Latest Results

Interim Results

Strong double-digit growth for the first half suggesting OTAQ is well on track to deliver on full year expectations

OTAQ, the marine technology products and solutions group for the global aquaculture and offshore oil and gas industries, announces its Interim Results for the half-year ended 30 September 2020.

Financial Highlights

  • Revenue increase of 16%, to £2.03m (HY 2019: £1.76m)
  • Gross Profit up 13%, to £1.14m (HY 2019: £1.01m)
  • Adjusted EBITDA* increased 22%, to £0.39m (HY 2019: £0.32m)
  • Net cash of £1.13m at 30 September 2020 (HY 2019: £0.16m)

Operating Highlights

  • Continued focus on diversifying revenue streams both geographically and through further enhancing the product portfolio
  • Delivered direct sales of SealFence units to customers in the Faroe Islands, while also launching the SealFence portable product in addition to new installs in Scotland and Ireland
  • Strategic alliance with Minnowtech LLC - enhancing capabilities to commercialise new technologies
  • Significant progress on the delivery of the biomass and plankton projects, with additional infrastructure put in place to support successful delivery
  • Post-period end acquisition of trade and assets of ROS Technology Limited

Outlook

  • Expectation remains to report revenue of £4.0m and Adjusted EBITDA* of £0.5m for the year to 31 March 2021
  • Well placed to return to a normal level of operations and business development activities once travel restrictions are lifted
  • Positioned to increase market share once the regulatory requirements across target markets are clarified

Appointments

  • Matt Enright joined the Board on 26 June 2020 as Chief Financial Officer and Company Secretary
  • Strengthened the R&D team with Chris Hyde appointed Chief Technology Officer and Dr Peter Robinson joining the Company through the ROS Technology acquisition

Alex Hambro, Non-Executive Chairman of OTAQ plc, commented: “Whilst Covid-19 is expected to continue to impact operations and business development for the remainder of the financial year, we believe that the Group is well placed to return to a normal level of operations and business development activities once travel restrictions are lifted. Furthermore, we believe that the business will be in a strong position to further grow its market share once the regulatory requirements across its target markets are clarified. 

“While trading conditions have been impacted by wider issues, we remain excited by the potential to diversify revenue streams both geographically and through further enhancing our product portfolio. Importantly, the business remains well placed to trade through this period of uncertainty and take advantage of strong growth opportunities as conditions allow.”

 

 

Chairman’s Statement

Summary

The Group is pleased to present its first set of interim results as a plc which have been delivered against the complexities of the Covid-19 pandemic.

Despite a challenging six months due to the pandemic, revenue has increased by 16% to £2.03m compared with the prior period (H1 2019: £1.80m) and adjusted EBITDA* has increased by 22% to £0.39m (H1 2019: £0.32m). Whilst these results were impacted by restricted operations and opportunities for business development, the Group remains focussed on delivering the long-term strategic goals it has set in order to realise OTAQ’s potential and significantly increase shareholder value. The focus remains on further growing our customer base, expanding into new geographies, and developing new products - with the ultimate goal of diversifying revenue streams.

This strategic objective is demonstrated by the progress made during the eight months since listing. The Group has developed and launched new products, invested in the USA-based aquaculture innovator Minnowtech LLC and post period-end acquired the trade and assets of ROS Technology. The research and development team has been strengthened by appointing Chris Hyde to the role of Chief Technology Officer and work continues to deliver the key aquaculture projects developing new products in the fields of biomass measuring and plankton detection.

Additionally, the Group is delighted to welcome Matt Enright who joined the Board on 26 June 2020 as Chief Financial Officer and Company Secretary.

Covid-19

The Covid-19 pandemic has impacted Group operations; however, the workforce has successfully adapted to Covid-safe working environments as well as working from home. Investments have been made in remote-working infrastructure enabling the Group to adapt and as such be able to successfully fulfil customer orders and requirements.

Conversely, business development activities have been constrained by global restrictions on travel meaning that the Group’s pursuit of growth opportunities in new markets are not progressing as quickly as anticipated. However, the Group remains excited about its ability to pursue these opportunities as and when travel restrictions are eased.

Trading

Aquaculture revenue has shown some progress in the period at £1.3m (H1 2019: £1.05m) and against £2.1m reported for the full year to 31 March 2020. The Aquaculture division, which represents 59% of Group revenue, is underpinned by long-term deployment of SealFence units at customer sites. We have continued to install new units in Scotland and a new location, Ireland, during the period but not to the extent we originally envisaged. Chile, in particular, has been more problematic due to significant travel restrictions imposed by the Chilean government during the period in response to the Covid-19 pandemic. 

In addition, we have also delivered direct sales of SealFence units to customers in the Faroe Islands. The launch of the SealFence portable product also resulted in additional sales in October and is expected to deliver further revenue in the full financial year.

The Offshore division has performed in line with the prior year with revenue of £0.30m (H1 2019: £0.34m) and against £0.62m in the full year to 31 March 2020 which was augmented through product sales rather than core rentals. Future performance in that division looks uncertain given the reduced market for rental of the flagship product, OceanSense. New product development being undertaken by the Offshore division is intended to increase non-rental revenue.

The Connectors division moved into larger premises in November 2020 which will support future growth in the division. Connectors has performed in-line with expectations for the year with revenue of £0.50m (H1 2019: £0.36m for four months post-acquisition).

Strategy

The Group’s strategy is to build a business of significance within the aquaculture industry focussed on enabling salmon producers, and farmers of other aquatic species, to become more productive by helping them overcome environmental challenges in their operations and generate efficiencies through the use of data and technology.

Acquisitions

A key part of the strategy, acquisition-led development, has made progress during the period. The strategic alliance with Minnowtech LLC, announced in June 2020, allows OTAQ not only to maintain a shareholding in an exciting aquaculture technology innovator but also contribute expertise in commercialising new technologies.

Post period end on 7 November 2020, The Group acquired the trade and assets, including key customer contracts and the core intellectual property, of ROS Technology Limited. The acquisition will be revenue generating and EBITDA enhancing for the remainder of the year and beyond.  ROS Technology Limited was set up by Dr Peter Robinson, the founder of OTAQ and inventor of the SealFence technology, as a vehicle for him to apply his expertise in electronics and mechanical design. This acquisition not only enhances the financial performance of the Group but also reunites Peter’s knowledge and experience with the OTAQ R&D team.

Innovation

Additional focus has been given to the R&D department with Chris Hyde appointed as Chief Technology Officer to lead the team. This was complemented by Dr Peter Robinson joining the Group through the ROS Technology acquisition. Chris and Peter have considerable expertise and experience within the aquaculture market. Chris will lead the delivery of the biomass and plankton projects, and the Group is pleased to report significant progress has been made regarding these projects with additional infrastructure put in place to support the successful delivery.

Regulation

Regulation of the aquaculture industry worldwide is still evolving due to the introduction of novel technologies and the demands of governing bodies who oversee food standards. OTAQ believes that clear regulation is a positive force in aquaculture, maintaining high standards in the industry and rewarding those who have invested in their technology. The benefit of regulatory standards being implemented ensures the maintenance of a respected industry and mitigates the risk of under-invested competitors undermining competition and threatening the marine environment.  It remains, however, that many markets have yet to define their regulatory policy in the field of aquaculture technology, and specifically deterrent technologies.  

In this regard, the Scottish fish farming industry, in which OTAQ’s SealFence technology is widely deployed awaits the outcome of a review of acoustic deterrent devices (ADDs) and their environmental impact.  OTAQ remains confident that its products are environmentally benign, with the added benefit that the nature of its products also means that they would be adaptable to comply with any variations in technical specifications if required. Until the Scottish Parliament has reviewed the scientific evidence on the environmental impact of ADDs (scheduled for March 2021), there will remain an element of uncertainty in the further development of this important market.

The Group is also increasingly confident that the SealFence product is compliant with the updated United States Marine Mammals Protection Act. This will potentially open up business development opportunities in North America and the rest of the world as salmon exports to the USA are forced to comply with the act.

Financial Highlights

Group H1 2019/20
£’000
H1 2018/19
£’000
Change
%
Revenue 2,031 1,757 +16
Gross profit 1,139 1,011 +13
Adjusted EBITDA* 385 316 +22
Net cash ** 1,132 157 +621

*EBITDA (earnings before income, tax, depreciation, share option charges and amortisation) is reconciled from the statutory operating loss per the consolidated statement of comprehensive income as follows:

  30 Sept 20
£’000
30 Sept 19
£’000
Operating (loss) / profit (157) 6
Amortisation of intangible assets 69 49
Covid-19 grant 108 -
IFRS16 depreciation 43 -
Depreciation on property, plant and equipment 322 261
Adjusted EBITDA 385 316

**Net cash is reconciled from the statutory cash position per the consolidated statement of financial position as follows:

  30 Sept
£’000
 31 Mar 20
£’000
Cash and cash equivalents 1,939 4,087
Non-current lease liabilities (277) (214)
Current lease liabilities (114) (78)
Current financial liabilities - (487)
Current deferred payment for acquisition (270) (232)
Non-current deferred payment for acquisition (153) (273)
Income tax asset 7 56
Net cash 1,132 2,859

Adjusted EBITDA grew to £0.39 million from £0.32m in 2019. This improvement was driven by the overall revenue growth to £2.03m. The adjusted EBITDA profit margin improved to 19% from an adjusted EBITDA operating profit margin of 18% in 2019. 

The reduction in the Net cash position to £1.13m from £2.86m is in line with management expectations as current financial liabilities of £0.49m have been repaid in the period to 30 September 2020 as well as the payment of professional fees in the period relating to the reverse takeover of Hertsford Capital plc and additional placing that took place on 31 March 2020 as shown in the Condensed Consolidated Statement of Cash Flows with £0.86m related to trade payables and other payables.

Outlook

As per the trading update dated 29 October 2020, the Group expects to report revenue of £4.0m and adjusted EBITDA of £0.5m for the year to 31 March 2021.

Whilst Covid-19 is expected to continue to impact operations and business development for the remainder of the financial year we believe that the Group is well placed to return to a normal level of operations and business development activities once travel restrictions are lifted. Furthermore, we believe that the business will be in a strong position to further grow its market share once the regulatory requirements across its target markets are clarified.

While trading conditions have been impacted by wider issues, we remain excited by the potential to diversify revenue streams both geographically and through further enhancing our product portfolio. Importantly, the business remains well placed to trade through this period of uncertainty and take advantage of strong growth opportunities as conditions allow.

Alex Hambro
Non-Executive Chairman
26 November 2020

Condensed Consolidated Statement of Comprehensive Income

    Half-year ended
Notes 30 September 2020 30 September 2019
 £000 £000
Revenue 2 2,031 1,757
Cost of sales (892) (746)
Gross profit  1,139 1,011
Administrative expenses  (1,296) (1,057)
Operating Loss  (157) (46)
Finance expense  (9) (97)
Other income 3 108 -
Exceptional items 4 (57) -
Loss on ordinary activities before taxation  (115) (143)
Taxation  - 6
Loss for the period  (115) (137)
Other comprehensive loss  - -
Total Comprehensive Loss  (115) (137)
Attributable to:    
The Group  (115) (136)
Non-controlling interests - (1)
   

The loss for the period arises from the Group’s continuing operations and is attributable to the equity holders of the parent.

There were no other items of comprehensive income for the period (2019: £nil) and therefore the loss for the period is also the total comprehensive loss for the period.
Condensed Consolidated Balance Sheet

30 September
2020
31 March 2020
£000 £000
Assets    
Non–current assets    
Plant and equipment 1,393 1,442
Right-of-use assets  383 292
Goodwill  1,030 1,030
Intangible assets        1,304 1,124
  4,110 3,888
Current assets    
Inventories  1,155 972
Trade and other receivables  1,106 757
Income tax asset  7 56
Cash and cash equivalents  1,939 4,087
  4,207 5,872
Total assets  8,317 9,760
 
Liabilities
   
Current liabilities    
Trade and other payables  1,348 2,206
Deferred payment for acquisition  270 273
Leases  114 78
Financial liabilities  - 487
  1,732 3,044
Non-current liabilities    
Deferred payment for acquisition  153 232
Deferred Tax  90 90
Leases  277 214
 520 536
Total liabilities  2,252 3,580
 
Net assets
 6,065 6,180
Capital and reserves    
Share capital  4,582 4,582
Share premium  2,892 2,892
Share option reserve  559 559
Merger relief reserve  9,154 9,154
Reverse acquisition reserve   (6,777) (6,777)
Revenue reserve  (4,345) (4,230)
Total equity  6,065 6,180

Condensed Consolidated Statement of Changes in Equity

  Issued Equity capital Share Premium  
 
 
Share option reserve
 
 
 
Merger relief reserve
 
 
Reverse acquisition reserve
Other Reserve Revenue Reserve Net Equity for OTAQ Sharehol-ders Non-Controlling Interests Total Equity
£000 £000 £000 £’000 £’000 £000 £000 £000 £000 £000
At 31 March 2019 960 1,924 - - - 355 (1,583) 1,656 (6) 1,650
Loss for the period and total comprehensive loss of the period - -  
 
-
 
 
-
 
 
-
- (136) (136) (1) (137)
Deferred cost related to the acquisition of subsidiary - -  
-
 
-
 
-
25 - 25 - 25
Unwinding of discount on deferred cost related to acquisition of subsidiary - -  
 
-
 
 
-
 
 
-
40 - 40 - 40
Group reconstruction - - - - 1,736 - - 1,736 - 1,736
At 30 September 2019 960 1,924 - - 1,736 420 (1,719) 3,321 (7) 3,314
           
At 31 March 2020 4,582 2,892 559 9,154 (6,777)- (4,230) 6,180 - 6,180
Loss for the period and total comprehensive loss for the period - -  
 
-
 
 
-
 
 
-
- (115) - - -
At 30 September 2020 4,582 2,892 559 9,154 (6,777)- (4,345) 6,065 - 6,065

Condensed Consolidated Statement of Cash Flows

             Half-year ended
 30 September 2020
£000
30 September 2019
£000
Cash flows from operating activities   
Loss after interest and tax (115) (137)
Adjustments for:   
Depreciation of tangible fixed assets 365 261
Interest expense 9  
Amortisation of intangible assets 69 100
Taxation Charge - (6)
Changes in working capital:   
(Increase)/decrease in inventories (183) 7
(Increase) in trade and other receivables (199) (97)
(Decrease)/increase in trade payables and other payables (857) 110
Cash (outflow)/inflow from operating activities (911) 314
Tax credit received 49 6
Net cash (outflow)/inflow from operating activities (862) 320
Cash flows from investing activities   
Purchases of tangible fixed assets(414) (385)
Purchases of intangible fixed assets (251) (190)
Payment of acquisition of subsidiary, net of cash acquired (82) (289)
Net cash outflow from investing activities (747) (864)
Cash flow from financing activities   
Proceeds from issues of ordinary share capital - 1,073
Loans (repayments)/proceeds (638) 255
Grant funding received108 -
Interest Paid (9) -
Net cash inflow from financing activities (539) 1,328
   
(Decrease)/increase in cash and cash equivalents (2,148) 784
Cash and cash equivalents at the start of the period 4,087 368
Cash and cash equivalents at the end of the period 1.939 1,152

NOTES TO THE FINANCIAL STATEMENTS

 

The notes are available in the printable pdf of the results. To download it, please click here