Preliminary Results
Transense Technologies PLC
("Transense" or the "Company")
Preliminary (unaudited) results for the year ended 31 December 2009
2nd June 2010
Highlights
* Turnover £636,000, a level approximately 250 per cent above that of 2008
(2008: £204,000)
* Made the successful move away from being a pure technology company to one
where sales, promotion and marketing of a new range of products becomes a
significant source of revenue in the future
* Encouraged by the level of commitment and enthusiasm displayed by American
partners in the flexplate projects
* Of significance was the strengthening of the relationship with SenGenuity,
from which modest royalty flows have already begun
* Growing near term prospects and revenues of Translogik in tyre management
solutions for major truck fleet operators and off the road (OTR) vehicles
following the setting up of the Translogik subsidiary in April 2009 and
subsequent acquisition of Pneu Logic in November 2009
* Appointment in July 2009 by Translogik of the Japan and Malaysia based FEC
International as exclusive distributor of Translogik's data collection tools
in the ASEAN territories
* Cash £1,277k (2008: £2,695k)
* Post period end:
* * * Distribution agreement signed in February 2010 with the China
based Qingdao Mesnac, for RFID products.
* Translogik signed a distribution agreement with RFID Chile in
May 2010 and subsequently announced in May an expansion to the
trial
* Placing and Open Offer announced today to raise £2.038m in the
placing and up to £0.5m in the Open Offer
David Kleeman, Chairman of Transense Technologies PLC commented "All in all,
2009 was a period of activity, development and repositioning. We anticipate a
material increase in Group sales in 2010 and a path towards profitability, which
should, on current plans, be achieved during 2011."
Management Review
Chairman's statement
We had an encouraging 2009, with sales of £636,700, a level approximately 250
per cent above that of 2008, and a stream of operational income never previously
achieved by the company. The loss for the year totalled £1,472,000 (2008 -
£1,085,000 which reflected the write back of £453,000 of previous share based
payments). The loss for 2009 includes all development expenditure incurred, the
cost of corporate activity, and the necessary staff changes as we move away from
being a pure technology transfer company, to one where sales, promotion and
marketing of our new range of products becomes a significant source of revenue.
The adoption of our torque technology was delayed as a result of the effects of
the recession on the automotive sector. Our ongoing flex plate projects with two
US OEMs were effectively slowed down during this period. One of the projects is
now, however, making progress. Although still at a stage where revenue
predictions would be unreliable, we are encouraged by the level of commitment
and enthusiasm displayed by our American partners.
A meaningful source of income last year emanated from our work with Mercedes and
McLaren in Formula 1. As the FIA agreed with the constructors last autumn that
KERS would not be used in 2010, the income from this source reduced in the
second half last year. We are not budgeting for any revenue from Formula 1 in
2010, but there remains the possibility of KERS being reintroduced thereafter,
and contact is being maintained with our partners in this area. Our involvement
in torque measurement in the extremely demanding environment of Formula 1 has
further endorsed this application and the reliability of the patented
technology.
The more important and long term outcomes stemming from 2009 operations were,
without a doubt, first the strengthening of the relationship with SenGenuity,
from which modest royalty flows have already begun, and second, the growing
prospects of Translogik.
An initial licence was granted to SenGenuity in July 2008. SenGenuity is a
division of Vectron International Inc, part of the US listed Dover Corporation
which has a group turnover in excess of $5.5 billion. The initial license
allowed SenGenuity to manufacture Transense's Temperature & Pressure sensor. As
a result of the developing relationship with SenGenuity a license extension was
granted which enables them to use Transense's patented wireless Reader
Electronics in isolation from the Company's sensors. This extended license will
produce a fresh source of royalty revenue, as our electronics are now part of
applications offering solutions in areas where our sensors are not suitable,
such as a wireless heat sensing solution in the power transmission industry.
SenGenuity also continues to be active in developing solutions using the
Company's sensors including fluid level sensing, and in engine applications at
very high temperatures (600c+) and pressures (1,500 psi). The Directors consider
that based on projections provided by SenGenuity, these opportunities have the
potential to produce meaningful royalty income from 2012 onwards.
Translogik is expected to be an important part of our future, particularly in
the near term. We identified tyre management solutions for major truck fleet
operators and off the road (OTR) vehicles as a target for profitability and
growth. In mid-2009 we bought the business and assets of Pneu Logic for this
purpose, thereby combining our tyre and pressure sensors with Pneu Logic's
patented tyre tread depth and pressure inspection probes. We are now developing
second and third generation probes incorporating RFID and SAW sensor readers in
addition to systems specifically targeted at the OTR market which will
incorporate in cab readers, data loggers and the ability to transmit that data
remotely so that it can be read 'live' by fleet operators.
Further validation of the Board's new strategy has been the appointment in July
2009 by Translogik of the Japan and Malaysia based FEC International as our
exclusive distributor of Translogik's data collection tools in the ASEAN
territories. We also signed a distribution agreement in February 2010 with the
China based Qingdao Mesnac, whereby we have become the exclusive worldwide (ex
China) distributors of their RFID products.
All in all, 2009 was a period of activity and development. We anticipate a
material increase in Group sales in 2010 and a path towards profitability, which
should, on current plans, be achieved during 2011. In order to achieve this
important goal, we need to be able to fund our development programme, extend our
sales and promotional activities, fund the stockholding of our products and the
build up of debtors as our business grows. Accordingly, we are announcing today
the raising of £2.038m before expenses by means of a Placing and up to £0.5m in
an Open Offer for subscription. Details of the Placing and Open Offer will also
be announced today.
Our staff and colleagues in our Upper Heyford office have responded well to the
many changes which the company has undergone in the last two years and we are
grateful to them for their specialist skills, endeavours and support.
David Kleeman
Chairman
Chief Executive's Report
2009 has been a very eventful, if transitional year. We have made significant
advances in the development of Translogik as a trading company, as well as
promising progress towards our goal of commercialising the Transense IP
portfolio.
Most of the projects relating to the Transense IP portfolio outlined in previous
reports are continuing although it's worth mentioning one or two specifics.
We are continuing to pursue various torque opportunities, notably EPAS (Electric
Power Assisted Steering) which, while still automotive, is a non-driveline
application. We have also started to explore the use of torque sensors in wind
turbines in conjunction with a gearbox manufacturer supplying the wind turbine
industry.
The decision by the FIA to withdraw KERS during the current Formula 1 season has
resulted in the suspension for the time being of that project. Should KERS be
reintroduced in some future season then we would be ready and able to recommence
development work.
However, on a much more positive note, our involvement in the development of an
automotive torque SAW solution, which had been suspended for some time, has
recommenced with a major American OEM.
These are promising developments; however, as we've learnt from past experience,
revenue streams from development of our IP portfolio have a lengthy pipeline
before they start to flow.
Turning to temperature and pressure sensing, our relationship with Vectron, and,
in particular their trading division Sengenuity, has gone from strength to
strength. Sengenuity have a number of significant projects under way involving
our sensor technology, our reader technology, or both.
In one particular project involving our reader electronics they have now
installed fully working systems in several major customer sites and are ready to
move into what they project will be high volume sales. We have already started
to receive royalty revenues from them in respect of this project which are
anticipated to grow steadily.
During 2009 Translogik took a number of significant steps:
* Acquired the exclusive worldwide (apart from China) distribution rights for
the only major independent RFID tyre tag manufacturer.
* Enhanced its distribution capability by signing a number of distribution
agreements, both exclusive and non-exclusive.
* Acquired the business and intellectual property of Pneu Logic Limited,
securing the rights to the Pneu Logic Truck and OTR tread depth and pressure
probes.
* Commenced development of next generation probes integrating the Transense
TPMS technology with the existing probes.
* Launched a coordinated global marketing campaign and exhibited at two major
trade exhibitions.
A further recent strategic change has been the decision for Translogik to offer
battery based TPMS systems alongside SAW based products. Different applications
require different selection criteria and there's no doubt that, just as SAW
based technology has unique advantages, so does battery based sensor technology.
For example, just as SAW sensors are more ecologically sound than battery based
systems and offer greater longevity, battery based systems can transmit their
data over greater distances. The question is which features make any one
solution more suitable for any particular application. The answer to that
question in any sales opportunity is not determined by us, but by the customer.
The key point from a commercial perspective is that none of our competitors
offer both a SAW based solution alongside a battery based solution, whereas we
can now offer a range of TPMS systems under the Translogik banner. So, whichever
system is chosen by the customer as providing the best solution for a particular
application, we have an opportunity to generate revenue.
While we have not yet achieved profitability, our record turnover in 2009
indicates  that our decision to focus on working more closely with those
responsible for producing and selling products implementing our technology, was
a correct one. We are now poised to see the growth of revenues arising from the
change in emphasis and we anticipate that 2010 will see continued improvement
towards profitability in 2011.
Financial review
Balance Sheet
Intangibles
The review of both R&D costs and Patent expenditure has now been completed and
no further impairment in value has been necessary.
Liabilities
Included in Liabilities is £200,000 due to Pneu Logic Limited in respect of the
sale of that business to Translogik in November 2009. The acquisition was agreed
on the basis of an initial payment of £50,000 and the balance payable based on
sales achieved in the next two years. As the Company is hopeful of achieving the
sales target the full consideration has been accounted for in the 2009 accounts.
Income Statement
Turnover
Turnover was at a record level as mentioned in the Chairman's statement and
included a substantial contribution from our work with McLaren and Mercedes in
Formula 1.
Costs
Included in these accounts is a provision of £75,000 reflecting restructuring
costs relating to staff and reflecting the short term change of emphasis towards
product sales. As a result of the changes annual employee costs are currently
running at approximately £300,000 less than in 2009.The accounts also include
some costs relating to fund raising activities.
Cash flow
Assuming the current fund raising is approved the Board consider that we should
have sufficient cash resources well into 2011 at which time it is expected that
the Group will become self financing.
Audit
The Audit has effectively been completed and the Board fully expects the
accounts to be signed off imminently without any changes.
Graham Storey
CEO
For the year ended 31 December, 2009
INCOME STATEMENT
+-------+ +-------+
  Note  |2009 | |2008 |
| | | |
    |£000's | |£000's |
| | | |
    | | | |
| | | |
 Continuing Operations   | | | |
| | | |
 Revenue   |636 | |204 |
| | | |
 Cost of sales   |(141) | |(38) |
+-------+ +-------+
    | | | |
| | | |
 Gross Profit   |495 | |166 |
| | | |
    | | | |
| | | |
 Administrative expenses 2,4  |(2,058)| |(2,086)|
| | | |
 Share based payments cancellation adjustment   |- | |453 |
+-------+ +-------+
    | | | |
| | | |
 Operating Loss   |(1,563)| |(1,467)|
| | | |
    | | | |
| | | |
 Financial Income   |21 | |178 |
+-------+ +-------+
    | | | |
| | | |
 Loss before taxation   |(1,542)| |(1,289)|
| | | |
    | | | |
| | | |
 Taxation   |70 | |204 |
+-------+ +-------+
    | | | |
| | | |
 Loss from continuing operations   |(1,472)| |(1,085)|
| | | |
    | | | |
| | | |
    | | | |
| | | |
 Basic loss per share (pence) 3  |(2.0) | |(1.4) |
| | | |
    | | | |
| | | |
 Fully diluted loss per share (pence) 3  |(1.9) | |(1.4) |
+-------+ +-------+
As at 31 December 2009
BALANCE SHEET
+----------+ +----------+
  Note  | 2009 |  | 2008 |
| | | |
    | £000's |  | £000's |
| | | |
    |  |  |  |
| | | |
 Non Current Assets   |  |  |  |
| | | |
 Property ,Plant & Equipment   | 151 |  | 24 |
| | | |
 Intangible Assets 4  | 1,494 |  | 1,446 |
| | | |
 Available for sale assets   | 90 |  | 65 |
| | | |
 Loans receivable   | - |  | 25 |
+----------+ +----------+
    | 1,735 |  | 1,560 |
+----------+ +----------+
    |  |  |  |
| | | |
 Current Assets   |  |  |  |
| | | |
 Stock   | 33 |  | 18 |
| | | |
 Corporation Tax   | 169 |  | 99 |
| | | |
 Trade and other receivables   | 138 |  | 75 |
| | | |
 Cash and cash equivalents   | 1,277 |  | 2,695 |
+----------+ +----------+
    | 1,617 |  | 2,887 |
+----------+ +----------+
    |  |  |  |
+----------+ +----------+
 Total Assets   | 3,352 |  | 4,447 |
+----------+ +----------+
    |  |  |  |
| | | |
 Current Liabilities   |  |  |  |
| | | |
 Trade and other payables   | (492) |  | (204) |
| | | |
 Current tax liabilities   | (32) |  | (30) |
| | | |
    |  |  |  |
+----------+ +----------+
 Total Liabilities   | (524) |  | (234) |
+----------+ +----------+
    |  |  |  |
+----------+ +----------+
 Net Assets   | 2,828 |  | 4,213 |
+----------+ +----------+
    |  |  |  |
| | | |
 Equity   |  |  |  |
| | | |
 Called-up equity share capital   | 7,580 |  | 7,580 |
| | | |
 Share premium account   | 7,856 |  | 7,830 |
| | | |
 Accumulated loss   | (12,608) |  | (11,197) |
| | | |
    |  |  |  |
+----------+ +----------+
 Total Equity   | 2,828 |  | 4,213 |
+----------+ +----------+
For the year ended 31 December, 2009
CASH FLOW STATEMENT
+-------+ +-------+
  Note  |2009 | |2008 |
| | | |
    |£000's | |£000's |
| | | |
 Loss before taxation   |(1,542)| |(1,289)|
| | | |
    | | | |
| | | |
 Adjustments for :   | | | |
| | | |
 Financial Income   |(21) | |(178) |
| | | |
 Depreciation   |11 | |11 |
| | | |
 Loss on disposal of intangible assets   |- | |54 |
| | | |
 Amortisation of intangible assets   |215 | |159 |
| | | |
 Impairment of intangible assets   |- | |50 |
| | | |
 Share based payment   |61 | |(191) |
+-------+ +-------+
 Operating cash flows before movements   | | | |
| | | |
 in working capital   |(1,276)| |(1,384)|
| | | |
    | | | |
| | | |
 (Increase)/Decrease in receivables   |(63) | |160 |
| | | |
 Increase/(Decrease)in payables   |290 | |(987) |
| | | |
 (Increase) in stock   |(15) | |(18) |
+-------+ +-------+
 Cash used in operations   |(1,064)| |(2,229)|
| | | |
    | | | |
| | | |
 Taxation recovered   |- | |105 |
+-------+ +-------+
 Net cash used in operations   |(1,064)| |(2,124)|
+-------+ +-------+
    | | | |
| | | |
 Investing activities   | | | |
| | | |
 Interest received   |21 | |178 |
| | | |
 Acquisitions of property, plant and equipment   |(138) | |(21) |
| | | |
 Acquisitions of intangible assets   |(263) | |(190) |
| | | |
    | | | |
+-------+ +-------+
 Net cash used in investing activities   |(380) | |(33) |
+-------+ +-------+
    | | | |
| | | |
 Financing activities   | | | |
| | | |
 Proceeds from issue of equity share capital   |- | |1,789 |
| | | |
 Share premium on issue of equity share capital   |26 | |2,162 |
| | | |
    | | | |
+-------+ +-------+
 Net cash from financing activities   |26 | |3,951 |
+-------+ +-------+
    | | | |
| | | |
 Net increase/(decrease) in cash and cash equivalents   |(1,418)| |(1,794)|
| | | |
    | | | |
| | | |
 Cash and equivalents at the beginning of year   |2,695 | |901 |
| | | |
    | | | |
+-------+ +-------+
 Cash and equivalents at end of year   |1,277 | |2,695 |
| | | |
    | | | |
+-------+ +-------+
Notes to the Preliminary results for the year 2009
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2009 or 2008. Â Statutory
accounts for 2008, which were prepared in accordance with Adopted IFRS as
adopted by the EU, have been delivered to the Registrar of Companies. Â The
auditors have reported on the 2008 accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and (iii) did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
The statutory accounts for 2009, which are being prepared under the same
standards as above will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
2. Administrative expenses in 2009 included a restructuring and redundancy
provision of £75,000 no similar charge arose in 2008.
3. Basic loss per share is calculated by dividing the loss after taxation of
£1,472,000 (2008: £1,085,000) by the weighted average number of ordinary shares
in issue during the year of 75,408,000 (2008: 75,408,000). Â Options over
3,905,000 ordinary shares (2008: 2,650,000) are not included in the calculation
of diluted loss per share as their effect is anti-dilutive.
4. The amortization charge of £185,000 in 2008 included £26,000 being first
time amortisation of torque development costs recognizing that this
technology has been commercialised during the year.
5. On 2nd June 2010 the Company proposed raising £1.874 million cash, net of
expenses, under a Subscription Agreement subject to approval by
shareholders. Additionally the Company is seeking to raise a further
£500,000 by way of an open offer.
6. No deferred tax asset is recognised in these financial statements in respect
of trading losses to date.
7. The financial statements have been prepared on a going concern basis, which
the Directors believe to be appropriate for the following reasons.
The Group meets its day to day working capital requirements through existing
cash reserves and does not have any overdraft facility.
The Directors have prepared base case and sensitised cash flow forecasts for the
period to 31 December 2011. These forecasts make a number of operational
assumptions, the most significant of which are the imminent raising of at least
£2million through a private placing of equity shares and an open offer to the
existing shareholders (see Directors' report) and a successful passing of
special shareholder resolutions to approve each of the placing and the open
offer . The Directors do not have any plans to arrange bank facilities.
The base and sensitised forecast indicate that, assuming the current cost base
and the receipt of the forecast proceeds of the private placing, the Group will
continue to have positive cash reserves to at least 31 December 2011.
In respect of the private placing and open offer, the Group is currently seeking
to raise at least £2 million from an issue of equity shares, planned to take
place on    2 June 2010 ("the Equity shares"). The issue of the equity shares
requires shareholder approval at the General Meeting of the Company on 30 June
2010. Based on firm pledges received by 28 May 2010 from potential investors in
the private placing the Directors are confident that the proceeds from the
planned issue of equity shares will be in line with their expectations.
However the ability to go ahead with both the private placing and the open offer
relies on the successful passing of special resolutions at the General Meeting
on 30 June 2010. Â In the absence of shareholder approval for the private
placing, the forecasts indicate that the Group may run out of cash by December
2010. Â The Directors have considered controllable mitigating actions available
to them to extend the period during which it can operate with the remaining cash
reserves. However, the ability to do this may be limited.
On the basis that the shareholders approve the private placing and that the
expected proceeds from the issue of the equity shares are received, the
Directors consider that the Group will continue to meet its liabilities as they
fall due for the foreseeable future. However, there can be no certainty in
relation to these matters.
The Directors have concluded that the need for shareholder approval of the
private placing represents a material uncertainty that may cast significant
doubt upon the Group's and Company's ability to continue as a going concern. The
Group and Company may, therefore, be unable to continue realising their assets
and discharging their liabilities in the normal course of business. The
financial statements do not include any adjustments that would result from the
basis of preparation being inappropriate.
8. The Annual Report and Accounts will be posted to shareholders on the 7th June
and the Annual General Meeting will be held on 30 June 2010. A copy of the
Company's results is available on the Company websitewww.transense.co.uk
<
http://www.transense.co.uk/> .
Contacts:
Transense Technologies plc
Melvyn Segal                     01869 238380
Brewin Dolphin Investment Banking
Neil Baldwin                     0845 2134730
Hybridan LLP - Broker
Claire Noyce                        020 7947 4350
Max Bascombe                        020 7947 4353
ENDS
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