REG - Tan Delta Systems - Interim results
30/09/2024 07:00
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RNS Number : 1629G Tan Delta Systems PLC 30 September 2024
Tan Delta Systems plc
('Tan Delta', or the 'Company')
Interim results for the six months ended 30 June 2024
Tan Delta (AIM:TAND), a leading provider of intelligent monitoring and
maintenance systems for commercial and industrial equipment is pleased to
report its financial results for the six months ended 30 June 2024 ('H1 2024'
or 'the Period').
Financial highlights:
· H1 revenue of £0.66m (H1 2023: £0.96m)
· Gross profit margin of 61% (H1 2023: £61%)
· Loss before tax of £0.53m (H1 2023: loss of £0.30m)
· £3.62m cash as at 30 June 2024(H1 2023: £0.33m)
Commenting on the results, Chris Greenwood, Tan Delta CEO said:
"The year to date has been an exciting and fast-moving period of operational
and sales development. The Company ends the period with £3.62m of cash, a
significant and growing pipeline of new customers and contracts. Despite some
frustration with the speed of conversion, included in our pipeline are four
specific pending contracts worth £4.5m of which I am optimistic that at least
£1.85m will close and be shipped during the current year."
For further enquiries:
Tan Delta Systems plc Tel: +44 (0) 845 094 8710
Chris Greenwood, CEO
John Higginbottom, CFO
Zeus (Nominated Adviser & Broker) Tel: +44 (0) 203 829 5000
David Foreman, James Hornigold, Ed Beddows (Investment Banking)
Nick Searle (Sales)
Chairman statement
The Board is pleased with the progress made by the Company during H1. Due to
the timing of conclusion of certain projects, revenue for H1 2024 was £0.66m
which underpins the expected second half increase in conversion of pending
sales opportunities. In particular, we are actively working to conclude four
potential contracts with new customers with an aggregate value of up to
£4.5m. These are expected to progress following completion of ongoing trials
during H2 and as such the Board remains cautiously optimistic about achieving
full year market expectations despite the slower H1.
The high level of standardisation of our product offer across different market
segments (application & geographic) has enabled us to grow our capacities
(production, deployment support and sales) more efficiently than anticipated
which is reflected in our lower than expected overheads and thus a loss of
£0.53m for the period despite the lower revenues during the Period.
In anticipation of the forthcoming closure and delivery of some of our sales
pipeline we have increased our stock of product during H1, with a specific
focus on being able to achieve customer supply time expectations. Cash
balances remains healthy at £3.62m as at 30 June 2024.
Operational
During the Period, we have completed our investment to increase production
capacity which has expanded our ability to support an annual revenue run rate
of £12m; a further doubling of this capacity is achievable within four months
with additional investment of only £50k which we expect to execute during
2025 to support anticipated demand. This increase in production capacity was
achieved alongside our investments in product support that has included
simplified sensor configuration and improved documentation which enables more
efficient and quicker installations by customers.
Sales
We are engaged with a substantial and growing number of customers across
multiple application and geographic segments. From Biogas genset operators in
Germany, to ports in the USA, mines in Chile, engine manufacturers in Europe
and one of the world's largest global retail and distribution business. All
have common objectives: to reduce their oil use; maintenance costs; and
improve reliability and the regard our sensor as a reliable and effective
route to achieve these ambitions.
We have good visibility on contract orders worth approximately £25m, of which
two, valued at £1.85m (in aggregate) are expected to convert into sales
during the current year following the successful completion of trials. These
specific opportunities are mostly in the Middle East and focused on power
generation and other engine-based applications. In addition to these defined
contract opportunities we also have a growing raft of strategic ones. These
include applications such as large Port Cranes, where we have recently kicked
off a trial with The Georgia Ports Authority in USA where they have 90 cranes,
each of which would require 6 sensors. Separately, we have recently started a
trial with one of the world's largest retail distribution businesses to help
them enhance reliability and maintenance planning of automated conveyor
systems in their logistics centres. We have no shortage of opportunities and
are systematically engaging with customers to learn about their specific needs
and develop implementation plans, this all bodes extremely well for the
future.
Outlook
The Board is pleased with progress made to develop the business and is looking
forward to seeing this groundwork reflected in the forecasted sales in H2 and
beyond. We see a growing array of opportunities across real time oil
analysis-based equipment monitoring and management which is where our core
technology delivers valuable data and insight. The Company has built a
substantial pipeline of opportunities, which is continuing to grow, and
includes a mix of substantial near term contract opportunities and longer-term
strategic ones which could be of exceptional value. Of course, the immediate
focus of the management team are the £1.85m of pending contracts which we
hope to close and ship in the current financial year. As such the outlook for
the future of the Company remains very positive.
Notes to editors
Tan Delta is an industrial-tech business that enables operators of commercial
and industrial equipment reduce operating and maintenance costs and improve
reliability. Our business is built around our unique proprietary core sensor
technology that analyses lubrication oil in real time generating data rich
with insight which with the application of analytics converts into actionable
information for equipment operators that can enable oil consumption and
associated cost savings of up to 50%. Our customers include operators of all
types of equipment that rely upon engines and gearboxes, from the largest
ships to mining trucks, generators, and wind turbines, applicable applications
are ubiquitous and worldwide.
www.tandeltasystems.com (http://www.tandeltasystems.com)
Statement of profit or loss and other comprehensive income
Note (Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Revenue 3 658 959 1,457
Cost of sales (254) (373) (588)
Gross profit 404 586 869
Other operating income 0 0 0
Distribution costs 0 0 0
Administrative expenses (1,022) (409) (1,270)
Non-underlying items 4 0 (471) (736)
Profit from operations
- Excluding non-underlying items (618) 177 (401)
- Non-underlying items 4 0 (471) (736)
Total (Loss) / Profit from operations (618) (294) (1,137)
Interest expense 5 (1) (4) (6)
Interest Income 5 90 0 36
Profit /(Loss) before tax
- Excluding non-underlying items (529) 173 (371)
- Non-underlying items 4 0 (471) (736)
Total (Loss) /Profit before tax (529) (298) (1,107)
Taxation 6 0 0 7
(Loss) / Profit for the period attributable to equity holders of the Company (529) (298) (1,100)
Other comprehensive income
Total other comprehensive income 0 0 0
Total comprehensive (loss) / profit for the period attributable to equity (529) (298) (1,100)
holders of the Company
Basic and diluted earnings per share (pence) 7 (0.72) (0.59) (0.02)
Statement of financial position
Note (Unaudited) (Audited) (Audited)
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Non-current assets
Intangible assets 129 141 144
Right of use asset 80 107 94
Property, plant and equipment 82 61 55
291 309 293
Current assets
Inventories 506 229 365
Trade and other receivables 8 308 277 274
Cash and cash equivalents 9 3,618 332 4,555
4,432 838 5,194
Total assets 4,723 1,147 5,487
Current liabilities
Trade and other payables 10 (244) (786) (466)
Short term borrowings 11 0 (24) 0
Short term lease liability 11 (28) (27) (27)
(272) (837) (493)
Non-current liabilities
Long term borrowings 11 0 (26) 0
Long term lease liability 11 (58) (86) (72)
(58) (112) (72)
Total liabilities (330) (949) (565)
Net assets 4,393 198 4,922
Equity attributable to equity holders of the Company
Ordinary share capital 12 73 50 73
Share premium account 13 5,426 0 5,426
Reserves Account 77 0 77
Retained earnings/(accumulated losses) 13 (1,183) 148 (654)
Total equity 4,393 198 4,922
Statement of changes in equity
Share capital Share premium account Reserves Account Retained earnings / (accumulated losses) Total equity
£000 £000 £000 £000 £000
Balance at 1 January 2023 0 1,565 0 (1,069) 496
Ordinary share capital 0 0 0 0 (0)
Comprehensive income:
Bonus issue of shares 50 (50) 0 0 0
Cancellation of share premium 0 (1,515) 0 1,515 0
Profit for the period 0 0 0 (298) (298)
Balance at 30 June 2023 50 (0) 0 148 198
Balance at 30 June 2023 50 (0) 0 148 198
Ordinary share capital 0 0 0 0 0
Share issue on IPO 23 5,426 0 0 5,449
Share option costs 0 0 77 0 77
Comprehensive income:
Profit for the period 0 0 0 (802) (802)
Balance at 31 December 2023 73 5,426 77 (654) 4,922
Balance at 31 December 2023 73 5,426 77 (654) 4,922
Ordinary share capital 0 0 0 0 0
Comprehensive income:
Profit for the period 0 0 0 (529) (529)
Balance at 30 June 2024 73 5,426 77 (1,183) 4,393
Statement of cash flows
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
Note 30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Cash flows from operating activities
(Loss) / Profit before Tax (529) (298) (1,107)
Adjustments for non-cash/non-operating items:
Depreciation 13 5 24
Amortisation of intangible assets 25 5 20
Amortisation of right of use assets 13 13 27
Taxation 0 0 7
Share option costs 0 0 77
Loss on disposal of plant and equipment 0 0 6
Interest income (90) 0 (36)
Interest expense 1 4 6
Operating cash flows before movements in working capital (567) (271) (976)
(Increase)/decrease in inventories (141) 11 (125)
(Increase)/decrease in trade and other receivables (34) 43 45
Increase/(decrease) in trade and other payables (222) 419 99
Net cash generated from operating activities (964) 202 (957)
Cash flows from investing activities
Purchase of property, plant and equipment (39) (2) (22)
Purchase of intangibles assets (10) (25) (43)
Proceeds from investment in bank 90 0 36
Net cash used in investing activities 41 (27) (29)
Cash flows from financing activities
Borrowings and finance lease obligations (14) (29) (94)
Issuance of equity 0 0 5,449
Net cash used in financing activities (14) (29) 5,355
Net decrease in cash and cash equivalents (937) 146 4,369
Cash and cash equivalents at the beginning of the period 4,555 186 186
Cash and cash equivalents at the end of the period 9 3,618 332 4,555
Notes to the condensed interim financial statements
1. General information
The interim financial statements were approved by the Board of Directors on
the 27(th) of September 2024.
2. Basis of preparation
The interim financial statements of the Company are for the six months ended
30 June 2024.
The financial statements were prepared under International Financial Reporting
Standards ('IFRS'). The comparative figures were audited and prepared in
accordance to International Financial Reporting Standards ('IFRS') and the
provisions of the Companies Act 2006.
The condensed interim financial statements for H1 2024 do not include all the
information and disclosures required in the annual financial statements and
have not been audited or reviewed by an auditor pursuant to the Auditing
Practices Board guidance on Review of Interim Financial Information.
However, selected explanatory notes are included to explain events and
transactions that are significant for an understanding of the changes in the
Company's financial position and performance in the period.
The condensed interim financial statements for H1 2024 have been prepared
based on the accounting policies expected to be adopted for the year ending 31
December 2024. These accounting policies are drawn up in accordance with
adopted International Accounting Standards ('IAS') and International Financial
Reporting Standards ('IFRS') as issued by the International Accounting
Standards Board and adopted by the EU.
AIM-listed companies are not required to comply with IAS 34 'Interim Financial
Reporting' and accordingly the Company has taken advantage of this exemption.
3. Revenue from contract customers
Geographical reporting (Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
United Kingdom 204 526 689
Europe 206 191 314
Rest of the World 248 242 454
658 959 1,457
4. Non-underlying items
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
IPO costs 0 (471) (736)
0 (471) (736)
IPO costs
On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new
ordinary shares, taking the number of ordinary shares in issue to
73,223,800. Total proceeds amounted to circa £6.0m. The costs associated
with the IPO, which were committed at 30 June 2023 amounted to £0.47m and at
30 December 2023 £0.74m. The costs were recognised as non-underlying expenses
in the income statement.
5. Finance expenses and income
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Interest expense on bank loans 0 (2) (3)
Interest expense on finance leases (1) (2) (3)
Finance Expenses (1) (4) (6)
Interest income on bank balances 90 0 36
Finance Income 90 0 36
6. Income tax expense
No income has yet been recognised in H1 2024 in relation to R&D tax
credits available from HMRC through the SME R&D relief scheme.
7. Earnings per share
Earnings per share are as follows:
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 Dec 2023
Basic and diluted earnings per share (pence) (0.72) (0.59) (0.02)
The calculations of basic and diluted earnings per share are based upon:
£000 £000 £000
(Loss) / Profit for the period attributable to the owners (529) (298) (1,100)
Number Number Number
Weighted average number of ordinary shares 73,223,800 50,149,800 58,802,550
The calculation of basic earnings per share is based on the results
attributable to ordinary shareholders divided by the number of ordinary shares
outstanding as if the bonus issue and share split had occurred at the
beginning of the earliest period presented. The earnings per share
calculations for the period and prior period presented are based on the new
number of shares.
The number of shares in issue at the end of the period is used as the
denominator in calculating basic earnings per share. As the Company is loss
making the effect of instruments that convert into ordinary shares is
considered anti-dilutive, hence there is no difference between the diluted and
non-diluted loss per share.
During the period ended 30 June 2023, the Company completed a 110 for 1 bonus
share issue and a subdivision of shares. Prior to the bonus issue there were
451,800 shares at £0.001, after the bonus issue there are 50,149,800 shares
at £0.001. On Admission to AIM on 18 August 2023, the Company issued
23,074,000 new ordinary shares, taking the number of ordinary shares in issue
to 73,223,800.
8. Trade and other receivables
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Amounts falling due within one year:
Trade receivables 213 161 144
Other receivables 46 63 94
Prepayments 49 53 36
Tax recoverable 0 0 0
308 277 274
9. Cash and cash equivalents
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Cash at bank available on demand 3,618 332 4,555
3,618 332 4,555
10. Trade and other payables
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Trade payables (112) (390) (304)
Other payables (61) (15) (22)
Other Taxation and social security (30) (15) (26)
Accruals (28) (295) (96)
Deferred Income (13) (71) (18)
(244) (786) (466)
11. Borrowings and lease liabilities
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Current:
Bank loans 0 (24) 0
Lease liability (28) (27) (27)
(28) (51) (27)
Non-current:
Bank loans 0 (26) 0
Lease liability (58) (86) (72)
Total borrowings (58) (112) (72)
Banks loans comprise a Coronavirus Business Interruption Loan provided by
Lloyds. The loan was taken out in August 2021 and fully repaid in August 2023.
12. Share capital
(Unaudited) (Audited) (Audited)
Six months ended Six months ended Year ended
30 June 2024 £000 30 June 2023 £000 31 Dec 2023 £000
Allotted, called up and fully paid
Ordinary shares of 50,149,800 @ £0.001 each 0 50 0
Ordinary shares of 73,223,800 @ £0.001 each 73 0 73
73 50 73
Called up share capital
Called up share capital represents the nominal value of shares that have been
issued.
All classes of shares have full voting, dividends, and capital distribution
rights.
On 1 June 2023, the ordinary shares were subdivided from £0.01 to £0.001
(45,180 shares to 451,800 shares). Subsequently a bonus issue was made for all
the shareholders holding 451,800 shares at that date. The bonus issue
offered 110 ordinary shares for every 1 ordinary share in issue, with a
nominal value of £0.001 per share. This increased the number of ordinary
shares in issue by 49,698,000 to 50,149,800.
On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new
ordinary shares, taking the number of ordinary shares in issue to 73,223,800
from 50,149,800.
13. Reserves
In anticipation of re-registering the Company as a public limited company
('plc'), at a general meeting of the Company on 1 June 2023, it was resolved
that the Company would reduce its share premium account by an amount of
£1.52m by crediting the Profit and Loss Account.
Share premium account.
This represents the excess value recognised from the issue of ordinary shares
above nominal value.
Retained earnings.
This represents cumulative net gains and losses less distributions made.
14. Post balance sheet events
No adjusting events have occurred between reporting date and the date of
authorisation of the condensed interim report.
15. Availability
Further copies of this interim announcement are available on the Tan Delta
Systems plc website,
www.tandeltasystems.com (http://www.tandeltasystems.com) .
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