Registered number 01885075
Annual report and financial
statements
For the year ended 30 June 2023
1
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Contents
Directors and advisers
Financial Highlights
Chairman’s Statement for the year ended 30 June 2023
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
14
15
19
22
25
26
31
32
33
34
35
2
Directors and advisers
Directors
N F Rogers (Executive Chairman)
M Segal (Chief Financial Officer)
R E Maughan (Business Development Director)
R J Westhead (Non-Executive Director) (1, 3)
S Parker (Non-Executive Director) (1) (2) (3)
1 Member of the Audit and Risk Committee
2 Appointed 1 May 2023
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
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Castle Donington
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 2023
3
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Financial Highlights
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Revenue up 34% to £3.53m (FY22: £2.63m)
iTrack royalty increased 29% to £2.01m (FY22: £1.56m)
Translogik probe revenue up 17% to £1.03m (FY22: £0.88m)
SAWsense revenue up 146% to £0.49m (FY22: £0.20m) with further substantial increases in
activity from prospective customers
Adjusted profit before taxation of £1.09m (FY22: £0.27m) *
Earnings per share up more than 64% to 8.81 pence (FY22: 5.36 pence)
Cash and cash equivalents at year end of £0.98m (FY22: £1.06m)
Completed share buybacks of £0.40m (FY22: £0.30m)
Distributable reserves at year end of £2.90m (FY22: £1.20m)
*Before exceptional administrative expenses
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Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Chairman’s Statement for the year ended 30 June 2023
The Company has again delivered good growth and reports another year of positive results, which in turn
provides a strong base for the continuing momentum across all business segments and thereby
maintaining a healthy future outlook.
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 two active business segments: Translogik and SAWsense. Translogik develops and
supplies smart, connected tyre monitoring equipment for the commercial truck and bus market, and
SAWsense designs and supplies advanced sensor solutions for accurate non-contact measurement of
torque, force, pressure and temperature for aerospace, electric motors and drives (EMD), industrial
machinery and high performance automotive sectors. In addition, the company earns residual royalty
income from iTrack, a system developed by the company for monitoring mining haul tyre performance
which was licenced to Bridgestone Corporation for a ten year period expiring in 2030.
Progress in the development of each of these segments during the year and plans for the future are
discussed in the Operating and Financial Review on pages 7 to 12.
The directors consider that there are positive market drivers across all of our key target market sectors
which provide ample opportunity to expand both businesses, despite current uncertain economic
conditions. We are investing in technology, equipment and human resources across both active business
segments in order to secure greater access to the target markets and build strategic and sustainable long
term shareholder value.
Financial overview
Results for the year were again in line with expectation with revenue up by more than one third and
adjusted profit before taxation up fourfold. Earnings per share (EPS) was up 64% and adjusted EPS before
exceptional costs nearly double. It was particularly pleasing to note that Translogik and SAWsense made
a combined positive contribution to the company’s earnings in the second half of the year; an important
step towards full financial self-sufficiency without reliance on residual royalty income.
The financial position continued to strengthen with net assets increasing to £4.19m or 28 pence per share
(FY22: £3.09m and 19 pence respectively), and available cash resources were broadly unchanged at
£0.98m (FY22: £1.06m). The company bought back shares for treasury at a cost of £0.41m during the
year, to add to the £0.30m purchased in the prior year, with distributable reserves closing at £2.20m
(FY22: £1.20m).
The directors are confident that the company has the financial resources necessary to continue to fund
expected growth in the business, invest for the future, and consider further returns to shareholders.
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 board currently comprises the Executive Chairman, two independent non-executive directors, and
two executive directors with responsibility for finance and business development respectively.
In May 2023, Stephen Parker joined the board as an independent non-executive director. He is a highly
experienced board director with an enviable track record of leading and advising businesses across the
technology, automotive and transportation sectors. The company has already benefited greatly from his
expertise and judgement, and I am grateful for his valuable support.
5
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Chairman’s statement (continued)
Rodney Westhead has indicated that he intends to retire from the board following the appointment of an
appropriate independent non-executive director and chair of audit committee to replace him. He has
served as a director since 2007 and has made an invaluable contribution over many years, especially
more recently as the commercialisation of SAW technology has come to the forefront of the company’s
strategy. The directors intend to appoint a suitable successor during the current financial year.
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.
Distribution policy
Since February 2022, when the Company first announced the commencement of a programme to conduct
market purchases of ordinary shares of 10 pence each in the Company, a total of 935,356 ordinary shares
have been acquired for treasury at an average price of 80 pence each (including 40,000 post year end).
During the financial year the share price fluctuated between 48.5 pence and 95.5 pence, and averaged
approximately 80 pence. The directors continue to view the Company’s shares as undervalued at this
level, and will execute further market purchases when suitable opportunities arise, subject to the renewal
of shareholder approval for such action at the upcoming Annual General Meeting.
The board has given careful consideration to the relative merits of share buybacks as an alternative form
of distribution over the payment of dividends. On balance, share buybacks are considered to be more
flexible and tax efficient, and are the preferred mechanism for the majority of shareholders by both number
and value. Accordingly, the directors do not recommend the payment of a dividend at the present time.
Current trading and outlook
In the first two months of trading since the end of the financial year revenues have increased year on year
by 16%, and the commercial pipeline in both Translogik and SAWsense continue to expand.
Royalties from iTrack have increased almost fourfold since inception in 2020, and with seven years of the
licence to run it is expected to provide more than sufficient cash income to enable further significant
investment in both SAWsense and Translogik and deliver strong returns to shareholders.
We have visibility of several exciting growth opportunities for Translogik and are now adding an
experienced and successful business development leader with sole focus on the delivery of greater scale
and reach.
There has been a rapid expansion of market awareness at SAWsense, and an increasing intensity of
funded development projects. Taken together with the potential to add depth, breadth and longevity to
the intellectual property portfolio of this segment, the directors are confident of achieving a financially self-
sustaining business model with substantial strategic value.
We now believe that we have built a dynamic leadership group within the executive team, with the requisite
skills, experience and networks to deliver further step changes in results in coming years.
Nigel Rogers
Executive Chairman
22 September 2023
6
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report
Operating and Financial Review
Results for the year
Revenues for the year increased by 34% to £3.53m (FY22: £2.63m), with SAWsense up 146% and
Translogik up 17%. Royalty income from iTrack increased by 29%, reflecting an expected improvement
in the second half of the year. Gross margin improved to 87% of revenue (FY22: 85%) amounting to
£3.05m (FY22: £2.23m).
Administrative expenses increased a modest amount to £2.09m (FY22: £1.97m), before exceptional
severance costs of £0.22m. Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA)
adjusted for the charge for exceptional costs and share-based payments was £1.40m (FY22: £0.62m),
and the adjusted net profit before taxation (excluding exceptional costs) was £1.09m (FY22: £0.27m).
There was a credit for taxation of £0.53m (FY22: £0.61m) arising from the increase in the deferred taxation
asset relating to the use of previous years’ tax losses in the future, reflecting a future forecast period of
two years which is in line with the basis adopted in the prior year. In total, the Company has UK tax losses
available to carry forward at 30 June 2023 in excess of £21m, which are available for offset against future
profits subject to HMRC agreement, of which approximately £4.70m is currently recognised for deferred
taxation purposes (FY22: £2.58m).
The resulting net total comprehensive income attributable to equity shareholders was £1.40m (FY22:
£0.88m) resulting in earnings per share (EPS) of 8.81 pence (FY22: 5.36 pence).
The adjusted EPS before exceptional administrative costs was 10.20 pence.
Mid-term financial goals 2023-28
Mid-term financial goals for the Company’s businesses were last set out 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 our expectations.
The directors now consider it an appropriate time to set out new mid-term goals for the company for the
period 2023 to 2028. During this period it is anticipated that the iTrack licence income will continue to
show healthy growth before reaching a peak in the year ending 30 June 2025. The increase in the number
of installations thereafter is unlikely to fully offset the reduction in the unit royalty rate, and the annual
royalty in the year to 30 June 2026 is expected to reduce to a level comparable with the year ended 30
June 2023.
The directors are confident that prospects in each of the two active business segments will be such that
the Company can maintain the overall level of profitability and earnings despite any reduction in the level
of iTrack royalty revenues.
Segmental review
Translogik tyre monitoring
Our range of tyre monitoring equipment marketed under the Translogik brand generated revenue of
£1.03m; an increase of almost 17% over the prior year (FY22: £0.88m), and the segmental result was up
by 17% to £0.42m (FY22: £0.36m).
The road haulage and transport logistics sector continues to experience strong volume growth yet is also
subject to intense competitive pressure to reduce unit costs and optimise asset utilisation. In parallel,
however, operators are subject to increasing road safety regulations, including the mandatory use of tyre
pressure monitoring systems (TPMS) in the EU from 2024 and the US from 2028. These add to the
existing regulations for mandatory vehicle inspections and digital record keeping, and the increasing
adoption of radio frequency identification tags (RFID) for tyre inventory management.
7
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report (continued)
All of these challenges can be managed efficiently through the use of Translogik tyre monitoring
equipment, which digitises key tyre data to integrate into a fleet management platform. We have a robust
blue chip customer base of global tyre manufacturers upon which to build, lending credibility to the
effectiveness and reliability of our equipment.
The directors estimate that there is an addressable market for fleet management tools exceeding US$25m
per annum, and this leads us to believe that Translogik provides the capacity to accelerate segmental
revenue in the next three to five years. Accordingly, we have recently secured the appointment of a
dedicated business development director to lead this activity who has the breadth of knowledge and
established network of contacts to deliver step change when he takes up this new role shortly.
SAWsense
SAWsense revenues more than doubled to £0.49m (FY22: £0.20m) and with operating overheads almost
unchanged the net loss (before exceptional costs) for the segment reduced by 33% to £0.55m (FY22:
£0.82m). During the year, changes were implemented to the segmental management structure to better
align the senior team to customer needs, which is now led by Ryan Maughan as Business Development
Director and Andy Bullock as Technical Director.
Our market approach for SAW technology continues to focus on four sectors in which there are
applications with clear differentiated benefits, and we have made good progress in each during the year.
Target market sectors for SAWsense:
Aerospace
The aerospace sector is undergoing a period of profound change driven by the need to reduce the
environmental impact of air travel, and opportunities to expand the sector through new and innovative
platforms for electrified urban air mobility (UAM). This has created intense development activity by
established market leaders and new entrants, focused on developing cleaner and more efficient
conventional aircraft, and on the feasibility of new propulsion systems including all-electric, hybrid electric
and hydrogen fuel cell technology.
In the past twelve months, we have doubled the number of potential customers with whom we are working
to introduce SAW technology into aerospace applications from seven to fourteen. These include GE
Aerospace, to whom we have granted existing licences, and Parker Meggitt who are subject of a
Memorandum of Understanding signed in September 2022 with the shared intention of agreeing terms for
a licence before the end of 2023. Discussions with Parker Meggitt are ongoing, and a further update
will be provided in due course. In addition, there are several other potential customers in this sector
whose involvement is covered by confidentiality agreements. The case for using SAW torque sensing
has been proven for helicopter engines, and there are now live development activities for use in electric
actuator force and torque control, and torque in hybrid generation systems and advanced open rotor
engines. In addition, there are other opportunities to introduce SAW for use in electric propulsion motors
for aerospace applications, as well as torque, pressure and/or temperature measurement for a variety of
other airframe and propulsion systems.
The aircraft sensor market was estimated to be valued at US$4bn in 2021, with forecast compound annual
growth at a rate of 8% in the period to 2028. The directors believe that a realistic goal for annual revenue
from development, engineering services and component supply into this sector by SAWsense could lie in
the range US$5-10m by 2030.
Industrial Machinery (including Off-Highway Vehicles and Robotics)
The use of SAW sensing technology for torque and/or temperature can improve accuracy, efficiency and
power distribution in industrial machinery ranging from robots to agricultural equipment. Enhanced
sensing is also required to enable more autonomous operation of machinery.
8
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report (continued)
During the year, SAWsense technology underwent rigorous trials by a major producer of agricultural
machinery. The project was completed on schedule and validated the accuracy and reliability of the
resulting data. Whilst this is expected to strengthen the business case for the use of SAW, this was an
advanced research and technology program and work continues to explore production applications for the
technology. A number of other off-highway OEM’s have also expressed interest, and are at an early stage
of engagement in information exchange under NDA. We believe that the addressable market for torque
and temperature sensors in this sector exceeds US$25m per annum.
The global market for force and torque sensors for industrial robotics was estimated to be worth US$300m
in 2022, and was forecast to grow to more than US$650m by 2028. Engagement with a select group of
leading companies in this industry indicates that SAW technology can provide an improved way to
measure torque and temperature in a robotic system, increasing the speed and accuracy of the robot by
reducing joint flex and motor jitter. This in turn offers increased load capacity and productivity, because
of this we believe that this valuable differentiation results in more than US$50m per annum of the robot
torque sensor market to be addressable by our technology by 2028.
Motorsport and high-performance vehicles
SAWsense continues to work closely in the premium motor sport sector with our joint collaboration
agreement partner, McLaren Applied. During the year, use of SAW was extended beyond its roots in
IndyCar to the Le Mans Daytona Hybrid series of endurance racing. There are further opportunites to
extend to additional championships at proposal stage, with the outcome expected in the final quarter of
2023.
SAW has proven to be more accurate and reliable than competitor systems, and offers a lower lifecycle
cost to event organisations and race teams. Whilst motorsport is a niche sector, we estimate that the
addressable market for motorsport torque measurement exceeds US$25m per annum and believe that
there are unique characteristics in our technology to be successful.
Success in these motor sport applications demonstrates the performance and reliability of the technology
in harsh operating conditions.
Electric Motors and Drives (EMD)
The drive to reduce global dependency on fossil fuels is heavily dependent on the development and
commercialisation of efficient electric motors and drives across a broad range of transport and industrial
applications. Using SAW technology offers access to real-time torque and temperature data to improve
performance, efficiency, range and functional safety, and provides opportunity to reduce material costs,
particularly of rare earth materials in permanent magnet motors.
Unlike our other key target sectors, the use of real time torque data to control electric motors and drives
is not common practice, and instead controls are reliant upon traditional torque estimation methods with
roots going back decades. During the year we have contracted a leading engineering consultancy to carry
out a program of simulation work to demonstrate the benefits of using real time actual torque in the control
loop, with good results.
In the current year, these findings will be expanded by conducting live trials on a demonstration test rig,
and we anticipate that this activity will generate opportunities to expand our intellectual property portfolio
further and to build a platform for commercial advancement.
Business development activities
Throughout the year there has been an increasing volume of inbound enquiries across all of our main
target markets, mostly driven by the increased awareness of the benefits of our technology from marketing
assets such as on-line video content, conference presentations and trade show attendance. Discussions
with Parker Meggitt are ongoing, a further update will be provided in due course. There are several other
potential customers in this sector whose involvement is covered by confidentiality agreements.
9
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report (continued)
Enquiries are carefully vetted, and those which meet our qualification criteria enter a standardised process
through a number of stage gates. Passage through this mechanism can take several months before
reaching agreement on a funded development project to instrument a demonstration unit and carry out
performance assessment. Beyond that, there are many other factors to evaluate (including for example
productionisation methods, supply chain and associated cost) before customers are ready to commit to
full scale commeecial implementation.
Overall, it is realistic to expect that achieving volume production in highly regulated markets such as
aerospace and automotive will take three to five years, during which period customers will have the
capacity and willingness to fund further development work.
This process has been underway for more than one year, and progress has been made both in the number
of active qualified enquiries (which has more than doubled from 24 to 57), and the depth of engagement
indicated by moving to towards funded development (which has also doubled from 6 to 13). Full details
are as follows:
Status of potential customers by sector as at September 2023 (September 2022)
Aerospace
Electric Motors
& Drives
Industrial
Machinery
Performance
Automotive
Stage 4 - Contracted
Stage 3 – Contract under
negotiation
Stage 2 – In development
Stage 1a – Development project in
planning
Stage 1b – Active enquiry
1 (1)
2 (1)
1 (1)
3 (0)
7 (4)
0 (0)
0 (0)
3 (1)
2 (2)
24 (8)
0 (0)
0 (0)
1 (1)
1 (1)
8 (3)
Total
14 (7)
29 (11)
10 (5)
1 (1)
0 (0)
1 (0)
1 (0)
1 (0)
4 (1)
Total
2 (2)
2 (1)
6 (3)
7 (3)
40 (15)
57 (24)
iTrack royalty income
Royalty income from iTrack generated income of £2.01m during the year, representing an increase of
29% over the prior year (FY22: £1.56m). By the end of the year, the installed base had risen to almost
four times that which prevailed at the outset of the licence, and the annualised royalty run rate had
increased to $2.92m, compared with $2.26m, representing a 29% increase over the prior year.
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.
Financial position and cash flow
The Company’s financial position strengthened further during the year with net assets increasing to
£4.19m at 30 June 2023 (FY22: £3.09m) as a result of the retention of net profits after taxation. Net
available cash balances amounted to £0.98m at the year end (FY22: £1.06m), and the final quarter royalty
income on iTrack receivable on 31 July 2023 stood at £0.54m (FY22: £0.47m).
Net cash generated from operations amounted to £0.65m (FY22: £0.41m). This was re-invested in capital
expenditure of £0.26m (FY22: £0.10m) and in the share buy-back programme during the year totaling
£0.41m (FY22: £0.30m). 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 ongoing and
any proposed new buy-back programme.
10
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2025 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
Turnover - (£m)
Adjusted EBITDA – (£m) *
EBT - (£m)
FY 23
FY 22
3.53
2.63
1.40
0.62
0.87
0.27
EPS - attributable to shareholders (Pence)
8.81
5.36
Closing share price (Pence)
86.5
62.5
Net cash generated in operations (£m)
0.65
0.41
Closing cash balance (£m)
Cash per Share (Pence) **
0.98
1.06
6.2
6.6
Consolidated Net Assets (£m)
4.31
3.09
Net Assets/Share (Pence) **
27.85
19.30
Market Capitalisation at year end (£m) **
13.44
10.00
Shares in issue (million) **
15.5
16.0
11
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report (continued)
*Adjusted EBITDA excludes the charge for share based payments £0.10m (2022: £0.10m) and
exceptional administrative expenses £0.22m (2022: £0m).
**Based on free shares in issue of 15,542,384 (2022: 16,003,740). Free shares are calculated based on
the total issued share capital of 16,437,740 less Treasury shares of 895,356.
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 inplace, their adequacy is monitored.
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Year on Year
change in
risk FY 23
Year on Year
change in
risk FY 22
Year on Year
change in risk
FY21
Suppliers and Raw
Materials
Due to a combination of worldwide
events, the latest being the continued
conflict in Ukraine, lead times for
acquiring stock for our products and
services remains challenging.
Foreign currency
fluctuation
The Royalty income from Bridgestone
is payable in USD and a substantial
proportion Translogik 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.
The Company has increased
inventory levels and has
experienced a greater availability
of electrical components towards
the end of the current financial
year and has seen lead times drop
by over 50%.
The Board regularly review the
key foreign exchange rates (USD
& Euro) and during the year, as the
dollar has strengthened, hedged
against detrimental movements.
During the course of the financial
year the USD against the GBP has
ranged from 1.08 to 1.28 (18.5%
movement). The hedging has
mitigated the impact by around
£0.04m.
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. During the course of the
of the financial year the Company
identified senior roles that were
effectively redundant going
forward and a restructuring of the
team is ongoing.
Global Companies
and Competition
Commercialisation
and Development of
New Products
Many of the customers of Transense
are major global 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 the Company is
sufficiently funded to endure the
long lead times between initial
discussions and PO's with Global
businesses.
Following the disposal of the iTrack
operating business in June 2020 and
the introduction of the modular
Translogik TLGX probe range the
focus on new products is primarily on
SAWsense. 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 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. The Board
changes made has enabled the
Company to best understand
where our opportunities lie and
also to best understand the
problems of particular markets and
technical products. This has
resulted in the Company focusing
on 4 key areas (aerospace,
motorsport, eDrive &
robotics)thereby reducing the
possibility of investing time and
money on non fruitful projects.
12
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Strategic Report (continued)
Risk and Uncertainty
Details of Risk & Impact
Mitigation
Year on Year
change in
risk FY 23
Year on Year
change in
risk FY 22
Intellectual Property
The SAWsense 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 17 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 Translogik
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.
We have a strong inhouse
development team, and with
excellent input from our new Board
Members widen our scope of
technical abilities. 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.
Development in the form of know
how is applied to the Translogik
probe adapting it to the needs of
OEM and fleet management
software systems.
Liquidity
Transense has in the past found it
necessary to raise funds to support
losses and working captal
requirements.
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
22 September 2023
22 September 2023
13
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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). 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.
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 and recruiting key employees.
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.
14
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 their 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 62
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 Solid State plc (AIM: SOLI) and an
independent non-executive director of Surgical Innovations Group plc (AIM: SUN), where he has indicated
his intention to step down around the end of 2023.
Melvyn Segal (Chief Financial Officer) age 68
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.
Ryan Maughan (Business Development Director) age 44
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.
15
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Corporate Governance Statement (continued)
Rodney Westhead (Non-Executive Director **) age 79
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. As stated above Rodney plans to retire during the current
financial year.
Stephen Parker (Non-Executive Director*) age 70
Stephen was appointed as a Non-Executive Director in May 2023. Stephen is an experienced automotive
and aerospace industry professional and company director, with particular expertise in electric motors and
drives. He has previously held senior executive positions at FEV Group, Ricardo plc, Perkins Engines and
was a Vice President of A.T. Kearney the global management consulting firm. More recently he is currently
Chairman of Evolito an aerospace e-propulsion business and a Non Executive Director of YASA a
Mercedes Benz company. He is currently a Pro-Chancellor of Coventry University and was previously
Chair of the Board of Governors.
*Member of Audit & Risk and Remuneration committee
** Chair of Audit & Risk and Remuneration committee
Andrew Bullock (Operations and Technical Director – Non Board) age 60
Andy joined Transense in 2022 as Technical Director bringing over 30 years experience of RF &
the Space, Defence, Security and
Microwave Engineering design and management
Telecommunications industries.
from
He is experienced in leading R&D and developing new technologies and processes, a manager with
proven ability to lead cross functional engineering teams, maximise productivity and increase company
profitability.Andy holds Engineering degrees from Leeds University and UCL and a Technology MBA from
the OU.
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.
16
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Corporate Governance Statement (continued)
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
Ryan Maughan
Stephen Parker
Nick Hopkins
9
9
9
9
2
5
9
9
9
7
2
5
1
1*
1
-
-
-
2
-
-
-
-
-
* attended part of the meeting as a non-committee member
The Board now has two Non-Executive Directors who are considered by the Directors to be independent
for the purposes of the QCA Code; Rodney Westhead who joined the Board in April 2007 and Stephen
Parker who joined the Board in May 2023. Both Rodney and Stephen prior to joining 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.
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 7-13, 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.
17
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Corporate Governance Statement (continued)
The Audit & Risk Committee meets twice 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 and Stephen Parker are members 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 Nomination
Committee comprises the Chairman and two independent non-executive directors.
18
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2023 two directors participated and total contributions
were £6.5k (2022: £4.6k).
Service Contracts
The service contracts provide for the following notice periods:
12 months: Nigel Rogers and Melvyn Segal.
3 months: Rodney Westhead and Stephen Parker
6 Months: 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.
19
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Remuneration report (continued)
Directors’ Emoluments
Information on Directors’ emoluments is as follows:
This table excludes the fair value of Directors’ share based payment options as defined by International
Financial Reporting Standard (IFRS) 2. Details of all options granted to Directors are shown on the next
page. Information on Directors' emoluments is as follows:
Basic
Cessation
Total emoluments
12 months
12 months
ended
ended
salary
payments
Benefits
Pension
30-Jun-23
30-Jun-22
£
£
51,933
-
143,800
-
77,328
103,149
£
-
8,813
307
77,733
- -
£
-
-
4,658
1,800
£
£
51,933
152,613
185,442
79,533
45,000
144,540
64,559
42,288
Executive
directors
N Rogers
M Segal
N Hopkins*
R Maughan
Non-
executive
directors
R Westhead
28,100
-
S Parker**
4,667
-
-
-
-
-
28,100
26,400
4,667
-
Total 2023
383,561
103,149
9,120
6,458
502,288
322,787
Total 2022
309,938
-
8,286
4563
322,787
* resigned from the board on 30 April 2023
** appointed to the board on 1 May 2023
Share based payment options have been granted under EMI and the discretionary scheme for Executive
Directors. The details of these are set out below:
20
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Remuneration report (continued)
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
R Maughan
N Hopkins
N Hopkins
Directors' interests in the UDSOS were:
M Segal
M Segal
N Rogers
N Rogers
R Maughan
R Westhead
At 1 July
2022
At 30 June
2023
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
170,000
126,000
40,000
170,000
12/08/21
126,000
24/06/23
40,000
30/09/24
-
100,000
23/03/26
100,000
25,000
-
-
24/06/23
22/11/24
£0.75
£0.62
£0.10
£0.10
£0.62
£0.10
£2.00
£1.50
£1.50*
£1.50*
**
£1.50*
==============================================
==============================================
==============================================
==============================================
==============================================
At 1 July
2022
At 30 June
2023
Earliest
exercise
date
Exercise
price per
share
Hurdle
price per
share
74,000
35,000
400,000
150,000
50,000
25,000
74,000
24/06/23
35,000
30/09/24
400,000
24/06/23
150,000
30/09/24
50,000
22/11/24
25,000
30/09/24
£0.62
£0.10
£0.62
£0.10
£0.10
£0.10
£1.50
£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 SAWsense segment making a positive contribution after direct salary
costs
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 2023
Directors’ report
The Directors present their annual report and audited financial statements for the year ended 30 June
2023.
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 13.
Results and Dividends
The results for the year ended 30 June 2023 show a profit after tax of £1.40m (2022: £0.88m). The
Directors do not recommend the payment of a dividend (2022: £nil).
Directors
The present Directors are listed on page 3. Nick Hopkins resigned from the Board on 13 March 2023.
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
Harwood Capital LLP
Dowgate Wealth Limited
Javed Abrahams
Legal & General
Gerald Oury
Ordinary shares of
10p each
%
10.39%
8.06%
6.25%
4.26%
4.00%
3.67%
3.48%
3.18%
1,610,004
1,250,000
968,979
660,000
620,300
569,214
540,000
493,333
Information correct as at 22 September 2023. The total number of Ordinary Shares in issue
(including 935,356 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 15,502,384.
22
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2023
30 June 2022
265,000
265,000
55,000
30,655
18,363
-
50,000
30,655
18,363
5,000
N Rogers
M Segal
R J Westhead
R Maughan
N Hopkins*
• Resigned 13 March 2023
Share price
The mid-price of the shares in the Company at 30 June 2023 was 86.5p (2022: 62.50p) and the range
during the period was 48.5 to 95.5p (2022: 58.0p to 122.5p).
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 (2022: £Nil).
23
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2022/23.
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.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution to appoint Cooper Parry Group
Limited as auditor 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
22 September 2023
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 2023
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 UK adopted international accounting standards.
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 UK adopted international accounting standards 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 2023
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 2023 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated and Company Balance Sheet, the Consolidated and
Company Statements of Changes in Equity, the Consolidated and Company Statement of Cash Flows
and the related notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group and parent
company financial statements 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 2023 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 year 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 2023
Independent auditor’s report to the members of Transense Technologies
plc (continued)
Risk Description
Revenue recognition:
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.
Our response to the risk
We have assessed accounting policies for
consistency and appropriateness with
the
financial reporting framework and in particular
that
recognised when
performance obligations were fulfilled. In
addition, we reviewed for the consistency of
application as well as the basis of any
recognition estimates.
revenue was
We have obtained an understanding of
processes
the businesses
initiate, record, process and report revenue
transactions.
through which
We performed walkthroughs of the processes
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.
We selected a sample of transactions from
each revenue stream to confirm that revenue
has been recognised in accordance with the
accounting
performance
obligations for the recognition have been met.
These have been vouched to invoices, delivery
notes and nominal postings.
policies
and
We performed cut-off procedures
test
transactions around the year end and verified a
sample
originating
that
documentation
transactions were recorded in the correct year.
revenue
to provide evidence
to
of
to
We obtained a complete listing of journals
posted to revenue nominal codes and reviewed
the listing for any unexpected entries. These
were then tested to supporting evidence.
Our procedures did not identify any material
misstatements
the revenue recognised
during the year.
in
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 and parent company financial statements as a whole was set at £52,000.
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. Performance materiality has been set at 75% of group materiality.
27
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Independent auditor’s report to the members of Transense Technologies
plc (continued)
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 and parent company financial statements as a whole was set at £52,000.
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. Performance materiality has been set at 75% 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.
Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern
basis of accounting included:
• Reviewing management’s cash flow forecasts for a period of at least 12 months from the date of approval
of these financial statements;
• Challenging management on key assumptions included in their forecast scenarios;
• Considering the potential impact of various scenarios on the forecasts;
• Reviewing results post year end to the date of approval of these financial statements and assessing them
against original budgets;
• Reviewing the forecasting accuracy through reviewing the prior year budgets compared to actuals; 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.
28
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Independent auditor’s report to the members of Transense Technologies
plc (continued)
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.
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, UK adopted
international accounting standards and relevant tax legislation.
29
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Independent auditor’s report to the members of Transense Technologies
plc (continued)
We are not responsible for preventing irregularities and cannot be expected to detect non-compliance
with all laws and regulations. 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 of controls;
• 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;
• 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 specifically in relation to goodwill and deferred tax assets.
Whilst considering how our audit work addressed the detection of irregularities, we also consider the
likelihood of detection based on our approach. Irregularities arising from fraud are inherently more difficult
to detect than those arising from error.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with law or regulation is removed from the events
and transactions reflected in the financial statements, as we will be less likely to become aware of non-
compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as
fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the 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.
Melanie Hopwell (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Statutory Audito
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
Date: 22 September 2023
30
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Exceptional administrative expenses
Operating profit
Financial income and (expense)
Other income
Profit 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)
Year ended
30 June
2023
Year ended
30 June
2022
Note
£'000
£'000
5
6
6
7
10
21
3,529
(474)
2,632
(398)
----------------------------------------------
----------------------------------------------
3,055
2,234
(2,086)
(220)
(1,970)
-
----------------------------------------------
----------------------------------------------
749
4
113
264
(12)
16
----------------------------------------------
----------------------------------------------
866
530
268
609
----------------------------------------------
----------------------------------------------
1,396
877
==============================================
==============================================
8.81
==============================================
5.36
==============================================
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 2023
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Non current assets
Property, plant and equipment
Intangible assets
Deferred tax
Current assets
Inventories
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
15
16
17
18
18
20
20
30 June
30 June
2023
£'000
154
731
1,175
2023
£'000
2022
£'000
2022
£'000
167
671
645
----------------------------------------------
----------------------------------------------
2,060
1,483
260
1,263
978
88
1,133
1,055
----------------------------------------------
----------------------------------------------
2,501
----------------------------------------------
4,561
2,276
----------------------------------------------
3,759
(334)
(36)
(560)
(65)
----------------------------------------------
----------------------------------------------
(370)
-
----------------------------------------------
(370)
----------------------------------------------
4,191
==============================================
1,644
65
(708)
288
2,902
----------------------------------------------
4,191
==============================================
(625)
(42)
----------------------------------------------
(667)
----------------------------------------------
3,092
==============================================
1,644
65
(303)
180
1,506
----------------------------------------------
3,092
==============================================
These financial statements were approved by the board of Directors and authorised for issue on 22 September 2023
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 2023
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 2021
1,631
-
82
629
-
2,342
£'000
£'000
£'000
£'000
£'000
£'000
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
Comprehensive income for the year:
Profit for the year
-
- -
1,396
-
1,396
Share based payment (note 19)
-
-
-
-
108
108
Treasury shares (note 20)
-
-
-
-
(405)
(405)
Balance at 30 June 2023
1,644
65
288
2,902
(708)
4,191
Notes to the financial statements are from pages 35 to 56.
33
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2023
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Profit from operations
Adjustments for:
Taxation
Net financial (income)/expense
Share based payment
Depreciation
Amortisation and impairment of intangible assets
Operating cash flows before movements in working capital
(Increase) in receivables
(Decrease)/increase in payables
(Increase) in inventories
Cash generated by operations
Taxation received
Net cash generated in operations
Investing activities
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Net cash used in investing activities
Financing activities
Treasury shares
Warrants exercised
Interest received/(paid)
Payment of lease liabilities
Net cash used in financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and equivalents at the beginning of year
Cash and equivalents at the end of year
Notes to the financial statements are from pages 35 to 56.
Note
10
7
19
11
12
15
17
14
Group and Company
Year ended
30 June
2023
Year ended
30 June
2022
£'000
1,396
(530)
(4)
108
98
112
£'000
877
(609)
12
98
88
155
----------------------------------------------
----------------------------------------------
1,180
(130)
(226)
(172)
621
(569)
300
(15)
----------------------------------------------
----------------------------------------------
652
-
337
71
----------------------------------------------
652
----------------------------------------------
----------------------------------------------
408
----------------------------------------------
11
12
(85)
(172)
(44)
(56)
----------------------------------------------
----------------------------------------------
(257)
(100)
----------------------------------------------
----------------------------------------------
(405)
-
4
(71)
(303)
78
(12)
(62)
----------------------------------------------
----------------------------------------------
(472))
(299)
----------------------------------------------
----------------------------------------------
(77)
1,055
9
1,046
----------------------------------------------
----------------------------------------------
16
978
==============================================
1,055
==============================================
34
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2023 (prior year ended
30 June 2022) 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 UK adopted international accounting standards (IFRS) 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 2023 the Group had net cash balances of £0.98m (2022: £1.06m). The business is now generating
cash and the Directors have prepared cash flow forecasts to June 2025, 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 2023
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 2020 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
2023. 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 2023
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, SAWsense 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 2023
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. 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. Following the substantial increase in activity on SAWsense and the related increase in R & D
activities the Company has identified employee time on research activities and these costs have been capitalised
and will be amortised over 10 years.
38
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2023
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 2023
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 (being the estimated selling price less costs to
complete and sell). 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 2023
30 June 2022
£'000
£'000
351
323
143
123
32
41
485
387
379
92
129
109
1,519
1,075
iTrack Royalty
2,010
1,557
Total
3,529
2,632
41
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
Segments
Translogik
SAWsense
iTrack royalties
Unallocated
£'000
£'000
£'000
£'000
Total
£'000
Year ended 30 June 2023
Sales
1,027
492
2,010
-
3,529
Gross profit
588
457
2,010
-
3,055
Administrative expenses (165)
(1,119)
(44)
(758) (2,086)
Exceptional
administrative expense
Operating profit/(loss)
-
(220)
-
-
(220)
423
(882)
1,966
(758) 749
Other Income
-
113
-
-
113
Net Financial Expense
-
-
-
4
4
Taxation
-
-
-
530
530
Profit/(loss) for the year
423
(769)
1,966
(224) 1,396
EBITDA reconciliation
Operating profit
Other income
Depreciation and amortisation
EBITDA
Note: Adjusted EBITDA (excluding share based payments)
Translogik
SAWsense
iTrack royalties
Unallocated
Year ended 30 June 2022
Sales
Gross profit
Overheads
Operating profit/(loss)
Other Income
Net Financial Expense
Deferred Tax
£'000
£'000
£'000
875
484
(126)
358
-
-
-
200
193
(1,014)
(821)
16
-
-
1,557
1,557
(44)
1,513
-
-
-
Profit/(loss) for the year
358
(805)
1,513
£'000
-
-
(786)
(786)
-
(12)
609
(189)
£'000
749
113
209
1,071
1,179
Total
£'000
2,632
2,234
(1,970)
264
16
(12)
609
877
During the current year the segmental numbers reflected premises related costs as unallocated costs
and the prior year numbers have been adjusted accordingly.
During the current year the segmental numbers reflected premises related costs as unallocated costs and the prior
year numbers have been adjusted accordingly. 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 2023
Notes to the financial statements (continued)
5
Revenue and segmental reporting (continued)
During the year ended 30 June 2023 there was 1 customer (2022: 2) whose turnover accounted for more than
10% of the Group’s total continuing revenue as follows:
Year ended 30 June 2023
Customer A
Year ended 30 June 2022
Customer A
Customer B
All non-current assets are held in the UK.
6
Expenses and auditor’s remuneration
Included in the profit are the following:
Depreciation of property, plant and equipment
Amortisation of intangible assets
(Gain)/Loss on foreign exchange transactions
Revenue
£'000
Percentage
of total
2,010
57
Revenue
£000
Percentage
of total
1,557
339
59
13
Year ended
30 June 2023
£'000
Year ended
30 June 2022
£'000
98
112
(22)
88
155
50
=============================================
=============================================
During the year £nil was recognised as an expense in the Statement of Comprehensive Income in respect of
operating leases (2022: £nil).
The Company incurred £220k of exceptional costs during the year (2022: £nil) in relation to restructuring the
business including redundancy costs.
Auditor’s 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 icome and expense
Recognised in statement of comprehensive income
Finance income/(expense)
Year ended
30 June 2023
£'000
Year ended
30 June 2022
£'000
40
4
5
37
4
-
=============================================
=============================================
Year ended
30 June 2023
Year ended
30 June 2022
£'000
£'000
=============================================
4
============================================-=
=============================================
(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 2023
Number of employees
Management and technical
Administration
Non-Executive Directors
Group and Company
Year ended
30 June 2023
Year ended
30 June 2022
17
2
1
----------------------------------------------
20
=============================================
13
2
1
----------------------------------------------
16
=============================================
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 2023
£'000
Year ended
30 June 2022
£'000
1,235
108
159
55
937
98
115
35
----------------------------------------------
----------------------------------------------
1,557
=============================================
1,185
=============================================
The share based payment charge included in the accounts in respect of share options in the year was £108,000
(2022: £98,000). The wages, salaries, social security costs and pension include £212,000 that are included in
exceptional administrative costs. £64,000 of wages, salaries and social security costs have been attributed to
Research and Development capital expenditure.
9
Directors’ remuneration
Directors’ emoluments
Directors cessation payment
Directors’ benefits
Directors’ pension
Employers national insurance
Share based payments (note 19)
Year ended
30 June 2023
£'000
Year ended
30 June 2022
£'000
384
103
9
6
310
8
5
----------------------------------------------
501
----------------------------------------------
323
44
75
=============================================
39
82
=============================================
The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid
director was £143,800 (2022: £135,000). Company pension contributions made to a money purchase scheme
on behalf of Directors was £6,008 (2022: £4,543). 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 (2022: Nil).
The number of Directors accruing retirement benefits under money purchase schemes in the year was 2 (2022:
2).
The number of Directors who exercised share options in the year was Nil (2022: Nil).
44
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 (2022: Nil).
The share based payment charge in respect of Directors share options in the year was £75,000 (2022: 82,000).
10
Taxation
Recognised in the statement of comprehensive income in respect of continuing operations
Current tax credit
Adjustment for previous year
Deferred tax credit
Current year
Tax credit in Statement of Comprehensive Income
Reconciliation of effective tax rate
Profit before tax
Tax calculated at the average standard UK corporation tax rate of 20.50% (2022:
19:00%)
Expenses not deductible for tax purposes
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
Deferred tax assets are:
Recognised – in respect of tax losses
Unrecognised – in respect of tax losses and other timing differences
Year ended
30 June 2023
£'000
Year ended
30 June 2022
£'000
-
(11)
(530)
(598)
----------------------------------------------
(530)
=============================================
----------------------------------------------
(609)
=============================================
Year ended
30 June 2023
Year ended
30 June 2022
£'000
866
=============================================
£'000
268
=============================================
178
23
25
(756)
51
19
(23)
(645)
-
----------------------------------------------
(530)
=============================================
(11)
----------------------------------------------
(609)
=============================================
1,175
4,258
645
4,900
=============================================
=============================================
The applicable UK corporation tax rate is a blend of 19% for the first 9 months and 25% thereafter giving an
average rate for the reporting period of 20.5%. The Group has tax losses, subject to agreement by HM Revenue
and Customs, in the sum of £21.9m (2022: £22.8m), 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.
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 2023
Right-of-use-
property
assets
Plant and
Equipment
Fixtures and
Fittings
Motor Vehicles
Total
£'000
£'000
£'000
£'000
£'000
Cost
Balance at 1 July 2021
272
410
174
10
866
Additions
-
44
-
-
44
Balance at 30 June 2022
272
454
174
10
910
Balance at 1 July 2022
272
454
174
10
910
Additions
-
85
-
-
85
Balance at 30 June 2023
272
539
174
10
995
Depreciation and impairment
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
Balance at 1 July 2022
171
415
147
10
743
Depreciation charge for the year
57
27
14
-
98
Balance at 30 June 2023
228
442
161
10
841
Net book value
At 1 July 2021
158
12
41
-
211
At 1 July 2022
101
39
27
-
167
At 30 June 2023
44
97
13
-
154
The depreciation charge is recognised in the following line items in the Statement of Comprehensive Income:
Administrative expenses – continuing operations
2023
£'000
98
----------------------------------------------
98
=============================================
2022
£'000
88
----------------------------------------------
88
=============================================
The right of use asset relates to the main property held under a 5 year lease. IFRS16 interest charges of (£1,000)
reflecting an overcharge in 2022, is included in note 7 (2022: £12,000). The lease liabilities are shown in note
18. The total cash outflow was £74,000 (2022: £74,000).
46
Notes to the financial statements (continued)
12
Intangible assets
Group and Company intangible assets
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Goodwill
Patents
rights and
Trademarks
Development
costs
Total
£'000
£'000
£'000
£'000
Cost
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
Balance at 1 July 2022
50
961
2,297
3,308
Additions
-
37
135
172
Balance at 30 June 2023
50
998
2,432
3,480
Amortisation and impairment
Balance at 1 July 2021
-
585
1,897
2,482
Amortisation for the year
-
111
44
155
Balance at 30 June 2022
-
696
1,941
2,637
Balance at 1 July 2022
-
696
1,941
2,637
Amortisation for the year
-
67
45
112
Balance at 30 June 2023
-
763
1,986
2,749
Net book value
At 1 July 2021
50
320
400
770
At 1 July 2022
50
265
356
671
At 30 June 2023
50
235
446
731
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 2023
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
2023
£'000
112
----------------------------------------------
112
=============================================
2022
£'000
155
----------------------------------------------
155
=============================================
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 2025
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:
Status
Country of
Class of
Ownership
Incorporation
Translogik RFID Limited
Dormant
UK
Lanesra Inc (Formerly IntelliSAW
Inc.)
Dormant
USA
Translogik Ltd (Formerly Cranwick
Ltd)
Dormant
UK
Transense K.K.
Dormant
Japan
SAWsense Limited
Dormant
UK
shares
held
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
2023
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
Company
Cost
At 1 July 2022
At 30 June 2022 and 2023
Impairment
Impairment in the year ended 30 June 2020
At 30 June 2022 and 30 June 2023
Net book value
At 30 June 2022
At 30 June 2023
£'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 2023
30 June 2023
£'000
30 June 2022
£'000
175
85
----------------------------------------------
260
=============================================
84
4
----------------------------------------------
88
=============================================
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in
the year ended 30 June 2023 amounted to £0.47m (2022: £0.39m). Inventories are stated net of impairment
provisions of £0.02m (2022: £0.02m).
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 2023
£'000
30 June 2022
£'000
246
(4)
----------------------------------------------
242
26
619
376
----------------------------------------------
1,263
=============================================
330
(4)
----------------------------------------------
326
23
441
343
----------------------------------------------
1,133
=============================================
As at 30 June 2023 there were no past due but not impaired trade receivables (2022: no past due but not
impaired). Included within other receivables is a rent deposit of £19,000 repayable within one year (2022 £18,000
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 2023 in order to to show the sterling
amount realised.
Forward exchange contracts to sell a further $0.45m from future expected receipts for £0.36m of sterling had a
fair value at 30 June 2023 of £3,000 which is reflected in other receivables.
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 2023
£'000
30 June 2022
£'000
978
----------------------------------------------
1,055
----------------------------------------------
978
1,055
=============================================
=============================================
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 2023
30 June 2023
£'000
30 June 2022
£'000
103
231
----------------------------------------------
334
=============================================
377
183
----------------------------------------------
560
=============================================
30 June 2023
£'000
30 June 2022
£'000
36
----------------------------------------------
65
----------------------------------------------
-
----------------------------------------------
36
=============================================
42
----------------------------------------------
107
=============================================
The Group operates a defined contribution pension plan. The total expense relating to these plans in the year
ended 30 June 2023 was £0.06m (2022: £0.04m).
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 £0.11m (2022: £0.10m).
50
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Notes to the financial statements (continued)
19
Employee benefits (continued)
Unapproved Discretionary Share Option Scheme
At 30 June 2023 the following share options remained outstanding under the Company’s Unapproved Discretionary
Share Option Scheme. .
Number of Options
1 July 2022
Granted
Cancelled/
Expired
1,800
5,000
5,000
50,000
474,000
210,000
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised 30 June 2023
1,800
-
-
-
-
-
-
-
5,000
5,000
50,000
474,000
210,000
50,000
Option Price
Date of
Grant
Date of Exercise
First
Last
£3.750
£3.750
£3.750
£0.750
£0.620
£0.100
£0.100
31.01.14
27.10.14
09.10.15
13.08.19
25.06.20
01.10.21
23.11.21
31.01.17
31.01.17
31.01.18
12.08.21
24.06.23
30.09.24
22.11.24
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
13.08.19
25.06.20
01.10.21
23.11.21
£0.1093
£0.1107
£0.6970
£0.6970
Share price Option price
Expected
volatility %
Expected
Life - Years
Risk free
rate %
Expected
dividends %
£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 2023, the following shares remained outstanding under an Enterprise Management Incentive Option
Scheme.
Number of Options
Option Price
Date of
Grant
Date of Exercise
First
Last
1 July 2022
Granted
5,000
507,000
8,000
170,000
40,000
25,000
93,000
12,500
-
-
-
-
-
-
-
-
Cancelled/
Expired
-
(307,000)
-
-
-
(25,000)
-
-
0
200,000
-
Exercised 30 June 2023
-
-
-
-
-
-
-
-
-
5,000
200,000
8,000
170,000
40,000
0
93,000
12,500
200,000
£0.750
£0.620
£0.620
£0.750
£0.100
£0.100
£0.795
£0.675
£0.100
26.06.17
25.06.20
08.12.20
08.12.20
01.10.21
23.11.21
22.02.22
08.06.22
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
24.06.30
12.08.29
12.08.29
30.0931
22.11.31
21.02.32
07.06.32
24.03.23
23.03.26
23.03.33
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
25.06.20
08.12.20
08.12.20
01.10.21
23.11.21
22.02.22
08.06.22
24.03.23
£0.0834
£0.1093
£0.1107
£0.1107
£0.6970
£0.6970
£0.0875
£0.0875
£0.6163
£0.850
£0.610
£0.620
£0.620
£1.000
£1.050
£0.795
£0.675
£0.855
£0.750
£0.750
£0.620
£0.620
£0.100
£0.100
£0.795
£0.675
£0.100
28.08%
52.40%
52.40%
52.40%
30.00%
30.00%
52.40%
52.40%
49.70%
3
3
3
3
3
3
3
3
3
1.00%
1.50%
1.50%
1.50%
0.45%
0.45%
1.50%
1.50%
3.75%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
51
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Notes to the financial statements (continued)
20
Share capital
Issued Share Capital
Ordinary shares of 10
pence each
30 June
30 June
2022
2023
In issue at 1 July
16,437,740
16,437,740
On issue at 30 June 2023/2022 – fully paid
16,437,740
16,437,740
Allotted, called up and fully
paid
Ordinary shares of £0.10
each
Shares classified in
shareholders’ funds
Treasury Shares
As at 1 July 2022
Additions
30 June
30 June
2023
£'000
2022
£'000
1,644
1,644
1,644
1,644
30 June 2023
30 June 2022
Cost
£
303,254
404,274
Number
Cost
£
Number
434,000 -
-
461,356
303,254
434,000
As at 30 June 2023
707,528
895,356
303,254
434,000
52
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
Notes to the financial statements (continued)
21
Basic and fully diluted profit 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 15,849,527 (2022: 16,365,640). 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
Year ended
30 June 2023
Number
Year ended
30 June 2022
Number
15,849,527
16,365,640
-
------------------------------
15,849,527
======================
-
------------------------------
16,365,640
======================
Year ended
30 June 2023
£'000
Year ended
30 June 2022
£'000
1,396
------------------------------
877
------------------------------
5.36
====================== ======================
8.81
Last year showed potential dilutive impact of share options being 431,808 however this was incorrect as none of
the share options had reached the hurdle requirement necessary for the option to be exercised. There are
1,504,300 share options and no warrants in place at 30 June 2023 (1,594,500 share options 30 June 2022).
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 £0.98m
(2022: £1.06m). 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 2023
Notes to the financial statements (continued)
22
Financial instruments (continued)
Cashflow sensitivity analysis for variable rate instruments
The Directors consider that the Group’s exposure to interest rates is low (2022: 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 and Euro’s which amounted to £2.97m
for the year ended 30 June 2023. The Group had no other significant assets or liabilities denominated in foreign
currencies at either 30 June 2023 or 30 June 2022 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 £0.30m 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
Management of capital
30 June
2023
£000
242
26
619
978
30 June
2022
£000
326
23
441
1,055
----------------------------------------------
1,865
----------------------------------------------
1,845
=============================================
=============================================
103
36
93
377
107
103
----------------------------------------------
232
----------------------------------------------
587
=============================================
=============================================
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 reduction 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 2023
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 £0.9m (2022: £0.8m)
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 2023 the Group’s cash was divided between current accounts £0.10m (2022: £0.10m) and £0.87m in
fixed rate monthly deposits (2022: £0.95m) with a weighted average interest rate for the year of 1.5% (2022: 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
Reconciliation of movements in total financing liabilities
At start of the year
Interest accrued
Payments of lease liabilities in the year
Interest received/(paid) in the year
Total financing liabilities at end of the year
Group and Company
30 June 2023
£'000
36
-
----------------------------------------------
36
=============================================
30 June 2022
£'000
73
37
----------------------------------------------
110
=============================================
Year ended
30 June 2023
Group and
Company
£’000
107
(2)
(62)
2
Year ended
30 June 2022
Group and
Company
£’000
169
9
(62)
(9)
----------------------------------------------
45
----------------------------------------------
107
=============================================
=============================================
55
Registered number 01885075
Annual report and financial statements
For the year ended 30 June 2023
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 2023 (2022: £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