Transense Technologies plc (LON:TRT) Chief Executive Officer Graham Storey caught up with DirectorsTalk to discuss their final results for year ended 30th June 2016
Q1: Your results seem pretty positive this morning, can you talk us through the highlights?
A1: Absolutely. Revenues are up 68% which given some challenging trading conditions in a certain side of the company that’s very encouraging, significant licence deals, one signed during the course of the last financial year with Emerson, the other with GE in July so post last financial year-end and quite significant in different ways. First of all raising the profile of the company to other people that maybe considering using wireless and battery-less Surface Acoustic Wave technology and also the revenue that has brought in in terms of the quantity of IP they’re using. So both of these applications use a very small slither of our IP which we’ve been $5.5 million for and with one of them expect royalties to accrue in the future which I think has given the market cause to begin a process of re-evaluating what our portfolio of technology, of IP, is actually worth. So I think that’s been very significant for us, we’ve made our first profit which is pleasing, we’re in a strong cash position, we are fully funded for the foreseeable future.
Q2: Now you mentioned the GE contract being a significant win, could you explain the background to the deal?
A2: Certainly, GE have been dealing with us now for something like 3 years, one of the encouraging aspects or differences between industrials and automotive, where that side of the company has been traditionally focussed, is speed to market. So 3 years we signed a licencing agreement, we have another European OE that in a similar period of time has actually commercialised the technology, it is now being used in a product that they are selling which monitors the condition of engines so obviously the talk signal, the talk information they get from our sensor is part of that system. That compared to automotive timescales for us is very encouraging so it’s more of a 3 year rather than automotive or disruptive new technology like ours is more typically 25 years.
Q3: Can you describe to me the strategy for both divisions in the group?
A3: Yes so on the Surface Acoustic Wave side of the company we have a combination of licencing or small volume manufacturing we do in-house, this is all volume high value bespoke equipment, there’s also the potential now that we are developing products in that side of the business to outsource manufacturing and sell products rather than licence so moving forward I think we’re likely to see a bit of both. On the iTrack we have spent the last year, a little over a year, developing iTrack II, iTrack II will be launched in Las Vegas at the MINExpo next week, on Monday, it is a considerable improvement on what is already regarded as the best in class, temperature and monitoring system in the mining industry, iTrack II is certainly a leap forward. They’ll be a lot of information going on the website next week if people would like to have a look at more specific information on the capabilities of that system so we’re expecting a considerable uptake or level of interest at the show.
Q4: Now you’re proposing a new capital structure, what’s the rationale behind this?
A4: A few different reasons, I think initially the spread we’ve seen recently on the share price, recently we were a 1.5p, it’s a 50% spread which is absolutely huge, so we are hoping to be able to get rid of that extortion with a higher share price. Secondly, distributable, the ability in the future to distribute, profits will be available to us should we decide to do so and finally allowing certain institutions that won’t to invest in penny shares or 2 penny shares, that will invest in a share price that’s higher, will widen the potential institutional investor opportunities for us.
Q5: Do you feel that Transense Technologies are well positioned for the rest of the year?
A5: Absolutely, cash is king and we have enough in the bank to see us through to, we believe, profitability so we are in no way considering raising anymore funds, we’re well positioned for the next year.