25 March 2024
Ocean Harvest Technology Group plc
("OHT" or the "Company")
Annual Results Announcement for the Year Ended 31 December 2023 and Notice of AGM
Ocean Harvest Technology Group Plc (AIM: OHT), a leading researcher, developer and supplier of proprietary blended seaweed products as functional additives for the global animal feed industry, announces its results for the year ended 31 December 2023 and gives notice of its AGM.
Highlights
· 28% growth in sales revenue from OHT's proprietary OceanFeedTM product year on year
· Significant increase in gross margin from 31% to 38%
· Strengthening of Intellectual Property position with two patents granted and multiple successful trial results, pushing OHT further ahead in the innovation of seaweed blends as an animal feed additive
· Doubling the volume of seaweed sourced, advancing OHT's leadership in global seaweed supply
· Cash of ?2.6 million and a receivables financing facility of up to ?2 million in place, putting OHT in a strong financial position
· A solid outlook for 2024 with sales growth expected from a number of channels
Operational Performance
OHT is pleased to announce its first set of full year financial results as a publicly listed company with 28% growth in the sales of its core proprietary OceanFeedTM product. This growth was driven through the addition of 15 new customers through the year, both in existing markets, and with first time sales in India, Korea and Taiwan. Pleasingly the company had good revenue growth in the UK and has also achieved product registration in Brazil which will be a new market for 2024.
To facilitate this growth the Company has doubled the amount of seaweed it has sourced in 2023 as compared to 2022. This has been driven by investment and expansion with existing suppliers and the opening up of additional harvesting regions in South East Asia and eastern Africa.
OHT has made significant strides in the development of its Intellectual Property portfolio. The Company recently announced that it had been granted a patent covering the claims that its seaweed blends have a pre-biotic effect which leads to increased growth rates and/or improved feed efficiency in a wide range of animals. This provides a significant competitive advantage and was in addition to the patent granted in 2023 which covered the claims that OHT's products improve the quantity and/or quality of eggs produced by egg laying birds. In addition to the patents, OHT was pleased to announce successful results from a number of animal feed trials demonstrating the performance benefits of using OceanFeedTM in swine, poultry and aqua diets as well as the superior performance observed in the presence of disease challenges in poultry and shrimp.
Summary of 2023 annual results
The Company has prepared the following financial summary, in addition to the attached financial statements, in the same format as previous announcements to ensure consistency of approach and comparability.
| | Year ended Year ended 31-Dec-23 31-Dec-22 | |
| | ?'000 | ?'000 |
| Product revenue | 3,029 | 2,513 |
| Other revenue | 339 | 495 |
| Reported revenue | 3,368 | 3,008 |
| Cost of goods sold | (2,230) | (2,229) |
| Gross Margin | 1,138 | 779 |
| Gross Margin % Product revenue | 38% | 31% |
| Overheads excluding IPO costs, share based payments, depreciation and finance costs | (3,321) | (3,164) |
| Adj EBITDA | (2,183) | (2,385) |
| Finance expense | (66) | (212) |
| Depreciation & Amortisation | (226) | (207) |
| Other | (55) | 13 |
| Adj Earnings | (2,530) | (2,791) |
| IPO transaction costs | (763) | - |
| Share based payments | (185) | (109) |
| Profit (loss) before tax | (3,478) | (2,900) |
Outlook
The Company is excited about the enormous potential to capitalise on the growing demand for sustainable and natural ingredients which improve the profitability and sustainability of feeding production animals. We continue to have good visibility over revenue growth supported by our solid revenue base from long standing repeat customers and the strength and depth of the future sales pipeline.
The Company is in a strong financial position. It had cash of ?2.6 million as at the end of 2023 and since the end of the 2023 financial year has secured a receivables financing facility which enables the Company to draw up to ?2 million. With the growth in its supply chain the Company believes it can improve its working capital efficiency and cashflow outlook by reducing the number of days inventory it holds and it has also conducted preliminary feasibility work on capacity expansion options which are less capital intensive than previously estimated.
Mark Williams, CEO of OHT, commented:
"The Company is growing quickly and this reflects the increasing demand from customers to include our proprietary seaweed blends in the diets of the animals they feed. We are very pleased with the growth of our seaweed supply chain during the year to underpin this increase in sales and the achievements in R&D and other intellectual property development that will help drive future growth.
OHT's seaweed blends have consistently demonstrated that they improve the performance, profitability and sustainability of livestock when included in their diets. These are key success factors that our customers are seeking to achieve. Our seaweeds are sustainably sourced, our products have one of the lowest carbon footprints of all animal feed ingredients and our sourcing activity generates material economic benefits for the harvesters involved.
OHT is well placed for the year ahead to extend our position as a leading provider of blended seaweed additives to the animal feed industry. We look forward to significant progress in 2024."
Notice of AGM
OHT's Annual General Meeting will be held on Thursday 25 April at 1.00pm and that the notice of Annual General Meeting will been sent to shareholders and is available on the OHT plc website at www.oceanharvesttechnology.com.
For more information please contact:
| Ocean Harvest Technology Group plc | Tel: +44 (0) 1737 735018
|
| Mark Williams, CEO Chris Scott, CFO |
|
|
|
|
| Cavendish Capital Markets Limited (Nominated Adviser and Sole Broker) | Tel: +44 020 7220 0500 |
| Geoff Nash / Seamus Fricker / George Dollemore (Corporate Finance)
Tim Redfern / Harriet Ward (ECM) |
|
|
|
|
Notes to Editors
Ocean Harvest Technology Group plc is a global leader in the development and commercialisation of value adding proprietary products from blending multiple species of seaweed. The Company provides a range of natural additives focused on improving animal performance and the sustainability of the feed chain, through its unique and proven proprietary seaweed blends. The Company sources its seaweed globally, utilising sustainable and socially responsible harvesting of largely wild blooming seaweed species. Its products are produced in its facility in Vietnam and sold into the $40bn animal feed additive sector in multiple markets across the world.
For more information, please visit www.oceanharvesttechnology.com.
Chairman's statement
Solid progress in our first year as a public company
I am delighted to announce, on behalf of the Board, OHT's first set of full year results following the successful admission of the Company to trading on AIM in April 2023. I would also like to take this opportunity to thank our longer term shareholders for their ongoing support and to welcome all our new shareholders.
Strategy
Ocean Harvest Technology's business model is centred on creating blended seaweed feed additives that deliver a number of specific benefits across multiple animal species based on the polysaccharides and other bioactive ingredients present in particular species of seaweeds.
Through its research and development ('R&D') programme, the Company continues to build a portfolio of intellectual property and has had commercial success in selling its products as ingredients to improve the efficiency, profitability and sustainability of the animal feed chain by delivering improvements in animal gut health.
Our core OceanFeedTM product has demonstrated benefits across multiple species through improved growth rates, feed efficiency and lower mortality rates. OceanFeedTM has a lower carbon footprint than additives produced from land-based plants and generates significant economic benefits in the communities where our seaweed raw material is harvested.
Ocean Harvest Technology's ambition is to continue to pioneer the use of proprietary blended seaweed ingredients to the global animal feed industry.
We expect to grow sales in this large global market, driving profits and increased value for our shareholders and other stakeholders.
Highlights of the year under review
The funds raised at IPO have enabled the Company to focus on its strategic growth objectives of investing and strengthening its global sales and marketing effort, building out its supply chain and continuing to invest in R&D to innovate and enhance the Company's existing product offering in the growing markets that it operates in.
The Company achieved total revenue for the year of ?3.4 million (2022: ?3.0 million) with a significantly improved gross margin of 38% on its product revenue. Pleasingly, there has been strong momentum in customer wins throughout the year from our growing pipeline of trials with 15 new customers onboarded including our first penetration into the Indian market. In addition, Ocean Harvest Technology has grown its supply chain to new regions including East Africa and the Philippines.
Board and Governance
At the time of the IPO, we strengthened the Board with the appointments of David Tilston and Professor Christine Maggs as Non-Executive Directors and Stephen Walker shortly thereafter, each of whom bring additional expertise and experience to our discussions.
As a Board, we are committed to promoting the highest standards of corporate governance and ensuring effective communication with shareholders. We remain focused on ensuring the Company delivers on its long-term growth strategy and is run in a sustainable and socially responsible manner with a strong level of governance oversight from the Board of Directors.
People
We have a wealth of knowledge and experience across the business and our people are core to OHT's success. I would like to thank everyone for their hard work during the year and for building the platform for OHT's future growth.
I would like to welcome Chris Scott to the Company, who joined as CFO and Executive Director post year end, and Nico Stein who recently joined as Chief Commercial Officer. We recently announced that Hadden Graham will retire during 2024, I would like to thank him for all his contribution to our Company and for his ongoing support during the transition period this year. We have also announced that after many years on the Board, Tom Onions will not be seeking re-election at the next AGM, I thank Tom for his valuable service.
Outlook
The Board believes that OHT has enormous potential to capitalise on the growing demand for sustainable and natural ingredients which improve the profitability and sustainability of feeding production animals. This is supported by our solid revenue base from long-standing repeat customers and the strength and depth of the future sales pipeline.
The Company anticipates that upcoming R&D trial data will further demonstrate the wide and expanding range of additional benefits provided by its feed additives, which the Directors believe will enable OHT to attract additional new customers and access new markets within the animal nutrition industry.
The market drivers for our business are supportive and we look forward to reporting further progress in the year ahead.
Ashley Head
Chairman
CEO's Statement
Growing current and future revenue from sales of our proprietary seaweed blends
This has been a significant year for Ocean Harvest Technology. We successfully joined AIM in April 2023, an important milestone on our journey as a listed business towards investing for future growth.
OHT is pioneering the use of blended seaweed additives in the animal feed industry. The business has continued to grow in 2023, driven by the acquisition of new customers, the expansion of our supply chain and continued investment in research and development.
Delivering our strategic ambitions
OHT has a strong position within a growing market. Our strategy is focused on three core areas: Research and Development; Sales and Marketing; and Seaweed Supply. Underpinning these is a portfolio of animal feed additives made from a blend of seaweeds which have a proven pre-biotic effect in livestock and companion animals.
Research and Development
The Company has conducted extensive R&D to demonstrate the many benefits of its products. Research has shown that OHT's products both improve gut health and lead to a number of benefits in livestock including higher growth rates, improved feed efficiency and lower mortality, which together contribute to improved profitability and sustainability of livestock production.
OHT's Research and Development activities during the year have been divided into:
i) Supporting potential customers to conduct trials of OceanFeedTM in their own production systems to generate near term sales growth; and
ii) Conducting trials to demonstrate additional applications of OceanFeedTM in various animal species to support future sales growth.
The key results of trials conducted during 2023 include the following:
· A laying hen trial confirmed improvements in both egg production and feed efficiency when birds were fed an OceanFeedTM Poultry supplemented diet. These performance improvements materially increased income per hen
· A catfish trial demonstrated that fish fed with OceanFeedTM Aqua in their diets had higher feed intake and weight gain, leading to a substantial increase in final live weight.
· A trial with juvenile shrimp where OceanFeedTM Aqua improved both weight gain and feed efficiency, thus reducing production costs. OceanFeedTM Aqua also helped reduce mortality in a disease challenge trial run in parallel.
· A commercial swine trial reported material improvements in feed efficiency in piglets with OceanFeedTM Swine included in their diet. OceanFeedTM Swine successfully replaced a combination of seven conventional gut health additives.
· A research institution led study demonstrating significantly improved survivability of poultry in the presence of a Necrotic Enteritis challenge which is a major disease faced by the poultry sector.
· During 2023, the Company was also granted its first patent. Patent No: GB 2594432 is focused on the efficacy of OceanFeedTM in layer hens and protects the claim made by the Company that use of a seaweed blend as a feed supplement for egg laying birds improves the quantity and/or quality of eggs produced.
· Subsequent to the year end, on 20 February 2024, the Company was granted its second patent (GB2594433B). This patent protects a number of claims which are key for OHT's business including OHT's specific seaweed blend can improve body weight and feed efficiency in a host animal through acting as a prebiotic and favourably altering the composition of the intestinal microbiome.
New Customer Acquisition
OHT sells its products into the global animal nutrition market, primarily those customers who either produce animal protein at large scale or manufacture the feed that is used in animal production. OHT sold products to over 45 customers during 2023. The customer base is global with approximately 50% of revenue earned from customers in the Americas, 30% from those in Europe, Middle East and Africa and 20% from the Asia Pacific region. During 2023, OHT made sales for the first time to Taiwan, South Korea and India, and achieved good growth in the UK and North America. OHT recently achieved product registration in Brazil, clearing the way for sales into that large animal nutrition market.
The majority of OHT's new customers are operating in the swine and poultry sectors, areas where the Company has particularly strong data supporting the performance benefits of its OceanFeedTM products.
Product revenue for 2023 was ?3.0 million, up from ?2.5 million in 2022, with the growth being underpinned by a 28% increase in revenue from the sale of OceanFeedTM products from ?1.86 million to ?2.39 million. OceanFeedTM is the Company's higher margin product, made from OHT's proprietary blend of seaweeds for specific animal species. Our customers include OceanFeedTM as an additive in their animal feeds and hence we see very consistent sales revenue from a customer once they have included the product in their diets.
Our sales of single seaweed products were ?0.64 million, roughly the same as recorded in 2022. Whilst our focus is on maximizing revenue from the sales of OceanFeedTM, which our trial data shows delivers superior performance for our customers, single seaweed sales are helpful in enabling the Company to scale its seaweed supply chain and can be useful in gaining access to new customers for future blended product sales.
The growth in OceanFeedTM sales contributed to the increase in OHT's gross margin to 37.6% in 2023 (2022: 31.0%), as a result of production efficiency improvements and a shift in product mix towards the higher margin OceanFeedTM products.
We have continued to grow the pipeline of trials where potential customers use the OceanFeedTM product to demonstrate product efficacy in their own production systems before adopting the product in their diets. As at the end of 2023, there were 20 customer trials either recently completed, ongoing or scheduled, which is an increase from the start of the year.
Seaweed Sourcing and Processing
The Company has continued to expand its supply chain, on-boarding new suppliers in new and existing markets for its key seaweed species. We have commenced sourcing seaweed from East Africa for the first time during 2023 and returned to sourcing from the Philippines where we had not sourced from since before the pandemic. We have onboarded new suppliers in Indonesia and increased volumes from existing suppliers in that important supply region. Our visibility and confidence of future seaweed supplies has grown with these developments, which will support the Company's continued growth.
In addition, the Company entered into a strategic arrangement with a supplier of brown seaweed in Ireland, which has committed supply to the Company at favourable pricing for at least the next two years. We are progressing the development of similar arrangements with other seaweed suppliers.
As well as the Company having improved visibility of much greater volumes of seaweed supply available to it, it has achieved an improvement in the quality of the seaweed it has sourced. Through having lower levels of sand, moisture, plastic and other physical impurities, OHT has achieved material improvements in production efficiencies when processing its finished products. This has contributed to the improvement in the Company's gross margin in 2023.
Our Vietnam facility had the full use of the second grinding line which was installed and commissioned in late 2022. In addition to providing increased volume capacity of the facility, we have observed that the efficiency of this new line has also contributed to lower yield losses when processing the seaweed raw material. This has also contributed to our margin improvement.
Environmental Factors
OHT is very proud of the multiple sustainability, environmental and social benefits that are generated from the sourcing of its seaweed and the use of its OceanFeedTM products.
OHT sources wild blooming red, green and brown seaweeds, the majority of which are invasive and can cause ecological damage if they are not removed from the areas where they are harvested.
During the year we commissioned an independent party to conduct a Life Cycle Analysis (LCA) of our OceanFeedTM product and calculate its carbon footprint. The findings of this work were that OceanFeedTM has a significantly lower carbon footprint than the majority of other ingredients and additives used in animal feed. Seaweed uses no arable land, fresh water or fertiliser when it grows naturally. Furthermore, due to the carbon capture benefits of the seaweed and the reduced feed consumption benefits of using OceanFeedTM as an additive, we have calculated that every tonne of OceanFeedTM used leads to a ten tonne reduction in CO2 equivalent emissions from the animal feed chain.
OHT sourced over 3,000 dry weight tonnes of raw seaweed during 2023. This has generated tens of thousands of euros for each of the multiple communities which harvest the seaweed. In many of these communities this seaweed harvesting forms an instrumental component of the income generating activity, often alongside fishing and seaweed cultivation. We have observed that the harvesting and drying of OHT's wild blooming seaweed has tended to employ the use of female members of the community who previously had limited opportunity for income generation.
Global Seaweed Market
OHT operates at the heart of the global seaweed market and is one of the only globally commercially viable seaweed feed ingredient businesses in a global feed additives market worth US$40bn growing at c. 6% p.a. In August 2023, the World Bank stated in its Global Seaweed Report 2023 that it views seaweed as a high growth input to many developing industries. In particular:
· The top four opportunities cited for new growth in seaweed applications are Animal Feed, Pet Feed, Methane Reduction Additives and Biostimulants.
· In discussing the animal feed and pet feed opportunities the report cites the pre-biotic effect of seaweed, and states the improvements in feed efficiency, production economics and anti-biotic replacement ability of seaweed.
· The report cites OceanFeedTM as a product that delivers specific benefits to animals, quoting the performance benefits of OceanFeedTM Bovine and OceanFeedTM Swine.
· It acknowledges the challenge in building the supply chain but goes on to say that OHT is a company that has already built a supply chain that gives it access to high volumes of seaweed.
· The report cites the three key challenges in growing an industry of seaweed ingredients for animal and pet feed as:
o having the R&D to demonstrate product efficacy;
o having a new customer onboarding timeline; and
o building the supply chain.
This independent analysis supports our conviction around the major drivers for our business and our strategy to exploit them.
Conclusion and Outlook
The Company has strong revenue momentum and continues to onboard new customers. There is good visibility of further growth in 2024 driven by:
· the stable revenue base provided by long standing, repeat OceanFeedTM customers;
· newly acquired customers that are increasing their usage of OceanFeedTM and are expected to use the product for the full year in 2024;
· existing customers who have trialed or are trialing OceanFeedTM products for additional applications with in their business;
· further new customers wins which in aggregate represent a pipeline of approximately ?15 million revenue potential from OceanFeedTM annual sales. It is important to note that nearly all of these potential customers are trialing the product for applications for which OHT has already demonstrated efficacy; and
· ongoing demand from customers demanding single seaweed products.
The Company has a strong pipeline of research trials where customers trial OceanFeedTM to replicate in their own production systems the efficacy that OHT has demonstrated in its trials. This can be key to winning new customer orders. OHT currently has trials scheduled or in progress with over 20 potential customers, an increase in the size of our customer trial pipeline since the start of the year. The pipeline of customer trials represents potential annual product revenue of approximately ?15 million, which is an increase from the ?5 million pipeline at the start of the year. The growth in the value of this customer pipeline provides the key visibility of OHT's revenue growth opportunity for the coming years.
The medium to longer term outlook for the business also remains very strong. The market backdrop remains supportive of OHT's products with customers looking for more sustainable feed additives which improve animal production metrics and can replace existing additives such as antibiotics, other synthetic additives and feed ingredients from land based plants. The global market for animal feed additives is estimated to be valued over US$40 billon per annum. Whilst the current value of potential revenue from OHT's customer trial pipeline of approximately ?15 million is only a small share of this, it demonstrates the growth potential to OHT from the on-boarding of these customers which are currently engaged and interested in using its OceanFeedTM products.
A number of our existing and potential customers are facing challenges in their own markets. Shrimp producers, for example, have suffered declines in prices for their harvest and feed manufacturers generally have had to endure material increases in costs over the past year. This can make the timing and process of onboarding new customers challenging as they turn their attention to manage their own internal profitability issues. Whilst this could impact the timing of a new customer's onboarding OceanFeedTM into their feeds, we do not believe these factors fundamentally impact the overall demand from customers to trial our products which can provide the performance, efficiency and sustainability improvements that they are seeking.
The Company's own R&D program during the coming year is designed to demonstrate additional benefits of using OceanFeedTM as an additive in animal feeds for various species. This includes key trials in beef and dairy cattle for both performance and enteric methane emissions, salmon performance and health data as well as sow performance and fertility data. The data demonstrating these additional applications is expected to help generate further growth in future years over and above the growth which the markets for the Company's existing applications offer.
We expect to maintain the improvements the Company achieved in gross margin on the sale of OceanFeedTM during 2023 and aim to further improve on that margin. We believe this is achievable through a combination of monitoring and adjusting price levels for customers, achieving production efficiencies on increased throughput in our facility and from the benefits of more efficient sourcing of high quality seaweed raw material.
The outlook for OHT's supply of seaweed remains strong and supportive of the Company's continued growth. OHT has worked with existing suppliers to help them access additional biomass and has also been developing new geographic regions for seaweed supply. Some of these new regions are
expected to come online during 2024. In addition to providing access to increased volumes, OHT's recent work on its supply chain has helped improve the quality of the seaweed it is sourcing and to better manage any volatility in price or volume from specific geographic areas. OHT hopes to further
develop strategic projects with some of its suppliers during 2024 to create greater alignment with these suppliers as the basis for long term supply partnerships.
OHT has also been reviewing its working capital requirements and future capacity expansion options in an effort to reduce the amount of cash that these can require. With the recent improvements in the reliability of our seaweed supply chain we will begin reducing the number of days sales of inventory that we hold. We are in the process of reviewing various options to increase capacity as it is required and believe that this could be done more cost effectively through an expansion of our existing Vietnam site or utilizing third party manufacturers before looking to build a new facility in another market.
We have ambitious targets. We are operating in a very large market with a product which has demonstrated it brings many economic and sustainability benefits to customers. We have a well developed and expanded supply chain to serve this market and we have an R&D program which is designed to further expand our addressable market. We look forward to executing our growth plan and are grateful to all of our shareholders for their support.
The Strategic Report has been approved by the Board of Directors.
On behalf of the Board
Mark Williams
CFO's Statement
Strong revenue growth, reduced losses, stronger balance sheet
The Company has prepared the following financial summary, in addition to the attached financial statements. This summary shows its product revenue and separates the other revenue it records which is a reimbursement of shipping arranged by OHT on behalf of its customers and on which it does not charge a margin. Adjusted EBITDA excludes IPO costs, share based payments, other income/expenses. 2022 comparatives in the table below are updated to reflect this definition.
| | Year ended Year ended 31-Dec-23 31-Dec-22 | |
|
| ?'000 | ?'000 |
| Product revenue | 3,029 | 2,513 |
| Other revenue | 339 | 495 |
| Reported revenue | 3,368 | 3,008 |
| Cost of goods sold | 2,230 | 2,229 |
| Gross Margin | 1,138 | 779 |
| Gross Margin % Product revenue | 38% | 31% |
| Overheads excluding IPO costs, share based payments, depreciation and finance costs | (3,321) | (3,164) |
| Adj EBITDA | (2,183) | (2,385) |
| Finance expense | (66) | (212) |
| Depreciation & Amortisation | (226) | (207) |
| Other | (55) | 13 |
| Adj Earnings | (2,530) | (2,791) |
| IPO transaction costs | (763) | - |
| Share based payments | (185) | (109) |
| Profit (loss) before tax | (3,478) | (2,900) |
Key Performance Indicators
The Company has identified that the Key Performance Indicators it should measure for the business include Product Revenue growth, Gross Margin, EBITDA and its cash balance.
Revenue
Product revenue grew 21% to ?3.0 million (2022: ?2.5 million). The product revenue on our OceanFeedTM products grew more impressively by 28% to ?2.4 million (2022 ?1.9 million), whereas the sales of the single seaweeds were flat for the year at ?0.6 million. The table below shows the steady growth we have recorded in OceanFeedTM revenue, whereas the revenue from single seaweed species is less predictable in each period.
| ?000's | H1 | H2 | H1 | H2 | H1 | H2 |
|
| 2021 | 2021 | 2022 | 2022 | 2023 | 2023 |
| OceanFeedTM | 526 | 883 | 822 | 1,038 | 1,130 | 1,255 |
| Single Seaweed | 84 | 14 | 130 | 523 | 446 | 198 |
| Total Product Revenue | 610 | 897 | 952 | 1,561 | 1,576 | 1,453 |
The growth in OceanFeedTM product revenue was driven from new customer acquisition and an increase in average selling prices. The Company sold significant volumes of its proprietary blended seaweed products to over 45 customers, increasing from the 30 sold to during 2022. The Company sold OceanFeedTM products for the first time in 2023 to customers in Taiwan, Korea, India and also commenced sales to one of the largest UK animal feed pre-mix companies.
The Company has been able to increase average selling prices by demonstrating the significant financial benefits of using its products to new customers and through eliminating selling concessions which the Company had offered to customers in previous years in response to the high shipping costs resulting primarily from the Covid-19 pandemic. The average selling price achieved on our OceanFeedTM products in 2023 was ?1,743 per tonne, an increase of 8% on the level achieved in 2022.
Profitability
The Company recorded gross margin of ?1.14 million in the year vs ?0.78 million achieved last year. Gross margins have benefited from the increases in average selling prices but also from expanded seaweed sourcing with improved quality, and therefore better production yields. The gross margin of 38% on product revenue in 2023 is a substantial increase on the equivalent margin of 31% recorded in 2022. We believe that we will be able to further improve gross margin through operational leverage as we scale the business further.
Operating expenses excluding IPO costs and shared based payments have been kept at similar levels, recording ?3.3 million in 2023, an increase of just 5% on 2022. This led to an adjusted earnings loss of ?2.5 million in the year vs a loss of ?2.8 million in 2022. Accordingly an adjusted EBITDA loss of ?2.2 million was recorded for the year against a ?2.4 million loss in 2022.
The Company also recorded non-operating expenses in the year of ?0.9 million which included IPO transaction expenses including legal, professional and advisory costs, and share based payments. The total reported loss for the year after these items has increased to a loss of ?3.5 million from ?2.9 million in 2022 primarily due to these items.
EPS
Basic loss per share of ?0.031 has reduced from a loss of ?0.044 in 2022.
Cash Flow and Balance Sheet
Net cash outflow from operating activities was ?2.1 million (2022: ?2.4 million), impacted by working capital increases from inventory build, particularly of semi-finished goods to support sales volume growth, and trade debtors increased in line with sales growth.
Net cash used in investing activities was ?0.3 million (2022: ?0.3 million) with investment in the Vietnam manufacturing facility, R&D activity and systems development costs.
Net cash generated from financing activities was ?4.9 million (2022: ?1.9 million) with IPO gross proceeds of ?6.9 million significantly improving cash flow. All of the convertible loan notes which were previously outstanding were converted into shares in the Company, in addition the IPO proceeds were used to repay the working capital facility that it had with one of its shareholders, hence the Company is in a strong financial position and has no external debt.
Total assets at year end increased to ?6.5 million (2022: ?3.7 million) through higher cash balance, trade debtors and inventory. Net Assets at year end increased to ?6.0 million (2022: ?0.4 million).
At the end of 2023, the Company had net cash of ?2.6 million and also had ?0.3 million receivable from government VAT refunds.
Events occurring since 31 December 2023
Since the year end the Company has entered into a receivables purchasing facility which enables it to draw down up to ?2,000,000 worth of finance against specific trade receivables.
There have not been any further material events since 31 December 2023.
Additional Information
Additional information relating to Ocean Harvest Technologies, can be found on the Company's website at www.oceanharvesttechnology.com
Christopher Scott
Consolidated Statement of Total Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| Notes |
| ? |
| ? |
|
|
|
|
|
|
|
|
| Revenue |
| 4 |
| 3,367,646 | | 3,008,296 |
| Cost of sales |
|
|
| (2,229,858) | | (2,229,108) |
| Gross profit |
|
|
| 1,137,788 |
| 779,188 |
|
|
|
|
|
|
|
|
| Administrative expenses |
| |
| (3,836,933) |
| (3,476,495) |
| Other operating income |
| |
| 50,327 |
| 9,004 |
| Operating loss |
| 5 |
| (2,648,818) |
| (2,688,303) |
|
|
|
|
|
|
|
|
| Finance expense |
| 7 |
| (65,504) |
| (212,380) |
| IPO transaction costs |
| |
| (763,315) |
| - |
| Loss before taxation |
|
|
| (3,477,637) |
| (2,900,683) |
| |
| |
| |
| |
| Taxation |
| 8 |
| 71,639 |
| 64,817 |
| Loss for the year |
|
|
| (3,405,998) |
| (2,835,866) |
|
|
|
|
|
|
| |
| Other comprehensive income |
|
|
|
|
| |
| Items that may be subsequently reclassified to profit or loss: |
|
|
| |
| |
| Currency translation differences |
|
|
| 12,159 |
| 50,321 |
| Other comprehensive income, net of tax |
|
|
| 12,159 | | 50,321 |
|
|
|
|
| |
| |
| Total comprehensive loss for the year |
|
|
| (3,393,839) |
| (2,785,545) |
|
|
|
|
|
|
|
|
| Earnings per share from continuing operations: |
|
|
|
|
|
|
| Basic and diluted loss per share |
| 9 |
| (0.031) |
| (0.044) |
|
|
|
|
|
|
|
|
The results above relate to continuing operations.
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2023
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| Notes |
| ? |
| ? |
| ? |
| Assets |
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
| | | | | |
| Intangible assets |
| 10 |
| 184,208 | | 20,617 | | 8,923 |
| Property, plant, and equipment |
| 11 |
| 398,788 | | 346,521 | | 124,212 |
| Right-of-use asset |
| 12 |
| 40,492 | | 219,075 | | 363,910 |
| Loan receivable |
| 13 |
| 50,000 | | - | | - |
| Total non-current assets |
| |
| 673,488 | | 586,213 | | 497,045 |
|
|
| |
| | | | | |
| Current assets |
| |
| | | | | |
| Trade and other receivables |
| 14 |
| 1,595,664 | | 1,251,027 | | 1,040,074 |
| Inventories |
| 15 |
| 1,450,884 | | 629,865 | | 729,868 |
| Corporation tax receivable |
| |
| 71,269 | | 62,412 | | 48,507 |
| Cash and cash equivalents |
| 16 |
| 2,598,501 | | 1,194,440 | | 1,739,935 |
| Total current assets |
| |
| 5,716,318 | | 3,137,744 | | 3,558,384 |
|
|
| |
| | | | | |
| Total assets |
| |
| 6,389,806 | | 3,723,957 | | 4,055,429 |
|
|
| |
| | | | | |
| Equity and liabilities |
| |
| | | | | |
| Equity |
| |
| | | | | |
| Share capital |
| 17 |
| 1,477,482 | | 761,448 | | 761,448 |
| Share premium |
| 17 |
| 8,104,571 | | - | | - |
| Share-based payment reserve |
| |
| 294,367 | | 109,456 | | - |
| Merger reserve |
| |
| 26,932,455 | | 26,932,455 | | 26,932,455 |
| Foreign exchange reserve |
| |
| (35,680) | | (47,839) | | (98,160) |
| Retained losses |
| |
| (30,807,666) | | (27,401,668) | | (24,565,802) |
| Total equity |
| |
| 5,965,529 | | 353,852 | | 3,029,941 |
|
|
| |
| | | | | |
| Liabilities |
| |
| | | | | |
| Non-current liabilities |
| |
| | | | | |
| Lease liability |
| 12 |
| - | | 74,504 | | 322,845 |
| Total non-current liabilities |
| |
| - | | 74,504 | | 322,845 |
| |
| |
| | | | | |
| Current liabilities |
| |
| | | | | |
| Trade and other payables |
| 18 |
| 376,663 | | 436,534 | | 227,154 |
| Convertible loan notes |
| 19 |
| - | | 2,285,030 | | - |
| Lease liability |
| 12 |
| 47,614 | | 170,514 | | 61,130 |
| Borrowings |
| 20 |
| - | | 403,523 | | 414,359 |
| Total current liabilities |
| |
| 424,277 | | 3,295,601 | | 702,643 |
|
|
| |
| | | | | |
| Total liabilities |
| |
| 424,277 | | 3,370,105 | | 1,025,488 |
|
|
| |
| | | | | |
| Total equity and liabilities |
|
|
| 6,389,806 | | 3,723,957 | | 4,055,429 |
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
| Share capital |
| Share premium |
| Share-based payment reserve |
| Merger reserve |
| Foreign exchange reserve |
| Retained losses |
| Total equity |
|
|
| ? |
| ? |
| ? |
| ? |
| ? |
| ? |
| ? |
|
|
| | | | | | | |
| | | | | |
| As at 1 January 2022 |
| 761,448 | | - | | - | | 26,932,455 |
| (98,160) | | (24,565,802) | | 3,029,941 |
|
|
| | | | | | | |
| | | | | |
| Comprehensive income |
| | | | | | | |
| | | | | |
| Loss for the year |
| - | | - | | - | | - |
| - | | (2,835,866) | | (2,835,866) |
| Other comprehensive income |
| - | | - | | - | | - |
| 50,321 | | - | | 50,321 |
| Total comprehensive income for the year |
| - | | - | | - | | - |
| 50,321 | | (2,835,866) | | (2,785,545) |
| Transactions with owners |
| | | | | | | |
| | | | | |
| Share-based payments |
| - | | - | | 109,456 | | - |
| - | | - | | 109,456 |
| As at 31 December 2022 |
| 761,448 | | - | | 109,456 | | 26,932,455 |
| (47,839) | | (27,401,668) | | 353,852 |
|
|
| | | | | | | |
| | | | | |
| Comprehensive income |
| | | | | | | |
| | | | | |
| Loss for the year |
| - | | - | | - | | - |
| - | | (3,405,998) | | (3,405,998) |
| Other comprehensive loss |
| - | | - | | - | | - |
| 12,159 | | - | | 12,159 |
| Total comprehensive income for the year |
| - | | - | | - | | - |
| 12,159 | | (3,405,998) | | (3,393,839) |
| Transactions with owners |
| | | | | | | |
| | | | | |
| Share placing |
| 434,093 | | 6,511,388 | | - | | - |
| - | | - | | 6,945,481 |
| Conversion of convertible loan notes |
| 281,941 | | 2,220,658 | | - | | - |
| - | | - | | 2,502,599 |
| Issue costs |
| - | | (627,475) | | - | | - |
| - | | - | | (627,475) |
| Share-based payments |
| - | | - | | 184,911 | | - |
| - | | - | | 184,911 |
| Total transactions with owners |
| 716,034 | | 8,104,571 | | 184,911 | | - |
| - | | - | | 9,005,516 |
|
|
| | | | | | | |
| | | | | |
| As at 31 December 2023 |
| 1,477,482 | | 8,104,571 | | 294,367 | | 26,932,455 |
| (35,680) | | (30,807,666) | | 5,965,529 |
|
|
| | | | | | | |
| | | | | |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| Notes |
| ? |
| ? |
| Cash flows from operating activities |
|
|
|
|
|
|
| Loss before taxation |
| |
| (3,477,637) | | (2,900,683) |
| Adjustments for: |
| |
| | | |
| Depreciation of property, plant and equipment |
| 11 |
| 67,066 | | 51,685 |
| Loss on derecognition of right-of-use assets |
| 12 |
| - | | 153,232 |
| Amortisation of intangible assets |
| 10 |
| 26,250 | | - |
| Depreciation of right-of-use assets |
| 12 |
| 133,012 | | |
| Finance expense |
| 7 |
| 65,504 | | 212,380 |
| (Profit)/loss on disposal of property, plant and equipment |
| 11 |
| (1,199) | | 1,426 |
| Foreign exchange differences on convertible loan note |
| |
| 182,321 | | - |
| Share-based payment |
| 23 |
| 184,911 | | 109,456 |
| IPO transaction costs |
| |
| 763,315 | | - |
| Net cash used in operating activities before changes in working capital |
| |
| (2,056,457) | | (2,372,504) |
|
|
| |
| | | |
| (Increase)/decrease in inventories |
| 15 |
| (821,019) | | 100,003 |
| Increase in trade and other receivables |
| 14 |
| (294,267) | | (210,953) |
| Decrease/(increase) in trade and other payables |
| 18 |
| (59,871) | | 210,959 |
| Cash used in operating activities |
| |
| (3,231,614) | | (2,272,495) |
| |
| |
| | | |
| Taxation received |
| |
| 62,412 | | 50,914 |
| Net cash used in operating activities |
| |
| (3,169,202) | | (2,221,581) |
|
|
| |
| | | |
| Cash flows from investing activities |
| |
| | | |
| Purchase of property, plant and equipment |
| 11 |
| (131,590) | | (273,752) |
| Purchase of intangible assets |
| 10 |
| (190,134) | | (11,694) |
| Net cash used in investing activities |
| |
| (321,724) | | (285,446) |
|
|
| |
| | | |
| Cash flows from financing activities |
| |
| | | |
| Proceeds from issue of share capital |
| 17 |
| 6,945,481 | | - |
| Cost of share issue |
| 17 |
| (1,390,790) | | - |
| Proceeds from convertible loan notes |
| 19 |
| - | | 2,160,030 |
| Interest paid on borrowings |
| 7 |
| (13,339) | | (49,890) |
| Other interest paid |
| 7 |
| (247) | | (207) |
| Repayment of borrowings |
| |
| - | | (10,836) |
| Loan paid to supplier |
| 13 |
| (100,000) | | - |
| Repayment of related party loan |
| 20 |
| (403,523) | | - |
| Principal paid on lease liabilities |
| 12 |
| (151,415) | | (147,976) |
| Interest paid on lease liabilities |
| 12 |
| (16,670) | | (38,862) |
| Net cash generated from financing activities |
| |
| 4,869,497 | | 1,912,259 |
|
|
| |
| | | |
| Net increase/(decrease) in cash and cash equivalents |
| |
| 1,378,571 | | (594,768) |
|
|
| |
| | | |
| Cash and cash equivalents at beginning of year |
| |
| 1,194,440 | | 1,739,935 |
| Effects of foreign exchange rate movements |
| |
| 25,490 | | 49,273 |
| Cash and cash equivalents at end of year |
|
|
| 2,598,501 | | 1,194,440 |
|
|
|
|
| | | |
Note 24 discloses significant non-cash transactions in relation to the Group's investing activities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1. Corporate information
Ocean Harvest Technology Group Plc (the "Company") is a public limited Company, incorporated and domiciled in the UK. The Company is listed on the AIM market of the London Stock Exchange. The address of the registered office is 41 London Road, Reigate, England, RH2 9RJ. The registered number of the Company is 13411717.
The principal activity of the Company together with its subsidiary undertakings (the "Group") is that of researching, developing, and selling seaweed and ancillary products, largely in the animal feed sector.
2. Accounting policies
(a) Basis of preparation
The Group's consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards ("IAS") and with the requirements of the Companies Act 2006 as applicable to companies reporting under IFRS. The consolidated financial statements have been prepared on historical cost basis and are presented in Euros (?).
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.
These are the Group's first annual consolidated financial statements prepared in accordance with IFRS; the Group previously prepared its annual consolidated financial statements under FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' ("FRS 102"). Therefore, the requirements of IFRS 1 'First-time adoption of First-time Adoption of International Financial Reporting Standards' ("IFRS 1") have been applied in these consolidated financial statements. The date of transition to IFRS is 1 January 2022 and the explanation of transition adjustments is included in note 29.
(b) Going concern
The Directors continue to adopt the going concern basis in the preparation of the financial statements as it is confident of the Group continuing operations into the foreseeable future.
The Board's forecasts for the Group include revenue from existing business, additional future revenues from anticipated new lines of business, potential future capital in-flows, continued operating losses, projected cash-burn of the Group (and taking account of reasonably possible changes in trading performance and also changes outside of expected trading performance) for a minimum period of at least twelve months from the date of approval of these financial statements.
The financial statements have been prepared on the going concern basis which the Directors believe to be appropriate for the following reasons. The Directors have prepared cash flow forecasts for a 12-month period from the date of approval of these financial statements. These have been prepared taking into account trading performance, bank and loan facilities available. They have applied a range of sensitivities to these forecasts and such forecasts and analysis have indicated that sufficient funds should be available to enable the Group to continue in operational existence for a period of at least 12 months from the date of approval of these financial statements by meeting its liabilities as they fall due for payment.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement.
The financial statements at 31 December 2023 show that the Group generated a loss for the year of ?3.4 million (2022: ?2.9 million); with cash used in operating activities of ?3.3 million (2022: ?2.3 million). Group balance sheet also showed cash reserves at 31 December 2023 of ?2.6 million (2022: ?1.2 million).
(c) New and amended standards and interpretations
The Directors intend to adopt new and amended standards and interpretations, if applicable, when they become effective. At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue for the period beginning 1 January 2024 but not yet effective:
· Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Amendments to IAS 1: Classification of Liabilities as Current or Non-current - Deferral of Effective Date - effective 1 January 2024
· Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Noncurrent - Deferral of Effective Date - effective date 1 January 2024
· Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback - effective date 1 January 2024
The directors do not expect that the adoption of these standards will have a material impact on the financial information of the Group or Company in future periods.
(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Director considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights.
The Directors re-assess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group.
All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
(e) Foreign currencies
The functional currency for each entity in the Group is the currency of the primary economic environment in which the entity, or each branch within an entity, operates. The consolidated financial statements are presented in Euros, which is the Group's presentational currency.
Transactions in currencies other than the functional currency of each entity are recorded at the exchange rate on the date the transaction occurred. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in the statement of total comprehensive income.
On consolidation, the results of each entity in the Group with a non-Euro functional currency are translated into Euro at rates approximating to those ruling when the transactions took place. All assets and liabilities of these entities are translated at the rate ruling at the reporting date. The resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
(f) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ("CODM"). The CODM, who is responsible for allocating resources, making strategic decisions, and assessing performance of the operating segments, has been identified as the Board of Directors. The CODM has determined there is one single operating segment, the provision of seaweed products.
(g) Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" is a principle-based model of recognising revenue from contracts with customers. It has a five-step model that requires revenue to be recognised when control over goods and services are transferred to the customer.
The Group earns revenue relating to the sale of animal feed through direct sales. Revenue is recognised at a point in time when the relevant performance obligation is satisfied. The Directors consider the control over goods is transferred to the customer at point of shipment. The performance obligation is considered to be satisfied when the Group dispatches a product to a customer and the bill of lading is signed. Contracts with customers do not contain a financing component or any element of variable consideration.
Other revenue has been recognised for income generated through shipping and delivery of products.
Invoices are raised at the point of shipment. As the Directors consider the significant risks and rewards of ownership of the goods to be transferred at this point, revenue is subsequently measured at this point and does not give rise to any contract assets or liabilities. New customers are required to make a payment on account prior to their first order which are recognised as contract liabilities.
Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
(h) Finance income and expense
Finance income comprises of bank interest received and is recognised in profit or loss when it is earned.
Finance expense comprises of interest payable, lease interest and interest on convertible loan notes which are expensed in the year in which they are incurred.
(i) Taxation
Income tax expense represents the sum of the current tax and deferred tax charge for the year. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity in which case the tax is also recognised in other comprehensive income or directly in equity, respectively.
Current tax
Current tax payable is based on the taxable profit for the year calculated on the basis of the tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases and is accounted for using the balance sheet liability method.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted and are expected to apply in the period when the liability is settled, or the asset realised.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Where applicable, the Group claims research and development tax reliefs in accordance with the Small and Medium Sized Enterprise R&D Relief Scheme. Projects are assessed by the Directors to ensure the claims made fit the criteria and definitions set out by the UK HM Revenue and Customs.
(j) Employee benefits: pension obligations
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position.
(k) Research and development
Research and development expenditure that does not meet the criteria of an intangible asset is recognised as an expense as incurred. Development costs are only capitalised after technical and commercial feasibility of the asset for sale or use have been established. There must be a clear intention to complete the asset and generate future economic benefit from it. If the costs incurred cannot be reliability distinguished between the research phase and development phase, then all costs are expensed as research costs within administrative costs in the consolidated statement of total comprehensive income. Capitalised costs include development trials designed to demonstrate to additional customers the market applications of this product and by providing them with additional data showing results of how the core benefits of the product manifests in particular applications. Development costs are amortised over a 3-year period on project completion.
(l) Intangible assets
Intangible assets are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets comprise internationally registered patents and patent applications for natural and sustainable seaweed formulae that replace synthetic additives in fish and animal feed. Amortisation is recognised on a straight-line basis over their estimated useful lives, which are deemed to be the life of the patents. Amortisation charge is included within administrative expenses in the consolidated statement of total comprehensive income.
(m) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following rates:
Leasehold improvements over the period of the lease
Plant and machinery 15% straight line
Fixtures and fittings 20% reducing balance
Computers 20% straight line
Motor vehicles 25% straight line
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the year in which they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
(n) Inventories
Inventories are stated at the lower of cost or net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Net realisable value is the amount that can be realised from the sale of the inventory in the normal course of business after allowing for the costs of realisation. An allowance is recorded for obsolescence and slow-moving items.
(o) Leases
At inception of a contract, the Directors assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: an identified physically distinct asset can be identified; and the Group has the right to obtain substantially all of the economic benefits from the asset throughout the period of use and has the ability to direct the use of the asset over the lease term being able to restrict the usage of third parties as applicable.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
· Leases of low value assets; and
· Leases with a duration of 12 months or less.
A lease will qualify for the low value asset exemption if the underlying asset is not dependant on, or highly interrelated with, other leased assets and the value of the leased asset is less than ?5,000.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used.
On initial recognition, the carrying value of the lease liability also includes:
· amounts expected to be payable under any residual value guarantee;
· the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to access that option; and
· any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
· the amount of any provision recognised where the Group is contractually required to dismantle, remove, or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the revised discount rate applicable at the date of estimation. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.
(p) Impairment of non-financial assets
Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset or cash generating unit ("CGU") to which the asset has been allocated is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or 'CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
(q) Equity and reserves
An equity instrument is any contract that evidences a residual interest in the assets of a Company after deducting all of its liabilities. Equity instruments issued are recorded at the proceeds received net of direct issue costs.
Share capital
Represents the nominal value of shares that have been issued.
Share premium
Represents the amount subscribed for share capital in excess of nominal value less issue costs.
Share-based payment reserve
Represents the cumulative share-based payment charge for options that are outstanding.
Merger reserve
Merger reserve represents the difference between the carrying value of net assets acquired and the nominal value of the shares issued in the share-for-share exchange as a result of merger accounting that took place in 2021.
Foreign exchange reserve
Represents the cumulative foreign exchange differences.
Retained losses
Retained earnings relate to cumulative net gains and losses less distributions made.
(r) Share-based payments
Equity-settled share-based payment transactions with employee and others providing similar services are at the fair value of the equity instruments at the grant date.
The grant date fair value of share-based payment awards is recognised in profit or loss, with a corresponding increase in the share options reserve, over the period that the employees become unconditionally entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Market vesting conditions are factored into the fair value of the award at grant date. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
When share-based payments awards are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital and the share premium account. The fair value of the awards exercised or forfeited prior to vesting and previously recognised in the share options reserve is transferred to accumulated losses for capital maintenance purposes.
(s) Cash and cash equivalents
Cash and cash equivalents are financial assets and include cash at bank and in hand and short term highly liquid deposits which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities.
(t) Financial assets
The Group's financial assets are measured at amortised cost and comprise trade and other receivables, cash and cash equivalents and a loan to a Group supplier. These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of the sale of goods.
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less expected credit loss ("ECL") allowance.
Other receivables are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less ECL allowance.
The loan to the Group supplier is initially recognised at fair value and is subsequently carried at amortised cost using the effective interest rate method.
Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 'Financial Instruments' ("IFRS 9") using the lifetime expected credit losses. The ECL balance is determined based on historical data available to management in addition to forward looking information utilising management knowledge. For trade receivables, which are reported net; such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for other receivables are recognised based on the general impairment model within IFRS 9. In doing so, the Group follows the 3-stage approach to expected credit losses. Step 1 is to estimate the probability that the debtor will default over the next 12 months. Step 2 considers if the credit risk has increased significantly since initial recognition of the debtor. Finally, Step 3 considers if the debtor is credit impaired, following the criteria under IFRS 9.
(u) Financial liabilities
All financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provision of the instrument.
The Group's financial liabilities measured at amortised cost comprise trade payables, other payables, accruals, lease liabilities, borrowings and convertible loan notes. It does not include other taxation, social security and deferred income.
These financial liabilities are initially measured at fair value net of any transaction costs directly attributable to the issue of the instrument and are subsequently measured at amortised cost using the effective interest rate method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability to the amortised cost of a financial liability.
3. Critical accounting estimates and judgements
The preparation of the financial information in compliance with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise judgement and use assumptions in applying the Group's accounting policies. The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events. The Directors believe that the estimates utilised in preparing the financial information are reasonable and prudent critical accounting judgements and estimates.
Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial information is discussed below:
Key accounting judgements
Research and development
Under IAS 38 Intangible assets, the Directors must assess whether an R&D project in the research phase, when costs incurred are expensed, or in the development phase, when the costs incurred are capitalised. This requires judgement over the technical and commercial feasibility of the project. Total costs capitalised in the year ended 31 December 2023 was ?190,134 (2022: ?nil).
Key accounting estimates and assumptions
Discount rates
IFRS 16 states that the lease payments shall be discounted using the lessee's incremental borrowing rate where the rate implicit in the lease cannot be readily determined. Accordingly, all lease payments have been discounted using the incremental borrowing rate ("IBR"). The IBR has been determined by management using a range of data including current economic and market conditions, review of current debt and capital within the Group, lease length and comparisons against seasoned corporate bond rates and other relevant data points. A range between 10.24%. - 12.66% has been adopted.
Useful economic lives of tangible and intangible assets
The annual depreciation and amortisation charge for tangible and intangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended, when necessary, to reflect current estimates, based on technological advancement, future investments, economic utilisation, and the physical condition of the assets.
Share-based payments
The Directors are required to determine the fair value of equity-settled share-based payments and recognise this as an expense over the period in which the employees become unconditionally entitled to the awards. Therefore, the Directors are required to estimate the fair value of the share-based payments using an option valuation model and need to estimate inputs such as volatility. Where necessary, the directors use an external specialist. In addition to this, the terms of the share-based payments are such that the Directors are required to estimate the number of options expected to vest, and the time period over which these options are expected to vest. The Directors re-assess this estimate at each reporting period. Please refer to note 23 for information on estimates and judgements used.
Carrying value of inventories
Inventories are valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecasts of consumer demand, the promotional, competitive, and economic environment and inventory loss trends.
Estimation of trade receivable provisions
The estimation of the recoverability of the trade receivables has a significant impact throughout the year. The Group measures any impairment of the trade receivables using an expected credit loss model and recognises the lifetime expected losses on all trade receivables.
4. Revenue
All of the Group's revenue was generated from the sale of goods and was recognised at a point in time. The Group considers the control over goods is transferred to the customer at the point of shipment which is when the revenue is recognised.
The CODM reviews the Group's internal reporting in order to assess performance and allocate resources. The CODM has determined that there is one single operating segment, the provision of seaweed products.
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
| Revenue split by type |
|
|
|
|
|
|
| Product sales |
|
|
| 3,029,327 | | 2,513,071 |
| Other revenue |
|
|
| 338,319 | | 495,225 |
| |
|
|
| 3,367,646 | | 3,008,296 |
Other revenue relates to delivery income where delivery costs incurred on behalf of the customer are recharged.
Revenue generated by the Group have been generated from the following geographic regions:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
| Geographic split |
|
|
|
|
|
|
| Europe |
|
|
| 1,017,556 |
| 708,040 |
| North America |
|
|
| 1,847,777 |
| 1,606,208 |
| South America |
|
|
| - |
| 240,902 |
| Asia |
|
|
| 502,313 |
| 453,146 |
| |
|
|
| 3,367,646 |
| 3,008,296 |
|
|
|
|
|
|
|
|
3 customers make up 10% or more of revenue for the period ending 31 December 2023 (2022: 4):
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
| Revenue from customers |
|
|
|
|
|
|
| Customer 1 |
|
|
| 817,465 |
| 525,851 |
| Customer 2 |
|
|
| 528,438 |
| 677,554 |
| Customer 3 |
|
|
| 426,121 |
| 212,484 |
| Customer 4 |
|
|
| - |
| 28,707 |
| Other customers |
|
|
| 1,595,622 |
| 1,563,700 |
| |
|
|
| 3,367,646 |
| 3,008,296 |
|
|
|
|
|
|
|
|
5. Operating loss
Operating loss for the year has been arrived at after charging the following items:
|
|
| Note |
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Employee benefit expenses |
| 6 |
| 1,890,458 |
| 1,676,834 |
| Depreciation of property, plant and equipment |
| 11 |
| 67,066 |
| 51,685 |
| Depreciation of right-of-use assets |
| 12 |
| 133,012 |
| 153,232 |
| Amortisation of intangible assets |
| 10 |
| 26,250 |
| 2,339 |
| Share-based payments |
| 23 |
| 184,911 |
| 109,456 |
| Exchange difference |
| |
| 105,106 |
| (4,863) |
| Inventory impairment |
| |
| 40,573 |
| 42,913 |
| |
|
|
|
|
| |
Auditors' remuneration
During the year, the Group obtained the following services from the Group's auditors:
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| ? |
| ? |
|
|
|
|
|
|
| Fees payables for the audit of the Group's annual accounts |
| 47,290 |
| 30,000 |
| Fees payables for the audit of the Company's subsidiaries |
| 34,603 |
| 49,928 |
| Fees payables for all other pre-IPO non-audit services |
| 201,848 |
| 100,000 |
| |
| 283,741 |
| 179,928 |
|
|
|
|
|
|
6. Employee benefit expenses
Employee benefit expenses consisted of the following:
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| ? |
| ? |
|
|
|
|
|
|
| Wages and salaries | | 1,556,791 | | 1,439,753 |
| Social security contributions and similar taxes | | 134,471 | | 118,764 |
| Pension costs | | 14,285 | | 8,861 |
| Share-based payment expenses | | 184,911 | | 109,456 |
| | | 1,890,458 | | 1,676,834 |
|
|
|
|
|
|
The average monthly number of employees during the year was:
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| Number |
| Number |
|
|
|
|
|
|
| Directors | | 8 | | 7 |
| Employees | | 42 |
| 31 |
| Total | | 50 | | 38 |
| | | | | |
Further details of Directors' remuneration are included in note 25.
7. Finance expense
Finance expense is outlined below:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Interest on borrowings |
|
|
| 13,339 |
| 49,890 |
| Interest on lease liabilities |
|
|
| 16,670 |
| 38,862 |
| Interest on convertible loan notes |
|
|
| 35,248 |
| 123,421 |
| Other interest paid |
|
|
| 247 |
| 207 |
| |
|
|
| 65,504 |
| 212,380 |
8. Taxation
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
| Current tax |
|
|
|
|
|
|
| Current taxation on loss for the year |
|
|
| - |
| - |
| R&D tax credit |
|
|
| (71,639) |
| (64,817) |
| Total current tax |
|
|
| (71,639) |
| (64,817) |
| |
|
|
|
|
|
|
| Deferred tax |
|
|
|
|
|
|
| Obligation and reversal of temporary differences |
|
|
| - |
| - |
| Total deferred tax |
|
|
| - |
| - |
|
|
|
|
|
|
|
|
| Total tax credit |
|
|
| (71,639) |
| (64,817) |
|
|
|
|
|
|
|
|
The total tax credits for the periods presented differ from the standard rate of corporate tax in the UK. The differences are explained below:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Loss for the year |
|
|
| (3,477,637) | | (2,900,683) |
|
|
|
|
| | | |
| Tax at the applicable rate of 23.5% (2022:19%) |
|
|
| (817,245) | | (551,130) |
| Expenses not deductible for tax |
|
|
| 218,557 | | - |
| Additional deduction for R&D expenditure |
|
|
| (78,055) | | (64,817) |
| Effect of tax losses not recognised as deferred tax assets |
|
|
| 611,877 | | 551,130 |
| Other differences leading to an decrease in tax charge |
|
|
| (6,773) | | - |
| Total tax credit for the year |
|
|
| (71,639) |
| (64,817) |
|
|
|
|
|
|
|
|
The main rate of UK corporation tax was 23.5% for the year ended 31 December 2023 (2022: 19%). From 1 April 2023 the UK Government increased the corporation tax rates to 25% on profits above ?284,000. Companies with profits of ?57,000 or less will be taxed at 19% and companies with profits between ?57,000 and ?284,000 will pay tax at 25% that is reduced by marginal relief on a sliding scale.
The Group has tax losses relating to the UK and Ireland carried forward as at 31 December 2023 of ?17,496,375 (2022: ?15,449,334) which can be carried forward indefinitely.
The Group has Vietnamese tax losses carried forward as at 31 December 2023 of ?1,520,134 (VND 40,762,678,527) (2022: ?1,600,997 (VND 40,613,199,683). The losses relating to Vietnam may be carried fully and consecutively for a maximum of five years. Carryback of losses is not permitted.
No deferred tax asset has been recognised in respect of these losses due to uncertainty over future taxable profits.
9. Loss per share
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Loss for the year from continuing operations |
|
|
| (3,405,998) |
| (2,835,866) |
| |
|
|
| |
| |
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| Number |
| Number |
|
|
|
|
|
|
|
|
| Weighted average number of ordinary shares for the purpose of calculating basic earnings per share |
|
|
| 110,095,106 |
| 63,999,613 |
| |
|
|
| | | |
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Basic and diluted loss per share |
|
|
| (0.031) |
| (0.044) |
|
The loss incurred by the Group means that the effect of any outstanding options would be anti-dilutive and is ignored for the purposes of the diluted loss per share calculation. Details of the share options are set out in note 23.
| ||||||
10. Intangible assets
|
|
|
|
| Development costs |
| Patents and licences |
| Total |
|
|
|
|
| ? |
| ? |
| ? |
| Cost |
|
|
|
|
|
|
|
|
| At 1 January 2022 |
|
|
| - |
| 15,602 | | 15,602 |
| Additions |
| | | - | | 14,033 | | 14,033 |
| Exchange rate differences |
| | | - | | 61 | | 61 |
| At 31 December 2022 |
|
|
| - | | 29,696 | | 29,696 |
| |
|
|
|
| | | |
|
| Additions |
|
|
| 190,134 | | - | | 190,134 |
| Exchange rate differences |
|
|
| (373) | | - | | (373) |
| At 31 December 2023 |
|
|
| 189,761 | | 29,696 | | 219,457 |
| |
|
|
|
| | | |
|
| Amortisation |
|
|
|
| | | |
|
| At 1 January 2022 |
|
|
| - | | 6,679 | | 6,679 |
| Charge for the year |
|
|
| - | | 2,339 | | 2,339 |
| Exchange rate differences |
|
|
| - | | 61 | | 61 |
| At 31 December 2022 |
|
|
| - | | 9,079 | | 9,079 |
| |
|
|
|
| | | |
|
| Charge for the year |
|
|
| 21,190 | | 5,060 | | 26,250 |
| Exchange rate differences |
|
|
| (80) | | - | | (80) |
| At 31 December 2023 |
|
|
| 21,110 | | 14,139 | | 35,249 |
| |
|
|
|
| | | |
|
| Net book value |
| | | | |
| |
|
| At 31 December 2023 |
| | | 168,651 | | 15,557 | | 184,208 |
| |
| | | | |
| | |
| At 31 December 2022 |
|
|
| - |
| 20,617 | | 20,617 |
| |
|
|
|
|
| | | |
| At 1 January 2022 |
|
|
| - |
| 8,923 | | 8,923 |
Amortisation charges are included within operating expenses in the consolidated statement of total comprehensive income. Development costs in prior years were immaterial.
11. Property, plant, and equipment
|
|
| Leasehold improvements |
| Plant and machinery |
| Fixtures and fittings |
| Computers |
| Motor vehicles |
| Total |
|
|
| ? |
| ? |
| ? |
| ? |
| ? |
| ? |
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2022 |
| 52,980 |
| 733,271 |
| 141,539 |
| 39,615 |
| 73,833 | | 1,041,238 |
| Additions |
| - | | 269,322 | | 3,819 | | 611 | | - | | 273,752 |
| Disposals |
| - | | - | | (9,761) | | (24,774) | | - | | (34,535) |
| Exchange rate differences |
| - | | 13,197 | | (126) | | - | | - | | 13,071 |
| At 31 December 2022 |
| 52,980 | | 1,015,790 | | 135,471 | | 15,452 | | 73,833 | | 1,293,526 |
| |
|
|
|
| | | |
|
|
|
|
|
| Additions |
| - |
| 58,097 | | - | | 73,493 |
| - |
| 131,590 |
| Disposals |
| (52,980) |
| (205,689) | | (100,047) | | (1,404) |
| (32,720) |
| (392,840) |
| Exchange rate differences |
| - |
| (45,001) | | - | | (10) |
| - |
| (45,011) |
| At 31 December 2023 |
| - |
| 823,197 | | 35,424 | | 87,531 |
| 41,113 |
| 987,265 |
| |
|
|
|
| | | |
|
|
|
|
|
| |
|
|
|
| | | |
|
|
|
|
|
| Depreciation |
|
|
|
| | | |
|
|
|
|
|
| At 1 January 2022 |
| 52,980 | | 652,644 | | 124,484 | | 33,641 | | 53,277 | | 917,026 |
| Charge for the year |
| - | | 23,873 | | 5,672 | | 1,585 | | 20,555 | | 51,685 |
| Eliminated due to disposals |
| - | | - | | (8,336) | | (24,773) | | - | | (33,109) |
| Exchange rate differences |
| - | | 11,225 | | 178 | | - | | - | | 11,403 |
| At 31 December 2022 |
| 52,980 | | 687,742 | | 121,998 | | 10,453 | | 73,832 | | 947,005 |
| |
|
|
|
| | | |
|
|
|
|
|
| Charge for the year |
| - |
| 60,836 | | 1,425 | | 4,805 | | - | | 67,066 |
| Eliminated due to disposals |
| (52,980) |
| (205,689) | | (100,758) | | (1,892) | | (32,720) | | (394,039) |
| Exchange rate differences |
| - |
| (31,817) | | - | | 261 | | 1 | | (31,555) |
| At 31 December 2023 |
| - |
| 511,072 | | 22,665 | | 13,627 | | 41,113 | | 588,477 |
| |
|
|
|
| | | |
|
|
|
|
|
| Net book value |
| | | | |
| |
|
|
|
|
|
| At 31 December 2023 |
| - | | 312,125 | | 12,759 | | 73,904 | | - | | 398,788 |
| |
| | | | |
| | | | | | |
| At 31 December 2022 |
| - | | 328,048 | | 13,473 | | 4,999 | | 1 | | 346,521 |
| |
| | | | | | | | | | | |
| At 1 January 2022 |
| - | | 80,627 | | 17,055 | | 5,974 | | 20,556 | | 124,212 |
Depreciation is charged to operating expenses within the statement of total comprehensive income.
12. Leases
The Group leases assets in the jurisdictions from which it operates with all lease payments, in-substance, fixed over the lease term. Where there are leasehold properties which hold a variable element to lease payments made these are not fixed and not capitalised as part of the right of use asset. All expected future cash out flows are reflected within the measurement of the lease liabilities at each year end.
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| Number |
| Number |
| Number |
|
|
|
|
|
|
|
|
| Number of active leases |
| 1 |
| 2 | | 2 |
|
|
|
|
|
|
|
|
The Group lease relates to leasehold properties for commercial and head office use. The current lease commenced in 2018 with a lease term of 6 years.
Extension, termination and break options
The Group negotiates extension, termination, or break clauses in its leases. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). On a case-by-case basis, the Group will consider whether the absence of a break clause would expose the Group to excessive risk. Typically, factors considered in deciding to negotiate a break clause include:
· The length of the lease term;
· The economic stability of the environment in which the property is located; and
· Whether the location represents a new area of operations for the Group.
Incremental borrowing rate
The Group has historically adopted a rate with a range of 10.24% - 12.66% as its incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The rate adopted on the single current lease as at 31 December 2023 is 12.66%. This rate is used to reflect the risk premium over the borrowing cost of the Group measured by reference to the Group's facilities. The incremental borrowing rate includes an additional risk premium on a lease based in Vietnam and denominated in Vietnamese Dong (VND).
Right-of-use assets
|
|
|
|
|
|
| Leasehold property |
|
|
|
|
|
|
|
| ? |
|
| Cost |
|
|
|
|
|
|
|
| At 1 January 2022 |
|
|
|
|
| 813,068 |
|
| Exchange rate differences |
| | | | | 14,990 | |
| At 31 December 2022 |
|
|
|
| | 828,058 | |
| |
|
|
|
| | | |
| Additions |
|
|
|
| | - | |
| Disposals |
|
|
|
| | (148,459) | |
| Exchange rate differences |
|
|
|
| | (11,294) | |
| At 31 December 2023 |
|
|
|
| | 668,305 | |
| |
|
|
|
| | | |
| Accumulated depreciation |
|
|
|
| | | |
| At 1 January 2022 |
|
|
|
| | 449,158 | |
| Charge for the year |
|
|
|
| | 153,232 | |
| Exchange rate differences |
|
|
|
| | 6,593 | |
| At 31 December 2022 |
|
|
|
| | 608,983 | |
| |
|
|
|
| | | |
| Charge for the year |
|
|
|
| | 133,012 | |
| Disposals |
|
|
|
| | (106,535) | |
| Exchange rate differences |
|
|
|
| | (7,647) | |
| At 31 December 2023 |
|
|
|
| | 627,813 | |
| |
|
|
|
| | | |
| Net book amount |
| | | | |
| |
| At 31 December 2023 |
| | | | | 40,492 | |
| |
| | | | |
| |
| At 31 December 2022 |
|
|
|
|
| 219,075 | |
| |
|
|
|
|
| | |
| At 1 January 2022 |
|
|
|
|
| 363,910 | |
Lease liabilities
|
|
|
|
|
|
| Leasehold property |
|
|
|
|
|
|
|
| ? |
|
|
|
|
|
|
|
|
|
|
| At 1 January 2022 |
|
|
|
|
| 383,975 |
|
| Interest expense |
| | |
| | 38,862 | |
| Lease payments |
| | |
| | (186,838) | |
| Exchange adjustments |
| | | | | 9,019 | |
| At 31 December 2022 |
|
|
|
| | 245,018 | |
| |
|
|
|
| | | |
| Disposals |
|
|
|
| | (41,924) | |
| Interest expense |
|
|
|
| | 16,670 | |
| Lease payments |
|
|
|
| | (168,085) | |
| Exchange adjustments |
|
|
|
| | (4,065) | |
| At 31 December 2023 |
|
|
|
| | 47,614 | |
| |
|
|
|
| | | |
Reconciliation of current and non-current lease liabilities is detailed below:
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
|
|
|
|
|
|
| |
| Current |
| 47,614 |
| 170,514 |
| 61,130 |
| Non-current |
| - |
| 74,504 |
| 322,845 |
| Total |
| 47,614 |
| 245,018 |
| 383,975 |
13. Loan receivable
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
|
|
|
|
| | | |
| Amounts due from BeoBio |
| 50,000 |
| - | | - |
|
|
|
|
| | | |
The Group advanced a ?100,000 loan to BeoBio Teoranta ("BeoBio"), a Company registered in Ireland, in July 2023. BeoBio supplies the Group with raw materials. The term of the loan is 2 years and interest is charged at 10% per annum in the event that BeoBio fail to meet a supply commitment for two consecutive quarters. The supply commitment relates to raw materials being supplied to the Group.
As at 31 December 2023, no further advances or repayments have been made and no interest has been charged. The directors recognised the loan at amortised cost. The loan has been recognised appropriately between non-current assets and current assets as determined by the dates the amounts are due to be repaid.
14. Trade and other receivables
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
| Amounts due in less than 1 year: |
|
|
|
|
|
|
| Trade receivables |
| 871,324 | | 915,912 |
| 822,863 |
| Other receivables | | 387,580 | | 218,830 |
| 107,764 |
| Amounts due from BeoBio | | 50,000 | | - | | - |
| Prepayments | | 286,760 | | 116,285 | | 109,447 |
| | | 1,595,664 | | 1,251,027 | | 1,040,074 |
| | | | | | | |
Trade receivables are amounts due from customers for services performed in the ordinary course of business. The Group negotiates the terms and payment conditions with each customer separately. The amounts due from customers are generally due for settlement within 45 days, but the Group does offer extended credit terms to certain customers. For new customers, the Group adopts a policy whereby 50% of the payment is due before fulfilment of any order. Any amounts received in advance are held as a contract liability and recognised in revenue on dispatch.
Other receivables include deposits and recoverable VAT.
Analysis of trade receivables based on age of invoices:
| |
| Current |
| 31 - 60 |
| 61 - 90 |
| > 90 |
| Total Gross |
| ECL |
| Total Net |
|
|
| ? | | ? | | ? | | ? | | ? | | ? | | ? |
| Expected Credit Loss rate |
| 0% |
| 0% |
| 0% |
| 0% |
| - |
| - | | - |
| 31 December 2023 |
| 586,753 |
| 165,539 |
| 55,103 |
| 63,929 |
| 871,324 |
| - | | 871,324 |
| 31 December 2022 |
| 384,362 |
| 349,046 |
| 3,662 |
| 178,842 |
| 915,912 |
| - | | 915,912 |
| 1 January 2022 |
| 540,194 | | 159,850 |
| 3,099 |
| 119,720 |
| 822,863 |
| - | | 822,863 |
| | |
| | |
|
|
| |
| |
| | | |
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. In measuring the expected credit loses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. During the assessment it was noted that evidence of historical loss was minimal and would not result in a material impact to the group. Additionally, no customer specific circumstances or future economic conditions that could adversely impact recoverability were identified. As such, the expected credit loss rate was deemed to be nil in the year ending 31 December 2023.
No ECL allowance is made against other receivables, and none have been written off (2022: ?nil).
15. Inventories
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
| Inventories |
| 1,450,884 |
| 629,865 |
| 729,868 |
|
|
|
|
|
|
|
|
The cost of Group inventories recognised as an expense in the year ended 31 December 2023 amounted to ?1,501,417, (2022: ?1,134,331) respectively. These costs are included within cost of sales in the consolidated statement of comprehensive income.
16. Cash and cash equivalents
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
|
|
|
|
|
|
|
|
| Cash at bank and in hand | | 2,598,501 |
| 1,194,440 | | 1,739,935 |
| | |
|
|
|
|
|
17. Share capital and share premium
|
| | | | Share capital |
| Share premium |
| Total |
| Called up and fully paid ordinary shares of £0.01 each | | Number | | ? |
| ? |
| ? |
| | | | | | | |
|
|
| At 1 January 2022 and 31 December 2022 | | 63,999,613 | | 761,448 | | - |
| 761,448 |
| Share placing | | 37,500,000 | | 434,093 | | 6,511,388 |
| 6,945,481 |
| Conversion of convertible loan notes | | 24,356,084 | | 281,941 | | 2,220,658 | | 2,502,599 |
| Issue costs | | - | | - | | (627,475) | | (627,475) |
| At 31 December 2023 | | 125,855,697 | | 1,477,482 | | 8,104,571 | | 9,582,053 |
| |
|
|
|
|
|
|
|
|
On 4 April 2023, the entire issued share capital of the Company was admitted to trading on AIM and the Company successfully raised £6,000,000 (?6,945,481) gross proceeds by placing 37,500,000 new Ordinary Shares at £0.16 per share. As part of the admission, the convertible loan notes converted to 24,356,084 ordinary shares. Further details on the conversion can be found in note 19.
The total costs in relation to the issuance of shares and the listing was ?1,390,790. Of the total costs incurred, direct costs of ?627,475 relating to the issuance of shares have been capitalised as part of the share premium. The costs associated with the listing have been expensed and amounted to ?763,315.
All share classes rank pari passu, including voting and distribution rights and repayment of capital in the event of winding up. There are no restrictions on the transfer of shares.
18. Trade and other payables
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
|
|
|
|
|
|
|
|
| Trade payables | | 125,354 |
| 64,166 | | 78,812 |
| Other payables | | 24,412 |
| 161,818 | | 33,041 |
| Taxation and social security | | 56,081 |
| 48,550 | | 46,075 |
| Accruals | | 170,816 |
| 162,000 | | 69,226 |
| | | 376,663 | | 436,534 | | 227,154 |
|
|
|
|
|
|
|
|
19. Convertible loan notes
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
|
|
| Convertible loan notes |
| - |
| 2,285,030 | | - |
|
|
|
|
|
|
|
|
On 23 June 2022, the Company issued £2,025,000 of convertible loan notes ("CLNs") to existing shareholders in order to fund the continuing operations and development activities of the Group in advance of the Company's IPO. £1,000,000 were subscribed by Terance Butler Holdings Limited, £700,000 were subscribed by Heaton Holdings Limited, £200,000 were subscribed by Ashley Head, £100,000 were subscribed by Mark Williams, £12,500 were subscribed for by Hadden Graham and £12,500 were subscribed for by Graham Ellis.
The CLNs convert into fully paid ordinary shares in the Company based on a range of factors, including the share price of the Company on the date of conversion, the principal and accrued interest on the CLNs at the date of conversion, as well as a discount to the share price related to whether the CLNs are converted before or after certain dates outlined in the agreement. In certain scenarios outlined within the CLN agreement, the holder can also redeem up to 75% of the principal and accrued interest thereon in cash. The CLNs accrue interest on the principal amount at 10% per annum from the date on which the CLNs are issued up to and including the 31 December 2022 and 6% per annum thereafter, with mandatory conversion at 1 September 2023 if certain other events have not occurred.
The CLNs meet the definition of financial liabilities and are carried at amortised cost, with the interest expense recognised in profit or loss.
The CLN's converted into 24,356,084 fully paid shares in the Company upon admission to trading on AIM on 4 April 2023 at a discount of 30% and 45% to the issue price.
20. Borrowings
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
| ? |
| ? |
| ? |
|
|
|
|
| | | |
| Amounts due to Heaton Holdings Limited |
| - |
| 403,523 | | 414,359 |
|
|
|
|
| | | |
Related party loans
The Group had a working capital loan with Heaton Holdings Limited, a related party in which Stuart Waring (a former director of the Company) is a director. Interest was charged at 10 per cent per annum upon amounts drawn down. The loan was secured by a fixed charge over the Group's assets.
During the year ended 31 December 2023 the balance of the loan was repaid in full. Interest charged during the period totalled ?13,339 (2022: ?49,890). Further details of the interest and repayments can be found in note 25.
21. Investments in subsidiaries and associate
The subsidiary undertakings of the Group are detailed below:
List of subsidiary undertakings
| Name and registered office address | Country of incorporation and residence | Registered address | Nature of the business | Proportion of equity shares held by the business |
| | | | | |
| Ocean Harvest Technology Limited | Ireland | Unit 5, Milltown Business Park, County Galway, H54 D722, Ireland. | Preparation of animal feed | 100% (Direct) |
| Ocean Harvest Technology Company Limited | Vietnam | Factory No.18, Lot CN6, H2 Street, Kim Huy Industrial Park, Thu Dau Mot City, Binh Duong Province, Vietnam | Preparation of animal feed | 100% (Indirect) |
| Ocean Harvest Technology (UK) Limited | England & Wales | 41 London Road, Reigate, England, RH2 9RJ. | Preparation of animal feed | 100% (Indirect) |
| | | | | |
22. Financial instruments
Categories of financial instruments
Financial assets are not measured at fair value and due to their short-term nature, the carrying value approximates their fair value. They comprise trade receivables, other receivables, a loan to a Group supplier and cash at bank. It does not include corporation tax or prepayments.
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
|
|
| ? |
| ? |
| ? |
| Financial assets at amortised cost: |
| | | | | | | |
| Trade receivables |
| | | 871,324 | | 915,912 | | 822,863 |
| Other receivables |
| | | 22,657 | | 218,830 | | 107,764 |
| Loan to BeoBio |
| | | 100,000 | | - | | - |
| Cash and cash equivalents |
| | | 2,598,501 | | 1,194,440 | | 1,739,935 |
| |
| | | 3,592,482 |
| 2,329,182 | | 2,670,562 |
| |
| | | |
| | | |
Financial liabilities measured at amortised cost comprise trade payables, other payables, accruals, lease liabilities, borrowings and convertible loan notes. It does not include other taxation, social security and deferred income.
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
|
|
| ? |
| ? |
| ? |
| Financial liabilities at amortised cost: |
|
|
| | | | | |
| Trade and other payables |
|
|
| 125,354 | | 64,166 | | 78,812 |
| Other payables |
|
|
| 21,696 | | 161,818 | | 33,041 |
| Accruals |
|
|
| 170,816 | | 162,000 | | 69,226 |
| Lease liabilities |
|
|
| 47,614 | | 170,514 | | 61,130 |
| Borrowings |
|
|
| - | | 403,523 | | 414,359 |
| Convertible loan notes |
|
|
| - | | 2,285,030 | | - |
|
|
| | | 365,480 | | 3,247,051 | | 656,568 |
The Directors consider that the carrying amounts of the financial instruments approximate to their fair value. The Group has no derivative foreign exchange contracts outstanding at the reporting dates.
Financial risk management
The Group is exposed through its operation to the following financial risks: credit risk, foreign exchange risk and liquidity risk. Risk management is carried out by the directors of the Group. The Group uses financial instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific financial risks to which it is exposed.
The Group finances its operations through a mixture of debt finance, cash and liquid resources and various items such as trade debtors and trade payables which arise directly from the Group's operations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. In order to minimise the risk, the Group endeavours only to deal with companies which are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk is the carrying value of its financial receivables, trade and other receivables and cash and cash equivalents as disclosed in the notes to the historical financial information.
The receivables' age analysis is evaluated on a regular basis for potential doubtful debts, considering historic, current and forward-looking information. Impairments are made to trade receivables when management consider the debt unlikely to be received. No impairment against trade receivables was made in the year ended 31 December 2023 (2022: none). Further disclosures regarding trade and other receivables are provided in note 14.
Credit risk also arises on cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "B+" are accepted. Currently all financial institutions whereby the Group holds significant levels of cash are rated from AA- to A+.
Foreign exchange risk
The Group operates internationally and is exposed to currency risk arising on cash and cash equivalents, receivables and payables denominated in a currency other than the respective functional currencies of the Group entities, which are primarily Euros, Sterling, US Dollar and Vietnamese Dong (VND). The Group's and Company's net exposure to foreign currency risk at the reporting date is as follows:
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
|
|
| ? |
| ? |
| ? |
| Net foreign currency financial assets/(liabilities) |
|
|
| | | | | |
| Sterling |
|
|
| 440,228 | | 757,392 | | 51,454 |
| US Dollar |
|
|
| 816,310 | | 863,862 | | 539,274 |
| Total net exposure |
| | | 1,256,538 | | 1,621,254 | | 590,728 |
Sensitivity analysis
A 10% strengthening of the Euro against the Group's primary currencies at the respective reporting dates below would have increased/(decreased) equity and profit or loss by the amounts shown below:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
| 1 Jan 2022 |
|
|
|
|
| ? |
| ? |
| ? |
| GBP |
|
|
| | | | | |
| Effect on equity |
| +10% |
| (44,022) | | (75,739) | | (5,145) |
| Effect on loss |
| +10% |
| 44,022 | | 75,739 | | 5,145 |
| |
|
|
| - | | - | | - |
| USD |
|
|
| | | | | |
| Effect on equity |
| +10% |
| (81,631) | | (86,386) | | (53,927) |
| Effect on loss |
| +10% |
| 81,631 | | 86,386 | | 53,927 |
| |
|
|
| - | | - | | - |
| |
|
|
| | | | | |
Liquidity risk
The Group seeks to maintain sufficient cash balances. Management reviews cash flow forecasts on a regular basis to determine whether the Group has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities.
A maturity analysis of the Group's undiscounted cash flows arising from financial liabilities (exclusive of interest amounts) is shown below:
|
|
| Less than 1 year |
| Between 1 and 5 years |
|
| Total |
| 2023 | | ? |
| ? |
|
| ? |
| Trade payables | | 125,354 | | - | | | 125,354 |
| Other payables | | 21,696 | | - | | | 21,696 |
| Lease liabilities | | 49,428 | | - | | | 49,428 |
| Accruals | | 170,816 | | - | | | 170,816 |
| | | 367,294 | | - | | | 367,294 |
| | | | | | | | |
| 2022 | | | | | | | |
| Trade payable | | 64,166 | | - | | | 64,166 |
| Other payables | | 161,818 | | - | | | 161,818 |
| Convertible loan notes | | 2,285,030 | | - | | | 2,285,030 |
| Lease liabilities | | 168,085 | | 74,504 | | | 242,589 |
| Borrowings | | 403,523 | | - | | | 403,523 |
| Accruals | | 162,000 | | - | | | 162,000 |
| | | 3,244,622 | | 74,504 | | | 3,319,126 |
| | | | | | | | |
Capital disclosures
The capital structure of the business consists of debt and equity. Equity comprises share capital, share premium, merger reserve, foreign exchange differences reserve, retained earnings and is equal to the amount shown as 'Equity' in the statement of financial position. Debt comprises borrowings and convertible loan notes.
The Group's current objectives when maintaining capital are to:
- Safeguard the Group's ability as a going concern so that it can continue to pursue its growth plans;
- Provide a reasonable expectation of future returns to shareholders; and
- Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt.
23. Share-based payments
The Group operates two employee share option schemes that are accounted for as equity-settled share-based payments.
Share Options Plan
On 29 March 2023 the Company granted 10,952,244 share options to certain directors of the Company as detailed below:
| Date of grant |
| Director |
| No. of options |
| Exercise price (£) |
| Vesting conditions |
| Contractual life of options |
|
|
| |
|
|
|
|
|
|
|
|
| 29 March 2023 |
| Mark Williams |
| 391,464 |
| 0.01 | | Immediate | | 10 years |
| 29 March 2023 |
| Mark Williams |
| 924,439 |
| 0.01 | | Upon admission | | 10 years |
| 29 March 2023 |
| Mark Williams |
| 5,478,770 |
| 0.01 | | Various share price targets | | 10 years |
| 24 March 2023 |
| Hadden Graham |
| 1,385,857 |
| 0.01 | | Various share price targets | | 10 years |
| 29 March 2023 |
| Adrian Crockett |
| 1,385,857 |
| 0.01 | | Various share price targets | | 10 years |
| 29 March 2023 |
| Ian Hutchinson |
| 593,939 |
| 0.01 | | Various share price targets | | 10 years |
| 29 March 2023 |
| Basil Kennedy |
| 791,918 |
| 0.01 | | Various share price targets | | 10 years |
| |
| | | | | | | | | |
All options granted are subject to a 12-month holding period from the date of vesting and may not be exercised whilst the Company's share price is below £0.192.
With the exception of 1,315,903 options granted to Mark Williams which vested immediately and on admission to AIM, the options are split into tranches with each tranche vesting once a share price target for that tranche has been met and, if applicable, a minimum of 2 years' service has been completed. The options therefore have a variable vesting period and in accordance with the applicable accounting standard the Directors have to estimate the most likely vesting period on grant date.
The fair value of the options and the expected vesting period was calculated at the date of grant using the Monte Carlo Model with the following key assumptions:
| Grant date | 29 March 2023 |
| Share price target range | £0.31 to £0.80 |
| Minimum share price on exercise | £0.19 |
| Exercise price | £0.01 |
| Risk free rate (10 year UK gilts) | 3.40% |
| Annualised volatility (based on peer Group companies) | 47.98% |
| Expected dividend yield | 0.00% |
| Exercise date | Once vested |
| Contractual life | 10 years |
| | |
The fair value of the options granted ranged between £0.06 and £0.12. The expected vesting period of the options was 10 years (except for the 1,315,903 options vested immediately and on admission to AIM).
Details of the number of share options granted, exercised, lapsed and outstanding at the end of the period, as well as the weighted average exercise prices in GBP as follows:
| | Number |
| Weighted Average Exercise Price |
| |
|
| £ |
| | | | |
| At 1 January 2023 | - | | - |
| Granted during the year | 10,952,244 | | 0.01 |
| Lapsed during the year | (462,219) | | 0.01 |
| Forfeited during the year | (1,385,857) | | 0.01 |
| At 31 December 2023 | 9,104,168 | | 0.01 |
| | | | |
| Total outstanding | 9,104,168 | | 0.01 |
| Total exercisable | - | | - |
The weighted average remaining contractual life of the options is 9 years and 91 days. The total share-based payment charge relating to the above options is ?180,128 (2022: ?109,456).
Other options
On 29 March 2023, the Company also granted a total of 180,000 ordinary shares under a separate option agreement to non-executive directors. The terms and conditions of the grants are detailed below:
| Date of grant |
| Director |
| No. of options |
| Exercise price (£) |
| Vesting conditions |
| Contractual life of options |
|
|
| |
|
|
|
|
|
|
|
|
| 29 March 2023 | | David Tilston | | 90,000 | | 0.16 | | 2-year service period | | 10 years |
| 29 March 2023 | | Christine Maggs | | 90,000 | | 0.16 | | 2-year service period | | 10 years |
| |
| | | | | | | | | |
The fair value of the options granted was calculated using the Black Scholes Model with the following assumptions:
| Grant date | 29 March 2023 |
| Exercise prices | £0.16 |
| Risk free rate | 3.40% |
| Expected volatility | 47.98% |
| Expected dividend yield | 0.00% |
| Exercise date | 29 March 2025 |
| Contractual life | 10 years |
| | |
The weighted average contractual life of the options is 9 years and 91 days. All options remain outstanding, and none are exercisable.
The total charge for the ended 31 December 2023 in respect of the two options schemes was ?4,783 (£4,244) and was recognised in profit or loss.
24. Changes in liabilities from financing activities
|
|
| Opening balance |
| Financing cash flows |
| Interest charge |
|
| Exchange movements |
| Other non-cash changes |
| Closing balance |
|
|
| ? |
| ? |
| ? |
|
| ? |
| ? |
| ? |
| 2022 |
|
|
|
|
| | | | | | | | |
| Lease liabilities |
| 383,975 |
| (186,838) |
| 38,862 | | | 9,019 | | - | | 245,018 |
| Convertible loan notes |
| - |
| 2,160,030 |
| - | | | - | | 125,000 | | 2,285,030 |
| Borrowings |
| 414,359 |
| (60,726) |
| 49,890 | | | - | | - | | 403,523 |
| Total |
| 798,334 |
| 1,912,466 |
| 88,752 | | | 9,019 | | 125,000 | | 2,933,571 |
| |
|
|
|
|
| | | | | | | | |
| 2023 |
|
|
|
|
| | | | | | | | |
| Lease liabilities |
| 245,018 |
| (168,085) |
| 16,670 | | | (4,065) | | (41,924) | | 47,614 |
| Convertible loan notes |
| 2,285,030 |
| - |
| 35,248 | | | 182,321 | | (2,502,599) | | - |
| Borrowings |
| 403,523 |
| (416,862) |
| 13,339 | | | - | | - | | - |
| Total |
| 2,933,571 |
| (584,947) |
| 65,257 | | | 178,256 | | (2,544,523) | | 47,614 |
| |
|
|
|
|
| | | | | | | | |
Other non-cash changes relates to the conversion of convertible loan notes into ordinary shares of the Company and the remeasurement of a lease liability.
25. Related party transactions
Key management personnel
Key management personnel include all Directors of the Company and certain senior employees, who together have authority and responsibility for planning, directing, and controlling the activities of the Group's business.
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Wages and salaries | | | | 1,046,916 | | 521,818 |
| Social security contributions and similar taxes | | | | 127,076 | | 69,638 |
| Pension costs | | | | 10,464 | | 2,919 |
| Share-based payment expenses | | | | 184,911 | | 109,456 |
| | | | | 1,369,367 | | 703,831 |
|
|
|
|
|
|
|
|
The number of Directors participating in defined contribution pension as at 31 December 2022 and 2023 was 8.
Details of Directors' remuneration are as follows:
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Wages and salaries | | | | 834,082 | | 442,258 |
| Social security contributions and similar taxes | | | | 103,669 | | 60,847 |
| Pension costs | | | | 5,788 | | 1,418 |
| Share-based payment expenses | | | | 184,911 | | 109,456 |
| | | | | 1,128,450 | | 613,979 |
|
|
|
|
|
|
|
|
(ii) Purchases of services
During the year ended 31 December 2023, the Group paid ?nil to Heaton Holdings Limited (2022: ?9,960), a Company in which Stuart Waring is a director and shareholder. The Company provided administrative coordination services and Company secretarial services to the Group. All transactions were conducted at arm's length. As at the year end, the balance due to Heaton Holdings Limited in relation to these services was ?nil (2022: ?nil; 2021: ?nil).
Other transactions
Other transactions with related parties included a working capital loan, detailed in note 20 and subscription and subsequent conversion of convertible loan notes detailed in note 19.
26. Capital commitments
The Group had no capital commitments as at 31 December 2023 (2022: none; 2021: none).
27. Ultimate controlling Party
The directors do not consider there to be one ultimate controlling party.
28. Events after the reporting date
There were no significant events after the reporting date and up to the date of approval of these financial statements.
29. Transition to IFRS
The Group's date of transition to IFRS is 1 January 2022. This note details the principal adjustments made by the Group in restating its FRS 102 financial statements, including the statement of financial position as at 1 January 2022 and the financial statements as of, and for, the year ended 31 December 2022.
The Company was incorporated on 20 May 2021 and remained a shell Company until it became the parent Company of the Group via a share-for-share exchange on 31 December 2021. The accounting treatment of the transaction under FRS 102 is consistent with IFRS and does not result in any adjustments.
During the year ended 31 December 2022, the Company issued convertible loan notes ("CLN") detailed in note 19. Under FRS 102, the CLNs did not meet the definition of 'basic financial instruments' and thus were carried at fair value through profit or loss. Under IFRS the CLNs met the definition of financial liabilities and thus are carried at amortised cost. As at 31 December 2022 the fair value of the CLNs was equal to their amortised cost resulting in no adjustment to the statement of comprehensive income or the statement of financial position.
The only adjustments on transition to IFRS are as a result of the application of IFRS 16 to the leases held by the Group. As disclosed in note 2(p), the Group recognises lease liabilities and right-of-use assets, whilst under FRS 102 all leases held by the Group were operating leases with rental expense charged to profit or loss as incurred. The full retrospective approach for lease accounting was adopted on transition. As one of the leases was held by an overseas subsidiary, there was a consequential adjustment to the foreign exchange reserve.
IFRS Transition
i) Right of use assets of ?363,910 was recognised in the period ended 31 December 2021. A decrease of ?144,835 was recognised in the period ended 31 December 2022
ii) Lease liabilities of ?383,975 was recognised in the period ended 31 December 2021. A decrease of ?138,957 was recognised in the period ended 31 December 2022.
iii) Increase finance costs by ?38,862 in the period ended 31 December 2022, relating to IFRS 16.
iv) Decrease in operating expenses by ?33,606 in the period ended 31 December 2022.
The reconciliation of the amounts presented under FRS 102 to the restated amounts under IFRS are shown below.
Effect of IFRS adoption on the consolidated statement of financial position
|
|
| 1 January 2022 |
| 31 December 2022 | ||||||||
|
|
| FRS 102 |
| IFRS 16 adj |
| IFRS |
| FRS 102 |
| IFRS 16 adj |
| IFRS |
|
|
| ? |
| ? |
| ? |
| ? |
| ? |
| ? |
| Assets |
| | | | | |
| | | | | |
| Non-current assets |
| | | | | |
| | | | | |
| Right of use asset | | - | | 363,910 | | 363,910 | | - | | 219,075 | | 219,075 |
| Total non-current assets | | - | | 363,910 | | 363,910 | | - | | 219,075 | | 219,075 |
| | | | | | | | | | | | | |
| Total assets | | - | | 363,910 | | 363,910 | | - | | 219,075 | | 219,075 |
| | | | | | | | | | | | | |
| Equity and liabilities | | | | | | | | | | | | |
| Equity | | | | | | | | | | | | |
| Foreign exchange reserve | | - | | (98,160) | | (98,160) | | - | | (47,839) | | (47,839) |
| Retained earnings | | (24,696,073) | | 78,095 | | (24,565,802) | | (27,423,564) | | 21,896 | | (27,401,668) |
| Total equity | | (24,696,073) | | (20,065) | | (24,663,962) | | (27,423,564) | | (25,943) | | (27,449,507) |
| | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | |
| Non-current liabilities | | | | | | | | | | | | |
| Lease liability | | - | | 322,845 | | 322,845 | | - | | 74,504 | | 74,504 |
| Total non-current liabilities | | | | 322,845 | | 322,845 | | - | | 74,504 | | 74,504 |
| | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | |
| Lease liability | | - | | 61,130 | | 61,130 | | - | | 170,514 | | 170,514 |
| Total current liabilities | | - | | 61,130 | | 61,130 | | - | | 170,514 | | 170,514 |
| | | | | | | | | | | | | |
| Total equity and liabilities | | (24,696,073) | | 363,910 | | (24,181,827) | | (27,423,564) | | 219,075 | | (27,204,489) |
| | | | | | | | | | | | | |
Effect of IFRS adoption on the consolidated statement of comprehensive income for the year end 31 December 2022
|
|
|
|
| FRS 102 |
| IFRS 16 adj |
| IFRS |
|
|
|
|
| ? |
| ? |
| ? |
|
|
| |
|
|
|
|
|
|
| Revenue |
| |
| 3,008,296 |
| - |
| 3,008,296 |
| Cost of Sales |
| |
| (2,229,108) |
| - |
| (2,229,108) |
| Gross Profit |
| |
| 779,188 |
| - |
| 779,188 |
|
|
| |
|
|
| |
|
|
| Operating expenses |
| |
| (3,501,097) |
| 33,606 |
| (3,467,491) |
| Operating loss |
| |
| (2,721,909) | | 33,606 | | (2,688,303) |
|
|
| |
|
|
| |
|
|
| Finance costs |
| |
| (173,518) |
| (38,862) |
| (212,380) |
| Loss before taxation |
| |
| (2,895,427) |
| (5,256) |
| (2,900,683) |
| Taxation |
| |
| 64,817 | | - | | 64,817 |
| Loss for the year |
| |
| (2,830,610) |
| (5,256) |
| (2,835,866) |
|
|
| |
|
|
| |
| |
| Other comprehensive loss |
| |
|
|
| |
| |
| Currency translation differences |
| |
| 50,943 |
| (622) |
| 50,321 |
| Other comprehensive income, net of tax |
| |
| 50,943 | | (622) | | 50,321 |
|
|
| |
| |
| |
| |
| Total comprehensive loss for the year |
| |
| (2,779,667) | | (5,878) | | (2,785,545) |
|
|
| |
|
|
| |
|
|
The transition to IFRS has impacted the presentation of items within the consolidated cash flow statement. The implementation of IFRS 16 has resulted in ?147,976 of payments being recognised within cash flows from financing activities, which were previously presented under cash flows from operating activities, during the year ended 31 December 2022.
Company Statement of Financial Position
AS AT 31 DECEMBER 2023
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
| Notes |
| ? |
| ? |
| Assets |
|
|
|
|
|
|
| Non-current assets |
|
|
| | | |
| Investments |
| 5 |
| 1,043,719 | | 870,904 |
| Other receivables |
| 6 |
| 7,228,912 | | 2,031,138 |
| Total non-current assets |
| |
| 8,272,631 | | 2,902,042 |
|
|
| |
| | | |
| Current assets |
| |
| | | |
| Trade and other receivables |
| 7 |
| 152,117 | | 35,850 |
| Cash and cash equivalents |
| |
| 43,616 | | 253,892 |
| Total current assets |
| |
| 195,733 | | 289,742 |
|
|
| |
| | | |
| Total assets |
| |
| 8,468,364 | | 3,191,784 |
|
|
| |
| | | |
| Equity and liabilities |
| |
| | | |
| Equity |
| |
| | | |
| Share capital |
| 8 |
| 1,477,482 | | 761,448 |
| Share premium |
| 8 |
| 8,104,571 | | - |
| Share-based payment reserve |
| |
| 294,367 | | 109,456 |
| Foreign exchange reserve |
| |
| 51,259 | | - |
| Retained earnings |
| |
| (1,486,106) | | (316,796) |
| Total equity |
| |
| 8,441,573 | | 554,108 |
|
|
| |
| | | |
| Liabilities |
| |
| | | |
| Current liabilities |
| |
| | | |
| Trade and other payables |
| 9 |
| 26,791 | | 352,646 |
| Convertible loan |
| 10 |
| - | | 2,285,030 |
| Total current liabilities |
| |
| 26,791 | | 2,637,676 |
|
|
| |
| | | |
| Total equity and liabilities |
|
|
| 8,468,364 | | 3,191,784 |
|
|
|
|
|
|
|
|
Under s408 of the Companies Act 2006 the Company is exempt from the requirement to present its own statement of comprehensive income. The loss after tax for the year ended 31 December 2023 was ?1,169,310 (2022: ?316,796).
Company Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
| Share capital |
| Share premium |
| Share-based payment reserve |
| Foreign exchange reserve |
| Retained earnings |
| Total |
|
|
| ? |
| ? |
| ? |
| ? |
| ? |
| ? |
|
|
| | | | | | | | | | | |
| As at 1 January 2022 |
| 761,448 | | - | | - | | - | | - | | 761,448 |
|
|
| | | | | | | | | | | |
| Comprehensive income |
| | | | | | | | | | | |
| Loss for the year |
| - | | - | | - | | - | | (316,796) | | (316,796) |
| Other comprehensive income |
| - | | - | | - | | - | | - | | - |
| Total comprehensive income for the year |
| - | | - | | - | | - | | (316,796) | | (316,796) |
| Transactions with owners |
| | | | | | | | | | | |
| Share-based payments |
| - | | - | | 109,456 | | - | | - | | 109,456 |
| As at 31 December 2022 |
| 761,448 | | - | | 109,456 | | - | | (316,796) | | 554,108 |
|
|
| | | | | | | | | | | |
| Comprehensive income |
| | | | | | | | | | | |
| Loss for the year |
| - | | - | | - | | - | | (1,169,310) | | (1,169,310) |
| Other comprehensive income |
| - | | - | | - | | 51,259 | | - | | 51,259 |
| Total comprehensive income for the year |
| - | | - | | - | | 51,259 | | (1,169,310) | | (1,118,051) |
| Transactions with owners |
| | | | | | | | | | | |
| Share placing |
| 434,093 | | 6,511,388 | | - | | - | | - | | 6,945,481 |
| Conversion of convertible loan notes |
| 281,941 | | 2,220,658 | | - | | - | | - | | 2,502,599 |
| Issue costs |
| - | | (627,475) | | - | | - | | - | | (627,475) |
| Share-based payments |
| - | | - | | 184,911 | | - | | - | | 184,911 |
| Total transactions with owners |
| 716,034 | | 8,104,571 | | 184,911 | | - | | - | | 9,005,516 |
|
|
| | | | | | | | | | | |
| As at 31 December 2023 |
| 1,477,482 | | 8,104,571 | | 294,367 | | 51,259 | | (1,486,106) | | 8,441,573 |
|
|
| | | | | | | | | | | |
1. Significant accounting policies
(a) Basis of preparation
The separate financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101, 'Reduced Disclosure Framework' ("FRS 101"), on a historical cost basis and in accordance with the Companies Act 2006.
The results of the Company are included in the consolidated financial statements of the Group, which are presented alongside these financial statements.
These are the Company's first annual financial statements prepared in accordance with FRS 101; the Company previously prepared its annual financial statements under FRS 102. Due to the similarities between FRS 101 and FRS 102, there are no adjustments on transition to FRS 101 for the Company.
These financial statements are presented in Euros, which is the Company's functional and presentational currency.
The principal accounting policies adopted are the same as those set out in note 2 to the consolidated financial statements of the Group except as described in this note.
Disclosure exemptions adopted:
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:
· The requirement of IFRS 1 to present a statement of financial position at the date of transition.
· IFRS 7, 'Financial instruments: Disclosures'.
· Paragraphs 91 to 99 of IFRS 13, 'Fair value measurement'.
· The following paragraphs of IAS 1, 'Presentation of financial statements'
a) 10(d) (statement of cash flows);
b) 16 (statement of compliance with IFRS);
c) 38A (requirement for minimum of two primary statements, including cash flow statements);
d) 38B-D (additional comparative information);
e) 111 (statement of cash flows information); and
f) 134-136 (capital management disclosures).
· IAS 7, 'Statement of cash flows'.
· Paragraphs 30 and 31 of IAS 8, 'Accounting policies, changes in accounting estimates and errors'.
· The requirements in IAS 24, 'Related party disclosures'.
(b) Going concern
The Directors continues to adopt the going concern basis in the preparation of the financial statements. Further details are included in note 2(b) to the consolidated financial statements.
(c) Investment in subsidiaries
Equity investment in subsidiaries are stated at cost, which is the fair value of the consideration transferred, less accumulated impairment.
2. Critical accounting estimates and judgements
The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements is discussed below:
Recoverability of investment in subsidiaries and intragroup receivables
In the Company financial statements, the carrying value of the Company's investment in subsidiaries is ?1,043,719 (2022: ?870,904) and amounts owed by intragroup receivables is ?7,228,912 (2022: ?2,031,138).
The Directors carry out impairment tests of the Company's investments which require estimates to be made of the value in use of its CGUs and G roups of CGUs. The value in use calculations are dependent on estimates of future cash flows, long-term growth rates and appropriate discount rates to be applied to future cash flows.
The recoverability of the Company's intragroup receivables is dependant on the success of the Group to continually commercialise existing products and generate revenue from existing development projects.
Share-based payments
Refer to note 23 to the consolidated financial statements.
3. Loss for the year
The average number of employees for the year ended 31 December 2023 was 0 (2022: 5). Staff costs were ?nil (2022: nil). Directors' remuneration are charged through the Company's subsidiaries.
Disclosures of auditor remuneration in relation to the audit of the Company financial statements are included within note 5 of the Group financial statements.
4. Share-based payments
Details of the Company's share-based payment schemes are included in note 23 to the consolidated financial statements and relate to employees or others providing similar services to the Company's subsidiaries. The share-based payment charge is included in the investments in subsidiaries balance.
5. Investments in subsidiaries
|
|
|
|
|
|
| Investments |
| Total |
|
|
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
|
|
| At 1 January 2022 |
|
|
|
|
| 761,448 |
| 761,448 |
| Additions |
| | | | | 109,456 | | 109,456 |
| At 31 December 2022 |
|
|
|
| | 870,904 | | 870,904 |
| |
|
|
|
| | | | |
| Additions |
|
|
|
| | 172,815 | | 172,815 |
| At 31 December 2023 |
|
|
|
| | 1,043,719 | | 1,043,719 |
| |
|
|
|
| | | |
|
The additions in the year relate to the share option expense recognised in a subsidiary company over shares in the parent. This is accounted for as an addition to the investment cost in that subsidiary.
6. Other receivables
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Amounts owed by Group undertakings |
| | | 7,228,912 |
| 2,031,138 |
| | |
| | 7,228,912 | | 2,031,138 |
The amounts owed by Group undertakings primarily represent working capital provided to facilitate operational activities within the Group. The loans are interest free and no material amounts are overdue. No impairment was incurred on the amounts owed by Group undertakings.
7. Trade and other receivables
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Other receivables | |
| | 152,117 |
| 35,850 |
| | |
| | 152,117 | | 35,850 |
|
Other receivables relate to VAT due and prepaid insurance. |
|
|
|
|
|
|
8. Share capital and share premium
Full details of movements in share capital and share premium are given in note 17 to the consolidated financial statements.
9. Trade and other payables
|
|
|
|
| 31 Dec 2023 |
| 31 Dec 2022 |
|
|
|
|
| ? |
| ? |
|
|
|
|
|
|
|
|
| Other payables | | | | 26,791 |
| 119,573 |
| Amounts owed to Group undertakings | | | | - |
| 233,073 |
| Total | |
| | 26,791 | | 352,646 |
|
|
|
|
|
|
|
|
10. Convertible loan notes
These are detailed in note 19 to the consolidated financial statements.
11. Ultimate controlling party
At 31 December 2023, there was no individual controlling party. Ocean Harvest Technology Group Plc is the ultimate parent entity and is listed on AIM.
12. Events after the reporting date
There were no significant events after the reporting date and up to the date of approval of these financial statements.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.