DJ Final Results for the Year to 31 December 2023
OTAQ Plc (OTAQ)
Final Results for the Year to 31 December 2023
01-Jul-2024 / 07:00 GMT/BST
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OTAQ plc
("OTAQ", or the "Company")
Final Results for the Year to 31 December 2023
OTAQ plc (OTAQ.AQ), the innovative technology company targeting the aquaculture, and offshore markets, announces its
audited results for the year ended 31 December 2023.
Financial Highlights
2023 2022
Group (12 months) (9 months)
GBP'000 GBP'000
Revenue 4,407 2,561
Gross profit 2,197 794
Adjusted EBITDA* (311) (258)
Net (debt) / cash (801) 758
*Adjusted EBITDA is earnings before income, tax, depreciation, exceptional costs, impairment, share option charges and amortisation
Strategic and Operational Highlights
-- Strong traction in the Aquaculture division with orders for 200 Shrimp sonar delivered in H2.
-- The Offshore division has shown strong growth, particularly benefiting from the continued demand andincreased orders for Connector solutions and OceanSense products.
-- Following more than three years in development, OTAQ has completed successful trials of its Live PlanktonAnalysis System (LPAS), and in May 2024 launched LPAS at the Aquaculture UK conference.
-- Conditional placing to raise GBP1.7m through Secured Convertible Loan Note issue announced on 26 May 2024
Commenting, Phil Newby, Chief Executive at OTAQ, said:
"With an improved reported revenue for the year, the Board remains confident in its current growth strategy, part of which is to commercialise a number of opportunities in the Aquaculture space. With LPAS systems now live, OTAQ is in constant receipt of highly valuable data that will, through a machine learning process, further enhance the AI engine and improve customer outcomes.
"We expect the Placing of GBP1.7m Secured Convertible Loan Notes and the Broker Option for up to a further GBP1m Secured Convertible Loan Notes to provide the working capital and balance sheet strength needed to complete the commercialisation of our new products."
Contacts:
OTAQ PLC 01524 748010 Adam Reynolds, Non-Executive Chairman Phil Newby, Chief Executive Officer Justine Dowds, Chief Financial Officer Dowgate Capital Limited (AQSE Corporate Advisor & Broker) 020 3903 7715 David Poutney / James Serjeant Nicholas Chambers / Russell Cook Walbrook PR Limited Tel: 020 7933 8780 or Otaq@walbrookpr.com Tom Cooper / Nick Rome 0797 122 1972 or 07748 325 236
About OTAQ:
OTAQ is a highly innovative technology company targeting the aquaculture and offshore markets. It already has a number of established products in its portfolio and is focused on further developing its presence, customer base and cross selling opportunities within core markets both organically and via acquisition.
OTAQ's aquaculture products, which include a sonar device (developed for Minnowtech LLC) to scan shrimp in ponds and water quality monitoring, are focused on maximising welfare and production yields. Additionally, the Company is developing a potentially game changing live plankton analysis product for finfish and shellfish farmers. It also continues to target opportunities in the acoustic deterrent devices market via its Sealfence product, which is used by salmon farmers, with global opportunities in Chile, Australia, Canada and Norway.
OTAQ's offshore product range includes OceanSense subsea leak detection, Eagle IP camera systems, Lander seabed survey devices and Subsea electrical connectors and penetrators. It is targeting a number of growth opportunities in new territories and has a strong client base including Expro, Amphenol and National Oilwell Varco. The Company is also focused on the development of new products through this division, with the aim of increased cross-deployment of skills and technologies into the aquaculture arena.
The Company is also developing high accuracy location trackers for specialist applications. Having already added clients within safety and multiple participant sport/racing applications, the Company is investigating wider market potential - including opportunities in the seafood industry.
CHAIRMAN'S STATEMENT
Over the past year, the Group has diligently worked to develop and expand its product portfolio within its core markets, Offshore and Aquaculture. Following initial sales of some of these new products the Group is now focused on developing new markets and commercial opportunities. Product development will continue into 2024 as the range expands to provide a suite of complementary aquaculture and offshore products.
I believe that 2024 will yield the benefit of our expanded and diversified product portfolio and I will be able to present improved revenue and profit performance for the year to 31 December 2024.
Strategy
The business strategy leverages the Group's customer base in the Offshore and Aquaculture industries to market new products developed by the Group's product development team. Over time, the Group aims to offer a comprehensive suite of advanced products for the Aquaculture industry, catering to both finfish and shrimp markets, while also targeting niche markets in the Offshore sector to sustain its historical success. Additionally, the Geotracking division will utilise these newly developed products to focus on specific sectors that are expected to benefit greatly from this technology.
Offshore
The Offshore division showed strong growth in 2023 with revenues up by 99% on the previous reporting period. This strong performance is expected to continue into 2024 as opportunities in new territories such as North America and other global markets are explored. Sales and marketing resource is being invested to help develop the potential in this division and accelerate revenue growth.
Aquaculture
The Group has developed innovative new products for use in the Aquaculture industry. The Live Plankton Analysis System (LPAS) was commercially launched at Aquaculture UK on 15 May 2024 and the Group continues to explore the huge market potential for its shrimp sonar and water quality monitoring products.
Geotracking
The Geotracking technology developed since 2020 has enjoyed some commercial success. Variants of the Geotracking device remain in development consisting of tracking devices for use in the railway industry and other similar sectors. Trials with partners in the railway industry are ongoing with orders placed and deliveries made. The potential for significant orders within this division exists and the Group is working hard to achieve this.
Our Team
The continued levels of passion and enthusiasm that exists within the business have driven the results we have seen this year and the strength of the development team have positioned the Group for growth into 2024 and beyond. I am delighted to welcome Justine Dowds to the Board and thank George Watt and Matt Enright for their contribution's. I am confident the team will work diligently to deliver the performance that the Board expects over the next twelve months.
STRATEGIC REPORT
OPERATING REVIEW
Review of the period
During the year the Group has continued its path to return to growth and profitability without relying on its historically core product in the Aquaculture division. The Offshore division has performed well in the year.
The phytoplankton analysis product was launched commercially in April 2024, following positive feedback from key client stakeholders. With the product achieving the desired identification rates on our initial target species, we are now set to develop this strategically important market.
During the year we made sales of over 200 shrimp sonars to Minnowtech LLC, in which we have a 13.9% investment. Early indications of further orders in 2024 have been given as the product has been well received by the early adopters.
Revenue
The Group achieved Revenue of GBP4.4m in the year (2022 9 mths: GBP2.56m) driven by GBP3.2m in the Offshore division (2022: GBP1.62m) and GBP1.2m (2022 9 mths: GBP0.88m) in the Aquaculture division.
Sales to non-UK territories have increased by 96% compared to the nine months to December 2022 and UK sales increased by 51% compared to the same period. Non-UK sales now make up 56% of total revenue up from 50% in the nine months to December 2022 as the Offshore division continues to expand and become a more significant part of the Group. This revenue change is all organic.
North America sales grew to 23% of total sales in 2023 from 16% in the nine month period for 2022. Europe and Chile are consistent with last year at 15% and 5% respectively.
Profit
The statutory loss for the year has reduced to GBP1.1m in 2023 (2022 9 mths: GBP2.30m). Gross profit increased to GBP2.2m (50%) in 2023 from GBP0.8m (31%) in the nine months to December 2022, driven by the transition to higher margin sales in the Offshore division. Effective management of the cost base throughout the year has meant administrative expenses increased only marginally to GBP3.3m despite being a full (2022 9 mths: GBP3.1m).
Dividends
The Board is not recommending a final dividend (2022: GBPnil).
Trading environment
The North Sea and wider oil market in which the Offshore division operates, and which impacts on demand for the Offshore division, has remained buoyant during the period. Demand in this division is expected to continue to be favourable in 2024 and will be supported by significant sales resources and dedicated product development support. Scotland is a key initial market for the Group's new live plankton analysis system (LPAS) and water quality monitoring product. Continued development of LPAS with the expansion into Australia and Chile continues in 2024.
Innovation
The Group has continued to invest in the development of new products and improvement to existing products. Investment in research and development, capitalised as development costs, amounted to GBP0.58 million in the period to 31 December 2023 (2022 9 mths: GBP0.36 million), equivalent to 13% of Group revenue (2022 9 mths: 14%). The aim of the Group's research and development team is to deliver key projects such as LPAS, water quality monitoring and shrimp sonar devices.
Current trading and prospects
We are pleased with the growth in sales achieved in the year, demonstrating the success of our strategy to diversify while focusing initial growth efforts in the Offshore division. Future growth is planned to be delivered by both Offshore and Aquaculture through expansion into new markets and with the launch of newly developed products. Whilst we drive the sales growth, we continue to exercise firm controls on costs and cash in our drive to see the Group returns to profitability.
Phil Newby
Chief Executive
FINANCIAL REVIEW
The strategy of the Group is to build a business of significance within the aquaculture and offshore industries with the key financing requirements being to ensure there is sufficient resource to fund new product development and working capital as the Group returns to profit.
The Group's Key Performance Indicators are aligned to revenue, profits and ensuring sufficient cash flow to deliver future growth. These three measures were above targets in the period to 31 December 2023.
The Group also monitors loss time incidents and employee absenteeism and turnover. Loss time incidents were zero (2022: zero) for the year and employee absenteeism and turnover were in line with historic levels.
Revenue
Group revenue increased to GBP4.41m in 2023 from GBP2.56 million in the 9 months to 31 December 2022. Offshore divisional revenue increased by 100% in the period, and the Group saw a 31% increase in Aquaculture revenue. Delays in new contracts for Geotrackers led to a small decline in revenue to GBP45k (GBP59k for nine months to December 2022).
Profits
The preferred measure of assessing profits for the Group is explained below:
2023 2022
12 months 9 months
GBP'000 GBP'000
Operating loss (1,064) (2,310)
Exceptional costs - 1,230
Amortisation of intangible assets 277 326
Impairment of rental units - 62
Right-of-use depreciation 168 130
Depreciation on property, plant and equipment 308 304
Adjusted EBITDA* (311) (258)
* Earnings before income, tax, depreciation, share option charges, impairment, exceptional costs and amortisation.
The Adjusted EBITDA loss of GBP0.31m for the year to 31 December 2023 is a slight reduction from GBP0.26m in the 9 months to 31 December 2022 however the corresponding EBITDA operating margin improves to -7% EBITDA from a -10% EBITDA operating loss in the prior year. This improvement was driven by the significant increase in Gross profit in the year, GBP2.2m from GBP0.79m in the prior year. The EBITDA improvement also resulted from an increase in the gross profit percentage from 50.0% to 31.0% due to the changing revenue mix towards the Offshore division.
Operating losses reduced to GBP1.06m from GBP2.31m in the nine months to 31 December 2022. The statutory loss before tax reduced to GBP1.22 million compared to GBP2.51 million in 2022.
Adjusted EBITDA
There were no adjusting items in 2023 compared to GBP1.23m in 2022, (expenditure which does not relate directly to the core activities of the Group and is considered to be one-off in nature or in relation to investing, restructuring or financing activities).
In addition to this, there were depreciation charges of GBP0.31 million (2022: GBP0.30m), intangible amortisation charges of GBP0.28m (2022: GBP0.33m) and right-of-use depreciation charges of GBP0.17m (2022: GBP0.13m).
Finance costs
Net finance costs totalled GBP0.20m (2022: GBP0.20m) and related to the interest charge relating to deferred acquisition payments made in the year associated with the terms of the acquisition of Marine Sense Limited in 2018, Right of use asset interest charges and predominantly interest costs relating to the CBILs loan.
Taxation
As the Group remains in a statutory loss-making position, there is no overall Group tax charge. The Group continues to benefit from research and development tax credits which, accounts for the GBP0.13m (2022: GBP0.22m) tax credit in the year.
Earnings and losses per share
Statutory basic losses per share reduced to 0.9p (2022: loss 5.0p) and statutory diluted losses per share totalled 0.9p (2022: loss 5.0p). These are calculated using the weighted average number of shares in existence during the year.
Return on Capital
The Group intends to report on capital returns once sustained profitability has been achieved. Whilst capital returns are monitored currently, it is not a key performance or key results measure given the Group's high revenue growth and current statutory loss-making position.
Dividends
No dividends have been paid in the year (2022: GBPnil) and no dividend is recommended. It is expected that all cash resources will be retained by the Group.
Headcount
The Group's number of employees for 2023 stood at 45 (2022: 43).
Share capital and share options
The Group's issued share capital as at 31 December 2023 totalled 128,144,360 Ordinary shares (2022: 127,824,881). During the year 319,479 (2022: 108,631) shares were issued as part of the employee Share Incentive Plan.
No share options were issued or exercised in the year (2022: 0) with 23,930,878 (2022: 23,930,878) share options and warrants in issue as at 31 December 2023. 350,000 (2022: 700,000) share options were cancelled in the year due to employee's leaving the company. Warrants totalling 22,499,978 were outstanding on 31 December 2023 (2022: 22,819,978).
Cashflow and net debt
This year's cash generated from operations totalled an outflow of GBP0.31 million (2022: GBP0.88 million). Total capital expenditure amounted to GBP0.94 million (2022: GBP0.61 million). Year-end cash balances totalled GBP0.32 million compared to GBP2.34 million in 2022. The Group finished 2023 with net debt of GBP0.8 million compared to GBP0.76 million of net cash at the end of 2022 as reconciled below:
2023 2022
12 months 9 months
GBP'000 GBP'000
Cash and cash equivalents 316 2,337
Non-current lease liabilities (42) (181)
Current lease liabilities (134) (172)
Non-current financial liabilities (570) (1,054)
Current financial liabilities (484) (447)
Income tax asset 113 275
Net (debt) / cash (801) 758
The directors consider the income tax credit to be part of net debt as the asset will be converted into cash and is not part of normal working capital requirements as with other current assets.
Assets and liabilities
Total current assets as at 31 December 2023 were GBP2.5m compared to total current assets of GBP4.24m at 31 December 2022. The key change during the year relates to the decrease in cash balances and the increase in trade and other receivables to GBP1.3m (2022: GBP0.69m) due to one significant debtor that paid in Q1 2024. Inventories have decreased to GBP0.81m from GBP0.94m with trade and other payables increasing to GBP0.66m from GBP0.50m.
Total liabilities have decreased from GBP2.36m as at 31 December 2022 to GBP1.9m as at 31 December 2023 with this decrease driven by the repayments due under the Coronavirus Business Interruption Loan Scheme (CBILs). The reduction in right-of-use lease liabilities of GBP177k if offset by an increase in trade and other payables of GBP158k
The Group remains focussed on tight cost control and cash management whilst revenue and EBITDA growth is delivered to enable the Group to become cash flow positive.
Summary
It is pleasing to see this year's 72% increase in revenue and 177% increase in Gross Profit compared to the previous 9 months. The Group's Offshore division is trading well and there is optimism that this division and new product launches can return the Group to an EBITDA-positive position and improve the Group's cash performance. However, management and the Board will continue to exercise firm controls on costs and cash during this period of growth.
Justine Dowds
Chief Financial Officer
consolidated Statement of comprehensive income
FOR the YEAR ended 31 DECEMBER 2023
Note Year ended 31 December 9 months ended 31 December
2023 2022
GBP'000 GBP'000
Revenue 4 4,407 2,561
Cost of sales (2,210) (1,767)
Gross profit 2,197 794
Administrative expenses (3,261) (3,104)
Operating loss 5 (1,064) (2,310)
Other operating income 5 - -
Finance income 7 11 1
Finance costs 7 (163) (203)
Loss before taxation (1,216) (2,512)
Taxation 8 126 217
Loss for the year (1,090) (2,295)
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Attributable to:
Equity shareholders of the Group (1,090) (2,295)
(1,090) (2,295)
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Other comprehensive income
Items that will be reclassified subsequently to profit and
loss:
Exchange differences on translation of foreign operations (-) (-)
Total comprehensive expense for the year (1,090) (2,295)
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Attributable to:
Equity shareholders of the Group (1,090) (2,295)
(1,090) (2,295)
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As per note 9, the loss for the year arises from the Group's continuing operations. Losses Per Share were 0.9p (2022: loss 5.0p) and Diluted Losses Per Share were 0.9p (2022: loss 5.0p).
The accompanying notes form an integral part of these consolidated financial statements.
CONSOLIDATED Statement of financial position
as at 31 DECEMBER 2023
Note 31 December 2023 31 December 2022
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 633 582
Right-of-use assets 11 167 364
Unlisted investments 13 511 511
Intangible assets 12 3,317 3,008
Total non-current assets 4,628 4,465
Current assets
Trade and other receivables 15 1,299 689
Income tax asset 16 113 275
Inventories 17 810 937
Cash and cash equivalents 18 316 2,337
Total current assets 2,538 4,238
Total assets 7,166 8,703
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EQUITY AND LIABILITIES
Equity
Share capital 19 1,281 1,278
Share premium 19 5,850 5,834
Deferred shares 19 5,286 5,286
Share option reserve 25 134 134
Merger relief reserve 20 9,154 9,154
Reverse acquisition reserve 20 (6,777) (6,777)
Other reserve 20 400 400
Revenue reserve 20 (10,053) (8,963)
Total equity 5,275 6,346
Non-current liabilities
Deferred tax 23 - -
Financial liabilities 24 570 1,054
Lease liabilities 11 42 181
Total non-current liabilities 612 1,235
Current liabilities
Trade and other payables 22 661 503
Financial liabilities 24 484 447
Deferred payment for acquisition 21 - -
Lease liabilities 11 134 172
Total current liabilities 1,279 1,122
Total liabilities 1,891 2,357
Total equity and liabilities 7,166 8,703
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The accompanying notes form an integral part of these consolidated financial statements. The financial statements were approved by the board of directors and authorised for issue on 28th June 2024.
consolidated Statement of changes in equity
FOR THE YEAR ended 31 DECEMBER 2023
Equity
Share Share Deferred Share Merger Reverse Other Revenue attributable to Total
capital premium shares option relief acquisition reserve reserve owners of the equity
reserve reserve reserve parent company
Note
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 5,657 3,280 - 150 9,154 (6,777) 384 (6,668) 5,180 5,180
2022
Loss for the - - - - - - - (2,295) (2,295) (2,295)
period
Exchange
differences on - - - - - - - - - -
translating
foreign operations
Total
comprehensive - - - - - - - (2,295) (2,295) (2,295)
expense for the
period
Sub-division and
conversion of (5,286) - 5,286 - - - - - 1,338 1,338
shares
Issues of shares 907 2,554 - - - - - - - -
Transfer on
exercised and 25 - - - (16) - - 16 - 20 20
cancelled options
Balance at 31 1,278 5,834 5,286 134 9,154 (6,777) 400 (8,963) 6,346 6,346
December 2022
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Balance at 1 1,278 5,834 5,286 134 9,154 (6,777) 400 (8,963) 6,346 6,346
January 2023
Loss for the year - - - - - - - (1,090) (1,090) (1,090)
Exchange
differences on - - - - - - - - - -
translating
foreign operations
Total
comprehensive - - - - - - - (1,090) (1,090) (1,090)
expense for the
year
Sub-division and
conversion of 19 - - - - - - - - - -
shares
Issues of shares 19 3 16 - - - - - - 19 19
Transfer on
exercised and 25 - - - - - - - - - -
cancelled options
Balance at 31 1,281 5,850 5,286 134 9,154 (6,777) 400 (10,053) 5,275 5,275
December 2023
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
31 December
Note 31 December 2022
2023
GBP'000 GBP'000
Cash flows from operating activities
Operating loss (1,064) (2,310)
Adjustments for non-cash/non-operating items:
Depreciation of property, plant and equipment 10 308 304
Impairment of property, plant and equipment 10 - 62
Loss on disposal of property, plant and equipment 5 10 6
Depreciation of right-of-use assets 11 168 130
Adjustment to right-of-use assets 11 10
Loss on disposal of right-of-use assets 5 19
Amortisation of intangible assets 12 277 181
Impairment of intangible assets 12 - 145
(272) (1,482)
Changes in working capital:
Decrease / (increase) in inventories 127 245
Decrease / (increase) in trade and other receivables (608) 1,077
Increase in trade and other payables 158 (740)
Cash from operations (595) (900)
Taxation 289 17
Net cash from operating activities (306) (883)
Cash flows from investing activities
Purchases of tangible fixed assets 10 (367) (35)
Purchases of intangible assets 12 (582) (364)
Interest received 7 11 1
Deferred payment of acquisition 21 - (213)
Net cash used in investing activities (938) (611)
Cash flows from financing activities
Proceeds on issue of shares - 3,611
Expenses of share issues - (150)
Repayment of loans (447) (312)
Principal element of lease payments 11 (167) (123)
Interest paid 7 (163) (203)
Net cash from financing activities 24 (777) 2,823
Net increase / (decrease) in cash and cash equivalents (2,021) 1,329
Cash and cash equivalents at beginning of year 2,337 1,008
Cash and cash equivalents at end of year 316 2,337
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NOTES TO THE FINANCIAL STATEMENTS 1. Reporting entity
OTAQ plc ("the Company") and its subsidiaries (together, "the Group") develop, provide and support the technology for use in the aquaculture industry and offshore oil & gas industries. The principal activity of the Company is that of a holding company for the Group as well as performing all administrative, corporate finance, strategic and governance functions of the Group. The Company is a public limited company, which is listed on the Aquis Stock Exchange and domiciled in England and incorporated and registered in England and Wales. The address of its registered office is 8-3-4 Harpers Mill, South Road, White Cross, Lancaster, England, LA1 4XF. The registered number of the Company is 11429299.
The principal accounting policies adopted by the Group and Company are set out in note 2. 2. Accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated. a. Basis of preparation
The consolidated financial statements of OTAQ plc have been prepared in accordance with International Financial Reporting Standards in conformity with the requirements UK-adopted International Accounting Standards applicable to companies reporting under IFRS and the Companies Act 2006. The consolidated financial statements have been prepared under the historical cost convention, as modified for any financial assets which are stated at fair value through profit or loss. The consolidated financial statements of OTAQ plc are presented in pounds sterling, which is the presentation currency for the consolidated financial statements. The functional currency of each of the group entities is Sterling apart from OTAQ Chile SpA which is the Chilean Peso. Figures have been rounded to the nearest thousand.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement and complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
The Group has taken advantage of the audit exemption for one of its subsidiaries, OTAQ Aquaculture Limited (company number SC498922) by virtue of s479A of the Companies Act 2006. The Group has provided a parent guarantee to this subsidiary which has taken advantage of the exemption from audit. The parent company has applied FRS101 in its entity statements. b. Basis of consolidation
The Group's financial statements consolidate the financial information of OTAQ plc and the entities it controls (its subsidiaries) drawn up to 31 December each year. In years prior to 31 December 2022, the financial statements were drawn up to 31 March each year. The year end date was amended on 16 December 2022 in order to algin with investor expectations. All business combinations (except for the Hertsford Capital plc reverse takeover on 31 March 2020 which used the merger accounting method) are accounted for by applying the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the acquiree; plus
-- the fair value of the existing equity interest in the acquiree; less
-- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilitiesassumed.
Transaction costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
All subsidiaries are entities in which the Group owns sufficient share capital and has sufficient voting rights in order to govern the financial and operating policies. The percentage holdings of the Company in its subsidiaries is set out in note 14. The subsidiaries have been fully consolidated from the date control passed. All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. The accounting policies of subsidiaries are amended where necessary to ensure consistency with the policies adopted by the Group. c. Foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to the Consolidated statement of comprehensive income. d. Going Concern
The Group is developing new products for its core markets in Offshore and Aquaculture as well as the new Geotracking division. The Group has invested heavily in the development and procurement of these products and has achieved this through use of its cash reserves as well as the funds received following the share issue in November 2022. As at 31 December 2023, the Group had cash and cash equivalents of GBP316,000.
The Group has conditionally raised GBP1.7m by way of Placing Convertible Loan Notes as disclosed in the circular to shareholders dated 26 June 2024, providing the funding to allow the Group to continue it's product development as well as providing working capital required until the forecasted growth makes the Group cash generative. A broker option for up to a further GBP1m Broker Option Convertible Loan Notes has also been agreed. The Placing commitments are legally binding, and funds will be available on 12th July subject only to shareholder approval at the general meeting on 12th July. The Directors and broker, having canvassed the % of shareholders required to pass the resolutions, are highly confident of success at the general meeting and hence believe the funding will complete as planned.
The directors have prepared and reviewed the Group's funding requirements over the next 18 months and are confident that with the proceeds of the Placing the Group has sufficient financial resources to meet its financial commitments and strategic objectives. The forecasts generated by the Group, which cover the period to January 2026 and have been modelled for reductions in anticipated revenue, demonstrate sufficient ongoing demand to satisfy liabilities as they fall due. For these reasons the directors continue to adopt the going concern basis in preparing Group's financial statements. As the shareholder resolutions required are outside the control of the directors, the funding cannot be considered certain. These conditions are necessarily considered to represent a material uncertainty that may cast significant doubt over the Group's and the Company's ability to continue as a going concern. It nevertheless remains appropriate to prepare the financial statements on a going concern basis and the financial statements do not include any adjustments that would result from that basis of preparation being inappropriate. e. Functional and presentational currency
The financial statements are presented in pounds sterling, which is the Group's functional and presentation currency. All financial information presented has been rounded to the nearest thousand. f. Segmental reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segmental information is set out in note 4. g. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of sales related taxes.
Revenue related to sales of stock is recognised when goods are dispatched and the title and control over a product have passed to the customer, in accordance with agreed delivery terms.
Revenue under service contracts is recognised over the period in which the performance obligation relating to the agreed contract are satisfied. For rentals of the Group's assets, revenue is recognised on a monthly basis based on the agreed rate and number of days for which the asset is on hire to the customer. Some contractual revenue is invoiced in advance and gives rise to a contract liability which is recognised as deferred income. h. Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
-- Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
-- Variable lease payments that depend on an index or rate, initially measured using the index or rate atthe commencement date;
-- The amount expected to be payable by the lessee under residual value guarantees;
-- The exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
-- Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option toterminate the lease.
The lease liability is presented as a separate line in the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
-- The lease term has changed or there is a significant event or change in circumstances resulting in achange in the assessment of exercise of a purchase option, in which case the lease liability is remeasured bydiscounting the revised lease payments using a revised discount rate;
-- The lease payments change due to changes in an index or rate or a change in expected payment under aguaranteed residual value, in which cases the lease liability is remeasured by discounting the revised leasepayments using an unchanged discount rate (unless the lease payments change is due to a change in a floatinginterest rate, in which case a revised discount rate is used); and
-- A lease contract is modified and the lease modification is not accounted for as a separate lease, inwhich case the lease liability is remeasured based on the lease term of the modified lease by discounting therevised lease payments using a revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Property, Plant and Equipment' policy. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in 'Administrative expenses' in profit or loss.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. i. Finance expense
Finance expense comprises interest expense on borrowings. All borrowing costs are recognised using the effective interest method. j. Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the consolidated statement of comprehensive income except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to, the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements with the following exceptions:
-- where the temporary difference arises from the initial recognition of goodwill or of an asset orliability in a transaction that is not a business combination, that at the time of the transaction affects neitheraccounting nor taxable profit nor loss; and
-- in respect of taxable temporary differences associated with investments in subsidiaries where the timingof the reversal of the temporary differences can be controlled and it is probable that the temporary differenceswill not reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured on an undiscounted basis using the tax rates and tax laws that have been enacted or substantively enacted by the date and which are expected to apply when the related deferred tax asset is realised, or the deferred tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which differences can be utilised. An asset is not recognised to the extent that the transfer or economic benefits in the future is uncertain.
Amounts due under the HMRC Research and Development tax credit scheme are accounted for based on the amount of qualifying expenditure in the year and assuming 21% of the claim is paid in cash once applicable losses and future profitability have been reviewed. l. Property, plant and equipment
Property, plant and equipment assets are recognised initially at cost. After initial recognition, these assets are carried at cost less any accumulated depreciation and any accumulated impairment losses. Cost comprises both the aggregate amount paid and the fair value of any other consideration given to acquire the asset, and includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is computed by allocating the depreciable amount of an asset on a systematic basis over its useful life and is applied separately to each identifiable component.
The following bases and rates are used to depreciate classes of assets:
Systems for rental - straight line over 4 years
Plant and equipment - straight line over 2 to 5 years
Motor vehicles - straight line over 3 years
The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.
All property, plant and equipment items are de-recognised on disposal, or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the de-recognition of the asset is included in the Consolidated statement of comprehensive income in the period of de-recognition. m. Intangible assets
Intangible assets acquired either as part of a business combination or from contractual or other legal rights are recognised separately from goodwill, provided they are separable and their fair value can be measured reliably. This includes the costs associated with acquiring and registering patents in respect of intellectual property rights. Trademarks are assessed on recognising fair value of assets acquired by calculating the future net book value of expected cash flows.
Development costs are also charged to the statement of comprehensive income in the year of expenditure, except when individual projects satisfy the following criteria:
-- the project is clearly defined and related expenditure is separately identifiable;
-- the project is technically feasible and commercially viable;
-- current and future costs will be exceeded by future sales; and
-- adequate resources exist for the project to be completed.
Where intangible assets recognised have finite lives, after initial recognition their carrying value is amortised on a straight-line basis over those lives. Development costs are amortised once the project to which they relate is viewed to be completed and capable of generating revenue. Once a project is completed, any further costs are charged to the statement of comprehensive income. The nature of those intangibles recognised and their estimated useful lives are as follows:
Intellectual property licence - straight line over 4 years
Development costs - straight line over 6 years
Trademarks - straight line over 8 years
Goodwill is recognised when the purchase price of a business exceeds the fair value of the assets acquired. Goodwill is subject to annual impairment reviews. n. Impairment of assets
At each reporting date the Group reviews the carrying value of its plant, equipment and intangible assets to determine whether there is an indication that these assets have suffered an impairment loss. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an assessment of the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying value of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, an appropriate valuation model is used, these calculations corroborated by valuation multiples, or other available fair value indicators. Impairment losses on continuing operations are recognised in the Consolidated statement of comprehensive income in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Consolidated statement of comprehensive income unless the asset is carried at re-valued amount, in which case the reversal is treated as a valuation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. o. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost based on latest contractual prices includes all costs incurred in bringing each product to its present location and condition. Net realisable value is based on estimated selling price less any further costs expected to be incurred to disposal. Provision is made for slow-moving or obsolete items if they are deemed to be no longer usable or sellable. p. Financial instruments
A financial asset or financial liability is initially measured at fair value. For an item not at fair value, adjustments to fair value are made through profit and loss (FVTPL) including transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at fair value and subsequently measured at amortised cost.
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) - debt investment; FVOCI - equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
The Group has only financial assets measured at amortised cost. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-- it is held within a business model whose objective is to hold assets to collect contractual cash flows;
-- its contractual terms give rise on specified dates to cash flows that are solely payments of principaland interest on the principal amount outstanding.
Financial assets - Business model assessment
The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
-- the stated policies and objectives for the portfolio and the operation of those policies in practice.These include whether management's strategy focuses on earning contractual interest income, maintaining aparticular interest rate profile, matching the duration of the financial assets to the duration of any relatedliabilities or expected cash outflows or realising cash flows through the sale of the assets;
-- how the performance of the portfolio is evaluated and reported to the Company's management;
-- the risks that affect the performance of the business model (and the financial assets held within thatbusiness model) and how those risks are managed;
-- how managers of the business are compensated - e.g. whether compensation is based on the fair value ofthe assets managed or the contractual cash flows collected; and
-- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for suchsales and expectations about future sales activity.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
-- contingent events that would change the amount or timing of cash flows;
-- terms that may adjust the contractual coupon rate, including variable-rate features;
-- prepayment and extension features; and
-- terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse features).
Financial assets at amortised cost are subsequently measured fair value. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in the income statement. Any gain or loss on derecognition is recognised in the income statement.
Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into. Financial liabilities, including trade and other payables and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company's obligations are discharged, cancelled, or they expire. q. Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits with maturities of three months or less from the date of acquisition. Foreign balances are revalued with any gain or loss adjusted. r. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated statement of comprehensive income, net of any expected reimbursement, but only where recoverability of such reimbursement is virtually certain.
Provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risk specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. s. Share capital and premium
Proceeds on issue of shares are included in shareholders' equity, net of transaction costs. The carrying amount is not re-measured in subsequent years. The proceeds of the issue of shares up to the nominal ordinary share value of 15p are included in share capital with the balance of the proceeds, net of relevant transaction costs, included in the share premium t. Share option reserve
The cost of issuing share options is calculated using the Black-Scholes method and are included in the share option reserve until the share options are exercised, lapsed or cancelled. u. Unlisted Investments
Unlisted investments are stated at fair value with adjustments made following annualised fair value reviews through impairment charges. v. Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The amounts charged against profits represent the contributions payable to the scheme in respect of the accounting period. w. New and amended standards adopted by the Group
The following new accounting standards, interpretations and amendments to existing standards have been published and are mandatory for the accounting period beginning on 1 January 2023.
. Amendments to IAS 1: Disclosure of Accounting Policies (Effective 1 January 2023).
. Amendments to IAS 8: Definition of Accounting Estimates (Effective 1 January 2023).
. Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Effective 1 January 2023).
The new and amended standards adopted by the Group in the year have not resulted in any impact in the current financial statements.
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective:
. Amendments to IAS 1: Presentation of Financial Statements (Effective 1 January 2024)
. Amendments to IFRS 16: Lease Liability in a Sale and Leaseback (Effective 1 January 2024).
The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant impact on the financial statements. 3. Use of estimates and judgements
The preparation of financial statements requires management to make estimates and judgements that affect the amounts reported for assets and liabilities as at the reporting date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual amounts could differ from those estimates. Estimates and judgements used in the preparation of the financial statements are continually reviewed and revised as necessary. While every effort is made to ensure that such estimates and judgements are reasonable, by their nature they are uncertain and, as such, changes in estimates and judgements may have a material impact on the financial statements. The key sources of judgement and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.
Taxation
Management judgement is required to determine the amount of tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. The carrying value of the unrecognised deferred tax asset for tax losses and other timing differences at 31 December 2023 was GBP1,337,000 (2022: GBP995,000). The value of the deferred tax liability at the period-end is nil (2022: nil). Further information is included in notes 8 and 23.
Useful Economic Life of assets and impairment
Judgements are required as to the useful economic life of systems for rental assets. Further information on all useful economic lives of assets is included in notes 2(l) and 10.
Development costs
Management judgement is required to determine the appropriate value of an asset as well as when an asset should be recognised. The value of the recognised asset is written off over the useful economic life of the asset. These judgements are based upon the likely timing and level of future revenues. Development costs are periodically and at least annually assessed for impairment and costs are written-off if the project to which they relate is no longer considered to be commercially viable. The value of the development costs capitalised at 31 December 2023 was GBP1,967,000 (2022: GBP1,538,000). Further information is included in note 12.
Goodwill impairment
Judgements are required as to the useful economic life of goodwill. These judgements are based upon the likely future benefits that will be derived from the recognised goodwill. Further information on all useful economic lives of assets is included in notes 2(l) and 12. 4. Segmental information
The directors review segmental information at a revenue, gross margin, salary and operating cost level but do not review the balance sheet by segments.
A segment is a distinguishable component of the Group's activities from which it may earn revenue and incur expenses, whose operating results are regularly reviewed by the Group's chief operational decision makers to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available. In identifying its operating segments, management generally follows the Group's service line which represent the main products and services provided by the Group.
The directors believe that the Group operates in three primary segments being the sale and supply of rental systems to the Aquaculture industry, the manufacture, rental and sale of underwater measurement devices, leak detection devices and underwater communication devices in the Offshore market and the manufacture and sale of Geotracking devices (Technology).
All of the Group's revenue have been generated from continuing operations, are from external customers and relates to point-in-time revenue recognised when the product or service is delivered.
31 December 31 December
2023 2022
GBP'000 GBP'000
Analysis of revenue
Amounts earned from Aquaculture rentals and sales 1,146 882
Amounts earned from Offshore rentals and sales 3,216 1,620
Amounts earned from Technology 45 59
4,407 2,561
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There are no material customers included within revenue (2022, none).
31 December 31 December
2023 2022
GBP'000 GBP'000
Analysis of gross profit
Amounts earned from Aquaculture rentals and sales 408 (114)
Amounts earned from Offshore rentals and sales 1,804 880
Amounts earned from Technology (15) 28
2,197 794
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The Group operates in six main geographic areas, although all are managed in the UK. The Group's revenue per geographical segment based on the customer's location is as follows:
31 December 31 December
2023 2022
GBP'000 GBP'000
Revenue
UK 1,942 1,290
Chile 182 137
Asia 386 293
Europe (excluding UK) 671 354
North America 1,018 403
Rest of the World 208 84
4,407 2,561
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The Group's assets are located in the UK and Chile and although some of its tangible assets, in the form of systems for rental, are located in Chile, all are owned by the company or its subsidiaries. 5. Operating loss
Operating loss is stated after charging/(crediting):
31 December 2023 31 December
2022
GBP'000 GBP'000
Depreciation of property, plant and equipment (see note 308 304
10)
Depreciation of right-of-use assets (see note 11) 168 130
Impairment of property, plant and equipment (see note 10) - 62
Amortisation and impairment of intangible assets (see note 277 326
12)
Research and development costs - 1
Exceptional costs - 1,230
Loss on disposal of right-of-use assets 19 -
Loss on disposal of assets 10 6
Net foreign exchange (gains) / losses (12) (37)
Exceptional costs relate to one-off and non-recurring costs primarily
professional fees incurred in relation
to fund raising activities and the exit of the Scottish acoustic deterrent
device market in Scotland.
Auditor remuneration
31 December 2023 31 December
2022
GBP'000 GBP'000
Audit services:
Fees payable to the Group's auditor for the audit of the 56 22
Group and Company annual accounts
Fees payable to the Group's auditor for the audit of the - 26
Company's subsidiaries
56 48
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6. Staff costs and numbers
The average monthly number of employees (including executive directors) for the continuing operations was:
31 December 2023 31 December 2022
No. No.
Directors 3 3
Administration 13 14
Engineering 14 8
Manufacturing 15 18
45 43
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Staff costs for the Group during the year including executive directors:
31 December 2023 31 December 2022
GBP'000 GBP'000
Wages and salaries 2,069 1,562
Social security costs 211 167
Other pension costs 61 42
Other employee benefit costs 69 -
2,410 1,771
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Directors' remuneration
31 December 2023 31 December 2022
GBP'000 GBP'000
Directors' emoluments 522 329
Company contributions to defined contribution pension schemes 18 11
540 340
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Directors' emoluments (excluding social security costs but including benefits in kind) disclosed above includes GBP187,000 paid to the highest paid director (2022: GBP132,382).
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the Group in independently administered funds. Retirement benefits are accruing to 3 directors (2022: 3).
The charge to the statement of comprehensive income in respect of defined contribution schemes was GBP61,000 (2022: GBP37,000). Contributions totalling GBP10,700 (2022: GBP9,000) were payable to the fund at the year-end and are included in creditors. 7. Net finance costs
31 December 2023 31 December 2022
GBP'000 GBP'000
Finance income
Bank interest received 11 1
Total finance income 11 1
Finance costs
Lease interest payable (24) (5)
Unwinding of discount on deferred acquisition payment - (62)
Bank and loan interest payable (139) (136)
Total finance costs (163) (203)
Net finance costs (152) (202)
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The tax credit is made up as follows:
31 December 2023 31 December 2022
GBP'000 GBP'000
Current income tax:
Adjustments in respect of prior year (14) (18)
Research and development income tax credit receivable (112) (119)
Total current income tax (126) (137)
Deferred tax expense:
Origination and reversal of temporary differences - (80)
Tax credit per statement of comprehensive income (126) (217)
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The tax charge differs from the standard rate of corporation tax in the UK of 25% for the year ended 31 December 2023 (19% for the 9 months ended 31 December 2022). The differences are explained below:
31 December 2023 31 December 2022
GBP'000 GBP'000
Loss on ordinary activities before taxation (1,216) (2,512)
UK tax credit at standard rate of 23.52% (2022: 19%) (213) (477)
Effects of:
Fixed assets timing differences - (80)
Expenses not deductible for tax 1 77
Additional deduction for R&D expenditure (120) (119)
Surrender of tax losses for R&D tax credit 125
Adjustments in respect of prior year (5) (18)
Prior year losses utilised - -
Deferred tax not recognised 86 400
Total taxation credit (126) (217)
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The Group has accumulated losses available to carry forward against future trading profits. The estimated value of the deferred tax asset measured at a standard rate of 25% (2022: 19%) is GBP1,337,000 (2022: GBP995,000), of which GBPnil (2022: GBPnil) has been recognised, as it is not certain that future taxable profits will be available against which the unused tax losses can be utilised.
The Group has not recognised a deferred tax liability in the year as it is covered by accumulated losses (2022: GBPnil).
From 1 April 2023 the corporation tax rate was increased to 25%. The deferred tax balance on 31 December 2023 has been calculated based on the rate as at the balance sheet date of 25%. 9. Losses per share
Basic earnings or losses per share are calculated by dividing the loss or profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year.
Diluted earnings or losses per share are calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. The calculation of earnings or losses per share is based on the following losses and number of shares.
A reconciliation is set out below.
2023 2022
GBP'000 GBP'000
Loss for the year attributable to owners of the Group (1,090) (2,295)
Weighted average number of shares:
- Basic 127,980,142 49,659,304
- Diluted* 127,980,142 49,659,304
Basic losses per share (pence) (0.9) (5.0)
Diluted losses per share (pence)* (0.9) (5.0)
Weighted average number of shares:
- Basic 127,980,142 49,659,304
- Diluted 127,980,142 49,659,304
Adjusted basic losses per share (pence) (0.9) (5.0)
Adjusted diluted losses per share (pence) (0.9) (5.0)
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options that are dilutive potential ordinary shares.
*These shares are not considered dilutive because they decrease the loss per share. 10. Property, plant and equipment
Systems for rental Plant and equipment Motor vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 31 March 2022 2,958 413 87 3,458
Additions 23 11 1 35
Disposals (348) (6) (9) (363)
At 31 December 2022 2,633 418 79 3,130
Adjustment 3 3
Additions 343 24 0 367
Disposals (837) (32) (4) (873)
At 31 December 2023 2,142 410 75 2,627
DEPRECIATION
At 31 March 2022 2,266 213 60 2,539
Depreciation charge for period 218 71 15 304
Disposals (348) (3) (6) (357)
Impairment for year 62 - - 62
At 31 December 2022 2,198 281 69 2,548
Adjustment 3 (2) 1
Depreciation charge for year 230 68 10 308
Disposals (831) (28) (4) (863)
At 31 December 2023 1,600 319 75 1,994
NET BOOK VALUE
At 31 December 2023 542 91 - 633
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At 31 December 2022 435 137 10 582
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Depreciation charges in relation to Systems for rental are included in cost of sale. All other depreciation is included in administrative expenses.
Impairment charges for the previous year relate to Sealfence rental systems returned from customers. The impairment review performed has been carried out on an individual asset basis, being the smallest group of assets contributing to future economic benefits. 11. Leases
Right-of-use assets
Buildings and facilities Motor vehicles
Total
GBP'000 GBP'000 GBP'000
Cost
At 31 March 2022 517 177 694
Additions 60 - 60
Disposals (52) - (52)
At 31 December 2022 525 177 702
Additions - - -
Disposals (14) (43) (57)
Adjustment (6) 1 (5)
At 31 December 2023 505 135 640
Accumulated depreciation
At 31 March 2022 201 59 260
Charge for the period 96 34 130
Disposals (52) - (52)
At 31 December 2022 245 93 338
Charge for the year 127 41 168
Disposals (14) (24) (38)
Adjustment 2 3 5
At 31 December 2023 360 113 473
Carrying amount
At 31 December 2023 145 22 167
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At 31 December 2022 280 84 364
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The Group leases several assets including buildings and facilities as well as motor vehicles acquired during the year. The average lease term by asset is 3.6 years (2022: 3.5 years). This term, excluding Motor Vehicles, include some extension rights, which the Group is may or may not exercise.
Amounts recognised in profit and loss:
31 December 2023 31 December 2022
GBP'000 GBP'000
Depreciation expense on right-of-use assets 168 130
Interest expense (included in finance cost) 24 6
The total cash outflow for leases amount to GBP167,000 (2022: GBP123,000).
Lease liabilities
A maturity analysis of lease liabilities based on discounted gross cash flows is reported in the table below:
31 December 31 December
2023 2022
GBP'000 GBP'000
Year 1 134 180
Year 2 42 137
Year 3 - 53
Interest costs - (17)
Total lease liabilities 176 353
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31 December 31 December
2023 2022
GBP'000 GBP'000
Due within one year 134 172
Due in over one year 42 181
Total lease liabilities 176 353
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All lease obligations are denominated in pounds sterling. 12. Intangible assets
Goodwill Trademarks IP licence Development costs Total intangible assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 March 2022 1,059 515 428 2,014 4,016
Additions - - - 364 364
Disposals (206) (206)
At 31 December 2022 1,059 515 428 2,172 4,174
Adjustment 20 20
Additions - - - 582 582
At 31 December 2023 1,059 515 428 2,774 4,776
Amortisation
At 31 March 2022 28 193 222 603 1,046
Charge for the period - 48 41 92 181
Impairments - - - 145 145
Disposals - - - (206) (206)
At 31 December 2022 28 241 263 634 1,166
Charge for the year - 65 57 155 277
Adjustment - - (2) 18 16
At 31 December 2023 28 306 318 807 1,459
Net Book Value
At 31 December 2023 1,031 209 110 1,967 3,317
At 31 December 2022 1,031 274 165 1,538 3,008
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Goodwill relates to the acquisition of MarineSense Limited (now part of the Offshore cash generating unit) of GBP611,000 and the acquisition of Link Subsea Limited (now part of the Offshore cash generating unit) of GBP420,000. Impairment calculations are reviewed bi-annually to ensure goodwill is valued fairly.
Discounted cash flow modelling is undertaken based on forecast future revenues and costs and the values compared to the value of goodwill recognised with any required adjustments made accordingly. The discounted cash flow modelling shows significant headroom in the forecast future values of the business units relating to Goodwill compared to the carrying values of Goodwill. Forecast future values were assessed over three years with recoverable amounts determined by considering value in use, budgeted growth rates were assumed and 10% was used as the modelling discount rates. Sensitivity analysis was performed with zero growth and 50% uplift in discount rate to ensure this would not result in the recoverable amounts being less than the carrying amount of Goodwill.
IP license costs mostly pertain to the intellectual property acquired as a part the acquisition of assets and liabilities of ROS Technology Limited, which took place in November 2020. The Group elected to apply the optional concentration test, which resulted in a conclusion that the acquisition is not a business combination on the basis that substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets. Therefore, this acquisition was accounted as an asset acquisition (i.e. outside the scope of IFRS 3). The remaining useful life of this asset is 1.9 years (2022: 2.9 years).
Development costs primarily relate to the development of the Group's new products which involve the utilisation internal salary costs and purchase of external materials for the development of prototypes. 13. Unlisted investments
31 December 2023 31 December 2022
GBP'000 GBP'000
Unlisted equity securities 511 511
Additions in the year - -
511 511
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Unlisted equity securities pertain to 13.9% of ordinary share capital of Minnowtech LLC and 10% of ordinary share capital of Blue Lions Labs Ltd which are both held directly by OTAQ Group Limited.
The directors consider that the carrying amount of unlisted equity securities approximates to their fair value based on level 2 inputs for both investments which include indicative third-party valuations of the investments and internal valuation models provided by the investments themselves based on forecasts. Based on this information, no impairment is required at the reporting date. 14. Subsidiaries of the Group
The principal subsidiaries of the Group at 31 December 2023 and 31 December 2022 are as follows:
% Held
Subsidiary undertakings Country of incorporation Principal activity Class of shares held
OTAQ Group Limited 1 England Manufacturing Ordinary 100% direct
OTAQ Aquaculture Limited2
Scotland Fish farm security Ordinary 100% indirect
OTAQ Chile SpA* 3 Chile Sales Ordinary 100% indirect
OTAQ Connectors Limited 1 England Dormant Ordinary 100% indirect
OTAQ Offshore Limited 2 Scotland Dormant Ordinary 100% indirect
OceanSense Limited2 Scotland Dormant Ordinary 100% indirect
OTAQ Australia PTY4 Australia Sales Ordinary 100% indirect
*OTAQ Chile SpA has a year-end date of 31 December in order to comply with the requirements of the Chilean authorities.
1 Registered office address: 8-3-4 Harpers Mill, South Road, White Cross, Lancaster, England, LA1 4XF
2 Registered office address: Crombie Lodge, Aberdeen Innovation Park, Campus 2, Aberdeen, Scotland, AB22 8GU
3 Registered office address: Pacheco Altamarino 2875, Puerto Montt, Chile
4 Registered office address: 12 Belar Avenue, Terrigal, New South Wales 2260, Australia 15. Trade and other receivables
31 December 2023 31 December 2022
GBP'000 GBP'000
Current:
Trade receivables - gross claim value 1,167 377
Provision for impairment of trade receivables (9) (9)
Prepayments 112 125
Other 29 196
1,299 689
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Trade receivables are non-interest bearing and are generally due and paid within 30 to 60 days. As trade receivables are short-term, the simplified approach under IFRS 9 applies as the credit risk exposure period is unlikely to have a significant change in economic conditions. Trade and other receivables represent financial assets and are considered for impairment on an expected credit loss mode based on historic credit notes issued. Therefore, there is a provision for impairment at the statement of financial position date of GBP9,000 (2022: GBP9,000).
The age of net trade receivables is all within one year (2022: one year) and the average gross debtor days calculated on a count back basis were 35 days (2022: 52 days). 16. Income tax asset
31 December 2023 31 December 2022
GBP'000 GBP'000
Research and development tax credit receivable 113 275
113 275
??????? ??????? 17. Inventories
31 December 2023 31 December 2022
GBP'000 GBP'000
Stock 810 937
810 937
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The value of inventory provided for as at 31 December 2023 is GBP525,000 (2022: GBP558,000). GBP1,270,000 of stock was expensed in the year through cost of sales (2022: GBP967,000). 18. Cash and cash equivalents
31 December 2023 31 December 2022
GBP'000 GBP'000
Cash at bank and in hand 316 2,337
316 2,337
Cash at banks earns interest at floating rates based on daily bank deposit rates. An analysis of cash and cash equivalents by denominated currency is given in note 28. 19. Share capital and share premium
The called-up and fully paid share capital of the Company is as follows:
31 December 31 December
2023 2022
GBP'000 GBP'000
Allotted, called-up and fully paid: 128,144,360 (2022: 127,824,881) Ordinary shares of 1,281 1,278
GBP0.01 each (2022: GBP0.01 each)
Movements in ordinary shares:
Shares Share capital Share premium Deferred Shares
Total
No GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2022 37,716,250 5,657 3,280 - 8,937
Shares issued to employees 108,631 7 4 - 11
Shares issued during the period 90,000,000 900 2,550 - 3,450
Shares sub-divided and converted - (5,286) - 5,286 -
At 31 December 2022 127,824,881 1,278 5,834 5,286 12,398
Shares issued to employees 319,479 3 16 - 19
Shares issued during the period - - - - -
At 31 December 2023 128,144,360 1,281 5,850 5,286 12,417
During the year 319,479 (2022: 108,631) ordinary shares were issued at price ranges between 4.5p and 7p per share as part of the all UK employee Share Incentive Plan. 20. Reserves
Share option reserve
The share option reserve arises from the requirement to value share options in existence at the year end at fair value. Further details of share options are included at note 25.
Share premium
The share premium account represents the amount received on the issue of ordinary shares by the Company in excess of their nominal value less applicable costs and is non-distributable.
Deferred shares
The deferred shares account represents the amount received on the cancellation of 15p ordinary shares by the Company and the creation of 1p ordinary shares and 14p deferred shares and is non-distributable.
Merger relief reserve
The merger relief reserve arose on the Company's reverse acquisition of OTAQ Group Limited on 31 March 2020 and relates to the share premium on the 21,539,904 shares issued to acquire OTAQ Group Limited.
Reverse acquisition reserve
The reverse acquisition reserve was created in accordance with IFRS 3 'Business Combinations'. The reserve arises due to the elimination of the Company's investment in OTAQ Group Limited. Since the shareholders of OTAQ Group Limited became the majority shareholders of the enlarged group, the acquisition is accounted for as though there is a continuation of the legal subsidiary's financial statements. In reverse acquisition accounting, the business combination's costs are deemed to have been incurred by the legal subsidiary.
Other reserve
Other reserve represents the value of the exercised or lapsed share options which were exercised and the foreign exchange in relation to the translation of subsidiaries reporting in foreign currencies.
Revenue reserve
The revenue reserve accumulates the losses attributable to the equity holders of the parent company. 21. Deferred payment for acquisition
31 December 31 December
2023 2022
GBP'000 GBP'000
Current
Fair value of deferred cash consideration on the acquisition of OTAQ Offshore Limited - -
(formerly MarineSense Limited)
- -
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31 December 2023 31 December 2022
GBP'000 GBP'000
Deferred payment for acquisition movement
Opening balance - 213
Unwinding of discount - 62
Repayments - (275)
Revaluation of the deferred consideration - -
Closing balance - -
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31 December 2023 31 December 2022
GBP'000 GBP'000
Current:
Trade payables 354 305
Accrued expenses 136 96
Deferred revenue - 24
Other creditors 171 78
661 503
Trade and other payables comprise amounts outstanding for trade purchases and on-going costs. Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period on purchases is 30 days (2022: 30 days). No interest is paid on trade payables over 30 days. The directors consider that the carrying amount of trade payables approximates to their fair value. 23. Deferred tax liability
31 December 2023 31 December 2022
GBP'000 GBP'000
Deferred tax liability
Deferred taxation on intangibles recognised at acquisition -
-
- -
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From 1 April 2023 the corporation tax rate increased to 25%. This was substantively enacted on 24 May 2021. The deferred tax balance at 31 December 2023 has been calculated based on the rate as at the balance sheet date of 25%. 24. Borrowings
31 December 2023 31 December 2022
GBP'000 GBP'000
Interest bearing loans 1,054 1,501
1,054 1,501
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Analysis of loans and borrowings
Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
31 December 2023 31 December 2022
GBP'000 GBP'000
Current liabilities 484 447
Non-current liabilities 570 1,054
1,054 1,501
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The terms and conditions of outstanding loans are as follows:
31 December 2023 31 December 2022
Nominal interest rate Date of Face value Carrying Face value Carrying
maturity amount amount
GBP'000 GBP'000 GBP'000 GBP'000
The higher of 8% p.a. and the
CBILS loan monthly average Sterling Over 1 January
Night Index Average ("SONIA") 2026 1,054 1,054 1,501 1,501
plus 6.0%
Total interest-bearing liabilities 1,054 1,054 1,501 1,501
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Liabilities arising from financing activities
Lease liabilities CBILS
GBP'000 GBP'000
Balance at 1 January 2023 353 1,501
Cash flows
Repayment of borrowings - (447)
Lease payments (172) -
Non-cash changes* (5) -
Balance at 31 December 2023 176 1,054
*This balance includes GBP10,000 early settlement discount, less GBP5,000 adjustment of opening liability from updated NPV's (2022: GBP60,000 new leases entered to in the year). The leases liabilities relate to capital amounts only. 25. Share options
On 19 August 2021, the Company granted 550,000 of share options to various key management personnel under the Enterprise Management Incentive ("EMI") Share options. On 16 December 2021, the Company granted 250,000 of share options to a new key management employee under the Enterprise Management Incentive ("EMI") Share options. Vesting conditions are detailed in the Remuneration Committee report.
On 7 November 2022, the Company granted 22,499,978 warrants to shareholders who participated in the new share issue of the same date. The warrants entitle the holder to be issued with one share for every warrant held at a price of 12p per share.
An option-holder has no voting or dividend rights in the Company before the exercise of a share option.
Set out below are summaries of options granted under the plan:
31 December 2023 31 December 2022
Weighted average exercise price per Number of Weighted average exercise price per Number of
share option options share option options
At 1 January /1 GBP0.46 1,110,900 GBP0.51 1,810,900
April
Cancelled during the GBP0.58 (350,000) GBP0.58 (700,000)
year
At 31 December GBP0.40 760,900 GBP0.46 1,110,900
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260,900 share options are vested (2022: 260,900) and can be exercised.
Set out below are summaries of warrants granted:
31 December 2023 31 December 2022
Weighted average exercise price per Number of Weighted average exercise price per Number of
warrant warrants warrant warrants
At 1 January / 1 GBP0.13 22,819,978 GBP0.50 320,000
April
- - GBP0.12 22,499,978
Granted during the
year
Lapsed during the GBP0.50 (320,000)
year
At 31 December / 31 GBP0.12 22,499,978 GBP0.13 22,819,978
March
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The remaining weighted average contractual life of the share options and warrants at 31 December 2023 is 2.31 years and 0.82 years respectively with the weighted average exercise price being GBP0.40 for share options and GBP0.12 for warrants. No options were exercised in the period to 31 December 2022 or to 31 December 2023. 26. Commitments and contingencies
Capital commitments
There were no capital commitments at 31 December 2023 and 31 December 2022.
Contingencies
There were no contingent liabilities at 31 December 2023 and 31 December 2022. 27. Financial instruments
Financial assets Demand and less than 3 From 3 to 12 From 12 months to 2 From 2 to 5 More than 5 Total
months months years years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other 573 - - - - 573
receivables
Cash and cash 2,337 - - - - 2,337
equivalents
31 December 2022 2,910 - - - - 2,910
Trade and other 1,299 - - - - 1,299
receivables
Cash and cash 316 - - - - 316
equivalents
31 December 2023 1,615 - - - - 1,615
Financial Demand and less than 3 From 3 to 12 From 12 months to 2 From 2 to 5 More than 5 Total
liabilities months months years years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other 479 - 24 - - 503
payables
Loans 108 339 484 570 1,501
Leases 42 131 130 50 353
31 December 2022 629 470 638 620 - 2,357
Trade and other 661 - - - - 661
payables
Loans 117 367 570 - 1,054
Leases 37 97 42 - 176
31 December 2023 815 464 612 - - 1,891
The maturity gap analysis on the Group's financial assets and liabilities is as follows:
Liquidity gap Demand and less than 3 From 3 to 12 From 12 months to 2 From 2 to 5 More than 5 Total
months months years years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2,281 (470) (638) (620) - 553
2022
As at 31 December 803 (464) (612) - - (273)
2023
28. Financial risk management
The Group's activities expose it to a variety of financial risks: interest rate risk, liquidity risk, market risk, currency risk and credit risk. Risk management is carried out by the board of directors. The Group uses financial instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific financial risks to which it is exposed.
The Group finances its operations through a mixture of equity finance, cash, loans and liquid resources and various items such as trade debtors and trade creditors which arise directly from the Group's operations. a. Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows associated with the instrument will fluctuate due to changes in market interest rates.
Interest bearing assets including cash and cash equivalents are considered to be short-term liquid assets. It is the Group's policy to settle trade payables within the credit terms allowed and the Group does therefore not incur interest on overdue balances.
The Group has external borrowings linked to SONIA but capped until SONIA exceeds 2%; the Group is now therefore exposed to interest rate risk with SONIA at 5.19% at 31 December 2023. The Group is able to place surplus cash reserves on short-term deposit to help offset the SONIA increase risk. The principal impact to the Group is the result of interest-bearing loans and cash including cash equivalent balances held as set out below:
31 December 2023 31 December 2022
Fixed rate Floating rate Total Fixed rate Floating rate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand - 316 316 - 2,337 2,337
Interest bearing loans - (1,054) (1,054) - (1,501) (1,501)
Total - (738) (738) - 836 836
???? ????? ???? ???? ????? ???? b. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with financial liabilities. Liquidity risk arises from the repayment demands of the Group's lenders.
The Group manages all of its external bank relations centrally. Any material change to the Group's principal banking facility requires approval by the Board. The cash requirements of the Group are forecasted by the Board annually. The Group is dependent on any external borrowings through it's CBILs facility.
At the reporting date the Group was cash positive.
The following tables set out the maturity profile of the Group's non-derivative financial liabilities, based on undiscounted contractual cash outflows, as at the following dates:
31 December 2023 31 December 2022
GBP'000 GBP'000
Trade and other payables
Less than 3 months 661 479
1 - 5 years 24
Other financial liabilities
Less than 3 months 154 -
4 months - 1 year 464 13
1 - 5 years 612 1,841
Total 1,891 2,357
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c. Capital risk management
The Group reviews its forecast capital requirements on a half-yearly basis to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. It is the current strategy of the Group to finance its activities from existing equity and reserves as well as additional financing where appropriate and by the issue of new equity as required.
The capital structure of the Group consists of equity attributable to equity holders, comprising issued share capital, share premium, other reserves and retained earnings as disclosed in notes 19 to 20 and the statement of changes in equity. Total equity attributable to the equity holders of the parent company was GBP5,275,000 at 31 December 2023 (31 December 2022: GBP6,346,000). The Group is not subject to externally imposed capital requirements. d. Credit risk management
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group and the risk that any debtors of the Group may default on amounts due to the Group. The Group's principal financial assets are trade receivables, other debtors and cash equivalents. The Group has a policy of only dealing with credit worthy counterparties which is assessed through credit checks and trade references. The Group had GBP1,167,000 of trade receivables at the period end (2022: GBP377,000). The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer or counterparty. However, management also considers the factors that may influence the credit risk of its customer or counterparty base, including the default risk associated with the industry and country in which the customer or counterparty operates. Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant. All trade receivables are ultimately overseen by the director responsible for finance and are managed on a day-to-day basis by the finance team. Credit limits are set as deemed appropriate for the customer. The maximum exposure to credit risk in relation to cash and cash equivalents is the carrying value at the statement of financial position date. e. Currency risk
The Group has limited exposure to currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of the Group. The risk is in respect of United States Dollars, Euros and Chilean Pesos. Transactions outside these currencies are limited.
The Group may use forward exchange contracts as an economic hedge against currency risk, where cash flow can be judged with reasonable certainty. Foreign exchange swaps and options may be used to hedge foreign currency receipts in the event that the timing of the receipt is less certain. There were no open forward contracts as at 31 December 2023 or at 31 December 2022 and the Group did not enter into any such contracts during 2023 nor 2022.
The summary quantitative data about the Group's exposure to currency risk is as follows:
31 December 2023 31 December 2022
GBP CLP USD EUR Total GBP CLP USD AUD EUR Total
GBP'000 GBP'000 GBP000 GBP000 GBP'000 GBP'000 GBP'000 GBP000 GBP000 GBP000 GBP'000
Cash at bank and in hand 254 12 18 32 316 2,279 58 - - 2,337 2,279
Trade receivables 1,050 5 60 52 1,167 261 16 89 11 377 261
Trade payables (335) (1) (14) (1) (351) (281) (16) (8) - (305) (281)
Total 969 16 64 83 1,132 2,259 58 81 11 2,409 2,259
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f. Sensitivity analysis to movement in exchange rates
Given the insignificant asset balances in foreign currency, the exposure to a change in exchange rate is negligible. g. Offsetting financial assets and financial liabilities
The Group has not presented any of its financial assets and financial liabilities on a net basis and no master netting arrangements are in place. 29. Related party transactions
Transactions with directors and companies controlled by directors
The following transactions with directors and companies controlled by directors of the Company were recorded, including VAT, during the year:
31 December 31 December
2023 2022
GBP'000 GBP'000
Charges incurred during the year by OTAQ Group Limited:
Falanx Cyber Defence Limited - a company controlled by a director who resigned during the
previous year
For goods and services provided 6 3
There were no outstanding balances between the Group and related parties at 31 December 2023 or 31 December 2022.
Balances and transactions between the Company and its subsidiaries are eliminated on consolidation and are not disclosed in this Note. There are no differences between directors and the key management personnel as they are considered to be the same. 30. Post balance sheet events
The Group has conditionally raised GBP1.7m by way of Placing Convertible Loan notes as disclosed in the circular dated 26 June 2024 providing the funding to allow the Group to continue its product development as well as providing working capital required until the forecasted growth makes the Group cash generative. A broker option to raise up to a further GBP1m Broker Option Convertible Loan Notes has also been agreed.
----------------------------------------------------------------------------------------------------------------------- Dissemination of a Regulatory Announcement that contains inside information in accordance with the Market Abuse Regulation (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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ISIN: GB00BK6JQ137 Category Code: FR TIDM: OTAQ LEI Code: 213800CZGMYB5XTUXJ52 Sequence No.: 331073 EQS News ID: 1936193 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
July 01, 2024 02:01 ET (06:01 GMT)
