PRESS RELEASE

from OTAQ Plc (isin : GB00BK6JQ137)

Final Results for the Year to 31 December 2023

OTAQ Plc (OTAQ)
Final Results for the Year to 31 December 2023

01-Jul-2024 / 07:00 GMT/BST


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 to

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