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OTAQ Plc: Final Results for 9 months to 31 December 2022


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OTAQ plc ยท OTAQ

19/05/2023 07:00

OTAQ Plc: Final Results for 9 months to 31 December 2022 DGAP

OTAQ Plc (OTAQ)
OTAQ Plc: Final Results for 9 months to 31 December 2022

19-May-2023 / 07:00 GMT/BST


 

 

19 May 2023

 

OTAQ plc

("OTAQ", or the "Company")

 

Final Results for 9 months to 31 December 2022

 

OTAQ plc (OTAQ.AQ), the innovative technology company targeting the aquaculture, geotracking and offshore markets, announces its audited results for the 9 month period to 31 December 2022.

 

Financial Highlights

 

Group

2022

(9 months)

£’000

2021/22

(12 months)

£’000

 

Revenue

2,561

4,292

 

Gross profit

794

2,027

 

Adjusted EBITDA*

(258)

(49)

 

Net cash / (debt)

758

(1,268)

 

 

 

Strategic and Operational Highlights

  • £2.3m of cash as at 31 December 2022 following the successful equity fund raising in November 2022
  • New sales resource recruited in both the Aquaculture and Offshore divisions
  • Commercialisation and near-commercialisation of key projects in Aquaculture and Geotracking poised to deliver growth in 2023

 

*Adjusted EBITDA is earnings before income, tax, depreciation, exceptional costs, impairment, share option charges and amortisation

 

Commenting, Phil Newby, Chief Executive at OTAQ, said:

 

“OTAQ has ended the financial period with a strong balance sheet following the November 2022 share issue and renewed optimism that the Group will be successful. OTAQ is continuing to enhance its portfolio of products in all divisions and is looking to penetrate new markets through additional sales resource over the coming year.

 

“Completing the commercialisation of our new products and continuing the growth seen in the Offshore divisions gives the directors confidence that the Group will return to profitable growth.”

 

Contacts:

 

OTAQ PLC

01524 748010

Adam Reynolds, Non-Executive Chairman

 

Phil Newby, Chief Executive Officer

 

Matt Enright, 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, geotracking and offshore markets. It already has a number of established products in its portfolio and is focused on further developing its presence, customer base and cross selling opportunities within core markets both organically and via acquisition.

 

OTAQ’s aquaculture products, which include a sonar device (developed for Minnowtech LLC) to scan shrimp in ponds and water quality monitoring, are focused on maximising welfare and production yields. Additionally, the Company is developing a potentially game changing live plankton analysis product for finfish and shellfish farmers. It also continues to target opportunities in the acoustic deterrent devices market via its Sealfence product, which is used by salmon farmers, with global opportunities in Chile, Australia, Canada and Norway.

 

The Company is also developing high accuracy location trackers for specialist applications. Having already added clients within safety and multiple participant sport/racing applications, the Company is investigating wider market potential - including opportunities in the seafood industry.

 

OTAQ’s offshore product range includes OceanSense subsea leak detection, Eagle IP camera systems, Lander seabed survey devices and Subsea electrical connectors and penetrators. It is targeting a number of growth opportunities in new territories and has a strong client base including Expro, Amphenol and National Oilwell Varco. The Company is also focused on the development of new products through this division, with the aim of increased cross-deployment of skills and technologies into the aquaculture arena.

 

 

CHAIRMAN’S STATEMENT FOR THE NINE-MONTH PERIOD ENDED 31 DECEMBER 2022

 

I’m pleased to present my first Chairman’s Statement for the nine-month period ended 31 December 2022.

 

The Group has spent the past nine-months working hard to develop and expand its product portfolio in each of its core markets, being Offshore, Aquaculture and Geotracking. Initial sales of some of these new products have been made in this or the prior financial period and the Group is now working hard to develop new markets and commercial opportunities for these products. Where development of key strategic products is not yet complete, efforts are being made in the new year to complete this development where credible market conditions prevail.

 

I am hopeful that 2023 will yield the benefit of our expanded product portfolio and I will be able to present improved revenue and profit performance for the year to 31 December 2023.

 

Strategy

The strategy of the business is to use the Group’s customer base in the Offshore and Aquaculture industries to allow it to sell our new products developed by the Group’s product development team. Over time, the Group intends to have a full suite of complementary and sophisticated products for use in the Aquaculture industry, be that salmon or shrimp, as well as target niche markets in the Offshore sector where the Group can continue to enjoy the success historically seen. The Geotracking division will also make use of the products developed for this division to target specific sectors that the Group believe will benefit significantly from this technology.

 

Offshore

The Offshore division, comprised of the previously separately reported Connectors and Offshore divisions, has continued to perform well and is expected to continue do so in 2023. The Group now sees additional opportunities for this division in new territories such as North America and other global markets. Sales and marketing resource is being invested to help develop the potential in this division and accelerate revenue growth.

 

Aquaculture

The Group has developed exciting new products for use in the Aquaculture industry. As revenue from the company’s historically core product, Sealfence, has reduced, product development has been pursued in collaboration with key strategic partners to permit entry into the shrimp market, water quality monitoring sectors and plankton analysis. Whilst not all of these products are yet fully commercialised, the Group continues to believe in these technologies and the huge market potential that is possible.

 

Geotracking

The Geotracking technology developed since 2020 has enjoyed some commercial success. In the year to 31 March 2022, the Group benefitted from a large contract award. 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 in 2023 exists and the Group is working hard to achieve this.

 

Our Team

Despite the challenges the Group has faced over the past year, I have been impressed since I joined with the passion and enthusiasm that exists within the business. I am delighted to welcome Giles Clifford to the Board and thank Malcolm Pye for his contribution now he has left. I am confident the team will work diligently to deliver the performance that the Board expects over the next twelve months.

 

 

Adam Reynolds

Non-Executive Chairman

 

 

 

 

 

CHIEF EXECUTIVE’S REPORT FOR THE NINE-MONTH PERIOD ENDED 31 DECEMBER 2022

 

Review of the period

Despite the declining Revenue and increasing losses in the period, the Group has taken steps to reposition itself during the year to ensure the business can return to growth and profitability without relying on its historically core product in the Aquaculture division. The Offshore division has performed well in the nine-month period with the Geotracking division not achieving Revenue of significance but continuing to develop new markets and products.  

 

Development of the phytoplankton analysis product is continuing with commercial launch being worked towards in 2023. Trial sites with potential customers have been deployed and this has been fruitful in enabling us to learn about this strategically important market as well as allow Blue Lion Labs Ltd, in which we own 10% of equity, to develop the software required as part of the product.

 

Development of the shrimp sonar product in collaboration with Minnowtech LLC, our 15% investment since February 2021, has continued during the period. No sales of significance were made but Minnowtech are continuing to finalise their end product and they have now, post year-end, placed a one hundred unit quantity order. 

 

The Group achieved Revenue of £2.56m in the nine-month period (2021/22: £4.29m) with this delivered by £1.62m in the Offshore division (2021/22: £2.09m), £0.06m (2021/22: £0.76m) in the Geotracking division and revenue of £0.88m (2021/22: £1.45m) in the Aquaculture division. The Geotracking division in 2021/22 benefitted from the fulfilment of a significant sports tracking contract as well as sonar sales to Minnowtech. Sonar sales in future will be recorded as Aquaculture sales.  

 

Sales to non-UK territories have increased from 46% of total revenue in 2021/22 to 50% in 2022 as the Offshore division continues to expand and become a more significant part of the Group.  

 

Revenue

Group revenue for the nine-month period ended 31 December 2022 was £2.56 million from £4.29 million in the twelve months to 31 March 2022. This revenue change is all organic.

 

With the changing mix of sales from Aquaculture to Offshore, the Group sales mix is changing with UK revenue now representing only 50% of total revenue (2021/22: 54%). Chile represents 5% (2021/22: 8%) of total revenue with other European countries accounting for 14% (2021/22: 13%) of total revenue and the rest of the world for 31% (2021/22: 25%) of total revenue.

 

Profit

The statutory loss for the year of £2.30m (2021/22: £1.90m) was impacted by the period being nine-months with Revenue being £1.73m lower than the twelve-month prior period and Gross profit being £1.23m lower accordingly. Gross profit of 31% (2021/22: 47%) was impacted by the high fixed costs in Cost of sales.  Administrative expenses changed to £3.10m (2021: £4.14) in line with the nine-month period.

 

The £3.10m of administrative expenses was impacted by the large exceptional charges and certain one-offs including a £0.06m (2021/22: £0.31ml) impairment charge for the write-down of Sealfence units returned from customers and a £0.33m (2021/22: £0.57m) intangibles amortisation charge which included an additional £0.15m impairment charge relating to development costs not commercially viable.     

 

The Group’s exceptional charges in the year totalled £1.23m (2021/22: £0.26m). These included costs regarding the end of the Scottish Acoustic Deterrent Device market and costs that were associated with legal fees for the new shares issued and listing on the Aquis Stock Exchange in November 2022.

 

Dividends

The Board is not recommending a final dividend (2021/22: £nil).

 

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 2023 and will be supported by additional sales resources and dedicated product development support. The market for ADDs in Scotland is no longer an area of focus although Scotland remains a key market for the Group’s new live plankton analysis system (LPAS) and water quality monitoring product. The Chilean market has been subdued in the year but progress is being made with the Chilean authorities around the approval required to use ADDs and it is hoped when this is concluded it will enable the Chilean market to grow.  

 

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 £0.36 million in the period to 31 December 2022 (2021/22: £0.59 million), equivalent to 14% of Group revenue (2021/22: 14%). The aim of the Group’s research and development team is to deliver key projects such as LPAS, water quality monitoring and Geotracking devices.

  

Current trading and prospects

There is cautious optimism that in the coming financial year the Group can return to profitable growth due to the performance of the Offshore division and the expected launch of the Group’s strategic new products such as LPAS. However, management and the Board will continue to exercise firm controls on costs and cash whilst the Group returns to profitability.

 

 

 

 

 

Phil Newby

Chief Executive

 

 

 

CHIEF FINANCIAL OFFICER’S REPORT FOR THE NINE-MONTH PERIOD ENDED 31 DECEMBER 2022

 

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 growth.

 

The Group's Key Performance Indicators are aligned to revenue, profits and ensuring sufficient cash flow to deliver future growth. These three measures were below targets in the period to 31 December 2022 due to the withdrawal of Sealfence units from the Scottish market. However, cash flow has been supplemented by the issue of shares in November 2022 which aided cash balances by an amount net of all relevant costs of £3.22m. In addition, the Group carefully monitors loss time incidents and employee absenteeism and turnover. Loss time incidents were zero (2021/22: zero) for the year and employee absenteeism was in line with historic levels although employee turnover increased.  

 

Revenue

Group revenue changed to £2.56m from £4.29 million with pro-rata growth in the Offshore division against decline in Aquaculture and Geotracking.

 

Profits

The preferred measure of assessing profits for the Group is explained below:

 

 

2022

9 months

£’000

2021/22

12 months

£’000

Operating loss

(2,310)

(2,114)

Share option charge

-

20

Exceptional costs

1,230

257

Amortisation of intangible assets

326

572

Impairment of rental units

62

311

Right-of-use depreciation

130

164

Depreciation on property, plant and equipment

304

741

Adjusted EBITDA*

(258)

(49)

 

* Earnings before income, tax, depreciation, share option charges, impairment, exceptional costs and amortisation.

 

Adjusted EBITDA declined to a loss of £0.26m from £0.05 million in 2021/22 with the corresponding EBITDA operating margin declining from 1% EBITDA operating loss in the prior year to a 10% EBITDA operating loss. This decline was driven by the decrease in Gross profit in the period to £0.79m from £2.03m in the prior year. The EBITDA decline also resulted from a decline in the gross profit percentage from 47.2% to 31.0% due to the changing revenue mix away from Sealfence rentals.

 

Operating losses increased to £2.31m from £2.11m with the total comprehensive expense for the year increasing to £2.30million (2021/22: £1.91 million). The statutory loss before tax increased to £2.51 million compared to £2.16 million in 2021/22.

 

Adjusted EBITDA

Adjusting items relate to 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. The total pre-tax adjusting items recorded in the nine-month period to 31 December 2022 were £1.23m. These relate to £0.23m of fees relating to the November 2022 issue of equity, £0.12m relating to the write-off of amounts loaned to the employee benefit trust due to the decline in the company’s share price, £0.34m of costs in association with Sealfence inventory purchased in the period immediately written down, £0.49m write-down of Aquaculture inventory associated with the Scottish Sealfence rental market and £0.05m of sundry costs considered to be one-off.

 

In addition to this, there were depreciation charges of £0.30 million (2021/22: £0.74m), intangible amortisation charges of £0.33m (2021/22: £0.57m) and right-of-use depreciation charges of £0.13m (2021/22: £0.16m). There was also an impairment charge of £0.06m (2021/22: £0.31m) relating to Sealfence units returned from customers following the end of rental agreements.

 

Other operating income

The grant income received in 2021/22 of £0.13m related to the HMRC CBILs scheme.

.

Finance costs

Net finance costs totalled £0.20m (2021/22: £0.17m) 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, along with a decrease in deferred tax of £0.08m, accounts for the £0.22m (2021/22: £0.25m) tax credit in the year.

 

Earnings and losses per share

Statutory basic losses per share were 5.0p (2021/22: loss 5.9p) and statutory diluted losses per share totalled 5.0p (2021/22: loss 5.9p). 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 (2021/22: £nil) 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 2022 stood at 43 (2021/22: 45). The change in staff numbers during the year was due to efficiency measures undertaken.

 

Share capital and share options

The Group's issued share capital at 31 December 2022 totalled 127,824,881 Ordinary shares (2021/1: 37,716,250). During the year, no share options were exercised with 108,631 (2021/22: 95,854) shares issued as part of the employee Share Incentive Plan. 90,000,000 new shares were issued at a price of 4p as part of a funding round held in November 2022. 6,272,729 new shares were issued at a price of 22p as part of a funding round held in January 2022. 

 

No share options were issued in the year (2021/22: 800,000) with 23,930,878 (2021/22: 2,130,900) share options and warrants in issue at 31 December 2022. 700,000 (2021/22: 229,592) share options lapsed in the year due to performance criteria not being met.  Warrants totalling 22,499,978 were issued in November 2022 with 22,819,978, included in the above figures, outstanding on 31 December 2022 (2021/22: 320,000).

 

Cashflow and net debt

This year's cash generated from operations totalled an outflow of £0.88 million (2021/22: £1.77 million). Total capital expenditure amounted to £0.61 million (2021/22: £1.23 million). Year-end cash balances totalled £2.34 million compared to £1.01 million in 2021/22. The Group finished 2022 with net cash of £0.76 million compared to £1.27 million of net debt at the end of 2021/22 as reconciled below:

 

 

2022

£’000

2021/22

£’000

Cash and cash equivalents

2,337

1,008

Non-current lease liabilities

(181)

(255)

Current lease liabilities

(172)

(161)

Non-current financial liabilities

(1,054)

(1,392)

Current financial liabilities

(447)

(421)

Current deferred payment for acquisition

-

(213)

Income tax asset

275

166

Net cash / (debt)

758

(1,268)

 

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 at 31 December 2022 were £4.24m compared to total current assets of £4.11m at 31 March 2022. The key change during the year relates to the increase in cash balances following the November 2022 fund raising to £2.34m from £1.01m and the decrease in trade and other receivables to £0.69m (2021/22: £1.77m) due to the timing of prior year revenue being weighted towards the last quarter of 2021/22. Inventories have decreased to £0.94m from £1.18m with trade and other payables decreasing to £0.50m from £1.24m with deferred income reducing by £0.43m.

 

Total liabilities have decreased from £3.77m at 31 March 2022 to £2.36m at 31 December 2022 with this decrease driven by the repayments due under the CBILs loan, reducing deferred income balances and a reduction in deferred payments for acquisition. Right-of-use lease liabilities at the end of the period amount to a total liability of £0.35m (2021/22: £0.42m).

 

Despite the difficulties of the period, the Group's financial position is improved over previous years due to the November 2022 fund raising. Nonetheless, 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

The Group begins the new financial year with a strong balance sheet, but where management and the Board will continue to exercise firm controls on costs and cash. 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.

 

 

 

 

Matt Enright

Chief Financial Officer

 

 

 

 

 

consolidated Statement of comprehensive income

FOR the NINE-MONTH PERIOD ended 31 DECEMBER 2022

 

 

Note

Nine-month period ended 31 December 2022

Year ended 31 March 2022

 

 

£’000

£’000

 

 

 

 

Revenue

4

2,561

4,292

Cost of sales

 

(1,767)

(2,265)

 

 

───────

───────

Gross profit

 

794

2,027

 

 

 

 

Administrative expenses

 

(3,104)

(4,141)

 

 

───────

───────

Operating loss

5

(2,310)

(2,114)

 

 

 

 

Other operating income

5

-

131

Finance income

7

1

-

Finance costs

7

(203)

(172)

 

 

───────

───────

Loss before taxation

 

(2,512)

(2,155)

 

 

 

 

Taxation

8

217

251

 

 

───────

───────

Loss for the year

 

(2,295)

(1,904)

 

 

═══════

═══════

 

 

 

 

Attributable to:

 

 

 

Equity shareholders of the Group

 

(2,295)

(1,904)   

 

 

───────

───────

 

 

(2,295)

(1,904)

 

 

═══════

═══════

Other comprehensive income

 

 

 

 

Items that will be reclassified subsequently to profit and loss:

 

 

 

Exchange differences on translation of foreign operations

 

(-)

(7)

 

 

───────

───────

 

 

 

 

Total comprehensive expense for the year

 

(2,295)

(1,911)

 

 

═══════

═══════

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

Equity shareholders of the Group

 

(2,295)

(1,911)

 

 

───────

───────

 

 

(2,295)

(1,911)

 

 

═══════

═══════

 

 

 

 

As per note 9, the loss for the year arises from the Group’s continuing operations. Losses Per Share were 5.0p (2021/22: loss 5.9p) and Diluted Losses Per Share were 5.0p (2021/22: loss 5.9p).

 

 

The accompanying notes on pages 36 to 66 form an integral part of these consolidated financial statements.

 

 

CONSOLIDATED Statement of financial position

as at 31 DECEMBER 2022

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

Note

 

 

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

10

582

919

Right-of-use assets

11

364

434

Unlisted investments

13

511

511

Intangible assets

12

3,008

2,970

 

 

───────

───────

Total non-current assets

 

4,465

4,834

Current assets

 

 

 

Trade and other receivables

15

689

1,766

Income tax asset

16

275

155

Inventories

17

937

1,182

Cash and cash equivalents

18

2,337

1,008

 

 

───────

───────

Total current assets

 

4,238

4,111

 

 

───────

───────

Total assets

 

8,703

8,945

 

 

═══════

═══════

EQUITY AND LIABILITIES

 

 

 

Equity

 

 

 

Share capital

19

1,278

5,657

Share premium

19

5,834

3,280

Deferred shares

19

5,286

-

Share option reserve

25

134

150

Merger relief reserve

20

9,154

9,154

Reverse acquisition reserve 

20

(6,777)

(6,777)

Other reserve

20

400

384

Revenue reserve

20

(8,963)

(6,668)

 

 

───────

───────

Total equity

 

6,346

5,180

 

 

 

 

Non-current liabilities

 

 

 

Deferred tax

23

-

80

Financial liabilities

24

1,054

1,392

Lease liabilities

11

181

255

 

 

───────

───────

Total non-current liabilities

 

1,235

1,727

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

22

503

1,243

Financial liabilities

24

447

421

Deferred payment for acquisition 

21

-

213

Lease liabilities

11

172

161

 

 

───────

───────

Total current liabilities

 

1,122

2,038

 

 

───────

───────

Total liabilities

 

2,357

3,765

 

 

───────

───────

Total equity and liabilities

 

8,703

8,945

 

 

═══════

═══════

 

The accompanying notes on pages 36 to 66 form an integral part of these consolidated financial statements. The financial statements were approved by the board of directors and authorised for issue on 18th May 2023. The results of the parent company are included on pages 67 to 71.

 

Signed on its behalf by M J Enright    Company number: 11429299

 

 

.............................

 

consolidated Statement of changes in equity

FOR THE NINE-MONTH PERIOD ended 31 DECEMBER 2022

 

 

 

 

 

 

Note

Share capital

Share premium

Deferred shares

Share option reserve

Merger relief reserve

Reverse acquisition reserve

Other reserve

Revenue reserve

Equity attributable to owners of the parent company

Total equity

 

 

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2021

 

4,614

2,897

-

473

9,154

(6,777)

136

(4,764)

5,733

5,733

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

-

-

-

(1,904)

(1,904)

(1,904)

Exchange differences on translating foreign operations

 

-

-

-

-

-

-

(7)

-

(7)

(7)

Total comprehensive expense for the year

 

-

-

-

-

-

-

(7)

(1,904)

(1,911)

(1,911)

 

 

 

 

 

 

 

 

 

 

 

 

Issues of shares

 

955

383

-

-

-

-

-

-

1,338

1,338

Transfer on exercised and cancelled options

 

88

-

-

(343)

-

-

255

-

-

-

Charge for share options

25

-

-

-

20

-

-

-

-

20

20

 

 

────

──────

──────

──────

──────

──────

──────

──────

──────

──────

Balance at 31 March 2022

 

5,657

3,280

-

150

9,154

(6,777)

384

(6,668)

5,180

5,180

 

 

════

══════

══════

══════

══════

══════

══════

══════

══════

══════

Balance at 1 April 2022

 

5,657

3,280

-

150

9,154

(6,777)

384

(6,668)

5,180

5,180

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

-

-

-

(2,295)

(2,295)

(2,295)

Exchange differences on translating foreign operations

 

-

-

-

-

-

-

-

-

-

-

Total comprehensive expense for the year

 

-

-

-

-

-

-

-

(2,295)

(2,295)

(2,295)

 

 

 

 

 

 

 

 

 

 

 

 

Sub-division and conversion of shares

19

(5,286)

-

5,286

-

-

-

-

-

-

-

Issues of shares

19

907

2,554

-

-

-

-

-

-

3,461

3,461

Transfer on exercised and cancelled options

25

-

-

-

(16)

-

-

16

-

-

-

 

 

────

──────

──────

──────

──────

──────

──────

──────

──────

──────

Balance at 31 December 2022

 

1,278

5,834

5,286

134

9,154

(6,777)

400

(8,963)

6,346

6,346

 

 

════

══════

══════

══════

══════

══════

══════

══════

══════

══════

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE-MONTH PERIOD ENDED 31 DECEMBER 2022

 

Note

31 December

 2022

31 March      2022

 

 

£’000

£’000

Cash flows from operating activities

 

 

 

 

Operating loss

 

(2,310)

(2,114)

 

Adjustments for non-cash/non-operating items:

 

 

 

 

Depreciation of property, plant and equipment

10

304

741

 

Impairment of property, plant and equipment

10

62

311

 

Loss on disposal of property, plant and equipment

10

6

-

 

Depreciation of right-of-use assets

11

130

164

 

Amortisation of intangible assets

12

181

277

 

Impairment of intangible assets

12

145

295

 

Gain on remeasurement of deferred consideration payable

21

-

40

 

Share option charge

25

-

20

 

 

 

───────

───────

 

 

 

(1,482)

(266)

 

Changes in working capital:

 

 

 

 

Decrease / (increase) in inventories

 

245

(283)

 

Decrease / (increase) in trade and other receivables

 

1,077

(906)

 

Decrease in trade and other payables

 

(740)

(603)

 

 

 

───────

───────

 

Cash from operations

 

(900)

(2,058)

 

Taxation

 

17

289

 

 

 

───────

───────

 

Net cash from operating activities

 

(883)

(1,769)

 

 

 

───────

───────

 

Cash flows from investing activities

 

 

 

 

Purchases of tangible fixed assets

10

(35)

(423)

 

Purchases of intangible assets

12

(364)

(587)

 

Acquisition of unlisted equity securities

13

-

(214)

 

Interest received

 

1

-

 

Deferred payment of acquisition

21

(213)

-

Re-translation of foreign subsidiaries

 

-

(7)

 

 

 

───────

───────

 

Net cash used in investing activities

 

(611)

(1,231)

 

 

 

───────

───────

 

Cash flows from financing activities

 

 

 

 

Proceeds on issue of shares

 

3,611

1,408

 

Expenses of share issues

 

(150)

(70)

 

Repayment of loans

 

(312)

(187)

 

Principal element of lease payments

 

(123)

(181)

 

Interest paid

 

(203)

(82)

 

 

 

───────

───────

 

Net cash from financing activities

24

2,823

888

 

 

 

───────

───────

 

Net increase / (decrease) in cash and cash equivalents

 

1,329

(2,112)

 

Cash and cash equivalents at beginning of year

 

1,008

3,120

 

 

 

───────

───────

 

Cash and cash equivalents at end of year

 

2,337

1,008

 

 

 

═══════

═══════

 
         
 
  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.

 

  1. 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.

 

  1. 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.

 

   

  1. 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 liabilities assumed.

 

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.                           

 

  1. 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.

 

  1. 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 2022, the Group had cash and cash equivalents of £2,337,000. The directors have prepared and reviewed the Group’s funding requirements over the next two years and are confident 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 June 2024 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

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. Government grants

Government grants are recognised when it is reasonable to expect that the grants will be received and that all related conditions are met, usually on submission of a valid claim for payment.  Government grants of a revenue nature are deducted from administrative expenses in the consolidated statement of comprehensive income in line with the terms of the underlying grant agreement. Government grants relating to capital expenditure are deducted in arriving at the carrying amount of the asset. Government grants relating specifically to Covid-19 support measures have been disclosed as “other operating income”.

 

  1. 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 at the 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 to terminate 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 a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting 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 a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest 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, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised 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.

 

  1. Finance expense

Finance expense comprises interest expense on borrowings. All borrowing costs are recognised using the effective interest method.

 

  1. 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 or liability in a transaction that is not a business combination, that at the time of the transaction affects neither accounting nor taxable profit nor loss; and
  • in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will 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 14.5% of the claim is paid in cash once applicable losses and future profitability have been reviewed.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

 

  1. 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.

 

  1. 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 principal and 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 a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities 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 that business model) and how those risks are managed;
  • how managers of the business are compensated – e.g. whether compensation is based on the fair value of the 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 such sales 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 variablerate features;
  • prepayment and extension features; and
  • terms that limit the Group’s claim to cash flows from specified assets (e.g. nonrecourse 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.

 

  1. 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.

 

  1. 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.

 

  1. 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

 

  1. 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.

 

  1. Unlisted Investments

Unlisted investments are stated at fair value with adjustments made following annualised fair value reviews through impairment charges.

 

  1. 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.

 

  1. 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 April 2022.

     Amendments to IAS 16: Property, Plant and Equipment: Proceeds before intended use.

     Amendments to IFRS 3: Reference to the Conceptual Framework.

     Amendments to IAS 37: Onerous Contracts - Cost of Fulfilling a Contract.

     Annual Improvements to IFRS Standards 2018 – 2020: Including amendments to IFRS 9 Financial Instruments and IFRS 16 Lease.

 

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) and 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).

     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.

 

  1. 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 2022 was £995,000 (2021/22: £595,000). The value of the deferred tax liability at the period-end is nil (2021/22: £105,000. 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 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 2022 was £1,538,000 (2021/22: £1,411,000). 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 and 12.

 

 

  1. 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 (GeoTracking). 

 

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

2022

31 March

2022

 

 

£’000

£’000

Analysis of revenue

 

 

 

Amounts earned from Aquaculture rentals and sales

 

882

1,450

Amounts earned from Offshore rentals and sales

 

1,620

2,085

Amounts earned from Geotracking

 

59

757

 

 

───────

───────

 

 

2,561

4,292

 

 

═══════

═══════

           

 

There are no material customers included within revenue (2021/22, one: £725,000).

 

 

 

 

31 December

2022

31 March

2022

 

 

£’000

£’000

Analysis of gross profit

 

 

 

Amounts earned from Aquaculture rentals and sales

 

(114)

590

Amounts earned from Offshore rentals and sales

 

880

1,094

Amounts earned from Geotracking

 

28

343

 

 

───────

───────

 

 

794

2,027

 

 

═══════

═══════

 

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

2022

31 March

2022

 

 

£’000

£’000

Revenue 

 

 

 

UK

 

1,290

2,302

Chile 

 

137

326

Asia

 

293

361

Europe (excluding UK)

 

354

548

North America

 

403

462

Rest of the World

 

84

293

 

 

───────

───────

 

 

2,561

4,292

 

 

═══════

═══════

 

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.

 

  1. Operating loss

 

Operating loss is stated after charging/(crediting):

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

 

Depreciation of property, plant and equipment (see note 10)

304

741

 

Depreciation of right-of-use assets (see note 11)

130

164

 

Impairment of property, plant and equipment (see note 11)

62

311

 

Amortisation and impairment of intangible assets (see note 12)

326

572

 

Research and development costs

1

227

 

Exceptional costs

1,230

257

 

Government grants relating to Covid-19 (Other Operating Income)

-

(131)

 

Share-based payment charge (see note 25)

-

20

 

Loss on disposal of assets

6

-

 

Net foreign exchange (gains) / losses

(37)

1

 

 

───────

───────

 

 

 

 

Auditor remuneration 

 

   

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Audit services:

 

 

 

Fees payable to the Group’s auditor for the audit of the Group and Company annual accounts 

 

22

35

Fees payable to the Group’s auditor for the audit of the Company’s subsidiaries

 

26

45

 

 

───────

───────

 

 

48

80

 

 

═══════

═══════

                 

 

 

 

  1. Staff costs and numbers

 

The average monthly number of employees (including executive directors) for the continuing operations was:

 

 

 

31 December 2022

31 March 2022

 

 

No.

No.

 

 

 

 

Directors

 

3

2

Administration

 

14

17

Engineering

 

8

9

Manufacturing

 

18

17

 

 

───────

───────

 

 

43

45

 

 

═══════

═══════

 

 

 

 

 
               

 

Staff costs for the Group during the year including executive directors:

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Wages and salaries

 

1,562

2,212

Social security costs

 

167

171

Other pension costs

 

42

56

 

 

───────

───────

 

 

1,771

2,439

 

 

═══════

═══════

         Directors’ remuneration

 

Full details of the directors’ remuneration, for current directors, is provided in the Directors’ Remuneration Report on pages 21 to 23.

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Directors’ emoluments

 

329

624

Company contributions to defined contribution pension schemes

 

11

14

 

 

───────

───────

 

 

340

638

 

 

═══════

═══════

 

The highest paid director received remuneration of £132,382 (2021/22: £390,219)

 

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 (2021/22: 2).

 

The charge to the statement of comprehensive income in respect of defined contribution schemes was £37,000 (2021/22: £56,000). Contributions totalling £9,000 (2021/22: £8,000) were payable to the fund at the year-end and are included in creditors.

 

  1. Net finance costs

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Finance income

 

 

 

Bank interest received

 

1

-

 

 

───────

───────

Total finance income

 

1

-

 

 

───────

───────

 

 

 

 

Finance costs

 

 

 

Bank and loan interest payable

 

(136)

(156)

Unwinding of discount on deferred acquisition payment

 

(62)

(10)

Lease interest payable

 

(5)

(6)

 

 

───────

───────

Total finance costs

 

(203)

(172)

 

 

───────

───────

 

 

 

 

Net finance costs

 

(202)

(172)

 

 

═══════

═══════

 

  1. Taxation

 

The tax credit is made up as follows:

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Current income tax:

 

 

 

Adjustments in respect of prior year

 

(18)

(11)

Research and development income tax credit receivable

 

(119)

(144)

 

 

───────

───────

Total current income tax

 

(137)

(155)

 

 

───────

───────

Deferred tax expense:

 

 

 

Origination and reversal of temporary differences

 

(80)

(96)

 

 

───────

───────

 

 

 

 

Tax credit per statement of comprehensive income

 

(217)

(251)

 

 

═══════

═══════

 

 

The tax charge differs from the standard rate of corporation tax in the UK of 19% for the nine-month period ended 31 December 2022 (19% for the year ended 31 March 2022).  The differences are explained below:

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Loss on ordinary activities before taxation 

 

(2,512)

(2,155)

 

 

 

 

UK tax credit at standard rate of 19% (2021/22: 19%)

 

(477)

(409)

Effects of:

 

 

 

Fixed assets timing differences

 

(80)

(74)

Expenses not deductible for tax

 

77

95

Additional deduction for R&D expenditure

 

(119)

(144)

Adjustments in respect of prior year

 

(18)

(11)

Prior year losses utilised

 

-

43

Deferred tax not recognised

 

400

249

 

 

───────

───────

Total taxation credit

 

(217)

(251)

 

 

═══════

═══════

 

 

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 19% (2021/22: 19%) is £995,000 (2021: £595,000), of which £nil (2021: £nil) 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 (2021/22: £80,000).

 

From 1 April 2023 the corporation tax rate will increase to 25%. This was substantively enacted on 24 May 2021. The deferred tax balance at 31 December 2022 has been calculated based on the rate as at the balance sheet date of 25%.

 

 

  1. 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.

 

2022

 

2021/22

 

£’000

 

£’000

Loss for the year attributable to owners of the Group

(2,459)

 

(1,904)

Weighted average number of shares:

 

 

 

- Basic

49,659,304

 

32,535,945

- Diluted

94,036,802

 

34,024,147

Basic losses per share (pence)

(5.0)

 

(5.9)

Diluted losses per share (pence)*

(5.0)

 

(5.9)

 

Weighted average number of shares:

 

 

 

- Basic

49,659,304

 

32,535,945

- Diluted

 94,036,802

 

 34,024,147

 

 

 

 

Adjusted basic losses per share (pence)

(5.0)

 

(5.9)

Adjusted diluted losses per share (pence)

(5.0)

 

(5.9)

 

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.

 

  1. Property, plant and equipment

 

 

Systems for rental

Plant and equipment

Motor vehicles 

Total

 

£’000

£’000

£’000

£’000

COST

 

 

 

 

At 31 March 2021

2,588

361

86

3,035

Additions

370

52

1

423

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

 

───────

───────

───────

───────

DEPRECIATION

 

 

 

 

At 31 March 2021

1,330

124

33

1,487

Depreciation charge for year

625

89

27

741

Impairment for year

311

-

-

311

At 31 March 2022

2,266

213

60

2,539

Depreciation charge for year

218

71

15

304

Disposals

(348)

(3)

(6)

(357)

Impairment for year

62

-

-

62

 

───────

───────

───────

───────

At 31 December 2022

2,198

281

69

2,548

 

───────

───────

───────

───────

NET BOOK VALUE

 

 

 

 

At 31 December 2022

435

137

10

582

 

═══════

═══════

═══════

═══════

At 31 March 2022

692

200

27

919

 

═══════

═══════

═══════

═══════

 

 

Depreciation charges in relation to Systems for rental are included in Costs of sale. All other depreciation is included in administrative expenses.

 

Impairment charges for the 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.
 

  1. Leases

 

 

 

Right-of-use assets

 

 

 

 

Buildings and facilities

Motor vehicles

 

 Total

 

 

 

£’000

£’000

  £’000

Cost

 

 

 

 

 

At 31 March 2021

 

 

511

134

645

Additions

 

 

33

43

76

Disposals

 

 

(27)

-

(27)

At 31 March 2022

 

 

517

177

694

Additions

 

 

60

-

60

Disposals

 

 

(52)

-

(52)

 

 

 

──────

──────

──────

At 31 December 2022

 

 

525

177

702

 

 

 

──────

──────

──────

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 31 March 2021

 

 

101

18

119

Charge for the year

 

 

123

41

164

Disposals

 

 

(23)

-

(23)

At 31 March 2022

 

 

201

59

260

Charge for the year

 

 

96

34

130

Disposals

 

 

(52)

-

(52)

 

 

 

──────

──────

──────

At 31 December 2022

 

 

245

93

338

 

 

 

──────

──────

──────

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

At 31 December 2022

 

 

280

84

364

 

 

 

══════

══════

══════

At 31 March 2022

 

 

316

118

434

 

 

 

══════

══════

══════

                 

 

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 3.5 years (2021/22: 2.8 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 2022

31 March 2022

 

 

 

£’000

£’000

Depreciation expense on right-of-use assets

 

 

130

164

Interest expense (included in finance cost) 

 

 

6

6

 

 

 

 

 

               

The total cash outflow for leases amount to £123,000 (2021/22: £181,000).

 

Lease liabilities

 

Maturity analysis

A maturity analysis of lease liabilities based on undiscounted gross cash flows is reported in the table below:

 

 

31 December

 2022

31 March

 2022

 

 

 

£’000

£’000

 

 

 

 

 

 

Year 1

 

180

168

 

Year 2

 

137

155

 

Year 3

 

53

92

 

Year 4

 

0

21

 

Interest costs

 

(17)

(20)

 

 

 

───────

───────

 

Total lease liabilities

 

353

416

 

 

 

═══════

═══════

 

 

 

 

 

 

31 December

 2022

 

31 March

 2022

   

 

 

£’000

£’000

   

 

 

 

 

 

Due within one year

 

172

168

   

Due in over one year

 

181

248

   

 

 

───────

───────

   

Total lease liabilities

 

353

416

   

 

 

═══════

═══════

   
                   

 

The Group does not face a significant liquidity risk with regard to its lease liabilities. All lease obligations are denominated in pounds sterling.

 

 

  1. Intangible assets

 

Goodwill

Trademarks

IP licence

Development costs

Total intangible assets

 

£’000

£’000

£’000

£’000

£’000

Cost

 

 

 

 

 

At 31 March 2021

1,059

515

428

1,427

3,429

Additions

-

-

-

587

587

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

 

──────

───────

───────

  ───────

───────

Amortisation

 

 

 

 

 

At 31 March 2021

28

129

152

165

474

Charge for the year

-

64

70

143

277

Impairments

-

-

-

295

295

At 31 March 2022

28

193

222

603

1,046

Charge for the year

-

48

41

92

181

Impairments

-

-

-

145

145

Disposals

-

-

-

(206)

(206)

 

──────

───────

───────

───────

───────

At 31 December 2022

28

241

263

634

1,166

 

──────

───────

───────

───────

───────

 

Net Book Value

──────

───────

───────

───────

───────

At 31 December 2022

1,031

274

165

1,538

3,008

 

──────

───────

───────

───────

───────

At 31 March 2022

1,031

322

206

1,411

2,970

 

 

══════

══════

══════

══════

═══════

Goodwill relates to the acquisition of MarineSense Limited (now part of the Offshore cash generating unit) of £611,000 and the acquisition of Link Subsea Limited (now part of the Offshore cash generating unit) of £420,000. 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 five years with recoverable amounts determined by considering value in use, no growth rates were assumed and 8% was used as the modelling discount rates. For these reasons, it is not considered reasonable that a reasonably possible change in the key assumptions would 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 2.9 years (2021/22: 3.6 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.

 

  1. Unlisted investments

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Unlisted equity securities

 

511

297

Additions in the year

 

-

214

 

 

───────

───────

 

 

511

511

 

 

═══════

═══════

 

Unlisted equity securities pertain to 15% 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.

 

 

  1. Subsidiaries of the Group

 

The principal subsidiaries of the Group at 31 December 2022 and 31 March 2022 are as follows:

 

Subsidiary undertakings

Country of incorporation

Principal activity

Class of shares held

% 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 Group UK Limited and OTAQ UK Limited were formally dissolved on 27 July 2021.

 

*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

 

 

  1. Trade and other receivables

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Current:

 

 

 

Trade receivables – gross claim value

 

377

1,467

Provision for impairment of trade receivables

 

(9)

(28)

Prepayments

 

125

142

Other

 

196

185

 

 

───────

───────

 

 

689

1,766

 

 

═══════

═══════

 

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 £9,000 (2021/22: £28,000).

 

The age of net trade receivables is all within one year (2021/22: one year except for £23,000 which is less than two years) and the average gross debtor days calculated on a count back basis were 52 days (2021/22: 78 days).

 

 

 

  1. Income tax asset

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Research and development tax credit receivable

 

275

155

 

 

───────

───────

 

 

275

155

 

 

═══════

═══════

 

 

  1. Inventories

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Stock

 

937

1,182

 

 

───────

───────

 

 

937

1,182

 

 

═══════

═══════

 

The value of inventory provided for as at 31 December 2022 is £558,000 (2021/22: £64,000). £967,000 of stock was expensed in the year through cost of sales (2021/22: £1,010,000).

 

 

  1. Cash and cash equivalents

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Cash at bank and in hand

 

2,337

1,008

 

 

───────

───────

 

 

2,337

1,008

 

 

───────

───────

 

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.

 

 

  1. Share capital and share premium

 

The called-up and fully paid share capital of the Company is as follows:

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Allotted, called-up and fully paid: 127,824,881 (2021/22: 37,716,250) Ordinary shares of £0.01 each (2021/22: £0.15 each)

 

1,278

5,657

 

 

───────

───────

 

Movements in ordinary shares:

 

 

Shares

Share capital

Share premium

Deferred Shares

 

Total

 

No

£’000

£’000

£’000

£’000

At 31 March 2021

30,763,251

4,614

2,897

-

7,511

Shares issued to employees

95,854

14

14

-

28

Shares issued during the year

6,272,729

941

369

-

1,310

Exercise of share options

584,416

88

-

-

88

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

 

───────

──────

────

────

────

 

During the year 108,631 (2021/22: 95,854) ordinary shares were issued at price ranges between 5p and 21p per share as part of the all UK employee Share Incentive Plan.

 

On 9 November 2022, 90,000,000 ordinary shares were issued following a General Meeting of the Company held on 7 November 2022 at a price of 4p per share. Contemporaneously, the existing ordinary share capital consisting of 37,758,052 ordinary shares of nominal value £0.15 each were sub-divided and each replaced with one new ordinary share of £0.01 each and one deferred share of £0.14. The new ordinary shares have the same rights as the ordinary shares they replaced. The new deferred shares have no economic rights.

 

On 11 January 2022, 6,272,729 ordinary shares were issued at a price of 22p per share following a General Meeting of the Company held on 10 January 2022.

 

  1. 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.

 

  1. Deferred payment for acquisition

 

 

31 December 2022

31 March 2022

 

£’000

£’000

Current

 

 

Fair value of deferred cash consideration on the acquisition of OTAQ Offshore Limited (formerly MarineSense Limited)

-

213

 

───────

───────

 

-

213

 

═══════

═══════

 

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Deferred payment for acquisition movement

 

 

 

Opening balance

 

213

215

Unwinding of discount

 

62

10

Repayments

 

(275)

(52)

Revaluation of the deferred consideration

 

-

40

 

 

───────

───────

Closing balance

 

-

213

 

 

═══════

═══════

 

 

  1. Trade and other payables

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Current:

 

 

 

Trade payables

 

305

520

Accrued expenses

 

96

109

Deferred revenue

 

24

453

Other creditors

 

78

161

 

 

───────

───────

 

 

503

1,243

 

 

═══════

═══════

 

 

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 (2021/22: 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. 

 

  1. Deferred tax liability

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

Deferred tax liability

 

 

 

Deferred taxation on intangibles recognised at acquisition

 

-

 

80

 

 

───────

───────

 

 

-

80

 

 

═══════

═══════

 

From 1 April 2023 the corporation tax rate will increase to 25%. This was substantively enacted on 24 May 2021. The deferred tax balance at 31 December 2022 has been calculated based on the rate as at the balance sheet date of 25%.

 

 

 

  1. Borrowings

 

 

31 December 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Interest bearing loans 

 

1,501

1,813

 

 

───────

───────

 

 

1,501

1,813

 

 

═══════

═══════

 

 

 

 

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 2022

31 March 2022

 

 

£’000

£’000

 

 

 

 

Current liabilities

 

447

421

Non-current liabilities

 

1,054

1,392

 

 

───────

───────

 

 

1,501

1,813

 

 

═══════

═══════

 

 

 

 

The terms and conditions of outstanding loans are as follows:

 

 

 

 

31 December 2022

 

31 March 2022

 

Nominal interest rate

Date of maturity

Face value

Carrying amount

 

Face value

Carrying amount

 

 

 

£’000

£’000

 

£’000

£’000

CBILS loan

The higher of 8% p.a. and the monthly average Sterling Over Night Index Average (“SONIA”) plus 6.0%

1 January 2026

              1,501

 

1,501

 

              1,813

 

1,813

 

Total interest-bearing liabilities

 

───────

1,501

───────

1,501

 

───────

1,813

───────

1,813

 

 

 

═══════

═══════

 

═══════

═══════

                     

 

Liabilities arising from financing activities

 

 

 

Lease liabilities

CBILS

 

 

£’000

£’000

 

 

 

 

Balance at 1 April 2022

 

416

1,813

Cash flows

 

 

 

Repayment of borrowings

 

-

(312)

Lease payments

 

(123)

-

Non-cash changes*

 

60

-

Balance at 31 December 2022

 

353

1,501

 

 

*This balance includes £60,000 (2021/22: £76,000) of new leases entered to in the year. The leases liabilities relate to capital amounts only.

 

 

  1. 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 2022

31 March 2022

 

Weighted average exercise price per share option

Number of
options

Weighted average exercise price per share option

Number of
options

 

 

 

 

 

At 1 April

£0.44

1,810,900

£0.27

1,824,908

 

Granted during the year

-

-

 

£0.60

 

800,000

Exercised during the year

-

-

£0.01

(584,416)

Lapsed during the year

-

-

£0.01

(229,592)

Cancelled during the year

£0.58

(700,000)

-

-

 

───────

───────

───────

───────

At 31 December / 31 March

£0.14

1,110,900

£0.44

1,810,900

 

═══════

═══════

═══════

═══════

 

260,900 share options are vested (2021/22: 260,900) and can be exercised

 

Set out below are summaries of warrants granted: 

 

 

31 December 2022

31 March 2022

 

Weighted average exercise price per warrant

Number of
warrants

Weighted average exercise price per warrant

Number of
warrants

 

 

 

 

 

At 1 April

£0.50

320,000

£0.50

320,000

 

Granted during the year

£0.12

22,499,978

 

-

 

-

 

───────

───────

───────

───────

At 31 December / 31 March

£0.13

22,819,978

£0.50

320,000

 

═══════

═══════

═══════

═══════

 

The remaining weighted average contractual life of the share options and warrants at 31 December 2022 is 2.43 years 1.82 years respectively with the weighted average exercise price being £0.14 (2021/22: £0.52).  The weighted average share price on the date of exercise of share options exercised during the year to 31 March 2022 was £0.36 and no options were exercised in the period to 31 December 2022. 

 

Fair value of options and warrants granted

 

The estimated average fair value of 22,499,978 (2021/22: 800,000 options) warrants granted during the year was £nil (2021/22: £0.08). The fair value at grant date is determined using an adjusted form of the Black-Scholes model which includes a Monte Carlo simulation model that takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, based on OTAQ plc historical share price history, and the risk-free interest rate for the term of the option.

 

The model inputs were:

  • share prices at grant date of £0.04 (2021/22: £0.23 to £0.42);
  • exercise prices of £0.12 (2021/22: £0.595 to £0.600);
  • expected volatility of 82% (2021/22: 50% to 58%);
  • expected dividend rate of 0% (2021/22: 0%);
  • contractual life of 2 years (2021/22: 0 to 3 years); and
  • a risk-free interest rate of 3% (2021/22: 1%).

 

The total reserve and share-based payment expense recognised in the statement of comprehensive income for the period ended 31 December 2022 in respect of these options granted was £nil (2021/22: £20,000).

 

 

  1. Commitments and contingencies

 

Capital commitments

The Group is committed to the following capital expenditure contracted in the current financial year:

 

 

 

31 December 2022

31 March 2022

 

 

£’000

 

£’000

 

 

 

-

411

 

 

═══════

═══════

         

           The prior year capital commitment related to a purchase order placed for Sealfence systems.

 

Contingencies

There were no contingent liabilities at 31 December 2022 and 31 March 2022.

 

 

  1. Financial instruments

 

Financial assets

Demand and less than 3 months

From 3 to 12 months

From 12 months to 2 years

From 2 to 5 years

More than 5 years

Total

 

£’000

£’000

£’000

£’000

£’000

£’000

 

 

 

 

 

 

 

Trade and other receivables

1,624

-

-

-

-

1,624

Cash and cash equivalents

1,008

-

-

-

-

1,008

 

───────

───────

───────

───────

───────

───────

31 March 2022

2,632

-

-

-

-

2,632

 

───────

───────

───────

───────

───────

───────

Trade and other receivables

573

-

-

-

-

573

Cash and cash equivalents

2,337

-

-

-

-

2,337

 

───────

───────

───────

───────

───────

───────

31 December 2022

2,910

-

-

-

-

2,910

 

───────

───────

───────

───────

───────

───────

 

Financial liabilities

Demand and less than 3 months

From 3 to 12 months

From 12 months to 2 years

From 2 to 5 years

More than 5 years

Total

 

£’000

£’000

£’000

£’000

£’000

£’000

Trade and other payables

790

441

12

 

 

1,243

Loans

102

319

456

936

 

1,813

Leases

39

123

147

107

 

416

 

───────

───────

───────

───────

───────

───────

31 March 2022

931

883

615

1,043

-

3,472

 

───────

───────

───────

───────

───────

───────

Trade and other payables

479

-

24

-

-

503

Loans

108

339

484

570

 

1,501

Leases

42

131

130

50

 

353

 

───────

───────

───────

───────

───────

───────

31 December 2022

629

470

638

620

-

2,357

 

───────

───────

───────

───────

───────

───────

 

 

The maturity gap analysis on the Group's financial assets and liabilities is as follows:

 

Liquidity gap

Demand and less than 3 months

From 3 to 12 months

From 12 months to 2 years

From 2 to 5 years

More than 5 years

Total

 

£’000

£’000

£’000

£’000

£’000

£’000

 

 

 

 

 

 

 

As at 31 March 2022

1,701

(883)

(615)

(1,043)

-

(840)

 

 

 

 

 

 

 

As at 31 December 2022

2,281

(470)

(638)

(620)

-

553

                 

 

 

 

  1. 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.

 

  1. 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 3.69% at 31 December 2022.  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 2022

 

31 March 2022

 

 

Fixed rate

Floating rate

Total

 

Fixed rate

Floating rate

Total

 

 

£’000

£’000

£’000

 

£’000

£’000

£’000

Cash at bank and in hand

 

-

2,337

2,337

 

-

1,008

1,008

Interest bearing loans 

 

-

(1,501)

(1,501)

 

(1,813)

-

(1,813)

 

 

────

─────

────

 

────

─────

────

Total

 

-

836

836

 

(1,813)

1,008

(805)

 

 

════

═════

════

 

════

═════

════

 

  1. 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 2022

31 March 2022

 

 

£’000

£’000

Trade and other payables

 

 

 

Less than 2 months

 

479

629

Other financial liabilities

 

 

 

Less than 2 months

 

-

224

3 months - 1 year

 

13

732

1 - 5 years

 

1,841

1,647

 

 

───────

───────

Total

 

2,333

3,232

 

 

═══════

═══════

 

  1. 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 £6,270,000 at 31 December 2022 (31 March 2022: £5,180,000). The Group is not subject to externally imposed capital requirements.

 

  1. 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 £377,000 of trade receivables at the period end (2021/22: £1,439,000). 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.

 

  1. 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 2022 or at 31 March 2022 and the Group did not enter into any such contracts during 2022 nor 2021.

 

The summary quantitative data about the Group’s exposure to currency risk is as follows:

 

 

31 December 2022

31 March 2022

 

GBP

CLP

USD

EUR

Total

GBP

CLP

USD

AUD

EUR

Total

 

 

£’000

£’000

£000

£000

£’000

£’000

£’000

£000

£000

£000

£’000

 

Cash at bank and in hand

2,279

58

-

-

2,337

904

67

37

-

-

1,008

 

Trade receivables

261

16

89

11

377

1,294

54

74

-

17

1,439

 

Trade payables

(281)

(16)

(8)

-

(305)

(410)

(21)

(1)

(88)

-

(520)

 

 

───

───

────

───

───

───

───

────

───

───

───

 

Total

2,259

58

81

11

2,409

1,788

100

110

(88)

17

1,927

 

 

═══

═══

════

═══

═══

═══

═══

════

═══

═══

═══

 
                           

 

  1. Sensitivity analysis to movement in exchange rates

Given the immaterial asset balances in foreign currency, the exposure to a change in exchange rate is negligible.

 

  1. 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.

 

 

  1. 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 2022

31 March 2022

 

£’000

£’000

 

Charges incurred during the year by OTAQ Group Limited:

 

 

Falanx Cyber Defence Limited – a company controlled by a director who resigned during the year

 

 

For goods and services provided

3

5

 

 

There were no outstanding balances between the Group and related parties at 31 December 2022 or 31 March 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.

 

 

 

 

 



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.


ISIN: GB00BK6JQ137
Category Code: FR
TIDM: OTAQ
LEI Code: 213800CZGMYB5XTUXJ52
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 244812
EQS News ID: 1636639

 
End of Announcement EQS News Service

fncls.ssp?fn=show_t_gif&application_id=1636639&application_name=news&site_id=acquiremedia3]]>

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