Tan Delta Systems plc
("Tan Delta", or the "Company")
Interim results for the six months ended 30 June 2023
Tan Delta, a provider of advanced industrial and commercial monitoring systems, is pleased to report its first set of financial results for the six months ended 30 June 2023 ("H1 2023" or the "Period"), since its admission to AIM in August 2023.
Financial highlights:
· Revenue increased by 54% to £0.96m (H1 2022: £0.62m)
· Gross profit increased by 52% to £0.61m at 63% margin (H1 2022: gross profit of £0.4m at 64% margin)
· Profit from operations (excluding non-underlying items relating to the IPO) of £0.18m (H1 2022: £0.03m)
· Strengthened balance sheet following receipt of net proceeds of £4.8 million, from successful AIM IPO
For further enquiries:
Tan Delta Systems plc | Tel: +44 (0) 845 094 8710 |
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Chris Greenwood, CEO | |
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Steve Johnson, CFO | |
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Zeus (Nominated Adviser & Broker) | Tel: +44 (0) 203 829 5000 |
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David Foreman, James Hornigold, Ed Beddows (Investment Banking) | |
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Nick Searle (Sales) | |
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Chairmans Statement It gives me great pleasure to present my first chairman's statement since the Company's successful IPO in August 2023. Whilst we are a relatively small team at present, all members of the Board and employees went above and beyond, to ensure the continuing commercialisation of our products and services, alongside the IPO, which necessarily requires huge time and focus.
In terms of financial performance, the management team have performed well during H1 2023 achieving 54% year on year revenue growth whilst also preparing the business for rapid scaling.
Our target markets are large commercial and industrial operators and manufacturers of any equipment with an engine, gearbox or hydraulics which thus relies on lubrication oil for reliable and efficient operation. In these days of intense global competition, high oil prices and a drive to decarbonise, our proposition of reduced operating costs, reduced break downs and oil consumption through waste reduction, resonates loudly and provides Tan Delta with a very significant global opportunity.
In anticipation of a successful IPO, the management undertook significant planning during the period to commence sales and marketing in the second half of the year ("H2 2023") with an initial focus on European and North American markets, expanding later on in 2024 to the Middle East, Asia, Africa and South America. The Company is now in a strategically advantageous situation with an innovative and proven product addressing a significant global market with a compelling proposition. Furthermore, as a result of our IPO we now have the cash to commence material and sustained sales activities and execution of the Board's long-term strategy.
In order to provide further support and governance strength during H2 2023 we will add a new independent Non-Executive Director to our Board. This will complete the Board of Directors and provide the Company with the management depth and governance to maximise its opportunities and deliver shareholder growth.
Finally, I would like to take this opportunity to thank our staff, advisers and investors who supported us through and at IPO. | ||
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Chief Executive Review
We are pleased to have achieved our targets for H1 2023. Following our successful IPO in August 2023 we are now well placed to continue performing in line with expectations in H2 2023 and beyond, as the business continues to grow and benefit from the ability to invest in product evolution and global sales and marketing.
Revenue increased by 54% to £0.96m (H1 2022: £0.62m) whilst broadly maintaining gross margin which slightly fell to 63% (H1: 2022 64%) as a result of a change in product sales mix. Underlying operating profits, excluding one-off IPO related costs, also increased by 608% to £0.18m (H2 2022: £0.03m) as our cost base growth is not directly coupled to revenue growth.
During the Period revenue was primarily driven by a small number of prospects who commenced implementations following their evaluation period, and by a number of small sales to new customers commencing their evaluations. In the second half we expect more customers to enter and commence implementation on their equipment fleets, as well as contribution from our off the shelf SENSE-2 and MOT products.
During the Period, we had three main operational objectives. Firstly, we continued to progress and grow existing customer evaluations and adoption planning for our sensor systems. Secondly, we planned and prepared for the acceleration of our business post IPO, so that we were ready to immediately start expanding sales, increasing marketing activities and upscaling production. Thirdly, was the successful completion of our IPO and securing significant capital to fund the execution of our global expansion plans.
Moving into H2 2023, we are focused on the implementation of our sales and marketing plan which is primarily focussed on our off the shelf SENSE-2 and MOT products, both of which can be immediately installed and used by equipment owners/operators. Our marketing program will see these products actively promoted to specific market verticals including power generation, manufacturing and transportation in Europe, North America, Middle East, Asia and South America. In parallel we have commenced increased production to fulfil expected demand.
A major operational focus for H2 2023 will be the increase of our human resources to support and enable our rapid scaling plans with a particular focus on sales, customer support and production. I am pleased to report that we are making good progress. In 2024 we will turn our attention to our technology and product development team which we will further develop to meet the needs of our next generation of technology and product development targeting the global automotive segment.
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Notes to editors
Tan Delta Systems plc has developed innovative technologies, products and services that enable operators of rotating equipment, from trucks and ships to generators and wind turbines, to reduce oil consumption, maintenance costs, breakdowns and carbon footprint.
Tan Delta's products offer customers a compelling proposition of being able to reduce operating costs whilst improving reliability. This is achieved through equipment operators gaining a better understanding of the actual real time maintenance status of their active equipment through the real time analysis of lubrication oil used within engine, gearboxes and hydraulic systems. Tan Delta's data analytics, enables the following benefits:
· Reduced oil consumption by approximately 30 per cent, by ensuring oil is not changed before it has reached the end of its life;
· Reduced breakdowns and associated costs by detecting issues before damage or failure occurs;
· Increased equipment operating times by enabling intervals between maintenance to be extended and;
· Reduced carbon footprint through a reduction in oil use and prolonged equipment life.
The Company currently offers four main products built around its core oil condition analysis sensor technology, all of which target primarily large commercial and industrial equipment market segments.
Tan Delta was admitted to trading on AIM in August 2023 with the ticker TAND. For additional information please visit www.tandeltasystems.com.
LinkedIn: http://www.tandeltasystems.com
Twitter: https://x.com/Tandeltasysyems
Unaudited statement of profit or loss and other comprehensive income
For the six months ended 30 June 2023
| Note | (Unaudited) | (Unaudited) | (Unaudited) |
Six months ended | Six months ended | Year ended | ||
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | ||
| | | ||
Revenue | 3 | 959 | 621 | 1,575 |
Cost of sales | | (351) | (222) | (585) |
Gross profit | | 608 | 399 | 990 |
Other operating income | | 0 | 0 | 1 |
Distribution costs | | (22) | (17) | (44) |
Administrative expenses | | (409) | (357) | (665) |
Non-underlying items | 4 | (471) | 0 | 0 |
Profit from operations | |
| | |
- Excluding non-underlying items | | 177 | 25 | 282 |
- Non-underlying items | 4 | (471) | 0 | 0 |
(Loss) / Profit from operations | | (294) | 25 | 282 |
Interest expense | 5 | (4) | (4) | (4) |
Interest Income | | 0 | 0 | 0 |
Profit /(Loss) before tax | |
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- Excluding non-underlying items | | 173 | 21 | 278 |
- Non-underlying items | 4 | (471) | 0 | 0 |
(Loss) /Profit before tax | | (298) | 21 | 278 |
Taxation | 6 | 0 | 0 | 4 |
(Loss) / Profit for the period attributable to equity holders of the Company | | (298) | 21 | 282 |
Other comprehensive income | |
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Total other comprehensive income | | 0 | 0 | 0 |
Total comprehensive (loss) / profit for the period attributable to equity holders of the Company | | (298) | 21 | 282 |
Basic and diluted earnings per share (£) | 7 | (0.01) | 0.00 | 0.01 |
Unaudited statement of financial position
As at 30 June 2023
| Note | (Unaudited) | (Unaudited) | (Unaudited) |
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| | As at | As at | As at |
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| | 30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 |
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Non-current assets | |
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Intangible assets | | 141 | 26 | 121 |
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Right of use asset | | 107 | 134 | 120 |
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Property, plant and equipment | | 61 | 70 | 64 |
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| | 309 | 230 | 305 |
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Current assets | |
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Inventories | | 229 | 193 | 240 |
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Trade and other receivables | 8 | 277 | 248 | 320 |
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Cash and cash equivalents | 9 | 332 | 458 | 186 |
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| | 838 | 899 | 746 |
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Total assets | | 1,147 | 1,129 | 1,051 |
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Current liabilities | |
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Trade and other payables | 10 | (786) | (682) | (367) |
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Short term borrowings | 11 | (24) | (24) | (24) |
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Short term lease liability | 11 | (27) | (26) | (27) |
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| | (837) | (732) | (418) |
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Non-current liabilities | |
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Long term borrowings | 11 | (26) | (49) | (38) |
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Long term lease liability | 11 | (86) | (113) | (99) |
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| | (112) | (162) | (137) |
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Total liabilities | | (949) | (894) | (555) |
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Net assets | | 198 | 235 | 496 |
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Equity attributable to equity holders of the Company | |
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Ordinary share capital | 12 | 50 | 0 | 0 | | |
Share premium account | 13 | 0 | 1,565 | 1,565 | | |
Retained earnings/(accumulated losses) | 13 | 148 | (1,330) | (1,069) | | |
Total equity | | 198 | 235 | 496 | |
Unaudited statement of changes in equity
For the six months ended 30 June 2023
| Share capital £000 | Share premium account £000 | Retained earnings / (accumulated losses) £000 | Total equity £000 |
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Balance at 1 January 2022 | 0 | 1,565 | (1,351) | 214 | | |
Ordinary share capital | 0 | 0 | 0 | (0) | | |
Comprehensive income: |
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Profit for the period | 0 | 0 | 21 | 21 | | |
Balance at 30 June 2022 | 0 | 1,565 | (1,330) | 235 | | |
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Balance at 30 June 2022 | 0 | 1,565 | (1,330) | 235 | | |
Ordinary share capital | 0 | 0 | 0 | 0 | | |
Comprehensive income: |
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Profit for the period | 0 | 0 | 261 | 261 | | |
Balance at 31 December 2022 | 0 | 1,565 | (1,069) | 496 | | |
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Balance at 31 December 2022 | 0 | 1,565 | (1,069) | 496 | | |
Ordinary share capital | 0 | 0 | 0 | 0 | | |
Comprehensive income: |
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Loss for the period | 0 | 0 | (298) | (298) | | |
Bonus issue of shares | 50 | (50) | 0 | 0 | | |
Cancellation of share premium | 0 | (1,515) | 1,515 | 0 | | |
Balance at 30 June 2023 | 50 | 0 | 148 | 198 | |
Unaudited statement of cash flows
For the six months ended 30 June 2023
| | (Unaudited) | (Unaudited) | (Unaudited) |
| Six months ended | Six months ended | Year ended | |
Note | 30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | |
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Cash flows from operating activities | | | | |
(Loss) / Profit before Tax | | (298) | 21 | 278 |
Adjustments for non-cash/non-operating items: | |
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Depreciation | | 5 | 4 | 11 |
Amortisation of intangible assets | | 5 | 0 | 0 |
Amortisation of right of use assets | | 13 | 13 | 27 |
Taxation | | 0 | 0 | 4 |
Loss on disposal of plant and equipment |
| 0 | 0 | 4 |
Interest income | | 0 | 0 | 0 |
Interest expense | | 4 | 4 | 4 |
Operating cash flows before movements in working capital | | (271) | 42 | 328 |
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(Increase)/decrease in inventories | | 11 | (140) | (187) |
(Increase)/decrease in trade and other receivables | | 43 | 41 | (31) |
Increase/(decrease) in trade and other payables | | 419 | 412 | 97 |
Net cash generated from operating activities | | 202 | 355 | 207 |
Cash flows from investing activities | |
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Purchase of property, plant and equipment | | (2) | (34) | (39) |
Purchase of intangibles assets | | (25) | (26) | (121) |
Net cash used in investing activities | | (27) | (60) | (160) |
Cash flows from financing activities | |
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Borrowings and finance lease obligations | | (29) | (29) | (53) |
Net cash used in financing activities | | (29) | (29) | (53) |
Net decrease in cash and cash equivalents | | 146 | 266 | (6) |
Cash and cash equivalents at the beginning of the period | | 186 | 192 | 192 |
Cash and cash equivalents at the end of the period | 9 | 332 | 458 | 186 |
Notes to the unaudited condensed interim financial statements.
1. General information
The interim financial statements were approved by the Board of Directors on the 28 September 2023.
2. Basis of preparation
The interim financial statements of the Company are for the six months ended 30 June 2023.
The comparative figures for the financial year ended 31 December 2022 are not the Company's statutory accounts for that financial year. The comparative figures were prepared under International Financial Reporting Standards ('IFRS') for the purposes of presentation in the Company's AIM Admission Document published on 11 August 2023 ('Admission Document'). The statutory accounts filed at Companies House were prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' including the provisions of Section 1A 'Small Entities' and the Companies Act 2006. The financial statements were audited and prepared in accordance with the provisions applicable to companies subject to the small companies' regime even though they were exempt from audit under Section 477 of the Companies Act 2006.
The condensed interim financial statements for H1 2023 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 2023 have been prepared based on the accounting policies adopted within the Admission Document, and those expected to be adopted for the year ending 31 December 2023. 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 | | | |
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Geographical reporting | (Unaudited) | (Unaudited) | (Unaudited) |
Six months ended | Six months ended | Year ended | |
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | |
| | | |
United Kingdom | 526 | 325 | 956 |
Europe | 191 | 161 | 270 |
Rest of the World | 242 | 135 | 349 |
| 959 | 621 | 1,575 |
4. Non-underlying items | | | |
| (Unaudited) | (Unaudited) | (Unaudited) |
Six months ended | Six months ended | Year ended | |
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | |
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IPO costs | (471) | 0 | 0 |
| (471) | 0 | 0 |
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 they have been recognised as non-underlying expenses in the income statement in H1 2023.
5. Finance expense | | | |
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| (Unaudited) | (Unaudited) | (Unaudited) |
Six months ended | Six months ended | Year ended | |
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | |
| | | |
Interest on bank loans | (2) | (2) | 0 |
Interest on finance leases | (2) | (2) | (4) |
| (4) | (4) | (4) |
6. Income tax expense
No income has yet been recognised in H1 2023 in relation to R&D tax credits available from HMRC through the SME R&D relief scheme.
7. Earnings per share | | | | |
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Earnings per share are as follows: | | | | |
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| | | |
Six months ended | Six months ended | Year ended | ||
30 June 2023 | 30 June 2022 | 31 Dec 2022 | ||
£ per share | £ per share | £ per share | ||
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Basic and diluted earnings per share | (0.01) | 0.00 | 0.01 | |
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The calculations of basic and diluted earnings per share are based upon: |
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| £000 | £000 | £000 | |
(Loss) / Profit for the period attributable to the owners | (298) | 21 | 282 | |
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| Number | Number | Number | |
Number of ordinary shares at the end of the period | 50,149,800 | 50,149,800 | 50,149,800 | |
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
8. Trade and other receivables | | | | |
| (Unaudited) | (Unaudited) | (Unaudited) | |
As at | As at | As at | ||
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | ||
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| | | |
Amounts falling due within one year: |
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Trade receivables | 162 | 193 | 277 | |
Other receivables | 58 | 20 | 19 | |
Prepayments | 53 | 17 | 20 | |
Tax recoverable | 4 | 18 | 4 | |
| 277 | 248 | 320 | |
9. Cash and cash equivalents | | | | |
| (Unaudited) | (Unaudited) | (Unaudited) | |
As at | As at | As at | ||
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | ||
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Cash at bank available on demand | 332 | 458 | 186 | |
| 332 | 458 | 186 | |
10. Trade and other payables | | | |
| (Unaudited) | (Unaudited) | (Unaudited) |
As at | As at | As at | |
30 June 2023 £000 | 30 June 2022 £000 | 31 Dec 2022 £000 | |
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Trade payables | (389) | (195) | (284) |
Other payables | (16) | (50) | (15) |
Other taxation and social security | (15) | (20) | (12) |
Accruals | (295) | (11) | (19) |
Deferred income | (71) | (406) | (37) |
| (786) | (682) | (367) |
11. Borrowings and lease liabilities | | | |
| (Unaudited) | (Unaudited) | (Unaudited) |
As at | As at | As at | |
30 June 2023 £'000 | 30 June 2022 £'000 | 31 Dec 2022 £'000 | |
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| | |
Current: |
| | |
Bank loans | (24) | (24) | (24) |
Lease liability | (27) | (26) | (27) |
| (51) | (50) | (51) |
Non-current: |
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Bank loans | (26) | (49) | (38) |
Lease liability | (86) | (113) | (99) |
Total borrowings | (112) | (162) | (137) |
Banks loans comprise a Coronavirus Business Interruption Loan provided by Lloyds. The loan was taken out in July 2020 and matures five years after this date.
12. Share capital | | | |
| (Unaudited) | (Unaudited) | (Unaudited) |
As at | As at | As at | |
30 June 2023 £'000 | 30 June 2022 £'000 | 31 Dec 2022 £'000 | |
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Allotted, called up and fully paid |
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Ordinary shares of 45,180 @ £0.01 each |
| 0 | 0 |
Ordinary shares of 50,149,800 @ £0.001 each | 50 | | |
| 50 | 0 | 0 |
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.
13. Reserves
In anticipation of re-registering the Company as a public limited company, 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. The Company listed on AIM on 18 August 2023 raising circa £6.0m. The Company issued 23,074,000 ordinary shares thus taking the total number of ordinary shares in issue to 73,223,800 from 50,149,800. The costs associated with the issue amounted to approximately £1.2m. £0.47m was recognised in H1 2023 and £0.73m will be recognised in H2 2023.
On 18 August 2023, 1,253,745 share options were granted to those eligible under the scheme in line with the disclosures made in the Company's admission document dated on 18 August 2023. The options have an exercise price of £0.26.
15. Availability
Further copies of this interim announcement are available on the Tan Delta Systems plc website, www.tandeltasystems.com.
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