Project Hawk March 2019 - Transense Technologies
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Project Hawk
March 2019
Disclamer
This document, which has been prepared by Transense Technologies plc (the "Company"), comprises the slides for a presentation to certain institutional investors concerning the Company and its proposed placing of new
ordinary shares of £0.10 each in the capital of the Company (the "Shares") (the "Placing"). This document, and any ancillary documents relating to it, any oral presentation and any question or answer session (together, the
"Presentation") have been prepared and issued by and are the sole responsibility of the Company.
The Presentation is not for viewing, release, distribution or publication into or in any jurisdiction where applicable laws prohibit its release, distribution or publication. The contents of the Presentation are strictly confidential
and may not be copied, distributed, published or reproduced in whole or in part, or disclosed or distributed by recipients to any other person.
The content of the Presentation has not been approved by an authorised person for the purposes of Section 21(2)(b) of the Financial Services and Markets Act 2000. Accordingly, the Presentation is directed only at (i) persons
outside the United Kingdom to whom it is lawful to communicate it, or (ii) persons having professional experience in matters relating to investments who fall within the definition "investment professionals" in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (iii) high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as
described in Article 49(2) of the Order, provided that in the case of persons falling into categories (ii) and (iii), the communication is directed only at persons who are also "qualified investors" as defined in Section 86 of the
Financial Services and Markets Act 2000 (together, "Relevant Persons"). The Presentation must not be acted on or relied on by persons who are not Relevant Persons. You represent and agree that you are a Relevant Person.
The Presentation is not a Prospectus, an admission document or an advertisement and is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or
invitation to sell or any solicitation of any offer to purchase or subscribe for any ordinary shares in the Company in any jurisdiction. Neither the Presentation, nor any part of it nor anything contained or referred to in it, nor the
fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment
whatsoever in relation to any Shares. No representation or warranty, express or implied, is given by or on behalf of the Company or finnCap Limited ("finnCap") or any of their respective directors and affiliates or any other
person as to the accuracy or completeness of the information or opinions contained in the Presentation and no liability whatsoever is accepted by the Company or finnCap or any of their respective directors and affiliates or any
other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. The Presentation does not constitute a recommendation regarding
the Company or an investment therein.
Certain statements, beliefs and opinions in the Presentation are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their
nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.
These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or
activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. You should not place undue reliance on forward- looking statements, which speak only as of the date of this document. Prospective recipients should not treat the contents of this
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The information contained in the Presentation is confidential and may constitute inside information for the purposes of the Criminal Justice Act 1993 and the EU Market Abuse Regulation (2014/596/EU) ("MAR"). You should not
use this information as a basis for your behaviour in relation to any financial instruments (as defined in MAR), as to do so could amount to market abuse for the purposes of MAR, and by attending the Presentation or by
accepting the Presentation you will be taken to have represented, warranted and undertaken that you will not deal in (or encourage any other person to deal in) the Shares or financial instruments of the Company or base any
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acknowledge that its content and any discussion surrounding the Presentation falls within the definition of a ‘market sounding’, as defined in MAR. By agreeing to receive the market sounding, you acknowledge that you will
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The Presentation may not be published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States. The Presentation does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in the United States or any state or other jurisdiction of the United States. The Shares proposed to be offered by the Company have not been and will not be registered under the US
Securities Act of 1933, as amended ("Securities Act") or under any securities laws of any state of the United States and may not be offered, sold, resold, pledged, delivered, distributed or transferred, directly or indirectly, in or
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2
Project Hawk - Introduction
Transense • Provider of sensor systems for industrial, mining and transport markets
Technologies
Progress • iTrack II mining tyre monitoring systems gaining commercial traction with significant recent orders:
o 41 iTrack II units for Nordgold in West Africa
o 50 iTrack II units to a major supplier to the mining marketplace
• Licensee GE Aviation’s T901-GE-900 engine, incorporating a Transense SAW sensor, selected by the
US Army, as announced 4 February 2019
Transaction • Equity placing to raise £1.5m
• Proceeds to provide working capital to grow and develop iTrack trade including the funding of
further research and development which will drive future growth in iTrack sales
3
Transense - Introduction
Provider of sensor
systems for industrial,
mining and transport
markets
4
iTrack II – System Overview
5
iTrack II Data – 24/7 Monitoring Centre
• Live 24/7 monitoring
• Real time alerts issued
• In-house developed algorithms
• Daily, Weekly, Monthly
reporting, emailed direct to
client
• Customised reporting based
on the clients’ needs
Maximise Truck Uptime - Improve productivity by minimising maintenance
requirements and using data to identify underperforming trucks
6
iTrack II – Game Changing Contract Win
Development Company to a Validated Commercial Operation
RNS 18 February 2019 – Major supplier to the mining marketplace
• 50 unit order
• Very substantial orders anticipated by the end of FY20
• Ongoing development with customer
• North America is a new territory for Translogik and a large
OTR market
7
SAWsense - Surface Acoustic Wave (SAW) sensing
SAW features & applications
• Batteryless & wireless
• Rotating shaft, hazardous environments
• Torque and temperature, or pressure and temperature
8
SAWsense – Game Changing Contract Win
Development Company to a Validated Commercial Operation
RNS 4 February 2019 – GE Contract Win
• Licensee GE Aviation’s T901-GE-900 engine, incorporating a
Transense SAW sensor, selected by the US Army
• T901 engine to replace the T700
• Significant technical endorsement
Further opportunities for Transense as license agreement with GE is
not exclusive
9
H1 Financial Highlights*
• iTrack subscription revenues up 63% to £0.44m (Dec 2017: £0.27m)
• Group revenues slightly down to £0.93m (Dec 2017: £1.07m)
• Net loss after taxation £0.78m (Dec 2017: 0.92m)
• Operating cash outflow before movements in working capital reduced by 46%
to £0.39m (Dec 2017: £0.72m)
• Net cash at end of period £0.84m (Jun 2018: £1.59m)
• Anticipated positive cash and profitable monthly run rate by June 2020
* Unaudited, Interim Results to 31 Dec 2018
10Use of Proceeds & Expected Timetable
Issue of 2,409,790 ordinary shares under existing authorities
Use of Proceeds
Working capital to grow and develop iTrack trade, including the funding of further
research and development to drive future growth in iTrack sales
Funds to be raised £1.5m
Expected Timetable
Roadshow Commence 28 February
Book Closes Tuesday 5 March
T&Cs and contract notes Wednesday 6 March
Announce placing & interims Thursday 7 March
1st Admission Monday 11 March
2nd Admission Following receipt of EIS
HMRC advanced assurance
11EIS & VCT
• Previous HMRC advanced assurance received 4/4/18
• Philip Hare & Associates (“PH”) application for EIS advanced assurance
8/2/19 – copy available on request
• Company are advised by PH that HMRC do not currently provide advanced
assurance in relation to VCT, unless submission includes specific details of
those VCTs investing. Accordingly, PH have not submitted an advanced
assurance application in relation to VCT
• PH EIS & VCT comfort letter 26/2/19 addressed to the Company – copy
available on request
12Summary – Investment Case
• Recent game changing contract wins:
• 50 iTrack II units – major supplier to the mining marketplace
• GE Aviation – selected by US Army
• Financials:
• Monthly subscription revenues growing
• Reduced losses and cash burn
• Anticipated positive cash and profitable monthly run rate by June 2020
• Increasingly valuable IP and know-how portfolio
• Engagement with several world class companies as customers and/or
channel partners for commercialisation
13Appendix
14Condensed Consolidated Statement of Comprehensive
Income - draft
31 Dec 18 31 Dec 17 30 Jun 18
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Continuing operations
Revenue 933 1,074 2,050
Cost of sales (202) (474) (761)
Gross profit 731 600 1,289
Administrative expenses (1,686) (1,522) (3,208)
Operating loss (955) (922) (1,919)
Financial income - - 5
Other income 49 - -
Loss before taxation (906) (922) (1,914)
Taxation 124 - 26
Loss from continuing operations (782) (922) (1,888)
Loss for the period (782) (922) (1,888)
Other comprehensive income:
Exchange difference on translating foreign operations 2 1 -
Other comprehensive income for the period 2 1 -
Total comprehensive income for the period attributable to
the equity holders of the parent (780) (921) (1,888)
15Condensed Consolidated Statement of Financial
Position - draft
31 Dec 18 31 Dec 17 30 Jun 18
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Non current assets
Property, plant and equipment 510 387 474
Intangible assets 860 940 909
Trade lease receivables - 3 -
1,370 1,330 1,383
Current assets
Inventory 575 842 685
Corporation tax receivable 129 - -
Trade and other receivables 729 917 698
Cash and cash equivalents 843 1,326 1,592
2,276 3,085 2,975
Total assets 3,646 4,415 4,358
Current liabilities
Trade and other payables (412) (352) (316)
Current tax liabilities (68) (67) (66)
Provisions (70) (100) (100)
Total liabilities (550) (519) (482)
Net assets 3,096 3,896 3,876
Capital and reserves
Share capital 5,025 4,775 5,025
Share premium 682 26 682
Share based payments 41 - 41
Translation reserve 23 22 21
Accumulated reserve/(deficit) (2,675) (927) (1,893)
Shareholders' funds 3,096 3,896 3,876
16Condensed Consolidated Statement of Cash Flows - draft
Half year to Half year to Full year to
31 Dec 18 31 Dec 17 30 Jun 18
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Cash flow from operating activities
(Loss) for the period (782) (922) (1.888)
Adjustments for
Financial income - - (5)
Depreciation of property, plant and equipment 178 69 227
Amortisation and impairment of intangible assets 211 130 332
Share based payments - - 41
Unrealised currency translation gain 2 1 -
Operating cash flows before movements in working capital (391) (722) (1,293)
Change in receivables (160) (215) (203)
Change in payables 68 (139) (169)
Change in inventories 110 143 300
Change in trade lease receivables - 56 266
Cash used in operations (373) (877) (1,099)
Taxation recovered/(paid) - - (7)
Net cash used in operations (373) (877) (1,106)
Cash flows from investing activities
Interest received - - 5
Acquisition of property, plant & equipment (215) (198) (443)
Acquisition of intangible assets (161) (132) (303)
Net cash used in investing activities (376) (330) (741)
Cash flows from financing activities
Proceeds from issue of equity share capital - 13 919
Net cash used for financing activities - 13 919
Net (decrease)/increase in cash and cash equivalents (749) (1,194) (928)
Cash and cash equivalents at beginning of period 1,592 2,520 2,520
Cash and cash equivalents at end of period 843 1,326 1,592
17Capital Structure
Shareholder % issued ordinary share capital
Criseren Investment Ltd 10.3%
Peter Lobbenberg (family) 7.2%
Harwood Capital 3.3%
As of 25 February 2019 the Company had been made aware of the above shareholdings amounting to 3% or more of the issued ordinary
share capital in the Company
Directors of the Company hold in aggregate 1.6% of the issued ordinary share capital. Share options have been granted to current Directors
and staff over 665,000 shares, representing 5.5% of the issued ordinary share capital of the Company with exercise prices of 75p & £1 per
share. Former US employees of IntelliSAW Inc (which was a 100% subsidiary of Transense Technologies plc up to the sale in 2015) were
allowed to retain their share options over 139,085 shares, representing 1.15% of the issued ordinary share capital of the Company with an
exercise price of £3.75
Issued ordinary share capital and total voting rights = 12,048,948 ordinary shares
18The Board
David Ford, Chairman: Specialist in IP law. In 1990 became Tarlo Lyons’ first Managing Partner. In 1998 he led the
management buyout of the consumer debt recovery department of his old firm, Tessera Group, where he was the non-
executive chairman until it was acquired by Arrow Group in December 2014.
Graham Storey, Group CEO: Previously CEO of The Moyses Stevens Group, following a management buy out. Through a
combination of organic growth and acquisitions, the group grew to become the biggest commercial and retail florist in the
UK. Graham carried out a successful sale of the business in 2004 to a venture capital fund and, prior to joining Transense
was involved in investing in several businesses one of which was Transense Technologies plc.
Melvyn Segal, Finance Director: Melvyn is a chartered accountant and experienced company finance director, having
previously held finance director positions at various high growth private businesses. Prior to entering the commercial sector
Melvyn was a partner for 22 years at the accountancy firm Arram Berlyn Gardner.
Nigel Rogers, Non-Executive Deputy Chairman: Nigel has over twenty years’ experience as a director of AIM listed
engineering businesses, notably as CEO at Stadium Group Plc (2001-2011) and CEO at 600 Group Plc (2012-2015). He joined
Transense as Non-Executive Deputy Chairman in 2015, and is also Executive Chairman at Surgical Innovations Group plc.
Rodney Westhead, Non-Executive Director: Chartered Accountant by training and until 2005 previous appointments were
Chief Executive of Ricardo plc, the major automotive consulting engineering group with sales of £200 million a year and
Chairman of Clean Air Power plc.
Non-Board:
Laren Yeomans, Translogik CEO: Previously Sales Director (1998–2004) for RBC Electronics - duties included selling white
goods products into major high street retailers including B&Q, Argos and QVC TV shopping channel outlet. During this time
also became Managing Director of Pneu-Logic Ltd which specialised in distributing data collection equipment into the tyre
industry with customers such as Bridgestone, Michelin and Goodyear adopting the technology.
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