Transense Regulatory News (TRT)

15 Apr 2008 12:46

Transense Technologies PLC15 April 2008 Transense Technologies PLC 15 April 2008 Preliminary Results Chairman's Statement The last twelve months have probably been the most eventful in Transense'srelatively short history. The proposed reverse takeover of the BishopTechnology Group was rejected by shareholders in November 2007, and in early2008, during an extremely difficult time for Capital markets, a £4m fundraisingwas completed, bringing with it new institutional support. Several Board changes have taken place following the rejection of the BishopGroup proposal. I believe the commercial experience and determination of thenewly constituted Board, together with the strengthened balance sheet andshareholder support, puts the Company in a much improved position tocommercialise its world leading SAW technology. Our strategic review is ongoing and will not be finalised until a new ManagingDirector is in place. Results In 2007, there was no repetition of any licence fee income from Honeywell, asthe series of upfront payments agreed in the original licence agreement hadalready been paid and accounted for by 31st December 2006. There has been modest growth of revenue from engineering support work, and weare seeking further opportunities to exploit our technical expertise fromconsultancy work. Revenue for the year was £145,000 (2006 - £604,000 whichincluded a £500K licence fee). Pre-tax losses for the year increased to £2.754million (2006 - £1.324 million), exacerbated by the significant abort costs fromthe failed Bishop transaction and the cost of the Board restructuring. The Board Several Board changes have occurred subsequent to the rejection of the Bishopproposal at the EGM. My predecessor as Chairman, Peter Woods, and Tony Baldryretired immediately, followed shortly afterwards by Graham Eves, who resigned asCommercial Director. Howard Pearl, Finance Director, and Jim Perry, who wasChief Executive for 17 years, have also recently retired as Directors. The Board now comprises Ray Lohr, who continues to give us the benefit of hisexcellent skills as Technical Director and Rodney Westhead, who was appointed asNon-Executive Director in 2007 and who brings to the company his substantialexperience from within the automotive industry. The new members are MelvynSegal and Graham Storey, who have been shareholders in Transense for severalyears. They have the commercial skills and determination required as Transenseseeks to supplement its existing licensees and widen the applications for whichits technology can be utilised. The position of Managing Director has yet to be filled. We are currentlyfinalising negotiations with a candidate whom we believe ideally fits our brief- an industry heavyweight with considerable experience in commercialisingautomotive IP. We hope to complete these discussions in the near future. Future Strategy In recent years, hopes had been raised that the Company's unique SAW technologyfor measuring torque, pressure and temperature, would be adopted by ourlicensees, particularly within the automotive industry, and that a consistentand growing flow of royalty, licensing, and consultancy income would havealready been generated. Whilst this remains our stated goal, the timescalesoriginally envisaged were unduly optimistic. In light of this, it has been oneof our initial priorities to seek updates from our licensees with regards totimescales for commercialisation. A series of meetings are now ongoing for thispurpose. The existing licensing agreements, negotiated several years ago do not providefor any minimum annual payments. As a consequence, there is no income untilsuch time as royalties become payable. This leaves Transense substantiallydependent on our licensees to create the demand for the Company's technology andestablish customers for it, thereby producing an income flow for Transense. Thenew Board has adopted a proactive approach, which involves widening the range oftechnical applications for the Company's SAW technology, achieving closerrelationships with existing licensees and aggressively seeking new licenceopportunities, with the intention of gaining more control over the scope andtiming of revenues. Research & Development The technical advances made in the year from our ongoing partnerships continuedapace. The focus of the Company's 2007/8 R&D activity has been to develop thetechnology to meet customer specific applications. This has involved workacross all of our engineering skills base - mechanical, electronic and software. Business Update The new Board members were appointed on a mandate of openness and clarity.Whilst both confidentiality and commerciality will dictate what can and cannotbe disclosed at any particular time, it is my intention to ensure that in futureshareholders will be consistently updated.. I am encouraged that during my short tenure to date, the Company has receivedseveral serious enquiries about its technology. I am setting out below asummary of the more important projects upon which Transense is currentlyworking: Honeywell Four members of the Transense team have recently returned from Minneapolis wherethey had two full days of meetings with senior members of the Honeywell teamdiscussing ongoing and potential projects across a wide range of automotive andindustrial applications. Torque Driveline Transense has been working with Honeywell on projects for two US OEMs to measureengine output torque on flexplates. The flexplate is an integral part of thepower train system and, when implemented, the potential benefits to the enginewill include smoother running and increased fuel efficiency, and to thetransmission, smoother gear changes. This will be the first time any enginesystem has been able to measure torque 'live', enabling optimal control to bemaintained throughout vehicle life. It is hoped that the technology will beimplemented across a range of vehicles and engines. Whilst we believe the outcome of our meetings with Honeywell to have been verypositive, we are not currently budgeting for a meaningful flow of royalty incomefrom the flexplate project before the 2013 models are in production, in thelight of Honeywell's negotiations with automotive manufacturers. EPAS We are in discussions for a joint development with a Canadian Tier 1 specialistautomotive supplier, which is evaluating our electric power assisted steering(EPAS) torque sensor technology for two separate projects. TPMS Transense are in early discussions with a UK based after-market TPMS supplierwhich has developed a vehicle management system providing "cradle to grave" tyreinformation - of a particular interest to the OTR (Off The Road) and truckmarkets. Their system incorporates a hand-held reader which reads a tyre patchRFID tag and measures tyre tread depth and pressure on a manual basis. Theyview the ability to check tyre pressure remotely as a significant advantage andwe are currently working to incorporate SAW technology into their product. Motor Sports We are working on potential projects linked to both Formula 1 and NASCAR whichinvolves both TPMS and Torque. Whilst these projects, if confirmed, are capableof earning modest royalties, they are prestigious for Transense and represent anendorsement of our technologies operating in a very demanding environment. Non Automotive Applications It is clear that there are many opportunities for torque and pressure sensors innon-automotive fields. Transense is currently in negotiations with SensorTechnology to extend our licence to incorporate non-Automotive applications. Asuccessful conclusion to the negotiations will broaden the market for ourtechnology in an area where the development and testing schedules areconsiderably shorter than those in automotive, and give us a quicker route tomarket. Others For strategic reasons, Lear has not proceeded with the Transense batterylessTPMS and the agreement has been terminated. There has been no meaningful progress to date with our arrangements withMichelin. Conclusion We are busy at operational levels. We have an encouraging set of projects uponwhich we are working, but these projects are unlikely to generate a consistentand meaningful income flow in the short term, which means we need to develop ourconsultancy and engineering work for third parties. Nevertheless, Transense hasadequate financial resources and a fresh and determined Board to guide theCompany towards what we believe will be a more prosperous future. David KleemanChairman Transense Technologies plcIncome Statement for the Year to 31 December 2007 2007 2006 £000 £000Continuing operationsRevenue 145 604Cost of sales (45) (52) Gross profit 100 552 Administrative expenses (Notes 2 & 3) (2,854) (1,966) Operating loss (2,754) (1,414) Financial income 71 90 Loss before taxation (2,683) (1,324) Taxation 113 114 Loss from continuing operations (2,570) (1,210) Basic and fully diluted loss per share (4.5p) (2.1p) Balance Sheet at 31 December 2007 2007 2006 £000 £000 £000 £000Non current assetsProperty , plant and equipment 14 23Intangible assets 1,519 1,567Available for sale investments 65 65Loans receivable 25 25 1,623 1,680Current assetsTrade and other receivables 235 639Cash and cash equivalents (Note 4) 901 1,136 1,390 2,029 Total assets 2,759 3,709 Current liabilitiesTrade and other payables (1,199) (267)Current tax liabilities (22) (21) Total liabilities (1,221) (288) Net assets 1,538 3,421 EquityCalled up equity share capital (Note 4) 5,791 5,646Share premium account (Note 4) 5,668 5,376Accumulated loss (Note 5) (9,921) (7,601) Total equity 1,538 3,421 Cash Flow Statement for the Year to 31 December 2007 Year Year 2007 2006 £000 £000Loss before taxation (2,683) (1,324)Adjustments for:Financial income (71) (90)Depreciation of property, plant and equipment 12 17Amortisation of intangible assets (Note 3) 186 275Equity settled share based payment 250 244 Operating cash flows before movements in working capital (2,306) (878)Decrease / (increase) in receivables 404 (66)Increase in payables 933 0 Cash used in operations (969) (944)Taxation recovered 113 114 Net cash used in operations (856) (830) Investing activitiesInterest received 71 90Acquisition of property, plant & equipment (3) (2)Acquisition of intangible assets (138) (240)Acquisition of investments 0 (40) Net cash used in investing activities (70) (192) Financing activitiesProceeds from issue of equity share capital 145 5Share premium on issue of equity share capital 292 8 Net cash from financing activities 437 13 Net decrease in cash and cash equivalents (489) (1,009)Cash and cash equivalents at beginning of years 1,390 2,399 Cash and cash equivalents at end of years 901 1,390 Notes to the Preliminary results for the year 2007 1. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 or 2006. Statutoryaccounts for 2006, which were prepared under UK GAAP, have been delivered to theRegistrar of Companies. The auditors have reported on the 2006 accounts; theirreport was (i) unqualified, (ii) did not include a reference to any matters towhich the auditors drew attention by way of emphasis without qualifying theirreport and (iii) did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. The statutory accounts for 2007, which are being prepared under accountingstandards adopted by the EU will be finalised on the basis of the financialinformation presented by the directors in this preliminary announcement and willbe delivered to the Registrar of Companies in due course. 2. Administrative expenses include a charge of £836,000 (2006 £nil) for costsincurred in an aborted acquisition. There is also a £150,000 provision (2006:£nil) to cover termination benefits for directors resigning since 1 January,2008. 3. The amortization charge of £186,000 (2006 £275,000) includes £52,000 beingfirst time amortisation of tyre pressure project development costs. 4. On 4 January 2008 the Company raised £3.9 million cash, net of expenses,under a Subscription Agreement approved by shareholders. 5. No deferred tax asset is recognised in these financial statements in respectof trading losses to date. 6. The Annual Report and Accounts will be posted to shareholders by the end ofApril and the Annual General Meeting will be held on 5 June 2008. Contacts: Transense Technologies plcMelvyn Segal 01869 238380 Brewin Dolphin Investment BankingNeil Baldwin 0113 241 0126 ENDS This information is provided by RNS The company news service from the London Stock Exchange