Unaudited Interim Results

OTAQ, the innovative technology company targeting the aquaculture, geotracking and offshore markets, is pleased to announce unaudited interim results for the six months ended 30 September 2022.

Financial Highlights:

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

Strategic and Operational Highlights:

• Established new Geotracking division
  • Follows successful sales to customers of its prototype technology 
  • Successfully applied in multi competitor sports tracking events and for geofencing safety products in industrial markets
  • First order received from Track Tracker for asset tracking in the rail industry
• Completed development of innovative custom-designed sonar for Minnowtech for shrimp market
  • Key growth area with an initial estimated target market size of £24m
• Live Plankton Analysis systems deployed at customer sites in Scotland, Chile and Ireland
  • Prototype versions expected to be installed in January 2023
  • Initial target market estimated to be in the region of £24m
• Increase in rentals of Offshore division’s core OceanSense product
  • Development of new technologies in this division supports cross-deployment of skills and technologies in aquaculture and geotracking
• Initial customer contracts signed for Water Quality Monitoring products in Scotland
  

Post-Period Highlights:

• Admitted to trading on the AQSE Growth Market of the Aquis Stock Exchange
• Successful placing and open offer, raising approximately £3.2m net of expenses
  • As a result, cash balances of approximately £2.7m expected as at 30 November 2022 following full settlement of onerous supply contracts and deferred acquisition costs
  • New funds enable the Company to accelerate the development and commercialisation of its strong pipeline of new products

Commenting on the results and prospects, Phil Newby, Chief Executive at OTAQ, said:

“As the Company diversifies, the Board is satisfied with these results, showing improved revenue, gross profit and adjusted EBITDA compared to the same period last year. The Board believes the Group can deliver on the long-term strategic goals it has set out in order to realise OTAQ’s potential and significantly increase shareholder value

“The funding recently completed will allow the Group to focus on further product development and allow OTAQ to make additional investment in sales and marketing resource to deliver new revenue and growth. It is notable that, across its key geographies, the Group has several key relationships that are expected to deliver in the near future, with others fast approaching commercialisation.

“The Board remains committed to continuing with the launch of innovative new products and significant business development throughout the next period in order to return the Company to growth and improved profitability.”

Summary

The Group presents its unaudited interim results for the six month period ended 30 September 2022.

These interim results are presented following the Company’s admission to trading on the Access Segment of the AQSE Growth Market of the Aquis Stock Exchange on 9 November 2022 and the successful placing and open offer raising £3.6m before expenses for the Group. These funds have comfortably addressed the uncertainty expressed at the time of the full year results announced in September 2022 regarding the Company’s ongoing cash position. The proceeds of the fundraising will enable the Company to accelerate the development and commercialisation of its strong pipeline of new products in OTAQ’s core markets of Aquaculture and Offshore as well as building out the new Geotracking division, which has been launched following successful sales to customers of its prototype technology. 

As the Company diversifies, the Board is satisfied with these results, showing improved revenue, gross profit and adjusted EBITDA compared to the same period last year. The Board believes the Group can deliver on the long-term strategic goals it has set out in order to realise OTAQ’s potential and significantly increase shareholder value. The focus is to develop the aquaculture market in Scotland, Chile and other global territories with its new products; support and develop the Minnowtech investment in shrimp sonar devices and to penetrate the significant market opportunity for the tracker technology. The anticipated launch of the live plankton analysis system, in collaboration with the Group’s strategic partner, Blue Lion Labs, in 2023, is expected to be of significance.

Strategy

The Group’s strategy is to further develop operations and revenue streams within the aquaculture, offshore and geotracking industries through new product development and strategic investments and collaborations with third parties. OTAQ has built significant technical resources, organically and through acquisition, to deliver innovative solutions for their customers.

The Company will continue to utilise the skills and technologies available in each of its divisions to accelerate the development of innovative new products for uses Group-wide. Given the potential to develop and deploy technology within each division, the Board believes that shareholder value will benefit from increased levels of product launches and cross-selling.

Trading

As anticipated, revenue has improved in the period to £2.0m (H1 2021: £1.8m) with the Offshore division achieving £1.2m (H1 2021: £0.9m) and the Aquaculture division achieving £0.8m (H1 2021: £0.9m). The Company has reported Adjusted EBITDA* of £13k (2021: loss £171k)

Aquaculture

The Aquaculture division revenue includes the balance of revenue from the final acoustic deterrent device customers in Scotland. Aquaculture revenue in Chile includes rentals from acoustic deterrent devices and this is expected to continue in the second half of the year. The division also includes revenue from sales and rentals to customers in other countries, including Finland and Ireland.

Regulation of the aquaculture industry worldwide is still evolving due to the demands of governing bodies who oversee food standards. OTAQ is continuing discussions with Subpesca, the Chilean authority tasked with aquaculture regulation, around use of the Group’s acoustic deterrent technology and is also continuing with trials in Tasmania regarding acoustic deterrent use. The Board has now ended all marketing and selling activities in relation to acoustic deterrents in Scotland.

Notable new product developments in the Aquaculture division include:

Shrimp Biomass

The Group has completed the development of an innovative and custom-designed sonar for Minnowtech that scans shrimp in ponds. Minnowtech is viewed as a key growth area with an initial estimated target market size of £24m, based on the number estimated shrimp ponds in early target markets.

Live Plankton Analysis System

Through its collaboration with Blue Lion Labs in Canada, the Group has developed AI software which monitors water quality by identifying phytoplankton which enables farmers to take immediate mitigating actions as required. To date, 14 development systems have been deployed at customer sites in Scotland, Chile and Ireland with prototype versions expected to be installed in January 2023. The initial target market is estimated to be in the region of £24m.

Water Quality Monitoring

Monitoring the quality of finfish cage water is an important factor in increasing yields and improving fish welfare. Following on from initial customer contracts signed in Scotland, the Board believes there is an initial estimated target market of £32m based on a rental model.

Offshore

The Offshore division produces a range of marine technology products for offshore industries, supplying customers around the world including subsea oil and gas, remotely operated vehicle operations, commercial diving and oceanographic research, with growth opportunities in the offshore renewables sector. The division has performed well during the period and continues to benefit from the customer rental contract agreed in the last financial year. This has helped to increase rentals of the division’s core OceanSense product.  In addition, the development of new technologies in this division permits cross-deployment of skills and technologies into the aquaculture and geotracking arenas.

Geotracking

Building upon the ROS Technology acquisition in late 2020 and using the Group’s existing technology and skill set, the Group has developed highly accurate personnel and asset tracking devices which are now being marketed for multi competitor sports tracking events and for geofencing safety products in industrial markets. 

The Company achieved its first order from Track Tracker Limited in September, which deploys a highly accurate geofencing product to help protect workers operating in a high risk environment, in this case railway track maintenance engineers. The Board believes there to be an estimated initial target market size of £13m through its relationship with Track Tracker.

Financial Highlights for the six months ended 30 September 2022

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

Adjusted EBITDA improved to a profit of £0.01m from a loss of £0.17m in 2021. This improvement resulted from increased Revenue in the period and improved overhead cost control but also a change in the sales mix and the related gross margins. 

Net debt as at 30 September was £1.56m (2021: £1.29m). However, following the successful completion of the fundraise on 9 November 2022, the Company expects to have cash balances of approximately £2.7m as at 30 November 2022 after payment of all deferred acquisition costs, fundraising fees and the amounts owed under the legacy Sealfence supply contract. 

Outlook

As a result of the Group diversifying and developing its interests, the Board now anticipates a period of adjustment whilst its new products are launched and developed commercially. The funding recently completed will allow the Group to focus on ensuring these products are correct for the markets in which they are intended and to make additional investment in sales and marketing resource in order to deliver new revenue and growth as quickly as possible. The Group’s investment, collaboration and supply agreement with Minnowtech is expected to deliver new sales in the near future as is the Group’s relationship with Track Tracker for our tracking technology. The investment in Blue Lion Labs and the resulting development of harmful algal bloom detection technology is nearing commercialisation with collaborations underway with potential customers in Chile, Scotland and Australia.  The Offshore division has launched new products with more under development and the Group is investing in additional sales resources, particularly in North America, with a view to developing these large markets.    

The Board remains committed to continuing with the launch of innovative new products and significant business development throughout the next period in order to return the Company to growth and, ultimately, profitability.

Phil Newby
Chief Executive Officer

The Board confirms that to the best of its knowledge the consolidated half year financial statements for the six months to 30 September 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting amended in accordance with changes in IAS 1 Presentation of Financial Statements, as adopted by the UK 

Unaudited Condensed Consolidated Statement of Comprehensive Income

As per note 4, Losses Per Share were 1.4p (2021: loss 2.8p) and Diluted Losses Per Share were 1.4p (2021: loss 2.8p).

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 (2021: £nil) and therefore the loss for the period is also the total comprehensive loss for the period.

The notes form an integral part of these condensed financial statements.

Unaudited Condensed Consolidated Balance Sheet

Unaudited Condensed Consolidated Statement of Changes in Equity

Unaudited Condensed Consolidated Statement of Cash Flows

Notes

Notes to the Financial Statements are available in the printable PDF version