Tru-Test wins breakthrough RFID sales

Despite an IP write-down, company makes breakthrough sales

Auckland-based agricultural technology specialist Tru-Test has made the first sale of its RFID-enabled electronic milk metering technology and is ready to deploy its Pinnacle animal weighing and management software.

The company’s annual report to March 2008, lodged with the Companies Office late last month, reveals falling sales (from $90.8 million in 2007 to $87.5 million in 2008), but increasing margins, as well as a significant write-down of its 57% share in the IP of Auckland-based Brainz, which manufactures bedside brain monitoring equipment.

However, the company is claiming an improved result in difficult conditions, with EBITDA up to $7.1 million from $4.6 million in 2007 and net profit of $1.3 million compared with a loss of 0.2 million in 2007. Net profit after tax and minority interests was a loss of $4.2 million, including a $4.1 million hit from the Brainz IP writedown.

Tru-Test management did not return calls seeking comment on the results.

The report says Tru-Test expects to see new growth on the back of R&D investment in scales, milk metering and Pinnacle, which the company says is now ready for both on-farm and enterprise use.

It says new animal traceability requirements are also playing into its portfolio. The National Animal Identification and Traceability timetable has been set and will be mandated by 2011, it says, and that is good for Tru-Test.

“The company will play a role in this critical transition period for beef, lamb and deer, offering the hardware and utilities necessary for compliance under our proven and trusted brands in New Zealand and around the world,” it says.

Tru-Test is also investing in “lean manufacturing”, reducing overheads by 8% over the previous year. Headcount decreased by 5% over the previous year and by 25% over the life of the lean programme, also freeing up manufacturing space.

Europe is presenting sales opportunities, the report says, in milk metering. The company’s electronic milk meters (EMMs) are being deployed in France and integration of its metering systems in Sweden among other developments.

“The EMM along with electronic weighing systems are positioned well to take advantage of the Compulsory Electronic Identification (EID) introduction for small ruminants scheduled for 2009 in Europe,” the report says.

During the year, Brainz’ cash reserves fell from $7 million to $3.5 million. Cash burn is being closely managed, the report says, and it is expected these will be reduced by $1.5 million annually.

“The value of intellectual property that was held on the company balance sheet was written down at the end of the fianancial year. For accounting purposes the company was unable to continue to hold these assets on the company balance sheet,” the report notes.

Strong interest in the technology is not translating into sales as quickly as expected, it says.

The company’s 2007 report, covering seven months through March 2007 due to a change in accounting period, showed Tru-Test had moved some of its manufacturing operations to Asia to improve margins. The report noted these transformation initiatives had “not been able to match the seemingly relentless increase in the value of the New Zealand dollar”.

Tru-Test’s fencing and tools brands include Speedrite, Stafix, Patriot, Cyclone and Hayes, while it also does custom manufacturing under the brand Simple. The company was founded in 1964, but one of its brands date back to 1895.

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