RNS Number : 1629G
Tan Delta Systems PLC
30 September 2024
 

Tan Delta Systems plc

('Tan Delta', or the 'Company')

 

Interim results for the six months ended 30 June 2024

 

Tan Delta (AIM:TAND), a leading provider of intelligent monitoring and maintenance systems for commercial and industrial equipment is pleased to report its financial results for the six months ended 30 June 2024 ('H1 2024' or 'the Period').

 

Financial highlights:            

 

·      H1 revenue of £0.66m (H1 2023: £0.96m)

 

·      Gross profit margin of 61% (H1 2023: £61%)

 

·      Loss before tax of £0.53m (H1 2023: loss of £0.30m)

 

·      £3.62m cash as at 30 June 2024(H1 2023: £0.33m)

 

Commenting on the results, Chris Greenwood, Tan Delta CEO said:

 

"The year to date has been an exciting and fast-moving period of operational and sales development. The Company ends the period with £3.62m of cash, a significant and growing pipeline of new customers and contracts. Despite some frustration with the speed of conversion, included in our pipeline are four specific pending contracts worth £4.5m of which I am optimistic that at least £1.85m will close and be shipped during the current year."

 

For further enquiries:

 

Tan Delta Systems plc        

Tel: +44 (0) 845 094 8710

 

Chris Greenwood, CEO      


 

John Higginbottom, CFO


 



 

Zeus (Nominated Adviser & Broker)                             

Tel: +44 (0) 203 829 5000

 

David Foreman, James Hornigold, Ed Beddows (Investment Banking)


 

Nick Searle (Sales)


 


Chairman statement

The Board is pleased with the progress made by the Company during H1. Due to the timing of conclusion of certain projects, revenue for H1 2024 was £0.66m which underpins the expected second half increase in conversion of pending sales opportunities. In particular, we are actively working to conclude four potential contracts with new customers with an aggregate value of up to £4.5m. These are expected to progress following completion of ongoing trials during H2 and as such the Board remains cautiously optimistic about achieving full year market expectations despite the slower H1. 

 

The high level of standardisation of our product offer across different market segments (application & geographic) has enabled us to grow our capacities (production, deployment support and sales) more efficiently than anticipated which is reflected in our lower than expected overheads and thus a loss of £0.53m for the period despite the lower revenues during the Period.

 

In anticipation of the forthcoming closure and delivery of some of our sales pipeline we have increased our stock of product during H1, with a specific focus on being able to achieve customer supply time expectations. Cash balances remains healthy at £3.62m as at 30 June 2024. 

 

Operational

During the Period, we have completed our investment to increase production capacity which has expanded our ability to support an annual revenue run rate of £12m; a further doubling of this capacity is achievable within four months with additional investment of only £50k which we expect to execute during 2025 to support anticipated demand. This increase in production capacity was achieved alongside our investments in product support that has included simplified sensor configuration and improved documentation which enables more efficient and quicker installations by customers.

 

Sales

We are engaged with a substantial and growing number of customers across multiple application and geographic segments. From Biogas genset operators in Germany, to ports in the USA, mines in Chile, engine manufacturers in Europe and one of the world's largest global retail and distribution business. All have common objectives: to reduce their oil use; maintenance costs; and improve reliability and the regard our sensor as a reliable and effective route to achieve these ambitions.

 

We have good visibility on contract orders worth approximately £25m, of which two, valued at £1.85m (in aggregate) are expected to convert into sales during the current year following the successful completion of trials. These specific opportunities are mostly in the Middle East and focused on power generation and other engine-based applications. In addition to these defined contract opportunities we also have a growing raft of strategic ones. These include applications such as large Port Cranes, where we have recently kicked off a trial with The Georgia Ports Authority in USA where they have 90 cranes, each of which would require 6 sensors. Separately, we have recently started a trial with one of the world's largest retail distribution businesses to help them enhance reliability and maintenance planning of automated conveyor systems in their logistics centres. We have no shortage of opportunities and are systematically engaging with customers to learn about their specific needs and develop implementation plans, this all bodes extremely well for the future.  

 

Outlook

The Board is pleased with progress made to develop the business and is looking forward to seeing this groundwork reflected in the forecasted sales in H2 and beyond. We see a growing array of opportunities across real time oil analysis-based equipment monitoring and management which is where our core technology delivers valuable data and insight. The Company has built a substantial pipeline of opportunities, which is continuing to grow, and includes a mix of substantial near term contract opportunities and longer-term strategic ones which could be of exceptional value. Of course, the immediate focus of the management team are the £1.85m of pending contracts which we hope to close and ship in the current financial year. As such the outlook for the future of the Company remains very positive.


Notes to editors

Tan Delta is an industrial-tech business that enables operators of commercial and industrial equipment reduce operating and maintenance costs and improve reliability. Our business is built around our unique proprietary core sensor technology that analyses lubrication oil in real time generating data rich with insight which with the application of analytics converts into actionable information for equipment operators that can enable oil consumption and associated cost savings of up to 50%. Our customers include operators of all types of equipment that rely upon engines and gearboxes, from the largest ships to mining trucks, generators, and wind turbines, applicable applications are ubiquitous and worldwide.

www.tandeltasystems.com

 

 

 

 



 

Statement of profit or loss and other comprehensive income

 


Note

(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000

 



Revenue

3

658

959

1,457

Cost of sales


(254)

(373)

(588)

Gross profit


404

586

869

Other operating income


0

0

0

Distribution costs


0

0

0

Administrative expenses


(1,022)

(409)

(1,270)

Non-underlying items

4

0

(471)

(736)

Profit from operations


 



- Excluding non-underlying items


(618)

177

(401)

- Non-underlying items

4

0

(471)

(736)

Total (Loss) / Profit from operations


(618)

(294)

(1,137)

Interest expense

5

(1)

(4)

(6)

Interest Income

5

90

0

36

Profit /(Loss) before tax


 



- Excluding non-underlying items


(529)

173

(371)

- Non-underlying items

4

0

(471)

(736)

Total (Loss) /Profit before tax


(529)

(298)

(1,107)

Taxation

6

0

0

7

(Loss) / Profit for the period attributable to equity holders of the Company


(529)

(298)

(1,100)

Other comprehensive income


 



Total other comprehensive income


0

0

0

Total comprehensive (loss) / profit for the period attributable to equity holders of the Company


(529)

(298)

(1,100)

Basic and diluted earnings per share (pence)

7

(0.72)

(0.59)

(0.02)

 

 

Statement of financial position

 

 


Note

(Unaudited)

(Audited)

(Audited)

 


30 June 2024                     £000

30 June 2023                     £000

31 Dec 2023                     £000

 



 



 

Non-current assets


 



 

Intangible assets


129

141

144

 

Right of use asset


80

107

94

 

Property, plant and equipment


82

61

55

 



291

309

293

 

Current assets


 



 

Inventories


506

229

365

 

Trade and other receivables

8

308

277

274

 

Cash and cash equivalents

9

3,618

332

4,555

 



4,432

838

5,194

 

Total assets


4,723

1,147

5,487

 

Current liabilities


 



 

Trade and other payables

10

(244)

(786)

(466)

 

Short term borrowings

11

0

(24)

0

 

Short term lease liability

11

(28)

(27)

(27)

 



(272)

(837)

(493)

 

Non-current liabilities


 



 

Long term borrowings

11

0

(26)

0

 

Long term lease liability

11

(58)

(86)

(72)

 

 


(58)

(112)

(72)

 

Total liabilities


(330)

(949)

(565)

 

Net assets


4,393

198

4,922

 


Equity attributable to equity holders of the Company


 




Ordinary share capital

12

73

50

73


Share premium account

13

5,426

0

5,426


Reserves Account


77

0

77


Retained earnings/(accumulated losses)

13

(1,183)

148

(654)


Total equity


4,393

198

4,922


 

 

Statement of changes in equity

 


Share capital

Share premium account

Reserves Account

Retained earnings / (accumulated losses)

Total equity

 


              £000

                      £000

     £000

                    £000

                £000








Balance at 1 January 2023

0

1,565

0

(1,069)

496


Ordinary share capital

0

0

0

0

(0)


Comprehensive income:

 

 

 

 

 


Bonus issue of shares

50

(50)

0

0

0


Cancellation of share premium

0

(1,515)

0

1,515

0


Profit for the period

0

0

0

(298)

(298)


Balance at 30 June 2023

50

(0)

0

148
















Balance at 30 June 2023

50

(0)

0

148

198


Ordinary share capital

0

0

0

0

0


Share issue on IPO

23

5,426

0

0

5,449


Share option costs

0

0

77

0

77


Comprehensive income:

 

 

 

 

 


Profit for the period

0

0

0

(802)

(802)


Balance at 31 December 2023

73

5,426

77

(654)
















Balance at 31 December 2023

73

5,426

77

(654)

4,922


Ordinary share capital

0

0

0

0

0


Comprehensive income:

 

 

 

 

 


Profit for the period

0

0

0

(529)

(529)


Balance at 30 June 2024

73

5,426

77

(1,183)


 

 

 

Statement of cash flows

 

 



(Unaudited)

(Audited)

(Audited)


Six months ended

Six months ended

Year ended

Note

30 June 2024                      £000

30 June 2023                    £000

31 Dec 2023               £000





Cash flows from operating activities





(Loss) / Profit before Tax


(529)

(298)

(1,107)

Adjustments for non-cash/non-operating items:


 

 

 

Depreciation


13

5

24

Amortisation of intangible assets


25

5

20

Amortisation of right of use assets


13

13

27

Taxation


0

0

7

Share option costs


0

0

77

Loss on disposal of plant and equipment

 

0

0

6

Interest income


(90)

0

(36)

Interest expense


1

4

6

Operating cash flows before movements in working capital


(567)

(271)

(976)

(Increase)/decrease in inventories


(141)

11

(125)

(Increase)/decrease in trade and other receivables


(34)

43

45

Increase/(decrease) in trade and other payables


(222)

419

99

Net cash generated from operating activities


(964)

202

(957)

Cash flows from investing activities


 



Purchase of property, plant and equipment


(39)

(2)

(22)

Purchase of intangibles assets


(10)

(25)

(43)

Proceeds from investment in bank


90

0

36

Net cash used in investing activities


41

(27)

(29)

Cash flows from financing activities


 



Borrowings and finance lease obligations


(14)

(29)

(94)

Issuance of equity


0

0

5,449

Net cash used in financing activities


(14)

(29)

5,355

Net decrease in cash and cash equivalents


(937)

146

4,369

Cash and cash equivalents at the beginning of the period


4,555

186

186

Cash and cash equivalents at the end of the period

9

3,618

332

4,555

 

 

Notes to the condensed interim financial statements

1.      General information

 

The interim financial statements were approved by the Board of Directors on the 27th of September 2024.

 

2.      Basis of preparation

 

The interim financial statements of the Company are for the six months ended 30 June 2024.

 

The financial statements were prepared under International Financial Reporting Standards ('IFRS'). The comparative figures were audited and prepared in accordance to International Financial Reporting Standards ('IFRS') and the provisions of the Companies Act 2006.

 

The condensed interim financial statements for H1 2024 do not include all the information and disclosures required in the annual financial statements and have not been audited or reviewed by an auditor pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.  However, selected explanatory notes are included to explain events and transactions that are significant for an understanding of the changes in the Company's financial position and performance in the period.

 

The condensed interim financial statements for H1 2024 have been prepared based on the accounting policies expected to be adopted for the year ending 31 December 2024.  These accounting policies are drawn up in accordance with adopted International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board and adopted by the EU.

 

AIM-listed companies are not required to comply with IAS 34 'Interim Financial Reporting' and accordingly the Company has taken advantage of this exemption.



3. Revenue from contract customers




 




Geographical reporting

(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000

 



United Kingdom

204

526

689

Europe

206

191

314

Rest of the World

248

242

454


658

959

1,457

 

 

4. Non-underlying items





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000

 



IPO costs

0

(471)

(736)


0

(471)

(736)

 

 

IPO costs

On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new ordinary shares, taking the number of ordinary shares in issue to 73,223,800. Total proceeds amounted to circa £6.0m.  The costs associated with the IPO, which were committed at 30 June 2023 amounted to £0.47m and at 30 December 2023 £0.74m. The costs were recognised as non-underlying expenses in the income statement.

 

5. Finance expenses and income




 





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000

 



Interest expense on bank loans

0

(2)

(3)

Interest expense on finance leases

(1)

(2)

(3)

Finance Expenses

(1)

(4)

(6)





Interest income on bank balances

90

0

36

Finance Income

90

0

36

 

 

6.      Income tax expense

 

No income has yet been recognised in H1 2024 in relation to R&D tax credits available from HMRC through the SME R&D relief scheme.

 

7. Earnings per share








Earnings per share are as follows:





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024               

 

30 June 2023              

 

31 Dec 2023

                          


 



Basic and diluted earnings per share (pence)

(0.72)

(0.59)

(0.02)


 



The calculations of basic and diluted earnings per share are based upon:

 




£000

£000

£000

(Loss) / Profit for the period attributable to the owners

(529)

(298)

(1,100)


 




Number

Number

Number

Weighted average number of ordinary shares

73,223,800

50,149,800

58,802,550

 

The calculation of basic earnings per share is based on the results attributable to ordinary shareholders divided by the number of ordinary shares outstanding as if the bonus issue and share split had occurred at the beginning of the earliest period presented. The earnings per share calculations for the period and prior period presented are based on the new number of shares.

 

The number of shares in issue at the end of the period is used as the denominator in calculating basic earnings per share.  As the Company is loss making the effect of instruments that convert into ordinary shares is considered anti-dilutive, hence there is no difference between the diluted and non-diluted loss per share.

 

During the period ended 30 June 2023, the Company completed a 110 for 1 bonus share issue and a subdivision of shares. Prior to the bonus issue there were 451,800 shares at £0.001, after the bonus issue there are 50,149,800 shares at £0.001. On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new ordinary shares, taking the number of ordinary shares in issue to 73,223,800.

 

8. Trade and other receivables





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000


 



Amounts falling due within one year:

 



Trade receivables

213

161

144

Other receivables

46

63

94

Prepayments

49

53

36

Tax recoverable

0

0

0


308

277

274

 

 

9. Cash and cash equivalents





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000


 



Cash at bank available on demand

3,618

332

4,555


3,618

332

4,555

 

 

10. Trade and other payables





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000


 



Trade payables

(112)

(390)

(304)

Other payables

(61)

(15)

(22)

Other Taxation and social security

(30)

(15)

(26)

Accruals

(28)

(295)

(96)

Deferred Income

(13)

(71)

(18)


(244)

(786)

(466)

 

 

11. Borrowings and lease liabilities





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000


 



Current:

 



Bank loans

0

(24)

0

Lease liability

(28)

(27)

(27)


(28)

(51)

(27)

Non-current:

 



Bank loans

0

(26)

0

Lease liability

(58)

(86)

(72)

Total borrowings

(58)

(112)

(72)

 

Banks loans comprise a Coronavirus Business Interruption Loan provided by Lloyds. The loan was taken out in August 2021 and fully repaid in August 2023.

 

12. Share capital





(Unaudited)

(Audited)

(Audited)

Six months ended

Six months ended

Year ended

30 June 2024                £000

30 June 2023               £000

31 Dec 2023                         £000


 



Allotted, called up and fully paid

 



Ordinary shares of 50,149,800 @ £0.001 each

0

50

0

Ordinary shares of 73,223,800 @ £0.001 each

73

0

                              73


73

50

73

 

Called up share capital

 

Called up share capital represents the nominal value of shares that have been issued.

 

All classes of shares have full voting, dividends, and capital distribution rights.

  

On 1 June 2023, the ordinary shares were subdivided from £0.01 to £0.001 (45,180 shares to 451,800 shares). Subsequently a bonus issue was made for all the shareholders holding 451,800 shares at that date.  The bonus issue offered 110 ordinary shares for every 1 ordinary share in issue, with a nominal value of £0.001 per share.  This increased the number of ordinary shares in issue by 49,698,000 to 50,149,800.

 

On Admission to AIM on 18 August 2023, the Company issued 23,074,000 new ordinary shares, taking the number of ordinary shares in issue to 73,223,800 from 50,149,800.

 

13.  Reserves

 

In anticipation of re-registering the Company as a public limited company ('plc'), at a general meeting of the Company on 1 June 2023, it was resolved that the Company would reduce its share premium account by an amount of £1.52m by crediting the Profit and Loss Account.

 

 

Share premium account.

This represents the excess value recognised from the issue of ordinary shares above nominal value.

  

Retained earnings.

This represents cumulative net gains and losses less distributions made.

 

14.  Post balance sheet events

 

No adjusting events have occurred between reporting date and the date of authorisation of the condensed interim report.

15.  Availability

 

Further copies of this interim announcement are available on the Tan Delta Systems plc website,

www.tandeltasystems.com.

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