REG - Tan Delta Systems - Interim results for six months ended 30 June 2023
29/09/2023 07:00
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RNS Number : 0674O Tan Delta Systems PLC 29 September 2023
Tan Delta Systems plc
("Tan Delta", or the "Company")
Interim results for the six months ended 30 June 2023
Tan Delta, a provider of advanced industrial and commercial monitoring
systems, is pleased to report its first set of financial results for the six
months ended 30 June 2023 ("H1 2023" or the "Period"), since its admission to
AIM in August 2023.
Financial highlights:
· Revenue increased by 54% to £0.96m (H1 2022: £0.62m)
· Gross profit increased by 52% to £0.61m at 63% margin (H1 2022:
gross profit of £0.4m at 64% margin)
· Profit from operations (excluding non-underlying items relating
to the IPO) of £0.18m (H1 2022: £0.03m)
· Strengthened balance sheet following receipt of net proceeds of
£4.8 million, from successful AIM IPO
For further enquiries:
Tan Delta Systems plc Tel: +44 (0) 845 094 8710
Chris Greenwood, CEO
Steve Johnson, CFO
Zeus (Nominated Adviser & Tel: +44 (0) 203 829 5000
Broker)
David Foreman, James Hornigold, Ed Beddows (Investment Banking)
Nick Searle (Sales)
Chairmans Statement
It gives me great pleasure to present my first chairman's statement since the
Company's successful IPO in August 2023. Whilst we are a relatively small team
at present, all members of the Board and employees went above and beyond, to
ensure the continuing commercialisation of our products and services,
alongside the IPO, which necessarily requires huge time and focus.
In terms of financial performance, the management team have performed well
during H1 2023 achieving 54% year on year revenue growth whilst also preparing
the business for rapid scaling.
Our target markets are large commercial and industrial operators and
manufacturers of any equipment with an engine, gearbox or hydraulics which
thus relies on lubrication oil for reliable and efficient operation. In these
days of intense global competition, high oil prices and a drive to
decarbonise, our proposition of reduced operating costs, reduced break downs
and oil consumption through waste reduction, resonates loudly and provides Tan
Delta with a very significant global opportunity.
In anticipation of a successful IPO, the management undertook significant
planning during the period to commence sales and marketing in the second half
of the year ("H2 2023") with an initial focus on European and North American
markets, expanding later on in 2024 to the Middle East, Asia, Africa and South
America. The Company is now in a strategically advantageous situation with an
innovative and proven product addressing a significant global market with a
compelling proposition. Furthermore, as a result of our IPO we now have the
cash to commence material and sustained sales activities and execution of the
Board's long-term strategy.
In order to provide further support and governance strength during H2 2023 we
will add a new independent Non-Executive Director to our Board. This will
complete the Board of Directors and provide the Company with the management
depth and governance to maximise its opportunities and deliver shareholder
growth.
Finally, I would like to take this opportunity to thank our staff, advisers
and investors who supported us through and at IPO.
Chief Executive Review
We are pleased to have achieved our targets for H1 2023. Following our
successful IPO in August 2023 we are now well placed to continue performing in
line with expectations in H2 2023 and beyond, as the business continues to
grow and benefit from the ability to invest in product evolution and global
sales and marketing.
Revenue increased by 54% to £0.96m (H1 2022: £0.62m) whilst broadly
maintaining gross margin which slightly fell to 63% (H1: 2022 64%) as a result
of a change in product sales mix. Underlying operating profits, excluding
one-off IPO related costs, also increased by 608% to £0.18m (H2 2022:
£0.03m) as our cost base growth is not directly coupled to revenue growth.
During the Period revenue was primarily driven by a small number of prospects
who commenced implementations following their evaluation period, and by a
number of small sales to new customers commencing their evaluations. In the
second half we expect more customers to enter and commence implementation on
their equipment fleets, as well as contribution from our off the shelf SENSE-2
and MOT products.
During the Period, we had three main operational objectives. Firstly, we
continued to progress and grow existing customer evaluations and adoption
planning for our sensor systems. Secondly, we planned and prepared for the
acceleration of our business post IPO, so that we were ready to immediately
start expanding sales, increasing marketing activities and upscaling
production. Thirdly, was the successful completion of our IPO and securing
significant capital to fund the execution of our global expansion plans.
Moving into H2 2023, we are focused on the implementation of our sales and
marketing plan which is primarily focussed on our off the shelf SENSE-2 and
MOT products, both of which can be immediately installed and used by equipment
owners/operators. Our marketing program will see these products actively
promoted to specific market verticals including power generation,
manufacturing and transportation in Europe, North America, Middle East, Asia
and South America. In parallel we have commenced increased production to
fulfil expected demand.
A major operational focus for H2 2023 will be the increase of our human
resources to support and enable our rapid scaling plans with a particular
focus on sales, customer support and production. I am pleased to report that
we are making good progress. In 2024 we will turn our attention to our
technology and product development team which we will further develop to meet
the needs of our next generation of technology and product development
targeting the global automotive segment.
Notes to editors
Tan Delta Systems plc has developed innovative technologies, products and
services that enable operators of rotating equipment, from trucks and ships to
generators and wind turbines, to reduce oil consumption, maintenance costs,
breakdowns and carbon footprint.
Tan Delta's products offer customers a compelling proposition of being able to
reduce operating costs whilst improving reliability. This is achieved through
equipment operators gaining a better understanding of the actual real time
maintenance status of their active equipment through the real time analysis of
lubrication oil used within engine, gearboxes and hydraulic systems. Tan
Delta's data analytics, enables the following benefits:
· Reduced oil consumption by approximately 30 per cent, by ensuring
oil is not changed before it has reached the end of its life;
· Reduced breakdowns and associated costs by detecting issues
before damage or failure occurs;
· Increased equipment operating times by enabling intervals between
maintenance to be extended and;
· Reduced carbon footprint through a reduction in oil use and
prolonged equipment life.
The Company currently offers four main products built around its core oil
condition analysis sensor technology, all of which target primarily large
commercial and industrial equipment market segments.
Tan Delta was admitted to trading on AIM in August 2023 with the ticker
TAND. For additional information please visit www.tandeltasystems.com.
LinkedIn: http://www.tandeltasystems.com (http://www.tandeltasystems.com)
Twitter: https://x.com/Tandeltasysyems (https://x.com/Tandeltasysyems)
Unaudited statement of profit or loss and other comprehensive income
For the six months ended 30 June 2023
Note (Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Revenue 3 959 621 1,575
Cost of sales (351) (222) (585)
Gross profit 608 399 990
Other operating income 0 0 1
Distribution costs (22) (17) (44)
Administrative expenses (409) (357) (665)
Non-underlying items 4 (471) 0 0
Profit from operations
- Excluding non-underlying items 177 25 282
- Non-underlying items 4 (471) 0 0
(Loss) / Profit from operations (294) 25 282
Interest expense 5 (4) (4) (4)
Interest Income 0 0 0
Profit /(Loss) before tax
- Excluding non-underlying items 173 21 278
- Non-underlying items 4 (471) 0 0
(Loss) /Profit before tax (298) 21 278
Taxation 6 0 0 4
(Loss) / Profit for the period attributable to equity holders of the Company (298) 21 282
Other comprehensive income
Total other comprehensive income 0 0 0
Total comprehensive (loss) / profit for the period attributable to equity (298) 21 282
holders of the Company
Basic and diluted earnings per share (£) 7 (0.01) 0.00 0.01
Unaudited statement of financial position
As at 30 June 2023
Note (Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Non-current assets
Intangible assets 141 26 121
Right of use asset 107 134 120
Property, plant and equipment 61 70 64
309 230 305
Current assets
Inventories 229 193 240
Trade and other receivables 8 277 248 320
Cash and cash equivalents 9 332 458 186
838 899 746
Total assets 1,147 1,129 1,051
Current liabilities
Trade and other payables 10 (786) (682) (367)
Short term borrowings 11 (24) (24) (24)
Short term lease liability 11 (27) (26) (27)
(837) (732) (418)
Non-current liabilities
Long term borrowings 11 (26) (49) (38)
Long term lease liability 11 (86) (113) (99)
(112) (162) (137)
Total liabilities (949) (894) (555)
Net assets 198 235 496
Equity attributable to equity holders of the Company
Ordinary share capital 12 50 0 0
Share premium account 13 0 1,565 1,565
Retained earnings/(accumulated losses) 13 148 (1,330) (1,069)
Total equity 198 235 496
Unaudited statement of changes in equity
For the six months ended 30 June 2023
Share capital Share premium account Retained earnings / (accumulated losses) Total equity
£000 £000 £000 £000
Balance at 1 January 2022 0 1,565 (1,351) 214
Ordinary share capital 0 0 0 (0)
Comprehensive income:
Profit for the period 0 0 21 21
Balance at 30 June 2022 0 1,565 (1,330) 235
Balance at 30 June 2022 0 1,565 (1,330) 235
Ordinary share capital 0 0 0 0
Comprehensive income:
Profit for the period 0 0 261 261
Balance at 31 December 2022 0 1,565 (1,069) 496
Balance at 31 December 2022 0 1,565 (1,069) 496
Ordinary share capital 0 0 0 0
Comprehensive income:
Loss for the period 0 0 (298) (298)
Bonus issue of shares 50 (50) 0 0
Cancellation of share premium 0 (1,515) 1,515 0
Balance at 30 June 2023 50 0 148 198
Unaudited statement of cash flows
For the six months ended 30 June 2023
(Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
Note 30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Cash flows from operating activities
(Loss) / Profit before Tax (298) 21 278
Adjustments for non-cash/non-operating items:
Depreciation 5 4 11
Amortisation of intangible assets 5 0 0
Amortisation of right of use assets 13 13 27
Taxation 0 0 4
Loss on disposal of plant and equipment 0 0 4
Interest income 0 0 0
Interest expense 4 4 4
Operating cash flows before movements in working capital (271) 42 328
(Increase)/decrease in inventories 11 (140) (187)
(Increase)/decrease in trade and other receivables 43 41 (31)
Increase/(decrease) in trade and other payables 419 412 97
Net cash generated from operating activities 202 355 207
Cash flows from investing activities
Purchase of property, plant and equipment (2) (34) (39)
Purchase of intangibles assets (25) (26) (121)
Net cash used in investing activities (27) (60) (160)
Cash flows from financing activities
Borrowings and finance lease obligations (29) (29) (53)
Net cash used in financing activities (29) (29) (53)
Net decrease in cash and cash equivalents 146 266 (6)
Cash and cash equivalents at the beginning of the period 186 192 192
Cash and cash equivalents at the end of the period 9 332 458 186
Notes to the unaudited condensed interim financial statements.
1. General information
The interim financial statements were approved by the Board of Directors on
the 28 September 2023.
2. Basis of preparation
The interim financial statements of the Company are for the six months ended
30 June 2023.
The comparative figures for the financial year ended 31 December 2022 are not
the Company's statutory accounts for that financial year. The comparative
figures were prepared under International Financial Reporting Standards
('IFRS') for the purposes of presentation in the Company's AIM Admission
Document published on 11 August 2023 ('Admission Document'). The statutory
accounts filed at Companies House were prepared under the historical cost
convention and in accordance with Financial Reporting Standard 102 'The
Financial Reporting Standard applicable in the UK and Republic of Ireland'
including the provisions of Section 1A 'Small Entities' and the Companies Act
2006. The financial statements were audited and prepared in accordance with
the provisions applicable to companies subject to the small companies' regime
even though they were exempt from audit under Section 477 of the Companies Act
2006.
The condensed interim financial statements for H1 2023 do not include all the
information and disclosures required in the annual financial statements and
have not been audited or reviewed by an auditor pursuant to the Auditing
Practices Board guidance on Review of Interim Financial Information.
However, selected explanatory notes are included to explain events and
transactions that are significant for an understanding of the changes in the
Company's financial position and performance in the period.
The condensed interim financial statements for H1 2023 have been prepared
based on the accounting policies adopted within the Admission Document, and
those expected to be adopted for the year ending 31 December 2023. These
accounting policies are drawn up in accordance with adopted International
Accounting Standards ('IAS') and International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board and adopted
by the EU.
AIM-listed companies are not required to comply with IAS 34 'Interim Financial
Reporting' and accordingly the Company has taken advantage of this exemption.
3. Revenue from contract customers
Geographical reporting (Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
United Kingdom 526 325 956
Europe 191 161 270
Rest of the World 242 135 349
959 621 1,575
4. Non-underlying items
(Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
IPO costs (471) 0 0
(471) 0 0
IPO costs
On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new
ordinary shares, taking the number of ordinary shares in issue to
73,223,800. Total proceeds amounted to circa £6.0m. The costs associated
with the IPO, which were committed at 30 June 2023, amounted to £0.47m and
they have been recognised as non-underlying expenses in the income statement
in H1 2023.
5. Finance expense
(Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Interest on bank loans (2) (2) 0
Interest on finance leases (2) (2) (4)
(4) (4) (4)
6. Income tax expense
No income has yet been recognised in H1 2023 in relation to R&D tax
credits available from HMRC through the SME R&D relief scheme.
7. Earnings per share
Earnings per share are as follows:
Six months ended Six months ended Y
e
a
r
e
n
d
e
d
30 June 2023 30 June 2022 3
1
D
e
c
2
0
2
2
£ per share £ per share £
p
e
r
s
h
a
r
e
Basic and diluted earnings per share (0.01) 0.00 0.01
The calculations of basic and diluted earnings per share are based upon:
£000 £000 £000
(Loss) / Profit for the period attributable to the owners (298) 21 282
Number Number Number
Number of ordinary shares at the end of the period 50,149,800 50,149,800 50,149,800
The calculation of basic earnings per share is based on the results
attributable to ordinary shareholders divided by the number of ordinary shares
outstanding as if the bonus issue and share split had occurred at the
beginning of the earliest period presented. The earnings per share
calculations for the period and prior period presented are based on the new
number of shares.
The number of shares in issue at the end of the period is used as the
denominator in calculating basic earnings per share. As the Company is loss
making the effect of instruments that convert into ordinary shares is
considered anti-dilutive, hence there is no difference between the diluted and
non-diluted loss per share.
During the period ended 30 June 2023, the Company completed a 110 for 1 bonus
share issue and a subdivision of shares. Prior to the bonus issue there were
451,800 shares at £0.001, after the bonus issue there are 50,149,800 shares
at £0.001
8. Trade and other receivables
(Unaudited) (Unaudited) (Unaudited)
As at As at A
s
a
t
30 June 2023 30 June 2022 3
1
£000 £000 D
e
c
2
0
2
2
£
0
0
0
Amounts falling due within one year:
Trade receivables 162 193 277
Other receivables 58 20 19
Prepayments 53 17 20
Tax recoverable 4 18 4
277 248 320
9. Cash and cash equivalents
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Cash at bank available on demand 332 458 186
332 458 186
10. Trade and other payables
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
£000 £000 £000
Trade payables (389) (195) (284)
Other payables (16) (50) (15)
Other taxation and social security (15) (20) (12)
Accruals (295) (11) (19)
Deferred income (71) (406) (37)
(786) (682) (367)
11. Borrowings and lease liabilities
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
£'000 £'000 £'000
Current:
Bank loans (24) (24) (24)
Lease liability (27) (26) (27)
(51) (50) (51)
Non-current:
Bank loans (26) (49) (38)
Lease liability (86) (113) (99)
Total borrowings (112) (162) (137)
Banks loans comprise a Coronavirus Business Interruption Loan provided by
Lloyds. The loan was taken out in July 2020 and matures five years after this
date.
12. Share capital
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
£'000 £'000 £'000
Allotted, called up and fully paid
Ordinary shares of 45,180 @ £0.01 each 0 0
Ordinary shares of 50,149,800 @ £0.001 each 50
50 0 0
Called up share capital
Called up share capital represents the nominal value of shares that have been
issued.
All classes of shares have full voting, dividends, and capital distribution
rights.
On 1 June 2023, the ordinary shares were subdivided from £0.01 to £0.001
(45,180 shares to 451,800 shares). Subsequently a bonus issue was made for all
the shareholders holding 451,800 shares at that date. The bonus issue
offered 110 ordinary shares for every 1 ordinary share in issue, with a
nominal value of £0.001 per share. This increased the number of ordinary
shares in issue by 49,698,000 to 50,149,800.
13. Reserves
In anticipation of re-registering the Company as a public limited company, at
a general meeting of the Company on 1 June 2023, it was resolved that the
Company would reduce its share premium account by an amount of £1.52m by
crediting the Profit and Loss Account.
Share premium account
This represents the excess value recognised from the issue of ordinary shares
above nominal value.
Retained earnings
This represents cumulative net gains and losses less distributions made.
14. Post balance sheet events
No adjusting events have occurred between reporting date and the date of
authorisation of the condensed interim report. The Company listed on AIM on 18
August 2023 raising circa £6.0m. The Company issued 23,074,000 ordinary
shares thus taking the total number of ordinary shares in issue to 73,223,800
from 50,149,800. The costs associated with the issue amounted to approximately
£1.2m. £0.47m was recognised in H1 2023 and £0.73m will be recognised in H2
2023.
On 18 August 2023, 1,253,745 share options were granted to those eligible
under the scheme in line with the disclosures made in the Company's admission
document dated on 18 August 2023. The options have an exercise price of
£0.26.
15. Availability
Further copies of this interim announcement are available on the Tan Delta
Systems plc website, www.tandeltasystems.com.
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