REG - Thruvision Group PLC - Results for the Year ended 31 March 2022
30/09/2022 07:00
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RNS Number : 2613B Thruvision Group PLC 30 September 2022
30 September 2022
Thruvision Group plc
("Thruvision" or the "Company")
Results for the Year ended 31 March 2022
Thruvision (AIM:THRU), the leading provider of "safe distance"
people-screening technology to the international security market, announces
its results for the financial year ended 31 March 2022.
Headlines
· Revenue of £8.4 million (2021: £6.7 million), with an operating loss before
tax of £1.9 million (2021: £2.8 million loss);
· Adjusted loss before tax* of £2.3 million (2021: £2.3 million);
· Gross margin at 47% (2021: 48%) and Overheads** increased to £5.6 million
(2021: £4.8 million), with Overheads as a percentage of Revenue falling to
67% (2021: 71%);
· Cash at 31 March 2022 of £5.4 million (31 March 2021: £7.3 million);
· Significant growth in Profit Protection revenue which grew 73% (2021: 49%) to
reach 45% of total Group revenues, with 7 new customers including Tesco,
European online retailer Zalando and a major US alcohol distributor; and
· Revenues from the Customs sector were in line with the prior year, and we
remain heavily engaged with US Customs and Border Protection in upgrading
their Thruvision fleet.
* Adjusted loss before tax is defined as loss before tax from continuing
operations after deducting Share-based payment credit, or by adding back the
Share-based payment charge.
** Total Administration costs excluding Depreciation and amortisation,
Share-based payments and Foreign exchange.
Commenting on the results, Colin Evans, Chief Executive, said: "It is very
pleasing to see the Group return to growth this year. Building on steady first
half momentum, our second half performance was very strong, driven by
significant growth in Profit Protection. We remain focused on this significant
market opportunity and have appointed Katrina Nurse to our Board to bolster
our retail sector expertise and help add further household names to our
growing list of major users.
Our relationship with US Customs and Border Protection (CBP) continues to
strengthen. Having delivered material revenue in the year to start upgrading
CBP's existing Thruvision cameras, we expect further growth with this key
customer over the coming years as it starts a full rollout of our technology.
With the broader economic picture looking increasingly challenging, I am
confident that our unique offering and diversity of our two core markets,
Profit Protection and Customs, will deliver further good growth this coming
year."
Notice of Trading Update and Annual report
The company will provide an update on H1 trading during the week commencing
10(th) October 2022.
The audited accounts for the year ended 31 March 2022 will be sent to
shareholders later today and will be available on the Company's website later
this morning.
For further information please contact:
Thruvision Group +44 (0)1235 436180
plc
Colin Evans, Chief Executive
Tom Black, Executive Chairman
Investec Bank plc +44 (0)20 7597 5970
James Rudd / Patrick Robb / Sebastian Lawrence
FTI Consulting LLP +44 (0)20 3727 1000
Matt Dixon / Tom Blundell
About Thruvision
Addressing the urgent need for "safe distance" people security screening in
the COVID era, Thruvision is uniquely capable of detecting metallic and
non-metallic items including weapons, explosives and contraband items that are
hidden under clothing, at distances between 3 and 10m. Using patented passive
Terahertz technology, Thruvision completely removes the need for physical
"pat-downs" and has been vetted and approved by the US Transportation Security
Administration for surface transportation. Operationally deployed in 20
countries around the world, Thruvision is used for aviation security, retail
supply chain loss prevention, customs and border control, and public area
security. The company has offices near Oxford and Washington DC.
www.thruvision.com (http://www.thruvision.com)
Chairman's statement
Introduction
As the many pandemic-related restrictions were progressively lifted through
the year, our business performance improved, and I am very pleased to report
that the Group returned to growth in the year. Driven by a very strong second
half, with Profit Protection performing particularly well, the Group grew
overall revenues by 25% to £8.4 million (2021: £6.7 million). We supported
this growth from our own cash resources and, at 31 March 2022, cash in hand
was £5.4 million (2021: £7.3 million).
As with last year, Profit Protection and Customs delivered over 90% of revenue
and, for different reasons, these markets proved to be resilient to the
ongoing effects of the pandemic. They remain the key future growth drivers for
the Group and their complementary characteristics should provide a resilient
platform for continued growth even in the more challenging macro-economic
environment.
Profit Protection
Our Profit Protection business has benefited significantly from the trend
towards online retail and home delivery, which was accelerated by the
pandemic. Our technology is used successfully by market leaders including
Next, Tesco, The Hut Group and CEVA to screen many thousands of employees
every day to detect and deter theft from the large number of Distribution
Centres ('DCs') that lie at the heart of their online delivery infrastructure.
Comprising a large number of retailers and home delivery partners, who operate
(by our estimates) in excess of 20,000 DCs across the UK, US and Europe, the
Profit Protection market represents our single biggest strategic opportunity
although short-term prospects here are inevitably dependent on the health of
the broader retail market. We recorded revenue growth in Profit Protection of
73% in the period, increasing Profit Protection to some 45% of total Group
revenue (2021: 32%), and since the end of the year have secured our first sale
with another global Third-Party Logistics provider (3PL).
Customs
International Customs agencies have historically been our largest market, and
9 different national agencies use our equipment globally to detect drugs, cash
and other contraband being smuggled as travellers cross international borders.
Our biggest end-customer is US Customs and Border Protection ('CBP') which in
prior years has purchased a significant fleet of cameras. These were fully
deployed on the Southern Border during the summer of 2021 to enable management
of the very high levels of migration experienced there. This close engagement
proved the significant value of our solution, in terms of actual seizures of
drugs and cash, and the very positive feedback from front-line officers. As a
result, we delivered material revenue in the second half to start the process
of upgrading CBP's existing 8-channel cameras to the latest 16-channel model.
We expect this upgrade process to deliver further revenue in FY23.
In addition, CBP has made public its intentions to purchase additional
"passive pedestrian scanners" and we expect this process to commence at some
point during FY23. With other international Customs agencies now restarting
procurements which were delayed by the pandemic, we remain optimistic about
our prospects in this market.
Other markets
Our other markets, Aviation and Entrance Security, remained subdued due to the
on-going effects of pandemic related restrictions. Some further progress has
been made through the US Government's Transportation Security Administration
('TSA') aviation accreditation process, although this was significantly
delayed by the pandemic, and we started a similar process with the Israeli
Government. As confirmed recently by US Congress, contactless aviation
security remains an important post-COVID priority. With the global aviation
market continuing to recover we will maintain our focus on gaining appropriate
accreditations to enter this regulated market fully.
Supply chain
Like other technology and manufacturing businesses, the combined effect of the
pandemic and Russia's invasion of Ukraine has negatively impacted supply
chains. While this has had little effect on our mostly UK-based Terahertz
specialist suppliers, we have had to redesign aspects of our cameras to
accommodate various substitute commercial components. We forward-purchased
these where necessary during late FY22 and early FY23 in order to protect
production capacity and drew on our cash reserves accordingly. We have seen
some raw material price inflation starting to feed through but at this stage
we are confident this can be managed. Overall, whilst supply chain issues
consumed significant effort by our team, they did not affect our production
capacity or schedules.
Board changes
I was delighted to announce the addition of another Independent Non-Executive
Director, Katrina Nurse, to our Board with effect from 1 April 2022. Katrina
is a highly experienced CFO from the retail sector with a track record in
growing businesses including Selfridges, Pentland Group, Arcadia Group and
most recently Asda. Katrina joined the Audit and Nomination Committees and
will chair the Remuneration Committee from the conclusion of the forthcoming
AGM.
After three years with the business, Adrian Crockett, our CFO, left the
Company in April 2022. He will be replaced on the Board by Victoria Balchin
who starts in October 2022 with an interim currently fulfilling this role.
Victoria brings significant relevant experience to the Group. She qualified as
a chartered accountant with PwC and has held a number of finance roles with
British Sky Broadcasting Group plc, SABMiller plc, Spectris plc and Brüel
& Kjær Vibro, a Spectris business headquartered in Germany.
Outlook
The Group operates in markets which are subject to different macro-economic
pressures and, as demonstrated through the pandemic, this diversity has given
our performance a good level of resilience. With the broader economic outlook
looking challenging, we continue to see this diversification as a strength.
The Board therefore believes that the Group is well positioned to deliver good
growth this year and into the future. We expect this growth to move us
materially towards our short-term objective of breaking even in both profit
and cash generation terms, and we continue to manage our investments and cost
base to match our anticipated growth with this objective in mind.
The first half of the new year has been challenging for the Profit Protection
segment as retailers reacted to the changing economic climate. However,
activity levels in this area are picking up as retailers identify the
significant benefits of our solution to a number of the challenges they are
facing. With revenue from both the Profit Protection and Customs markets
expected to continue growing, the Board is confident that the Group is well
positioned to deliver good growth this year and into the future.
Strategic Update
Business focus and competitive differentiation
Thruvision addresses the growing international need to safely, quickly and
comprehensively security-screen individuals for weapons, contraband or other
illicit metallic and non-metallic items that might be concealed in or under
their clothing. The two most widely deployed existing technologies, metal
detectors and airport body scanners, do not meet this need. Critically, both
these technologies require close-proximity physical searches to resolve alarms
and, in the former case, detect only metallic objects. These intrusive body
searches have always been undesirable, but the COVID pandemic forced security
organisations globally to re-evaluate the safety implications of such 'pat
down' searches and many are now looking for new capabilities to deliver
contactless security.
Thruvision comprehensively solves this problem. By allowing a security guard
to see concealed items of any material, as small as 3cm by 3cm, and from a
safe distance of 3 metres, Thruvision completely removes the need for physical
search. This combination of safe distance, contactless operation with
reliable, high-throughput and comprehensive detection is unique to Thruvision
and we have not yet identified a competing solution with comparable
performance.
Macro-economic update
The broader economic climate changed significantly through the course of the
year. The negative effects of COVID started to recede in spring 2021 and by
Christmas had broadly disappeared. The aviation sector started opening up,
albeit seriously under-staffed, and major in-person events restarted.
Offsetting these positive developments were the wide-ranging supply-chain
shortages caused by the pandemic and prolonged lock-downs in China. The
Russian invasion of Ukraine in February 2022 sent a fresh set of shockwaves
through the global economy and further exacerbated global supply-chain issues.
The surge in inflation, driven in large part by higher energy costs, is
impacting consumer confidence and the retail sector.
Specific market sector updates
Profit Protection
As a result of the pandemic, we have seen continued strong interest and a
growing uptake from a wide range of retailers and their third-party logistics
partners in this market. Our customers use our technology to detect and deter
theft in their Distribution Centres ('DCs') where typically many millions of
pounds of stock are held, and many hundreds of employees work on each shift.
We estimate there are in excess of 20,000 DCs across the UK, US and Europe,
meaning Profit Protection represents our single biggest market opportunity.
Almost all items being stolen from DCs by employees are non-metallic. This
means normal exit security comprising guards with either walk-through or
handheld metal detectors are completely ineffective, in addition to being slow
and unpopular with employees. COVID safety concerns resulted in a fresh push
towards "contactless" security and more recent economic headwinds have both
driven up theft levels and emphasised the need for faster, less intrusive
security procedures which is a significant differentiator in a highly
competitive market for scarce staff.
Despite the worsening economic situation, a number of our key customers
continue to expand and upgrade their fleets of Thruvision cameras on the
strength of the deterrent effect, to counter increasing levels of employee
theft, and consequent faster return on investment. Although currently harder,
we are still able to win new customers, with a major global Third-Party
Logistics ('3PL') provider which is headquartered in Germany, the latest
organisation to invest in Thruvision as part of its DC security capability.
Customs
This is a well-established market for Thruvision, where we screen travellers
at border checkpoints for predominantly non-metallic, prohibited items such as
cash and drugs. We saw the pandemic-induced slowdown extend through much of
calendar year 2021 as Customs agencies operations continued to be affected by
various lock-downs, sickness and other factors.
The exception to this trend was US Customs and Border Protection ('CBP') where
we were very active throughout the year in deploying cameras they had
previously purchased and in training many hundreds of officers in their use
along the Southern Border. Operational feedback was very strong and Thruvision
has since been used highly successfully by CBP to detect on-person smuggling
of prohibited substances and cash. The process of upgrading CBP's Thruvision
fleet to our latest model is now well underway and future order flow is
expected to further expand the CBP fleet.
Aviation
We continued the process to obtain TSA accreditation to allow Thruvision to
enter the regulated international aviation security market. However,
pandemic-related after-effects have caused some major challenges in getting
the aviation sector back to anywhere close to full effectiveness. This problem
has extended into US equipment accreditation where a combination of TSA
COVID-related safety controls in US Government facilities, followed by delays
in passing the US Federal Government spending bills, caused major delays to
the restarting of all equipment testing. We also started a similar process
with the Israeli Government. Despite these challenges, we remain engaged with
TSA and, should we be successful in obtaining accreditation, this will open
the door to the regulated aviation security market to those countries that
require TSA accreditation for their airport security equipment.
Entrance Security
This sector focuses on checking that people entering facilities are not
carrying prohibited items which, in most cases, means weapons of various
types. Such facilities include public and private buildings, entertainment
venues, places of worship, prisons, and this sector now includes surface
transport hubs which we previously reported on separately.
Geographically, our customers have tended to be mostly located in Asia and the
Middle East and demand has remained suppressed due to the effects of the
pandemic. However, a number of enquires have recently been received in respect
of several dormant opportunities in these regions.
Global supply-chain issues
The after-effects of the pandemic and the subsequent supply chain issues
caused by the war in Ukraine are well documented. We have worked hard with our
specialist Terahertz component suppliers to maintain surety of supply for the
very specific and even unique components we require. Like others, we have been
fully exposed to global shortages of more mainstream electronics but have
managed this situation effectively by holding higher than normal levels of
inventory to mitigate delivery risk.
Summary
As reported last year, our strategy remains to ensure we commit sufficient
resources to Profit Protection sales & marketing to capitalise on the
opportunity this very large, international and growing market presents. We are
mindful of the strengthening economic headwinds in which our customers operate
and the impact that could have on investment decisions in the short term.
However, we believe our solution offers a very real and rapid return on
investment by reducing theft and supporting employee retention which can help
our customers manage their profitability in difficult times.
Equally, we are seeing a recovery in interest from a broader range of
international government customers and believe we are very well placed to
achieve real scale with CBP over the coming years. With this in mind, we will
continue to concentrate on the international Customs agency market, work with
Asian and Middle Eastern government agencies as programmes remobilise and
respond quickly to aviation accreditation testing as it restarts.
Business review
Summary
Our revenue grew by 25% to £8.4 million (2021: £6.7 million) in the period,
with new equipment sales growing at 35% to £7.7 million (2021: £5.7
million). Within this, Profit Protection grew very strongly and Customs
remained flat, but together again accounted for 92% of Group revenue (2021:
92%). Support and Development revenues remained healthy at £0.7 million
(2021: £1.0 million).
Profit Protection
Performance in our Profit Protection sector was very strong and continued to
be driven by a shift to online sales and home delivery, accelerated by the
pandemic. We added 7 new customers in the period, and our revenues grew by 73%
to £3.8 million (2021: £2.2 million and 49%), and now represents some 45% of
total revenue (2021: 32%).
After an extended and ultimately very successful trial, Tesco became the
second major UK grocer to purchase our technology and we completed the rollout
of that significant order late in the period. Other new customers included the
large European online retailer, Zalando, and a large US alcohol distributor.
Another feature of the year saw long-standing customers such as Next and Boots
start to replace their older Thruvision cameras with our latest products to be
used in either single camera configurations, or in pairs as part of new,
high-throughput screening lanes. This latter "walk through" capability,
incorporating our new AI-based detection algorithm, allows customers to screen
100% of employees at shift change without causing exit delays. This maximises
the theft deterrence, without inconveniencing staff, the benefits of which
rapidly exceed the additional investment.
CEVA, a global Third-Party Logistics ('3PL') provider, has adopted Thruvision
as a standard element in its security offering for its potential new
customers. In FY23, we have added a major global 3PL, which is headquartered
in Germany, as an additional customer. Adding such large organisations to our
customer list is an important part of our sales strategy as, once we are
established in such businesses, we are able to cross-sell to new sites more
easily, reducing sales cycle times and overall cost of sale, and seeding our
geographic expansion.
We continued to work with industry bodies including the US Loss Prevention
Foundation, the Transported Asset Protection Association ('TAPA') in Europe,
and an increasing number of large-scale security integrators including
Securitas in the UK and Europe, and Vector Security in the US.
Customs
Despite the prolonged impact of COVID through much of 2021 affecting a broader
set of international Customs agency opportunities, we still delivered revenues
of £3.9 million from our Customs sector (2021: £4.0 million). These revenues
were almost entirely derived from CBP.
As mentioned in the Strategic update, we provided significant training support
to CBP once lock-down restrictions lifted on the Southern Border and received
positive operational feedback as the 8-channel cameras that CBP had previously
purchased were rolled-out under a newly approved Department of Homeland
Security "Pedestrian Detect-at-Range" Privacy Impact Policy. This rollout
generated operational seizures of drugs and cash and significant interest in
our latest higher definition 16-channel camera running our new AI-based
detection algorithm.
This led to the commencement of a programme in Q4 FY22 to upgrade CBP's
8-channel fleet to our latest model which delivered the revenues, via our US
Government contracting partner, set out above. This programme continues and
will deliver further revenue in FY23. In addition, CBP has made public its
intentions to purchase additional "passive pedestrian scanners" and we expect
this to commence at some point during FY23.
It is also the case that several of the delayed Customs opportunities in other
countries have started progressing again now that most international travel
restrictions have been lifted and this supports our expectation of further
sales in the coming year.
Aviation
There was minimal sales activity in this sector through the year, with
revenues of £0.2 million (2021: £0.3 million). Discussions held with the US
aviation sector in particular have revealed that investment in security is
currently a low priority as the industry attempts to recover from the
financial damage caused by the pandemic and we have low expectations for any
meaningful growth in revenue in the short to medium term.
As discussed in the Strategic Update, our focus is ensuring that we respond
quickly to the restarting of the TSA accreditation process, and actioning
feedback from the Israeli Government preliminary test findings. In the
meantime, pre-pandemic opportunities with individual US airports for staff
screening are starting to move again.
Entrance Security
There was very little sales activity in this sector through the year, with
modest revenues of £0.5 million (2021: £0.2 million). Again, this was a
direct consequence of our lack of ability to travel during the pandemic and
the subdued demand levels from customers, especially in the Middle East and
Asia.
As discussed in the Strategic Update, we have started to see renewed interest
from organisations in these regions again, and some specific opportunities
with retail and logistics customers in the US who are equally interested in
both inbound weapons screening and outbound theft prevention.
Support and Development
Revenues in this sector were £0.7 million (2021: £1.0 million). Some £0.6
million (2021: £0.8 million) came from support contracts and the balance was
from minor customer-funded R&D projects.
Routes to market
As previously reported, where we have a geographic presence (predominantly the
US and UK), we continue to sell directly to end customers. However, as
reported in the Profit Protection update above, we are starting to work more
closely with large-scale security system integrators in this sector to
increase our market penetration and speed-up sales cycles.
Outside of the UK, Europe and US, we work with a range of smaller Value-Added
Resellers across a broader set of international markets. Each of these tends
to bring very specific domain expertise and each is typically focused on
specific foreign government departments of interest to us.
New product development
We have been very encouraged by the uptake of the new range of products
launched in 2020.
Our Loss Prevention Camera ('LPC') range is optimised for the needs of the
Profit Protection market and customers predominantly bought our standard
8-channel product ('the LPC8'). However, some customers with more demanding
detection needs opted for the higher-priced 16-channel variant ('the LPC16')
and, towards the end of the period, Next became our first customer for a dual
LPC16 camera walk-through screening lane, with both cameras running our new AI
detection algorithm to assist operators. We also saw a number of customers
upgrade their older generation TS4 cameras for LPC8s.
Customs agencies continued to focus on the Tactical Awareness Camera ('TAC'),
which provides the extra flexibility needed for a broader set of operational
scenarios. The programme to upgrade CBP's 8-channel TAC8 cameras to 16-channel
TAC16s started in the period and we expect will ultimately result in CBP's
full fleet comprising TAC16s running our AI algorithm.
Our main Research and Development ('R&D') activities in the year have been
aimed at re-architecting our image processing capability in preparation for a
series of further significant improvements to our technology. This will not
only utilise improvements in our Terahertz imaging capability but will also
incorporate the latest IP video camera technology and develop our AI
capability. These enhancements will result in higher performance systems which
are even easier to operate.
Competition
We continue to see limited competitive activity from our competitor set that
comprises metal detectors, active millimetre wave airport body scanners, and
passive Terahertz cameras. One airport body scanner company has started
marketing more to the Profit Protection sector in response to our success and,
in a head-to-head competition, our system delivered much higher employee
throughput, with excellent detection performance and very few false alarms. In
the passive Terahertz field, one small European competitor ceased trading and
in China a potential competitor has been marketing a product but we have yet
to see any evidence of its deployment anywhere. At this time, we remain very
confident that we are the clear market leader in our field.
Manufacturing and support
Our manufacturing capability and supply chain has continued to be highly
effective. Like many other businesses, we have seen shortages of various types
of commercial electronics and that has required some level of redesign and
consumed resources. Whilst we remain vigilant, we do not currently foresee any
material problem in this area moving forward. However, we have worked very
closely with suppliers of the highly specialised Terahertz components we
require to guarantee availability moving forwards. In a couple of specific
areas we bought components ahead of forecast demand to guarantee availability.
Our post-sales support has now matured and been extended out to partners and
we remain confident about the reliability of our equipment.
IP protection
We continue to invest in the R&D of the Thruvision product range and,
where appropriate, suitable patent protection is put in place. During the year
the two patent applications, submitted in 2019, continued to be assessed in
accordance with the normal global patent application process. In addition, and
post year-end, a provisional patent application was successfully filed in
respect of further improvements in software image processing discussed above.
People
We increased average headcount from 40 to 43 staff during the year. This
increase was again predominantly in Sales and Sales Support but also included
a strengthening of our software R&D capability.
Financial review
Summary
During the year ended 31 March 2022, revenues increased by 25% to £8.4
million (2021: £6.7 million), resulting in a reduced operating loss of £1.9
million (2021: £2.8 million loss).
The Directors use Adjusted loss before tax as an important measure of the
performance of the business. The Group recorded an Adjusted loss before tax of
£2.3 million (2021: £2.3 million loss). This was calculated as follows:
2022 2021
£'000 £'000
Loss before tax (1,889) (2,756)
Share-based payments (credit)/charge (366) 409
Adjusted loss before tax for the year (2,255) (2,347)
Further details on the above are provided in note 3.
We continued the trend of selling more high specification products in both our
Customs and Profit Protection markets and expect this to continue. Gross
profit increased to £3.9million (2021: £3.2million) although gross margin
reduced slightly to 47% (2021: 48%) as a result of an increased proportion of
revenue from equipment sales relative to support.
During the year, we invested in our Profit Protection sales team to drive
further growth, and headcount increased as a result of this. The associated
cost impact was mitigated by continued effective control of Overheads (as
defined in the section entitled Total Administration costs), which increased
to £5.6 million (2021: £4.8 million), but fell as a percentage of Revenue to
67% (2021: 71%).
The Group total average headcount increased by three to 43.
Key Performance Indicators ('KPIs')
The Board considers the following to be the most effective KPIs for managing
and tracking the trading performance of the business.
The performance indicators selected represent the most important determinants
of maximising our cash generation and retention, and therefore value creation
for the future. Establishing the optimum levels of overhead expenditure and
employee numbers is also critical for investing in a robust business and
realising our growth potential. Monitoring and maintaining the appropriate
amount of inventories ensures we match efficiency of sensible working capital
management with the agility to deliver new orders on a timely basis.
KPIs 2022 2021
£'000 £'000
Revenue 8,361 6,700
Gross profit 3,902 3,214
Gross margin 47% 48%
Overheads* (5,600) (4,764)
Adjusted loss before tax (2,255) (2,347)
Average number of employees 43 40
Inventories at year end 3,868 4,419
*Excludes Depreciation and amortisation, Share-based payments and Foreign
exchange.
Revenue
The analysis of total revenue by type and sector is shown in the tables below:
Revenue by Type 2022 2021 %
£'000 £'000 movement
Equipment revenue 7,667 5,678 35
Support and development revenue 694 1,022 (32)
Total 8,361 6,700 25
Revenue by Sector 2022 2021 %
£'000 £'000 movement
Profit Protection 3,756 2,165 73
Customs 3,947 4,011 (2)
Aviation 179 299 (40)
Entrance Security 479 225 113
Total 8,361 6,700 25
Gross profit
The analysis of total Gross profit and Gross margin by revenue type is shown
in the table below:
Gross margin 2022 Gross margin % 2021 Gross margin %
£'000 £'000
Equipment gross profit 3,282 43% 2,416 43%
Support and development gross profit 620 89% 798 78%
Total gross profit 3,902 47% 3,214 48%
The small decrease in Gross margin to 47% (2021: 48%) was due to an increased
proportion of revenue from equipment sales relative to support.
Total Administration costs
Total Administration costs comprising Overheads, Depreciation and
amortisation, Share-based payments and Foreign exchange reduced to £5.8
million (2021: £6.0 million).
Overheads increased to £5.6 million (2021: £4.8 million) for the year,
although our ratio of Overheads to Revenue fell to 67% (2021: 71%)
demonstrating an element of operational gearing in the business. With Property
and administration and Management costs remaining flat with the prior year,
investment in our cost base was focused on expanding our Profit Protection
sales team in the US and Europe, with the additional travel and marketing
costs this entails, recruiting a new VP Software Development to lead our ever
more important software R&D programme, and adding a Production Technician.
Plc costs include £91k of professional costs with regards the liquidation of
dormant subsidiaries.
Total Administration costs 2022 2021
£'000 £'000
Engineering 1,690 1,403
Sales and marketing 2,006 1,718
Property and administration 502 469
Management 708 642
Plc costs 694 532
Overheads 5,600 4,764
Depreciation and amortisation 561 518
Share-based payment (credit)/charge (see note 4) (366) 409
Foreign exchange (gain)/loss (6) 329
Total Administration costs 5,789 6,020
Our expenditure is monitored closely and continually throughout the trading
year as we retain the agility to manage costs incurred when reacting quickly
to market conditions and opportunities.
Inventories
Inventories at 31 March 2022 stood at £3.9 million (31 March 2021: £4.4
million). However, given the already worsening global supply-chain shortages
discussed more fully in the Strategic Update, the Board started the process of
forward purchasing scarce or long-lead time items towards the end of the
reporting period. This was to ensure that production levels could be
maintained through the first few months of calendar year 2022 and this policy
has continued since 31 March 2022.
Cash
The Group's cash and cash equivalents at 31 March 2022 were £5.4 million
(2021: £7.3 million).
The overall cash outflow of £1.8 million during the year resulted principally
from the operating loss incurred, the impact of which was mitigated by careful
working capital management.
Trade and other receivables
The £0.5million increase in trade receivables was due to the timing of
material sales realised in the final month of the year.
Deferred revenue
Deferred revenue decreased from £1.3 million as at 31 March 2021 to £0.7
million at 31 March 2022. This resulted from the monthly recognition of income
on two large US governmental support contracts won in previous years.
Adjusted operating loss before tax
The Adjusted operating loss for operations before tax and share based payments
but including depreciation, foreign exchange and interest, amounted to a £2.3
million loss (2021: £2.3 million loss).
Taxation
At 31 March 2022, the Group had unutilised tax losses carried forward of
approximately £14.0 million (2021: £13.0 million), of which £7.2 million
(2021: £6.7 million) relate to trading losses available indefinitely for
offset against future taxable trading profits. The remaining losses are
attributable to Thruvision Group plc and, because the Company does not carry
out a trade, these losses are only available to offset against future profits
of the Company.
Given the uncertainty regarding the expected utilisation of these losses the
Group has not recognised any associated deferred tax assets. At 31 March 2022,
the Group had no net deferred tax liability (2021: £nil).
The income statement tax credit for the year of £231k (2021: £266k) relates
predominantly to a R&D tax credit reclaim.
Currency impact
The Group recorded a £6k foreign currency exchange gain (2021: £329k loss)
resulting principally from US dollar transactions.
Consolidated income statement
for the year ended 31 March 2022
Notes Year ended Year ended
31 March
31 March 2021
2022
£'000 £'000
Revenue 2 8,361 6,700
Cost of sales (4,459) (3,486)
Gross profit 3,902 3,214
Administration costs (5,789) (6,020)
Other income 1 49
Operating loss 3 (1,886) (2,757)
Finance income 17 22
Finance costs (20) (21)
Loss before tax (1,889) (2,756)
Income tax 231 266
Loss for the year from continuing operations (1,658) (2,490)
Discontinued operations
Profit from discontinued operations after tax - 2
Loss for the year (1,658) (2,488)
Loss per share
Loss per share - basic 5 (1.14p) (1.71p)
Loss per share - diluted 5 (1.14p) (1.71p)
Adjusted loss:
Loss before tax from continuing operations 4 (1,889) (2,756)
Share-based payment (credit)/charge 4 (366) 409
Adjusted loss before tax on continuing operations (2,255) (2,347)
Consolidated statement of comprehensive income
for the year ended 31 March 2022
Year ended Year ended
31 March
31 March
2022 2021
£'000
£'000
Loss for the year from continuing operations (1,658) (2,490)
Profit for the year from discontinued operations - 2
Loss for the year attributable to owners of the parent (1,658) (2,488)
Other comprehensive loss from continuing operations
Exchange differences on retranslation of foreign operations (6) (48)
Net other comprehensive expense to be reclassified to profit or loss in (6) (48)
subsequent periods
Total comprehensive loss attributable to owners of the parent (1,664) (2,536)
Consolidated statement of financial position
at 31 March 2022
Assets Year ended Year ended
31 March 2022 31 March 2021
£'000 £'000
Non-current assets
Property, plant and equipment 1,175 1,103
Intangible assets 79 48
1,254 1,151
Current assets
Inventories 3,868 4,419
Trade and other receivables 1,982 1,442
Current tax recoverable 210 378
Cash and cash equivalents 5,441 7,268
11,501 13,507
Total assets 12,755 14,658
Equity and liabilities
Attributable to owners of the parent
Equity share capital 1,466 1,458
Share premium 201 47
Capital redemption reserve 163 163
Translation reserve 61 67
Retained earnings 7,554 9,578
Total equity 9,445 11,313
Non-current liabilities
Other payables 600 643
Provisions 38 38
638 681
Current liabilities
Trade and other payables 2,494 2,489
Provisions 178 175
2,672 2,664
Total liabilities 3,310 3,345
Total equity and liabilities 12,755 14,658
Consolidated statement of changes in equity
for the year ended 31 March 2022
Ordinary Share Capital redemption reserve Translation reserve Retained Total
Share
premium
£'000
£'000
earnings
equity
capital
account
£'000
£'000
£'000
£'000
At 31 March 2020 1,455 - 163 115 11,652 13,385
Shares issued 3 47 - - - 50
Share-based payment charge - - - - 414 414
Transactions with Shareholders 3 47 - - 414 464
Loss for the year - - - - (2,488) (2,488)
Other comprehensive loss - - - (48) - (48)
Total comprehensive loss - - - (48) (2,488) (2,536)
At 31 March 2021 1,458 47 163 67 9,578 11,313
Shares issued 8 154 - - - 162
Share-based payment credit - - - - (366) (366)
Transactions with Shareholders 8 154 - - (366) (204)
Loss for the year - - - - (1,658) (1,658)
Other comprehensive loss - - - (6) - (6)
Total comprehensive loss - - - (6) (1,658) (1,664)
At 31 March 2022 1,466 201 163 61 7,554 9,445
Consolidated statement of cash flows
for the year ended 31 March 2022
Note Year ended Year ended
31 March 2022
31 March 2021
£'000
£'000
Operating activities
Loss before tax from continuing operations (1,889) (2,756)
Profit before tax from discontinued operations - 2
Loss before tax (1,889) (2,754)
Non-cash adjustment to reconcile loss before tax to net cash flows
Depreciation of property, plant and equipment 546 504
Amortisation of intangible assets 15 14
Share-based payment (credit) / charge 4 (366) 409
Finance income (17) (22)
Finance costs 20 21
Working capital adjustments:
(Increase)/decrease in trade and other receivables (540) 779
Decrease in financial instruments - 203
Decrease/(increase) in inventories 551 (748)
Increase/(decrease) in trade and other payables 317 (326)
Increase in provisions 3 175
(Decrease)/increase in deferred revenue (683) 891
Transfers from fixed assets to inventory 70 103
Cash utilised in operations (1,973) (751)
Net tax receipts 399 184
Net cash flow from operating activities (1,574) (567)
Investing activities
Property, plant & equipment additions (187) (407)
Leased property additions (502) (84)
Intangible asset additions (46) -
Proceeds from sales of fixed assets - 20
Interest received 17 22
Net cash flow from investing activities (718) (449)
Financing activities
Proceeds from issue of shares 162 50
New leases taken out in the year 509 84
Leasing obligations repayments (180) (186)
Lease disposals - (51)
Finance costs (20) (21)
Net cash flow from financing activities 471 (124)
Net decrease in cash and cash equivalents (1,821) (1,140)
Cash and cash equivalents at the beginning of the year 7,268 8,431
Effect of foreign exchange rate changes on cash and cash equivalents (6) (23)
Cash and cash equivalents at end of year 5,441 7,268
Notes to the financial information
1. Accounting policies
1.1 Basis of preparation
The financial information of the Group set out above does not constitute
statutory accounts for the purposes of Section 435 of the Companies Act
2006. The financial information for the year ended 31 March 2022 has been
extracted from the Group's audited financial statements which were approved
by the Board of Directors on 29 September 2022. The accounts will be posted to
shareholders and filed at Companies House on 30 September 2022.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
Thruvision Group plc transitioned to UK-adopted International Accounting
Standards in its company financial statements on 1 April 2021. This change
constitutes a change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a result of
the change in framework.
The financial statements of Thruvision Group plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
Monetary amounts are expressed in Pounds Sterling ('GBP') and are rounded to
the nearest thousand (£'000), except where otherwise stated.
The financial statements were authorised for issue by the Board of Directors
on 29 September 2022 and the Statement of Financial Position was signed on the
Board's behalf by Tom Black and Colin Evans.
The Company is a public limited company incorporated and domiciled in England
and Wales and whose shares are quoted on AIM, a market operated by the London
Stock Exchange.
The consolidated financial statements have been prepared on a historical cost
basis, except:
· Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the
initial transactions.
1.2 Accounting policies
The key accounting policies which apply in preparing the financial statements
for the period are set out below. These policies have been consistently
applied to all periods presented in these consolidated financial statements.
1.3 Basis of measurement
Going concern
The Group's loss before tax from continuing operations for the year was £1.9
million (2021: £2.8 million). As at 31 March 2022, the Group had net current
assets of £8.8 million (31 March 2021: £10.8 million) and net cash reserves
of £5.4 million (31 March 2021: £7.3 million).
The Board has taken the cash flow forecast for the period 1 September 2022 to
30 September 2023, reviewed the key assumptions unpinning the projection, and
considered a range of downside scenarios to assess whether the business has
adequate financial resources to continue operational existence and to meet
liabilities as they fall due for a period of not less than 12 months from the
approval of the financial statements.
In completing the above analysis the Board has reviewed the following:
· The current pipeline of potential sales opportunities, differentiating between
existing customers and new customers, and smaller sales and large, multi-unit
sales. Potential scenarios included a general downgrading of smaller units
sales volumes and the removal of larger sales for which confidence of securing
an order was not already high based on customer interaction to date
· Market, political and recessionary economic trends that may adversely impact
the prospects of revenue realisation from a broad range of customers in all
geographical areas of operation
· The potential for supply chain issues to result in higher purchasing costs and
reduced margins, or an inability to fulfil all orders received due to raw
materials shortages
· An expectation of retaining a materially higher overheads cost base than the
prior year, aligned to support a growing business
· General inflationary pressures that may have similar impacts on revenues and
costs to those described above
· The availability of manufacturing facilities and the impact of unforeseen
outages
Reverse stress testing has been performed to identify and analyse the
circumstances under which the Group's business would no longer be viable
without recourse to new funding throughout the period reviewed. The testing
undertaken applied various stresses simultaneously even though it would not be
considered reasonable to expect all downsides to occur concurrently.
However, despite this assertion, the above modelling demonstrates that cash
generation is sufficient for the business to remain a going concern, without
recourse to alternative sources of finance, for the period to 30 September
2023.
Furthermore, it should be noted that in adverse circumstances various
mitigating actions, not accounted for in the testing process, could be taken
to maximise liquidity including, for example, a reduction of inventory levels
and discretionary spend.
Overall, the Group is well placed to manage business risk effectively and the
Board reviews the Group's performance against budgets and forecasts on a
regular basis to ensure action is taken where needed.
The Directors are satisfied that the Group has adequate resources to continue
operating for a period of at least 12 months from the approval of these
accounts. For this reason, they have adopted the going concern basis in
preparing the financial statements.
2. Segmental information
The business is run as one segment although we sell our products into a number
of sectors with differing needs as disclosed in the Finance review. The
employees of the business work across both our geographical and market
sectors, with the assets of the business being utilised across these sectors
as well, and it is not possible to directly apportion these costs between
these sectors.
As such, the Directors do not split the business into segments in order to
internally analyse the business performance, and consequently the results of
the business are only presented as continuing (and discontinued last year).
Given the contingent consideration which had been received historically (sale
of Digital Barriers inventory) ceased in year ended 31 March 2021 the
discontinued results have now ceased. Last year the discontinued activities
were not material to the business results.
The Directors believe that allocating overheads by department provides a
suitable level of business insight. The overhead department cost centres
comprise :
· Engineering (manufacturing and R&D);
· Sales and marketing;
· Property and administration;
· Management; and
· Plc costs.
with the split of costs as shown on page 12.
Whilst, as noted in the Strategic report, the Group sells into multiple
sectors, there is only considered to be one operating segment in line with
IFRS 8 based on the information reviewed by the Chief Operating Decision
Maker. In accordance with IFRS 8, the Group has derived the information for
its operating segments using the information used by the Chief Operating
Decision Maker and supplemented this with additional analysis to assist
readers of the Annual Report to better understand the impact of the Group's
current trading performance. The Group has identified the Board of Directors
as the Chief Operating Decision Maker as it is responsible for the allocation
of resources to operating segments and assessing their performance.
Following its disposal on 31 October 2017, the Video Business has been
reported as a discontinued operation. The profit disclosed this year within
discontinued operations includes further amounts due on deferred consideration
as part of the Share Purchase Agreement on the sale of the Video Business.
Analysis of revenue by customer
There have been two (2021: one) individually material customers (comprising
over 10% of total revenue) in the year. These customers individually
represented £3,740k and £1,059k of revenue for the year (2021: £3,094k).
Other segment information
The following tables provide disclosure of the Group's revenue analysed by
geographical market based on the location of the customer.
The Group's revenue by geographical market is detailed below:
2022 2021
£'000
£'000
UK 2,644 1,045
Americas 4,445 4,501
Asia-Pacific 104 140
Europe 864 428
Middle East and Africa 304 586
8,361 6,700
The Group's Revenue by type is detailed below:
2022 2021
£'000
£'000
Revenue recognised at point of delivery 7,718 5,864
Revenue recognised over time - Extended warranty and support revenue 643 836
8,361 6,700
The Group's non-current assets by geography are detailed below:
2022 2021
£'000
£'000
United Kingdom 1,157 1,001
United States of America 97 150
1,254 1,151
3. Group operating loss
The Group operating loss attributable to continuing operations is stated after
charging/(crediting):
2022 2021
£'000
£'000
Research and development costs 631 577
Expected credit loss expense 32 -
Depreciation of property, plant and equipment 546 504
Amortisation of intangible assets 15 14
Exchange (gains)/losses (6) 329
Non-core operating costs((i)) 91 29
(i) One-off costs comprising professional fees incurred in the
rationalisation of a number of the Group's dormant subsidiaries.
4. Adjusted loss before tax
An adjusted loss before tax measure has been presented as the Directors
believe that this is a better measure of the Group's underlying performance.
Adjusted loss is not defined under IFRS and may not be comparable with
similarly titled measurements reported by other companies, neither is it
intended to be a substitute for, or superior to, IFRS measures of profit. The
net adjustments to loss before tax from continuing operations are summarised
below:
2022 2021
£'000
£'000
Share-based payment (credit)/charge((i)) (366) 409
Total adjustments (366) 409
(i) The performance conditions associated with certain LTIP awards
are subject to a non-market based performance measure. Accordingly, should
these LTIP awards fail to vest, the share-based payment charge will be added
back to the income statement. To date the majority of historic LTIP awards
have failed to vest. The inclusion of Adjusted loss before tax provides
consistency over time allowing a better understanding of the financial
position of the Group.
5. Loss per share
Unadjusted loss per share
2022 2021
£'000
£'000
Loss from continuing operations attributable to Ordinary Shareholders (1,658) (2,490)
Loss from continuing and discontinued operations attributable to Ordinary (1,658) (2,488)
Shareholders
Weighted average number of shares 145,853,091 145,515,022
Basic and diluted loss per share - continuing operations (1.14p) (1.71p)
Basic and diluted loss per share - continuing and discontinued operations (1.14p) (1.71p)
Adjusted loss per share
2022 2021
£'000
£'000
Loss attributable to Ordinary Shareholders (1,658) (2,490)
Share-based payment (credit)/charge (366) 409
Adjusted loss after tax (2,024) (2,081)
Weighted average number of shares 145,853,091 145,515,022
Basic and diluted loss per share (1.14p) (1.71p)
Basic and diluted adjusted loss per share (1.39p) (1.43p)
The inclusion of potential Ordinary Shares arising from LTIPs and EMI Options
would be anti-dilutive. Basic and diluted loss per share has therefore been
calculated using the same weighted number of shares.
6. Post-balance sheet events
The Group has no post-balance sheet events.
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