OTAQ Otaq Plc

OTAQ plc

("OTAQ", or the "Company")

Final Results for the Year to 31 December 2023

OTAQ plc (OTAQ.AQ), the innovative technology company targeting the aquaculture, and offshore markets, announces its audited results for the year ended 31 December 2023.

Financial Highlights

Group	2023 (12 months) £’000	2022 (9 months) £’000
Revenue	4,407	2,561
Gross profit	2,197	794
Adjusted EBITDA*	(311)	(258)
Net (debt) / cash	(801)	758

 

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

Strategic and Operational Highlights

• Strong traction in the Aquaculture division with orders for 200 Shrimp sonar delivered in H2.
• The Offshore division has shown strong growth, particularly benefiting from the continued demand and increased orders for Connector solutions and OceanSense products.
• Following more than three years in development, OTAQ has completed successful trials of its Live Plankton Analysis System (LPAS), and in May 2024 launched LPAS at the Aquaculture UK conference.
• Conditional placing to raise £1.7m through Secured Convertible Loan Note issue announced on 26 May 2024

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

“With an improved reported revenue for the year, the Board remains confident in its current growth strategy, part of which is to commercialise a number of opportunities in the Aquaculture space. With LPAS systems now live, OTAQ is in constant receipt of highly valuable data that will, through a machine learning process, further enhance the AI engine and improve customer outcomes.

“We expect the Placing of £1.7m Secured Convertible Loan Notes and the Broker Option for up to a further £1m Secured Convertible Loan Notes to provide the working capital and balance sheet strength needed to complete the commercialisation of our new products.”  

Contacts:

OTAQ PLC		01524 748010
Adam Reynolds, Non-Executive Chairman
Phil Newby, Chief Executive Officer
Justine Dowds, Chief Financial Officer
Dowgate Capital Limited (AQSE Corporate Advisor & Broker)		020 3903 7715
David Poutney / James Serjeant Nicholas Chambers / Russell Cook
Walbrook PR Limited	Tel: 020 7933 8780 or Otaq@walbrookpr.com
Tom Cooper / Nick Rome	0797 122 1972 or 07748 325 236

 

 

 

About OTAQ:

OTAQ is a highly innovative technology company targeting the aquaculture and offshore markets. It already has a number of established products in its portfolio and is focused on further developing its presence, customer base and cross selling opportunities within core markets both organically and via acquisition.

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

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

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

 

CHAIRMAN’S STATEMENT

 

 

Over the past year, the Group has diligently worked to develop and expand its product portfolio within its core markets, Offshore and Aquaculture. Following initial sales of some of these new products the Group is now focused on developing new markets and commercial opportunities. Product development will continue into 2024 as the range expands to provide a suite of complementary aquaculture and offshore products.

 

I believe that 2024 will yield the benefit of our expanded and diversified product portfolio and I will be able to present improved revenue and profit performance for the year to 31 December 2024.

 

Strategy

The business strategy leverages the Group’s customer base in the Offshore and Aquaculture industries to market new products developed by the Group’s product development team. Over time, the Group aims to offer a comprehensive suite of advanced products for the Aquaculture industry, catering to both finfish and shrimp markets, while also targeting niche markets in the Offshore sector to sustain its historical success. Additionally, the Geotracking division will utilise these newly developed products to focus on specific sectors that are expected to benefit greatly from this technology.

 

Offshore

The Offshore division showed strong growth in 2023 with revenues up by 99% on the previous reporting period.  This strong performance is expected to continue into 2024 as opportunities in new territories such as North America and other global markets are explored. Sales and marketing resource is being invested to help develop the potential in this division and accelerate revenue growth.

 

Aquaculture

The Group has developed innovative new products for use in the Aquaculture industry. The Live Plankton Analysis System (LPAS) was commercially launched at Aquaculture UK on 15 May 2024 and the Group continues to explore the huge market potential for its shrimp sonar and water quality monitoring products.

 

Geotracking

The Geotracking technology developed since 2020 has enjoyed some commercial success. Variants of the Geotracking device remain in development consisting of tracking devices for use in the railway industry and other similar sectors. Trials with partners in the railway industry are ongoing with orders placed and deliveries made. The potential for significant orders within this division exists and the Group is working hard to achieve this.

 

Our Team

The continued levels of passion and enthusiasm that exists within the business have driven the results we have seen this year and the strength of the development team have positioned the Group for growth into 2024 and beyond. I am delighted to welcome Justine Dowds to the Board and thank George Watt and Matt Enright for their contribution’s.  I am confident the team will work diligently to deliver the performance that the Board expects over the next twelve months.

 

STRATEGIC REPORT

 

 

OPERATING REVIEW

 

Review of the period

During the year the Group has continued its path to return to growth and profitability without relying on its historically core product in the Aquaculture division. The Offshore division has performed well in the year.  

 

The phytoplankton analysis product was launched commercially in April 2024, following positive feedback from key client stakeholders. With the product achieving the desired identification rates on our initial target species, we are now set to develop this strategically important market.

 

During the year we made sales of over 200 shrimp sonars to Minnowtech LLC, in which we have a 13.9% investment. Early indications of further orders in 2024 have been given as the product has been well received by the early adopters.

 

Revenue

The Group achieved Revenue of £4.4m in the year (2022 9 mths: £2.56m) driven by £3.2m in the Offshore division (2022: £1.62m) and £1.2m (2022 9 mths: £0.88m) in the Aquaculture division.

 

Sales to non-UK territories have increased by 96% compared to the nine months to December 2022 and UK sales increased by 51% compared to the same period. Non-UK sales now make up 56% of total revenue up from 50% in the nine months to December 2022 as the Offshore division continues to expand and become a more significant part of the Group. This revenue change is all organic.

 

North America sales grew to 23% of total sales in 2023 from 16% in the nine month period for 2022.  Europe and Chile are consistent with last year at 15% and 5% respectively. 

 

Profit

The statutory loss for the year has reduced to £1.1m in 2023 (2022 9 mths: £2.30m).  Gross profit increased to £2.2m (50%) in 2023 from £0.8m (31%) in the nine months to December 2022, driven by the transition to higher margin sales in the Offshore division.  Effective management of the cost base throughout the year has meant administrative expenses increased only marginally to £3.3m despite being a full (2022 9 mths: £3.1m).

 

Dividends

The Board is not recommending a final dividend (2022: £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 2024 and will be supported by significant sales resources and dedicated product development support. Scotland is a key initial market for the Group’s new live plankton analysis system (LPAS) and water quality monitoring product. Continued development of LPAS with the expansion into Australia and Chile continues in 2024.

 

Innovation

The Group has continued to invest in the development of new products and improvement to existing products. Investment in research and development, capitalised as development costs, amounted to £0.58 million in the period to 31 December 2023 (2022 9 mths: £0.36 million), equivalent to 13% of Group revenue (2022 9 mths: 14%). The aim of the Group’s research and development team is to deliver key projects such as LPAS, water quality monitoring and shrimp sonar devices.

 

Current trading and prospects

We are pleased with the growth in sales achieved in the year, demonstrating the success of our strategy to diversify while focusing initial growth efforts in the Offshore division. Future growth is planned to be delivered by both Offshore and Aquaculture through expansion into new markets and with the launch of newly developed products.  Whilst we drive the sales growth, we continue to exercise firm controls on costs and cash in our drive to see the Group returns to profitability.

 

Phil Newby

Chief Executive

 

 

FINANCIAL REVIEW

 

The strategy of the Group is to build a business of significance within the aquaculture and offshore industries with the key financing requirements being to ensure there is sufficient resource to fund new product development and working capital as the Group returns to profit.

 

The Group's Key Performance Indicators are aligned to revenue, profits and ensuring sufficient cash flow to deliver future growth. These three measures were above targets in the period to 31 December 2023.

 

The Group also monitors loss time incidents and employee absenteeism and turnover. Loss time incidents were zero (2022: zero) for the year and employee absenteeism and turnover were in line with historic levels.  

 

Revenue

Group revenue increased to £4.41m in 2023 from £2.56 million in the 9 months to 31 December 2022.  Offshore divisional revenue increased by 100% in the period, and the Group saw a 31% increase in Aquaculture revenue. Delays in new contracts for Geotrackers led to a small decline in revenue to £45k (£59k for nine months to December 2022).

 

Profits

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

 

	2023 12 months £’000	2022 9 months £’000
Operating loss	(1,064)	(2,310)
Exceptional costs	-	1,230
Amortisation of intangible assets	277	326
Impairment of rental units	-	62
Right-of-use depreciation	168	130
Depreciation on property, plant and equipment	308	304
Adjusted EBITDA*	(311)	(258)

 

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

 

The Adjusted EBITDA loss of £0.31m for the year to 31 December 2023 is a slight reduction from £0.26m in the 9 months to 31 December 2022 however the corresponding EBITDA operating margin improves to -7% EBITDA from a -10% EBITDA operating loss in the prior year. This improvement was driven by the significant increase in Gross profit in the year, £2.2m from £0.79m in the prior year. The EBITDA improvement also resulted from an increase in the gross profit percentage from 50.0% to 31.0% due to the changing revenue mix towards the Offshore division.

 

Operating losses reduced to £1.06m from £2.31m in the nine months to 31 December 2022. The statutory loss before tax reduced to £1.22 million compared to £2.51 million in 2022.

 

Adjusted EBITDA

There were no adjusting items in 2023 compared to £1.23m in 2022, (expenditure which does not relate directly to the core activities of the Group and is considered to be one-off in nature or in relation to investing, restructuring or financing activities). 

 

In addition to this, there were depreciation charges of £0.31 million (2022: £0.30m), intangible amortisation charges of £0.28m (2022: £0.33m) and right-of-use depreciation charges of £0.17m (2022: £0.13m).

 

Finance costs

Net finance costs totalled £0.20m (2022: £0.20m) and related to the interest charge relating to deferred acquisition payments made in the year associated with the terms of the acquisition of Marine Sense Limited in 2018, Right of use asset interest charges and predominantly interest costs relating to the CBILs loan.

 

Taxation

As the Group remains in a statutory loss-making position, there is no overall Group tax charge. The Group continues to benefit from research and development tax credits which, accounts for the £0.13m (2022: £0.22m) tax credit in the year.

 

Earnings and losses per share

Statutory basic losses per share reduced to 0.9p (2022: loss 5.0p) and statutory diluted losses per share totalled 0.9p (2022: loss 5.0p). These are calculated using the weighted average number of shares in existence during the year.

 

Return on Capital

The Group intends to report on capital returns once sustained profitability has been achieved. Whilst capital returns are monitored currently, it is not a key performance or key results measure given the Group’s high revenue growth and current statutory loss-making position.

 

Dividends

No dividends have been paid in the year (2022: £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 2023 stood at 45 (2022: 43).

 

Share capital and share options

The Group's issued share capital as at 31 December 2023 totalled 128,144,360 Ordinary shares (2022: 127,824,881). During the year 319,479 (2022: 108,631) shares were issued as part of the employee Share Incentive Plan.

 

No share options were issued or exercised in the year (2022: 0) with 23,930,878 (2022: 23,930,878) share options and warrants in issue as at 31 December 2023. 350,000 (2022: 700,000) share options were cancelled in the year due to employee’s leaving the company.  Warrants totalling 22,499,978 were outstanding on 31 December 2023 (2022: 22,819,978).

 

Cashflow and net debt

This year’s cash generated from operations totalled an outflow of £0.31 million (2022: £0.88 million). Total capital expenditure amounted to £0.94 million (2022: £0.61 million). Year-end cash balances totalled £0.32 million compared to £2.34 million in 2022. The Group finished 2023 with net debt of £0.8 million compared to £0.76 million of net cash at the end of 2022 as reconciled below:

	2023 12 months £’000	2022 9 months £’000
Cash and cash equivalents	316	2,337
Non-current lease liabilities	(42)	(181)
Current lease liabilities	(134)	(172)
Non-current financial liabilities	(570)	(1,054)
Current financial liabilities	(484)	(447)
Income tax asset	113	275
Net (debt) / cash	(801)	758

 

The directors consider the income tax credit to be part of net debt as the asset will be converted into cash and is not part of normal working capital requirements as with other current assets.

 

Assets and liabilities

Total current assets as at 31 December 2023 were £2.5m compared to total current assets of £4.24m at 31 December 2022. The key change during the year relates to the decrease in cash balances and the increase in trade and other receivables to £1.3m (2022: £0.69m) due to one significant debtor that paid in Q1 2024. Inventories have decreased to £0.81m from £0.94m with trade and other payables increasing to £0.66m from £0.50m.

 

Total liabilities have decreased from £2.36m as at 31 December 2022 to £1.9m as at 31 December 2023 with this decrease driven by the repayments due under the Coronavirus Business Interruption Loan Scheme (CBILs). The reduction in right-of-use lease liabilities of £177k if offset by an increase in trade and other payables of £158k

 

The Group remains focussed on tight cost control and cash management whilst revenue and EBITDA growth is delivered to enable the Group to become cash flow positive.  

 

Summary

It is pleasing to see this year’s 72% increase in revenue and 177% increase in Gross Profit compared to the previous 9 months.  The Group’s Offshore division is trading well and there is optimism that this division and new product launches can return the Group to an EBITDA-positive position and improve the Group’s cash performance. However, management and the Board will continue to exercise firm controls on costs and cash during this period of growth.

 

Justine Dowds

Chief Financial Officer

 

 

consolidated Statement of comprehensive income

FOR the YEAR ended 31 DECEMBER 2023

 

	Note	Year ended 31 December 2023	9 months ended 31 December 2022
		£’000	£’000
Revenue	4	4,407	2,561
Cost of sales		(2,210)	(1,767)
		───────	───────
Gross profit		2,197	794
Administrative expenses		(3,261)	(3,104)
		───────	───────
Operating loss	5	(1,064)	(2,310)
Other operating income	5	-	-
Finance income	7	11	1
Finance costs	7	(163)	(203)
		───────	───────
Loss before taxation		(1,216)	(2,512)
Taxation	8	126	217
		───────	───────
Loss for the year		(1,090)	(2,295)
		═══════	═══════
Attributable to:
Equity shareholders of the Group		(1,090)	(2,295)
		───────	───────
		(1,090)	(2,295)
		═══════	═══════
Other comprehensive income
Items that will be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations		(-)	(-)
		───────	───────
Total comprehensive expense for the year		(1,090)	(2,295)
		═══════	═══════
Attributable to:
Equity shareholders of the Group		(1,090)	(2,295)
		───────	───────
		(1,090)	(2,295)
		═══════	═══════

 

 

 

 

As per note 9, the loss for the year arises from the Group’s continuing operations. Losses Per Share were 0.9p (2022: loss 5.0p) and Diluted Losses Per Share were 0.9p (2022: loss 5.0p).

 

The accompanying notes form an integral part of these consolidated financial statements.

 

CONSOLIDATED Statement of financial position

as at 31 DECEMBER 2023

	Note	31 December 2023	31 December 2022
		£’000	£’000
ASSETS
Non-current assets
Property, plant and equipment	10	633		582
Right-of-use assets	11	167		364
Unlisted investments	13	511		511
Intangible assets	12	3,317		3,008
		───────		───────
Total non-current assets		4,628		4,465
Current assets
Trade and other receivables	15	1,299		689
Income tax asset	16	113		275
Inventories	17	810		937
Cash and cash equivalents	18	316		2,337
		───────		───────
Total current assets		2,538		4,238
		───────		───────
Total assets		7,166		8,703
		═══════		═══════
EQUITY AND LIABILITIES
Equity
Share capital	19	1,281		1,278
Share premium	19	5,850		5,834
Deferred shares	19	5,286		5,286
Share option reserve	25	134		134
Merger relief reserve	20	9,154		9,154
Reverse acquisition reserve	20	(6,777)		(6,777)
Other reserve	20	400		400
Revenue reserve	20	(10,053)		(8,963)
		───────		───────
Total equity		5,275		6,346
Non-current liabilities
Deferred tax	23	-		-
Financial liabilities	24	570		1,054
Lease liabilities	11	42		181
		───────		───────
Total non-current liabilities		612		1,235
Current liabilities
Trade and other payables	22	661		503
Financial liabilities	24	484		447
Deferred payment for acquisition	21	-		-
Lease liabilities	11	134		172
		───────		───────
Total current liabilities		1,279		1,122
		───────		───────
Total liabilities		1,891		2,357
		───────		───────
Total equity and liabilities		7,166		8,703
		═══════		═══════

 

The accompanying notes form an integral part of these consolidated financial statements. The financial statements were approved by the board of directors and authorised for issue on 28th June 2024.

  

consolidated Statement of changes in equity

FOR THE YEAR ended 31 DECEMBER 2023

 

	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 2022		5,657	3,280	-	150	9,154	(6,777)	384	(6,668)	5,180	5,180
Loss for the period		-	-	-	-	-	-	-	(2,295)	(2,295)	(2,295)
Exchange differences on translating foreign operations		-	-	-	-	-	-	-	-	-	-
Total comprehensive expense for the period		-	-	-	-	-	-	-	(2,295)	(2,295)	(2,295)
Sub-division and conversion of shares		(5,286)	-	5,286	-	-	-	-	-	1,338	1,338
Issues of shares		907	2,554	-	-	-	-	-	-	-	-
Transfer on exercised and cancelled options	25	-	-	-	(16)	-	-	16	-	20	20
		────	──────	──────	──────	──────	──────	──────	──────	──────	──────
Balance at 31 December 2022		1,278	5,834	5,286	134	9,154	(6,777)	400	(8,963)	6,346	6,346
		════	══════	══════	══════	══════	══════	══════	══════	══════	══════
Balance at 1 January 2023		1,278	5,834	5,286	134	9,154	(6,777)	400	(8,963)	6,346	6,346
Loss for the year		-	-	-	-	-	-	-	(1,090)	(1,090)	(1,090)
Exchange differences on translating foreign operations		-	-	-	-	-	-	-	-	-	-
Total comprehensive expense for the year		-	-	-	-	-	-	-	(1,090)	(1,090)	(1,090)
Sub-division and conversion of shares	19	-	-	-	-	-	-	-	-	-	-
Issues of shares	19	3	16	-	-	-	-	-	-	19	19
Transfer on exercised and cancelled options	25	-	-	-	-	-	-	-	-	-	-
		────	──────	──────	──────	──────	──────	──────	──────	──────	──────
Balance at 31 December 2023		1,281	5,850	5,286	134	9,154	(6,777)	400	(10,053)	5,275	5,275
		════	══════	══════	══════	══════	══════	══════	══════	══════	══════

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	31 December  2023	31 December      2022
		£’000	£’000
Cash flows from operating activities
Operating loss		(1,064)	(2,310)
Adjustments for non-cash/non-operating items:
Depreciation of property, plant and equipment	10	308	304
Impairment of property, plant and equipment	10	-	62
Loss on disposal of property, plant and equipment	5	10	6
Depreciation of right-of-use assets	11	168	130
Adjustment to right-of-use assets	11	10
Loss on disposal of right-of-use assets	5	19
Amortisation of intangible assets	12	277	181
Impairment of intangible assets	12	-	145
		───────	───────
		(272)	(1,482)
Changes in working capital:
Decrease / (increase) in inventories		127	245
Decrease / (increase) in trade and other receivables		(608)	1,077
Increase in trade and other payables		158	(740)
		───────	───────
Cash from operations		(595)	(900)
Taxation		289	17
		───────	───────
Net cash from operating activities		(306)	(883)
		───────	───────
Cash flows from investing activities
Purchases of tangible fixed assets	10	(367)	(35)
Purchases of intangible assets	12	(582)	(364)
Interest received	7	11	1
Deferred payment of acquisition	21	-	(213)
		───────	───────
Net cash used in investing activities		(938)	(611)
		───────	───────
Cash flows from financing activities
Proceeds on issue of shares		-	3,611
Expenses of share issues		-	(150)
Repayment of loans		(447)	(312)
Principal element of lease payments	11	(167)	(123)
Interest paid	7	(163)	(203)
		───────	───────
Net cash from financing activities	24	(777)	2,823
		───────	───────
Net increase / (decrease) in cash and cash equivalents		(2,021)	1,329
Cash and cash equivalents at beginning of year		2,337	1,008
		───────	───────
Cash and cash equivalents at end of year		316	2,337
		═══════	═══════

NOTES TO THE FINANCIAL STATEMENTS

 

1. Reporting entity

 

OTAQ plc (“the Company’’) and its subsidiaries (together, “the Group’’) develop, provide and support the technology for use in the aquaculture industry and offshore oil & gas industries. The principal activity of the Company is that of a holding company for the Group as well as performing all administrative, corporate finance, strategic and governance functions of the Group.  The Company is a public limited company, which is listed on the Aquis Stock Exchange and domiciled in England and incorporated and registered in England and Wales.  The address of its registered office is 8-3-4 Harpers Mill, South Road, White Cross, Lancaster, England, LA1 4XF. The registered number of the Company is 11429299. 

 

The principal accounting policies adopted by the Group and Company are set out in note 2.

 

2. Accounting policies

 

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.

 

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.

 

   

2. 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.

 

  

 

3. 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.

 

4. Going Concern

The Group is developing new products for its core markets in Offshore and Aquaculture as well as the new Geotracking division. The Group has invested heavily in the development and procurement of these products and has achieved this through use of its cash reserves as well as the funds received following the share issue in November 2022. As at 31 December 2023, the Group had cash and cash equivalents of £316,000.

 

The Group has conditionally raised £1.7m by way of Placing Convertible Loan Notes as disclosed in the circular to shareholders dated 26 June 2024, providing the funding to allow the Group to continue it’s product development as well as providing working capital required until the forecasted growth makes the Group cash generative. A broker option for up to a further £1m Broker Option Convertible Loan Notes has also been agreed. The Placing commitments are legally binding, and funds will be available on 12th July subject only to shareholder approval at the general meeting on 12th July. The Directors and broker, having canvassed the % of shareholders required to pass the resolutions, are highly confident of success at the general meeting and hence believe the funding will complete as planned.

 

The directors have prepared and reviewed the Group’s funding requirements over the next 18 months and are confident that with the proceeds of the Placing the Group has sufficient financial resources to meet its financial commitments and strategic objectives. The forecasts generated by the Group, which cover the period to January 2026 and have been modelled for reductions in anticipated revenue, demonstrate sufficient ongoing demand to satisfy liabilities as they fall due. For these reasons the directors continue to adopt the going concern basis in preparing Group’s financial statements. As the shareholder resolutions required are outside the control of the directors, the funding cannot be considered certain. These conditions are necessarily considered to represent a material uncertainty that may cast significant doubt over the Group’s and the Company’s ability to continue as a going concern. It nevertheless remains appropriate to prepare the financial statements on a going concern basis and the financial statements do not include any adjustments that would result from that basis of preparation being inappropriate.

 

5. 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.

 

6. 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.

 

7. 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.

 

 

8. 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.

 

9. Finance expense

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

 

 

 

 

 

10. 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 21% of the claim is paid in cash once applicable losses and future profitability have been reviewed.

 

 

12. 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.

 

 

13. 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.

 

14. 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.

 

 

15. 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.

 

16. 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 variable‑rate features;
• prepayment and extension features; and
• terms that limit the Group’s claim to cash flows from specified assets (e.g. non‑recourse features).

 

 

Financial assets at amortised cost are subsequently measured fair value. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in the income statement. Any gain or loss on derecognition is recognised in the income statement.

 

Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into. Financial liabilities, including trade and other payables and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

 

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

 

 

17. 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.

 

18. 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.

 

19. 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

 

20. 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.

 

21. Unlisted Investments

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

 

22. 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.

 

23. New and amended standards adopted by the Group

The following new accounting standards, interpretations and amendments to existing standards have been published and are mandatory for the accounting period beginning on 1 January 2023.

•     Amendments to IAS 1: Disclosure of Accounting Policies (Effective 1 January 2023).

•     Amendments to IAS 8: Definition of Accounting Estimates (Effective 1 January 2023).

•   Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Effective 1 January 2023).

 

The new and amended standards adopted by the Group in the year have not resulted in any impact in the current financial statements.

 

 

Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective:

•     Amendments to IAS 1: Presentation of Financial Statements (Effective 1 January 2024)

•     Amendments to IFRS 16: Lease Liability in a Sale and Leaseback (Effective 1 January 2024).

The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant impact on the financial statements.

 

3. Use of estimates and judgements

 

The preparation of financial statements requires management to make estimates and judgements that affect the amounts reported for assets and liabilities as at the reporting date and the amounts reported for revenues and expenses during the year.  The nature of estimation means that actual amounts could differ from those estimates.  Estimates and judgements used in the preparation of the financial statements are continually reviewed and revised as necessary. While every effort is made to ensure that such estimates and judgements are reasonable, by their nature they are uncertain and, as such, changes in estimates and judgements may have a material impact on the financial statements. The key sources of judgement and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

 

Taxation

Management judgement is required to determine the amount of tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. The carrying value of the unrecognised deferred tax asset for tax losses and other timing differences at 31 December 2023 was £1,337,000 (2022: £995,000). The value of the deferred tax liability at the period-end is nil (2022: nil). Further information is included in notes 8 and 23.

 

Useful Economic Life of assets and impairment

Judgements are required as to the useful economic life of systems for rental assets. Further information on all useful economic lives of assets is included in notes 2(l) and 10.

 

Development costs

Management judgement is required to determine the appropriate value of an asset as well as when an asset should be recognised. The value of the recognised asset is written off over the useful economic life of the asset. These judgements are based upon the likely timing and level of future revenues. Development costs are periodically and at least annually assessed for impairment and costs are written-off if the project to which they relate is no longer considered to be commercially viable. The value of the development costs capitalised at 31 December 2023 was £1,967,000 (2022: £1,538,000). Further information is included in note 12.

 

Goodwill impairment

Judgements are required as to the useful economic life of goodwill. These judgements are based upon the likely future benefits that will be derived from the recognised goodwill. Further information on all useful economic lives of assets is included in notes 2(l) and 12.

 

 

4. Segmental information

 

The directors review segmental information at a revenue, gross margin, salary and operating cost level but do not review the balance sheet by segments.

 

A segment is a distinguishable component of the Group’s activities from which it may earn revenue and incur expenses, whose operating results are regularly reviewed by the Group’s chief operational decision makers to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available. In identifying its operating segments, management generally follows the Group’s service line which represent the main products and services provided by the Group.

 

The directors believe that the Group operates in three primary segments being the sale and supply of rental systems to the Aquaculture industry, the manufacture, rental and sale of underwater measurement devices, leak detection devices and underwater communication devices in the Offshore market and the manufacture and sale of Geotracking devices (Technology). 

 

All of the Group’s revenue have been generated from continuing operations, are from external customers and relates to point-in-time revenue recognised when the product or service is delivered.

 

				31 December 2023	31 December 2022
				£’000	£’000
Analysis of revenue
Amounts earned from Aquaculture rentals and sales				1,146	882
Amounts earned from Offshore rentals and sales				3,216	1,620
Amounts earned from Technology				45	59
				───────	───────
				4,407	2,561
		═══════			═══════

 

There are no material customers included within revenue (2022, none).

 

		31 December 2023	31 December 2022
		£’000	£’000
Analysis of gross profit
Amounts earned from Aquaculture rentals and sales		408	(114)
Amounts earned from Offshore rentals and sales		1,804	880
Amounts earned from Technology		(15)	28
		───────	───────
		2,197	794
		═══════	═══════

 

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 2023	31 December 2022
		£’000	£’000
Revenue
UK		1,942	1,290
Chile		182	137
Asia		386	293
Europe (excluding UK)		671	354
North America		1,018	403
Rest of the World		208	84
		───────	───────
		4,407	2,561
		═══════	═══════

 

The Group’s assets are located in the UK and Chile and although some of its tangible assets, in the form of systems for rental, are located in Chile, all are owned by the company or its subsidiaries.

 

5. Operating loss

 

Operating loss is stated after charging/(crediting):

					31 December 2023				31 December 2022
					£’000				£’000
Depreciation of property, plant and equipment (see note 10)						308				304
Depreciation of right-of-use assets (see note 11)						168				130
Impairment of property, plant and equipment (see note 10)						-				62
Amortisation and impairment of intangible assets (see note 12)						277				326
Research and development costs						-				1
Exceptional costs						-				1,230
Loss on disposal of right-of-use assets						19				-
Loss on disposal of assets						10				6
Net foreign exchange (gains) / losses						(12)				(37)
					───────				───────
	Exceptional costs relate to one-off and non-recurring costs primarily professional fees incurred in relation to fund raising activities and the exit of the Scottish acoustic deterrent device market in Scotland.
Auditor remuneration
							31 December 2023	31 December 2022
							£’000	£’000
Audit services:
Fees payable to the Group’s auditor for the audit of the Group and Company annual accounts							56	22
Fees payable to the Group’s auditor for the audit of the Company’s subsidiaries							-	26
							───────	───────
							56	48
							═══════	═══════

 

 

 

 

 

 

 

 

 

 

 

 

 

6. Staff costs and numbers

 

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

 

		31 December 2023	31 December 2022
		No.	No.
Directors		3	3
Administration		13	14
Engineering		14	8
Manufacturing		15	18
		───────	───────
		45	43
		═══════	═══════

 

 

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

 

		31 December 2023	31 December 2022
		£’000	£’000
Wages and salaries		2,069	1,562
Social security costs		211	167
Other pension costs		61	42
Other employee benefit costs		69	-
		───────	───────
		2,410	1,771
		═══════	═══════

         Directors’ remuneration

 

		31 December 2023	31 December 2022
		£’000	£’000
Directors’ emoluments		522	329
Company contributions to defined contribution pension schemes		18	11
		───────	───────
		540	340
		═══════	═══════

 

Directors’ emoluments (excluding social security costs but including benefits in kind) disclosed above includes £187,000 paid to the highest paid director (2022: £132,382).

 

 

The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the Group in independently administered funds. Retirement benefits are accruing to 3 directors (2022: 3).

 

The charge to the statement of comprehensive income in respect of defined contribution schemes was £61,000 (2022: £37,000). Contributions totalling £10,700 (2022: £9,000) were payable to the fund at the year-end and are included in creditors.

 

 

 

 

 

 

 

 

 

 

 

 

7. Net finance costs

		31 December 2023	31 December 2022
		£’000	£’000
Finance income
Bank interest received		11	1
		───────	───────
Total finance income		11	1
		───────	───────
Finance costs
Lease interest payable		(24)	(5)
Unwinding of discount on deferred acquisition payment		-	(62)
Bank and loan interest payable		(139)	(136)
		───────	───────
Total finance costs		(163)	(203)
		───────	───────
Net finance costs		(152)	(202)
		═══════	═══════

 

8. Taxation

 

The tax credit is made up as follows:

 

		31 December 2023	31 December 2022
		£’000	£’000
Current income tax:
Adjustments in respect of prior year		(14)	(18)
Research and development income tax credit receivable		(112)	(119)
		───────	───────
Total current income tax		(126)	(137)
		───────	───────
Deferred tax expense:
Origination and reversal of temporary differences		-	(80)
		───────	───────
Tax credit per statement of comprehensive income		(126)	(217)
		═══════	═══════

 

The tax charge differs from the standard rate of corporation tax in the UK of 25% for the year ended 31 December 2023 (19% for the 9 months ended 31 December 2022).  The differences are explained below:

 

		31 December 2023	31 December 2022
		£’000	£’000
Loss on ordinary activities before taxation		(1,216)	(2,512)
UK tax credit at standard rate of 23.52% (2022: 19%)		(213)	(477)
Effects of:
Fixed assets timing differences		-	(80)
Expenses not deductible for tax		1	77
Additional deduction for R&D expenditure		(120)	(119)
Surrender of tax losses for R&D tax credit		125
Adjustments in respect of prior year		(5)	(18)
Prior year losses utilised		-	-
Deferred tax not recognised		86	400
		───────	───────
Total taxation credit		(126)	(217)
		═══════	═══════

 

 

The Group has accumulated losses available to carry forward against future trading profits. The estimated value of the deferred tax asset measured at a standard rate of 25% (2022: 19%) is £1,337,000 (2022: £995,000), of which £nil (2022: £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 (2022: £nil).

 

From 1 April 2023 the corporation tax rate was increased to 25%. The deferred tax balance on 31 December 2023 has been calculated based on the rate as at the balance sheet date of 25%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9. Losses per share

 

Basic earnings or losses per share are calculated by dividing the loss or profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year.

 

Diluted earnings or losses per share are calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. The calculation of earnings or losses per share is based on the following losses and number of shares.

 

A reconciliation is set out below.

	2023		2022
	£’000		£’000
Loss for the year attributable to owners of the Group	(1,090)		(2,295)
Weighted average number of shares:
- Basic	127,980,142		49,659,304
- Diluted*	127,980,142		49,659,304
Basic losses per share (pence)	(0.9)		(5.0)
Diluted losses per share (pence)*	(0.9)		(5.0)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares:
- Basic	127,980,142		49,659,304
- Diluted	127,980,142		49,659,304
Adjusted basic losses per share (pence)	(0.9)		(5.0)
Adjusted diluted losses per share (pence)	(0.9)		(5.0)

 

 

 

 

 

 

 

 

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options that are dilutive potential ordinary shares.

 

*These shares are not considered dilutive because they decrease the loss per share.

10. Property, plant and equipment

 

	Systems for rental	Plant and equipment	Motor vehicles	Total
	£’000	£’000	£’000	£’000
COST
At 31 March 2022	2,958	413	87	3,458
Additions	23	11	1	35
Disposals	(348)	(6)	(9)	(363)
At 31 December 2022	2,633	418	79	3,130
Adjustment	3			3
Additions	343	24	0	367
Disposals	(837)	(32)	(4)	(873)
	───────	───────	───────	───────
At 31 December 2023	2,142	410	75	2,627
	───────	───────	───────	───────
DEPRECIATION
At 31 March 2022	2,266	213	60	2,539
Depreciation charge for period	218	71	15	304
Disposals	(348)	(3)	(6)	(357)
Impairment for year	62	-	-	62
At 31 December 2022	2,198	281	69	2,548
Adjustment	3	(2)		1
Depreciation charge for year	230	68	10	308
Disposals	(831)	(28)	(4)	(863)
	───────	───────	───────	───────
At 31 December 2023	1,600	319	75	1,994
	───────	───────	───────	───────
NET BOOK VALUE
At 31 December 2023	542	91	-	633
	═══════	═══════	═══════	═══════
At 31 December 2022	435	137	10	582
	═══════	═══════	═══════	═══════

 

 

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

 

Impairment charges for the previous year relate to Sealfence rental systems returned from customers. The impairment review performed has been carried out on an individual asset basis, being the smallest group of assets contributing to future economic benefits.

11. Leases

 

		Right-of-use assets
					Buildings and facilities	Motor vehicles	Total
					£’000	£’000	£’000
Cost
At 31 March 2022					517	177	694
Additions					60	-	60
Disposals					(52)	-	(52)
At 31 December 2022					525	177	702
Additions					-	-	-
Disposals					(14)	(43)	(57)
Adjustment					(6)	1	(5)
					──────	──────	──────
At 31 December 2023					505	135	640
					──────	──────	──────
Accumulated depreciation
At 31 March 2022					201	59	260
Charge for the period					96	34	130
Disposals					(52)	-	(52)
At 31 December 2022					245	93	338
Charge for the year					127	41	168
Disposals					(14)	(24)	(38)
Adjustment					2	3	5
					──────	──────	──────
At 31 December 2023					360	113	473
					──────	──────	──────
Carrying amount
At 31 December 2023					145	22	167
					══════	══════	══════
At 31 December 2022					280	84	364
					══════	══════	══════

 

The Group leases several assets including buildings and facilities as well as motor vehicles acquired during the year. The average lease term by asset is 3.6 years (2022: 3.5 years). This term, excluding Motor Vehicles, include some extension rights, which the Group is may or may not exercise.

 

	Amounts recognised in profit and loss:
				31 December 2023			31 December 2022
					£’000	£’000
Depreciation expense on right-of-use assets					168	130
Interest expense (included in finance cost)					24	6

The total cash outflow for leases amount to £167,000 (2022: £123,000).

 

 

 

 

 

 

 

 

 

 

 

Lease liabilities

 

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

 

					31 December  2023	31 December  2022
					£’000	£’000
Year 1					134	180
Year 2					42	137
Year 3					-	53
Interest costs					-	(17)
					───────	───────
Total lease liabilities					176	353
					═══════	═══════
		31 December  2023				31 December  2022
		£’000				£’000
Due within one year		134				172
Due in over one year		42				181
		───────				───────
Total lease liabilities		176				353
		═══════				═══════

 

All lease obligations are denominated in pounds sterling.

 

 

12. Intangible assets

	Goodwill	Trademarks	IP licence	Development costs	Total intangible assets
	£’000	£’000	£’000	£’000	£’000
Cost
At 31 March 2022	1,059	515	428	2,014	4,016
Additions	-	-	-	364	364
Disposals				(206)	(206)
At 31 December 2022	1,059	515	428	2,172	4,174
Adjustment				20	20
Additions	-	-	-	582	582
	──────	───────	───────	───────	───────
At 31 December 2023	1,059	515	428	2,774	4,776
	──────	───────	───────	───────	───────
Amortisation
At 31 March 2022	28	193	222	603	1,046
Charge for the period	-	48	41	92	181
Impairments	-	-	-	145	145
Disposals	-	-	-	(206)	(206)
At 31 December 2022	28	241	263	634	1,166
Charge for the year	-	65	57	155	277
Adjustment	-	-	(2)	18	16
	──────	───────	───────	───────	───────
At 31 December 2023	28	306	318	807	1,459
	──────	───────	───────	───────	───────
Net Book Value	──────	───────	───────	───────	───────
At 31 December 2023	1,031	209	110	1,967	3,317
	──────	───────	───────	───────	───────
At 31 December 2022	1,031	274	165	1,538	3,008
	══════	══════	══════	══════	═══════

 

 

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 three years with recoverable amounts determined by considering value in use, budgeted growth rates were assumed and 10% was used as the modelling discount rates. Sensitivity analysis was performed with zero growth and 50% uplift in discount rate to ensure this would not result in the recoverable amounts being less than the carrying amount of Goodwill. 

 

IP license costs mostly pertain to the intellectual property acquired as a part the acquisition of assets and liabilities of ROS Technology Limited, which took place in November 2020. The Group elected to apply the optional concentration test, which resulted in a conclusion that the acquisition is not a business combination on the basis that substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets. Therefore, this acquisition was accounted as an asset acquisition (i.e. outside the scope of IFRS 3). The remaining useful life of this asset is 1.9 years (2022: 2.9 years).

 

Development costs primarily relate to the development of the Group’s new products which involve the utilisation internal salary costs and purchase of external materials for the development of prototypes.

 

 

13. Unlisted investments

		31 December 2023	31 December 2022
		£’000	£’000
Unlisted equity securities		511	511
Additions in the year		-	-
		───────	───────
		511	511
		═══════	═══════

 

Unlisted equity securities pertain to 13.9% of ordinary share capital of Minnowtech LLC and 10% of ordinary share capital of Blue Lions Labs Ltd which are both held directly by OTAQ Group Limited.

 

The directors consider that the carrying amount of unlisted equity securities approximates to their fair value based on level 2 inputs for both investments which include indicative third-party valuations of the investments and internal valuation models provided by the investments themselves based on forecasts. Based on this information, no impairment is required at the reporting date.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14. Subsidiaries of the Group

 

The principal subsidiaries of the Group at 31 December 2023 and 31 December 2022 are as follows:

 

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 Chile SpA has a year-end date of 31 December in order to comply with the requirements of the Chilean authorities.

 

1 Registered office address: 8-3-4 Harpers Mill, South Road, White Cross, Lancaster, England, LA1 4XF

2 Registered office address: Crombie Lodge, Aberdeen Innovation Park, Campus 2, Aberdeen, Scotland, AB22 8GU

3 Registered office address: Pacheco Altamarino 2875, Puerto Montt, Chile

4 Registered office address: 12 Belar Avenue, Terrigal, New South Wales 2260, Australia

 

 

15. Trade and other receivables

		31 December 2023	31 December 2022
		£’000	£’000
Current:
Trade receivables – gross claim value		1,167	377
Provision for impairment of trade receivables		(9)	(9)
Prepayments		112	125
Other		29	196
		───────	───────
		1,299	689
		═══════	═══════

 

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 (2022: £9,000).

 

The age of net trade receivables is all within one year (2022: one year) and the average gross debtor days calculated on a count back basis were 35 days (2022: 52 days).

 

16. Income tax asset

		31 December 2023	31 December 2022
		£’000	£’000
Research and development tax credit receivable		113	275
		───────	───────
		113	275
		═══════	═══════

 

 

 

17. Inventories

		31 December 2023	31 December 2022
		£’000	£’000
Stock		810	937
		───────	───────
		810	937
		═══════	═══════

 

The value of inventory provided for as at 31 December 2023 is £525,000 (2022: £558,000). £1,270,000 of stock was expensed in the year through cost of sales (2022: £967,000).

 

 

18. Cash and cash equivalents

		31 December 2023	31 December 2022
		£’000	£’000
Cash at bank and in hand		316	2,337
		───────	───────
		316	2,337
		───────	───────

 

Cash at banks earns interest at floating rates based on daily bank deposit rates. An analysis of cash and cash equivalents by denominated currency is given in note 28.

 

19. Share capital and share premium

 

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

 

		31 December 2023	31 December 2022
		£’000	£’000
Allotted, called-up and fully paid: 128,144,360 (2022: 127,824,881) Ordinary shares of £0.01 each (2022: £0.01 each)		1,281	1,278
		───────	───────

 

Movements in ordinary shares:

 

	Shares	Share capital	Share premium	Deferred Shares	Total
	No	£’000	£’000	£’000	£’000
At 31 March 2022	37,716,250	5,657	3,280	-	8,937
Shares issued to employees	108,631	7	4	-	11
Shares issued during the period	90,000,000	900	2,550	-	3,450
Shares sub-divided and converted	-	(5,286)	-	5,286	-
At 31 December 2022	127,824,881	1,278	5,834	5,286	12,398
Shares issued to employees	319,479	3	16	-	19
Shares issued during the period	-	-	-	-	-
	───────	──────	────	────	────
At 31 December 2023	128,144,360	1,281	5,850	5,286	12,417
	───────	──────	────	────	────

 

During the year 319,479 (2022: 108,631) ordinary shares were issued at price ranges between 4.5p and 7p per share as part of the all UK employee Share Incentive Plan.

 

 

20. Reserves

 

Share option reserve

The share option reserve arises from the requirement to value share options in existence at the year end at fair value. Further details of share options are included at note 25.

 

Share premium

The share premium account represents the amount received on the issue of ordinary shares by the Company in excess of their nominal value less applicable costs and is non-distributable.

 

Deferred shares

The deferred shares account represents the amount received on the cancellation of 15p ordinary shares by the Company and the creation of 1p ordinary shares and 14p deferred shares and is non-distributable.

 

Merger relief reserve

The merger relief reserve arose on the Company’s reverse acquisition of OTAQ Group Limited on 31 March 2020 and relates to the share premium on the 21,539,904 shares issued to acquire OTAQ Group Limited.

 

Reverse acquisition reserve

The reverse acquisition reserve was created in accordance with IFRS 3 ‘Business Combinations’. The reserve arises due to the elimination of the Company’s investment in OTAQ Group Limited. Since the shareholders of OTAQ Group Limited became the majority shareholders of the enlarged group, the acquisition is accounted for as though there is a continuation of the legal subsidiary’s financial statements. In reverse acquisition accounting, the business combination’s costs are deemed to have been incurred by the legal subsidiary.

 

Other reserve

Other reserve represents the value of the exercised or lapsed share options which were exercised and the foreign exchange in relation to the translation of subsidiaries reporting in foreign currencies.

 

Revenue reserve

The revenue reserve accumulates the losses attributable to the equity holders of the parent company.

 

21. Deferred payment for acquisition

 

	31 December 2023	31 December 2022
	£’000	£’000
Current
Fair value of deferred cash consideration on the acquisition of OTAQ Offshore Limited (formerly MarineSense Limited)	-	-
	───────	───────
	-	-
	═══════	═══════

 

		31 December 2023	31 December 2022
		£’000	£’000
Deferred payment for acquisition movement
Opening balance		-	213
Unwinding of discount		-	62
Repayments		-	(275)
Revaluation of the deferred consideration		-	-
		───────	───────
Closing balance		-	-
		═══════	═══════

 

 

 

 

 

 

22. Trade and other payables

		31 December 2023	31 December 2022
		£’000	£’000
Current:
Trade payables		354	305
Accrued expenses		136	96
Deferred revenue		-	24
Other creditors		171	78
		───────	───────
		661	503
		═══════	═══════

 

Trade and other payables comprise amounts outstanding for trade purchases and on-going costs. Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period on purchases is 30 days (2022: 30 days). No interest is paid on trade payables over 30 days. The directors consider that the carrying amount of trade payables approximates to their fair value. 

 

23. Deferred tax liability

		31 December 2023	31 December 2022
		£’000	£’000
Deferred tax liability
Deferred taxation on intangibles recognised at acquisition		-	-
		───────	───────
		-	-
		═══════	═══════

 

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

 

 

24. Borrowings

		31 December 2023	31 December 2022
		£’000	£’000
Interest bearing loans		1,054	1,501
		───────	───────
		1,054	1,501
		═══════	═══════

Analysis of loans and borrowings

 

Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

 

		31 December 2023	31 December 2022
		£’000	£’000
Current liabilities		484	447
Non-current liabilities		570	1,054
		───────	───────
		1,054	1,501
		═══════	═══════

The terms and conditions of outstanding loans are as follows:

 

				31 December 2023					31 December 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	1,054	1,054		1,501	1,501
Total interest-bearing liabilities						─────── 1,054	─────── 1,054		─────── 1,501	─────── 1,501
						═══════	═══════		═══════	═══════

 

Liabilities arising from financing activities

 

		Lease liabilities	CBILS
		£’000	£’000
Balance at 1 January 2023		353	1,501
Cash flows
Repayment of borrowings		-	(447)
Lease payments		(172)	-
Non-cash changes*		(5)	-
Balance at 31 December 2023		176	1,054

 

*This balance includes £10,000 early settlement discount, less £5,000 adjustment of opening liability from updated NPV’s (2022: £60,000 new leases entered to in the year). The leases liabilities relate to capital amounts only.

 

25. Share options

 

On 19 August 2021, the Company granted 550,000 of share options to various key management personnel under the Enterprise Management Incentive ("EMI") Share options. On 16 December 2021, the Company granted 250,000 of share options to a new key management employee under the Enterprise Management Incentive ("EMI") Share options. Vesting conditions are detailed in the Remuneration Committee report.

 

On 7 November 2022, the Company granted 22,499,978 warrants to shareholders who participated in the new share issue of the same date. The warrants entitle the holder to be issued with one share for every warrant held at a price of 12p per share.

 

An option-holder has no voting or dividend rights in the Company before the exercise of a share option.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Set out below are summaries of options granted under the plan: 

 

	31 December 2023		31 December 2022
	Weighted average exercise price per share option	Number of options	Weighted average exercise price per share option	Number of options
At 1 January /1 April	£0.46	1,110,900	£0.51	1,810,900
Cancelled during the year	£0.58	(350,000)	£0.58	(700,000)
	───────	───────	───────	───────
At 31 December	£0.40	760,900	£0.46	1,110,900
	═══════	═══════	═══════	═══════

 

260,900 share options are vested (2022: 260,900) and can be exercised.

 

Set out below are summaries of warrants granted: 

 

	31 December 2023				31 December 2022
		Weighted average exercise price per warrant		Number of warrants		Weighted average exercise price per warrant		Number of warrants
At 1 January / 1 April		£0.13		22,819,978		£0.50		320,000
Granted during the year		-		-		£0.12		22,499,978
Lapsed during the year		£0.50		(320,000)
		───────		───────		───────		───────
At 31 December / 31 March		£0.12		22,499,978		£0.13		22,819,978
	═══════		═══════		═══════		═══════

 

The remaining weighted average contractual life of the share options and warrants at 31 December 2023 is 2.31 years and 0.82 years respectively with the weighted average exercise price being £0.40 for share options and £0.12 for warrants.  No options were exercised in the period to 31 December 2022 or to 31 December 2023. 

 

 

26. Commitments and contingencies

 

Capital commitments

There were no capital commitments at 31 December 2023 and 31 December 2022.

 

Contingencies

There were no contingent liabilities at 31 December 2023 and 31 December 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27. Financial instruments

 

Financial assets	Demand and less than 3 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	573	-	-	-	-	573
Cash and cash equivalents	2,337	-	-	-	-	2,337
	───────	───────	───────	───────	───────	───────
31 December 2022	2,910	-	-	-	-	2,910
	───────	───────	───────	───────	───────	───────
Trade and other receivables	1,299	-	-	-	-	1,299
Cash and cash equivalents	316	-	-	-	-	316
	───────	───────	───────	───────	───────	───────
31 December 2023	1,615	-	-	-	-	1,615
	───────	───────	───────	───────	───────	───────

 

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	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
	───────	───────	───────	───────	───────	───────
Trade and other payables	661	-	-	-	-	661
Loans	117	367	570	-		1,054
Leases	37	97	42	-		176
	───────	───────	───────	───────	───────	───────
31 December 2023	815	464	612	-	-	1,891
	───────	───────	───────	───────	───────	───────

 

 

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

 

Liquidity gap	Demand and less than 3 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 December 2022	2,281	(470)	(638)		(620)		-	553
As at 31 December 2023	803	(464)	(612)		-		-	(273)

 

 

28. Financial risk management

 

The Group’s activities expose it to a variety of financial risks: interest rate risk, liquidity risk, market risk, currency risk and credit risk.  Risk management is carried out by the board of directors.  The Group uses financial instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific financial risks to which it is exposed.

 

The Group finances its operations through a mixture of equity finance, cash, loans and liquid resources and various items such as trade debtors and trade creditors which arise directly from the Group's operations.

 

 

 

 

 

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 5.19% at 31 December 2023.  The Group is able to place surplus cash reserves on short-term deposit to help offset the SONIA increase risk.  The principal impact to the Group is the result of interest-bearing loans and cash including cash equivalent balances held as set out below:

 

		31 December 2023				31 December 2022
		Fixed rate	Floating rate	Total		Fixed rate	Floating rate	Total
		£’000	£’000	£’000		£’000	£’000	£’000
Cash at bank and in hand		-	316	316		-	2,337	2,337
Interest bearing loans		-	(1,054)	(1,054)		-	(1,501)	(1,501)
		────	─────	────		────	─────	────
Total		-	(738)	(738)		-	836	836
		════	═════	════		════	═════	════

 

2. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with financial liabilities.  Liquidity risk arises from the repayment demands of the Group's lenders. 

 

The Group manages all of its external bank relations centrally. Any material change to the Group’s principal banking facility requires approval by the Board. The cash requirements of the Group are forecasted by the Board annually.  The Group is dependent on any external borrowings through it’s CBILs facility.

 

At the reporting date the Group was cash positive.

 

The following tables set out the maturity profile of the Group's non-derivative financial liabilities, based on undiscounted contractual cash outflows, as at the following dates:

 

			31 December 2023	31 December 2022
			£’000	£’000
Trade and other payables
Less than 3 months			661	479
1 - 5 years				24
Other financial liabilities
Less than 3 months			154	-
4 months - 1 year			464	13
1 - 5 years			612	1,841
			───────	───────
Total			1,891	2,357
			═══════	═══════

 

 

3. 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 £5,275,000 at 31 December 2023 (31 December 2022: £6,346,000). The Group is not subject to externally imposed capital requirements.

 

4. 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 £1,167,000 of trade receivables at the period end (2022: £377,000). 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.

 

5. Currency risk

The Group has limited exposure to currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of the Group. The risk is in respect of United States Dollars, Euros and Chilean Pesos. Transactions outside these currencies are limited.

 

The Group may use forward exchange contracts as an economic hedge against currency risk, where cash flow can be judged with reasonable certainty. Foreign exchange swaps and options may be used to hedge foreign currency receipts in the event that the timing of the receipt is less certain. There were no open forward contracts as at 31 December 2023 or at 31 December 2022 and the Group did not enter into any such contracts during 2023 nor 2022.

 

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

 

	31 December 2023					31 December 2022
	GBP	CLP	USD	EUR	Total		GBP	CLP	USD	AUD	EUR	Total
	£’000	£’000	£000	£000	£’000		£’000	£’000	£000	£000	£000	£’000
Cash at bank and in hand	254	12	18	32	316		2,279	58	-	-	2,337	2,279
Trade receivables	1,050	5	60	52	1,167		261	16	89	11	377	261
Trade payables	(335)	(1)	(14)	(1)	(351)		(281)	(16)	(8)	-	(305)	(281)
	───	───	────	───	───		───	───	────	───	───	───
Total	969	16	64	83	1,132		2,259	58	81	11	2,409	2,259
	═══	═══	════	═══	═══		═══	═══	════	═══	═══	═══

 

6. Sensitivity analysis to movement in exchange rates

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

 

7. Offsetting financial assets and financial liabilities

The Group has not presented any of its financial assets and financial liabilities on a net basis and no master netting arrangements are in place.

 

 

 

 

 

 

 

 

 

 

 

29. Related party transactions

 

Transactions with directors and companies controlled by directors

The following transactions with directors and companies controlled by directors of the Company were recorded, including VAT, during the year:

 

 

	31 December 2023	31 December 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 previous year
For goods and services provided	6	3

 

 

There were no outstanding balances between the Group and related parties at 31 December 2023 or 31 December 2022.

 

Balances and transactions between the Company and its subsidiaries are eliminated on consolidation and are not disclosed in this Note. There are no differences between directors and the key management personnel as they are considered to be the same.

 

 

 

30. Post balance sheet events

 

The Group has conditionally raised £1.7m by way of Placing Convertible Loan notes as disclosed in the circular dated 26 June 2024 providing the funding to allow the Group to continue its product development as well as providing working capital required until the forecasted growth makes the Group cash generative. A broker option to raise up to a further £1m Broker Option Convertible Loan Notes has also been agreed.