almost 16% over the prior year (FY21: £0.76m), and the segmental result was up
by a third to £0.36m (FY21: £0.27m).
The modular TLGX range is now firmly established and this has facilitated the decision to phase out the
TL-G1 range which is now well underway. This process has provided many opportunities to up-sell
products with more sophisticated features, which together with favourable exchange rates increased gross
margins in this segment from 50.4% of revenue in FY21 to 55.7% in FY22.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
The Directors believe that working closely with the leading global tyre manufacturers has resulted in the
Translogik probe becoming a tool of choice to diagnose mandatory commercial vehicle tyre safety and
condition inspection data for their fleet management systems, and this has substantially increased sales
opportunities. The technology has been shown to deliver reduced costs and improved collection of data
which helps commercial vehicle fleets comply with safety inspection regulations and manage the
significant costs of their tyres more effectively, again, key objectives for the future. As market penetration
continues to build, we are also becoming increasingly aware of opportunities for additional features and
enhanced software compatibility to maintain leadership in this market sector. This process further
cements our relationships with major tyre manufacturers. The business has continued to expand beyond
these important clients, and has new relationships in the fleet management arena, including software
developers and manufacturers of complementary hardware products.
Surface Acoustic Wave (SAW)
SAW generated revenue of £0.20m (FY21: £0.18m) and operating overheads for the segment increased
slightly from £0.92m to £1.14m, reflecting increased headcount adding new senior people to both business
and technical development. Revenue was derived mainly from low volume production of instrumented
shafts either for motorsport or for customer evaluation projects, whilst increased headcount was required
to manage new business opportunities and technical support which are yet to deliver revenue.
There is a broad range of potential market applications for SAW technology which have been explored
fully, especially over the past two years with the support of the commercial advisory panel (SAWCAP).
Our market focus for SAW technology has now settled on four sectors in which there are applications with
clear differentiated benefits.
Target market sectors for SAW technology:
Aerospace
The measurement of torque is common practice in all types of aerospace engines, and is used to improve
safety, pilot control and engine reliability. Our SAW technology offers advantages in these applications
due to its accuracy over other technologies. Our sensor system is robust, and compact in size and weight.
Its ability to measure or compensate for temperature fluctuations, and immunity from background
electromagnetic interference, make it the ideal choice.
The case for using SAW in aerospace applications was proven in 2016 by the specification of SAW sensor
technology under licence from Transense on the GE ITEP programme to re-engine Apache and
Blackhawk helicopters for the US Army. The First Engine to Test under this programme was built
successfully earlier this year, and low volume production is planned to commence in 2024/25.
In May 2022, an amending agreement was signed between Transense and GE Aviation to extend the
scope of the field of use of their licence to encompass work for the Hybrid Electric Altitude Testbed flight
demonstrator (HEAT) Programme. This programme covers the build of a SAW torque measurement
system for evaluation in both test laboratory and flight test conditions. Although there is no current intention
for this programme to directly enter commercial production, Transense is involved in the development
phase over the period to 2024 to provide technical know-how, limited supply of critical components and
the provision of calibration services at agreed commercial rates.
More recently, in September 2022, the Company entered into an important collaboration with Meggitt SA,
the leading designer and manufacturer of complete condition monitoring, vibration monitoring and
measurement solutions for the aerospace and energy markets. Under a new Memorandum of
Understanding, the Company will support Meggitt’s evaluation of potential future market opportunities in
the aerospace sector. Meggitt has indicated that our SAW technology has the potential to become a great
addition to its Engine Sensing portfolio as part of its strategy to support global engine OEM customers.
There is a shared aim to enter into a licensing agreement prior to 31 December 2023 covering one or
more fields of use in aerospace.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
Electric Motors and Drives (EMD)
As the market for electrified vehicle powertrain develops rapidly, the quest to deliver improved efficiency
and performance in electric drive systems is paramount. Maximising vehicle range for a given battery
capacity is a key target of every powertrain development programme, alongside maintaining and
improving the safety integrity of the powertrain system.
The present state of the art is to use advanced torque estimation techniques based on electrical current
and rotational speed measurements. Accurate torque measurement is desirable but has not been
possible using competing torque measurement systems. Using SAW sensors eliminates the need for
estimation and gives reliable torque and temperature measurement from the motor rotor that can be used
to improve both motor efficiency and safety.
In May 2022, the Company secured a place on the Advanced Propulsion Centre (APC) Technology
Developer Accelerator Programme (TDAP) in a competitive process. Alongside grant funding of up to
£0.13m, this programme provides access to advice and support from the APC and their delivery partners
focusing on product development, market strategy, intellectual property management and networking.
The initial phase of this work is underway and it will progress through the current financial year. Grant
income of £0.02m was recognised in the year ended 30 June 2022, the remaining available funding is
expected to be realised in the year to 30 June 2023 and 2024.
EMD also has links into the other sectors with increasing electrification in aerospace and industrial
machinery.
Industrial Machinery (including Off-Highway Vehicles, Heavy Industrial Engines and
Robotics)
Industrial Machinery provides the backbone of many sectors, from mining and construction to agriculture,
materials handling and logistics. Industrial machines are becoming increasingly complex with more
features and controls, and are being developed to do more work for a given amount of power. There is
also a clear drive to partly or fully automate machinery and deploy more robotics in industry.
The propulsion systems in off-highway vehicles and other machines transmit drive forces through a
rotating shaft to drive the wheels or other systems such as hydraulic pumps. The demanding nature of
these heavy-duty applications means that implementing traditional torque sensor technology is difficult
and it is more common to rely on shaft speed data as an alternative.
The use of SAW sensing of torque and/or temperature can improve accuracy, efficiency and power
distribution, all of which can also contribute to the ability to operate such machines remotely or on a fully
autonomous basis. Transense SAW sensor technology is under ongoing trial by a major producer of
agricultural machinery. The project is progressing on schedule, and is expected to strengthen the
business case for the use of SAW in this sector.
The global market for industrial robotics is expanding rapidly and is accelerated by the advent of lower
cost collaborative robots that are easier and less costly to deploy. These robots have a position and torque
sensing system embedded into every joint to allow automated control and safe operation, which are
generally reliant on strain gauge or displacement sensors. Whilst these sensors are low cost and suitable
for simple applications, they lack the robustness required in some harsh environments and can be
susceptible to electromagnetic interference. Furthermore, each of these existing technologies require an
element of twist or flex in the robots joints, which means that the robotic arm will flex in operation limiting
performance and repeatability.
Transense SAW sensor technology can provide an improved way to measure torque, rotation and
temperature in a robotic system, virtually eliminating flex and creating high performing and more
repeatable robots with more compact joints than has been possible previously.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
Motorsport and high-performance vehicles
Transense SAW technology has been in use for several years in premium motor sport driveline
applications to measure delivered torque in race vehicle drivetrain for monitoring and regulatory
compliance purposes. In September 2021, the Company entered into a five–year Joint Collaborative
Agreement (JCA) with McLaren Applied Ltd to further develop non-contact torque products for this sector.
Under the JCA. McLaren has exclusive access to the technology for the premium motor sport market in
exchange for meeting minimum target revenues on an annual basis over five years. Progress under the
JCA has been in line with our initial expectations and a number of new customer opportunities are in
development.
The motorsport market offers limited scale as a consequence of the relatively low number of vehicles in
operation, but is a proving ground for new automotive technology which may subsequently be adopted in
mainstream vehicles. There is strong overlap with EMD as high volume performance vehicles are
increasingly being developed using electric drivetrain.
Business development activities
In view of the positive indications for the development of applications in which SAW offers benefits over
other methods of torque measurement, and with clear target market sectors in view, it became appropriate
during the year to inject additional business development resource. Ryan Maughan joined the Board in a
part-time role as Business Development Director in December 2021, and his involvement has generated
a growing pipeline of potential customer engagements which can be summarised as follows:
Number of potential customers by sector as at 26 September 2022 (July 2021)
Stage 4 - Contracted
Stage 3 – Contract under
negotiation
Stage 2 – In development
Stage 1 – Active enquiry
Total
Aerospace
Electric Motors
& Drives
Industrial
Machinery
Performance
Automotive
1 (1)
1 (0)
1 (0)
4 (3)
7 (4)
0 (0)
0 (0)
1 (0)
10 (0)
11 (0)
0 (0)
0 (0)
1 (1)
4 (0)
5 (1)
1 (1)
0 (0)
0 (1)
0 (0)
1 (2)
Total
2 (2)
1 (0)
3 (2)
18 (3)
24 (7)
There is now a healthy and growing pipeline of active customer engagement, where the minimum
requirements for an enquiry to be considered active are met. These include pre-qualification that the
project is technically feasible, and is known to be supported by decision makers and budget holders in the
customer organisation.
There will normally be a significant time lag in progressing enquiries from stage 1 to stage 4, and much
more work to be done. It is also more than likely that timescales can be extended, and that some will not
mature into revenue. Nevertheless, the progress made in recent months provides ample indication of
future growth potential, and a number of projects are close to moving from enquiry stage to some form of
paid engineering project, which will increase the revenue of this segment with no significant additional
costs.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
Operations and engineering activities
Nick Hopkins, who joined the Company to lead the SAW business during the reorganisation phase in
2020, became Chief Operating Officer and joined the Board in December 2021.
In parallel with the opening up of new commercial opportunities, resources have been applied in
developing the technical and operational capabilities that will be required to satisfy increasing customer
demand for chargeable development projects, leading into engineering support for transfer of SAW into
production.
Unlike some alternative torque and temperature sensing devices, SAW components require a degree of
customisation in order to unlock their unique benefits specific to each application and are therefore not
sold “out of the box”. This calls for detailed application engineering, covering for example the methods for
bonding components to OEM equipment, and calibrating the output signal for accuracy and repeatability
across the temperature cycle.
To advance our knowledge and experience in these areas, Andy Bullock joined the Company in July 2022
in the newly created role of Technical Director. He brought a proven record of leading the design and
development of complex electronic solutions and associated manufacturing processes. The primary focus
is to build the engineering capability of the business to meet customer demand for practical support in
application of SAW technology, both in-house for proto-typing, development and pilot production, and
through the provision of technology transfer to potential licencees.
Working in partnership
It has been an important feature of the Company’s business model to work closely with some of the world’s
largest and most respected companies in collaborative partnerships to facilitate market access that would
otherwise challenge the financial resources of a specialist innovator. This has led to the successful
licensing of SAW technology to GE and Emerson, and the iTrack licence granted to Bridgestone in 2020.
This approach is maintained in our recent announcement of the new collaboration with Meggitt in the
aerospace sector. The directors consider that working alongside a company of Meggitt’s stature will
expand our capacity to develop customers in this rapidly changing sector and will continue to support this
partnership approach in other segments where suitable opportunities arise to increase access to markets,
customers, supply chain and/or engineering and production capabilities.
Prospects for SAW
Taken as a whole, there has been much progress during the year and clear signs of traction across high
value growth markets. The level and quality of customer engagement has increased substantially, and
the engineering tasks required to enable customers to apply our technology in a more accessible manner
are underway.
It will remain a time consuming process to convert qualified enquiries into development projects, and
transition these through to full production, and doubtless not all will mature. The directors consider,
however, that the prospects of future commercial success for SAW are building.
Financial position and cash flow
The Company’s financial position strengthened further during the year with net assets increasing to
£3.09m (FY21: £2.34m) as a result of the retention of net profits after taxation. Net available cash
balances amounted to £1.06m (FY21: £1.05m), and the final quarter royalty income on iTrack receivable
on 31 July 2022 stood at £0.47m (FY21: 0.26m).
Net cash generated from operations amounted to £0.41m (FY21: net cash used of £0.25m). This was re-
invested in capital expenditure of £0.10m (FY21: £0.05m) and in the share buy-back programme during
the final quarter of the year totaling £0.30m, leaving net cash balances unchanged over the year. The
directors anticipate that the Company will continue to be cash generative for the foreseeable future, and
will accumulate further cash balances well in excess of the buy-back programme currently proposed.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
Going concern
The Company meets its day to day working capital requirements through existing cash reserves and does
not currently require an overdraft or other borrowing facility. The directors have prepared cash flow
forecasts for the period to 30 June 2024 which indicate that there is a reasonable expectation that the
Company will continue to operate within current and future cash resources throughout this period
Accordingly, these financial statements have been prepared on the going concern basis.
Key Performance Indicators
The following KPIs are some of the tools used by management to monitor the performance of the operating
business. In addition to the KPIs, the statement of financial position and cash flow analysis are reviewed
at monthly Board meetings.
KPIs
FY 22
FY 21
Turnover - continuing operations (£m)
2.63
1.77
Adjusted EBITDA – (£m) *
EBT - (£m)
0.62
0.10
0.27
(0.16)
EPS - attributable to shareholders (Pence)
5.36
0.96
Closing share price (Pence)
62.5
90.5
Net cash generated/(used) in operations (£m)
0.41
(0.25)
Closing cash balance (£m)
Cash per Share (Pence) **
1.06
1.05
6.6
6.4
Consolidated Net Assets (£m)
3.09
2.34
Net Assets/Share (Pence) **
19.3
14.4
Market Capitalisation at year end (£m) **
10.00
14.76
Shares in issue (million) **
16.0
16.3
*Adjusted EBITDA excludes the charge for share based payments £0.10m (2021: £0.04m)
**Based on free shares in issue of 16,003,740 (2021: 16,307,282). Free shares are calculated based on
the total issued share capital of 16,437,740 less Treasury shares 434,000.
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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
Year on Year
change in risk
FY 22
Year on Year
change in risk
FY21
Covid - 19
Suppliers and Raw Materials
The Covid-19 pandemic continued into the
financial year ended 30 June 2022 and has again
impacted individuals, businesses, markets and
economies substantially reducing the ability to
travel overseas and meet with major customers and
suppliers. During the second half of the financial
year the impact began to reduce considerably and
many and subsequently nearly all of the restrictions
in place were removed.
Due to a combination of worldwide events, the
latest being the conflict in Ukraine, lead times for
acquiring stock for our products and services
continues to be challenging and has put the
Company in a position where the demand could
outstrip the supply in turn impacting on customer
relationships.
Foreign currency fluctuation
The Royalty income from Bridgestone is payable in
USD and over 90% of Probes sales are made
outside the UK. The major currency exposure is to
USD.
People
An experienced and knowledgeable team is
essential to continually develop complex products
for customers to be used in demanding markets.
The market for skilled staff is extremely competitive
and a failure to recruit and retain suitably qualified
staff could impact the Company's ability to develop
and deliver services and product.
Transense's exposure regarding Covid - 19
has continued to be fairly minimal despite
most of the team having tested positive at
some stage. The Company adopted
Government guidelines throughout the period
restrictions were in place and video
conferencing has substantially mitigated the
failure to be able to travel to visit non UK
customers however in the second half of the
year the team were able to travel abroad and
meet some important customers.
Towards the end of the year the Company
substantially increased the level of inventory
ordered and this together with some technical
modifications enabling the use of more
available components facilitated the ability to
meet anticipated demand.
The Board regularly review the key foreign
exchange rates (USD & Euro) and during the
year, as the dollar has strengthened, hedged
against detrimental movements. The
strengthening of the dollar has had a positive
impact on the business.
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 of new employees, when
required, is done so by experienced staff to
ensure the correct calibre of individual is
identified. The Company has successfully
recruited new members to the SAW team in
key toles working closely with a recruitment
team specialising in our industry.
Global Companies and
Competition
Many of the customers 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.
Whilst in the past the delay in PO's could
have been critical to the Company's cash
flow the Board consider we are sufficiently
funded to endure the long lead times
between initial discussions and PO's with
Global businesses.
13
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Strategic Report (continued)
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Year on Year
change in risk
Commercialisation and
Development of New
Products
Following the disposal of the iTrack operating
business the focus on new products is primarily on
SAW. The decision making process for the
development of new and existing products needs a
broad understanding of future industrial needs and
then an assessment of the potential return which
can be uncertain in the early stages of
development. A changing and evolving market
place and environment (see below) will always
present challenges to produce profitable products.
Development spend is regularly planned and
reviewed. The Company's understanding of
customer needs and expectations is greatly
enhanced by working closely with customers
on extensive product trials. SAWCAP enables
us best understand where our opportunities
lie and also to best understand the problems
of particular markets and technical products.
This also assists in subsequently eliminating
those opportunities deemed least likely to
provide a good return.
Intellectual Property
The SAW business is centred on the exploitation of
the SAW patents with a clear focus on the design
and development of technologically advanced
products and applications. Investment continues to
be made in Development. Following the latest
review of our patent portfolio we currently have 22
live granted patents and continue to have
significant in house know how. The development of
know how is equally applicable to the iTrack
system and the Probe.
The risk exists that we fail to improve and generate
new know how and where possible extend the
scope and life of our patents.
Liquidity
Transense has in the past found it necessary to
raise funds to support losses and working captal
requirements.
We are strengthening our inhouse
development team, receiving excellent ideas
from our SAWCAP team of engineering
industry experts and thereby widening our
scope of technical and industrial need and
opportunities. With the assistance of our
Patent agents 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.
The IP relating to iTrack has now been
licensed to ATMS Technologies Limited (a
Bridgestone Corporation subsidiary) and no
further development is carried out by
Transense. Development in the form of know
how is applied to the Probe adapting it to the
needs of OEM and fleet management
software systems.
Following the completion of the Bridgestone
deal the Company's finances have become
substantially stronger and the operating cash
flow has become positive. Notwithstanding
the stronger financial position the Board
review monthly forecast cash flows which
look forward between 12 and 24 months to
ensure the Company remains liquid
throughout that period.
By order of the board
Nigel Rogers
Melvyn Segal
Executive Chairman
Chief Financial Officer
26 September 2022
26 September 2022
14
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Environmental, Social and Governance
Transense’s commitment to promoting a greener environment continues to be of significant importance to
our mission. Our technologies can improve sustainability across the wide variety of markets in which we
are present. Transense operates in line with the United Nations 17 Sustainable Development Goals
(SDGs); the UN guidelines for member states to ensure they operate in line with its 2030 Agenda for
Sustainable Development. As a leading developer of technology, Transense aims to “ensure sustainable
consumption and production patterns” aligned with Goal 12 of the SDGs.
Reducing our impact on the environment
Transense has adopted a policy to safeguard the environment and minimize the generation of harmful
substances as much as possible. We enable customers to do the same, through the supply of our value
added technologies that improve efficiency, optimise performance and reduce emissions.
We operate in line with all relevant environmental legislation and regulatory requirements and train our
employees to carry out their duties whilst being mindful of the environment and the Company’s concern
for it. Transense only uses approved waste disposal contractors to dispose of waste in an environmentally
friendly manner, whilst promoting responsible energy use and recycling on site. We encourage and
support our suppliers to have sound environmental policies in place.
Our technology is an enabling technology and aims to achieve a positive environmental impact for larger
manufacturing companies who wish to use it to improve their products in areas of performance, fuel
consumption, predictive maintenance, and unit up time as they work towards net zero emissions.
Social responsibility
The Board of Transense continually aim to manage their business in a socially responsible and ethical
manner and act with integrity and behave responsibly as we execute our strategy.
Health and safety
We are committed to operating an environment that promotes Health and Safety (H&S). During the Covid-
19 pandemic we regularly reviewed H & S procedures and considered risk assessments whilst also
supporting homeworking during the height of the pandemic.
Employees
People are central to what we do. Transense strives to provide its team with good training and incentives
which have been instrumental in retaining key employees. Our Health and Safety Policy enables
employees to perform their work safely and efficiently in line with health and safety law and is reviewed
annually with employees consulted before the integration of any new practices.
We are continually looking to develop a high performance culture through our recruitment, employee
engagement, people development and resource management strategies.
Equal opportunities
The Group is committed to a policy of equal opportunity by which it ensures that all activities are based
on merit.
15
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Corporate Governance Statement
The Board is committed to high standards of corporate governance as appropriate to the Company’s size
and activities and sets out below key areas of Corporate Governance. The Board considers it appropriate
to adopt the principles of the QCA Code published in April 2018. The extent of compliance with the ten
principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and
any steps taken or intended to move towards full compliance, are set out on the company
website https://www.transense.com.
The group aims to operate to high standards of moral and ethical behaviour. All members of the Board
fully support the value and importance of good corporate governance and in our accountability to all of the
Company’s stakeholders, including shareholders, employees, customers, distributors, suppliers,
regulators and the wider community.
The corporate governance framework which the Company has set out, including Board leadership and
effectiveness, remuneration and internal control, is based upon practices which the Board believes are
proportionate to the risks inherent to the size and complexity of group operations.
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, Oxfordshire,
OX25 3SX.
Nigel Rogers (Executive Chairman *) Age 61
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 the Audit committee.
In addition to his responsibilities at Transense, he is also Chairman of both AIM listed Surgical Innovations
Group Plc and Solid State plc.
Melvyn Segal (Chief Financial Officer) Age 67
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.
Rodney Westhead (Non-Executive Director **) Age 78
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 annual sales
exceeding £200 million, 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.
Nick Hopkins (Chief Operating Officer) Age 62
Nick had several years of business experience in the electronics sector using SAW for Test and
Instrumentation, following a military career which included the command of an Army Air Corps operational
helicopter squadron and operational and capability equipment roles with the Joint Helicopter Command.
16
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Corporate Governance Statement (continued)
Ryan Maughan (Business Development Director) Age 43
Ryan is an award-winning engineer and business leader with more than 20 years' experience in the high-
performance, heavy-duty and off-highway automotive markets. Prominent in the development of power
electronics, electric motors and drives (PEMD) for these demanding applications, he has successfully
founded, scaled and sold three businesses in the electric vehicle space. He is currently CEO of eTech49
Limited, an advisory business specialising in disruptive hardware technology in PEMD. In addition, he is
Chairman of EV North, an industry group representing the booming electric vehicle industry in the north
of England, a Board member of the North East Local Enterprise Partnership and an advisor to a number
of corporations.
*Member of Audit & Risk committee
** Chair of Audit & Risk and Remuneration committee
The Board has not adopted a formal process of evaluation, although the Chairman has actively
encouraged self-evaluation by all Board members, and sought individual feedback on the conduct and
content of Board meetings. The Board will consider whether a more structured approach is required in
future.
The Board is satisfied that the current composition provides the required degree of skill, experience and
capabilities appropriate to the current needs of the business, and that individual Directors have access to
adequate sources of information to update their knowledge as required.
The Board seeks appropriate expert advice where circumstances require such action to be necessary or
desirable, for example, by utilising legal advisors and regulatory compliance specialists in transaction
work. No Board committees or individual Board members have sought external advice in the current year,
but are free to do so at any time, and at the Company’s expense, should the need arise.
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.
During the year, Board members attended meetings as follows:
Director
Maximum number
of meetings
Actual meetings
attended
Audit Committee
Remuneration
Committee
Nigel Rogers
Melvyn Segal
Rodney Westhead
Nick Hopkins
Ryan Maughan
9
9
9
5
5
9
9
9
5
5
1
1*
1
-
-
-
-
-
-
2
*attended part of the meeting only as not a Committee member
Nick Hopkins and Ryan Maughan joined the Board on 1 December 2021. The Board has one Non-
Executive Director who is considered by the Directors to be independent for the purposes of the QCA
Code, Rodney Westhead. Rodney joined the Board in April 2007, and prior to this had no association with
the Company.
The Board promotes high ethical and moral standards. The Board and all employees expect to be judged
by, and accountable for, their actions and compliance with the Company’s policies procedures.
17
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Corporate Governance Statement (continued)
Regular meetings with shareholders and other key representative groups provide specific opportunity for
raising any concerns relating to Company performance and/or corporate governance. Independent
feedback is sought following such meetings and provided to the Board, where appropriate on an
anonymised basis.
As noted in the Strategic Report on pages 7-14, the Board has in place a risk management policy and a
risk management register for identifying, assessing and mitigating the Company’s principal risks and
uncertainties.
Internal Financial Control
The Board is responsible for establishing and maintaining the Company’s system of internal financial
controls. Internal financial control systems are designed to meet the particular needs of the Company and
the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute, assurance
against material misstatement or loss. 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 & Risk Committee
The Audit & Risk 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 & Risk 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 & Risk 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. Rodney Westhead is the sole member of the
Remuneration Committee.
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.
18
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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, Rodney Westhead, 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, during the year ended 30 June 2022 two directors participated and total contributions
were £4.6k (2021: £nil).
19
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Remuneration report (continued)
Service Contracts
The service contracts provide for the following notice periods:
12 months: Nigel Rogers and Melvyn Segal.
No notice period: Rodney Westhead
6 Months: Nick Hopkins and Ryan Maughan
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:
Basic
salary
£
45,000
135,000
61,250
42,288
26,400
----------------------------------------------
309,938
==============================================
189,250
Bonus
Benefits
Pension
£
-
-
-
-
-
£
-
£
-
8,040
246
1,500
3,063
-
-
-
-
Total emoluments
Year ended
30 June 2022
Year ended
30 June 2021
£
£
45,000
144,540
64,559
42,288
45,000
127,738
-
-
26,400
24,000
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
-
8,286
4,563
322,787
196,738
==============================================
==============================================
==============================================
==============================================
-
7,488
-
196,738
==============================================
==============================================
==============================================
==============================================
==============================================
Executive Directors
N Rogers
M Segal
N Hopkins*
R Maughan*
Non-Executive
Directors
R Westhead
Total 2022
Total 2021
*appointed to the Board 1 December 2021
These emoluments can be analysed as follows:
Continuing directors remuneration excluding bonus
Total
2022
£
2021
£
322,787
196,738
----------------------------------------------
322,787
----------------------------------------------
196,738
==============================================
==============================================
20
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Remuneration report (continued)
Share based payment options have been granted under EMI and the discretionary scheme 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:
M Segal
M Segal
M Segal
M Segal
N Hopkins
N Hopkins
R Maughan
Directors' interests in the UDSOS were:
M Segal
M Segal
N Rogers
N Rogers
R Westhead
At 1 July
2021
At 30 June
2022
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
50,000
170,000
126,000
-
30/06/20
170,000
12/08/21
126,000
24/06/23
-
40,000
30/09/24
***100,000
100,000
24/06/23
-
-
25,000
22/11/24
50,000
22/11//24
£1.00
£0.75
£0.62
£0.10
£0.62
£0.10
£0.10
£2.00
£2.00
£1.50
£1.50*
**
£1.50*
£1.50*
==============================================
==============================================
==============================================
==============================================
==============================================
At 1 July
2021
At 30 June
2022
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
74,000
74,000
24/06/23
-
35,000
30/09/24
400,000
400,000
24/06/23
-
-
150,000
30/09/24
25,000
30/09/24
£0.62
£0.10
£0.62
£0.10
£0.10
£1.50
£1.50*
£1.50
£1.50*
£1.50*
==============================================
==============================================
==============================================
==============================================
==============================================
* The hurdle price commences at £1.50 (for 10 consecutive days) and rises to £2.00
** The hurdle is based on the SAW Segment making a positive contribution after direct salary costs
*** Joined the Board in December 2021. The opening balance reflects share options granted prior to
joining the board
Share price performance
The share price performance is disclosed in the Directors’ Report on page 23.
21
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Directors’ report
The Directors present their annual report and audited financial statements for the year ended 30 June
2022.
Business activities, review of the business and future developments
Transense is a provider of specialist sensor systems.
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 14.
Results and Dividends
The results for the year ended 30 June 2022 show a profit after tax of £0.88m (2021: £0.16m). The
Directors do not recommend the payment of a dividend (2021: £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
The following substantial shareholdings of 3% or more of the Company’s share capital have been notified
to the Company:
CriSeren
Seneca
P Lobbenberg
Javed Abrahams
Harwood Capital LLP
Legal & General
Gerald Oury
Ordinary shares of
10p each
%
10.06%
7.81%
6.05%
4.21%
4.12%
3.37%
3.08%
1,610,004
1,250,000
968,979
674,096
660,000
540,000
493,333
Information correct as at 24 September 2022. The total number of Ordinary Shares in issue
(including 434,000 shares held as treasury shares) is 16,437,740 and, therefore, the total number of
voting rights in the Company, which is the basis for the above percentages, totals 16,003,740.
22
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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:
Ordinary shares
of 50p each
Ordinary shares of
50p each
30 June 2022
30 June 2021
265,000
50,000
30,655
200,000
44,888
30,655
18,363
-
5,000
-
N Rogers
M Segal
R J Westhead
R Maughan
N Hopkins
Share price
The mid-price of the shares in the Company at 30 June 2022 was 62.5p (2021: 90.50p) and the range
during the period was 58.0p to 122.5p (2021: 47.5p to 98.0p).
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 21.
Financial Instruments
The directors adopt a low risk financial objective. The financial instruments are denominated in sterling,
Euros and US dollars. In view of the significant exposure to US dollar income including the royalties, the
Group now enters into forward contracts to sell US dollars for sterling at fixed rates in order to mitigate the
risk of unexpected fluctuations in exchange rates (see note 22 to the financial statements).
Research and Development
In order to maintain and improve upon its market position, each of the Group’s trading divisions actively
engage in research and development activities. This ensures the Group continually improves its product
offerings and technical abilities.
Following the grant of an exclusive licence to ATMS in June 2020 in respect of the iTrack Intellectual
Property no further development expenditure on the iTrack or other products has been capitalised in the
year (2021: £Nil).
23
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Directors’ report (continued)
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 2021/22.
Disclosure of information to Auditors
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.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution to appoint Cooper Parry Group
Limited as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.
By order of the board
N F Rogers
Chairman
M Segal
Chief Financial Officer
26 September 2022
1 Landscape Close
Weston-on-the-Green
Bicester
Oxfordshire
OX25 3SX
24
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Statement of Directors’ responsibilities in respect of the Annual Report
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 United Kingdom.
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 United Kingdom have been followed, subject
to any material departures and explained in the financial statements; and
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 group and parent company’s transactions and disclose with reasonable accuracy at any time
the financial position of the group and 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 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.
25
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Independent auditor’s report to the members of Transense Technologies
plc
Opinion
We have audited the financial statements of Transense Technologies plc (the ‘parent Company’)
and its subsidiaries (the ‘Group’) for the year ended 30 June 2022 which comprise the
consolidated Statements of Comprehensive Income, the Consolidated and Company Balance
Sheets, the Statement of Changes in Equity, the Consolidated and Company Cash Flow
Statement and the related 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
UK adopted international accounting standards.
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 2022 and of the group’s profit for the year then
ended;
• have been properly prepared in accordance with UK adopted international accounting
•
standards; 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 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.
Our approach to the audit
We adopted a risk-based audit approach. We gained a detailed understanding of the Group’s
business, the environment it operates in and the risks it faces.
The key elements of our audit approach were as follows:
Our Group audit scope focused on the Group’s principal trading entity, Transense Technologies
plc which was subject to a full scope audit and represents all of the revenue and profits generated
in the year and all of the net assets at year end.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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) we identified, including
those which 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.
26
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Independent auditor’s report to the members of Transense
Technologies (continued)
Risk of error in revenue recognition
Matter
Under International Standard on Auditing (UK) 240 there is a presumed risk that revenue is
misstated due to fraud. The Group recognises revenue to the extent that economic benefits will
flow to the Group and the revenue can be reliably measured. Whilst there are a number of ways
in which the Group generates
revenue, there is relatively little judgement involved in determining the timing and value of the
amount to be recognised. We therefore assess the significant risk to be specifically with respect
to manual journals posted to revenue.
Response
Our procedures in response to the risk included:
• Performing a walkthrough of the process as set out by management, to ensure controls
appropriate to the size and nature of operations are designed and implemented correctly
throughout the transaction cycle for each revenue stream;
• Obtaining a complete listing of journals posted to revenue nominal codes. From this
listing we selected a sample of manual adjustments which were vouched to evidence
supporting the timing and measurement of the revenue recognised;
• Performing enhanced cut-off testing to ensure sales are recognised in the correct
accounting period; and
• Performing transactional revenue testing to confirm the existence of revenue.
Our procedures did not identify any material misstatements in the revenue recognised during the
year.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in determining the
nature, timing and extent of our audit procedures, in evaluating the effect of any identified
misstatements, and in forming our audit opinion.
The materiality for the group financial statements as a whole was set at £39,465. This has been
determined with reference to the benchmark of the group’s revenue which we consider to be an
appropriate measure for a group of companies such as these. Materiality represents 1.5% of
group revenue. In determining the level of testing to be performed during our audit work, we used
performance materiality of £35,500.
The materiality for the parent company financial statements as a whole was set at £35,500. This
has been determined with reference to the benchmark of the parent company’s revenue which
we consider to be an appropriate measure for a parent company such as this. Materiality has
been capped to 90% of group materiality.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
27
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Independent auditor’s report to the members of Transense
Technologies (continued)
Conclusions relating to going concern (continued)
Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going
concern basis of accounting included:
• Challenging management on key assumptions included in their forecast scenarios;
• Considering the potential impact of forecast scenarios on the forecast cash position,
specifically around trade and other receivables and inventory; and
• Reviewing management’s disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the group's
ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information included in the annual report. 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. 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.
Opinions on other matters prescribed by the Companies Act 2006
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 by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
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, 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.
28
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Independent auditor’s report to the members of Transense
Technologies (continued)
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 25, 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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
Our assessment focused on key laws and regulations the company has to comply with and areas
of the financial statements we assessed as being more susceptible to misstatement. These key
laws and regulations included but were not limited to compliance with the Companies Act 2006,
International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom, and
relevant tax legislation.
We are not responsible for preventing irregularities. Our approach to detecting irregularities
included, but was not limited to, the following:
• obtaining an understanding of the legal and regulatory framework applicable to the
entity and how the entity is complying with that framework;
• obtaining an understanding of the entity’s policies and procedures and how the entity
has complied with these, through discussions and sample testing;
• obtaining an understanding of the entity’s risk assessment process, including the risk
of fraud;
• designing our audit procedures to respond to our risk assessment; and
• performing audit testing over the risk of management override of controls, including
testing of journal entries and other adjustments for appropriateness, evaluating the
business rationale of significant transactions outside the normal course of business
and reviewing accounting estimates for bias.
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.
29
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Independent auditor’s report to the members of Transense
Technologies (continued)
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent
company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Katharine Warrington (Senior Statutory Auditor)
For and on behalf of
Cooper Parry Group Limited
Chartered Accountants
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
Date:
30
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Financial expense
Other income
Profit/(loss) before taxation
Taxation
Profit and total comprehensive income for the year attributable
to the equity holders of the parent
Basic profit per share for the year (pence)
Diluted profit per share for the year (pence)
Year ended
30 June
2022
Year ended
30 June
2021
Note
£'000
£'000
5
6
7
10
21
21
2,632
(398)
1,773
(385)
----------------------------------------------
----------------------------------------------
2,234
1,388
(1,970)
(1,581)
----------------------------------------------
----------------------------------------------
264
(12)
16
(193)
(12)
48
----------------------------------------------
----------------------------------------------
268
609
(157)
313
----------------------------------------------
----------------------------------------------
877
156
==============================================
==============================================
5.36
==============================================
5.22
==============================================
0.96
==============================================
0.96
==============================================
The Company only has dormant subsidiaries and therefore its result is shown above and comprises all of
the Consolidated statement of comprehensive income presented.
Notes to the financial statements are from pages 35 to 56.
31
Consolidated and Company Balance Sheet
at 30 June 2022
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Non current assets
Property, plant and equipment
Intangible assets
Deferred tax
Current assets
Inventories
Corporation tax
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Non current liabilities
Lease liabilities
Total liabilities
Net assets
Equity
Issued share capital
Share premium
Treasury Shares
Share based payments
Retained earnings
Total equity
Note
11
12
10
14
10
15
16
17
18
18
20
20
30 June
2022
£'000
167
671
645
2022
£'000
30 June
2021
£'000
2021
£'000
211
770
47
----------------------------------------------
----------------------------------------------
1,483
1,028
88
-
1,133
1,055
73
60
564
1,046
----------------------------------------------
----------------------------------------------
2,276
----------------------------------------------
3,759
1,743
----------------------------------------------
2,771
(560)
(65)
(260)
(65)
----------------------------------------------
----------------------------------------------
(625)
(42)
----------------------------------------------
(667)
----------------------------------------------
3,092
==============================================
1,644
65
(303)
180
1,506
----------------------------------------------
3,092
==============================================
(325)
(104)
----------------------------------------------
(429)
----------------------------------------------
2,342
==============================================
1,631
-
-
82
629
----------------------------------------------
2,342
==============================================
These financial statements were approved by the board of Directors and authorised for issue on 26 September 2022
and were signed on its behalf by:
N F Rogers
Chairman
M Segal
Chief Financial Officer
Notes to the financial statements are from pages 35 to 56.
32
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Statement of Changes in Equity
Company and Group
Share
Capital
Share
Premium
Share based
payments
Retained
earnings
Treasury
shares
Total
Equity
Balance at 1 July 2020
5,451
2,591
41
(5,900)
-
2,183
£'000
£'000
£'000
£'000
£'000
£'000
Comprehensive income for the year:
Profit for the year
- -
-
156
-
156
Share based payment (note 19)
- -
41
-
-
41
Share capital reduction (note 20)
(3,820)
(2,591)
- 6,411
-
-
Expenses of capital reduction (note 20)
-
- -
(38)
-
(38)
Balance at 30 June 2021
1,631
-
82
629
-
2,342
Comprehensive income for the year:
Profit for the year
-
- -
877
-
877
Share based payment (note 19)
-
- 98
-
-
98
Warrants exercised (note 20)
13
65
-
-
-
78
Treasury shares (note 20)
-
-
-
-
(303)
(303)
Balance at 30 June 2022
1,644
65
180
1,506
(303)
3,092
Notes to the financial statements are from pages 35 to 56.
33
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2022
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Profit from operations
Adjustments for:
Taxation
Net financial expense
Share based payment
Depreciation
Amortisation and impairment of intangible assets
Operating cash flows before movements in working capital
(Increase) in receivables
Increase/(Decrease) in payables
(Increase) in inventories
Cash generated / (used in) operations
Taxation received
Net cash generated / (used) in operations
Investing activities
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Proceeds from disposal of trade and assets
Net cash (used in) investing activities
Financing activities
Capital reduction expenses
Treasury shares
Warrants exercised
Loans repaid
Interest paid
Payment of lease liabilities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and equivalents at the beginning of year
Cash and equivalents at the end of year
Group and Company
Year ended
30 June
2022
Year ended
30 June
2021
£'000
877
£'000
156
Note
10
7
19
11
12
15
17
14
11
12
20
(609)
(313)
12
98
88
155
12
41
85
121
----------------------------------------------
----------------------------------------------
621
(569)
300
(15)
102
(124)
(594)
(10)
----------------------------------------------
----------------------------------------------
337
71
(626)
381
----------------------------------------------
408
----------------------------------------------
----------------------------------------------
(245)
----------------------------------------------
(44)
(56)
-
(6)
(47)
1,237
----------------------------------------------
----------------------------------------------
(100)
1,184
----------------------------------------------
----------------------------------------------
-
(303)
78
-
(12)
(62)
(38)
-
-
(976)
(12)
(60)
----------------------------------------------
----------------------------------------------
(299)
(1,086)
----------------------------------------------
----------------------------------------------
9
1,046
(147)
1,193
----------------------------------------------
----------------------------------------------
16
1,055
==============================================
1,046
==============================================
In the year ended 30 June 2021,the investing activity cashflows included a £1,237,000 inflow in respect of the
disposal of discontinued operations in June 2020 and financing activity cashflows a related £976,000 outflow.
Notes to the financial statements are from pages 35 to 56.
34
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements
1
General Information
Transense Technologies plc (the “Company”) is a public company incorporated in the United Kingdom under the
Companies Act 2006. The address of the registered office and principal place of business is given on page 3. The
consolidated financial statements of the Company as at and for the year ended 30 June 2022 (prior year ended 30
June 2021) comprise the Company and its subsidiaries (together referred to as “the Group” and individually as
“Group entities”). The Company’s subsidiaries are dormant and have no external assets or liabilities. As the financial
statements are the same for company and Group, all financial information therefore relates to the Company and
Group and is shown headed as Company and Group. The nature of the Company’s and Group’s operations and its
principal activities are discussed in the business review on page 22.
These financial statements are presented in pounds sterling, in round thousands, 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 United
Kingdom (“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 2022 the Group had net cash balances of £1.06m (2021: £1.05m). The business is now generating cash
and the Directors have prepared cash flow forecasts to June 2024, including plausible downside sensitivities that
might arise in respect of the impact of the current economic conditions, and consider that there are sufficient cash
resources available in this period in which exceeding a break-even level of revenues is expected to occur, 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.
There are no new standards, interpretations and amendments that are in issue but not yet effective which are
expected to have a material effect on the Company’s or Group’s future Financial Statements.
35
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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 historical cash flows on which to
base the future cash flows. 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 a substantial amount of developments costs as the new iTrack is a
significant improvement on the original iTrack model. Following the licence granted to ATMS Technologies
Limited in June 2020 it is unlikely that there will be any further development costs incurred by Transense
as the iTrack product has reached a level of maturity.
The balance of iTrack II development costs are, with effect from July 2021 amortised over the period of the
10 year period of the licence agreement with Bridgestone reflecting the longer useful life.
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
2022. Following the disposal of the trading subsidiaries in June 2020, there is no difference between the Company’s
and Group Balance Sheets.
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.
36
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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;
• Product sales to customers are recognised on customer acceptance of the goods; and
•
License revenue is recognised in accordance with the contractual agreement for each deal.
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 had three reportable segments being the unique trading divisions, SAW and Translogik, which make use
of technology developed by the Group to measure and record temperature, pressure and torque and the iTrack
royalty activity in respect of income from licensed technology.
The revenues include royalties, engineering support and sale of product in relation to this technology.
Information regarding the Group’s segments is included in the 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.
37
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
4
Accounting policies (continued)
Assets and liabilities arising from a lease are initially measured at the present value of the lease payments and
payments to be made under reasonably certain extension options are also included in the measurement of the
liability. The lease payments are discounted using the interest rate implicit in the lease or the incremental borrowing
rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal, presented as a separate category within liabilities, and finance
cost. The finance cost is charged to the Statement of Comprehensive Income over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are
measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at
or before the commencement date less any lease incentives received and any initial direct costs.
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;
Fixtures and Fitting 3 – 10 years;
Motor Vehicles 4 years; and
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis.
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 measured reliably.
All new expenditure on research and development activities in relation to iTrack was capitalised up to 30 June 2020.
The amortisation of this expenditure was previously amortised over a fixed 3 year period to August 2019 however
as the development of iTrack II was ongoing the policy was changed to write off all expenditure over 3 years from
the date of the expenditure. Following the 10 year IP licence granted to the Bridgestone Corporation subsidiary
ATMS Limited in June 2020, the amortisation policy with effect from 1 July 2020 is to amortise the remaining net
book value over the life of the licence.
Historical expenditure on development activities has been capitalised and is being amortised over 10 years on a
straight line basis.
38
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
4
Accounting policies (continued)
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.
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
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets continue
to be recognised on a straight-line basis as an expense in the Statement of Comprehensive Income. Short-term
leases are leases with a lease term of 12 months or less.
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.
39
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
4
Accounting policies (continued)
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.
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
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 the Statement of Comprehensive Income.
The group does not apply hedge accounting in respect of forward foreign exchange contracts held to manage the
cash flow exposures of forecast transactions denominated in foreign currencies. The group utilises forward exchange
contracts to mitigate the risk of adverse exchange rate movements on foreign currency denominated revenue. These
derivatives are measured at the fair market value, at the reporting date, with the fair value gain or loss movements
arising being recognised within administrative expenses in the Statement of Comprehensive Income.
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
or Monte Carlo Option Pricing Models. These models consider 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. The
Monte Carlo model also evaluates the probability of different outcomes being achieved in respect of market based
vesting conditions and is applied where a share price hurdle has to be exceeded..
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.
40
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
4
Accounting policies (continued)
Trade receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured
at amortised cost using the effective interest method, less any impairment losses.
Trade payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured
at amortised cost using the effective interest method.
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.
Equity and reserves
Share capital represents the nominal value of shares that have been issued. Share premium represents the excess
consideration received over the nominal value of share capital upon the issue of shares, less any costs of issue.
The retained earning reserve includes all current and prior period net retained profits and losses.
Treasury shares are included in equity in respect of the Company’s purchase of its own shares. These are stated at
cost.
The share based payment reserve represents the accumulated amount arising from crediting equity share based
payment charges included in the Statement of Comprehensive Income.
5
Revenue and segmental reporting
The tables below set out the Group’s revenue split by destination and operating segments. The royalty income,
received through a UK customer company, is included in the UK & Europe totals.
Revenue
North America
South America
Australia
Europe
UK
Rest of the World
Year ended
Year ended
30 June 2022
30 June 2021
£'000
Restated
£'000
323
244
123
83
41
28
387
228
92
90
109
268
1,075
941
iTrack Royalty
1,557
832
Note comparatives are restated as they were shown incorrectly last year.
41
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
Segments
Year ended 30 June 2022
Translogik
£'000
SAW
£'000
iTrack royalties
Unallocated
£'000
£'000
Total
£'000
Sales
Gross profit
Overheads
875
200
1,557
-
2,632
484
193
1,557
-
2,234
(126)
(1,142)
(44)
(658) (1,970)
Operating profit/(loss)
358
(949)
1,513
(658) 264
Other Income
-
16
-
-
16
Net Financial Expense
-
(12)
-
-
(12)
Taxation
-
-
-
609
609
Profit/(loss) for the year
358
(945)
1,513
(49) 877
EBITDA reconciliation
Operating profit
Other income
Depreciation and amortisation
EBITDA
Note: Adjusted EBITDA (excluding share based payments)
£'000
264
16
243
523
621
Translogik
£'000
SAW
£'000
iTrack royalties
£'000
Admin
£'000
Total
£'000
Year ended 30 June 2021
Sales
Gross profit
Overheads
Operating profit/(loss)
Other Income
Net Financial Expense
Taxation
Deferred Tax
764
385
(114)
271
-
-
-
-
Profit/(loss) for the year
271
177
171
(917)
(746)
48
(12)
164
-
(546)
832
832
(47)
785
-
-
102
-
887
-
-
(503)
(503)
-
-
-
47
(456)
1,773
1,388
(1,581)
(193)
48
(12)
266
47
156
The directors have not disclosed Balance Sheet segmental information as no analysis is prepared at this level.
42
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
During the year ended 30 June 2022 there were 2 customers (2021: 2) whose turnover accounted for more than
10% of the Group’s total continuing revenue as follows:
Year ended 30 June 2022
Customer A
Customer B
Year ended 30 June 2021
Customer A
Customer B
All non-current assets are held in the UK.
6
Expenses and auditor’s remuneration
Included in the loss are the following:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss/(Gain) on foreign exchange transactions
Revenue
£'000
Percentage
of total
1,557
339
59
13
Revenue
£000
Percentage
of total
915
200
52
11
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
88
155
50
85
121
(19)
=============================================
=============================================
During the year £nil was recognised as an expense in the Statement of Comprehensive Income in respect of
operating leases (2021: £nil).
Auditors’ remuneration for the Group and Company:
Audit of these financial statements
Fees payable for tax compliance services
Fees payable for other tax and financial advice
7
Finance expense
Recognised in statement of comprehensive income
Finance expense
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
37
4
-
31
4
3
=============================================
=============================================
Year ended
30 June 2022
Year ended
30 June 2021
£'000
£'000
=============================================
(12)
============================================-=
=============================================
(12)
=============================================
43
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:
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Number of employees
Management and technical
Administration
Non-Executive Directors
Group and Company
Year ended
30 June 2022
Year ended
30 June 2021
13
2
1
----------------------------------------------
16
11
2
1
----------------------------------------------
14
=============================================
=============================================
The aggregate payroll costs including Directors of these persons were as follows:
Wages and salaries
Share based payments (note 19)
Social security costs
Contributions to defined contribution pension plan
Group and Company
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
937
98
115
35
----------------------------------------------
1,185
=============================================
771
41
93
30
----------------------------------------------
935
=============================================
The share based payment charge included in the accounts in respect of share options in the year was £98,000
(2021: £41,000).
9
Directors’ remuneration
Directors’ emoluments
Directors’ benefits
Directors’ pension
Employers national insurance
Share based payments (note 19)
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
310
8
5
189
7
-
----------------------------------------------
323
----------------------------------------------
196
39
82
=============================================
22
28
=============================================
The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid
director was £135,000 (2021: £127,738). Company pension contributions made to a money purchase scheme
on behalf of Directors was £4,543 (2021: £Nil). During the year, the highest paid Director received 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 (2021: Nil).
The number of Directors accruing retirement benefits under money purchase schemes in the year was 2 (2021:
Nil).
The number of Directors who exercised share options in the year was Nil (2021: Nil).
44
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
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 (2021: Nil).
The share based payment charge in respect of Directors share options in the year was £82,000 (2021: 28,000).
10
Taxation
Recognised in the statement of comprehensive income in respect of continuing operations
Current tax credit
Current year
Adjustment for previous year
Deferred tax credit
Current year
Tax credit in Statement of Comprehensive Income
Reconciliation of effective tax rate
Profit/(loss) before tax
Tax calculated at the average standard UK corporation tax rate of 19.00% (2021:
19:00%)
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Utilisation of losses brought forward for which no deferred tax asset was
recognised
Recognition of deferred tax in respect of prior year losses
Prior year adjustment
Total tax credit
Corporation tax receivable
Deferred tax assets are:
Recognised – in respect of tax losses
Unrecognised – in respect of tax losses and other timing differences
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
-
(11)
(60)
(206)
(598)
(47)
----------------------------------------------
(609)
=============================================
----------------------------------------------
(313)
=============================================
Year ended
30 June 2022
Year ended
30 June 2021
£'000
268
=============================================
£'000
(157)
=============================================
51
19
-
(23)
(645)
(30)
8
(38)
-
(47)
(11)
----------------------------------------------
(609)
=============================================
-
(206)
----------------------------------------------
(313)
=============================================
60
645
4,900
47
5,670
=============================================
=============================================
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 £22.8m (2021: £23.1m), which are available for offset
against future profits of the same trade. There is no expiry date for tax losses. An appropriate deferred tax asset
is being recognised as the Group is able to demonstrate a reasonable expectation of sufficient future taxable
profits arising in order to utilise the losses.
The Finance Act 2020 maintained the rate of UK Corporation Tax at 19% and in May 2021 the Finance Act 2021
was substantively enacted with a rate of 25% to apply from April 2023. Recognised and unrecognised deferred
tax balances at 30 June 2022 have been calculated using a rate of 19% for reversals expected in the period to
April 2023 and 25% for reversals after that date (2021: 25%) as this was the substantively enacted rate at the
year end date. The recent budget on 23 September 2022, the Chancellor of the Exchequer announced that the
corporation tax rate would not increase to a maximum of 25% however this has not been enacted as at year end
nor at the time of signing the financial statements.
45
Notes to the financial statements (continued)
11
Property, plant and equipment – Group and company
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
i
Right-of-use-
T
property
r
assets
a
£
’
£'000
Plant and
Equipment
Fixtures and
Fittings
Motor
Vehicles
Total
£'000
£'000
£'000
£'000
Cost
Balance at 1 July 2020
272
404
174
10
860
Additions
-
6
-
-
6
Balance at 30 June 2021
272
410
174
10
866
Balance at 1 July 2021
272
410
174
10
866
Additions
-
44
-
-
44
Balance at 30 June 2022
272
454
174
10
910
Depreciation and impairment
Balance at 1 July 2020
57
385
118
10
570
Depreciation charge for the year
57
13
15
-
85
Balance at 30 June 2021
114
398
133
10
655
Balance at 1 July 2021
114
398
133
10
655
Depreciation charge for the year
57
17
14
-
88
Balance at 30 June 2022
171
415
147
10
743
Net book value
At 1 July 2020
215
19
56
-
290
At 1 July 2021
158
12
41
-
211
At 30 June 2022
101
39
27
-
167
The depreciation charge is recognised in the following line items in the Statement of Comprehensive Income:
Administrative expenses – continuing operations
2022
£'000
88
----------------------------------------------
88
=============================================
2021
£'000
85
----------------------------------------------
85
=============================================
The right of use asset relates to the main property held under a 5 year lease. IFRS16 interest charges of £12,000
(2021: £12,000) are included in note 7 and lease liabilities are shown in note 18. The total cash outflow was
£74,000 (2021: £72,000).
46
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
12
Intangible assets
Group and Company intangible assets
G
o
o
£
’
Goodwill
£'000
Patents
rights and
Trademarks
£'000
Development
costs
Total
£'000
£'000
Cost
Balance at 1 July 2020
50
969
2,297
3,316
Additions
Disposals
-
47
-
47
-
(111)
-
(111)
Balance at 30 June 2021
50
905
2,297
3,252
Balance at 1 July 2021
50
905
2,297
3,252
Additions
-
56
-
56
Balance at 30 June 2022
50
961
2,297
3,308
Amortisation and impairment
Balance at 1 July 2020
Amortisation for the year
Disposals
-
622
1,850
2,472
-
74
47
121
-
(111)
-
(111)
Balance at 30 June 2021
-
585
1,897
2,482
Balance at 1 July 2021
Amortisation for the year
-
585
1,897
2,482
-
111
44
155
Balance at 30 June 2022
-
696
1,941
2,637
Net book value
At 1 July 2020
50
347
447
844
At 1 July 2021
50
320
400
770
At 30 June 2022
50
265
356
671
Goodwill represents the excess of consideration paid for a business over the value of the net assets acquired and is
not amortised.
47
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
12
Intangible assets (continued)
Amortisation and impairment charge
The amortisation and impairment charge is recognised in the following line items in the Statement of Comprehensive
Income:
Administrative expenses – continuing operations
2022
£'000
155
----------------------------------------------
155
=============================================
2021
£'000
121
----------------------------------------------
121
=============================================
Impairment testing
Impairment testing has been performed in accordance with the provisions of IAS 36, 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 cash flow projections for the period to June 2024
based on currently contracted income levels and which support the carrying value of goodwill.
13
Investments in subsidiaries
The Group and Company have the following investments in subsidiaries:
Country of
Incorporation
Class of
shares held
Status
Ownership
2022
2021
Translogik RFID Limited
Dormant
Lanesra Inc (Formerly IntelliSAW Inc.)
Dormant
Translogik Ltd (Formerly Cranwick Ltd)
Dormant
UK
USA
UK
Transense K.K.
Dormant
Japan
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
100%
100%
100%
100%
100%
100%
100%
100%
Company
Cost
At 1 July 2020
At 30 June 2021 and 2022
Impairment
Impairment in the year ended 30 June 2020
At 30 June 2021 and 30 June 2022
Net book value
At 30 June 2021
At 30 June 2022
£'000
3
----------------------------------------
3
----------------------------------------
3
----------------------------------------
3
----------------------------------------
-
=============================================
-
=============================================
48
Notes to the financial statements (continued)
14
Inventories
Group and Company
Raw materials
Finished goods
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
30 June 2022
£'000
30 June 2021
£'000
84
4
----------------------------------------------
88
=============================================
38
35
----------------------------------------------
73
=============================================
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in
the year ended 30 June 2022 amounted to £0.39m (2021: £0.36m). Inventories are stated net of impairment
provisions of £0.018m (2021: £0.016m).
15
Trade and other receivables
Group and Company
Amounts falling due within one year
Trade receivables
Expected credit losses
Other receivables
Accrued income
Prepayments
30 June 2022
£'000
30 June 2021
£'000
330
(4)
----------------------------------------------
326
23
441
343
----------------------------------------------
1,133
=============================================
139
(4)
----------------------------------------------
135
39
276
114
----------------------------------------------
564
=============================================
As at 30 June 2022 there were no past due but not impaired trade receivables (2021: no past due but not
impaired). Included within receivables is a rent deposit of £18,000 (2021: £28,000) repayable after more than
one year.
Accrued income receivable in US dollars shortly post year end was subject to forward contracts to sell dollars to
sterling and has been stated net of the derivative liability value at 30 June 2022 in order to to show the sterling
amount realised.
Forward exchange contracts to sell a further 1.18m dollars from future expected receipts for £0.96m of sterling
had an immaterial fair value at 30 June 2022 and have not been recorded as derivatives at 30 June 2022 in the
Statement of Financial Position.
16
Cash and cash equivalents
Group and Company
Cash and cash equivalents per Balance Sheet
Cash and cash equivalents per cash flow
statements
30 June 2022
£'000
30 June 2021
£'000
1,055
----------------------------------------------
1,046
----------------------------------------------
1,055
1,046
=============================================
=============================================
49
Notes to the financial statements (continued)
17
Trade and other payables
Group and Company
Current
Trade payables
Non-trade payables and accrued expenses
18
Lease liabilities
Group and Company
Current
Amounts due in less than one year
Non-current
Amounts due in one to five years
19
Employee benefits
Defined contribution plans
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
30 June 2022
£'000
30 June 2021
£'000
377
183
----------------------------------------------
560
=============================================
103
157
----------------------------------------------
260
=============================================
30 June 2022
£'000
30 June 2021
£'000
65
----------------------------------------------
65
----------------------------------------------
42
----------------------------------------------
107
=============================================
104
----------------------------------------------
169
=============================================
The Group operates a defined contribution pension plan. The total expense relating to these plans in the year
ended 30 June 2022 was £0.04m (2021: £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 or Monte Carlo option pricing models. These models consider the exercise price,
share price at grant date, expected term and expected share price volatility with the Monte Carlo model also
factoring in the probability of different outcomes where there are market related conditions attached to vesting.
The volatility level and risk-free interest rate depends on the date of grant as shown in the tables below. There
is an expected dividend yield of nil pence. The key variables are share price volatility and the probability of market
based hurdles being met..
The share based payment charge in respect of share options in the year was £0.98m (2021: £0.04m).
50
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
19
Employee benefits (continued)
Unapproved Discretionary Share Option Scheme
At 30 June 2022 the following share options remained outstanding under the Company’s Unapproved Discretionary
Share Option Scheme. .
Number of Options
Exercised
30 June
2021
Option Price
Date of
Grant
Date of Exercise
First
Last
1 July 2021
Granted
127,285
1,800
5,000
5,000
50,000
474,000
-
-
-
-
-
-
-
-
210,000
50,000
Cancelled/
Expired
(127,285)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,800
5,000
5,000
50,000
474,000
210,000
50,000
£3.750
£3.750
£3.750
£3.750
£0.750
£0.620
£0.100
£0.100
15.08.13
31.01.14
27.10.14
09.10.15
13.08.19
25.06.20
01.10.21
23.11.21
15.08.13
31.01.17
31.01.17
31.01.18
12.08.21
24.06.23
30.09.24
22.11.24
06.03.22
31.01.24
27.10.24
09.10.25
12.08.29
24.06.30
30.09.31
22.11.31
The assumptions used in the valuation of the old share options are as follows, the value attributable to the older
options has been accounted for in earlier periods:
Date of
grant
Estimated
fair value
Share price Option price Expected
volatility %
Expected
Life - Years
Risk free
rate %
Expected
dividends %
13.08.19
25.06.20
01.10.21
23.11.21
£0.1093
£0.1107
£0.6970
£0.6970
£0.61
£0.62
£1.00
£1.05
£0.75
£0.62
£0.10
£0.10
52.40%
52.40%
30.00%
30.00%
3.00
3.00
3.00
3.00
1.50%
1.50%
0.45%
0.45%
Nil
Nil
Nil
Nil
Enterprise Management Incentive Option Scheme
At 30 June 2022, the following shares remained outstanding under an Enterprise Management Incentive Option
Scheme.
Number of Options
Option Price
Date of
Grant
1 July 2021
Granted
50,000
5,000
539,000
8,000
170,000
Cancelled/
Expired
(50,000)
(32,000)
40,000
25,000
93,000
12,500
Exercised
30 June
2021
0
5,000
507,000
8,000
170,000
40,000
25,000
93,000
12,500
£1.000
£0.750
£0.620
£0.620
£0.750
£0.100
£0.100
£0.795
£0.675
26.06.17
26.06.17
25.06.20
08.12.20
08.12.20
01.10.21
23.11.21
22.02.22
08.06.22
Date of Exercise
First
Last
30.06.20
30.06.20
24.06.23
08.12.20
08.12.20
30.09.24
22.11.24
21.02.25
07.06.25
30.06.27
30.06.27
24.06.30
12.08.29
12.08.29
30.0931
22.11.31
21.02.32
07.06.32
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
25.06.20
08.12.20
08.12.20
01.10.21
23.11.21
22.02.22
08.06.22
£0.0388
£0.0834
£0.1093
£0.1107
£0.1107
£0.6970
£0.6970
£0.0875
£0.0875
£0.850
£0.850
£0.610
£0.620
£0.620
£1.000
£1.050
£0.795
£0.675
£1.000
£0.750
£0.750
£0.620
£0.620
£0.100
£0.100
£0.795
£0.675
28.08%
28.08%
52.40%
52.40%
52.40%
30.00%
30.00%
52.40%
52.40%
3
3
3
3
3
3
3
3
3
1.00%
1.00%
1.50%
1.50%
1.50%
0.45%
0.45%
1.50%
1.50%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
51
Notes to the financial statements (continued)
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
20
Share capital
Issued Share Capital
In issue at 1 July
Share capital reduction
Ordinary shares of 10 pence
each
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Deferred shares of 40
pence each
Number
Number
Number
Number
16,307,282 16,307,282 - 9,548,948
- - - (9,548,948)
Shares issued in respect of warrants on 18 August 2021
130,458
- - -
Issued at 30 June 2022/2021 – fully paid
16,437,740 16,307,282 - -
Allotted, called up and fully
paid
Ordinary shares of £0.10 each
Shares classified in
shareholders’ funds
30 June
30 June
2022
£'000
2021
£'000
1,644
1,631
1,644
1,631
There were 130,458 warrants exercised on 18 August 2021 at £0.60 per share.
In the previous year resolutions were passed and approved by court order to cancel all the deferred shares and
the share premium account. The respective amounts of £3,820,000 and £2,591,000 were transferred to the
retained earnings reserve together with directly related expenses of £38,000.
Treasury Shares
As at 1 July 2021
Additions
As at 30 June 2022
Number of
shares
Cost
£
-
-
303,254
434,000
303,254
434,000
52
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
21
Basic and fully diluted loss per share
Basic profit per share is calculated by dividing the profit by the weighted average number of ordinary shares in
issue during the year of 16,365,640 (2021: 16,307,282). This excludes treasury shares held by the Company.
Weighted average number of shares – basic
Share option adjustment for potentially dilutive shares
Weighted average number of shares – diluted
Profit
Basic profit per share
Diluted profit per share
Year ended
30 June 2022
Number
Year ended
30 June 2021
Number
16,365,640
16,307,282
431,808
------------------------------
16,797,448
======================
30,206
------------------------------
16,337,488
======================
Year ended
30 June 2022
£'000
Year ended
30 June 2021
£'000
877
------------------------------
156
------------------------------
0.96
0.96
====================== ======================
5.36
5.22
There are 1,594,500 share options and no warrants in place at 30 June 2022 (1,435,085 share options and 130,458
warrants at 30 June 2021).
22
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;
•
• Market risk.
Liquidity risk; and
This note presents information about the Group’s exposure to credit. liquidity and market risks, the objectives,
policies and processes for measuring and managing risk, and the 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 year end totalling £1.06m
(2021: £1.05m). The Directors consider there to be sufficient cash resources for the foreseeable future period in
the context of the profitable trading now being achieved and that the Group remains a going concern with cash
available for current investment plans. The Group has no external borrowing other than property lease liabilities
arising under IFRS 16 .
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.
53
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
22
Financial instruments (continued)
flow sensitivity analysis for variable rate instruments
The Directors consider that the Group’s exposure to interest rates is low (2021: low). Cash is invested in deposits
with UK high street banks with no major changes expected in the short term from the relatively low rates. There
are no borrowings and lease liabilities are subject to fixed rates (as part of the rental payments made).
This note is in relation to the company’s compliance with IFRS 7.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, equity price and interest rate
risk will affect the Group's income or the value of its holdings of financial instruments.
The Group receives royalty and other income denominated in US dollars which amounted to £2.07m for the year
ended 30 June 2022. The Group had no other significant assets or liabilities denominated in foreign currencies at
either 30 June 2022 or 30 June 2021 and which therefore could give rise to exchange gains and losses in the
Statement of Comprehensive Income.
In order to manage the exposure to this dollar income, the Group enters into forward contracts to sell dollars and
buy sterling at fixed rates in respect of the expected receipts in the next year (see note 15).
The Group has analysed the effects of both a 10% increase and decrease in the US dollar compared to the
contracted rates and considers the impact would be approximately £0.20m 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
Other receivables
Accrued income
Cash and cash equivalents
Financial liabilities held at amortised cost
Trade payables
Lease liabilities
Accruals and other payables
Financial liabilities at amortised cost
30 June
2022
£000
326
23
441
1,055
30 June
2021
£000
135
39
276
1,046
----------------------------------------------
1,845
----------------------------------------------
1,496
=============================================
=============================================
377
107
103
103
169
121
----------------------------------------------
587
----------------------------------------------
393
=============================================
=============================================
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 Board considers it
important that the Company has the flexibility to pay dividends and make other returns of capital to shareholders
when appropriate and desirable to do so. Accordingly, a capital rduction was made to cancel deferred shares and
transfer the amount standing to the credit of the share premium account to retained earnings to provide this
flexibility as more cash is generated from operations. The Group is not subject to externally imposed capital
requirements.
54
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
22
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 receivable credit exposure including accrued income was £0.8m (2021: £0.41m)
which is the respective carrying amounts (which is not significantly different to their fair value and contractual cash
flow). There were no material financial assets that were past due at the period end.
At 30 June 2022 the Group’s cash was divided between current accounts £0.1m (2021: £0.15m) and £0.95m in
fixed rate monthly deposits (2021: £0.9m) with a weighted average interest rate for the year of 0.1% (2021: 0.1%).
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
The maturity of the lease liabilities including financing charges is as follows
In less than one year
In one to two years
In two to five years
Reconciliation of movements in total financing liabilities
At start of the year
Interest accrued
Payments of lease liabilities in the year
Loan repaid
Interest paid in the year
Total financing liabilities at end of the year
Group and Company
30 June 2022
£'000
73
37
-
----------------------------------------------
110
=============================================
30 June 2021
£'000
73
73
36
----------------------------------------------
182
=============================================
Year ended
30 June 2022
Group and
Company
£’000
169
9
(62)
-
(9)
Year ended
30 June 2021
Group and
Company
£’000
1,205
12
(60)
(976)
(12)
----------------------------------------------
107
----------------------------------------------
169
=============================================
=============================================
55
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2022
Notes to the financial statements (continued)
23
Contingencies and commitments
The Company and Group had no capital commitments or contingent liabilities as at 30 June 2022 (2021: £nil).
24
Related parties and controlling party
Group
The compensation of key management personnel (considered to be the Directors) is shown in note 9.
In the opinion of the Directors, there is no one individual controlling party of the Company.
56