TIDMTHRU
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 GBP12.4 million (2022: GBP8.4 million).
-- Multi-year framework contract awarded by US Customs and
Border Protection ('CBP') and related orders from the same
customer delivered revenue of GBP8.3 million (2022: GBP3.7
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 GBP0.2 million (2022: loss GBP1.7
million).
-- Operating loss was GBP1.0 million (2022: loss GBP1.9 million)
-- Cash balance as at 31 March 2023 was GBP2.8 million (31
March 2022: GBP5.4 million), with cash at 20 July 2023 of
GBP2.4 million.
2023 2022
Continuing operations GBPm GBPm 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 plc
Colin Evans, Chief Executive
Victoria Balchin, Chief Financial
Officer +44 (0)1235 425400
Investec Investment Banking (NOMAD
& Broker)
James Rudd / Patrick Robb / Sebastian
Lawrence +44 (0)20 7597 5970
Meare Consulting
Adrian Duffield +44 (0) 7990 858548
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 GBP12.4 million (2022:
GBP8.4 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 GBP0.5 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 GBP0.5
million (2022: GBP0.1 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 GBP9.2 million (2022: GBP3.9 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 GBP2.4 million (2022:
GBP3.8 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 GBP0.2 million (2022: GBP0.2
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 GBP0.6 million (2022:
GBP0.5 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 GBP12.4
million (2022: GBP8.4 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 GBP1.0 million (2022: loss
GBP1.9 million), with an Adjusted EBITDA loss of GBP0.2 million
(2022: loss GBP1.7 million). Adjusted loss before tax of GBP0.8
million improved by 62% (2022: loss GBP2.3 million) with statutory
loss before tax of GBP1.0 million (2022: loss GBP1.9 million).
Cash as at 31 March 2023 was GBP2.8 million (31 March 2022:
GBP5.4 million). The majority of the reduction in year-end cash
relates to the net working capital outflow of GBP2.3 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
GBP'000 GBP'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:
2023 2022
Revenue by market sector GBP'000 GBP'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 GBP'000 GBP'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 GBP1.0 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 GBP0.2 million, compared to
the prior year average exchange rate experienced.
Adjusted gross profit and statutory gross profit are shown
below.
2023 2022
GBP'000 GBP'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% (GBP1.5
million) to GBP6.8 million with overheads up by 19% (GBP0.9
million) to GBP6.1 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 GBP0.2
million, compared to the prior year average exchange rate
experienced.
Administrative expenses are analysed as follows:
2023 2022
GBP'000 GBP'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 GBP0.8
million with the adjusted loss after tax of GBP0.7 million
improving by 67%. The tax credit of GBP0.2 million (2022: GBP0.2
million) reflects R&D tax credits receivable. Unrelieved tax
losses in the UK available to carry forward indefinitely are
GBP15.2 million (2022: GBP14.0 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
GBP2.6 million to GBP2.8 million as at 31 March 2023, was
principally caused by a GBP2.3 million outflow in net working
capital, with an operating cash outflow before working capital
movements of GBP0.2 million and net outflows of GBP0.1 million each
from investing and financing activities.
The movements in net working capital were as follows:
-- Trade and other receivables caused a GBP2.4 million outflow
in the year, driven by higher sales in the final quarter of the
year. Included in trade and other receivables of GBP3.7 million
at
31 March 2023 was GBP2.7 million relating to CBP, GBP1.7 million
of which has been received to date.
-- Inventory reduced by GBP0.2 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 GBP0.3 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 GBP2.8
million (31 March 2022: GBP5.4 million).
In order to manage fluctuations in working capital, the Group
has recently agreed an overdraft facility with HSBC of GBP1.0
million which reduces to GBP0.25 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 GBP1.0 million
higher, gross margin being GBP0.2m higher and Adjusted EBITDA
GBP34k 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 GBP0.2m (2022: GBP6k 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.
2023 2022
----------------------------------- ------ -----
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 GBP1.0
million which reduces to GBP0.25 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 2022
31 March GBP'000
2023 (As restated
Notes GBP'000 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
GBP'000 GBP'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
GBP'000 GBP'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 Retained Total
capital premium reserve Translation reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
31 March
2022
Year ended GBP'000
31 March 2023 (As restated
GBP'000 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 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 2023 has been extracted from the Group's audited nancial
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 (GBP'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:
2023 2022
----------------------------------- ------ -----
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 GBP1.0 million (2022: GBP1.9 million). As at 31 March 2023
the Group had net current assets of GBP8.2 million (31 March 2022:
GBP8.8 million) and cash and cash equivalents of GBP2.8 million (31
March 2022: GBP5.4 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
GBP1.0 million reducing to GBP0.25 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
GBP'000 GBP'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:
2023 2022
Revenue by market sector GBP'000 GBP'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 GBP'000 GBP'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
GBP'000 GBP'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 GBP8,286k (or 66%) of revenue for the year
(2022: GBP3,740k (44%) and GBP1,059k (13%)).
Other segment information
The Group's non-current assets by geography are detailed
below:
2023 2022
GBP'000 GBP'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
GBP'000 GBP'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 (GBP'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 GBP0.5 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 GBP0.5 million and a reduction in financing
activities of GBP0.5 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 GBP1.0
million, reducing to GBP0.25 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 GBP3.1k for total consideration of GBP80k.
APPIX - 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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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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END
FR URSRROSUBUUR
(END) Dow Jones Newswires
July 21, 2023 02:00 ET (06:00 GMT)
Thruvision (LSE:THRU)
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