REG - Filtronic PLC - Interim Results
04/02/2025 07:15
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RNS Number : 7443V Filtronic PLC 04 February 2025
4 February 2025
FILTRONIC PLC
("Filtronic", the "Company" or the "Group")
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2024
Filtronic plc (AIM: FTC), the designer and manufacturer of products and
sub-systems for the aerospace, defence, telecoms infrastructure, space and
critical communications markets, announces its half year results for the six
months ended 30 November 2024 ("H1 2025").
Financial Highlights
H1 2025 H1 2024
Revenue £25.6m £8.5m
Adjusted EBITDA¹ £8.7m £0.2m
Operating profit/(loss) £6.8m (£0.4m)
Profit/(loss) for the period £6.7m (£0.5m)
Basic earnings/(loss) per share 3.08p (0.24p)
Diluted earnings/(loss) per share 3.04p (0.24p)
Cash generated from operating activities £2.1m £1.8m
At 30 Nov 2024 At 31 May 2024
Net cash when including right of use property leases £4.3m £4.2m
Net cash when excluding right of use property leases £5.1m £5.2m
¹ Adjusted EBITDA is earnings before interest, taxation, depreciation,
amortisation, share-based payments and exceptional items.
Operational Highlights
· Strong order inflow from SpaceX in the period aligned with the
Strategic Partnership agreement.
· Technology developments progressing well to deliver on our future
product roadmap in conjunction with key customers.
· Excellent progress made with the recruitment drive to scale the
engineering team to meet demand and serve the healthy opportunity pipeline.
This has resulted in a 16% headcount increase including the recruitment of a
design team in Cambridge.
· Two new production lines installed in the period to increase
manufacturing capacity to support revenue growth.
· Healthy cash position enables continued investment in revenue growth
initiatives to deliver the strategic plan.
Post-period Highlights
· Leadership team further strengthened with three key appointments
added.
· Positive cadence of order intake has continued in H2 resulting in two
material upgrades to market expectations in the last two months.
Commenting, Jonathan Neale, Chairman, said: "We are pleased to communicate
these strong set of interim results. Robust order intake has resulted in the
improved revenue and profit outlook in H2 which we communicated in market
upgrades in December 2024 and January 2025. Investing in the business to
underpin the orderbook has been timely and effective and we look forward to
being able to communicate more about the next financial year as things develop
during H2".
Enquiries
Filtronic plc www.filtronic.com
Nat Edington, CEO 01740 618800 or investor.relations@filtronic.com
Michael Tyerman, CFO
Cavendish Capital Markets Limited 020 7220 0500
Jonny Franklin-Adams/Isaac Hooper/Trisyia Jamaludin (Corporate Finance)
Sunila de Silva (ECM)
Walbrook PR Limited 020 7933 8780 or filtronic@walbrookpr.com
Nick Rome/Joseph Walker
Walbrook PR Limited
020 7933 8780 or filtronic@walbrookpr.com
Nick Rome/Joseph Walker
Notes:
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014.
Forward-looking statements
Certain statements in this half-yearly financial report are forward-looking.
Where the half-yearly financial report includes forward-looking statements,
these are made by the directors in good faith based on the information
available to them at the time of their approval of this report. Such
statements are based on current expectations and are subject to a number of
risks and uncertainties, including both economic and business risk factors
that could cause actual events or results to differ materially from any
expected future events or results referred to in these forward-looking
statements. Unless otherwise required by applicable law, regulation or
accounting standard, the Group undertakes no obligation to update any
forward-looking statements whether as a result of new information, future
events or otherwise.
Chairman's Statement
I am pleased to present the half year results for FY2025 and update
shareholders on the progress we have made in the period. This is not only
reflected in the financial results, but also the great strides we have made to
develop the organisation and appropriately scale the business.
Engineering recruitment has been more successful, with a significant uplift in
headcount, following the opening of a new design centre in Cambridge coupled
with a re-energised recruitment strategy. To meet the growing demand, we have
strengthened our leadership team not just in technical areas, but also in
operations, engineering, commercial and business development.
We have an exciting technology roadmap, developing semiconductor and passive
technologies in the millimetre-wave spectrum for both the ground station,
payload and platform systems and components. These are supported by leading
edge global semiconductor foundry technologies. The developments relating to
these are progressing well and we still expect to deliver against critical
timelines.
We continue our aim to deliver increased output from our existing operational
facilities and production resources. To meet the strong demand, we
successfully introduced two new production lines during the period to give
further flexibility and enable further conversion of new business. As we move
to larger premises at our headquarters in Sedgefield, County Durham, later
this year we expect to see further gains to capacity and efficiency.
Financial Performance Summary
The Board are pleased with the trading results in H1. Coupled with this,
strong order intake resulted in the improved revenue and profit outlook in H2
which we communicated in December and January.
Group revenue for the first half of FY2025 increased by over 200% on the prior
year with sales of £25.6m (H1 2024: £8.5m).
We have invested further in the business during the period to support the
growth, leading to our overhead cost base increasing by 62%. Despite this, the
revenue growth from increased trading has delivered an operating profit of
£6.8m (H1 2024: operating loss of £0.4m) and adjusted earnings before
interest, taxation, depreciation and amortisation ("adjusted EBITDA") of
£8.7m (H1 2024: £0.2m).
At 30 November 2024, the Group recorded cash in the bank of £7.2m (31 May
2024: £7.2m), net cash of £5.1m when excluding the right of use property
leases (31 May 2024: £5.2m) and net cash including right of use property
leases of £4.3m (31 May 2024: £4.2m).
Our Markets
The Low Earth Orbit ("LEO") space market remains a driving force for the
business with the market still offering further significant growth potential.
Our strategic partnership with the market leader, SpaceX, continues to
strengthen and grow. The success of the relationship has enabled us to deliver
at high volume and high quality, working closely with our business and supply
chain partners. This achievement has enabled both parties to consider further
collaboration following the remarkable success of the Starlink
constellation.
We still see LEO space payload as an exciting area for us and we have factored
that into our technology road map. As a lead-in project to payload, we have a
prestigious programme underway with the European Space Agency ("ESA") which is
expected to complete over the next year with material revenues still to be
recognised in FY2026.
We were delighted to see our customers, Almagest Space Corporation and XDLINX
Space Labs, take our first mmWave product into space on their recently
developed satellite using one of our Morpheus X2 E-band transceivers.
The defence pipeline contains several interesting opportunities particularly
within airborne radar systems. Our active programmes, with QinetiQ will
substantively complete in FY2025, and with BAE Maritime Systems within FY2026.
The UK government's Strategic Defence Review pushed back the planned timing of
a number of prospective opportunities but has not impacted financial
forecasts.
We are pleased to see the UK Government secure the future of the semiconductor
foundry at Newton Aycliffe, County Durham, safeguarding critical semiconductor
components for the UK defence market and providing longevity of supply. This
creates an opportunity for us to align ourselves with the Defence Industrial
Strategy where we can utilise our advanced semiconductor packaging and test
capability which we see as essential for sovereign capability and
competitiveness.
Outlook
The Group has continued the momentum from H1 with a strong start to trading in
H2. Our order book is healthy and underpins the recent upgrades, whilst the
opportunity pipeline continues to build serving us well as we move towards the
next financial year.
The overall macro factors for the low earth orbit ("LEO") satellite market are
robust, driven by the emergence of reusable launch vehicles and advanced
manufacturing, which significantly reduces the cost of launch and enables more
companies to participate in space activities. Commercial engagements, not only
with SpaceX, have demonstrated to us the relevance of our technology to the
wider satellite market serving a multitude of missions. This enables us to
bring forwards leading-edge high-performance technology that we anticipate
could be widely adopted.
The industry growth rates for LEO satellite market are projected to grow at a
CAGR of over 9% by 2031 with the overall market size growing to $310bn USD by
2031 (Exactitude Consultancy) whilst the defence market for electronic warfare
is expected to grow to 2031 by 7% to $35bn USD (Insight Partners).
I am grateful for the hard work and dedication of the entire Filtronic team
and our impressive supply chain partners in their efforts to achieve
considerable production volume ramps at the quality that premium markets
expect. I would like to take this opportunity to publicly thank them all for
their innovation, commitment and success.
Jonathan Neale
Chairman, 3 February 2025
Condensed Consolidated Interim Income Statement
For the period ended 30 November 2024
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
(Unaudited) (Unaudited) (Audited)
Continuing operations Note £000 £000 £000
Revenue 5 25,595 8,480 25,432
====== ====== ======
Adjusted EBITDA¹ 8,712 206 4,889
Depreciation of property, plant and equipment and right of use assets (607) (451) (945)
Amortisation of intangible assets (258) (124) (287)
Amortisation of contract assets 10 (901) - -
Share-based payments (185) - (47)
---------- ---------- ----------
Operating profit/(loss) 6 6,761 (369) 3,610
Finance costs 7 (127) (166) (332)
Finance income 8 101 18 83
---------- ---------- ----------
Profit/(loss) before taxation 6,735 (517) 3,361
Taxation (7) (5) (220)
---------- ---------- ----------
Profit/(loss) for the period 6,728 (522) 3,141
====== ====== ======
Basic and diluted earnings/(loss) per share (pence)
Basic earnings/(loss) per share 9 3.08p (0.24p) 1.45p
Diluted earnings/(loss) per share 9 3.04p (0.24p) 1.41p
====== ====== ======
1 Adjusted EBITDA is defined as profit before interest,
taxation, depreciation, amortization, share-based payments and exceptional
items which is a non-GAAP metric used by management and is not an IFRS
disclosure.
Condensed Consolidated Interim Statement of Comprehensive Income
For the period ended 30 November 2024
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit/(loss) for the period 6,728 (522) 3,141
---------- ---------- ----------
Items that are or may be subsequently reclassified to profit and loss:
Currency translation arising on consolidation (15) (39) (52)
---------- ---------- ----------
Total comprehensive income/(expense) for the period 6,713 (561) 3,089
====== ====== ======
The total comprehensive income/(expense) for the period is attributable to the
equity shareholders of the parent company Filtronic plc.
Condensed Consolidated Interim Statement of Financial Position
At 30 November 2024
(restated)
Note 30 November 30 November 31 May
2024 2023 2024
(Unaudited) (Unaudited) (Audited*)
£000 £000 £000
Non-current assets
Goodwill and other intangible assets 2,604 1,977 2,271
Right of use assets 3,774 3,566 3,756
Property, plant and equipment 2,061 764 1,153
Contract assets 10 1,302 - 1,302
Deferred tax 1,046 1,252 1,047
---------- ---------- ----------
10,787 7,559 9,529
---------- ---------- ----------
Current assets
Inventories 4,202 2,569 3,273
Trade and other receivables 15,070 4,545 6,550
Contract assets 10 401 - 1,303
Cash and cash equivalents 7,204 4,057 7,215
---------- ---------- ----------
26,877 11,171 18,341
---------- ---------- ----------
---------- ---------- ----------
Total assets 37,664 18,730 27,870
---------- ---------- ----------
Current liabilities
Trade and other payables 8,224 2,759 5,406
Provisions 493 363 493
Deferred Income 11 1,426 1,235 1,403
Lease liabilities 731 746 895
---------- ---------- ----------
10,874 5,103 8,197
---------- ---------- ----------
Long term liabilities
Deferred income 11 116 537 132
Lease liabilities 2,214 2,092 2,121
---------- ---------- ----------
2,330 2,629 2,253
---------- ---------- ----------
---------- ---------- ----------
Total liabilities 13,204 7,732 10,450
---------- ---------- ----------
---------- ---------- ----------
Net assets 24,460 10,998 17,420
====== ====== ======
Equity
Share capital 12 10,800 10,796 10,798
Share premium 13 11,352 11,087 11,213
Share warrant reserve 10 2,605 - 2,605
Translation reserve (537) (509) (522)
Retained earnings 240 (10,376) (6,674)
---------- ---------- ----------
Total equity 24,460 10,998 17,420
====== ====== ======
The total equity is attributable to the equity shareholders of the parent
company Filtronic plc.
Company number 2891064
* Certain prior period figures are restated, please refer to note 15 for
further information.
Condensed Consolidated Interim Statement of Changes in Equity
For the period ended 30 November 2024
Share capital Share premium Share warrant reserve Translation reserve Retained earnings Total equity
£000 £000 £000 £000 £000 £000
Balance at 30 November 2023 10,796 11,087 - (509) (10,376) 10,998
Profit for the period - - - - 3,663 3,663
New shares issued (net of issue costs) 2 126 - - - 128
Share warrants - - 2,605 2,605
Currency translation movement arising on consolidation - - - (13) - (13)
Share-based payments - - - - 39 39
---------- ---------- ---------- ---------- ---------- ----------
Balance at 31 May 2024 (restated*) 10,798 11,213 2,605 (522) (6,674) 17,420
Profit for the period - - - - 6,728 6,728
New shares issued (net of issue costs) 2 139 - - - 141
Currency translation movement arising on consolidation - - - (15) - (15)
Share-based payments - - - - 186 186
---------- ---------- ---------- ---------- ---------- ----------
Balance at 30 November 2024 10,800 11,352 2,605 (537) 240 24,460
====== ====== ====== ====== ====== ======
(*) Certain prior period figures are restated, please refer to note 15 for
further information.
Condensed Consolidated Interim Cash Flow Statement
For the period ended 30 November 2024
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Cash flows from operating activities
Profit/(loss) for the period 6,728 (522) 3,141
Taxation 7 5 220
Finance income (101) (18) (83)
Finance costs 127 166 332
---------- ---------- ----------
Operating profit/(loss) 6,761 (369) 3,610
Tax paid (7) (5) (16)
Share-based payments 186 8 47
Depreciation 607 451 945
Amortisation of contract assets 901 - -
Amortisation of intangible assets 258 124 287
Movement in inventories (926) 186 (531)
Movement in trade and other receivables (8,534) 766 (1,235)
Movement in trade and other payables 2,820 (906) 1,749
Movement in provisions - (1) 129
Change in deferred income 8 1,579 1,342
---------- ---------- ----------
Net cash generated from operating activities 2,074 1,833 6,327
---------- ---------- ----------
Cash flows from investing activities
Capitalisation of development costs (486) (326) (677)
Acquisition of intangible assets (103) - (107)
Acquisition of plant and equipment (1,535) (162) (666)
Acquisition of right of use assets - (34) (120)
Interest received 101 14 83
---------- ---------- ----------
Net cash used in investing activities (2,023) (508) (1,487)
---------- ---------- ----------
Cash flows from financing activities
Interest paid (127) (166) (332)
Proceeds from financing agreements - - 750
Exercise of employee share options 141 10 138
Repayment of principal element of lease liabilities (437) (411) (784)
Receipt of interest-bearing borrowings 364 684 -
---------- ---------- ----------
Net cash generated (used in)/from financing activities (59) 117 (228)
---------- ---------- ----------
Movement in cash and cash equivalents (8) 1,442 4,612
Currency exchange movements (3) 5 (7)
Opening cash and cash equivalents 7,215 2,610 2,610
---------- ---------- ----------
Closing cash and cash equivalents 7,204 4,057 7,215
====== ====== ======
Notes to the Condensed Financial Statements
1 Company information
Filtronic plc is a company registered and domiciled in the United
Kingdom and is listed on the AIM market of the London Stock Exchange. The
Company's registered number is 2891064. The address of the Company's
registered office is Filtronic plc, Plexus 1, NETPark, Thomas Wright Way,
Sedgefield, County Durham, TS21 3FD.
Copies of the Company's Annual Report and interim financial report are
available from the Company's registered office or the Company's website at
www.filtronic.com.
2 Basis of preparation
Whilst the financial information included in this preliminary
statement has been prepared on the basis of the requirements of IFRSs in
issue, this statement does not itself contain sufficient information to comply
with IFRS.
These financial results for the six months ended 30 November 2024 do
not comprise statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The interim report should be read in conjunction with the
Annual Report 2024, which includes annual financial statements for the year
ended 31 May 2024. Those accounts have been reported on by the Company's
auditor and delivered to the registrar of companies. The report of the auditor
was (i) unqualified (ii) did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The condensed consolidated financial statements for the six months
ended 30 November 2024 consolidate the financial statements of the Company and
all of its subsidiaries (together referred to as the "Group"). Transactions
between Group companies, which are related parties, have been eliminated upon
consolidation and therefore do not require disclosure.
The condensed consolidated financial statements for the six months
ended 30 November 2024 and comparative period have not been audited. The
interim financial report for the six months ended 30 November 2024 was
approved by the Board on 3 February 2025.
3 Going Concern
In accordance with corporate governance requirements the directors have
undertaken a review of forecasts and the Group's cash requirements to consider
whether it is appropriate that the Group continues to adopt the going concern
assumption.
The directors have reviewed the projected cash flow and other relevant
information, including a 'severe but plausible' scenario and have a reasonable
expectation that the Group has adequate resources to continue in operational
existence and therefore it remains appropriate to adopt the going concern
basis in preparing the interim financial report for the six months ended 30
November 2024.
4 Accounting estimates and judgements
The preparation of the financial statements requires the use of
accounting estimates and judgements that affect the application of accounting
policies and reported amounts of assets and liabilities, income and expenses.
The accounting estimates and judgements are continually evaluated and are
based on historical experience and other factors, including expectations of
the future that are believed to be reasonable under the circumstances. Actual
results may differ from the expected results. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods. The
accounting estimates and judgements that have a significant effect on the
financial statements are considered in the Filtronic plc Annual Report for the
year ended 31 May 2024 which can be found on the Filtronic website. Unless
stated below there is no material change to those judgements from the Annual
Report in the basis of calculation.
There is one change to the accounting estimates and judgements in the period
relating to the share warrants issued to SpaceX. This judgement is described
in note 10.
5 Segmental Analysis
Operating Segments
IFRS 8 requires consideration of the identity of the Chief Operating
Decision Maker ('CODM') within the Group. In line with the Group's internal
reporting framework and management structure, the key strategic and operating
decisions are made by the Board, who reviews internal monthly management
reports, budget and forecast information as part of this. Accordingly, the
Board is deemed to be the CODM.
The CODM has identified one operating segment within the Group as
defined under IFRS 8. In turn, this is the only reportable segment of the
Group as the entities in the Group have similar products and services,
production processes and economic characteristics. Therefore, there is no
allocation of operating expenses, profit measures or assets and liabilities to
specific commercial markets.
Accordingly, the CODM assesses the performance of the operating segment on
financial information which is measured and presented in a manner consistent
with those in the financial statements by reference to Group results against
budget.
The Group profit measures are adjusted operating profit and adjusted EBITDA,
both disclosed on the face of the consolidated income statement. No
differences exist between the basis of preparation of the performance measures
used by management and the figures in the Group financial statements.
Revenue by Destination
The revenue presented is based on the geographic location of customers
receiving the product/service from the continuing operations.
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Revenue
United Kingdom 1,559 1,396 2,239
Europe 508 1,046 2,154
Americas 23,446 3,433 17,121
Rest of the world 82 2,605 3,918
---------- ---------- ----------
25,595 8,480 25,432
====== ====== ======
Revenue from sales
The revenue presented is based on the Group deriving revenue from product
sales and those received from Non-Recurring Engineering ("NRE") at a point in
time when the performance obligation is satisfied.
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Revenue
Sales of product 25,565 8,031 24,135
NRE - point in time 931 449 1,297
Amortisation of contract assets (901) - -
---------- ---------- ----------
25,595 8,480 25,432
====== ====== ======
6 Operating profit/(loss)
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Revenue 25,595 8,480 25,432
---------- ---------- ----------
Material cost of goods sold 9,738 3,245 9,357
Wages and salaries 4,187 3,171 6,092
Social security costs 469 316 650
Pension costs 269 182 372
Bonus 540 - 810
Temporary employees 418 - 208
Share-based payments 186 8 47
---------- ---------- ----------
Employee costs 6,069 3,677 8,179
---------- ---------- ----------
Amortisation of intangible assets 258 124 287
Depreciation of property, plant and equipment and right of use assets 607 451 945
---------- ---------- ----------
Depreciation and amortisation 865 575 1,232
---------- ---------- ----------
Other operating income (34) (153) (326)
Other expenses 2196 1,505 3,380
---------- ---------- ----------
Total operating costs 9,096 5,604 12,465
====== ====== ======
Operating profit/(loss) 6,761 (369) 3,610
====== ====== ======
Development costs of £486,000 were capitalised in HY2025 (HY2024: £295,000).
Other operating income relates to grants received for plant and machinery and
R&D innovation whilst R&D tax credits claimed under the RDEC scheme
are also recognised in operating profit.
7 Finance costs
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Interest expense for lease arrangements 127 114 236
Minimum service costs and interest charges on invoice discounting facilities - 52 96
---------- ---------- ----------
127 166 332
====== ====== ======
8 Finance income
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Revaluation of foreign currency denominated intercompany balance 9 4 1
Interest receipt on treasury deposits 92 14 82
---------- ---------- ----------
101 18 83
====== ====== ======
9 Basic and diluted earnings/(loss) per share
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Profit/(loss) for the period 6,728 (522) 3,141
====== ====== ======
'000 '000 '000
Basic weighted average number of shares 218,771 215,172 216,340
Dilution effect of share options 2,663 2,781 6,555
----------- ----------- ----------
Diluted weighted average number of shares 221,434 217,953 222,895
======= ======= ======
Basic earnings/(loss) per share (pence) 3.08p (0.24p) 1.45p
Diluted earnings/(loss) per share (pence) 3.04p (0.24p) 1.41p
====== ====== ======
10 SpaceX share warrants
On 24 April 2024, the Group entered into a share warrant arrangement with
SpaceX in conjunction with a commercial agreement and strategic partnership.
This related to the supply of E-band Solid State Power Amplifiers ("SSPAs")
and new technology being developed for SpaceX for use in their Starlink
constellation. Full details of the warrants can be found in the 2024 Annual
Report and Accounts in note 31.
The warrant agreement grants SpaceX the right to acquire up to 21,712,109
shares of the Company (equivalent to 10% of the Company's total share capital
at the inception of the warrant agreement). The exercise price of vested
warrants is 33.0p per share, based on the closing mid-market price at 23 April
2024, which is the date prior to signing the warrant agreement. The directors
have assessed the warrants and have made a judgement that the warrants should
be treated as equity instruments as defined by IAS32. This is because the
warrants have a fixed consideration at 33.0p per share for a fixed number of
units to exercise.
The warrants have been recognised in the financial statements based on the
value at the date of signing of the agreement. An initial entry has been made
in contract assets measured at fair value, but not subsequently remeasured
with the corresponding entry to equity. As the warrants represent non-cash
consideration payable to a customer under IFRS 15. The contract asset, which
effectively represents a deferred volume rebate, is amortised to revenue based
on when the units are supplied to SpaceX. In this period under review, this
represented a £901,000 charge to revenue.
The initial fair value of the warrants at inception was £2,605,453, based on
a fair value per warrant of £0.11 and the total number of warrants expected
to vest over the 5-year vesting period. The directors have judged all of the
warrants will vest, otherwise SpaceX and Filtronic would not have entered into
the agreement.
The fair value of the warrants was determined using the Black-Scholes Model
valuation method using a number of variables that require judgement including
share price volatility, discount to the bid price, the risk-free rate and the
expected life of the warrants. There are a number of variables that require
judgement within this model including the risk-free rate, share price
volatility, the vesting period and a bid price discount.
11 Deferred income
6 months 6 months Year
Ended Ended Ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Contract liabilities 1,484 1,198 1,369
Capital grant 29 37 34
----------- ----------- -----------
Total current deferred income 1,513 1,235 1,403
----------- ----------- -----------
Contract liabilities - 392 -
Capital grant 116 145 132
----------- ----------- ----------
Total non-current deferred income 116 537 132
----------- ----------- -----------
Total deferred income 1,629 1,772 1,535
======= ======= =======
Contract liabilities are invoices raised in advance of NRE work completed for
customers that will be recognised as income once the performance obligation of
the contract has been met. The majority of NRE contracts are invoiced with a
proportion of the contract value upfront which is recognised as revenue, over
time, across the life of contract at each milestone based on the percentage of
the overall contract value achieved at that performance obligation.
12 Share Capital
Deferred shares of 10p each Ordinary shares of 0.1p each
Number '000 Number '000 £000
At 30 November 2023 106,877 215,321 10,796
Exercise of employee share options - 1,800 2
------------ ------------- -------------
At 31 May 2024 106,877 217,121 10,798
Exercise of employee share options - 1,861 2
------------ ------------ -------------
At 30 November 2024 106,877 218,982 10,800
======== ======== ========
All shares are allotted, called up and fully paid. Holders of the ordinary
shares and entitled to retrieve dividends when declared and are entitled to
one vote per share at meetings of the company.
Holders of the ordinary shares are entitled to receive dividends when declared
and are entitled to one vote per share at meetings of the Company.
13 Share Premium
£000
At 30 November 2023 11,087
Exercise of employee share options 126
-----------
At 31 May 2024 11,213
Exercise of employee share options 139
-----------
At 30 November 2024 11,352
=======
14 Analysis of net cash
1 June 2024 Cash Flow Other movements 30 Nov 2024
£000 £000 £000 £000
Cash and cash equivalents 7,215 (8) (3) 7,204
Lease liability - plant and equipment (1,990) 296 (363) (2,057)
--------- --------- --------- ---------
Net cash when including all debt except property leases 5,225 288 (366) 5,147
Lease liability - property lease (1,027) 139 - (888)
--------- --------- --------- ---------
Net cash 4,198 427 (366) 4,259
====== ====== ====== ======
Cash at bank earns interest at floating rates based on daily bank deposit
rates.
The Group entered into a new financing arrangement in November 2024 with
Santander UK plc. This included the operational banking facilities and
successful attainment of a committed £5.0m Revolving Credit Facility ("RCF")
for three years from November 2024. Consequently, the invoice discounting
facilities with Barclays Bank and Wells Fargo have been closed.
There were no drawings on the RCF facility at 30 November 2024 (31 May 2024:
undrawn).
15 Restatement of financial statements
Restatements have been made to some of the financial statements for the period
ended 31 May 2024. This impacted the Consolidated Statement of Financial
Position and Statement of Changes In Equity but there have been no amendments
to the income statement or cash flow statement.
The share warrants have been restated in line with the IAS 32 accounting
standard which requires the fair value of share warrants to be accounted for
as a contract asset with a corresponding entry to equity or financial
liability. The director's judged this to be accounted for as equity. IAS 32
requires for this to be accounted at the time the warrant agreement was
signed. Consequently, the contract asset in FY2024 increased by £2.6m, prior
to amortisation, and equity in the share warrant reserve increased by £2.6m.
31 May 31 May
2024 2024
(Audited) Correction (Audited*)
£000 £000 £000
Non-current assets
Contract assets - 1,302 1,302
---------- ---------- ----------
8,227 1,302 9,529
---------- ---------- ----------
Current assets
Contract assets - 1,303 1,303
---------- ---------- ----------
17,038 1,303 18,341
---------- ---------- ----------
---------- ---------- ----------
Total assets 25,265 2,605 27,870
---------- ---------- ----------
---------- ---------- ----------
Net assets 14,815 2,605 17,420
====== ====== ======
Equity
Share warrant reserve - 2,605 2,605
---------- ---------- ----------
Total equity 14,815 2,605 17,420
====== ====== ======
* Certain prior period figures are restated, please refer to note 15 for
further information.
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