TIDMMSYS
RNS Number : 2520B
Microsaic Systems plc
30 September 2022
30 September 2022
Microsaic Systems plc
("Microsaic", "Microsaic Systems" or the "Company")
Interim Results for the six months ended 30 June 2022
Microsaic Systems plc (AIM: MSYS), the developer of
micro-electronic instruments and analytical solutions, is pleased
to announce its unaudited interim results for the six months ended
30 June 2022 ("H1 2022"). Performance has exceeded Board
expectations with the new high-tech services division launch in
April helping with the transition from product-only sales to
customer-centric service solutions in science and engineering
services that include analytical and AI software service programmes
designed for the medical device, environmental, aerospace and food
industries.
Highlights
-- Unaudited revenues of GBP735k: an increase of 47% on H1 2021 (GBP499k)
-- Increase in gross profit by 164% to GBP433k (H1 2021: GBP164k)
-- Adjusted EBITDA loss of GBP661k an improvement of 21% on H1 2021 (GBP839k loss)
-- Total comprehensive loss reduced by 65% to GBP705k (H1 2021: GBP2.01m loss)
-- Cash at 30 June 2022 was GBP2.56m (H1 2021: GBP4.48m)
-- International deployment of Microsaic's products and services
in applications such as water monitoring of chemicals and pathogens
continues to expand. Units have been installed in Ireland and the
UK and are being shipped to Japan and the US for installation
during H2 2022
-- Laboratory services that have been completed are for toxic
shock, insulin and a range of metabolites carried out under
contract by Microsaic as mass spectrometry services. Other
laboratory service work scheduled for H2 2022 include ceramides and
pesticides
-- Mass spectrometry units have been installed and demonstrated
in Modern Water mobile monitoring vehicles
-- March: Bob Moore joined the Board. Bob is a UK qualified
lawyer and brings over 35 years' commercial and legal experience to
the Company
-- April: New manufacturing services framework and an initial
contract worth GBP400k with Innovenn UK Limited, a division of
DeepVerge plc, supplying services for multi-sensor upgrades of
environmental and human health diagnostic equipment
-- April: Launch of Microsaic Services Division provi ding
integrated solutions in science and engineering services that
include analytical and AI software service programmes designed for
the medical device, environmental, aerospace and food
industries
Post Period Events
-- August: Microsaic appointed as an Authorised Partner for
Kingfield Electronics Limited ("Kingfield") for front-end research,
development, and engineering product development in scientific
instrumentation and micro-engineering adding these complementary
services to Kingfield's existing electronics aerospace, defence,
and process and scientific instrumentation clients
-- August: ISO 9001:2015 Surveillance Audit secured
Outlook
-- The growth in revenues, at higher margins, illustrates that
Microsaic is able to access additional revenues from other
innovative companies seeking a high quality product design,
development and manufacturing service. As a result, the Board
expects the solid sales momentum noted in H1 to continue through
H2.
Gerry Brandon, Acting Executive Chairman of Microsaic Systems
plc, commented:
"The change in business strategy which began in 2021 has carried
through to 2022. The result of which can be seen in the increased
revenues and gross profit which have led to reduced losses. We look
forward to continued growth with our existing collaboration
partners and already see new business opportunities developing for
2023 through the Authorised Partnership with Kingfield Electronics
Limited. The Board notes a strong momentum of sales growth in H1
and expects this to continue through H2 with a strong
orderbook."
Enquiries:
Microsaic Systems plc
Gerry Brandon, Acting Executive Chairman +44 (0)734 0055 648
Singer Capital Markets (Nominated Adviser & Joint
Broker)
Aubrey Powell / George Tzimas / Asha Chotai +44 (0)20 7496
3000
Turner Pope Investments (TPI) Limited (Joint Broker)
Andy Thacker / James Pope +44 (0)20 3657 0050
About Microsaic Systems
Microsaic has over 20 years' experience in microelectronics and
development of instrumentation. The Company has a robust and
innovative patent portfolio in cutting-edge technology designed and
developed for "Industry 4.0" application serving markets in
diversified Industries, Human and Environmental Health. Microsaic's
system solutions have enabled analytical detection and
characterisation at the point-of-need, whether within a
conventional laboratory setting, or within a bioprocessing facility
for continuous detection of data at multiple steps in the process
workflow.
Microsaic's products and solutions are commercially available
through global markets via a network of regional and local
partners, targeting its core laboratory, manufacturing and
point-of-need applications.
CHAIRMAN'S STATEMENT
Introduction
The shift in commercial strategy from product-only sales to
customer-centric service solutions began with the launch of the
Microsaic Services Division earlier this year resulting in an
uplift in revenues of 47% to GBP735k in H1 2022 (H1 2021: GBP499k)
and a healthy order book for the second half of the year. With 20
years of expertise in research and development of miniaturised
mass-spectrometry equipment, with 60 patents in scientific
analytical instrumentation, the combination of science and
engineering services now delivers turn-key project management,
hardware and software product development, and product lifecycle
management systems with quality management to ISO 9001:2015
standards.
Relevant Global Trends
Microsaic has adapted to a changing world where supply chains
and health-care systems have been disrupted by Covid and the
Ukraine war, creating new opportunities in science and engineering
services. Our proprietary technology and know-how is being deployed
to address a number of needs and shifting trends in the way
companies and even national bodies seek to source
technology-enabled solutions.
The Covid pandemic, has amongst other things, also emphasised
the need for national capability, supply chain resilience and
on-shoring with core competence of delivering both upstream and
downstream services to manufacturers to ensure continuity rather
than relying on off-shore capabilities. Microsaic is able to
address this demand for more localised solutions by supplying
through partners which are already present in the major
markets.
The health costs associated with ageing populations with limited
economic capacity have highlighted the need for automation and
technology-driven efficiencies in healthcare, particularly for
surveillance in disease biomarkers as the move to digital health
diagnostics becomes inevitable, either in GP offices or bedside
observations of proteins in patient treatments.
At the same time, there is a heightened realisation of the
finite, shared resources of our planet and the need to manage
levels of pollutants by measuring them. Microsaic's miniaturised
portable mass spectrometry units have application in monitoring
pollution and are being rolled out as part of the DeepVerge Modern
Water mobile monitoring services. The complementary systems have
the ability to monitor contaminants in the air, in soil, rivers,
lakes and sea and in wastewater. All areas offer the opportunity to
identify recycling processes - which all play a role in the
management of the circular economy.
There is no doubt that the conflict in Ukraine has demonstrated
that defence and security are a necessity, and also need to be
deployed in an agile and affordable manner. This comes with supply
chain resilience, the availability of technology which is closer to
home and the provision of science and engineering services to the
Defence Science and Technology Laboratory, Ministry of Defence and
the Home Office.
Collaboration across partner core competences
Microsaic and DeepVerge plc ("DeepVerge") have been working
together since March 2021 when the parties signed a 3-year
framework agreement under which Microsaic supplies its own
miniaturised mass spectrometry equipment and services on a
non-exclusive basis across DeepVerge's global sales, marketing and
distribution channels, for healthcare diagnostic and environmental
health applications.
In April 2022, Microsaic and Innovenn UK Limited, a subsidiary
of DeepVerge, entered into a new Manufacturing Services Framework
Agreement ("MSFA") with an initial contract worth GBP400,000
supplying services for Multi-Sensor Upgrades of Environmental and
Human Health Diagnostic Equipment.
These new services leverage the considerable depth and breadth
of technical design, engineering and delivery expertise within the
Microsaic team and diversifies the Company's revenues beyond
equipment sales of Mass Spectrometers, in line with the Company's
shift in strategy. By offering the skillsets that created the
smallest compact mass spectrometer in the world, collaboration
partners, such as DeepVerge and Kingfield Electronics Limited, who
recently appointed Microsaic as their Authorised Partner, can
outsource engineering development of existing and new analytical
instrumentation equipment while concentrating on growing their
business.
Going Concern
Having considered the plans and prospects of the business, the
Board of Directors believes that the Company has enough cash to
cover its anticipated working capital requirements for the next 12
months. Therefore, the Directors have adopted the going concern
basis of reporting in preparing the financial statements.
Outlook
The growth in revenues, at higher margins, illustrates that
Microsaic is able to access additional revenues from other
innovative companies seeking a high quality product design,
development and manufacturing service. As a result, t he Board
expects the solid sales momentum noted in H1 to continue through
H2.
Gerard Brandon
Acting Executive Chairman
30 September 2022
Financial Review
Statement of Comprehensive Income
In H1 2022, total revenues of GBP734,914 were GBP235,629 (47.2%)
above H1 2021 (GBP499,285). Reflecting the shift in strategy,
service and support revenues were GBP502,317 (H1 2021: GBP12,170)
and represented 68.4% of total revenue (H1 2021: 2.4%). In
comparison, product revenue of GBP165,011 (H1 2021: GBP367,474)
represented 22.4% of total revenue (H1 2021: 73.6%) whilst
consumables and spares revenues of GBP67,586 (H1 2021: GBP119,641)
represented 9.2% of total revenue (H1 2021: 24.0%).
A new accounting policy for cost of sales has been introduced to
reflect the staff time directly attributable to the new service
lines (further information is included in note 5) and therefore the
comparative periods have been restated accordingly (note 14). Gross
margin in H1 2022 was 59.0%, exceeding the margin achieved in H1
2021 of 32.8% (restated), as a result of a higher proportion of
services sales which generate higher margins.
Operating expenses of GBP1,134,310 were stable and also slightly
lower by GBP27,304 (2.4%) than the comparative period (H1 2021
restated: GBP1,161,614).
With increased gross profit and relatively flat operating
expenses, the loss from operations before share-based payments of
GBP700,934 marks a 26.3% improvement on the loss in H1 2021
(restated: GBP950,652).
Share-based payments of GBP126,002 fell substantially by
GBP1,031,700 (89.1%) compared with H1 2021 (restated: GBP1,157,702)
chiefly reflecting the full vesting of directors share options in
H1 2021 and with no further option grants since February 2021.
Adjusted EBITDA is deemed by the Board to be a key performance
indicator of the Company's profitability. The adjusted EBITDA loss
in H1 2022 was GBP661,491 compared with GBP838,804 in H1 2021, an
improvement of GBP177,313. Note 7 details the reconciliation
between Adjusted EBITDA loss and comprehensive loss for the
period.
The comprehensive loss of GBP704,711 is 64.9% lower than H1 2021
(restated: GBP2,008,203) reflecting the aforementioned changes
which have been implemented. The H1 2021 comprehensive loss is
GBP98,722 higher than previously reported due to the recognition of
an accrued tax credit receivable as set out in note 14.
Accordingly, the basic loss per share of 0.011p has reduced by
72.5% compared to last year (H1 2021 restated: 0.040p per share)
following the improved performance of the business during the
period.
Statement of Financial Position
Total non-current assets of GBP453,533 are GBP53,092 lower (31
December 2021: GBP506,625). The reduction is mainly attributable to
the decrease in right of use assets by GBP35,979, representing the
depreciation charge in the period.
Total current assets of GBP4,317,724 are GBP330,787 lower (31
December 2021: GBP4,648,511). The main contributor to this
reduction is the GBP902,136 lower cash balance at the period end of
GBP2,562,741 (31 December 2021: GBP3,464,876) and this is discussed
further in the Statement of Cash Flows section which follows. The
main increase offsetting the cash reduction is the rise by
GBP480,657 in trade and other receivables to GBP1,112,605 (31
December 2021: GBP631,948). The main component of that increase is
trade receivables of GBP820,566 which have increased by GBP493,505
(31 December 2021: GBP327,061).
Total assets of GBP4,771,257 are GBP383,879 lower (31 December
2021: GBP5,155,136), mainly due to the movement in total current
assets as explained above.
Total equity of GBP4,194,511 is GBP378,709 lower (31 December
2021: GBP4,573,220). The movements during the period were the
comprehensive loss of GBP704,711 offset by the exercise of warrants
and directors fees paid in shares totalling GBP285,000 and a
share-based reserve movement of GBP41,002 in respect of
leavers.
Current liabilities of GBP453,081 are GBP27,283 higher (31
December 2021: GBP425,798). This is mainly due to trade and other
payables of GBP379,382 which are up by GBP24,711 (31 December 2021:
GBP354,611).
Total non-current liabilities of GBP123,665 are GBP32,453 lower
(31 December 2021: GBP156,118). This is mainly due to a GBP37,538
reduction in non-current lease liabilities to GBP18,620 (31
December 2021: GBP56,158) as right of use assets approach the end
of their term and their renewal dates.
Statement of Cash Flows:
Cash and cash equivalents fell GBP902,136 from GBP3,464,876 at
31 December 2021 to GBP2,562,741 at 30 June 2022.
The main component of this reduction was due to cash used in
operating activities (see note 12), which increased to GBP997,506
and was GBP90,260 higher than H1 2021 (GBP907,246). Cash absorbed
by operating activities before working capital movements improved
by GBP309,342 to GBP579,451 (H1 2021: GBP888,793), primarily due to
lower losses. However, this was offset by working capital movements
amounting to a net increase in cash absorbed of GBP418,055 (H1
2021: GBP18,453 increase). The largest component of the working
capital movements was due to an increase in trade receivables by
GBP485,413 (H1 2021: GBP298,503 increase) which is expected to
improve in H2 2022.
Net cash used in investing activities in H1 2022 of GBP65,500
(H1 2021: GBP50,832) increased by GBP14,668. The movements were an
increase in the purchases of property, plant and equipment by
GBP25,526 to GBP65,019 (H1 2021: GBP39,493), off-set by a decrease
in the purchases of intangibles by GBP7,333 to GBP6,331 (H1 2021:
GBP13,664) and interest received was GBP3,525 higher at GBP5,850
(H1 2021: GBP2,325).
Net cash from financing activities amounted to GBP160,870 (H1
2021: GBP5,044,261). The main difference compared to the
comparative period are net proceeds of share issues from warrant
exercises of GBP200,000 compared with net cash raised from the
February 2021 fundraising of GBP5,083,140.
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHSED 30 JUNE 2022
6 months 6 months Year to
to 30 June to 30 June 31
December
2022 2021 2021
Notes Unaudited Unaudited Audited
RESTATED(1) RESTATED(1)
GBP GBP GBP
------------------------------------------------------------------------------------ --------------- ---------------
Revenue 4 734,914 499,285 906,876
Cost of sales 14 (301,538) (335,356) (526,125)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Gross profit 433,376 163,929 380,751
Other operating income - 47,033 67,283
Research and development expenses (219,491) (312,755) (738,145)
Professional fees - Corporate transactions - (65,789) (65,789)
Other operating expenses 14 (914,819) (783,070) (1,678,335)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Total operating expenses (1,134,310) (1,161,614) (2,482,269)
Loss from operations before share-based payments (700,934) (950,652) (2,034,235)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Share-based payments 11 (126,002) (1,157,702) (1,363,764)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Loss from operations after share-based payments (826,936) (2,108,354) (3,397,999)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Financial cost (4,104) (1,554) (4,604)
Finance income 7,083 2,983 6,237
--------------------------------------------------- -------------- --------------- --------------- ---------------
Loss before tax (823,957) (2,106,925) (3,396,366)
Tax on loss on ordinary activities 119,246 98,722 267,785
--------------------------------------------------- -------------- --------------- --------------- ---------------
Total comprehensive loss for the period (704,711) (2,008,203) (3,128,581)
--------------------------------------------------- -------------- --------------- --------------- ---------------
Loss per share attributable to the equity
holders of the Company
Basic and diluted loss per ordinary shares
(1)See note 14 for an explanation of the prior
period restatement. 6 (0.011)p (0.040)p (0.056)p
--------------------------------------------------- -------------- --------------- --------------- ---------------
STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 30 JUNE
2022
30 June 30 June 31 December
2022 2021 2021
Notes Unaudited Unaudited Audited
RESTATED(1)
GBP GBP GBP
----------------------------------------------------------- -------------- --------------
ASSETS
Non-current assets
Intangible assets 66,637 77,294 74,405
Property, plant and equipment 296,342 112,645 305,687
Right of use assets 90,554 15,037 126,533
------------------------------ ------------- ------------ -------------- --------------
Total non-current assets 453,533 204,976 506,625
------------------------------ ------------- ------------ -------------- --------------
Current assets
Inventories 255,346 377,156 283,902
Trade and other receivables 1,112,605 524,049 631,948
Corporation tax receivable 387,032 317,290 267,785
Cash and cash equivalents 2,562,741 4,483,252 3,464,876
------------------------------ ------------- ------------ -------------- --------------
Total current assets 4,317,724 5,701,747 4,648,511
------------------------------ ------------- ------------ -------------- --------------
TOTAL ASSETS 4,771,257 5,906,723 5,155,136
------------------------------ ------------- ------------ -------------- --------------
EQUITY AND LIABILITIES
Equity
Share capital 1,731,413 1,702,913 1,702,913
Share premium 28,262,518 28,006,018 28,006,018
Share-based payment reserve 2,817,181 2,743,064 2,888,707
Retained losses (28,616,601) (26,904,040) (28,024,418)
------------------------------ ------------- ------------ -------------- --------------
Total Equity 4,194,511 5,547,955 4,573,220
------------------------------ ------------- ------------ -------------- --------------
Current liabilities
-------------
Trade and other payables 379,382 245,346 354,611
------- ----
Lease liability 73,699 16,143 71,187
------------------------------ ------- ---- ------------ -------------- --------------
Total current liabilities 453,081 261,489 425,798
------------------------------ ------------- ------------ -------------- --------------
Non-current liabilities
Provision 9 105,045 97,279 99,960
Lease liability 18,620 - 56,158
------------------------------ ------------- ------------ -------------- --------------
Total non-current liabilities 123,665 97,279 156,118
------------------------------ ------------- ------------ -------------- --------------
Total liabilities 576,746 358,768 581,916
------------------------------ ------------- ------------ -------------- --------------
TOTAL EQUITY AND LIABILITIES 4,771,257 5,906,723 5,155,136
------------------------------ ------------- ------------ -------------- --------------
(1)See note 14 for an explanation of the prior period restatement.
-------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN EQUITY (UNAUDITED) AS AT 30 JUNE
2022
Share
based
Share Share payment Retained Total capital premium reserve
Losses equity
RESTATED(1)
GBP GBP GBP GBP GBP
------------------------------------------------------------------- --------------------------
At 1 January 2021 1,140,913 24,867,886 324,264 (25,090,083) 1,242,980
Total comprehensive loss for
the period as presented in
the unaudited interim financial
statements to 30 June 2021 - - - (2,106,925) (2,106,925)
Impact of restatement of R&D
tax credit recognition (see
note 14) - - - 98,722 98,722
Transactions with owners
Shares issued 562,000 5,058,000 - - 5,620,000
Share issue costs - (1,919,868) 1,503,008 - (416,860)
Transfer in respect of lapsed
share options - - (194,246) 194,246 -
Share based payments-share
options - - 1,110,038 - 1,110,038
--------------------------------- -------------------------------- --------------------------
At 30 June 2021 1,702,913 28,006,018 2,743,064 (26,904,040) 5,547,955
--------------------------------- -------------------------------- --------------------------
At 1 July 2021 1,702,913 28,006,018 2,743,064 (26,904,050) 5,547,955
Total comprehensive loss for
the period - - - (1,120,378) (1,120,378)
Transactions with owners
Shares issued - - - - -
Share issue costs - - - - -
Transfer in respect of lapsed - - - - -
share options
Share based payments-share
options - - 145,643 - 145,643
--------------------------------- -------------------------------- --------------------------
At 31 December 2021 1,702,913 28,006,018 2,888,707 (28,024,418) 4,573,220
--------------------------------- -------------------------------- --------------------------
At 1 January 2022 1,702,913 28,006,018 2,888,707 (28,024,418) 4,573,220
Total comprehensive loss for
the period - - - (704,711) (704,711)
Transactions with owners
Shares issued 28,500 256,500 - - 285,000
Share issue costs - - - - -
Transfer in respect of lapsed
share options - - (112,528) 112,528 -
Share based payments share
options - - 41,002 - 41,002
--------------------------------- -------------------------------- --------------------------
At 30 June 2022 1,731,413 28,262,518 2,817,181 (28,616,601) 4,194,511
--------------------------------- -------------------------------- --------------------------
(1)See note 14 for an explanation of the prior period restatement.
-----------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHSED 30 JUNE
2022
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
Notes Unaudited Unaudited Audited
GBP GBP GBP
------------------------------------------------------------------------------ ----------- -------------
Cash flows from operating activities
Cash absorbed by operations 12 (997,506) (907,246) (1,827,851)
Corporation tax received - - 218,568
---------------------------------------------- ---------------- ------------ ----------- -------------
Net cash used in operating activities (997,506) (907,246) (1,609,283)
---------------------------------------------- ------------------------------ ----------- -------------
Cash flows from investing activities
Purchases of intangible assets (6,331) (13,664) (28,883)
Purchases of property, plant and equipment (65,019) (39,493) (305,334)
Interest received 5,850 2,325 6,237
---------------------------------------------- ------------------------------ ----------- -------------
Net cash used in investing activities (65,500) (50,832) (327,980)
---------------------------------------------- ------------------------------ ----------- -------------
Cash flows from financing activities
Proceeds from share issues 200,000 5,500,000 5,500,000
Share issue costs - (416,860) (416,860)
Repayment of lease liabilities (39,130) (38,879) (78,070)
---------------------------------------------- ------------------------------ ----------- -------------
Net cash from/(used in) financing
activities 160,870 5,044,261 5,005,070
---------------------------------------------- ------------------------------ ----------- -------------
Net increase/(decrease) in cash and
cash equivalents (902,136) 4,086,183 3,067,807
Cash and cash equivalents at beginning
of the year 3,464,876 397,069 397,069
---------------------------------------------- ------------------------------ ----------- -------------
Cash and cash equivalents at the end
of the period 2,562,741 4,483,252 3,464,876
---------------------------------------------- ------------------------------ ----------- -------------
NOTES TO THE INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. Nature of operations
Microsaic Systems plc is registered in England and Wales. The
Company's registered office is GMS House, Boundary Road, Woking,
GU21 5BX. The Company has no subsidiaries, so the financial
information relates to the Company only. Microsaic is a high
technology company developing compact, chip-based mass
spectrometers that are designed to improve the efficiency of
pharmaceutical R&D.
2. Basis of preparation
The interim financial statements of the Company for the six
months ended 30 June 2022, which are unaudited, have been prepared
in accordance with the accounting policies set out in the annual
report and accounts for the year ended 31 December 2021, which were
prepared under International Financial Reporting Standards ("IFRS")
with the exception of Revenue and Cost of sales policies which have
been amended for the year ending 31 December 2022, as per notes 4,
5 and 14. Comparable information for the six months ended 30 June
2021 has been restated in accordance with these policies.
This report does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006 and has not been audited. The
financial information for the full preceding year is based on the
statutory accounts for the year ended 31 December 2021. Those
statutory accounts have been filed with the Registrar of Companies.
The auditor's report on those statutory accounts was
unqualified.
As permitted, this interim report has been prepared in
accordance with the AIM Rules for Companies and not in accordance
with IAS 34 "Interim Financial Reporting" and therefore it is not
fully compliant with IFRS.
The interim financial statements are presented in pounds
sterling.
3. Critical accounting estimates and judgements
Accounting estimates and judgements are continually evaluated
and are based on past experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates could, by definition,
differ from the actual outcome.
The following estimates and assumptions are those that, in
addition to those set out in the annual report and accounts for the
year ended 31 December 2021, have a risk of causing a material
adjustment to the carrying amounts of assets and liabilities:
Carrying value of trade receivables
The Company has applied a simplified "provision matrix" for
calculating expected credit losses as a practical expedient. The
percentage ranges are applied to the receivable balance.
Current 1-30 days 31-60 61-90 91-120 121-150 151-180 181 days
past due days past days past days past days past days past + past
due due due due due due
0%-1% 1%-2% 1%-2% 1%-2% 2%-5% 5%-10% 10%-20% 10%-50%
---------- ----------- ----------- ----------- ----------- ----------- ---------
The directors have reviewed the expected credit losses
calculated in accordance with the "provision matrix" above and
believe that there is no change required to the provision in
respect of recoverability.
4. Revenues
IFRS 15 provides a single, principles based five-step model to
be applied to all contracts with customers. The five-step framework
includes:
Identify the contract(s) with a customer;
Identify the performance obligations in the contract; Determine
the transaction price;
Allocate the transaction price to the performance obligations in
the contract; and Recognise revenue when the entity satisfies a
performance obligation.
The Company recognises revenue from the following four
sources:
Sale of products;
Sale of consumables and spare parts; Product service and product
support; and Consultancy services.
All revenues and trade receivables arise from contracts with
customers. Revenue is measured based on the consideration which the
Company expects to be entitled in a contract with a customer and
excludes amounts collected on behalf of third parties. The sale of
products, consumables and spare parts is recognised when the sole
performance obligation is met which is usually on delivery to the
customer. For product service, product support and consultancy
services revenue, the performance obligation is satisfied over the
duration of the service period and revenue is recognised in line
with the satisfaction of the performance obligation.
Sale of products
The Company sells compact mass spectrometers (Microsaic 4500
MiD(R)) mainly through OEMs and Distributors. A small proportion of
its sales are direct to the customer. Discounts are offered and
agreed as part of the contractual terms. Terms are generally Ex
Works so control passes when the customer collects the goods.
Payment terms are generally 30 days from the date of invoice.
Sales of consumables and spare parts
The Company sells consumables and spare parts mainly through
OEMs and Distributors. Terms are generally Ex Works so control
passes when the customer collects the goods. Discounts are offered
and agreed as part of the contractual terms. Payment terms are
generally 30 days from the date of invoice.
Product service and product support revenue
Service and support to our OEMs and Distributors includes
training their sales and service teams and servicing the products
from time to time. Discounts are offered and agreed as part of the
contractual terms. Terms are Ex Works so control passes when the
customer receives the service. Payment terms are generally 30 days
from the date of invoice.
Usually, there is no obligation on the Company for returns,
refunds or similar arrangements. Also, the Company does not
manufacture specific items to a customer's specification and no
financing component is included in the terms with customers.
The Company provides assurance warranties which are 15 months
from the date of shipment for OEMs and Distributors. These
warranties confirm that the product complies with agreed-upon
specifications. The Company is looking to provide service
warranties in the future to direct Europe customers, where the
revenue from such warranties will be recognised over the period of
the service agreement.
Consultancy services revenue
Consultancy services comprises science and engineering
consultancy, laboratory services and monitoring services. These
services are delivered over a period of time usually in accordance
with a master services agreement and/or statement of works with an
agreed outcome at the end of the project or project phase.
Consultancy services revenue is recognised by reference to the
stage of completion of the project or project phase at the balance
sheet date as follows:
-- Where there are defined project or project phase milestones,
the revenue is recognised in full on completion of the project or
project phase and on a time basis for the stage of completion where
the project or project phase is not completed at the balance sheet
date. The stage of completion is recognised as the proportion of
time spent on the project or project phase compared with the total
time anticipated to complete the project or project phase;
and/or
-- Where the project is defined with the client in terms of time
spent, the revenue is recognised on the basis of consulting time
spent on the project by the Company at the time-based rates agreed
with the client.
The geographical analysis of revenues (by location of shipment)
was as follows:
6 months 6 months Year to
to 30 June to 30 June 31
December
2022 2021 2021
Unaudited Unaudited Audited
GBP GBP GBP
--------------------------- ------- -------
UK 634,200 220,192 532,364
Japan 8,279 - 1,000
USA 50,703 130,960 187,673
Europe 29,610 42,057 71,887
China 12,122 106,076 106,076
South Korea - - 3,662
Rest of World - - 4,214
-------------- ----------- ------- -------
734,914 499,285 906,876
-------------- ----------- ------- -------
The product group analysis of revenues
was as follows:
6 months 6 months Year to
31
to 30 June to 30 June December
2022 2021 2021
Unaudited Unaudited Unaudited
GBP GBP GBP
--------------------------------------- ---------- --------------- ----------------
Product/Unit Consumables and spares 165,011 367,474 617,614
Service and support income 67,586 119,641 230,831
502,317 12,170 58,431
--------------------------------------- ---------- --------------- ----------------
734,914 499,285 906,876
--------------------------------------- ---------- --------------- ----------------
5. Cost of sales
With effect from 1 January 2022, the company has adopted new
accounting policies for the presentation of cost of sales, to
better reflect the costs associated with the new revenue streams.
The financial impact of this change is set out in note 14, and the
new policies applied are as follows:
Cost of sales of products
The cost of sales of mass spectrometers and related equipment is
the bought in purchase cost of the product or the transfer value
from stock value if a unit has been previously written down.
Usually, the sale is made on an Ex-Works basis but if it were not
the cost of delivery to the customer is also included in cost of
sales.
Cost of sales of consumables and spare parts
The cost of sales of consumable and spare parts is the bought in
purchase cost of the consumable or spare part or the transfer value
from stock value if an item has been previously written down.
Usually, the sale is made on an Ex-Works basis but if it were not
the cost of delivery to the customer is also included in cost of
sales.
Cost of sales of product service and product support income
The cost of sales of service and support income is the
time-based apportionment of the employment costs of the relevant
staff spent on the delivery of the service and support income plus
any related costs of fulfilment such as travel expenses and any
externally incurred direct costs. For the purposes of cost of
sales, the employment costs are considered to be salaries, pensions
and employers national insurance but cost of sales does not include
share-based payments nor any apportionment of training or
overheads.
Cost of sales of consultancy services revenue
The cost of sales of consultancy services (comprising science
and engineering consultancy, laboratory services and monitoring
services) is the time-based apportionment of the employment costs
of the relevant staff spent on the delivery of this revenue plus
any related costs of fulfilment such as travel expenses and any
externally-incurred direct costs. For the purposes of cost of
sales, the employment costs are considered to be salaries, pensions
and employers national insurance but does not include share-based
payments nor any apportionment of training or overheads.
6. Loss per share
6 months 6 months Year to 31
to 30 June to 30 June December
2022 2021 2021
Unaudited Unaudited Audited
RESTATED
-------------------------------------------------------------------------------------------------------
Comprehensive loss attributable
to equity shareholders (GBP)
Weighted average number of ordinary
0.01p (704,711) (2,008,203) (3,128,581)
(2021: 0.01p) shares for the
purpose of basic
and diluted loss per share 6,287,359,621 4,989,624,815 5,537,461,036
------------------------------------- --------------------- -------------------- -------------------
Basic and diluted loss per ordinary
share (p) (0.011)p (0.040)p (0.056)p
------------------------------------- --------------------- -------------------- -------------------
The basic loss per share has continued to reduce. It fell by 72%
compared with H1 2021. This was due to a 65% reduction in
comprehensive loss as well as the impact of the share
reorganisation early in 2021 and issues of equity in 2022. The main
contributions to the reduction in comprehensive loss was an
increase in gross profit of 164% and a reduction in share-based
payment costs by 93%. The 6 months to 30 June 2021 loss per share
has been re-stated due to the change in recognition of R&D tax
credit receivable as set out in note 14.
Potential ordinary shares are not treated as dilutive as the
Company is loss making, therefore the weighted average number of
ordinary shares for the purposes of the basic and diluted loss per
share are the same.
7. Adjusted EBITDA Loss
A key indicator of performance for the Company is Adjusted
EBITDA Loss (Loss of earnings before interest, tax, depreciation,
amortisation and other items such as share-based payments and
exceptional one-off expenditure). Detailed below is the Adjusted
EBITDA Loss for the period:
6 months 6 months Year to 31-Dec
to 30 June to 30 June 2021
2022 2021 Unaudited
Unaudited Unaudited
------------------------------------
GBP GBP GBP
------------------------------------ ----------- ------------ ---------------------
Comprehensive loss for period (704,711) (2,008,203) (3,128,581)
Adjust for:
Tax on loss on ordinary activities (119,246) (98,722) (267,785)
Depreciation of property, plant
and equipment 74,364 39,222 90,628
Depreciation of right of use
assets 35,980 34,368 70,499
Amortisation of Intangibles 14,099 20,133 38,241
Net finance cost (2,979) (1,429) (1,633)
Share-based payments (excluding
fee shares) 41,002 1,110,038 1,255,681
Exceptional costs - 65,789 65,789
------------------------------------ ----------- ------------ ---------------------
Adjusted EBITDA Loss (661,491) (838,804) (1,877,161)
------------------------------------ ----------- ------------ ---------------------
8. Employees and employment related costs
6 months 6 Months Year to 31
to 30 June to 30 June December
2022 2021 2021
Unaudited Unaudited Audited
Staff Numbers RESTATED
Directors 3 4 4
Other staff 19 17 18
----------------------------------------- ----------- ----------- ----------
Average Headcount 22 21 22
----------------------------------------- ----------- ----------- ----------
Employment costs (including Directors) GBP GBP GBP
----------------------------------------- ----------- ----------- ----------
Wages and salaries 514,539 590,195 1,123,276
Social security costs 74,710 67,452 160,902
Termination payments 21,125 - 18,189
Pension costs 77,578 80,296 173,051
Employment related share-based
payments 82,943 1,143,800 1,332,240
----------------------------------------- ----------- ----------- ----------
770,895 1,881,743 2,807,699
----------------------------------------- ----------- ----------- ----------
9. Provisions
Total unaudited
Dilapidations Warranty GBP
GBP GBP
-------------------------------------------- -------------- --------- ---------------
Balance at 1 January 2022 75,779 24,181 99,960
Provided for/(Reduction) during the period 8,199 (3,114) (5,085)
-------------------------------------------- -------------- --------- ---------------
Balance at 30 June 2022 83,978 21,067 105,045
-------------------------------------------- -------------- --------- ---------------
The dilapidations provision has been updated for the estimated
impact of inflation. The warranty provision methodology was updated
to reflect more recent performance with the increased value of
products under warranty offset by reduced warranty claim rates and
costs.
10. Commitments
As at 30 June 2022, purchase commitments relating to purchase
orders placed on, and related contractual arrangements and
obligations, with our third-party manufacturers amounted to
GBP684,978 (31 December 2021: GBP781,990).
11. Share-based payments
The share-based payments charge 6 months 6 Months Year to 31
comprises: to 30 June to 30 June December
2022 2021 2021
Unaudited Unaudited Audited
RESTATED
GBP GBP GBP
---------------------------------- ----------- ------------ ----------
Directors' fees settled in shares 41,941 33,762 76,559
Share options granted 41,002 1,110,038 1,255,681
---------------------------------- ----------- ------------ ----------
Employment related share-based
payments 82,943 1,143,800 1,332,240
Brokers' fees settled in shares 43,059 13,902 31,524
---------------------------------- ----------- ------------ ----------
126,002 1,157,702 1,363,764
---------------------------------- ----------- ------------ ----------
The Directors' fees settled in shares in respect of the years
commencing 5 February 2021 and 5 February 2022 and Broker's fees
settled in shares in respect of the year commencing 5 February 2021
are both in respect of paying annual fees in advance at the placing
price of 5 February 2021 being a valuation of 0.1p per ordinary
share of 0.01p nominal value. The restatement above reflects the
inclusion of Brokers' fees settled in shares previously included as
Directors' fees settled in shares.
12. Cash absorbed by operations
6 months 6 months Year to
to 30 June to 30 June 31
December
2022 2021 2021
Unaudited Unaudited Audited
RESTATED
GBP GBP GBP
-------------------------------------------------------------- --------------- ---------------
Total comprehensive loss for the year (704,711) (2,008,203) (3,128,581)
Adjustments for:
Amortisation of intangible assets 14,099 20,133 38,241
Depreciation of right of use assets 35,980 34,367 70,499
Depreciation of property, plant and equipment 74,364 39,222 90,628
Transfer of property, plant and equipment
to
cost of goods - 23,867 23,164
Profit on disposal of right of use assets - - (113)
Decrease in provision for warranty (3,114) (26,756) (24,075)
Increase in provision for dilapidations 8,199 - -
(Decrease)/Increase in provision for expected
credit losses 4,755 (18,532) (65,825)
Share-based payments (inclusive of fees
settled in shares) 126,002 1,157,702 1,363,764
Increase/(Decrease) in inventory provision (14,033) (10,442) 32,535
Tax on loss on ordinary activities (119,246) (98,722) (267,785)
Interest on lease liability 4,104 1,554 4,433
Interest received (5,850) (2,983) (6,237)
-------------- --------------- ---------------
Cash absorbed by operations before movements
in working capital (579,451) (888,793) (1,869,352)
-------------- --------------- ---------------
Movements in working capital:
Decrease/(Increase) in inventories 42,587 202,883 253,152
(Increase)/Decrease in trade and other
receivables (485,413) (298,503) (398,083)
Increase/(Decrease) in trade and other
payables 24,771 59,419 168,684
Accrued furlough income - 17,748 17,748
-------------- --------------- ---------------
Net movement in working capital (418,055) (18,453) 41,501
Cash absorbed by operations (997,506) (907,246) (1,827,851)
---------------------------------------------- -------------- --------------- ---------------
13. Related party transactions
Microsaic and DeepVerge plc ("DeepVerge") have two directors in
common: Gerard Brandon and Nigel Burton. In particular, Gerard
Brandon is Executive Chairman of Microsaic and CEO of
DeepVerge.
On 19 April 2022, Microsaic signed a new Manufacturing Services
Framework Agreement ("MSFA") with Innovenn UK Limited, a division
of DeepVerge plc ("DeepVerge"), to refine and miniaturise existing
monitoring equipment for environmental and human health
diagnostics, together with an initial contract worth GBP400,000.
The MSFA framework sets out the terms and conditions for Microsaic
to improve and manufacture certain DeepVerge products and to
provide the design, assembly, quality, and project management
functions necessary to produce and ship equipment based on
DeepVerge approved specifications, design, and quality
requirements.
In summary for the six months ended 30 June 2022, revenue from
DeepVerge sales totalled GBP546,718 and purchases from DeepVerge
were GBPnil. At 30 June 2022, GBP632,021 was owed by DeepVerge to
Microsaic in relation to the revenue recognised in H1 2022 and
GBP65,610 was owed by Microsaic to DeepVerge.
At 30 June 2022, Director Nigel Burton owed GBP14,100 in respect
of tax and national insurance which was settled in July 2022.
14. Prior period restatement
The year to 31 December 2021 Cost of Sales and other operating
expenses have been restated to reclassify amounts of GBP7,424 for
the 6-month period to 30 June 2021 and GBP15,233 for the 12-month
period to December 2021. There was no effect on the final
results.
To reflect the change in revenue, further detail with regards to
the product group of how revenue is generated has been included
within note 4.
An adjustment was made to the Income statement for the tax
credit receivable through R&D claims. Previously, the accrued
tax credit receivable was not included at each half year. This has
been included for the 6-month period to 30 June 2022 at GBP119,246
(being GBP134,355 for the 6 months less an adjustment of GBP15,089
in respect of the year ended 31 December 2021) on the basis that
the directors believe it is probable that it will be recovered. The
6 month period to 30 June 2021 has accordingly been re-stated to
include an amount of GBP98,722. Subsequently this has impacted the
calculation of loss per share, note 6.
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END
IR SEAFAUEESEEU
(END) Dow Jones Newswires
September 30, 2022 02:00 ET (06:00 GMT)
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