Transense Regulatory News (TRT)

31 Mar 2006 07:01

Transense Technologies PLC31 March 2006 31 March 2006 Transense Technologies PLC ("Transense") Preliminary results for the year ended 31 December 2005 Chairman's Statement 2005 was a year of considerable progress. Turnover was similar to last year at£553,000 (2004: £563,000) and gross profit was £468,000 (2004: £521,000).Overheads rose by 10% predominantly because of staff increases and oneretirement settlement, as well as increased executive and staff costs fromgreater travel in support of major licensees' requests as the pace of programmesquickens. This resulted in an increased loss for the year of £874,000 comparedwith £683,000 in 2004. Cash at the end of December 2005 was £2.4 millionfollowing the successful placement announced in October. Our Intellectual Property (IP) base continued to strengthen during 2005. Thenumber of granted patents per invention increased to 24 from 20 in 2004 and thenumber of granted patents around the world based on these inventions is farhigher. The costs of these new additions, and maintenance of those alreadygranted, came to £143,000 against £136,000 in 2004. Our IP base representssignificant shareholder value considerably in excess of our balance sheet andwill result in strong dividend flow in the years to come as our licensees launchtheir product programmes. This IP is the foundation of our licence deals. Even with strong IP, thedevelopment of new licence contracts often appears to take an inordinate amountof time, but this is par for the course where valuable licences are concerned.We recognise this can be frustrating for shareholders and it can also test thepatience of management. Notwithstanding this, we need to be very careful whennegotiating with large world-class companies to fully protect our valuable IP,regardless of time delays. It is imperative that we get these deals right. We have finished the Tyre Pressure Monitoring System (TPMS) engineeringdevelopment programme for commercial vehicle applications on behalf of a majorlicensee and the launch is going ahead this year. We have previously stressedthe importance of this launch since it will trigger the follow on truckapplications in Europe and Asia, as well as expediting other projects,particularly passenger car TPMS. The licensee is well known for its verythorough testing and the endorsement this will give Transense's technology willopen up further business opportunities. The team that had been working on commercial vehicle applications is nowsupporting other licensees and potential licensees by installing our TPMS inpassenger cars for demonstration purposes to major automotive Original EquipmentManufacturers (OEMs). We have added European TPMS (different specification)demonstration vehicles to the North American demonstrators and we are indiscussions with Japanese companies. Through our own contacts, together withthose of certain of our licensees, we already have direct links on TPMS withmost of the world's vehicle manufacturers. Our initial target implementationobjective for TPMS on passenger vehicles remains 2007. We are actively engaged in finalising a further arrangement with a Tier Onesystem integrator of major significance that is currently heavily involved inthe supply of first generation TPMS. Collaboration with them has involvedincorporating the TPMS into the keyless entry system. We anticipate this will bethe subject of a further announcement over the coming months. Now that the key components are becoming available, Transense has been exploringalternative routes to market for TPMS. We have a number of other licenceopportunities under discussion, particularly for the aftermarket. In particular,we have identified an aftermarket application in conjunction with the fitment ofanother safety product. The safety product is already established and marketedworldwide and one country has recently made fitment mandatory for certaincategories of vehicles. The Transense TPMS enhances this product and asignificant order is expected shortly for delivery this year. The availability of components has also impacted on STACK. Since taking alicence for F1 and other motorsport and special applications, STACK havedeveloped their dedicated version of the Transense TPMS, which they havepresented at a number of international motorsport exhibitions. This has givenrise to a considerable volume of enquiries, which should translate topotentially valuable orders in the coming months. The endorsement of SurfaceAcoustic Wave (SAW) TPMS by motorsport will not go unnoticed by the vehicle andmotorcycle manufacturers behind these teams. We delivered, under contract, our first prototype driveline torque transducer toone of the largest automotive groups in the world, which has now been followedup with a further order for two more systems, one of which will be tested in apassenger vehicle in the next few months. In addition, another of the big threeautomakers has also commissioned us to supply a driveline transducer for test inits vehicles. These two contracts are extremely important to Transense because,given successful trials, the market that will open up for our technology in thisarea alone is very large. Our technology has also been selected by a 3 OEMjoint research group for a torque sensing demonstration project in the USA. Wehave high confidence these programmes will be implemented over the next twoyears and show strong growth thereafter. To enhance these requirements we havedeveloped a new torque and temperature sensor. Our Electric Power Assisted Steering (EPAS) torque sensors, which provide a moredirect feel to the steering, continue to attract the attention of relevant TierOne suppliers, and we are providing support as they demonstrate our technologyto their customers. The technical development of SAW system components is now virtually complete.SAW die and packaging, electronic interrogation and antennae, and ApplicationSpecific Integrated Circuits (ASICs) are at, or close to, production status. Weare also in the final stages of making an agreement with another majorinternational electronic component supplier. The emphasis is now on refining,extending, protecting and supporting our technological base by working with ourlicensees as they finalise their plans to market to the automotive OEMs. In thisregard it is noteworthy that in 2005 two major licensees requested our strongdirect support at these important later stages. Sensor production has started at Honeywell's Chinese plant. In a recentrestructure, Honeywell formed the Emerging Electronic Solutions Group which hasresponsibility for developing all applications of the SAW sensor business.Transense works very closely with this Group and provides technical support,particularly for application projects. As part of this teamwork, we have beendeveloping new applications for SAW sensors in conjunction with vehiclemanufacturers and Tier Ones. Our relationship with Honeywell is developing verywell. In summary, we continue to make sound progress and are now not far from thatfirst licensee launch date. We have of course intimated that before, but, as inall technology developments, hurdles appear and have to be overcome, andeventually are overcome. The heavy investment, dedication and persistence ofthat first licensee towards ensuring the launch of a perfect new system willhave a significant impact on Transense as our other technologies arrive in themarket place over the coming years. Once again on behalf of the Board, I thank all in the Transense team for theirhard work over the past year. P.J. Woods Chairman Transense Technologies plc Profit & Loss Account for the Year to 31 December, 2005 2005 2004 £000 £000Turnover 553 563Cost of Sales (85) (42)Gross profit 468 521 Administration expenses (1,500) (1,358) Operating loss (1,032) (837) Interest income 58 54 Loss on ordinary activities before taxation (974) (783) Taxation 100 100Loss for the year (874) (683) Loss per share (1.6p) (1.3p) Balance Sheet at 31 December, 2005 2005 2005 2004 2004 £000 £000 £000 £000Fixed assets 1,665 1,579 Current assets: Debtors 598 590 Cash 2,399 1,161 2,997 1,751Less: Creditors falling due within one year 288 242 Net current assets 2,709 1,509 Net assets 4,374 3,088 Capital and reserves: Share capital 5,641 5,376 Share premium 5,368 3,473 Profit and Loss account (6,635) (5,761)Shareholders' funds 4,374 3,088 Cash Flow Statement for the Year to 31 December, 2005 2005 2004 £000 £000Net cash outflow from operating activities (912) (1,079) Returns on investments and servicing of finance 58 54 Taxation Corporation tax received 100 100 Net capital expenditure (168) (164)Cash outflow before management of liquid resources and financing (922) (1,089) Management of liquid resources (Payments to) / receipts from short term deposits (1,200) 850 Financing Issue of new ordinary shares 2,160 179 Increase / (decrease) in cash in the year 38 (60) Reconciliation of operating loss to net cash outflow fromoperating activities Operating loss (1,032) (837) Depreciation and amortisation 87 77 Profit on disposal of fixed assets (5) -- Net movement in current debtors and creditors 38 (319)Net cash outflow from operating activities (912) (1,079) Reconciliation of net cash flow to movement in net funds Increase / (decrease) in cash in the year 38 (60) Cash outflow / (inflow) from changes in liquid resources 1,200 (850) Movement in net funds in the year 1,238 (910) Net funds at 1 January 1,161 2,071 Net funds at 31 December 2,399 1,161 Analysis of net funds Liquid Resources Cash Total £000 £000 £000 At 1 January 1,100 61 1,161 Cash flow 1,200 38 1,238 At 31 December 2,300 99 2,399 Notes to the Preliminary results for the year 2005 1. The Accounts The summary of results for the year to 31 December, 2005 does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985.The full statutory accounts, which will be available to shareholders shortly,have been reported on by the Company's auditors but have not yet been deliveredto the Registrar of Companies. Full accounts in respect of the year to 31 December, 2004 have been delivered tothe Registrar of Companies. The auditors have reported on the accounts and theAudit Reports were unqualified and did not contain statements under theCompanies Act 1985, Section 237 (2) or (3). 2. The Annual Report and the AGM The Annual Report and Accounts will be posted to shareholders by the end ofApril and the Annual General Meeting will be held on 19 May, 2006. This information is provided by RNS The company news service from the London Stock Exchange