REG - OTAQ PLC - Half-year Report
18/11/2022 08:15
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RNS Number : 8351G OTAQ PLC 18 November 2022
OTAQ plc
("OTAQ" or the "Company")
Unaudited Interim Results
OTAQ, the innovative technology company targeting the aquaculture, geotracking
and offshore markets, is pleased to announce unaudited interim results for the
six months ended 30 September 2022.
Financial Highlights:
Group H1 2022 H1 2021 Change
£'000 £'000 %
Revenue 2,026 1,821 11.3
Gross profit 1,034 826 25.2
Adjusted EBITDA* 13 (171) 107.6
*Adjusted EBITDA (earnings before income, tax, depreciation, exceptional
costs, impairment, share option charges and amortisation)
Strategic and Operational Highlights:
· Established new Geotracking division
- Follows successful sales to customers of its prototype
technology
- Successfully applied in multi competitor sports tracking events
and for geofencing safety products in industrial markets
- First order received from Track Tracker for asset tracking in
the rail industry
· Completed development of innovative custom-designed sonar for
Minnowtech for shrimp market
- Key growth area with an initial estimated target market size of
£24m
· Live Plankton Analysis systems deployed at customer sites in
Scotland, Chile and Ireland
- Prototype versions expected to be installed in January 2023
- Initial target market estimated to be in the region of £24m
· Increase in rentals of Offshore division's core OceanSense
product
- Development of new technologies in this division supports
cross-deployment of skills and technologies in aquaculture and geotracking
· Initial customer contracts signed for Water Quality Monitoring
products in Scotland
Post-Period Highlights:
· Admitted to trading on the AQSE Growth Market of the Aquis Stock
Exchange
· Successful placing and open offer, raising approximately £3.2m
net of expenses
- As a result, cash balances of approximately £2.7m expected as
at 30 November 2022 following full settlement of onerous supply contracts and
deferred acquisition costs
- New funds enable the Company to accelerate the development and
commercialisation of its strong pipeline of new products
Commenting on the results and prospects, Phil Newby, Chief Executive at OTAQ,
said:
"As the Company diversifies, the Board is satisfied with these results,
showing improved revenue, gross profit and adjusted EBITDA compared to the
same period last year. The Board believes the Group can deliver on the
long-term strategic goals it has set out in order to realise OTAQ's potential
and significantly increase shareholder value.
"The funding recently completed will allow the Group to focus on further
product development and allow OTAQ to make additional investment in sales and
marketing resource to deliver new revenue and growth. It is notable that,
across its key geographies, the Group has several key relationships that are
expected to deliver in the near future, with others fast approaching
commercialisation.
"The Board remains committed to continuing with the launch of innovative new
products and significant business development throughout the next period in
order to return the Company to growth and improved profitability."
Contacts:
OTAQ plc +44 (0)1524 748028
Alex Hambro, Non-Executive Chairman
Phil Newby, Chief Executive Officer
Matt Enright, Chief Financial Officer
Dowgate Capital Limited (AQSE Corporate Adviser & Broker) +44 (0)20 3903 7715
David Poutney / James Serjeant
Nicholas Chambers / Russell Cook
Walbrook PR Limited (PR) Tel: 020 7933 8780 or O (mailto:Otaq@walbrookpr.com) taq@walbrookpr.com
(mailto:Otaq@walbrookpr.com)
Tom Cooper / Nick Rome 0797 122 1972 or 07748 325 236
About OTAQ:
OTAQ is a highly innovative technology company targeting the aquaculture,
geotracking and offshore markets. It already has a number of established
products in its portfolio and is focused on further developing its presence,
customer base and cross selling opportunities within core markets both
organically and via acquisition.
OTAQ's aquaculture products, which include a sonar device (developed for
Minnowtech LLC) to scan shrimp in ponds and water quality monitoring, are
focused on maximising welfare and production yields. Additionally, the Company
is developing a potentially game changing live plankton analysis product for
finfish and shellfish farmers. It also continues to target opportunities in
the acoustic deterrent devices market via its Sealfence product, which is used
by salmon farmers, with global opportunities in Chile, Australia, Canada and
Norway.
The Company is also developing high accuracy location trackers for specialist
applications. Having already added clients within safety and multiple
participant sport/racing applications, the Company is investigating wider
market potential - including opportunities in the seafood industry.
OTAQ's offshore product range includes OceanSense subsea leak detection, Eagle
IP camera systems, Lander seabed survey devices and Subsea electrical
connectors and penetrators. It is targeting a number of growth opportunities
in new territories and has a strong client base including Expro, Amphenol and
National Oilwell Varco. The Company is also focused on the development of new
products through this division, with the aim of increased cross-deployment of
skills and technologies into the aquaculture arena.
Summary
The Group presents its unaudited interim results for the six month period
ended 30 September 2022.
These interim results are presented following the Company's admission to
trading on the Access Segment of the AQSE Growth Market of the Aquis Stock
Exchange on 9 November 2022 and the successful placing and open offer raising
£3.6m before expenses for the Group. These funds have comfortably addressed
the uncertainty expressed at the time of the full year results announced in
September 2022 regarding the Company's ongoing cash position. The proceeds of
the fundraising will enable the Company to accelerate the development and
commercialisation of its strong pipeline of new products in OTAQ's core
markets of Aquaculture and Offshore as well as building out the new
Geotracking division, which has been launched following successful sales to
customers of its prototype technology.
As the Company diversifies, the Board is satisfied with these results, showing
improved revenue, gross profit and adjusted EBITDA compared to the same period
last year. The Board believes the Group can deliver on the long-term strategic
goals it has set out in order to realise OTAQ's potential and significantly
increase shareholder value. The focus is to develop the aquaculture market in
Scotland, Chile and other global territories with its new products; support
and develop the Minnowtech investment in shrimp sonar devices and to penetrate
the significant market opportunity for the tracker technology. The anticipated
launch of the live plankton analysis system, in collaboration with the Group's
strategic partner, Blue Lion Labs, in 2023, is expected to be of significance.
Strategy
The Group's strategy is to further develop operations and revenue streams
within the aquaculture, offshore and geotracking industries through new
product development and strategic investments and collaborations with third
parties. OTAQ has built significant technical resources, organically and
through acquisition, to deliver innovative solutions for their customers.
The Company will continue to utilise the skills and technologies available in
each of its divisions to accelerate the development of innovative new products
for uses Group-wide. Given the potential to develop and deploy technology
within each division, the Board believes that shareholder value will benefit
from increased levels of product launches and cross-selling.
Trading
As anticipated, revenue has improved in the period to £2.0m (H1 2021: £1.8m)
with the Offshore division achieving £1.2m (H1 2021: £0.9m) and the
Aquaculture division achieving £0.8m (H1 2021: £0.9m). The Company has
reported Adjusted EBITDA* of £13k (2021: loss £171k)
Aquaculture
The Aquaculture division revenue includes the balance of revenue from the
final acoustic deterrent device customers in Scotland. Aquaculture revenue in
Chile includes rentals from acoustic deterrent devices and this is expected to
continue in the second half of the year. The division also includes revenue
from sales and rentals to customers in other countries, including Finland and
Ireland.
Regulation of the aquaculture industry worldwide is still evolving due to the
demands of governing bodies who oversee food standards. OTAQ is continuing
discussions with Subpesca, the Chilean authority tasked with aquaculture
regulation, around use of the Group's acoustic deterrent technology and is
also continuing with trials in Tasmania regarding acoustic deterrent use. The
Board has now ended all marketing and selling activities in relation to
acoustic deterrents in Scotland.
Notable new product developments in the Aquaculture division include:
Shrimp Biomass
The Group has completed the development of an innovative and custom-designed
sonar for Minnowtech that scans shrimp in ponds. Minnowtech is viewed as a key
growth area with an initial estimated target market size of £24m, based on
the number estimated shrimp ponds in early target markets.
Live Plankton Analysis System
Through its collaboration with Blue Lion Labs in Canada, the Group has
developed AI software which monitors water quality by identifying
phytoplankton which enables farmers to take immediate mitigating actions as
required. To date, 14 development systems have been deployed at customer sites
in Scotland, Chile and Ireland with prototype versions expected to be
installed in January 2023. The initial target market is estimated to be in the
region of £24m.
Water Quality Monitoring
Monitoring the quality of finfish cage water is an important factor in
increasing yields and improving fish welfare. Following on from initial
customer contracts signed in Scotland, the Board believes there is an initial
estimated target market of £32m based on a rental model.
Offshore
The Offshore division produces a range of marine technology products for
offshore industries, supplying customers around the world including subsea oil
and gas, remotely operated vehicle operations, commercial diving and
oceanographic research, with growth opportunities in the offshore renewables
sector. The division has performed well during the period and continues to
benefit from the customer rental contract agreed in the last financial year.
This has helped to increase rentals of the division's core OceanSense
product. In addition, the development of new technologies in this division
permits cross-deployment of skills and technologies into the aquaculture and
geotracking arenas.
Geotracking
Building upon the ROS Technology acquisition in late 2020 and using the
Group's existing technology and skill set, the Group has developed highly
accurate personnel and asset tracking devices which are now being marketed for
multi competitor sports tracking events and for geofencing safety products in
industrial markets.
The Company achieved its first order from Track Tracker Limited in September,
which deploys a highly accurate geofencing product to help protect workers
operating in a high risk environment, in this case railway track maintenance
engineers. The Board believes there to be an estimated initial target market
size of £13m through its relationship with Track Tracker.
Financial Highlights for the six months ended 30 September 2022
Group H1 2022 H1 2021 Change
£'000 £'000 %
Revenue 2,026 1,821 11.3%
Gross profit 1,034 826 25.2%
Adjusted EBITDA* 13 (171) 107.6%
*EBITDA (earnings before income, tax, depreciation, share option charges and
amortisation) is reconciled from the operating loss per the condensed
consolidated statement of comprehensive income as follows:
H1 2022 H1 2021
£'000 £'000
Operating loss (388) (747)
Amortisation of intangible assets 115 120
Depreciation of right-of-use assets 86 77
Depreciation on property, plant and equipment 200 379
Adjusted EBITDA 13 (171)
Adjusted EBITDA improved to a profit of £0.01m from a loss of £0.17m in
2021. This improvement resulted from increased Revenue in the period and
improved overhead cost control but also a change in the sales mix and the
related gross margins.
Net debt as at 30 September was £1.56m (2021: £1.29m). However, following
the successful completion of the fundraise on 9 November 2022, the Company
expects to have cash balances of approximately £2.7m as at 30 November 2022
after payment of all deferred acquisition costs, fundraising fees and the
amounts owed under the legacy Sealfence supply contract.
Outlook
As a result of the Group diversifying and developing its interests, the Board
now anticipates a period of adjustment whilst its new products are launched
and developed commercially. The funding recently completed will allow the
Group to focus on ensuring these products are correct for the markets in which
they are intended and to make additional investment in sales and marketing
resource in order to deliver new revenue and growth as quickly as possible.
The Group's investment, collaboration and supply agreement with Minnowtech is
expected to deliver new sales in the near future as is the Group's
relationship with Track Tracker for our tracking technology. The investment in
Blue Lion Labs and the resulting development of harmful algal bloom detection
technology is nearing commercialisation with collaborations underway with
potential customers in Chile, Scotland and Australia. The Offshore division
has launched new products with more under development and the Group is
investing in additional sales resources, particularly in North America, with a
view to developing these large markets.
The Board remains committed to continuing with the launch of innovative new
products and significant business development throughout the next period in
order to return the Company to growth and, ultimately, profitability.
Phil Newby
Chief Executive Officer
The Board confirms that to the best of its knowledge the consolidated half
year financial statements for the six months to 30 September 2022 have been
prepared in accordance with IAS 34 Interim Financial Reporting amended in
accordance with changes in IAS 1 Presentation of Financial Statements, as
adopted by the UK
Unaudited Condensed Consolidated Statement of Comprehensive Income
Half-year ended
Notes 30 September 2022 30 September 2021
£000 £000
Revenue 1 2,026 1,821
Cost of sales (992) (995)
Gross profit 1 1,034 826
Administrative expenses (1,422) (1,573)
Operating loss (388) (747)
Finance expense (104) (105)
Other income 2 - 93
Exceptional items 3 (46) (122)
Loss on ordinary activities before taxation (538) (881)
Taxation - -
Loss for the period (538) (881)
Other comprehensive loss - -
Total Comprehensive Loss (538) (881)
Attributable to:
The Group (538) (881)
As per note 4, Losses Per Share were 1.4p (2021: loss 2.8p) and Diluted Losses
Per Share were 1.4p (2021: loss 2.8p).
The loss for the period arises from the Group's continuing operations and is
attributable to the equity holders of the parent.
There were no other items of comprehensive income for the period (2021: £nil)
and therefore the loss for the period is also the total comprehensive loss for
the period.
The notes form an integral part of these condensed financial statements.
Unaudited Condensed Consolidated Balance Sheet
Notes 30 September 2022 30 September 2021 31 March 2022
£000 £000 £000
Assets
Non-current assets
Plant and equipment 736 1,466 919
Right-of-use assets 388 488 434
Unlisted investments 511 511 511
Intangible assets 3,078 3,179 2,970
4,713 5,644 4,834
Current assets
Inventories 1,163 1,068 1,182
Trade and other receivables 936 1,017 1,766
Income tax asset 139 177 155
Cash and cash equivalents 519 1,160 1,008
2,757 3,422 4,111
Total assets 7,470 9,066 8,945
Liabilities
Current liabilities
Trade and other payables 524 1,400 1,243
Deferred payment for acquisition 236 187 213
Leases 173 155 161
Financial liabilities 5 426 353 421
1,359 2,095 2,038
Non-current liabilities
Deferred tax 80 176 80
Leases 199 321 255
Financial liabilities 5 1,182 1,607 1,392
1,461 2,104 1,727
Total liabilities 2,820 4,199 3,765
Net assets 4,650 4,867 5,180
Capital and reserves
Share capital 6 5,664 4,708 5,657
Share premium 6 3,281 2,905 3,280
Share option reserve 150 225 150
Merger relief reserve 9,154 9,154 9,154
Reverse acquisition reserve (6,777) (6,777) (6,777)
Other reserve 384 297 384
Revenue reserve (7,206) (5,645) (6,668)
Total equity 4,650 4,867 5,180
Unaudited Condensed Consolidated Statement of Changes in Equity
Issued Equity capital Share Premium Share option reserve Merger relief reserve Reverse acquisition reserve Other Reserve Revenue Reserve Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
At 31 March 2021 4,614 2,897 473 9,154 (6,777) 136 (4,764) 5,733
Loss for the period and total comprehensive loss for the period - - - - - - (881) (881)
Transfer on exercised options 87 - (248) - - 161 - -
At 30 September 2021 4,708 2,905 225 9,154 (6,777) 297 (5,645) 4,867
At 31 March 2022 5,657 3,280 150 9,154 (6,777) 384 (6,668) 5,180
Loss for the period and total comprehensive loss for the period - - - - - - (538) (538)
Issues of shares 7 1 - - - - - 8
At 30 September 2022 5,664 3,281 150 9,154 (6,777) 384 (7,206) 4,650
Unaudited Condensed Consolidated Statement of Cash Flows
Half-year ended
30 September 2022 30 September 2021
£000 £000
Cash flows from operating activities
Loss after interest and tax (538) (881)
Adjustments for:
Depreciation of tangible fixed assets 200 379
Depreciation of right-of-use assets 86 77
Interest expense 104 105
Amortisation of intangible assets 115 120
Shares issued as part of Share Incentive Plan 8 15
Changes in working capital:
Decrease / (increase) in inventories 19 (169)
Decrease / (Increase) in trade and other receivables 830 (158)
Decrease in trade payables and other payables (719) (448)
Cash inflow / (outflow) from operating activities 105 (960)
Tax credit received 16 109
Net cash inflow / (outflow) from operating activities 121 (851)
Cash flows from investing activities
Purchases of tangible fixed assets (17) (336)
Purchases of intangible fixed assets (223) (420)
Acquisition of unlisted equity securities - (214)
Payment of deferred consideration (15) (38)
Net cash outflow from investing activities (255) (1,008)
Cash flow from financing activities
Loans repayments (205) (40)
Grant funding received - 93
Principal element of lease payments (44) (58)
Interest paid (106) (96)
Net cash outflow from financing activities (355) (101)
Decrease in cash and cash equivalents (489) (1,960)
Cash and cash equivalents at the start of the period 1,008 3,120
Cash and cash equivalents at the end of the period 519 1,160
Notes to the condensed financial statements
1. Segmental information
In a change to the year ended 31 March 2022, [with effect from] 30 September
2022 the Group operated as three primary segments, being the rental and sales
of aquaculture products (Aquaculture), rentals of underwater measurement and
leak detection devices in the Offshore market and the development and
manufacture of products for geo-tracking industries (Trackers). This is the
level at which operating results are reviewed by the chief operating decision
maker (i.e. the CEO) to make decisions about resources, and for which
financial information is available. All revenues have been generated from
continuing operations and are from external customers. For this period,
financial information is disclosed based on materiality levels and the size of
the segments meaning only Aquaculture and Offshore are separately disclosed:
Half-year ended
30 September 2022 30 September 2021
£000 £000
Analysis of revenue
Aquaculture equipment rentals, sales and associated charges 808 911
Offshore equipment rentals, sales and associated charges 1,218 910
2,026 1,821
Half-year ended
30 September 2022 30 September 2021
£000 £000
Analysis of gross profit
Aquaculture equipment rentals, sales and associated charges 333 344
Offshore equipment rentals, sales and associated charges 701 482
1,034 826
2. Other income
Other income pertains to the interest on a loan received under the Coronavirus
Business Interruption Loan Scheme.
3. Exceptional items
Exceptional items include £0.05m of one-off employee expenses and legal fees.
4. Losses per share
Basic earnings or losses per share are calculated by dividing the loss or
profit after tax attributable to the equity holders of the Group by the
weighted average number of shares in issue during the year. Diluted earnings
or losses per share are calculated by adjusting the weighted average number of
shares outstanding to assume conversion of all potential dilutive shares,
namely share options.
The calculation of earnings or losses per share is based on the following
losses and number of shares:
Half-year ended
30 September 2022 30 September
2021
£000 £000
Loss for the period attributable to the owners of the Group (538) (881)
Weighted average number of shares:
- Basic 37,743,044 30,957,487
- Diluted 38,003,944 32,484,532
Basic earnings per share (pence) (1.4) (2.8)
Diluted earnings per share (pence) (1.4) (2.8)
5. Loan repayment
During the period, the Group repaid £0.21m of loans provided under the
Coronavirus Business Interruption Loan Scheme.
6. Share capital and share premium
The called-up and fully paid share capital of the Company is as follows:
30 September 2022 30 September
2021
£000 £000
Allotted, called-up and fully paid: 37,758,052 Ordinary shares of £0.15 each 5,664 4,708
(2021: 31,388,369 of £0.15 each)
Movements in ordinary shares:
Number of shares Share capital Share premium Total
No. £000 £000 £000
At 31 March 2022 37,716,250 5,657 3,280 8,937
Shares issued 41,802 7 1 8
At 30 September 2022 37,758,052 5,664 3,281 8,945
7. Financial instruments - classification and
measurement
Financial assets
Financial assets measured at fair value include the following:
Half year ended
30 September 2022 30 September 2021
£'000 £'000
Unlisted equity securities 297 297
Investments made in unlisted equity securities 214 214
─────── ───────
511 511
═════ ═════
8. Basis of preparation of half-year report
This condensed consolidated interim financial report for the half-year
reporting period ended 30 September 2022 has been prepared in accordance with
Accounting Standard IAS 34 Interim Financial Reporting. The interim report
does not include all the notes of the type normally included in an annual
financial report. Accordingly, this report is to be read in conjunction with
the annual report for the year ended 31 March 2022 and any public
announcements made by OTAQ PLC during the interim reporting period. This
interim financial information has not been reviewed nor audited by the
auditors. The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period, except for
the adoption of new amended standards as set out below.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current
reporting period. The Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting these standards.
Going concern
The Directors have considered going concern and a range of scenarios has been
reviewed. On 9 November 2022, the Company issued new ordinary shares of 1
pence nominal value for gross proceeds of approximately £3.60m. The Directors
believe that these funds are adequate for the Group to continue to trade for
the next twelve months. For this reason, the Directors continue to adopt the
going concern basis in preparing the Interim Financial Statements.
Significant estimates and judgements
The Group shall assess at each reporting date whether there is any indication
that non-current assets may be impaired. The Directors believe that at the
half-year reporting period ended 30 September 2022 no indicators of impairment
existed. The Directors continue to monitor regulatory and market developments
and their impact on the carrying value of the assets.
9. Events occurring after the reporting period
On 7 November 2022, the Company held a shareholder general meeting and passed
the required resolutions to allow admission of the Company's share capital to
trading on the Access Segment of the AQSE Growth Market which took effect on 9
November 2022. On this date, the Company issued 90,000,000 new ordinary shares
for gross proceeds of £3.60m. The existing 37,758,052 ordinary shares of 15
pence each were cancelled and 37,758,052 new ordinary shares of 1 penny each
were issued with 37,758,052 deferred shares issued each with a nominal value
of 14 pence. The deferred shares carry no voting rights and no rights to
dividends.
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