TIDMTHRU
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 GBP8.4 million (2021: GBP6.7 million), with
an operating loss before tax of GBP1.9 million (2021:
GBP2.8 million loss);
-- Adjusted loss before tax* of GBP2.3 million (2021: GBP2.3
million);
-- Gross margin at 47% (2021: 48%) and Overheads** increased
to GBP5.6 million (2021: GBP4.8 million), with Overheads
as a percentage of Revenue falling to 67% (2021: 71%);
-- Cash at 31 March 2022 of GBP5.4 million (31 March 2021:
GBP7.3 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 plc
Colin Evans, Chief Executive
Tom Black, Executive Chairman +44 (0)1235 436180
Investec Bank plc
James Rudd / Patrick Robb / Sebastian
Lawrence +44 (0)20 7597 5970
FTI Consulting LLP
Matt Dixon / Tom Blundell +44 (0)20 3727 1000
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
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 GBP8.4 million (2021: GBP6.7 million). We supported this
growth from our own cash resources and, at 31 March 2022, cash in
hand was GBP5.4 million (2021: GBP7.3 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 GBP8.4 million (2021: GBP6.7 million)
in the period, with new equipment sales growing at 35% to GBP7.7
million (2021: GBP5.7 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 GBP0.7 million (2021:
GBP1.0 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 GBP3.8 million (2021:
GBP2.2 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 GBP3.9 million from
our Customs sector (2021: GBP4.0 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 GBP0.2 million (2021: GBP0.3 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 GBP0.5 million (2021: GBP0.2
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 GBP0.7 million (2021: GBP1.0
million). Some GBP0.6 million (2021: GBP0.8 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 GBP8.4 million (2021: GBP6.7 million), resulting in a reduced
operating loss of GBP1.9 million (2021: GBP2.8 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 GBP2.3 million (2021: GBP2.3 million
loss). This was calculated as follows:
2022 2021
GBP'000 GBP'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 GBP3.9million
(2021: GBP3.2million) 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 GBP5.6 million
(2021: GBP4.8 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
GBP'000 GBP'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 %
GBP'000 GBP'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 %
GBP'000 GBP'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 2021 Gross
GBP'000 margin GBP'000 margin
% %
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 GBP5.8 million (2021: GBP6.0 million).
Overheads increased to GBP5.6 million (2021: GBP4.8 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 GBP91k of professional costs with
regards the liquidation of dormant subsidiaries.
Total Administration costs 2022 2021
GBP'000 GBP'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 GBP3.9 million (31 March
2021: GBP4.4 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
GBP5.4 million (2021: GBP7.3 million).
The overall cash outflow of GBP1.8 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 GBP0.5million 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 GBP1.3 million as at 31 March
2021 to GBP0.7 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 GBP2.3 million loss (2021: GBP2.3 million
loss).
Taxation
At 31 March 2022, the Group had unutilised tax losses carried
forward of approximately GBP14.0 million (2021: GBP13.0 million),
of which GBP7.2 million (2021: GBP6.7 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: GBPnil).
The income statement tax credit for the year of GBP231k (2021:
GBP266k) relates predominantly to a R&D tax credit reclaim.
Currency impact
The Group recorded a GBP6k foreign currency exchange gain (2021:
GBP329k 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 GBP'000
GBP'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
GBP'000 GBP'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 subsequent periods (6) (48)
----------- -----------
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
GBP'000 GBP'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 Translation reserve Retained Total
Share premium reserve GBP'000 earnings equity
capital account GBP'000 GBP'000 GBP'000
GBP'000 GBP'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
GBP'000 GBP'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 nancial information of the Group set out above does not
constitute statutory accounts for the purposes of Section 435 of
the Companies Act 2006. The nancial information for the year ended
31 March 2022 has been extracted from the Group's audited nancial
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 (GBP'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 GBP1.9 million (2021: GBP2.8 million). As at 31 March
2022, the Group had net current assets of GBP8.8 million (31 March
2021: GBP10.8 million) and net cash reserves of GBP5.4 million (31
March 2021: GBP7.3 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 GBP3,740k and GBP1,059k of revenue for the
year (2021: GBP3,094k).
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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'000
Loss from continuing operations attributable to Ordinary Shareholders (1,658) (2,490)
Loss from continuing and discontinued operations attributable to Ordinary Shareholders (1,658) (2,488)
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
GBP'000 GBP'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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END
FR LLMBTMTATTPT
(END) Dow Jones Newswires
September 30, 2022 02:00 ET (06:00 GMT)
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