REG - Thruvision Group PLC - Results for the year ended 31 March 2023
21/07/2023 07:00
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RNS Number : 7234G Thruvision Group PLC 21 July 2023
21 July 2023
Thruvision Group plc
Results for the year ended 31 March 2023
Thruvision Group plc (AIM:THRU, "Thruvision" or the "Group"), the leading
provider of walk-through security technology, today publishes its results for
the financial year ended 31 March 2023.
Key Highlights
· Revenue was up 49% to £12.4 million (2022: £8.4 million).
· Multi-year framework contract awarded by US Customs and Border Protection
('CBP') and related orders from the same customer delivered revenue of £8.3
million (2022: £3.7 million).
· Adjusted gross margin(2) up 4.8pp to 51.5% resulting from positive product mix
and higher margin software revenue, with statutory gross margin(3) growing
6.2pp to 47.0% reflecting production efficiencies.
· Adjusted EBITDA(2) loss was £0.2 million (2022: loss £1.7 million).
· Operating loss was £1.0 million (2022: loss £1.9 million)
· Cash balance as at 31 March 2023 was £2.8 million (31 March 2022: £5.4
million), with cash at 20 July 2023 of £2.4 million.
2023 2022
Continuing operations £m £m Change
Statutory measures:
Revenue(1) 12.4 8.4 +49%
Gross profit(3) 5.8 3.4 +71%
Gross margin(3) 47.0% 40.8% +6.2pp
Operating loss (1.0) (1.9) +48%
Loss before tax (1.0) (1.9) +48%
Loss per share (pence) (0.55) (1.14) +52%
Alternative measures(2):
Adjusted gross profit 6.4 3.9 +64%
Adjusted gross margin 51.5% 46.7% +4.8pp
Adjusted EBITDA loss (0.2) (1.7) +87%
Adjusted loss before tax (0.8) (2.3) +62%
Adjusted loss per share (pence) (0.46) (1.39) +67%
(1) Re-translation of 2023 US$ entity revenues at prior year exchange rates
results in a constant currency increase in Group revenue of 37%.
(2) Alternative performance measures ('APMs') are used consistently throughout
this announcement and are referred to as 'adjusted'. These are defined in full
and reconciled to the reported statutory measures in the Appendix.
(3) As restated see note 5.
Commenting on the results, Colin Evans, Chief Executive, said: "In this
breakthrough year, which saw revenues jump by 49%, we have now taken a
significant step forward towards meeting our key strategic objectives of
becoming the leading provider of walk-through security technology to the
international market and delivering sustainable profitability as a Group.
We are delighted to be first to market with our unique, new WalkTHRU solution.
Walk-through security - the ability to screen 100% of people for all types of
concealed items at walking pace - is seen by many customers as their ultimate
requirement, and we are seeing strong interest in our new capability.
With the award of a multi-year US CBP contract and the addition of further
flagship retailers as customers, we have secured our market-leading position
in the International Customs Agency and Retail Distribution markets. We
believe that our existing revenue base in these markets, combined with their
significant potential, provides a robust base from which we can profitably
grow the Group."
For further information please contact:
Thruvision Group +44 (0)1235 425400
plc
Colin Evans, Chief Executive
Victoria Balchin, Chief Financial Officer
Investec Investment Banking (NOMAD & Broker) +44 (0)20 7597 5970
James Rudd / Patrick Robb / Sebastian Lawrence
Meare Consulting +44 (0) 7990 858548
Adrian Duffield
About Thruvision (www.thruvision.com)
Thruvision is the leading developer, manufacturer and supplier of walk-through
security technology. Its technology is deployed in more than 20 countries
around the world by government and commercial organisations in a wide range of
security situations, where large numbers of people need to be screened
quickly, safely and efficiently. Thruvision's patented technology is uniquely
capable of detecting concealed objects in real time using an advanced AI-based
detection algorithm. The Group has offices and manufacturing capability in the
UK and US.
Important information
This announcement may include statements that are, or may be deemed to be,
"forward-looking statements" (including words such as "believe", "expect",
"estimate", "intend", "anticipate" and words of similar meaning). By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances, and actual results may, and often
do, differ materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with respect to
future events as at the date of this announcement. Save as required by
applicable law, the Company undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
Chairman's statement
This was a breakthrough year for the Group where we delivered very strong
revenue growth and took a significant step towards sustainable profitability.
I am delighted with the excellent progress we made towards our strategic
objective of becoming the leading provider of walk-through security technology
to the international market.
It was very pleasing to see such strong revenue growth during the year to 31
March 2023. This was based on a combination of adding new customers, often as
a result of recommendations from existing users and, equally encouragingly,
from those existing customers extending and upgrading their use of our
solutions. This supports our long-held view that Thruvision technology adds
significant value for our customers which underpins our long-term confidence
in the business.
We are now a leader in the development, manufacture and supply of walk-through
security technology to the international market. Our systems are used by a
growing number of both government and commercial organisations in a variety of
security situations, where, typically, large numbers of people need to be
screened quickly, safely and cost-effectively for items hidden in their
clothing.
Although we have an established product range now in place, we continued to
invest in R&D. This paid off with the highly successful launch of our
"WalkTHRU" solution, based on our latest AI-driven detection software and
developed in close cooperation with NEXT plc, a long-term user and one of our
most highly-valued customers. This new offering enables very high numbers of
people per hour to be checked for all types of concealed item, allowing NEXT
to security screen 100% of staff leaving its Distribution Centre at the end of
their shifts, thereby maximising deterrence and reducing theft rates. Such
capability meets a very clear market need and we are delighted to be unique in
the market with such a solution.
Our decision to focus our efforts primarily on International Customs Agencies
and on the Retail Distribution (previously called Profit Protection) markets
has paid off. Significant progress with US Customs and Border Protection
('CBP') led to very strong demand from the Customs market which offset a
weaker performance in Retail Distribution which was not surprising given the
strong headwinds faced by the retail sector. We remain confident that both
markets represent significant growth opportunities and that their
complementary nature provides us with a high degree of resilience to economic
cycles.
We continued to strengthen our leadership team during the year. The most
significant arrival was Victoria Balchin, our new Chief Financial Officer
('CFO'), who joined last Autumn. More recently, we promoted Nick Graham-Rack
to Chief Technology Officer ('CTO') to accelerate the development of our new
software capabilities. John Woollhead, our Company Secretary, retired in
December after 12 years of service with the Group and was replaced by Hannah
Platt. John was a first-class and trusted colleague for almost 20 years, and
we will greatly miss his wise counsel and good humour.
On behalf of the Board, I would like to express our thanks to all our staff
who have worked so hard to grow the business during the year. Many are
long-term employees, and some have been with Thruvision since its inception,
and I am delighted that they are now seeing the Group starting to fulfil its
undoubted potential.
Outlook
Having proved the value of our solutions beyond doubt, the focus of the
business is now moving towards scaling as rapidly as our markets and resources
will allow. We believe that our target markets are significant and should
impose no foreseeable limits on our growth. Our growing sales team will focus
equally on acquiring new customers, particularly in the US, and on increasing
the Thruvision presence with existing customers. Meanwhile, our technology
investment will ensure that we build an even greater lead over our
competition.
The past year, combined with current activity levels, have reinforced our
confidence that Thruvision will continue to grow well and become the solution
of choice for walk-through security.
Chief Executive's statement
Strategic update
Our strategy is to build on our market-leading position as a developer,
manufacturer and supplier of walk-through security technology. We aim to
become a mainstream provider and increase our market-share in a number of
growing and established international markets. We expect that our continued
investment in improving our patented, AI-enhanced Terahertz (THz) imaging
technology will maintain our significant advantage over our competition.
Business performance
We took a significant step forward towards meeting a key strategic goal of
sustainable profitability in the reporting period. Revenue grew strongly by
49% to £12.4 million (2022: £8.4 million) and, driven by the uptake of our
new, higher performance products and AI software licences, Adjusted gross
margin increased by 4.8 percentage points to 51.5% (2022: 46.7%). For the
first time software license revenues made a modest but meaningful,
contribution at £0.5 million (2022: nil). We see software licences as an
important new and margin-enhancing revenue stream and expect to add further
licensable software functionality in FY24. Statutory gross margin grew by 6.2
percentage points to 47.0% reflecting increasing economies of scale in our
manufacturing operations.
Given this performance, the Board decided to award bonuses across the business
for the first time. These totalled £0.5 million (2022: £0.1 million) and
rewarded all employees for achieving such strong growth. While leading to a
small Adjusted EBITDA loss, the Board believes this award is in the best
long-term interests of the Group.
Technology strategy
Walk-through security - the ability to screen 100% of people for all types of
concealed items at walking pace - is seen by many customers as their ultimate
requirement. Derived from our R&D work in the Aviation sector, we were
therefore delighted to be able to be the first company to offer this
capability to the market in the form of our new "WalkTHRU" security system in
October 2022. NEXT, Selfridges and Saks Fifth Avenue all bought walk-through
lanes in the second half of the financial year and we see growing interest for
this solution from a broader range of existing and new customers.
During the year we also established that, in many cases, existing customers
purchase upgrades for their existing systems if available rather than wait to
replace old systems at end-of-life. This point was well illustrated by US
Customs and Border Protection's ('CBP') decision to upgrade its systems to the
latest high-performance version during the year and purchase our AI-software
algorithm to run on them.
In the light of this strong interest in walk-through security and a
willingness by customers to upgrade, we have refined our technology strategy
and will be launching a series of new products and product upgrades in FY24.
These will extend our walk-through product range and offer the opportunity to
further extend system functionality in the form of software upgrades which we
will be able to license separately.
Strategic market focus
We have now firmly established ourselves in two strategic markets:
International Customs Agencies and Retail Distribution, and these are
described in more detail in the Business Review. With differing economic
drivers, together these markets are sizeable enough to offer us a very
significant growth opportunity, particularly given the increasing reliance our
existing customers have on our technology. Furthermore, the two markets offer
us revenue diversity and, over time, will help ensure our growth prospects are
resilient to economic cycles.
A key strategic achievement in the year was the award of a multi-year CBP
contract in September 2022, and CBP is already delivering operational success
from these new systems. The adoption by CBP of our technology assists our
broader sales efforts with other international Customs agencies.
Retail Distribution, we believe, is ultimately our largest target market and,
as such, offers us the greatest growth potential. Given economic challenges,
employee theft is increasingly problematic for the retail industry and,
despite challenging trading conditions for our customers, our performance in
Retail Distribution remained resilient. We made progress in opening up Europe
and the US, and we continued to add new customers as well as receiving further
orders from existing customers. We remain confident that the very rapid return
on investment reported by our Retail Distribution customers (with many citing
a payback period of less than one year) means that our performance in this
market will return to growth as economic conditions recover.
Leadership team strengthening
As reported in the Chairman's statement, we continued the process of
strengthening the leadership within the business and appointed a new CFO and a
CTO in the period. To complete our investment in senior leadership, we have
recently recruited a very senior sales leader with 20 years' experience
working for one of the global security equipment vendors. With this
strengthened leadership, we now have an established infrastructure,
encompassing technology, operations, finance, sales and commercial, that is
capable of supporting our continued international growth.
Business review
Markets
As discussed above, while we operate in four distinct markets, our strategic
focus is on two, Customs and Retail Distribution, which represented 93% of our
revenue in the year (2022: 90%). We remain active in the other two markets,
Aviation and Entrance Security, but we are not expecting strong growth in
either in the short term and these are not therefore a current focus. We
report and review performance internally as one segment.
Customs
Thruvision is used by international customs agencies to screen people who
travel for drugs, cash and other contraband. We already have systems deployed
with agencies in nine countries.
Very much driven by CBP in the US, revenue here more than doubled to £9.2
million (2022: £3.9 million). We successfully delivered all the upgraded and
new high-performance systems that had been ordered in the two contracts we
received in September 2022. Deployed at a range of land border crossings,
international airports and cruise liner terminals, CBP is already achieving
operational success with these systems where, at some locations, 100% of legal
entrants to the US are being screened using our technology.
With the multi-year CBP framework purchasing agreement secured by our US
distribution partner in September 2022 and running to September 2026, we
expect further orders, noting that CBP normally places new orders during the
latter part of the US Government fiscal year, which ends on 30 September.
Elsewhere, we delivered an order for a sixth tranche of systems to an existing
Asian customer in March 2023 and have several significant opportunities with
other Customs Agencies, where we expect to see progress in FY24.
Retail Distribution
Retailers and their logistics partners use our technology to check employees
as they leave Distribution Centres ('DCs') for a wide range of items that they
may be trying to steal. Our analysis shows there are around 20,000 DCs in UK,
US and Europe which could use Thruvision systems.
Retail Distribution delivered revenue of £2.4 million (2022: £3.8 million).
However, FY22 performance was boosted by a single major sale, and without
this, revenue was broadly flat year to year. Given the challenging trading
environment currently faced by the retail industry, we believe this represents
a resilient result.
We continue to focus on major retailers and their third-party logistics
('3PL') partners and were particularly pleased that over half of our revenues
in Retail Distribution came from the purchasing of further new systems, or
upgrading of systems, by existing customers. Such high levels of customer
loyalty demonstrates the value ourtechnology provides and further reinforces
the very rapid return on investment that Thruvision offers.
Our investment in the US also started to deliver results, with new customers
including Saks Fifth Avenue and Clarins. We are confident that a very large
opportunity exists for the Group in the US and we expect to continue to invest
here to build the business.
Although progress in Europe has been impacted by economic challenges, we did
receive orders from two new customers. With conditions stabilising, we are
seeing renewed interest levels and expect to make further progress moving
forwards.
Aviation
Thruvision is approved for airport employee screening in the US and has
equipment in use with three US airports. We are seeking formal US Government
accreditation to compete with airport body scanners for the aviation passenger
screening market.
As expected, there was minimal sales activity in this sector through the year,
with revenue of £0.2 million (2022: £0.2 million). This constituted a single
sale to an existing US airport employee screening customer which upgraded its
Thruvision technology to the latest high-performance camera. We have seen a
gradual uptick in interest from other US airports for staff screening
applications, driven by possible future changes in US Government policy, and
we will respond quickly as circumstances change.
Although we are already used to security screen employees in airports in the
US, we require formal US Government Transportation Security Administration
accreditation to compete with airport body scanners for the passenger
screening market. We started this process in 2020 and, after several
COVID-related delays, it restarted during the period. Some further progress
has been made through what we continue to expect to be a protracted process.
Entrance Security
Thruvision is used by a wide variety of venues ranging from high-security
government sites to public museums to check visitors for concealed weapons.
We saw a modest improvement in revenue of £0.6 million (2022: £0.5 million)
as a number of delayed opportunities in the Middle East re-engaged after the
Pandemic. We expect to make some further progress in this area with the launch
of our WalkTHRU solution but continue to see this as a fragmented, high cost
of sale market.
Routes to market
For our core geographies, UK, US and Europe, we retain our own sales force,
and we tend to sell directly to end customers (noting that, with CBP, we
contract via a third-party). In Retail Distribution, we have a small number of
partnerships with large-scale security system integrators that serve this
market. We saw good progress with new customer sales through this channel in
the period, with Saks Fifth Avenue and Clarins examples of new customers that
were added.
Outside our core geographies, 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.
Product R&D and Intellectual Property ('IP')
Our technology allows security guards to see items hidden in clothing which
means that intrusive physical searches, or 'pat-downs', are no longer
necessary. Based on our patented THz sensor and image processing software, our
systems can detect, quickly and reliably, all types of material (non-metallic
as well as metallic).
With the major innovations on our hardware sensor successfully completed with
US Government funding three years ago, our focus is now on broadening the
number of sensor types we can offer at differing price / performance levels.
This sensor range utilises the same underlying modular hardware design meaning
we get economies of scale in sourcing components and manufacturing, resulting
in a lower cost per sensor as we grow volumes.
The focus of our more recent investment in R&D, led by our newly appointed
CTO, has been making significant improvements to our image processing
software. Encouraged by the commercial success of our AI-based automated
detection algorithm, we have made further significant progress and expect to
launch further new software capability in FY24. Importantly, this will include
software licensing capability which will enable us to deliver on, in due
course, our ambition to increasingly monetise our software functionality.
The Group's patent strategy is designed to cover the IP value in the Group
which is based on our modular, satellite-grade engineering THz sensor
platform, the unique combination of this sensor with purpose-designed optics
and scanning mirror, and purpose-developed image processing software.
As we invest more in our R&D, we continue to manage our patent portfolio
carefully and ensure our IP and broader information assets are well protected.
We remain comfortable with the position as it stands and will maintain a
proactive stance regarding patenting new innovations as they are developed.
Competition
We remain very confident that we are the clear market leader in our two key
markets, Customs and Retail Distribution. In these markets, items being
searched for are predominantly non-metallic, so metal detectors are completely
ineffective.
Airport body scanners use active millimetre-wave technology to detect all
types of material. However, they are too large and too slow for use in Retail
Distribution where we consistently win any head-to-head competitions.
In the passive THz field, we have still not seen any evidence that an
advertised Chinese manufactured product has successfully been operationally
deployed. We believe we beat this nascent competitor in a recently won Asian
contract award. We continue to believe that our technology delivers superior
operational performance.
Manufacturing and support
We remain confident about the effectiveness of our manufacturing capability
across the UK and US. We set a new record in our fourth quarter when, in one
month, we delivered 40 cameras as we worked through the large order backlog we
had in H2.
Despite some challenges with the availability of various components, our
manufacturing capability has remained effective through the year. Component
shortages were limited to various types of commercial electronics where we can
"design around" to maintain production levels. While we remain vigilant, we do
not currently foresee any material problem in this area moving forward.
We continue to work very closely with suppliers of the highly specialised THz
components and will continue to buy specialist components ahead of forecast
demand to guarantee availability.
Our post-sales support has now matured and is now increasingly being provided
by local partners which offers us an effective means of scaling up as the
number of deployed systems increases. We remain confident about the
reliability of our equipment.
People
Average headcount increased from 40 to 43 staff during the year. This was
driven by an increase in software R&D capability and manufacturing
management.
Financial review
Revenue for the year to 31 March 2023 was up 49% to £12.4 million (2022:
£8.4 million) benefiting particularly from a large order for CBP. Adjusted
gross margin improved by 4.8pp to 51.5%
(2022: 46.7%) mainly due to increased sales of higher performance products and
software. Statutory gross margin was up 6.2pp to 47.0% (as restated see note
5) additionally reflecting production efficiencies as volumes increased.
Operating loss in the period was £1.0 million (2022: loss
£1.9 million), with an Adjusted EBITDA loss of £0.2 million (2022: loss
£1.7 million). Adjusted loss before tax of £0.8 million improved by 62%
(2022: loss £2.3 million) with statutory loss before tax of £1.0 million
(2022: loss £1.9 million).
Cash as at 31 March 2023 was £2.8 million (31 March 2022: £5.4 million). The
majority of the reduction in year-end cash relates to the net working capital
outflow of £2.3 million caused principally by higher trade receivables at the
end of the year, primarily related to CBP for which settlement occurs as
equipment is deployed in the field.
( )
Revenue
Revenue is split between our two principal activities below:
2023 2022
£'000 £'000
Product 11,782 7,667
Support and Development 638 694
Total 12,420 8,361
The principal growth driver for the business is product sales. Support revenue
includes extended warranty and other post-sale support revenue, as well as
customer-funded development contracts. We expect warranty and other support
revenue to grow in the future, with customer-funded development contracts not
a key driver for future growth.
Revenue is split by market sector and geographical region below:
2022
2023
Revenue by market sector £'000 £'000
Retail Distribution 2,429 3,756
Customs 9,165 3,947
Aviation 246 179
Entrance Security 580 479
12,420 8,361
2023 2022
Revenue by geographical region £'000 £'000
UK and Europe 2,249 3,508
Americas 9,223 4,445
Rest of World 948 408
12,420 8,361
Revenue benefited from translational exchange as the depreciation in the US$
exchange rates improved revenue by approximately £1.0 million, compared to
the prior year average exchange rate experienced. This resulted in constant
currency growth in revenue of 37%.
Gross Profit
Adjusted gross profit, defined as gross profit excluding production overheads,
is used to enable a like-for-like comparison of underlying sales
profitability. Production overheads are excluded due to recent changes in
product mix and investments in the production team which have improved
capacity and therefore changed the labour and overhead absorption rates in the
current year. As a result, adjusted gross profit is the Alternative
Performance Measure ('APM') used to represent this metric, see Appendix for
calculation. Statutory gross profit for 2022 has been re-stated to include
production overheads within cost of sales rather than administrative expenses
in accordance with IAS 2
(see note 5).
Adjusted gross margin grew in the second half of the year reflecting improved
product mix caused by an increased proportion of higher performance product
sales and software revenue. This contributed to the 4.8pp increase in adjusted
gross margin for the full year, with statutory gross margin up by 6.2pp
including a 1.4pp benefit from manufacturing efficiencies as we increased
production throughput. Statutory gross margin benefitted from translational
exchange as the depreciation in the US$ exchange rates improved revenue by
approximately £0.2 million, compared to the prior year average exchange rate
experienced.
Adjusted gross profit and statutory gross profit are shown below.
2023 2022
£'000 £'000
(as restated
see note 5)
Revenue 12,420 8,361
Adjusted gross profit 6,401 3,902
Adjusted gross margin 51.5% 46.7%
Statutory gross profit 5,837 3,413
Statutory gross margin 47.0% 40.8%
Administrative expenses
Administrative expenses increased as expected by 29% (£1.5 million) to £6.8
million with overheads up by 19% (£0.9 million) to £6.1 million. The ratio
of overheads to revenue fell to 49% from 62% last year demonstrating continued
operational leverage. The anticipated payment of a bonus to all employees for
the first time accounted for almost half of the increase in overheads in the
year. Administrative expenses include share-based payment charges,
depreciation and amortisation and impairment of intangible assets, but these
are excluded from overheads. Overheads were impacted by translational exchange
as the depreciation in the US$ exchange rates increased overheads by
approximately £0.2 million, compared to the prior year average exchange rate
experienced.
Administrative expenses are analysed as follows:
2023 2022
£'000 £'000
Sales and marketing 2,215 1,945
Engineering 1,359 1,300
Management 1,046 685
PLC costs 829 663
Property and administration 417 494
Bonus 458 84
Foreign exchange gains (198) (6)
Overheads 6,126 5,165
Depreciation and amortisation 569 500
Share based payments charge / (credit) 96 (366)
Impairment of intangible assets 36 -
Administrative expenses 6,827 5,299
The increase in overheads is driven by higher staff costs including
investments in headcount and related costs. Sales and marketing expenditure
increased due to higher sales commissions resulting from revenue growth and
travel to support growth in our European and US Retail Distribution markets.
Engineering costs, including R&D costs, were up as a result of increased
headcount in our software team as we continue to scale up to support new
product offerings going forward. Management and PLC costs were higher, driven
by one-off costs relating to the CFO replacement, higher insurance costs and
professional fees.
Loss after tax and loss per share
Statutory loss after tax improved by 51% to a loss of £0.8 million with the
adjusted loss after tax of £0.7 million improving by 67%. The tax credit of
£0.2 million (2022: £0.2 million) reflects R&D tax credits receivable.
Unrelieved tax losses in the UK available to carry forward indefinitely are
£15.2 million (2022: £14.0 million).
The loss per share and adjusted loss per share were 0.55 pence and 0.46 pence
respectively
(2022: loss per share and adjusted loss per share of 1.14 pence and 1.39 pence
respectively) and reflected the movements in adjusted and statutory loss after
tax.
Cash flow
The decrease in cash and cash equivalents during the year of £2.6 million to
£2.8 million as at 31 March 2023, was principally caused by a £2.3 million
outflow in net working capital, with an operating cash outflow before working
capital movements of £0.2 million and net outflows of £0.1 million each from
investing and financing activities.
The movements in net working capital were as follows:
· Trade and other receivables caused a £2.4 million outflow in the
year, driven by higher sales in the final quarter of the year. Included in
trade and other receivables of £3.7 million at
31 March 2023 was £2.7 million relating to CBP, £1.7 million of which has
been received to date.
· Inventory reduced by £0.2 million with tighter inventory management
offset by selective forward purchasing of key electronic components where
potential global shortages became apparent.
· An increase in trade and other payables resulted in an inflow of
£0.3 million. Trade payables increased principally due to the volume of stock
purchased in the final quarter compared to the prior year.
Financing, Treasury and Going Concern
Cash and cash equivalents as at 31 March 2023 were £2.8 million (31 March
2022: £5.4 million).
In order to manage fluctuations in working capital, the Group has recently
agreed an overdraft facility with HSBC of £1.0 million which reduces to
£0.25 million from 30 September 2023 and currently expires on 31 May 2024.
This remains undrawn to date.
The Group has prepared and reviewed cash flow forecasts for the period to 31
July 2024, which reflect forecast changes in revenue across its business and
performed a reverse stress test of the forecasts to determine the extent of
any downturn which would result in insufficient cash being available to the
business. Following this assessment, the Board are satisfied that the Group
has sufficient resources to continue in operation for a period of not less
than 12 months from the date of this report. Accordingly, they continue to
adopt the going concern basis in relation to this conclusion and preparing
the Consolidated Financial Statements.
Currency
The Group has both translational and transactional currency exposures.
Translational exposures arise on the consolidation of the US overseas
subsidiary results into GBP. The largest translational exposures during
the year were to the US Dollar. Translational exposures are not hedged.
During the year, currency translation effects resulted in revenue being £1.0
million higher, gross margin being £0.2m higher and Adjusted EBITDA £34k
higher than they would have been if calculated using prior year exchange
rates.
Transactional exposures arise where the currency of sale or purchase invoices
differs from the functional currency in which each company prepares its local
accounts. The transactional exposures include situations where foreign
currency denominated trade receivables, trade payables and cash balances are
held. Transactional foreign exchange gains of £0.2m (2022: £6k gain) were
included in administrative expenses. The Group maintains non-GBP cash balances
to meet short-term operational requirements.
The table below shows the average and closing key exchange rates for the US
Dollar compared to GBP.
2022
2023
Average exchange rate for the year 1.206 1.367
Exchange rate at the year end 1.236 1.312
Other
A limited programme of share purchases by the Thruvision plc Employee Benefit
Trust is being undertaken over the 12 months from April 2023 with the purpose
of partly satisfying future employee exercises of share options. The first
share purchase under this programme occurred in April 2023.
Dividends
The Board is not proposing to pay a dividend (2022: none).
Events after the balance sheet date
The Group has recently agreed an overdraft facility of £1.0 million which
reduces to £0.25 million for the period from 30 September 2023 to 31 May 2024
and nil thereafter, in order to support working capital requirements as the
business expands. The Group has entered into guarantees in respect of this
facility. This facility remained undrawn at the date of publication of these
results.
Consolidated income statement
for the year ended 31 March 2023
Year ended Year ended
31 March
31 March 2022
Notes
2023
£'000 £'000
(As restated
see note 5)
Revenue 2 12,420 8,361
Cost of sales (6,583) (4,948)
Gross profit 5,837 3,413
Administrative expenses (6,827) (5,299)
Operating loss 3 (990) (1,886)
Finance income 26 17
Finance costs (15) (20)
Loss before tax (979) (1,889)
Taxation credit 174 231
Loss for the year (805) (1,658)
Loss per share
Loss per share - basic and diluted 4 (0.55p) (1.14p)
All operations are continuing.
Consolidated statement of comprehensive income
for the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March 2022
£'000 £'000
Loss for the year attributable to owners of the parent (805) (1,658)
Other comprehensive loss - items that may be subsequently reclassified to
profit or loss:
Exchange differences on retranslation of foreign operations (50) (6)
Total other comprehensive loss (50) (6)
Total comprehensive loss attributable to owners of the parent (855) (1,664)
Consolidated statement of financial position
at 31 March 2023
31 March 2023 31 March 2022
£'000 £'000
Non-current assets
Property, plant and equipment 1,173 1,175
Intangible assets 109 79
1,282 1,254
Current assets
Inventories 3,639 3,868
Trade and other receivables 4,342 1,982
Current tax recoverable 375 210
Cash and cash equivalents 2,810 5,441
11,166 11,501
Total assets 12,448 12,755
Current liabilities
Trade and other payables (2,690) (2,344)
Lease liabilities (121) (150)
Provisions (107) (178)
(2,918) (2,672)
Net current assets 8,248 8,829
Non-current liabilities
Trade and other payables (72) (97)
Lease liabilities (604) (503)
Provisions (38) (38)
(714) (638)
Total liabilities (3,632) (3,310)
Net assets 8,816 9,445
Equity
Share capital 1,472 1,466
Share premium 325 201
Capital redemption reserve 163 163
Translation reserve 11 61
Retained earnings 6,845 7,554
Total equity 8,816 9,445
Consolidated statement of changes in equity
for the year ended 31 March 2023
Share Share Capital redemption reserve Translation reserve Retained Total
capital
premium
£'000
£'000
earnings
equity
£'000
£'000
£'000
£'000
At 1 April 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
Shares issued 6 124 - - - 130
Share-based payment charge - - - - 96 96
Transactions with Shareholders 6 124 - - 96 226
Loss for the year - - - - (805) (805)
Other comprehensive loss - - - (50) - (50)
Total comprehensive loss - - - (50) (805) (855)
At 31 March 2023 1,472 325 163 11 6,845 8,816
Consolidated statement of cash flows
for the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March
£'000 2022
£'000
(As restated
see note 5)
Operating activities
Loss after tax (805) (1,658)
Adjustments for:
Taxation credit (174) (231)
Finance income (26) (17)
Finance costs 15 20
Depreciation of property, plant and equipment 619 546
Profit on disposal of property, plant and equipment (10) -
Amortisation of intangible assets 20 15
Impairment of intangible assets 36 -
Share-based payment charge/(credit) 96 (366)
Operating cash outflow before changes in working capital and provisions (229) (1,691)
Increase in trade and other receivables (2,360) (540)
(Increase)/decrease in inventories (183) 621
Increase/(decrease) in trade and other payables 321 (378)
(Decrease)/increase in provisions (71) 3
Cash utilised in operations (2,522) (1,985)
Net income taxes received/(paid) - 399
Net cash outflow from operating activities (2,522) (1,586)
Investing activities
Purchase of property, plant and equipment (37) (187)
Purchase of intangible assets (86) (46)
Proceeds from disposal of property, plant and equipment 11 -
Interest received 26 17
Net cash outflow from investing activities (86) (216)
Financing activities
Proceeds from issue of shares 130 162
Payments on principal portion of lease liabilities (180) (168)
Interest paid on lease liabilities (15) (13)
Net cash outflow from financing activities (65) (19)
Net decrease in cash and cash equivalents (2,673) (1,821)
Cash and cash equivalents at 1 April 5,441 7,268
Effect of foreign exchange rate changes 42 (6)
Cash and cash equivalents at 31 March 2,810 5,441
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 2023 has been
extracted from the Group's audited financial statements which were approved
by the Board of Directors on 20 July 2023.
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.
These financial statements are presented 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 20 July 2023 and the Statement of Financial Position was signed on the
Board's behalf by Colin Evans and Victoria Balchin.
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.
1.2 Accounting policies
The key accounting policies which apply in preparing the financial statements
for the year are set out below. These policies have been consistently applied
to all periods presented in these consolidated financial statements.
The USD/GBP exchange rates used in the consolidated financial statements is as
follows:
2022
2023
Average exchange rate for the year 1.206 1.367
Exchange rate at the year end 1.236 1.312
1.3 Basis of measurement
Going concern
The Group's loss before tax from continuing operations for the year was £1.0
million (2022: £1.9 million). As at 31 March 2023 the Group had net current
assets of £8.2 million (31 March 2022: £8.8 million) and cash and cash
equivalents of £2.8 million (31 March 2022: £5.4 million).
The Board has taken the cash flow forecast for the period to 31 July 2024,
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
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, including steps taken to maximise
liquidity, for example a reduction in discretionary spend and inventory
levels. The testing undertaken applied various stresses simultaneously even
though it would not be considered reasonable to expect all downsides to occur
concurrently.
As a result, the above testing 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 31 July 2024.
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.
In addition, in order to manage fluctuations in working capital, the Group has
recently agreed an overdraft facility with HSBC of £1.0 million reducing to
£0.25 million from 30 September 2023 to 31 May 2024 and nil thereafter.
This facility has remained undrawn to date.
2. Segmental information
The business is run as one segment although we sell our products into a number
of sectors 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. The Directors believe that
allocating administrative expenses by department provides a suitable level of
business insight. The overhead department cost centres comprise:
· Engineering (including R&D);
· Sales and marketing;
· Property and administration;
· Management; and
· Plc costs.
with the split of costs as shown within the Financial Review.
2. Segmental information (continued)
Revenue is split between our two principal activities below:
2023 2022
£'000 £'000
Product 11,782 7,667
Support and Development 638 694
12,420 8,361
The principal growth driver for the business is product sales. Support revenue
includes extended warranty and other post-sale support revenue, as well as
customer-funded development contracts. We expect warranty and other support
revenue to grow in the future, with customer-funded development contracts not
a key driver for future growth.
The Group's revenue by market sector and geographical region is detailed
below:
Revenue by market sector 2023 2022
£'000
£'000
Retail Distribution 2,429 3,756
Customs 9,165 3,947
Aviation 246 179
Entrance Security 580 479
12,420 8,361
Revenue by geographical region 2023 2022
£'000
£'000
UK and Europe 2,249 3,508
Americas 9,223 4,445
Rest of World 948 408
12,420 8,361
The Group's revenue by point of recognition is detailed below:
2023 2022
£'000
£'000
Revenue recognised at point in time 11,888 7,718
Revenue recognised over time - Extended warranty and support revenue 532 643
12,420 8,361
Analysis of revenue by customer
There has been one individually material customer (comprising over 10% of
total revenue) in the year (2022: two customers). This customer represented
£8,286k (or 66%) of revenue for the year (2022: £3,740k (44%) and £1,059k
(13%)).
Other segment information
The Group's non-current assets by geography are detailed below:
2023 2022
£'000
£'000
United Kingdom 1,027 1,157
United States of America 255 97
1,282 1,254
3. Operating loss
The operating loss is stated after charging/(crediting):
2023 2022
£'000
£'000
Cost of inventories recognised as an expense - restated 2022 see note 5 5,475 4,571
Research and development expense 598 631
Net impairment (credit)/charge on trade receivables and contract assets (57) 57
Share based payment charge/(credit) 96 (366)
Depreciation of property, plant and equipment 619 546
Profit on disposal of property, plant and equipment (10) -
Expenses relating to short-term and low-value leases 3 3
Amortisation of intangible assets 20 15
Impairment of intangible assets 36 -
Exchange gains (198) (6)
4. Loss per share
2023 2022
Loss after tax (£'000) (805) (1,658)
Weighted average number of shares (number) 147,138,774 145,853,091
Basic and diluted loss per share (pence) (0.55p) (1.14p)
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 for each financial year.
5. Restatements
Income statement
In 2022, gross margin has been restated to correctly classify certain fixed
and variable production overheads including production staff costs and related
overheads to cost of sales from administrative expenses. The total costs
reclassified in 2022 from administrative expenses to cost of sales was £0.5
million. There is no impact on operating profit.
Cash flow statement
The cash flow statement has been re-stated to correct non-cash movements
relating to leases. A new lease entered into during 2022 had incorrectly
been grossed up and presented as a lease property addition outflow within
investing activities and the respective lease liability had been presented as
a new lease cash inflow within financing activities. The impact is a
reduction in investing activities of £0.5 million and a reduction in
financing activities of £0.5 million. There is no impact on cash and cash
equivalents.
For both restatements there was no impact on the basic and diluted EPS figures
as reported or on the statement of financial position for the 2022 financial
year.
6. Post-balance sheet events
The Group has recently agreed an overdraft facility of £1.0 million, reducing
to £0.25 million on 30 September 2023, and expiring on 31 May 2024, in order
to further support working capital requirements as the business expands. The
Group has entered into guarantees in respect of this facility. This facility
remained undrawn at the date of signing of these financial statements.
From 1 April 2023 to the date of this report, 309,619 of Shares in the Company
have been purchased by the EBT with a nominal value of £3.1k for total
consideration of £80k.
APPENDIX - ALTERNATIVE PERFORMANCE MEASURES (APMs)
Thruvision uses adjusted figures as key performance measures in addition to
those reported under IFRS, as management believe these measures enable
management and stakeholders to assess the underlying trading performance of
the businesses as they exclude certain items that are considered to be
significant in nature and/or quantum.
The APMs are consistent with how the businesses' performance is planned and
reported within the internal management reporting to the Board. Some of these
measures are used for the purpose of setting remuneration targets.
The key APMs that the Group uses include adjusted measures for the income
statement together with adjusted cash flow measures. Explanations of how they
are calculated and how they are reconciled to an IFRS statutory measure are
set out below.
Adjusted measures
The Group's policy is to exclude items that are considered to be significant
in nature and/or quantum and where treatment as an adjusted item provides
stakeholders with additional useful information to better assess the
period-on-period trading performance of the Group. The Group excludes certain
items, which management have defined as:
- Share based payments charge or credit
- Impairment of intangible assets or property, plant and equipment
Gross profit, excluding production overheads, is used to enable a
like-for-like comparison of underlying sales profitability. Production
overheads are excluded due to recent changes in product mix and investments in
the production team which have improved capacity and therefore changed the
labour and overhead absorption rates in the current year. As a result,
adjusted gross profit is the APM used to represent this metric.
Based on the above policy, the alternative performance measures are derived
from the statutory figures as follows:
a) Adjusted gross profit
2023 2022
£'000 £'000
Gross profit 5,837 3,413
Add back:
Production overheads 564 489
Adjusted gross profit 6,401 3,902
b) Adjusted EBITDA
2023 2022
£'000 £'000
Statutory operating loss (990) (1,886)
Add back:
Depreciation and amortisation 639 561
Impairment of intangible assets 36 -
Share-based payment charge/(credit) 96 (366)
Adjusted EBITDA (219) (1,691)
c) Adjusted loss before tax
2023 2022
£'000 £'000
Statutory loss before tax (979) (1,889)
Add back:
Impairment of intangible assets 36 -
Share-based payment charge/(credit) 96 (366)
Adjusted loss before tax (847) (2,255)
d) Adjusted loss per share
2023 2022
£'000 £'000
Statutory loss after tax (805) (1,658)
Add back:
Impairment of intangible assets 36 -
Share-based payment charge/(credit) 96 (366)
Adjusted loss after tax (673) (2,024)
Weighted average number of shares 147,138,774 145,853,091
Statutory loss per share (pence) (0.55) (1.14)
Adjusted loss per share (pence) (0.46) (1.39)
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