TIDMTHRU
RNS Number : 8904J
Thruvision Group PLC
10 December 2018
10 December 2018
Thruvision Group plc
("Thruvision" or the "Group")
Interim Results for the six months ended 30 September 2018
Thruvision (AIM: THRU) the specialist provider of
people-screening technology to the international security market
announces its unaudited results for the six months ended 30
September 2018.
Key Highlights
-- Revenues for the six months ended 30 September 2018 of GBP3.2
million (H1 2018: GBP0.3 million)
-- Operating loss before tax reduced to GBP(0.8) million (H1 2018: GBP(1.7) million).
-- Additional investment in sales and engineering increased the
cost base to GBP(2.1) million (H1 2018: GBP(1.7) million)
-- A record number of 60 Thruvision units shipped in the first
half across our four target markets (H1 2018: 3 units)
-- Broad-based sales success
o new flagship customers, including Los Angeles Metro following
US Transportation Security Administration ("TSA") approval, Sony,
Next plc and The Hut Group
o repeat sales to existing customers, including Boots and
Hermes
o continued strengthening of international sales pipeline.
-- Average revenue per unit (including accessories) of GBP52k
with gross margin of 39% (H1 2018:GBP58K and (7%))
-- GBP3.3 million cash returned to shareholders by way of a
Tender Offer process in August 2018 reducing the number of Ordinary
Shares in issue to 145,454,118
-- Since 31 March 2018, completion of the formal process to
separate from the Digital Barriers business that was divested in
October 2017
-- Cash at 30 September 2018 of GBP12.6 million, with cash at 7
December 2018 of GBP11.7 million
Summary of Results
30-Sep-18 30-Sep-17 FY 2018
---------- ---------- --------
Unaudited Unaudited Audited
---------- ---------- --------
Number of units sold 60 3 57
---------- ---------- --------
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Revenue 3,169 344 3,103
---------- ---------- --------
Gross Profit 1,243 (23) 1,079
---------- ---------- --------
Gross Margin 39% (7%) 35%
---------- ---------- --------
Overheads (2,083) (1,660) (3,654)
---------- ---------- --------
Operating (loss) (840) (1,683) (2,575)
---------- ---------- --------
Commenting on the results, Colin Evans, Managing Director of
Thruvision, said:
"We are pleased with the progress we have made in the first half
of this year. We continue to deliver additional units to existing
customers, and we are also winning new customers across a variety
of geographies and markets, with particular success in
Transportation and Loss Prevention. This, combined with our
deepening relationship with TSA and the very high profile nature of
the LA Metro deployment is testament to the international appeal of
our solution and the scale of the opportunity ahead."
For further information please contact:
Thruvision Group plc
Tom Black, Executive Chairman
Colin Evans, Managing Director +44 (0)1235 425 400
Investec Bank plc
Andrew Pinder / Sebastian Lawrence / Patrick
Robb +44 (0)20 7597 5970
FTI Consulting LLP
Matt Dixon / Harry Staight +44 (0)20 3727 1000
About Thruvision
Thruvision Group plc is a specialist provider of
people-screening technology. Using patented passive terahertz
technology, Thruvision is uniquely capable of detecting metallic
and non-metallic threats including weapons, explosives and
contraband items that are hidden under clothing, at distances up to
10m. Addressing the growing need for fast, safe and effective
security, Thruvision has been vetted and approved by the US
Transportation Security Administration. More than 200 units have
been deployed worldwide over the last five years for applications
including mass transit and aviation security, facilities and public
area protection, customs and border control and supply chain loss
prevention.
www.thruvision.com
Chairman's Statement
The momentum that we saw building early in 2018 has continued in
H1 2019 and has resulted in the delivery of a good performance in
the first half of the year. Overall, our confidence about the size
of the market opportunity has continued to increase during the
period, and we made good strategic progress in positioning
Thruvision to take advantage of this.
New 'flagship' customers, including Los Angeles Metro, Next plc
and Sony, purchased Thruvision units after comprehensive testing,
and repeat orders were received from customers in Asia and the UK.
This, combined with the US Government's Transportation Security
Administration ("TSA") approving Thruvision for use in the mass
transport market and the start of a test programme with TSA's
Innovation Task Force looking at future airport checkpoint
screening, provided the international market with an important
validation of the merits of our technology.
Following the divestment of Digital Barriers to Volpi Capital in
October 2017, we successfully completed the return of cash to
shareholders through a Tender Offer process that completed in
August 2018. During the period we also completed the formal process
of separating Digital Barriers from the Group.
Outlook
With a continuing strengthening of our sales pipeline, and our
production capacity increasing, the business is trading in line
with management's expectations. The Board therefore remains
confident that Thruvision is very well placed to become a leading
new technology provider to the international security market.
Business review
Update by market segment
In our Annual Report for FY 2018, we identified four clear
market segments where we believe Thruvision has strongest
differentiation and the greatest opportunity for growth. We have
made good progress in each of these areas as follows:
-- Loss Prevention: screening staff for items being removed,
without permission, from distribution centres or factories. With
the continuing significant shift towards online retailing, we have
focused on leading branded goods manufacturers and suppliers, where
a clear return on investment on deploying Thruvision to reduce
losses due to theft exists. In the period we added Next plc, Sony
Digital Audio Distribution Company (DADC) and The Hut Group as new
customers, and made further sales to two existing customers, Boots
and Hermes. In October, a leading UK loss prevention association,
Retail Risk, awarded Thruvision "Best Newcomer" at its 2018 Fraud
Awards.
-- Customs: screening travellers for prohibited items such as
cash and drugs. We sold and delivered a second tranche of
Thruvision units to an Asian Customs agency, and we supported Hong
Kong Customs in installing a fourth tranche of Thruvision units on
the new Hong Kong to Macau Bridge that was officially opened in the
Autumn of 2018.
-- Transportation: screening travellers for weapons in railways,
subways and airports. After successfully completing two years of
comprehensive TSA laboratory and operational trials, Los Angeles
Metro purchased Thruvision as part of its strategy to detect and
deter acts of terrorism. TSA's Innovation Task Force also awarded
us a contract to investigate the potential for using Thruvision as
part of new, higher passenger throughput airport security
capability. In Asia, we delivered a major order to the Philippines
to strengthen its transport infrastructure against terrorist
attack.
-- Entrance security: screening visitors for weapons at
entrances to high security buildings. Here, we sold and delivered
two Thruvision projects in China. The first was a major new 'Silk
Road' conference centre where fast, discreet security is required.
The second project, for a Government customer, required very high
levels of security assurance.
We added two new specialist value-added reseller partners
covering North America and Israel and continued supporting the
efforts of our partners in Hong Kong, China, South East Asia and
Australia to sell and deliver Thruvision.
Brexit
The Board has considered the principal risks and uncertainties
possible as a result of Brexit. The principal risks considered are
sales delays, import tax, intra-EU contracts, intellectual
property, and foreign currency movements. To date the Board does
not consider the triggering of the Brexit process to have a
material impact on the interim financial statements and ongoing
operation of the business.
Engineering
Given increasing demand, we have successfully manufactured our
new TSA-approved Thruvision TAC product in the US using a
high-precision manufacturing partner in Florida. We also increased
our overall monthly manufacturing output in line with order intake
and are confident we can now sustain an average of 20 units per
month, if required.
New product research and development has also continued with a
new product prototype for outdoor use expected to be delivered
under contract to TSA in H2 2019.
People
Overall headcount increased from 23 to 27 during the period as
the Group invested in further pre-sales and engineering resource to
support increased demand.
Financial review
Financial results
For the period ended 30 September 2018, revenues increased to
GBP3.2 million (H1 2018: GBP0.3 million, FY 2018 GBP3.1 million),
with 60 Thruvision units sold. (H1 2018: 3 units, FY 2018: 57
units) resulting in a reduced operating loss of GBP(0.8) million
(H1 2018: GBP(1.7) million, FY 2018: GBP(2.5) million).
The gross margin increased to 39% (H1 2018: (7%), FY 2018: 35%)
principally as a result of new product sales.
The operating loss of GBP(0.8) million (H1 2018: GBP(1.7)
million, FY 2018: GBP(2.5) million) was achieved after further
investment in our sales and engineering activities to support
future revenue expansion.
Key Performance Indicators ("KPIs")
The Group considers the following to be the relevant KPIs which
track the trading performance and position of the business.
Financial KPIs
30-Sep-18 30-Sep-17 FY 2018
GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- --------
Revenue 3,169 344 3,103
-------------------------- ---------- ---------- --------
Average revenue per unit 52 58 51
-------------------------- ---------- ---------- --------
Gross Profit 1,243 (23) 1,079
-------------------------- ---------- ---------- --------
Gross Margin 39% (7%) 35%
-------------------------- ---------- ---------- --------
Overheads (2,083) (1,660) (3,654)
-------------------------- ---------- ---------- --------
Operating (loss) (840) (1,683) (2,575)
-------------------------- ---------- ---------- --------
Non-financial KPIs
30-Sep-18 30-Sep-17 FY 2018
---------------------------------- ---------- ---------- --------
No of units sold 60 3 57
Number of staff at end of period 27 23 23
---------------------------------- ---------- ---------- --------
Revenue
Thruvision revenues have increased to GBP3.2 million in the
period to 30 September 2018 (H1 2018: GBP0.3 million, FY 2018
GBP3.1 million). Revenues from unit sales contributed GBP3.1
million (H1 2018: GBP0.2 million, FY 2018 GBP2.9 million), and
development revenue from the US Transport Security Administration
of GBP47k (H1 2018: GBP132k, FY 2018 GBP208k). The growth in
revenues over the prior year reflects strong growth in organic unit
sales in our main markets, with unit volumes increasing to 60 (H1
2018: 3 units, FY 2018: 57 units).
30-Sep-18 30-Sep-17 FY 2018
Revenue GBP'000 GBP'000 GBP'000
---------------- --------- --------- --------
Units 3,122 212 2,895
Development 47 132 208
---------------- --------- --------- --------
Total 3,169 344 3,103
---------------- --------- --------- --------
The principal growth driver for the business is unit sales and,
while we expect to continue to be awarded customer funded
development contracts, we do not expect this to form a material
proportion of revenues in the future.
Gross Profit Margin
Gross margin increased to 39% in the year (H1 2018: (7%), FY
2018: 35%). The increase in gross margin compared to the prior year
is primarily due to a one-off stock provision of GBP168k provided
in the period ended 30 September 2017. The gross margin
attributable to unit revenues increased from 34% (FY 2018) to 39%
for the 6 months ending 30 September 2018 principally as a result
of new product sales.
Gross Margin 30-Sep-18 30-Sep-17 FY 2018
GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- -------
Unit Revenue 3,122 212 2,895
Unit Gross Profit 1,225 (80) 991
-------------------------- --------- --------- -------
Gross margin % 39% (38%) 34%
Development Revenue 47 132 208
Development Gross Profit 18 57 88
-------------------------- --------- --------- -------
Gross margin % 38% 43% 42%
Overall Revenue 3,169 344 3,103
Overall Gross Profit 1,243 (23) 1,079
-------------------------- --------- --------- -------
Gross margin % 39% (7%) 35%
-------------------------- --------- --------- -------
Loss from Operations
Losses from operations in the period were GBP(0.8) million (H1
2018: GBP(1.7) million, FY 2018: GBP(2.5) million), including share
based payments principally driven by strong sales growth, and an
overall overhead increase in the period GBP(2.1) million (H1 2018:
GBP(1.7) million, FY 2018 GBP(3.7) million).
Thruvision continues to invest in sales and marketing
activities, developing new markets and segments, whilst further
investing in our engineering and manufacturing capacity including
R&D. Thruvision generated foreign exchange gains of GBP0.1
million during the period, as a result of the movement in the
GBP:USD exchange rate.
Cash Flows
Cash and cash equivalents at 30 September 2018 were GBP12.6
million (H1 2018: GBP0.1 million continuing (GBP2.4 million
discontinuing), FY 2018: GBP17.6 million), reflecting GBP3.35
million (GBP3.5 million including associated fees) returned to
shareholders by way of a Tender Offer process in August 2018
(reducing shares in issue to 145,454,118), and GBP1.5m of operating
loss and working capital investment in inventory and debtors.
THRUVISION GROUP PLC
Consolidated income statement
for the six months ended 30 September 2018
6 months 6 months Year ended
ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ------------- ------------- ----------------
Revenue 2 3,169 344 3,103
Cost of sales (1,926) (367) (2,024)
----------------------------- ----- ------------- ------------- ----------------
Gross profit 1,243 (23) 1,079
Administration costs (2,083) (1,660) (3,654)
Other income 5 - 51
Operating loss (835) (1,683) (2,524)
Finance revenue 41 - 70
Finance costs - (749) (758)
----------------------------- ----- ------------- ------------- ----------------
Loss before tax (794) (2,432) (3,212)
Income tax - (22) 90
----------------------------- ----- ------------- ------------- ----------------
Loss for the period /
year from continuing
operations (794) (2,454) (3,122)
----------------------------- ----- ------------- ------------- ----------------
Discontinued operations
Loss from discontinued operation
(net of tax) (330) (11,329) (16,429)
Loss for the period /
year (1,124) (13,783) (19,551)
Adjusted loss: 3
Loss before tax from
continuing operations (794) (2,432) (3,212)
Share buyback costs 116 - -
Share-based payment 68 35 52
Financing set up fees - 263 263
Adjusted loss before
tax for the period /
year from continuing
operations (610) (2,134) (2,897)
----- ------------- -------------
THRUVISION GROUP PLC
Consolidated statement of comprehensive income
for the six months ended 30 September 2018
6 months 6 months Year ended
ended ended
30 September 30 September 31 March 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------- --------------
Loss for the period /
year from continuing
operations (794) (2,454) (3,122)
Loss for the period /
year from discontinued
operations (330) (11,329) (16,429)
-------------------------------------- ------------- ------------- --------------
Loss for the period /
year attributable to
owners of the parent (1,124) (13,783) (19,551)
Other comprehensive (loss)/income
from continuing operations
------------------------------------- ------------- ------------- --------------
Other comprehensive income
that may be subsequently
reclassified to profit
and loss:
Exchange differences
on retranslation of foreign
operations - discontinued (5) (926) (694)
Reclassification to profit
and loss - - 701
-------------------------------------- ------------- ------------- --------------
Net other comprehensive
income to be reclassified
to profit or
loss in subsequent periods (5) (926) 7
-------------------------------------- ------------- ------------- --------------
Total comprehensive loss
attributable to owners
of the parent (1,129) (14,709) (19,544)
-------------------------------------- ------------- ------------- --------------
THRUVISION GROUP PLC
Consolidated statement of financial position
at 30 September 2018
30 September 30 September 31 March 2018
2018 2017
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------ ----- ------------- ------------- --------------
Assets
Non current assets
Property, plant and
equipment 387 407 278
Goodwill - - -
Other intangible assets 8 - 2
------------------------------ ----- ------------- ------------- --------------
395 407 280
Current assets
Inventories 2,237 2,359 1,813
Trade and other receivables 1,496 877 1,229
Current tax recoverable 90 145 90
Cash and cash equivalents 12,636 113 17,587
------------------------------ ----- ------------- ------------- --------------
16,459 3,494 20,719
------------------------------ ----- ------------- ------------- --------------
Assets classified as
held for resale 10 - 36,070 -
Total assets 16,854 39,971 20,999
Equity and liabilities
Attributable to owners
of the parent
Equity share capital 6 1,618 1,814 1,814
Share premium - 109,078 109,078
Capital redemption
reserve - 4,786 4,786
Merger reserve - 454 -
Translation reserve 3 (925) 8
Other reserves - (307) -
Retained earnings 13,452 (90,640) (96,207)
------------------------------ ----- ------------- ------------- --------------
Total equity 15,073 24,260 19,479
Non current liabilities
Provisions 38 62 36
Current liabilities
Trade and other payables 1,743 1,871 1,455
Provisions - 28 29
------------------------------ ----- ------------- ------------- --------------
1,743 1,899 1,484
------------------------------ ----- ------------- ------------- --------------
Liabilities directly
associated with assets
classified as held
for sale 10 - 13,750 -
------------------------------ ----- ------------- ------------- --------------
Total liabilities 1,781 15,711 1,520
------------------------------ ----- ------------- ------------- --------------
Total equity and liabilities 16,854 39,971 20,999
------------------------------ ----- ------------- ------------- --------------
THRUVISION GROUP PLC
Consolidated statement of changes in equity
for the 6 months ended 30 September 2018
Ordinary Share Capital Merger Translation Other Total
share premium redemption reserve reserve reserves Retained equity
capital account reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
At 31 March
2017 1,814 109,078 4,786 454 1 (307) (76,912) 38,914
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Loss for the
period - - - - - - (13,783) (13,783)
Other
comprehensive
income - - - - (926) - - (926)
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Total
comprehensive
loss - - - - (926) - (13,783) (14,709)
Share-based
payment
credit - - - - - - 55 55
At 30
September
2017 1,814 109,078 4,786 454 (925) (307) (90,640) 24,260
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Loss for the
period - - - - - - (5,768) (5,768)
Other
comprehensive
income - - - - 933 - - 933
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Total
comprehensive
loss - - - - 933 - (5,768) (4,835)
On disposal of
Video
Business - - - (454) - 307 147 -
Share-based
payment
charge - - - - - - 54 54
At 31 March
2018 1,814 109,078 4,786 - 8 - (96,207) 19,479
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Loss for the
period - - - - - - (1,124) (1,124)
Other
comprehensive
income - - - - (5) - - (5)
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
Total
comprehensive
loss - - - - (5) - (1,124) (1,129)
Capital
reduction - (109,078) (4,786) - - - 113,864 -
Share buyback (196) - - - - (3,149) (3,345)
Share-based
payment
credit - - - - - - 68 68
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
At 30
September
2018 1,618 - - - 3 - 13,452 15,073
--------------- --------- ---------- ----------- ---------- ------------- --------------- --------- --------------
THRUVISION GROUP PLC
Consolidated statement of cash flows
for the 6 months ended 30 September 2018
6 months 6 months Year ended
ended 30 ended 30 31 March
September September 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- ----------- -----------
Operating activities
Loss before tax from continuing
operations (794) (2,432) (3,212)
Loss before tax from discontinued
operations (330) (11,329) (16,337)
---------------------------------------- ----------- ----------- -----------
Loss before tax (1,124) (13,761) (19,549)
Non-cash adjustment to reconcile loss before
tax to net cash flows
Depreciation of property,
plant and equipment 77 257 400
Amortisation of intangible
assets 1 616 716
Impairment of goodwill - 4,291 4,291
Share-based payment transaction
expense 68 55 109
Unrealised gains on foreign
exchange 6 (71) 62
Realisation of foreign exchange
losses on disposal of Video
Business - - 708
Disposal of fixed assets 29 26 (5)
Loss on disposal of Video
Business - - 2,085
Recovery of purchase consideration - (1,126) (1,126)
Finance income (41) - (70)
Finance costs - 1,126 1,227
Non-cash consideration - - 7,635
Non-cash settlement of borrowings
- repayment of loan out of
disposal proceeds - - (7,635)
Working capital adjustments:
Decrease in trade and other
receivables (267) 1,119 (109)
Decrease / (increase) in inventories (424) 466 (108)
Increase / (decrease) in trade
and other payables 208 795 370
Increase / (decrease) in deferred
revenue 82 626 762
Decrease in provisions (27) (28) (54)
---------------------------------------- ----------- ----------- -----------
Cash utilised in operations (1,412) (5,609) (10,291)
Tax received - 617 762
---------------------------------------- ----------- ----------- -----------
Net cash flow from operating
activities (1,412) (4,992) (9,529)
---------------------------------------- ----------- ----------- -----------
Investing activities
Purchase of property, plant &
equipment (213) (65) (196)
Expenditure on intangible assets (7) (9) (2)
Interest received 41 - 70
Cash proceeds from disposal of
Video Business - - 19,187
Cash balance in Video Business
at disposal - - (928)
Recovery of purchase consideration - 1,126 1,126
---------------------------------------- ----------- ----------- -----------
Net cash flow from investing
activities (179) 1,052 (19,257)
---------------------------------------- ----------- ----------- -----------
Financing activities
Share buyback - reduction in (3,345) - -
share capital
Proceeds from borrowings - 5,442 7,635
Finance costs - - (741)
---------------------------------------- ----------- ----------- -----------
Net cash flow from financing
activities (3,345) 5,442 6,894
---------------------------------------- ----------- ----------- -----------
Net increase / (decrease) in
cash and cash equivalents (4,936) 1,502 16,622
Cash and cash equivalents at
beginning of period / year 17,587 1,002 1,002
Effect of foreign exchange rate
changes on cash and cash equivalents (15) 24 (37)
---------------------------------------- ----------- ----------- -----------
Cash and cash equivalents at
end of period / year 12,636 2,528 17,587
---------------------------------------- ----------- ----------- -----------
Reconciliation of net cash and
cash equivalents
---------------------------------------- ------- ------ -------
Cash and cash equivalents (disclosed
within current assets) 12,636 113 17,587
Cash held by disposal group (disclosed - 2,415 -
within assets classified as held
for resale)
---------------------------------------- ------- ------ -------
Net cash and cash equivalents
at end of period / year 12,636 2,528 17,587
---------------------------------------- ------- ------ -------
1. Accounting policies
Basis of preparation
The consolidated interim financial statements include those of
Thruvision Group plc and all of its subsidiary undertakings
(together "the Group") drawn up at 30 September 2018, and have been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting" ("IAS 34") as adopted for use in the
European Union ("EU"). The consolidated interim financial
statements have been prepared using accounting policies and methods
of computation consistent with those applied in the consolidated
financial statements for the period ended 31 March 2018.
The Group is a public limited company incorporated and domiciled
in England & Wales and whose shares are quoted on AIM, a market
operated by The London Stock Exchange.
Accounting policies
The annual consolidated financial statements of the Group are
prepared on the basis of International Financial Reporting
Standards ("IFRS"). The consolidated interim financial statements
are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all the disclosures that would otherwise
be required in a full set of financial statements and should be
read in conjunction with the most recent Annual Report and Accounts
which were approved by the Board of Directors on 25 June 2018 and
have been filed with Companies House. The condensed interim
financial statements do not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006 and are unaudited
for all periods presented. The financial information for the
12-month period ended 31 March 2018 is extracted from the financial
statements for that period. The auditors' report on those financial
statements was unqualified and did not contain an emphasis of
matter reference and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
The half year results for the current period to 30 September
2018 have not been audited or reviewed by auditors pursuant to the
Auditing Practices Board guidance of Review of Interim Financial
Information.
The comparative statement of comprehensive income has been
re-presented as if an operation discontinued during the prior year
had been discontinued from the start of the comparative year.
Adoption of new and revised International Financial Reporting
Standards
The Group's accounting policies have been prepared in accordance
with IFRS effective as at its reporting date of 30 September 2018.
The IASB issued amendments to 4 standards under Annual improvement
2012-2014 cycle together with amendments to IAS 1. These amendments
had an effective date after the date of 1 January 2016 and have
been applied by the Group. These did not have a material impact on
the Group's financial statements in the period of initial
application.
Standards Issued
The standards and interpretations that are issued up to the date
of issuance of the Group's interim financial statements are
disclosed below. The Group has adopted these standards, if
applicable, when these became effective. Further details are
disclosed in the 31 March 2018 Annual Report available on the
Group's website: thruvision.com
IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts
with Customers
Management have conducted an assessment of IFRS 9 and IFRS 15
using the modified retrospective method. The Directors have
assessed the impact of IFRS 15 with the study focussing on:
-- revenue recognition; and
-- accounting for commission on sales.
The assessment for both IFRS 9 and IFRS 15 show these haven't
materially impacted the Group's financial results for the interim
period to 30 September 2018.
IFRS 16 Leases
Management have assessed the impact of IFRS 16 and have
concluded this will materially impact the value of Property, plant
and equipment and Lease liabilities on the Balance Sheet. The
impact has not been reflected in these interim results and will be
completed in advance and included in the full year results to 31
March 2019 using the modified retrospective method. The Group's
lease commitments are detailed in Note 20 in the 31 March 2018
Annual Report.
1. Accounting policies (continued)
Going concern
The Group's loss before tax from continuing operations for the
period was GBP0.8 million (H1 2018: GBP2.5 million, FY 2018 GBP3.1
million). As at 30 September 2018 the Group had net current assets
of GBP14.7 million (31 March 2018: GBP19.2 million) and net cash
reserves of GBP12.6 million (31 March 2018: GBP17.6 million).
The Board has reviewed cash flow forecasts for the period up to
and including 31 December 2019. These forecasts and projections
take into account reasonably possible changes in trading
performance and show that the Group will be able to operate within
the level of current funding resources. The Directors therefore
believe there is sufficient cash available to the Group to manage
through these requirements.
As with all businesses, there are particular times of the year
where the Group's working capital requirements are at their peak.
However, the Group is well placed to manage business risk
effectively and the Board reviews the Group's performance against
budgets and forecasts on a regular basis to ensure action is taken
where needed.
The Directors therefore are satisfied that the Group has
adequate resources to continue operating for a period of at least
12 months from the approval of these accounts. For this reason,
they have adopted the going concern basis in preparing the
financial statements.
Financial instruments
The Group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement.
2. Segmental information
During the period ended 30 September 2017 the directors believed
that providing segment analysis that showed the Video Business as a
separate segment to the Thruvision Business would aid readers of
the Financial Statements. The Video Business was subsequently
disposed of on 31 October 2017, and as a result at 30 September
2017 the Video Business was classified as an asset held for sale,
and has since been reported as a discontinued operation.
Until the disposal of the segment, the Group's 'Video Business'
Division was focused on the advanced surveillance market. This
covered image and data capture (for example, unattended ground
sensors), a range of processing and enhancement techniques (for
example, thermal image processing, image stabilisation, and
enhancing low light performance), image transmission (both wired
and wireless technologies) and a range of analytics algorithms.
The Group's continuing Thruvision Business is focused on
stand-off passive body scanning technology.
In accordance with IFRS 8, the Group derived the information for
its operating segments using the information used by the Chief
Operating Decision Maker and supplemented this with additional
analysis to assist readers of the Annual Report to better
understand the impact of the proposed divestment. The Group
identified the Board of Directors as the Chief Operating Decision
Maker as the Board is responsible for the allocation of resources
to operating segments and assessing their performance.
Historically central overheads, which primarily relate to
operations of the Group function, are not allocated to the business
units. Following the sale of the Video Business, some of these
central costs transferred to the Video Business or ceased.
Consistent with the reporting of the Video Business as a
discontinued operation, these central costs were classified as
discontinued. Group financing (including finance costs and finance
income) and income taxes are managed centrally and are not
allocated to an operating segment. No operating segments have been
aggregated to form the above reportable segments.
2. Segmental information (continued)
6 months ended 30 September 2018
Solutions Central
----------------- -----------------------------------------------
Video Business Thruvision Central Central
Discontinued Continuing Discontinued Continuing Total
Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Revenue - 3,169 - - 3,169
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Depreciation - 77 - - 77
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Segment adjusted operating
loss - (295) - (356) (651)
Share based payment charge - (19) - (49) (68)
Share buyback costs - - - (116) (116)
Discontinued exceptional
costs (95) - - - (95)
Release of deferred
consideration - - (235) - (235)
Segment operating loss (95) (314) (235) (521) (1,165)
Finance income - - - 41 41
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Segment loss before tax (95) (314) (235) (480) (1,124)
Loss attributable to
discontinued
operations (330)
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Loss before tax from continuing
operations (794)
Income tax expense -
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Loss for the period from
continuing operations (794)
-------------------------------- ----------------- ------------ ----------------- -------------- ------------
Following a review of key management time spent on the
Thruvision segment, an increased cost has been allocated to the
Thruvision segment, with a corresponding reduced cost being
allocated to Central costs. This better reflects the actual time
spent on developing the business following the conclusion of the
sale of the Video Business, and is in line with how the management
accounts have been presented internally since 1 April 2018.
6 months ended 30 September 2017
Services Solutions Central
---------------- ---------------------------- ------------------------------
Video
Services Business Thruvision Central Central
Discontinued Discontinued Continuing Discontinued Continuing Total
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------------- -------------- ------------ --------------- ------------- -----------
Total segment
revenue - 11,228 344 - - 11,572
Revenue - 11,228 344 - - 11,572
----------------- ---------------- -------------- ------------ --------------- ------------- -----------
Depreciation - 173 84 - - 257
----------------- ---------------- -------------- ------------ --------------- ------------- -----------
Segment adjusted
operating
loss - (4,994) (864) (1,377) (784) (8,019)
Amortisation of
intangibles
initially
recognised on
acquisition - (616) - - - (616)
Share based
payment charge - - - (20) (35) (55)
Acquisition
related
income/(costs) - 1,126 - - - 1,126
Restructuring
costs - (779) - - - (779)
Impairment of
goodwill
and intangibles - (4,291) - - - (4,291)
Segment
operating loss - (9,554) (864) (1,397) (819) (12,634)
Finance costs - - - (378) 749) (1,127)
----------------- ---------------- -------------- ------------ --------------- ------------- -----------
Segment loss
before tax - (9,554) (864) (1,775) (1,568) (13,761)
Loss attributable to discontinued
operations (11,329)
----------------------------------- -------------- ------------ --------------- ------------- -----------
Loss before tax from continuing
operations (2,432)
Income tax expense (22)
----------------------------------- -------------- ------------ --------------- ------------- -----------
Loss for the year from
continuing operations (2,454)
----------------------------------- -------------- ------------ --------------- ------------- -----------
12 months ended 31 March 2018
Services Solutions Central
--------------------------------- ------------------ --------------------------------------------
Video
Services Business Thruvision Central Central
Discontinued Discontinued Continuing Discontinued Continuing Total
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Total segment
revenue - 13,129 3,103 - - 16,232
Revenue - 13,129 3,103 - - 16,232
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Depreciation - 218 182 - - 400
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Segment adjusted
operating
loss - (5,830) (752) (1,642) (1,720) (9,944)
Amortisation of
intangibles
initially
recognised on
acquisition - (716) - - - (716)
Share based
payment charge - - - (57) (52) (109)
Acquisition
related income - 1,126 - - - 1,126
Loss on disposal
and related
costs - (4,458) - - - (4,458)
Impairment of
goodwill
and intangibles - (4,291) - - - (4,291)
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Segment
operating loss - (14,169) (752) (1,699) (1,772) (18,392)
Finance income - - - - 70 70
Finance costs - - - (469) (758) (1,227)
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Segment loss
before tax - (14,169) (752) (2,168) (2,460) (19,549)
Income tax
(expense)
(discontinued) (92)
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Loss before tax
from
discontinued
operations (16,429)
Loss before tax
from continuing
operations (3,212)
Income tax
credit 90
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Loss for the
year from
continuing
operations (3,122)
----------------- --------------- ------------------ ------------ --------------- ------------- -----------
Analysis of revenue by customer
There have been two (H1 17: three) individually material
customers during the period representing GBP1,826,000 of revenue
(H1 17: GBP307,000).
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- ------------
Asia Pacific 2,287 (10) 1,404
Europe, Middle East and Africa 518 116 1,286
Americas 364 238 413
3,169 344 3,103
-------------------------------- ------------- ------------- ------------
The Group's non-current assets by geography are detailed
below:
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ------------
United Kingdom 369 407 258
United States of America 26 - 22
395 407 280
-------------------------- ------------- ------------- ------------
3. Adjusted loss before tax
An adjusted loss before tax measure has been presented as the
Directors believe that this is a more relevant measure of the
Group's underlying performance. Adjusted loss is not defined under
IFRS and has been shown as the Directors consider this to be
helpful for a better understanding of the performance of the
Group's underlying business. It may not be comparable with
similarly titled measurements reported by other companies and is
not intended to be a substitute for, or superior to, IFRS measures
of profit. The net adjustments to loss before tax from continuing
operations are summarised below:
6 months 6 months Year ended
ended ended 31 March
30 September 30 September 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------ -------------- -------------- -------------
Share buyback costs (i) 116 - -
Share-based payment (ii) 68 35 52
Financing set-up costs (iii) - 263 263
Total adjustments 184 298 315
------------------------------ -------------- -------------- -------------
(i) On 24 July 2018 a Special Resolution was passed to allow the
Group to repurchase up to 47,000,000 ordinary shares at 17p each.
The legal and professional fees incurred in connection with the
repurchase of shares have been split out from continuing costs.
(ii) The performance condition associated with LTIP awards made
from July 2015 are subject to a non-market based performance
measure. Accordingly, should these LTIP awards fail to vest, the
share based payment charge will be added back to the income
statement. Historic LTIP awards have been made with a market based
performance measure which in the event that LTIPs fail to vest the
share based payment charge is not added back to the income
statement. To date the majority of historic LTIP awards have failed
to vest. The inclusion provides consistency over time allowing a
better understanding of the financial position of the Group.
(iii) On 28 September 2017 the Group arranged an unsecured
GBP5.25 million loan facility with Herald Investment Trust,
incurring legal and set up fees.
4. Loss per share
The following reflects the loss and share data used in the basic
and diluted loss per share calculations:
6 months 6 months Year ended
ended 30 ended 30 31 March
September September 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------------
Loss from continuing operations
attributable to ordinary shareholders (794) (2,454) (3,122)
---------------------------------------- ------------ ------------ ------------------
Loss from continuing and discontinued
operations attributable to ordinary
shareholders (1,129) (13,783) (19,551)
Weighted average number of shares 145,454,118 165,130,024 165,130,024
---------------------------------------- ------------ ------------ ------------------
Basic and diluted loss per share
- continuing operations (0.55p) (1.49p) (1.89p)
---------------------------------------- ------------ ------------ ------------------
Basic and diluted loss per share
- continuing and discontinued
operations (0.78p) (8.35p) (11.84p)
---------------------------------------- ------------ ------------ ------------------
4. Loss per share (continued)
6 months 6 months Year ended
ended ended 30 31 March
30 September September 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss from continuing operations
attributable to ordinary shareholders (794) (2,454) (3,122)
Share buyback costs 116 - -
Share-based payment 68 35 52
Financing set up fees - 263 263
Adjusted (loss)/profit after
tax (610) (2,156) (2,807)
------------------------------------------ -------------- ------------ ------------------
Weighted average number of shares 145,454,118 165,130,024 165,130,024
------------------------------------------ -------------- ------------ ------------------
Basic and diluted loss per share (0.55p) (1.49p) (1.89p)
------------------------------------------ -------------- ------------ ------------------
Basic and diluted adjusted (loss)/profit
per share (0.42p) (1.31p) (1.70p)
------------------------------------------ -------------- ------------ ------------------
The inclusion of potential Ordinary Shares arising from LTIP
awards would be anti-dilutive. Basic and diluted loss per share has
therefore been calculated using the same weighted number of
shares.
5. Goodwill
Carrying amount of goodwill allocated to operating segments:
6 months 6 months Year ended
ended ended 31 March
30 September 30 September 2018
2018 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------- -------------- -------------- ------------
Video Business - 12,151 -
Thruvision - - -
Goodwill - 12,151 -
--------------- -------------- -------------- ------------
Historically the Group was organised into Services and
Solutions. In light of the completed disposal of the Video Business
on 31 October 2017, the directors believed that providing segment
analysis that showed the Video Business as a separate segment to
the Thruvision Business would aid readers of the Financial
Statements. Combined, the Video Business and Thruvision made up the
previously reported Solutions segment. Consequently goodwill
acquired through business combinations has been allocated for
impairment testing purposes. These segments were deemed to be the
two cash-generating units ('CGUs') for impairment testing.
The Group conducts annual impairment tests on the carrying value
of the CGUs in the statement of financial position as at 28
February each year. Impairment testing is only re-performed if an
impairment triggering event occurs in the intervening period. As a
result of the proposed divestment the impairment review conducted
at the annual testing date was revisited in the Annual Report for
the year ended 31 March 2018.
Following the classification of the disposal group as held for
sale, the recoverable amount of the Video Business CGU as at 30
September 2017 was based on fair value less costs of disposal. Fair
value was assessed based on the agreed consideration for the Video
Business, and as a result an impairment of GBP4.3 million in the
carrying amount of goodwill was required.
The movement in goodwill in the prior period is a result of
foreign exchange movement (decrease GBP0.6m) and the impairment of
GBP4.3m.
6. Issued share capital
On 15 August 2018 the Group repurchased 19,675,906 Ordinary
shares at 17p per share for a total consideration of GBP3,345k.
As at 30 September 2018, there were 145,454,118 Ordinary Shares
in issue (30 September 2017: 165,130,024, 31 March 2018:
165,130,024). In addition, there were 163,124 Deferred Shares in
issue (31 March 2018 and 30 September 2017: 163,124).
7. Share options
The following share awards were granted in the six month period
ended 30 September 2018:
EMI Approved Sharesave
Options options
Grant date 28 Aug 2018 21 Sept
2018
------------- ----------
Number granted 360,000 1,443,600
------------- ----------
Fair value per option/award 13.47p 9.46p
------------- ----------
Exercise price 25.00p 20.00p
------------- ----------
Vesting period (years) 3.0 3.0
------------- ----------
The vesting and exercise of EMI share awards and Sharesave
option awards are not subject to performance conditions.
The share-based payment charge in the period amounts to GBP68k
(H1 2018: GBP35k, FY 2018: GBP52k), with the fair value charge
attributable to new awards in the period determined using a Black
Scholes calculation. Share option awards made prior to 2015 have
been made with a market based performance measure which in the
event that LTIPS fail to vest the share-based payment charge is not
added back to the income statement. To date the majority of these
historic LTIP awards have failed to vest.
8. Related Party Transactions
As noted in note 7 above, on 21 September 2018 Sharesave Options
were offered to employees as well as Directors of the Business. The
following sharesave options with a vesting date of 1 November 2021
were taken up by Directors of the Group:
Sharesave Exercise
Options Price
Tom Black 90,000 20.00p
---------- ---------
Colin Evans 90,000 20.00p
---------- ---------
9. Financial instruments
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair values of financial instruments by valuation
techniques:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
The Group had one Level 2 financial liability of GBP30k (H1
2018: GBPnil, FY 2018 GBPnil) as a result of a financial swap
measured at fair value. The fair values of other financial assets
and liabilities, which are short term, are not disclosed as the
Directors estimate that the carrying amount of the financial assets
and liabilities are not significantly different to their fair
value. These financial assets and liabilities are carried at
amortised cost.
10. Disposal group classified as held for sale
Video Business
As reported in the 2017 Annual Report, the Board undertook a
far-reaching internal review of the Group in early 2017. As a
result of the review, the Board concluded that a sale of the Video
Business would be in the best interests of the Group. A sale
process was undertaken, managed by Investec Bank plc, which
involved approaching a full range of potential trade and financial
buyers. Following a multi-staged and competitive process, the Board
received a number of indicative offers from interested parties. The
disposal group was classified as held for sale in September
2017.
The sale completed on 31 October 2017.
In the six months ended 30 September 2018 revenues attributable
to the disposal group amounted to GBPnil (H1 2018: GBP11.2 million,
FY 2018: GBP13.1 million) with a loss attributable to the disposal
group of GBP0.4 million (H1 2018: GBP11.3 million, FY 2018: GBP16.4
million).
The basic and diluted loss per share from discontinued
operations for the six months ended 30 September 2018 is 0.22 pence
(H1 2018: 6.86 pence, FY 2018: 9.52 pence) based on 145,454,118 (H1
2018 and FY 2018: 165,130,024) weighted average shares in issue.
The inclusion of potential Ordinary Shares arising from LTIP awards
would be anti-dilutive. Basic and diluted loss per share has
therefore been calculated using the same weighted number of
shares.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ZKLFBVLFBFBK
(END) Dow Jones Newswires
December 10, 2018 02:00 ET (07:00 GMT)
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