TIDMOTAQ
RNS Number : 8351G
OTAQ PLC
18 November 2022
OTAQ plc
(" OTAQ " or the "Company")
Unaudited Interim Results
OTAQ, the innovative technology company targeting the
aquaculture, geotracking and offshore markets, is pleased to
announce unaudited interim results for the six months ended 30
September 2022.
Financial Highlights:
Group H1 H1 Change
2022 2021
%
GBP'000 GBP'000
Revenue 2,026 1,821 11.3
Gross
profit 1,034 826 25.2
Adjusted EBITDA* 13 (171) 107.6
*Adjusted EBITDA (earnings before income, tax, depreciation,
exceptional costs, impairment, share option charges and
amortisation)
Strategic and Operational Highlights:
-- Established new Geotracking division
- Follows successful sales to customers of its prototype technology
- Successfully applied in multi competitor sports tracking
events and for geofencing safety products in industrial markets
- First order received from Track Tracker for asset tracking in the rail industry
-- Completed development of innovative custom-designed sonar for Minnowtech for shrimp market
- Key growth area with an initial estimated target market size of GBP24m
-- Live Plankton Analysis systems deployed at customer sites in Scotland, Chile and Ireland
- Prototype versions expected to be installed in January 2023
- Initial target market estimated to be in the region of GBP24m
-- Increase in rentals of Offshore division's core OceanSense product
- Development of new technologies in this division supports
cross-deployment of skills and technologies in aquaculture and
geotracking
-- Initial customer contracts signed for Water Quality Monitoring products in Scotland
Post-Period Highlights:
-- Admitted to trading on the AQSE Growth Market of the Aquis Stock Exchange
-- Successful placing and open offer, raising approximately GBP3.2m net of expenses
- As a result, cash balances of approximately GBP2.7m expected
as at 30 November 2022 following full settlement of onerous supply
contracts and deferred acquisition costs
- New funds enable the Company to accelerate the development and
commercialisation of its strong pipeline of new products
Commenting on the results and prospects, Phil Newby, Chief
Executive at OTAQ, said :
" As the Company diversifies, the Board is satisfied with these
results, showing improved revenue, gross profit and adjusted EBITDA
compared to the same period last year. The Board believes the Group
can deliver on the long-term strategic goals it has set out in
order to realise OTAQ's potential and significantly increase
shareholder value.
"The funding recently completed will allow the Group to focus on
further product development and allow OTAQ to make additional
investment in sales and marketing resource to deliver new revenue
and growth. It is notable that, across its key geographies, the
Group has several key relationships that are expected to deliver in
the near future, with others fast approaching
commercialisation.
"The Board remains committed to continuing with the launch of
innovative new products and significant business development
throughout the next period in order to return the Company to growth
and improved profitability . "
Contacts :
OTAQ plc +44 (0)1524 748028
Alex Hambro, Non-Executive Chairman
Phil Newby, Chief Executive Officer
Matt Enright, Chief Financial Officer
Dowgate Capital Limited (AQSE Corporate Adviser & Broker ) +44 (0)20 3903 7715
David Poutney / James Serjeant
Nicholas Chambers / Russell Cook
Walbrook PR Limited (PR) Tel: 020 7933 8780 or O taq@walbrookpr.com
Tom Cooper / Nick Rome 0797 122 1972 or 07748 325 236
About OTAQ:
OTAQ is a highly innovative technology company targeting the
aquaculture, geotracking and offshore markets. It already has a
number of established products in its portfolio and is focused on
further developing its presence, customer base and cross selling
opportunities within core markets both organically and via
acquisition.
OTAQ's aquaculture products, which include a sonar device
(developed for Minnowtech LLC) to scan shrimp in ponds and water
quality monitoring, are focused on maximising welfare and
production yields. Additionally, the Company is developing a
potentially game changing live plankton analysis product for
finfish and shellfish farmers. It also continues to target
opportunities in the acoustic deterrent devices market via its
Sealfence product, which is used by salmon farmers, with global
opportunities in Chile, Australia, Canada and Norway.
The Company is also developing high accuracy location trackers
for specialist applications. Having already added clients within
safety and multiple participant sport/racing applications, the
Company is investigating wider market potential - including
opportunities in the seafood industry.
OTAQ's offshore product range includes OceanSense subsea leak
detection, Eagle IP camera systems, Lander seabed survey devices
and Subsea electrical connectors and penetrators. It is targeting a
number of growth opportunities in new territories and has a strong
client base including Expro, Amphenol and National Oilwell Varco.
The Company is also focused on the development of new products
through this division, with the aim of increased cross-deployment
of skills and technologies into the aquaculture arena.
Summary
The Group presents its unaudited interim results for the six
month period ended 30 September 2022.
These interim results are presented following the Company's
admission to trading on the Access Segment of the AQSE Growth
Market of the Aquis Stock Exchange on 9 November 2022 and the
successful placing and open offer raising GBP3.6m before expenses
for the Group. These funds have comfortably addressed the
uncertainty expressed at the time of the full year results
announced in September 2022 regarding the Company's ongoing cash
position. The proceeds of the fundraising will enable the Company
to accelerate the development and commercialisation of its strong
pipeline of new products in OTAQ's core markets of Aquaculture and
Offshore as well as building out the new Geotracking division,
which has been launched following successful sales to customers of
its prototype technology.
As the Company diversifies, the Board is satisfied with these
results, showing improved revenue, gross profit and adjusted EBITDA
compared to the same period last year. The Board believes the Group
can deliver on the long-term strategic goals it has set out in
order to realise OTAQ's potential and significantly increase
shareholder value. The focus is to develop the aquaculture market
in Scotland, Chile and other global territories with its new
products; support and develop the Minnowtech investment in shrimp
sonar devices and to penetrate the significant market opportunity
for the tracker technology. The anticipated launch of the live
plankton analysis system, in collaboration with the Group's
strategic partner, Blue Lion Labs, in 2023, is expected to be of
significance.
Strategy
The Group's strategy is to further develop operations and
revenue streams within the aquaculture, offshore and geotracking
industries through new product development and strategic
investments and collaborations with third parties. OTAQ has built
significant technical resources, organically and through
acquisition, to deliver innovative solutions for their
customers.
The Company will continue to utilise the skills and technologies
available in each of its divisions to accelerate the development of
innovative new products for uses Group-wide. Given the potential to
develop and deploy technology within each division, the Board
believes that shareholder value will benefit from increased levels
of product launches and cross-selling.
Trading
As anticipated, revenue has improved in the period to GBP2.0m
(H1 2021: GBP1.8m) with the Offshore division achieving GBP1.2m (H1
2021: GBP0.9m) and the Aquaculture division achieving GBP0.8m (H1
2021: GBP0.9m). The Company has reported Adjusted EBITDA* of GBP13k
(2021: loss GBP171k)
Aquaculture
The Aquaculture division revenue includes the balance of revenue
from the final acoustic deterrent device customers in Scotland.
Aquaculture revenue in Chile includes rentals from acoustic
deterrent devices and this is expected to continue in the second
half of the year. The division also includes revenue from sales and
rentals to customers in other countries, including Finland and
Ireland.
Regulation of the aquaculture industry worldwide is still
evolving due to the demands of governing bodies who oversee food
standards. OTAQ is continuing discussions with Subpesca, the
Chilean authority tasked with aquaculture regulation, around use of
the Group's acoustic deterrent technology and is also continuing
with trials in Tasmania regarding acoustic deterrent use. The Board
has now ended all marketing and selling activities in relation to
acoustic deterrents in Scotland.
Notable new product developments in the Aquaculture division
include:
Shrimp Biomass
The Group has completed the development of an innovative and
custom-designed sonar for Minnowtech that scans shrimp in ponds.
Minnowtech is viewed as a key growth area with an initial estimated
target market size of GBP24m, based on the number estimated shrimp
ponds in early target markets.
Live Plankton Analysis System
Through its collaboration with Blue Lion Labs in Canada, the
Group has developed AI software which monitors water quality by
identifying phytoplankton which enables farmers to take immediate
mitigating actions as required. To date, 14 development systems
have been deployed at customer sites in Scotland, Chile and Ireland
with prototype versions expected to be installed in January 2023.
The initial target market is estimated to be in the region of
GBP24m.
Water Quality Monitoring
Monitoring the quality of finfish cage water is an important
factor in increasing yields and improving fish welfare. Following
on from initial customer contracts signed in Scotland, the Board
believes there is an initial estimated target market of GBP32m
based on a rental model.
Offshore
The Offshore division produces a range of marine technology
products for offshore industries, supplying customers around the
world including subsea oil and gas, remotely operated vehicle
operations, commercial diving and oceanographic research, with
growth opportunities in the offshore renewables sector. The
division has performed well during the period and continues to
benefit from the customer rental contract agreed in the last
financial year. This has helped to increase rentals of the
division's core OceanSense product. In addition, the development of
new technologies in this division permits cross-deployment of
skills and technologies into the aquaculture and geotracking
arenas.
Geotracking
Building upon the ROS Technology acquisition in late 2020 and
using the Group's existing technology and skill set, the Group has
developed highly accurate personnel and asset tracking devices
which are now being marketed for multi competitor sports tracking
events and for geofencing safety products in industrial
markets.
The Company achieved its first order from Track Tracker Limited
in September, which deploys a highly accurate geofencing product to
help protect workers operating in a high risk environment, in this
case railway track maintenance engineers. The Board believes there
to be an estimated initial target market size of GBP13m through its
relationship with Track Tracker.
Financial Highlights for the six months ended 30 September
2022
Group H1 H1 Change
2022 2021
%
GBP'000 GBP'000
Revenue 2,026 1,821 11.3%
Gross
profit 1,034 826 25.2%
Adjusted EBITDA* 13 (171) 107.6%
*EBITDA (earnings before income, tax, depreciation, share option
charges and amortisation) is reconciled from the operating loss per
the condensed consolidated statement of comprehensive income as
follows:
H1 2022 H1 2021
GBP'000 GBP'000
Operating loss (388) (747)
Amortisation of intangible assets 115 120
Depreciation of right-of-use assets 86 77
Depreciation on property, plant
and equipment 200 379
Adjusted EBITDA 13 (171)
Adjusted EBITDA improved to a profit of GBP0. 01m from a loss of
GBP0.17m in 2021. This improvement resulted from increased Revenue
in the period and improved overhead cost control but also a change
in the sales mix and the related gross margins.
Net debt as at 30 September was GBP1.56m (2021: GBP1.29m).
However, following the successful completion of the fundraise on 9
November 2022, the Company expects to have cash balances of
approximately GBP2.7m as at 30 November 2022 after payment of all
deferred acquisition costs, fundraising fees and the amounts owed
under the legacy Sealfence supply contract.
Outlook
As a result of the Group diversifying and developing its
interests, the Board now anticipates a period of adjustment whilst
its new products are launched and developed commercially. The
funding recently completed will allow the Group to focus on
ensuring these products are correct for the markets in which they
are intended and to make additional investment in sales and
marketing resource in order to deliver new revenue and growth as
quickly as possible. The Group's investment, collaboration and
supply agreement with Minnowtech is expected to deliver new sales
in the near future as is the Group's relationship with Track
Tracker for our tracking technology. The investment in Blue Lion
Labs and the resulting development of harmful algal bloom detection
technology is nearing commercialisation with collaborations
underway with potential customers in Chile, Scotland and Australia.
The Offshore division has launched new products with more under
development and the Group is investing in additional sales
resources, particularly in North America, with a view to developing
these large markets.
The Board remains committed to continuing with the launch of
innovative new products and significant business development
throughout the next period in order to return the Company to growth
and, ultimately, profitability.
Phil Newby
Chief Executive Officer
The Board confirms that to the best of its knowledge the
consolidated half year financial statements for the six months to
30 September 2022 have been prepared in accordance with IAS 34
Interim Financial Reporting amended in accordance with changes in
IAS 1 Presentation of Financial Statements, as adopted by the
UK
Unaudited Condensed Consolidated Statement of Comprehensive
Income
Half-year ended
30 September 30 September
Notes 2022 2021
GBP000 GBP000
----------------------------- ------ ------------- -------------
Revenue 1 2,026 1,821
Cost of sales (992) (995)
----------------------------- ------ ------------- -------------
Gross profit 1 1,034 826
Administrative expenses (1,422) (1,573)
Operating loss (388) (747)
----------------------------- ------ ------------- -------------
Finance expense (104) (105)
Other income 2 - 93
Exceptional items 3 (46) (122)
Loss on ordinary activities
before taxation (538) (881)
Taxation - -
----------------------------- ------ ------------- -------------
Loss for the period (538) (881)
----------------------------- ------ ------------- -------------
Other comprehensive loss - -
----------------------------- ------ ------------- -------------
Total Comprehensive Loss (538) (881)
----------------------------- ------ ------------- -------------
Attributable to:
The Group (538) (881)
As per note 4, Losses Per Share were 1.4p (2021: loss 2.8p) and
Diluted Losses Per Share were 1.4p (2021: loss 2.8p).
The loss for the period arises from the Group's continuing
operations and is attributable to the equity holders of the
parent.
There were no other items of comprehensive income for the period
(2021: GBPnil) and therefore the loss for the period is also the
total comprehensive loss for the period.
The notes form an integral part of these condensed financial
statements.
Unaudited Condensed Consolidated Balance Sheet
Notes 30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
Assets
Non-current assets
Plant and equipment 736 1,466 919
Right-of-use assets 388 488 434
Unlisted investments 511 511 511
Intangible assets 3,078 3,179 2,970
4,713 5,644 4,834
Current assets
Inventories 1,163 1,068 1,182
Trade and other receivables 936 1,017 1,766
Income tax asset 139 177 155
Cash and cash equivalents 519 1,160 1,008
------------- ------------- ----------
2,757 3,422 4,111
------------- ------------- ----------
Total assets 7,470 9,066 8,945
Liabilities
Current liabilities
Trade and other payables 524 1,400 1,243
Deferred payment for
acquisition 236 187 213
Leases 173 155 161
Financial liabilities 5 426 353 421
------------- ------------- ----------
1,359 2,095 2,038
Non-current liabilities
Deferred tax 80 176 80
Leases 199 321 255
Financial liabilities 5 1,182 1,607 1,392
------------- ------------- ----------
1,461 2,104 1,727
------------- ------------- ----------
Total liabilities 2,820 4,199 3,765
------------- ------------- ----------
Net assets 4,650 4,867 5,180
------------- ------------- ----------
Capital and reserves
Share capital 6 5,664 4,708 5,657
Share premium 6 3,281 2,905 3,280
Share option reserve 150 225 150
Merger relief reserve 9,154 9,154 9,154
Reverse acquisition
reserve (6,777) (6,777) (6,777)
Other reserve 384 297 384
Revenue reserve (7,206) (5,645) (6,668)
------------- ------------- ----------
Total equity 4,650 4,867 5,180
------------- ------------- ----------
Unaudited Condensed Consolidated Statement of Changes in
Equity
Issued Share Merger Reverse
Equity Share option relief acquisition Other Revenue Total
capital Premium reserve reserve reserve Reserve Reserve Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 March 2021 4,614 2,897 473 9,154 (6,777) 136 (4,764) 5,733
Loss for the period and
total
comprehensive loss for
the
period - - - - - - (881) (881)
Transfer on exercised
options 87 - (248) - - 161 - -
At 30 September 2021 4,708 2,905 225 9,154 (6,777) 297 (5,645) 4,867
At 31 March 2022 5,657 3,280 150 9,154 (6,777) 384 (6,668) 5,180
Loss for the period and
total
comprehensive loss for
the
period - - - - - - (538) (538)
Issues of shares 7 1 - - - - - 8
At 30 September 2022 5,664 3,281 150 9,154 (6,777) 384 (7,206) 4,650
Unaudited Condensed Consolidated Statement of Cash Flows
Half-year ended
30 September 30 September
2022 2021
GBP000 GBP000
Cash flows from operating activities
Loss after interest and tax (538) (881)
Adjustments for:
Depreciation of tangible fixed assets 200 379
Depreciation of right-of-use assets 86 77
Interest expense 104 105
Amortisation of intangible assets 115 120
Shares issued as part of Share Incentive
Plan 8 15
Changes in working capital:
Decrease / (increase) in inventories 19 (169)
Decrease / (Increase) in trade and
other receivables 830 (158)
Decrease in trade payables and other
payables (719) (448)
Cash inflow / (outflow) from operating
activities 105 (960)
Tax credit received 16 109
Net cash inflow / (outflow) from
operating activities 121 (851)
Cash flows from investing activities
Purchases of tangible fixed assets (17) (336)
Purchases of intangible fixed assets (223) (420)
Acquisition of unlisted equity securities - (214)
Payment of deferred consideration (15) (38)
Net cash outflow from investing
activities (255) (1,008)
Cash flow from financing activities
Loans repayments (205) (40)
Grant funding received - 93
Principal element of lease payments (44) (58)
Interest paid (106) (96)
Net cash outflow from financing
activities (355) (101)
Decrease in cash and cash equivalents (489) (1,960)
-------------- ----------------
Cash and cash equivalents at the
start of the period 1,008 3,120
Cash and cash equivalents at the
end of the period 519 1,160
Notes to the condensed financial statements
1. Segmental information
In a change to the year ended 31 March 2022, [with effect from]
30 September 2022 the Group operated as three primary segments,
being the rental and sales of aquaculture products (Aquaculture),
rentals of underwater measurement and leak detection devices in the
Offshore market and the development and manufacture of products for
geo-tracking industries (Trackers). This is the level at which
operating results are reviewed by the chief operating decision
maker (i.e. the CEO) to make decisions about resources, and for
which financial information is available. All revenues have been
generated from continuing operations and are from external
customers. For this period, financial information is disclosed
based on materiality levels and the size of the segments meaning
only Aquaculture and Offshore are separately disclosed:
Half-year ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------- ------------- -------------
Analysis of revenue
Aquaculture equipment rentals,
sales and associated charges 808 911
Offshore equipment rentals,
sales and associated charges 1,218 910
-------------------------------- ------------- -------------
2,026 1,821
-------------------------------- ------------- -------------
Half-year ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------- ------------- -------------
Analysis of gross profit
Aquaculture equipment rentals,
sales and associated charges 333 344
Offshore equipment rentals,
sales and associated charges 701 482
-------------------------------- ------------- -------------
1,034 826
-------------------------------- ------------- -------------
2. Other income
Other income pertains to the interest on a loan received under
the Coronavirus Business Interruption Loan Scheme.
3. Exceptional items
Exceptional items include GBP0.05m of one-off employee expenses
and legal fees.
4. Losses per share
Basic earnings or losses per share are calculated by dividing
the loss or profit after tax attributable to the equity holders of
the Group by the weighted average number of shares in issue during
the year. Diluted earnings or losses per share are calculated by
adjusting the weighted average number of shares outstanding to
assume conversion of all potential dilutive shares, namely share
options.
The calculation of earnings or losses per share is based on the
following losses and number of shares:
Half-year ended
30 September 30 September
2022 2021
GBP000 GBP000
------------------------------------ ------------- -------------
Loss for the period attributable
to the owners of the Group (538) (881)
Weighted average number of shares:
* Basic 37,743,044 30,957,487
* Diluted 38,003,944 32,484,532
Basic earnings per share (pence) (1.4) (2.8)
Diluted earnings per share (pence) (1.4) (2.8)
------------------------------------ ------------- -------------
5. Loan repayment
During the period, the Group repaid GBP0.21m of loans provided
under the Coronavirus Business Interruption Loan Scheme.
6. Share capital and share premium
The called-up and fully paid share capital of the Company is as
follows:
30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------- ------------- -------------
Allotted, called-up and fully
paid: 37,758,052 Ordinary shares
of GBP0.15 each
(2021: 31,388,369 of GBP0.15
each) 5,664 4,708
----------------------------------- ------------- -------------
Movements in ordinary shares:
Number of shares Share capital Share premium Total
No. GBP000 GBP000 GBP000
---------------------- ----------------- -------------- -------------- -------
At 31 March 2022 37,716,250 5,657 3,280 8,937
---------------------- ----------------- -------------- -------------- -------
Shares issued 41,802 7 1 8
At 30 September 2022 37,758,052 5,664 3,281 8,945
---------------------- ----------------- -------------- -------------- -------
7. Financial instruments - classification and measurement
Financial assets
Financial assets measured at fair value include the
following:
Half year ended
30 September 30 September
2022 2021
GBP'000 GBP'000
Unlisted equity securities 297 297
Investments made in unlisted equity
securities 214 214
-------------- --------------
511 511
8. Basis of preparation of half-year report
This condensed consolidated interim financial report for the
half-year reporting period ended 30 September 2022 has been
prepared in accordance with Accounting Standard IAS 34 Interim
Financial Reporting. The interim report does not include all the
notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
annual report for the year ended 31 March 2022 and any public
announcements made by OTAQ PLC during the interim reporting period.
This interim financial information has not been reviewed nor
audited by the auditors. The accounting policies adopted are
consistent with those of the previous financial year and
corresponding interim reporting period, except for the adoption of
new amended standards as set out below.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the
current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards.
Going concern
The Directors have considered going concern and a range of
scenarios has been reviewed. On 9 November 2022, the Company issued
new ordinary shares of 1 pence nominal value for gross proceeds of
approximately GBP3.60m. The Directors believe that these funds are
adequate for the Group to continue to trade for the next twelve
months. For this reason, the Directors continue to adopt the going
concern basis in preparing the Interim Financial Statements.
Significant estimates and judgements
The Group shall assess at each reporting date whether there is
any indication that non-current assets may be impaired. The
Directors believe that at the half-year reporting period ended 30
September 2022 no indicators of impairment existed. The Directors
continue to monitor regulatory and market developments and their
impact on the carrying value of the assets.
9. Events occurring after the reporting period
On 7 November 2022, the Company held a shareholder general
meeting and passed the required resolutions to allow admission of
the Company's share capital to trading on the Access Segment of the
AQSE Growth Market which took effect on 9 November 2022. On this
date, the Company issued 90,000,000 new ordinary shares for gross
proceeds of GBP3.60m. The existing 37,758,052 ordinary shares of 15
pence each were cancelled and 37,758,052 new ordinary shares of 1
penny each were issued with 37,758,052 deferred shares issued each
with a nominal value of 14 pence . The deferred shares carry no
voting rights and no rights to dividends.
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