TIDMKMK
RNS Number : 8778G
Kromek Group PLC
24 July 2023
24 July 2023
Kromek Group plc
("Kromek" or the "Company" or the "Group")
Final Results
Kromek (AIM: KMK), a leading developer of radiation and
bio-detection technology solutions for the advanced imaging and
CBRN detection segments, announces its final results for the year
ended 30 April 2023.
Financial Summary
-- Revenue increased 44% to GBP17.3m (2022: GBP12.1m)
-- Gross margin improved to 51.6% (2022: 46.7%). Improvement
largely due to sale mix and easing of supply chain challenges
-- Adjusted EBITDA loss reduced to GBP1.0m (2022: GBP1.2m loss)*
and positive for H2
-- Loss before tax was GBP7.3m (2022: GBP6.1m loss)
-- Cash and cash equivalents at 30 April 2023 were GBP1.1m (30
April 2022: GBP5.1m). Fundraise of GBP8m (gross) post year end
*A reconciliation of adjusted EBITDA can be found in the
Financial Review.
Operational Highlights
Advanced Imaging
-- Strong revenue growth with delivery under component supply
agreements; secured new milestone contracts; and end products
launched into the market
-- Significant progress in medical imaging:
o Signed a landmark 7-year collaboration agreement with a tier 1
OEM to provide CZT-based detectors for use in the customer's
advanced medical imaging scanners
o Entered a collaboration agreement with Analogic Corporation
("Analogic") to develop CZT-based detectors for photon counting
computed tomography ("CT") applications in medical imaging and
security screening
o Launch by Spectrum Dynamics Medical ("Spectrum Dynamics") of
the world's first digital single-photon emission computed
tomography ("SPECT")/CT scanner for higher energy imaging, which
uses Kromek's CZT technology
o Received repeat orders totalling over $2.0m for the supply of
detectors for bone mineral densitometry ("BMD") and SPECT
applications and the gamma probes market
o Awarded GBP2.5m from Innovate UK for two programmes to further
develop a low dose molecular breast imaging technology based on
Kromek's CZT-based detectors
o Further contract win of $1.4m post year end from a new
Asia-based OEM customer for CZT-based detectors to be used in the
customer's SPECT systems
CBRN Detection
-- Record revenue in nuclear security, with the winning and
delivery of new and repeat orders, including:
o A $1.3m contract from a US customer for the D3M and two orders
totalling $1.5m from US government customers for the D3S-ID
o Two contracts, totalling GBP1.5m, for D3M and D3S-based
product products for European government end-users
-- Established distribution partnership with Smiths Detection
for the distribution of the Group's nuclear security products to
North and South American markets, the Middle East and certain key
markets in Asia and Australasia
-- Post year end, awarded a $1.5m contract in Asia for a new
product in the civil nuclear market
Biological Threat Detection
-- Concluded long-running programme with the Defense Advanced
Research Projects Agency to develop a biological-threat detection
solution
-- Received a GBP4.9m contract from a UK government department
for a three-year programme to deliver bio-security solutions
Manufacturing and IP
-- Significant progress in improving yield and cost efficiency
in CZT crystal growth and detector manufacturing
-- Nine new patents were filed and four were granted during the
year
Dr Arnab Basu, CEO of Kromek, said: "We are pleased to have
delivered record revenues, with significant growth in advanced
imaging and CBRN detection, and achieved positive adjusted EBITDA
for the second half. During the year, we experienced our highest
levels of customer engagement, with some of this transitioning to
major agreements that are great endorsements of our offering as
well as demonstrations of our strategy coming to fruition.
Accordingly, we ended the year strongly, with enhanced foundations
for future growth.
"We entered the 2024 financial year with a much-strengthened
balance sheet and heightened commercial momentum - winning new
orders in addition to a growing and substantial opportunity funnel.
Accordingly, we anticipate a strong year-on-year increase in
revenue and we remain on track to be adjusted EBITDA positive for
the full year. This growth will be based on both of our segments,
with demand continuing to be underpinned by macro-economic and
market conditions. In advanced imaging, there is increasing
widespread need for the early and accurate medical diagnosis
facilitated by our CZT-based products. In CBRN, global insecurity
and raised concern over potential nuclear threats continue to
underscore the requirement for products such as ours in this
sector. Consequently, the Board looks to the future with
confidence."
For further information, please contact:
Kromek Group plc
Arnab Basu, CEO
Paul Farquhar, CFO +44 (0)1740 626 060
finnCap Ltd (Nominated Adviser and Joint
Broker)
Geoff Nash/Seamus Fricker/George Dollemore
- Corporate Finance
Tim Redfern/Charlotte Sutcliffe - ECM +44 (0)20 7220 0500
Cenkos Securities plc (Joint Broker)
Giles Balleny - Corporate Finance
Michael Johnson/Tamar Cranford-Smith - Sales +44 (0)20 7397 8900
Gracechurch Group (Financial PR)
Harry Chathli/Claire Norbury/Henry Gamble +44 (0)20 4582 3500
Investor Webinar
Arnab Basu, CEO, and Paul Farquhar, CFO, will be hosting a
webinar for investors at 6.00pm BST on Wednesday 26 July 2023.
The event is open to all existing and potential shareholders.
Interested parties should register to attend, and submit any
questions, using the following link:
https://forms.gle/dbLNhSfdUMuJ7WCx6 . Participants are requested to
submit questions in advance by 12.00pm on 26 July 2023.
Kromek Group plc
Kromek Group plc is a leading developer of radiation detection
and bio-detection technology solutions for the advanced imaging and
CBRN detection segments. Headquartered in County Durham, UK, Kromek
has manufacturing operations in the UK and US, delivering on the
vision of enhancing the quality of life through innovative
detection technology solutions.
The advanced imaging segment comprises the medical (including CT
and SPECT), security and industrial markets. Kromek provides its
OEM customers with detector components, based on its core cadmium
zinc telluride (CZT) platform, to enable better detection of
diseases such as cancer and Alzheimer's, contamination in
industrial manufacture and explosives in aviation settings.
In CBRN detection, the Group provides nuclear radiation
detection solutions to the global homeland defence and security
market. Kromek's compact, handheld, high-performance radiation
detectors, based on advanced scintillation and solid-state readout
technology, are primarily used to protect critical infrastructure,
events, personnel and urban environments from the threat of 'dirty
bombs'.
The Group is also developing bio-security solutions in the CBRN
detection segment. These consist of fully automated and autonomous
systems to detect a wide range of airborne pathogens.
Kromek is listed on AIM, a market of the London Stock Exchange,
under the trading symbol 'KMK'.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014. Upon the publication
of this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Operational Review
In the year to 30 April 2023, Kromek achieved its highest ever
revenue - reflecting record revenue in both advanced imaging and
CBRN detection respectively - and was adjusted EBITDA positive for
the second half of the year. The Group delivered on its existing
contracts and development programmes, won new and repeat orders
across the business and from around the world, and experienced
significantly increased customer engagement regarding future
projects. Importantly, some of this engagement transitioned to
significant agreements during the year - most notably, with a tier
1 OEM and Analogic in the advanced imaging segment and Smiths
Detection in the CBRN detection segment. These agreements are great
endorsements of Kromek's technology and solutions, but are also
tangible demonstrations of the Group's strategy coming to fruition.
Accordingly, the Group continues to deliver on its strategy, and
ended the year strongly with a foundation for continued growth.
Advanced Imaging
In the advanced imaging segment, Kromek primarily operates in
the medical imaging market with some opportunities in the security
screening and industrial screening sectors. Kromek provides OEM
customers with detector components, based on its core cadmium zinc
telluride ("CZT") platform, to enable better detection of diseases
such as cancer and Alzheimer's, contamination in industrial
manufacture and explosives in aviation settings. The Group designs,
develops and produces CZT detectors and solutions along with
specialist electronics, which, when incorporated into its
customers' systems, significantly enhance imaging quality to
provide high resolution information on material composition and
structure, which enables more effective identification and
analysis.
In this segment, commercial engagement with customers consists
of an initial design phase followed by incorporation of the Group's
detectors and technologies into a customer's system and then the
award of a multi-year supply contract, which provides long-term
revenue visibility.
Medical Imaging
As the only independent commercial producer of CZT at scale,
Kromek is well-positioned in the medical imaging market. The rate
of introduction by leading OEMs of new medical imaging products
that include CZT detector platforms as the enabling technology has
been increasing in recent years. GE Healthcare and Siemens
Healthineers introduced new products in their clinical SPECT and CT
businesses in 2021 and Spectrum Dynamics launched the VERITON-CT
400 Series in 2022. SPECT and CT, as well as molecular breast
imaging ("MBI") and BMD, are key target areas for future growth as
they address diseases particularly associated with an ageing
population such as cancer, Alzheimer's, Parkinson's, cardiovascular
illnesses and osteoporosis - with higher resolution images enabling
earlier diagnosis for better patient outcomes and reduced overall
cost of care. Kromek also serves the gamma probes market in this
sector, which are used during surgeries for the removal of lymph
nodes.
This has been a milestone year in terms of the Group's medical
imaging activity. Most notably, Kromek signed collaboration
agreements with a recognised tier 1 OEM and with Analogic to
develop CZT-based detectors for use in their advanced imaging
scanners. The agreement with the tier 1 OEM, which is a leading
health-technology company, has an initial period of seven years.
This comprises a short development phase when the parties will work
together to integrate Kromek's CZT-based detectors into the
customer's medical imaging scanners, with the agreement then
transitioning to a longer commercial supply phase.
With Analogic, who have been global leaders in CT detector
technology for over 50 years, Kromek is developing CZT-based
detector solutions for photon counting CT applications in both the
medical imaging and security screening sectors. Its CZT sensors
will be integrated with Analogic's detector designs and, as the
project progresses towards commercialisation, Kromek will ensure
production capacity is available to support their demand.
Another key milestone during the year was the introduction by
Spectrum Dynamics of the VERITON-CT 400 Series, the world's first
digital SPECT/CT scanner capable of high energy imaging, which uses
Kromek's CZT detector technology. Kromek believes that this product
is receiving wide-ranging interest, and the Group's business with
Spectrum Dynamics is tracking as expected.
Post year end, Kromek received an order worth $1.4m from a new
OEM customer that is an established player in the medical imaging
sector in Asia. The order is for CZT-based detector-modules for use
in the customer's next generation SPECT systems. Delivery and
revenue recognition are expected in the current financial year.
In total, Kromek is now working with nine OEMs in SPECT and CT,
including its current customers, and the Group expects some of the
engagements to transition to formal significant contracts for final
design and integration followed by the supply of CZT detectors and
modules in the near term.
In its regular repeat business, the Group received two orders
during the first half of the year worth GBP751k, with one being for
the supply of detectors for BMD applications and the other for the
gamma probes market. Kromek has seen an increase in demand for
detectors in the BMD segment and the Group expects that demand to
grow significantly over the next two years as rapid adoption of its
customer's systems continue in China. In the second half, the Group
received three further orders totalling $1.1m, which were primarily
for SPECT applications.
Kromek continued to make progress under its development
programme for ultra-low dose MBI technology based on its CZT-based
SPECT detectors, which can significantly improve the early
detection of breast cancer in women with dense breast tissue. The
Group is expecting to enter the clinical study phase of this
technology development with a US-based OEM customer over the next
year. Kromek also received approximately GBP2.5m in funding from
Innovate UK for two programmes to further develop an MBI system.
The projects are being conducted in collaboration with the
Newcastle-upon-Tyne Hospitals NHS Foundation Trust, the University
of Newcastle-Upon-Tyne and University College London.
Security & Industrial Screening
In security screening, the Group's technologies are used in
travel, primarily aviation, settings to enable its customers to
meet the high-performance standards they require, and as demanded
by regulatory bodies, to ensure passenger safety while increasing
the convenience and efficiency of the security process. The Group
provides OEM and government customers with components and systems
for cabin and hold luggage scanning. In industrial screening ,
Kromek provides OEM customers with detector components for
incorporating into scanning systems used during manufacturing
processes to identify potential contaminants.
During the year, Kromek continued to deliver under its existing
component supply agreements and development programmes. As noted
above, the detector solutions to be developed under its
collaboration agreement with Analogic, that was entered during the
year, will be for security applications as well as medical.
CBRN Detection
In CBRN detection, the Group provides nuclear radiation
detection solutions to the global homeland defence and security
market. Kromek's compact, handheld, high-performance radiation
detectors, based on advanced scintillation and solid-state readout
technology, are primarily used to protect critical infrastructure,
events, personnel and urban environments from the threat of 'dirty
bombs'. Kromek's portfolio also includes a range of high-resolution
detectors and measurement systems used for civil nuclear
applications, primarily in nuclear power plants and research
establishments.
Nuclear Security
The Group experienced a significant increase in demand for its
nuclear security products - with multiple new and repeat orders
being won and delivered during the year - as geopolitical
instabilities continued to drive greater global government defence
and security spending. Kromek also established key distribution
partnerships to support continued expansion in this market.
Accordingly, the Group delivered record revenues in nuclear
security in 2023. Its detector solutions were used in multiple
high-profile sporting, political and state events in the UK, across
Europe and in the US. In May 2023, for example, the Group's D3S
product range was used by the EU Commission Protective Security
Advisor team to provide security at an event in Aachen, Germany
where President Zelensky of Ukraine was awarded the Charlemagne
Prize for work done in the service of European unification.
During the year, Kromek received, and delivered, a $1.3m
contract from a US customer for the D3M and two orders totalling
$1.5m from US government customers for the D3S-ID, all of which
were repeat orders. The Group also received, and delivered, two
contracts, totalling GBP1.5m, for the supply of the D3M and
D3S-based nuclear security products to European government
end-users - with the contracts having been secured through its
distribution and procurement partners. The large proportion of
repeat orders reflects the increasingly regular nature of the
Group's business in this market.
Kromek expanded its channels-to-market for its nuclear security
products, as well as supporting the generation of regular, repeat
business, through the establishment of a distribution partnership
with Smiths Detection, a global leader in threat detection and
security screening technologies for aviation, ports and borders,
defence and urban security markets. The initial agreement was to
distribute Kromek's nuclear security products - with a focus on the
D3 and D5 series - to North and South American markets, with a
further agreement being signed for distribution to the Middle East
and certain key markets in Asia and Australasia.
Civil Nuclear
Business in the civil nuclear market progressed as expected,
with regular sales through the Group's distributor network and
direct to customer. In this sector, Kromek's products are used by
over 450 customers around the globe.
Since year end, Kromek was awarded a $1.5m contract by one of
its distribution partners in Asia, which is for a new product,
based on the Group's existing technology, in the civil nuclear
market. The development of this new product was funded by the
distribution partner. Kromek believes that the product has a global
market beyond its partner's targeted market in Asia.
Biological-Threat Detection
The Group is developing biosecurity solutions that consist of
fully automated and autonomous systems to detect a wide range of
airborne pathogens for the purposes of national security and
protecting public health.
The Group continued to deliver on its long-running programme
with the Defense Advanced Research Projects Agency, an agency of
the US Department of Defense, to develop a biological-threat
detection solution. The solution developed under this programme,
which concluded during the year, is intended to form part of a
mobile wide-area bio-surveillance system deployed in urban
environments. Kromek's work with the UK government also resulted in
the award of a contract by a UK government department for a
three-year programme worth GBP4.9m to develop and supply biological
threat detection systems. The contract includes an option for
extended maintenance services after the initial term.
The biosecurity strategies of the UK and US governments are
aligned with the need for a national network of automated genomic
sequencing systems for the early warning of pathogens, which was
reiterated in the UK Biological Security Strategy published by the
UK government in June 2023.
Kromek continues to believe that biosecurity has significant
market opportunities as its technologies align very well with major
governments' biosecurity strategies to protect against future
pandemics. In this sector, the Group may consider forming strategic
or financial partnerships to further accelerate the time to market
for this technology.
R&D, IP and Manufacturing
Kromek continued to execute on its programmes for the expansion
of production capacity and increased process automation, with
particular progress being made at its CZT manufacturing facility in
the US. These programmes are on track and are resulting in greater
manufacturing productivity and cost efficiencies. Kromek is making
significant progress in its cost and productivity in CZT crystal
growth and detector manufacturing. The Group has dedicated teams
that are focussed on targeted improvements for every step in the
manufacturing process, which directly contributes to yield and cost
improvement.
As noted, during the year Kromek continued to advance
development programmes with a number of partners.
During the year, the Group applied for 9 new patents and had 4
patents granted across 12 patent families, with the total number of
patents held by Kromek being in excess of 240. The new applications
cover innovations in both of the Group's segments.
Financial Review
Revenue
The Group generated total revenue of GBP17.3m (2022: GBP12.1m).
The split between product sales and revenue from R&D contracts
is detailed in the table below.
Revenue Mix 2023 2022
GBP'000 % share % share
-------- -------
Product 14,768 85% 9,935 82%
-------- -------
R&D 2,541 15% 2,120 18%
-------- -------
Total 17,309 12,055
-------- -------- ------- --------
Gross Margin
Gross profit at GBP8.9m (2022: GBP5.6m) represented a margin of
51.6% (2022: 46.8%). The increase in gross margin, particularly in
the second half of 2023, is attributable to a change in revenue mix
and the easing of the supply chain pressures that impacted margin
in 2022 and the first half of 2023.
Distribution and Administrative Expenses
Distribution and administrative expenses increased by GBP2.4m to
GBP14.6m (2022: GBP12.2m). Of this GBP2.4m increase, GBP0.8m
represents the foreign exchange impact of translating USD
denominated expenses in the period due to the weaker GBP against
the USD in 2023 compared to 2022. The remaining GBP1.6m increase is
substantially the net result of:
-- GBP0.3m of depreciation and amortisation due to continued
investment in the technology platform and product applications;
-- GBP1.1m increase in staff costs reflecting pay rises in line
with the wider economy and modest increased headcount to drive
future revenue growth;
-- GBP0.5m bad debt expense having assessed receivables at the
year end for expected credit losses; and
-- savings of GBP0.3m relating to facility and general office
expenses.
Adjusted EBITDA* and Result from Operations
Adjusted EBITDA loss for 2023 was reduced to GBP1.0m compared
with a loss of GBP1.2m for the prior year as set out in the table
below:
2023 2022
GBP'000 GBP'000
-------- --------
Revenue 17,309 12,055
-------- --------
Gross profit 8,935 5,636
-------- --------
Gross margin (%) 51.6% 46.8%
-------- --------
Loss before Tax (7,292) (6,129)
-------- --------
EBITDA Adjustments:
-------- --------
Net interest 1,243 548
-------- --------
Depreciation of PPE and
Right-of-Use assets 1,903 1,751
-------- --------
Amortisation 2,891 2,569
-------- --------
Share-based payments 354 236
-------- --------
Change in fair value of
derivative (77) -
-------- --------
Exceptional Item - (132)
-------- --------
Adjusted EBITDA* (978) (1,157)
-------- --------
*Adjusted EBITDA is defined as earnings before interest,
taxation, depreciation, amortisation, exceptional items, early
settlement discounts, the change in fair value of financial
derivatives and share-based payments. The change in the value of
financial derivatives and share-based payments are adjusted for
when calculating the Group's adjusted EBITDA as these items have no
direct cash impact on financial performance. Adjusted EBITDA is
considered a key metric to the users of the financial statements as
it represents a useful milestone that is reflective of the
performance of the business resulting from movements in revenue,
gross margin and the costs of the business.
The reduction in the adjusted EBITDA loss in 2023 compared to
the prior year loss reflects the higher revenue and gross margin
and that the greater operating costs were offset primarily due to
an increase in net interest, amortisation and depreciation.
Importantly, due to cost control measures and significantly
improved gross margin in the second half of the year, the Group
delivered positive adjusted EBITDA of GBP1.7m in H2 2023.
As a result of the increase in operating costs - which primarily
comprise distribution and administrative expenses as described
above - loss before tax for the year was GBP7.3m (2022:
GBP6.1m).
During 2023, the Group recognised a loss of GBP0.2m (2022: a
gain of GBP2.1m) in the statement of other comprehensive income
that arose from foreign exchange differences on the translation of
foreign operations as described in note 2 to the financial
statements. This gain has been treated as a reserve movement,
consistent with the prior year. This accounting treatment is unlike
the GBP0.1m foreign exchange gain (2022: GBP0.2m foreign exchange
loss) arising on the revaluation and realisation of working capital
balances that were expensed to the profit and loss account during
the year.
Tax
The Group continues to benefit from the UK Research and
Development Tax Credit regime as it invests in developments of
technology. The Group recorded an R&D credit of GBP1.2m for the
year (2022: GBP1.2m credit) arising from the option of surrendering
tax losses in the year that qualify for cash credit, rather than
carrying forward the tax losses to set against future taxable
profits. The Group's deferred tax provision for the year remained
static at GBPnil (2022: GBPnil) due to the distribution of losses
between the UK and US operations, and accordingly there was a total
tax credit to the income statement for the Group of GBP1.2m (2022:
GBP1.2m credit).
Earnings per Share ("EPS")
Due to a GBP1.0m increase in the loss after tax for the period,
the EPS is recorded in the year on a basic and diluted basis as a
1.4p loss per share (2022: 1.1p loss per share after excluding
exceptional items).
R&D
The Group invested GBP4.8m in the year (2022: GBP5.6m) in
technology and product developments that were capitalised on the
balance sheet, reflecting the continuing investment in new
products, applications and platforms for the future growth of the
business. This expenditure was capitalised in accordance with IAS38
to the extent that it related to projects in the later stage
(development phase) of the project life cycle.
The Group continues to advance its development roadmap in
relation to the automated wide-area detection of biological and
viral pathogens, involving portable DNA sequencing. It is the
Board's belief that this technology platform, which enables the
identification of COVID-19 and other biological pathogens, offers
significant short and medium-term opportunities for the Group in
this critical market.
The other key areas of development continue to be the
development and expansion of the D3 and D5 suite of products in
CBRN threat detection and the SPECT and CT platforms in advanced
imaging. All such investments in research and development are
linked to contract deliverables and productivity improvements
which, in the Board's belief, add to the significant future revenue
opportunities that the Group's technology offers. The Group
continues to undertake this investment to strengthen its commercial
advantage.
During the year, the Group undertook expenditure on patents and
trademarks of GBP0.2m (2022: GBP0.2m) with 9 new patents filed and
4 patents granted across 12 patent families.
Other Income
The Group generated total other operating income of GBP0.1m
(2022: GBP1.4m), which relates to a retrospective Customs Duty
claim granted by HMRC. Other operating income in the previous year
predominantly comprised the forgiveness of Paycheck Protection
Program ("PPP") loans of GBP1.4m in the US.
Capital Expenditure
Capital expenditure in the year amounted to GBP0.3m (2022:
GBP0.7m), which primarily relates to modest capital expenditure
across lab and computer equipment, IT and manufacturing
projects.
Financing Activities
The Group issued GBP2.8m of convertible loan notes, largely to
existing shareholders, in August 2022. The loan notes have a term
of 18 months, carry a coupon of 8% per annum and have conversion
dates in January and February 2024. They are senior in ranking and
unsecured. If they are repaid other than on the repayment date or
not repaid by the repayment longstop date, they are convertible at
the investors' option into ordinary shares in the capital of the
Company at the lower of the closing mid-market price on the
repayment date, or 15 pence per ordinary share.
At 30 April 2023, the Group had a GBP5.0m revolving credit
facility ("RCF") with HSBC, the repayment date for which was
extended by the bank from 11 March 2023 to 31 August 2023. At the
date of this announcement, the Company is finalising the terms of
an alternative borrowing facility to replace the HSBC RCF, and the
Board is confident that this facility will be secured to repay the
RCF by the required repayment date. Further details of the Group's
borrowings are available at note 15.
Inventories
Inventories increased by GBP0.4m to GBP10.9m at 30 April 2023
(30 April 2022: GBP10.5m). This reflects a continuation of the
global supply chain pressures, which requires the Group to hold
higher inventory levels than historically has been necessary.
However, raw material inventory reduced during the year to GBP2.2m
at 30 April 2022 (30 April 2022: GBP3.6m), reflecting the
conversion to work in progress and finished goods of some of the
additional component inventories purchased during the previous year
when the supply chain had been acutely constrained.
Cash Balance
Cash and cash equivalents were GBP1.1m as of 30 April 2023 (30
April 2022: GBP5.1m). The GBP4.0m decrease in cash during 2023 was
due to the combination of the following cash inflows and
outflows:
-- Adjusted EBITDA loss for the year of GBP1.0m, significantly
ahead of market expectations
-- R&D tax receipts of GBP1.2m
-- Investment in product development and other intangible
assets, with capitalised development costs of GBP4.8m and IP
additions of GBP0.2m
-- Capital expenditure of GBP0.7m (including GBP0.4m in respect
of leased assets)
-- Net cash generated from financing activities of GBP1.7m
(including GBP2.8m from the issue of convertible loan notes)
-- A decrease in cash arising from the impact of foreign
exchange of GBP0.2m
Post year end, the Group's balance sheet was strengthened with
the successful completion of a placing, subscription and open offer
raising GBP8m before expenses, of which GBP7m was raised through
the share placing and subscription, and a further GBP1m through the
open offer.
Outlook
Kromek entered the 2024 financial year with a much-strengthened
balance sheet and heightened commercial momentum - winning new
orders in addition to a growing and substantial opportunity funnel.
The Group already has visibility of 60% of full year 2024 revenue
forecasts, comprising 45% contracted or already shipped, 4% awarded
and going through contract negotiation and 11% being provided by
the Group's regular repeat order business. Accordingly, Kromek
anticipates a substantial year-on-year increase in revenue,
representing growth in both the advanced imaging and CBRN detection
segments. Alongside the anticipated revenue growth, the Group
remains confident in delivering positive adjusted EBITDA for FY
2024.
Looking further ahead, the macro-economic and market conditions
continue to drive strong demand across both segments. There is an
ever-growing need for medical imaging solutions that facilitate
earlier and more accurate diagnosis. The position of CZT as the
enabling technology for such solutions is widely recognised, with
leading OEMs increasingly launching their CZT-based SPECT and CT
scanners to the market. Kromek's recent agreement with a leading
tier 1 OEM is representative of this trend and offers significant
potential. As the only independent commercial producer of CZT at
scale, the Group is extremely well placed within this market. At
the same time, ongoing geopolitical conflict combined with the
awareness of the threat to public health posed by pathogens will
continue to drive demand for, and interest in, the Group's CBRN
detection solutions. The Group remains extremely well placed to
benefit from all of these market drivers.
As a result, the Board looks to the future with confidence.
Kromek Group plc
Group statement of comprehensive income
For the year ended 30 April 2023
2023 2022
Note GBP'000 GBP'000
Continuing operations
Revenue 4 17,309 12,055
Cost of sales (8,374) (6,419)
--------- ---------
Gross profit 8,935 5,636
Other operating income 5 121 1,410
Distribution costs (612) (551)
Administrative expenses (14,570) (12,208)
Change in fair value of derivative 77 -
--------- ---------
Operating loss (before exceptional
items) (6,049) (5,713)
Exceptional impairment reversal
on trade receivables and amounts
recoverable on contracts 8 - 132
Operating results (post exceptional
items) (6,049) (5,581)
--------- ---------
Finance income 2 34
Finance costs (1,245) (582)
--------- ---------
Loss before tax 6 (7,292) (6,129)
Tax 9 1,192 1,211
--------- ---------
Loss for the year from continuing
operations (6,100) (4,918)
========= =========
Loss per share 10
- basic (p) (1.4) (1.1)
The accompanying notes form part of these financial
statements.
Kromek Group plc
Group statement of other comprehensive income
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
Loss for the year (6,100) (4,918)
------- -------
Items that are or may be subsequently
reclassified to profit or loss:
Exchange differences on translation
of foreign operations (166) 2,063
Total comprehensive loss for the
year (6,266) (2,855)
======= =======
The accompanying notes form part of these financial
statements.
Kromek Group plc
Consolidated statement of financial position
As at 30 April 2023
2023 2022
Note GBP'000 GBP'000
Non-current assets
Goodwill 11 1,275 1,275
Other intangible assets 12 30,554 28,375
Property, plant and equipment 13 9,831 10,944
Right-of-use assets 3,758 3,874
-------- ---------
45,418 44,468
-------- ---------
Current assets
Inventories 14 10,894 10,503
Trade and other receivables 5,529 6,429
Current tax assets 9 940 942
Cash and bank balances 1,097 5,081
-------- ---------
18,460 22,955
-------- ---------
Total assets 63,878 67,423
-------- ---------
Current liabilities
Trade and other payables (7,436) (7,855)
Borrowings 15 (8,318) (5,716)
Derivative financial instruments 16 (517) -
Lease obligation (405) (375)
-------- ---------
(16,676) (13,946)
Net current assets 1,792 9,009
-------- ---------
Non-current liabilities
Deferred income (1,021) (1,131)
Lease obligation (4,089) (4,161)
Borrowings 15 (568) (749)
-------- ---------
(5,678) (6,041)
-------- ---------
Total liabilities (22,354) (19,987)
-------- ---------
Net assets 41,524 47,436
-------- ---------
Equity
Share capital 4,319 4,319
Share premium account 72,943 72,943
Merger reserve 21,853 21,853
Translation reserve 1,897 2,063
Accumulated losses (59,488) (53,742)
-------- --------
Total equity 41,524 47,436
-------- --------
The accompanying notes form part of these financial
statements.
The financial statements of Kromek Group plc (registered number
08661469) were approved by the Board of Directors and authorised
for issue on 21 July 2023. They were signed on its behalf by:
Arnab Basu MBE
Chief Executive Officer
Kromek Group plc
Consolidated statement of changes in equity
For the year ended 30 April 2023
Share
Share premium Merger Translation Retained Total
capital account reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 May 2021 4,319 72,943 21,853 - (49,060) 50,055
Loss for the
year - - - - (4,918) (4,918)
Exchange difference
on translation
of foreign operations - - - 2,063 - 2,063
--------- -------- ------------- ---------- --------
Total comprehensive
gain/(loss)
for the year - - - 2,063 (4,918) (2,855)
Credit to equity
for equity-settled
share-based
payments - - - - 236 236
--------- -------- --------- ------------- ---------- --------
Balance at
30 April 2022 4,319 72,943 21,853 2,063 (53,742) 47,436
--------- -------- --------- ------------- ---------- --------
Loss for the
year - - - - (6,100) (6,100)
Exchange difference
on translation
of foreign operations - - - (166) - (166)
--------- -------- --------- ------------- ---------- --------
Total comprehensive
loss for the
year - - - (166) (6,100) (6,266)
Credit to equity
for equity-settled
share-based
payments - - - - 354 354
--------- -------- --------- ------------- ---------- --------
Balance at
30 April 2023 4,319 72,943 21,853 1,897 (59,488) 41,524
--------- -------- --------- ------------- ---------- --------
The accompanying notes form part of these financial
statements.
Kromek Group plc
Consolidated statement of cash flows
For the year ended 30 April 2023
2023 2022
Note GBP'000 GBP'000
Net cash generated from/(used in)
operating activities 17 197 (3,530)
-------- ---------
Investing activities
Interest received 2 34
Purchases of property, plant and
equipment 13 (269) (651)
Purchases of patents and trademarks 12 (183) (179)
Capitalisation of development costs 12 (4,821) (5,619)
-------- ---------
Net cash used in investing activities (5,271) (6,415)
-------- ---------
Financing activities
New borrowings 1,100 760
Proceeds from the issue of convertible
loan notes 16 2,840 -
Payment of borrowings (1,258) (1,340)
Payment of lease liability (692) (646)
Interest paid (703) (340)
-------- ---------
Net cash generated from/(used in)
financing activities 1,287 (1,566)
Net decrease in cash and cash equivalents (3,787) (11,511)
Cash and cash equivalents at beginning
of year 5,081 15,602
Effect of foreign exchange rate
changes (197) 990
Cash and cash equivalents at end
of year 1,097 5,081
-------- ---------
The accompanying notes form part of these financial
statements.
Kromek Group plc
Notes to the consolidated financial statements
For the year ended 30 April 2023
1. General information
Kromek Group plc is a company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. These financial
statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the Group
operates. Foreign operations are included in accordance with the
policies set out in note 2.
The Group prepares its consolidated financial statements in
accordance with UK-adopted IFRS.
The Board is currently evaluating the impact of the adoption of
all other standards, amendments and interpretations but does not
expect them to have a material impact on the Group's operation or
results.
2. Significant accounting policies
Basis of preparation
The Group's financial statements have been prepared in
accordance with IFRS and International Financial Reporting
Interpretations Committee ("IFRIC").
The financial statements have been prepared on the historical
cost basis modified for assets recognised at fair value on
acquisition. Historical cost is generally based on the fair value
of the consideration given in exchange for the assets. The
principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the results
and net assets of the Group and entities controlled by the Group
(its subsidiaries) made up to 30 April each year. Control is
achieved where the Group has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits
from its activities.
The results of subsidiaries acquired during the year are
included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to results of
subsidiaries to bring the accounting policies used into line with
those used by the Group. All intra-Group transactions, balances,
income and expenses, and profits are eliminated on
consolidation.
Going concern
As at 30 April 2023, the Group had net current assets of GBP1.8m
(30 April 2022: GBP9.0m) and cash and cash equivalents of GBP1.1m
(30 April 2022: GBP5.1m) as set out in the consolidated statement
of financial position. The Group made a loss before tax of
GBP7,292k in the year (2022: GBP6,129k).
The Directors have prepared detailed forecasts of the Group's
financial performance over the next twelve months from the date of
these financial statements. Given the rapidly changing
macroeconomic landscape and the Group's forecast financial
performance for the next twelve months, management also prepared a
financial forecast based on a sensitised and severe but plausible
scenario. It should be noted that in each scenario, the Board has
specifically excluded any significant upsides from these scenarios
or mitigating cost reductions.
The Group has a GBP5.0m revolving credit facility ("RCF") with
HSBC. The expiry date of this facility was 11 March 2023, although
the bank has extended this date to 31 August 2023. In both the
original and the severe but plausible scenario forecasts, the
Directors indicate that this facility will be replaced by
alternative borrowing and additional financing will be available to
the Group. In addition, post year end, the Group successfully
concluded a placing, subscription and open offer which raised
GBP7.4m net of fundraising costs. Accordingly, the Board has
concluded that it is almost certain that the required mitigating
financing will be secured, allowing the Group to repay the RCF by
the agreed payment date. The Board has received a confirmation of
financial support from one of the Group's largest shareholders, in
the event that refinancing the debt takes longer than expected and
the HSBC facility needs to be repaid prior to a new facility being
in place. As a consequence, the Board is confident that the Group
will have sufficient resources and working capital to meet its
present and foreseeable obligations for a period of at least twelve
months from approval of these financial statements. Accordingly,
the Board continues to adopt the going concern basis in preparing
the Group financial statements.
Business combinations
The Group financial statements consolidate those of the Company
and its subsidiary undertakings. Subsidiaries are entities
controlled by the Group. Control exists when the Group has the
power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account. The
financial information of subsidiaries is included from the date
that control commences until the date that control ceases.
Intra-Group balances and transactions, and any unrealised income
and expenses arising from intra-Group transactions, are eliminated
in preparing the consolidated financial information.
Acquisitions on or after 1 May 2010
For acquisitions on or after 1 May 2010, the Group measures
goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the
acquiree; plus
-- the fair value of the existing equity interest in the
acquiree; less
-- the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, the negative goodwill is recognised
immediately in profit or loss.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed as
incurred.
Goodwill
Goodwill arising in a business combination is recognised as an
asset at the date that control is acquired (the acquisition date).
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer's previously held
equity interest (if any) in the entity over the net of the
acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed.
If, after reassessment, the Group's interest in the fair value
of the acquiree's identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling
interest in the acquiree and the fair value of the acquirer's
previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain
purchase gain.
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's cash generating units ("CGUs")
expected to benefit from the synergies of the combination. CGUs to
which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the cash
generating unit ("CGU") is less than the carrying amount of the
unit, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Contracts with customers
The Group recognises revenue in line with IFRS 15 'Revenue from
contracts with customers'. Revenue represents income derived from
contracts for the provision of goods and services by the Group to
customers in exchange for consideration in the ordinary course of
the Group's activities.
The Board disaggregates revenue by sales of goods or services,
grants and contract customers. Sales of goods and services
typically include the sale of product on a run rate or ad-hoc
basis. Grants include technology development with parties such as
Innovate UK as detailed above. Customer contracts represents
agreements that the Group has entered into that typically span a
period of more than 12 months.
Performance obligations
Upon approval by the parties to a contract, the contract is
assessed to identify each promise to transfer either a distinct
good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the
customer. Goods and services are distinct and accounted for as
separate performance obligations in the contract if the customer
can benefit from them either on their own or together with other
resources that are readily available to the customer, and they are
separately identifiable in the contract.
Transaction price
At the start of the contract, the total transaction price is
estimated as the amount of consideration to which the Group expects
to be entitled in exchange for transferring the promised goods and
services to the customer, excluding sales taxes. Variable
consideration, such as price escalation and early settlements, is
included based on the expected value or most likely amount only to
the extent that it is highly probable that there will not be a
reversal in the amount of cumulative revenue recognised. The
transaction price does not include estimates of consideration
resulting from contract modifications, such as change orders, until
they have been approved by the parties to the contract. The total
transaction price is allocated to the performance obligations
identified in the contract in proportion to their relative
standalone selling prices. Given the bespoke nature of many of the
Group's products and services, which are designed and/or
manufactured under contract to the customer's individual
specifications, there are sometimes no observable standalone
selling prices. Instead, standalone selling prices are typically
estimated based on expected costs plus contract margin consistent
with the Group's pricing principles or based on market knowledge of
selling prices relating to similar product.
Revenue and profit recognition
Revenue is recognised as performance obligations are satisfied
as control of the goods and services is transferred to the
customer.
For each performance obligation within a contract, the Group
determines whether it is satisfied over time or at a point in time.
The Group has determined that the performance obligations of the
majority of its contracts are satisfied at a point in time.
Performance obligations are satisfied over time if one of the
following criteria is satisfied:
-- the customer simultaneously receives and consumes the
benefits provided by the Group's performance as it performs;
-- the Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
-- the Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to
payment for performance completed to date.
For each performance obligation to be recognised over time, the
Group recognises revenue using an input method, based on costs
incurred in the period. Revenue and attributable margin are
calculated by reference to reliable estimates of transaction price
and total expected costs, after making suitable allowances for
technical and other risks. Revenue and associated margin are
therefore recognised progressively as costs are incurred, and as
risks have been mitigated or retired. The Group has determined that
this method faithfully depicts the Group's performance in
transferring control of the goods and services to the customer.
If the over-time criteria for revenue recognition are not met,
revenue is recognised at the point in time that control is
transferred to the customer, which is usually when legal title
passes to the customer and the business has the right to payment.
Kromek's standard terms of delivery are FCA Delivery Location
(Incoterms 2020), unless otherwise stated.
The Group's contracts that satisfy the over-time criteria are
typically product development contracts where the customer
simultaneously receives and consumes the benefit provided by the
Group's performance. In some specific arrangements, due to the
highly specific nature of the contract deliverables tailored to the
customer requirements and the breakthrough technology solutions
that Kromek provides, the Group does not create an asset with an
alternative use but retains an enforceable right to payment and
recognises revenue over time on that basis.
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately as an
expense.
Contract modifications
The Group's contracts are sometimes amended for changes in
customers' requirements and specifications. A contract modification
exists when the parties to the contract approve a modification that
either changes existing, or creates new, enforceable rights and
obligations. The effect of a contract modification on the
transaction price and the Group's measure of progress towards the
satisfaction of the performance obligation to which it relates, is
recognised in one of the following ways:
(a) prospectively as an additional, separate contract;
(b) prospectively as a termination of the existing contract and
creation of a new contract; or
(c) as part of the original contract using a cumulative catch
up.
The majority of the Group's contract modifications are treated
under either (a) (for example, the requirement for additional
distinct goods or services) or (b) (for example, a change in the
specification of the distinct goods or services for a partially
completed contract), although the facts and circumstances of any
contract modification are considered individually as the types of
modifications will vary contract-by-contract and may result in
different accounting outcomes.
Costs to obtain a contract
The Group expenses pre-contract bidding costs that are incurred
regardless of whether a contract is awarded. The Group does not
typically incur costs to obtain contracts that it would not have
incurred had the contracts not been awarded.
Costs to fulfil a contract
Contract fulfilment costs in respect of over-time contracts are
expensed as incurred. No such costs have been incurred in the year
under review or in previous years. Contract fulfilment costs in
respect of point-in-time contracts are accounted for under IAS 2,
Inventories.
Sale of inventories
Inventories include raw materials, work-in-progress and finished
goods recognised in accordance with IAS 2 in respect of contracts
with customers that have been determined to fulfil the criteria for
point-in-time revenue recognition under IFRS 15. Also included are
inventories for which the Group does not have a contract. This is
often because fulfilment costs have been incurred in expectation of
a contract award. The Group does not typically build inventory to
stock. Inventories are stated at the lower of cost, including all
relevant overhead and net realisable value. The Group continued to
adopt the policy of valuing its recyclable material. In accordance
with the standard, this is valued at the lower of cost and net
realisable value, less the cost required to bring the material back
into use.
Contract receivables
Contract receivables represent amounts for which the Group has
an unconditional right to consideration in respect of unbilled
revenue recognised at the balance sheet date and comprises costs
incurred plus attributable margin. The Group does not plan,
anticipate or offer extended payment terms within its contractual
arrangements unless express payment interest charges are applied
and represent a value over and above that contracted or invoiced
with the customer.
Contract liabilities
Contract liabilities represent the obligation to transfer goods
or services to a customer for which consideration has been
received, or consideration is due, from the customer.
Leases
The Group recognises a right-of-use ("ROU") asset and a lease
liability at the lease commencement date. The ROU asset is
initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred, and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The ROU asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the ROU or the end of the lease term.
The estimated useful lives of the ROU assets are determined on the
same basis as those of property and equipment. In addition, the ROU
is periodically reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease, or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise fixed payments.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, or if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the ROU
asset, or is recorded in profit or loss if the carrying amount of
the ROU has been reduced to zero.
The Group has elected not to recognise ROU assets and lease
liabilities for short-term leases of machinery that have a lease
term of 12 months or less and leases of low value assets, including
IT equipment and leased cars. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
Foreign currencies
The individual results of each Group company are presented in
the currency of the primary economic environment in which it
operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in pounds sterling,
which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
The Directors have applied IAS 21 The Effects of Changes in Foreign
Exchange Rates and have concluded that the inter-company loans held
by Kromek Limited substantially form part of the net investment in
Kromek USA (Kromek Inc, eV Products, Inc. and Nova R&D, Inc.),
and so any gain or loss arising on the inter-company loan balances
are recognised as other comprehensive income in the period.
In preparing the results of the individual companies,
transactions in currencies other than the entity's functional
currency (foreign currencies) are recognised at the average
exchange rate for the month to which the transaction relates. At
each statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated. Exchange differences are recognised in profit or loss
in the period in which they arise.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the statement of
financial position date. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the date of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive
income and accumulated in equity. On consolidation, the results of
overseas operations are translated into pounds sterling at rates
approximating to those ruling when the transactions took place. All
assets and liabilities of overseas operations, including goodwill
arising on the acquisition of those operations, are translated at
the rate ruling at the statement of financial position date.
Exchange differences arising on translating the opening net assets
at opening rate and the results of overseas operations at actual
rate are recognised directly in other comprehensive income and are
credited/(debited) to the retranslation reserve.
Government grants
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received.
Government grants towards job creation and growth are normally
recognised as income over the useful economic life of the capital
expenditure to which they relate.
Government grants are recognised in the income statement so as
to match them with the related expenses that they are intended to
compensate. Grants that relate to capital expenditure are offset
against related depreciation costs. Where grants are received in
advance of the related expenses, they are initially recognised in
the balance sheet and released to match the related expenditure.
Non-monetary grants are recognised at fair value.
Operating result
Operating loss is stated as loss before tax, finance income and
costs.
Exceptional items
Exceptional items are those items that, in the judgement of
management, need to be disclosed separately by virtue of their
nature, size or incidence. Exceptional items, such as impairment
reversals, have been classified separately in order to draw them to
the attention of the reader of the accounts and, in the opinion of
the Board, to show more accurately the underlying results of the
Group.
Retirement benefit costs
The Group operates two defined contribution pension schemes for
UK employees, one of which is an auto-enrolment workplace pension
scheme established following the UK Pensions Act 2008. The
employees of the Group's subsidiaries in the US are members of a
state-managed retirement benefit scheme operated by the US
Government.
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due. For these schemes, the
assets are held separately from those of the Group in independently
administered funds. Payments made to US state-managed retirement
benefit schemes are dealt with as payments to defined contribution
schemes where the Group's obligations under the schemes are
equivalent to those arising in a defined contribution retirement
benefit scheme.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity. The UK R&D
tax credit is calculated using the current rules as set out by HMRC
and is recognised in the income statement during the period in
which the R&D programmes occurred.
i) Current tax
The tax credit is based on the taxable loss for the year.
Taxable loss differs from net loss as reported in the income
statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted at the date of the statement of financial
position.
ii) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the Consolidated Statement of Financial Position and the
corresponding tax bases used in the computation of taxable profit
and is accounted for using the statement of financial position
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
statement of financial position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised, based on tax laws and rates that have been enacted or
substantively enacted at the date of the statement of financial
position. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited in
other comprehensive income, in which case the deferred tax is also
dealt with in other comprehensive income. Deferred tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is recognised so as to write off the cost or
valuation of assets (other than land and properties under
construction) less their residual values over their useful lives,
using the straight-line method, on the following bases:
Plant and machinery 6% to 25%
Fixtures, fittings and equipment 15%
Computer equipment 25%
Lab equipment 6% to 25%
The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset, and is recognised in
income.
Internally-generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally-generated intangible asset arising from the
Group's product development is recognised only if all of the
following conditions are met:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- its intention to complete the intangible asset and use or
sell it;
-- its ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future
economic benefits. Among other things, the entity can demonstrate
the existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- its ability to measure reliably the expenditure attributable
to the intangible asset during its development.
Research expenditure is written off as incurred. Development
expenditure is also written off, except where the Directors are
satisfied as to the technical, commercial and financial viability
of individual projects. In such cases, the identifiable expenditure
is deferred and amortised over the period during which the Group is
expected to benefit. This period normally equates to the life of
the products to which the development expenditure relates. Where
expenditure relates to developments for use rather than direct
sales of product, the cost is amortised straight-line over a
2-15-year period. Assets that have been developed are not amortised
until they are available for use and commercial sale. Provision is
made for any impairment.
Amortisation of the intangible assets recognised on the
acquisitions of Nova R&D, Inc. and eV Products, Inc. are
recognised in the income statement on a straight-line basis over
their estimated useful lives of between five and fifteen years.
Patents and trademarks
Patents and trademarks are measured initially at purchase cost
and are amortised on a straight-line basis over their estimated
useful lives.
Impairment of tangible and intangible assets, excluding
goodwill
At each statement of financial position date, the Group reviews
the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the CGU to which the
asset belongs. When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to
individual CGUs, or otherwise they are allocated to the smallest
group of CGUs for which a reasonable and consistent allocation
basis can be identified.
An intangible asset with an indefinite useful life is tested for
impairment at least annually and whenever there is an indication
that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate of 10.25% (2022: 11.35%) that reflects
current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows
have not been adjusted. See note 11 for further detail.
If the recoverable amount of an asset (or CGU) is estimated to
be less than its carrying amount, the carrying amount of the asset
(or CGU) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or CGU) is increased to the revised estimate
of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or
CGU) in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable
value. The Group continue to adopt a policy of valuing recyclable
material. Costs comprise direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition.
Cost is calculated in the statement of financial position at
standard cost, which approximates to historical cost determined on
a first in, first out basis. Net realisable value represents the
estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Work
in progress costs are taken as production costs, which include an
appropriate proportion of attributable overheads.
Provision is made for obsolete, slow moving or defective items
where appropriate. This is reviewed by operational finance at least
every six months. Given the nature of the products and the
gestation period of the technology, commercial rationale
necessitates that this provision is reviewed on a case-by-case
basis.
Provisions for liabilities
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is more
likely than not that an outflow of resources will be required to
settle the obligation, and the amount can be reliably estimated.
Such provisions are measured at the present value of management's
best estimate of the expenditure required to settle the present
obligation at the balance sheet date. The discount rate used to
determine the present value reflects current market assessments of
the time value of money. Provisions are not recognised for future
operating losses.
Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are
originated. All other financial assets and financial liabilities
are initially recognised when the Group becomes a party to the
contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at Fair
Value Through Profit or Loss (FVTPL), transaction costs that are
directly attributable to its acquisition or issue. A trade
receivable without a significant financing component is initially
measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as
measured at: amortised cost; Fair Value through Other Comprehensive
Income (FVOCI) - debt investment; FVOCI - equity investment; or
FVTPL.
Financial assets are not reclassified subsequent to their
initial recognition unless the Company changes its business model
for managing financial assets in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions:
-- It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- Its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL.
Investments in subsidiaries are carried at cost less
impairment.
Cash and cash equivalents comprise cash balances and call
deposits.
(b) Subsequent measurement and gains and losses
Financial assets at FVTPL - these assets (other than derivatives
designated as hedging instruments) are subsequently measured at
fair value. Net gains and losses, including any interest or
dividend income, are recognised in profit or loss.
Financial assets at amortised cost - these assets are
subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial liabilities and equity
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) They include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) Where the instrument will or may be settled in the Group's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Group's own
equity instruments or is a derivative that will be settled by the
Group exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Group's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held for trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised
cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in profit or
loss.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
Convertible loan notes
The convertible loan issued by the Group is a hybrid financial
instrument, whereby a debt host liability component and an embedded
derivative liability component was determined at initial
recognition. The conversion option did not satisfy the fixed for
fixed equity criterion (fixed number of shares and fixed amount of
cash). Conversion features that are derivative liabilities are
accounted for separately from the host instrument. The embedded
derivative is accounted for as a financial instrument through
profit or loss and is initially measured at fair value, and changes
therein are recognised in profit or loss. The debt host liability
is accounted for at amortised cost. In the case of a hybrid
financial instrument, IFRS 9 requires that the fair value of the
embedded derivative is calculated first and the residual value
(residual proceeds) is assigned to the host financial liability.
The initial recognition of the embedded derivative conversion
feature has been recognised as a liability on the balance sheet
with any changes to the fair value of the derivative recognised in
the income statement. It has been fair valued using a Black Scholes
simulation which was performed at the transaction date and the
period end date.
The debt host liability will be accounted for using the
amortised cost basis with an effective interest rate of 16%. The
Group will recognise the unwinding of the discount at the effective
interest rate, until the maturity date, the carrying amount at the
maturity date will equal the cash payment required to be made.
Intra-Group financial instruments
Where the Group enters into financial guarantee contracts to
guarantee the indebtedness of other companies within its Group, the
Group considers these to be insurance arrangements and accounts for
them as such. In this respect, the Group treats the guarantee
contract as a contingent liability until such time as it becomes
probable that the Group will be required to make a payment under
the guarantee.
(iii) Impairment
The Group recognises loss allowances for expected credit losses
(ECLs) on financial assets measured at amortised cost, debt
investments measured at FVOCI and contract assets (as defined in
IFRS 15).
The Group measures loss allowances at an amount equal to
lifetime ECL, except for other debt securities and bank balances
for which credit risk (i.e. the risk of default occurring over the
expected life of the financial instrument) has not increased
significantly since initial recognition, which are measured as
twelve-month ECL.
Loss allowances for trade receivables and contract assets are
always measured at an amount equal to lifetime ECL. When
determining whether the credit risk of a financial asset has
increased significantly since initial recognition and when
estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Company's historical experience and
informed credit assessment and including forward-looking
information.
The Group assumes that the credit risk on a financial asset may
have increased if it is more than 120 days past due. This is
assessed on a case-by-case basis, taking into consideration the
commercial relationship and historical pattern of payments.
The Group considers a financial asset to be at risk of default
when:
-- The borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as
realising security (if any is held); or
-- The financial asset is more than 120 days past due, subject
to management discretion and commercial relationships.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument.
Twelve-month ECLs are the portion of ECLs that result from
default events that are possible within 12 months after the
reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed to
credit risk.
Measurement of ECLs
Credit losses are measured and assessed on an individual balance
by balance basis. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses. The general approach
incorporates a review for any significant increase in counterparty
credit risk since inception.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost and debt securities at FVOCI are
credit impaired. A financial asset is "credit impaired" when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery. If there is recovery of the
financial asset, a reversal will be recognised in the profit and
loss.
Share-based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date and spread over the period
during which the employees become unconditionally entitled to the
options, which is based on a period of employment of three years
from grant date. In accordance with IFRS 2, from a single entity
perspective, Kromek Group plc recognises an increase in investment
and corresponding increase in equity to represent the
settlement.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest. The vesting date is
determined based on the date an employee is granted options,
usually three years from date of grant. At each statement of
financial position date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the
effect of non-market-based vesting conditions and taking into
account the average time in employment across the year. The impact
of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to equity
reserves.
Cash
Cash, for the purposes of the statement of cash flows, comprises
cash in hand and term deposits repayable between one and twelve
months from balance sheet date, less overdrafts repayable on
demand.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying the Group's accounting
policies
The following are the critical judgements that the Directors
have made in the process of applying the Group's accounting
policies and that have the most significant effect on the amounts
recognised in the financial statements.
Development costs
As described in note 2, Group expenditure on development
activities is capitalised if it meets the criteria as per IAS 38.
Management have exercised and applied judgement when determining
whether the criteria of IAS 38 is satisfied in relation to
development costs. As part of this judgement process, management
establish the future Total Addressable Market relating to the
product or process, evaluate the operational plans to complete the
product or process and establish where the development is
positioned on the Group's technology road map and asses the costs
against IAS 38 criteria. This process involves input from the
Group's Chief Technical Officer plus the operational, financial and
commercial functions and is based upon detailed project cost
analysis of both time and materials.
Performance obligations arising from customer contracts
As described in note 2, the Group recognises revenue as
performance obligations are satisfied when control of the goods and
services is transferred to the customer. Management have exercised
and applied judgment in determining what the performance
obligations are and whether they are satisfied over time or at a
point in time. In applying this judgement, management considers the
nature of the overall contract deliverable, legal form of the
contract and economic resources required for the performance
obligation to be satisfied. Management disaggregate revenues by
sales of goods and services, revenue from development grants (such
as Innovate UK) and revenue from contract customers. Typically,
revenue from the sales of goods and services is recognised at a
point in time. Revenue from development grants and contract
customers are recognised either over time or at a point in time
depending on the characteristics of the specific contract when
applying IFRS15.
Cash Generating Units
Management have exercised judgement in determining the number of
CGUs. As set out in note 11, An asset's CGU is the smallest
identifiable group of assets that includes the asset and generates
cash inflows that are largely independent of the cash inflows from
other assets or groups of assets. An asset or group of assets must
be identified as a cash-generating unit where an active market
exists for the output produced by that asset or group of assets,
even if some or all of the output is used internally. This is
because the asset or group of assets could generate cash inflows
that would be largely independent of the cash inflows from other
assets or group of assets. The smallest identifiable group of
assets identified by management can be split into three markets:
Advanced Imaging, CBRN and Biological Threat Detection. CGUs are
not necessarily consistent with the way management monitors the
business. Management continues to oversee and monitor the business
as two separate operating segments - UK and US and as three
separate CGUs as noted above.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the statement of financial position
date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
i) Development costs
The key source of estimation uncertainty relates to the
estimation of the asset's recoverable amount, which involves
assumptions in relation to future uncertainties including discount
rates and growth rates. For further details, see note 11.
As disclosed in note 12, development costs are capitalised in
accordance with the accounting policy noted above. These
capitalised assets are amortised over the period during which the
Group is expected to benefit.
ii) Contract revenue
This policy requires forecasts to be made of the outcomes of
long-term contracts, which include assessments and judgements on
changes in expected costs. A change in the estimate of total
forecast contract costs would impact the stage of completion of
those contracts and the level of revenue recognised thereon, which
could have a material impact on the results of the Group.
iii) R&D Tax credit
The R&D tax credit is calculated using the current rules as
prescribed by HMRC. The estimation is based on the actual UK
R&D projects that qualify for the scheme that have been carried
out in the period. Management estimate the tax credit on a prudent
basis and then obtain additional professional input from the
Company's tax advisers prior to submission of the claim to HMRC.
The Group has assumed 100% of the R&D tax credit is
recoverable. If only 95% of the claim were to be accepted by HMRC,
this would have the effect of reducing the tax receivable and
corresponding tax credit by GBP47k to GBP893k.
iv) Recoverability of receivables and amounts recoverable on contract ("AROC")
Management judges the recoverability at the balance sheet date
and makes a provision for impairment where appropriate. The
resultant provision for impairment represents management's best
estimate of losses incurred in the portfolio at the balance sheet
date, assessed on the customer risk scoring and commercial
discussions. Further, management estimate the recoverability of any
AROC balances relating to customer contracts. This estimate
includes an assessment of the probability of receipt, exposure to
credit loss and the value of any potential recovery. Management
base this estimate using the most recent and reliable information
that can be reasonably obtained at any point of review. A material
change in the facts and circumstances could lead to a reversal of
impairment proportional to the expected cash inflows supported by
this information.
v) Impairment reviews
Management conducts annual impairment reviews of the Group's
non-current assets on the consolidated statement of financial
position. This includes goodwill annually, development costs where
IAS 36 requires it, and other assets as the appropriate standards
prescribe. Any impairment review is conducted using the Group's
future growth targets regarding its key markets of nuclear
detection, medical imaging and security screening. The current
carrying value of this class of assets is GBP45,418k as set out on
the Group's consolidated statement of financial position.
Sensitivities are applied to the growth assumptions to consider any
potential long-term impact of current economic conditions.
Provision is made where the recoverable amount is less than the
current carrying value of the asset. Further details as to the
estimation uncertainty and the key assumptions are set out in note
11.
vi) Calculation of share-based payment charges
The charge related to equity-settled transactions with employees
is measured by reference to the fair value of the equity
instruments at the date they are granted, using an appropriate
valuation model selected according to the terms and conditions of
the grant. The simplest option pricing model is the Black-Scholes
model, which tends to be suitable for simple forms of share awards,
in particular where there are no market-based performance
conditions. More complex share schemes require the use of a more
complex model such as the Monte Carlo Model. Judgement is applied
in determining the most appropriate valuation model and estimates
are used in determining the inputs to the model. The Group have
engaged a third-party expert in FY23 to value the LTIPs granted in
year using the Monte Carlo Model.
vii) Convertible loan notes
The Group issued GBP2.8m of convertible loan notes during the
year. The convertible loan is a hybrid financial instrument,
whereby a debt host liability component and an embedded derivative
liability component was determined at initial recognition. The
conversion option did not satisfy the fixed for fixed equity
criterion (fixed number of shares and fixed amount of cash).
For convertible notes with embedded derivative liabilities, the
fair value of the embedded derivative liability is determined first
and the residual amount is assigned to the debt host liability.
The embedded derivative has been fair valued using a Black
Scholes simulation which was performed at the transaction date and
the period end date. The future expected market share price of the
Group and the volatility of the share price are the key estimates
that are critical in the determination of the fair value of the
embedded derivative and subsequently the debt host liability of the
convertible loan notes.
4. Operating segments
Products and services from which reportable segments derive
their revenues
For management purposes, the Group is organised into two
geographical business units from which the Group currently operates
(US and UK) and it is these operating segments for which the Group
is providing disclosure. Whilst there are two operating segments
(US and UK), the Group recognises three CGUs (CBRN, medical imaging
and Biological Threat Detection) on the basis that operating
segments can consist of multiple CGUs. Both operating segments
serve the three principal key markets. However, typically, the US
business unit focuses principally on Advanced Imaging and the UK
focuses on CBRN and Biological Threat Detection. However, this
arrangement is flexible and can vary based on the geographical
location of the Group's customer.
The chief operating decision maker is the Board of Directors,
which assesses the performance of the operating segments using the
following key performances indicators: revenues, gross profit and
operating profit. The amounts provided to the Board with respect to
assets and liabilities are measured in a way consistent with the
financial statements.
The turnover, profit on ordinary activities and net assets of
the Group are attributable to two business segments. The first
segment relates to the development of digital colour X-ray imaging
enabling direct materials identification as well as developing a
number of detection products in the industrial and consumer
markets. The second segment relates to the development of a
technology platform, as described above, which aims to identify
airborne pathogens.
Analysis by geographical area
A geographical analysis of the revenue from the Group's
customers, by destination, is as follows:
2023 2022
GBP'000 GBP'000
United Kingdom 3,944 2,033
North America 6,110 5,807
Asia 2,071 1,556
Europe 5,031 2,601
Other 153 58
Total revenue 17,309 12,055
-------- --------
The Group has aggregated its CGUs, being CBRN, Advanced Imaging
and Biological Threat Detection, into two reporting segments being
the operational business units in the UK and US. The UK operations
comprise Kromek Group plc and Kromek Limited and the US operations
comprise Kromek Inc, eV Products Inc, and Nova R&D Inc. The
Board currently considers this to be the most appropriate
aggregation due to the main markets that are typically addressed by
the UK and US business units and the necessary skillsets and
expertise.
A geographical analysis of the Group's revenue by origin is as
follows:
Year ended 30 April 2023:
UK Operations US Operations Total for
GBP'000 GBP'000 Group
GBP'000
Revenue from sales
Revenue by segment:
-Sale of goods and services 11,530 14,844 26,374
-Revenue from grants 226 - 226
-Revenue from contract customers 2,164 51 2,215
Total sales by segment 13,920 14,895 28,815
Removal of inter-segment sales (8,529) (2,977) (11,506)
-------------- -------------- ----------
Total external sales 5,391 11,918 17,309
-------------- -------------- ----------
Segment result - operating
loss before exceptional items (1,881) (4,168) (6,049)
Interest received 2 - 2
Interest expense (975) (270) (1,245)
Loss before tax (2,854) (4,438) (7,292)
Tax credit 1,192 - 1,192
-------------- -------------- ----------
Loss for the year (1,662) (4,438) (6,100)
-------------- -------------- ----------
Reconciliation to adjusted
EBITDA:
Net interest 973 270 1,243
Tax (1,192) - (1,192)
Depreciation of PPE and right-of-use
assets 1,004 899 1,903
Amortisation 1,558 1,333 2,891
Change in fair value of derivative (77) - (77)
Share-based payment charge 354 - 354
Adjusted EBITDA 958 (1,936) (978)
-------------- -------------- ----------
Other segment information
Property, plant and equipment
additions 42 227 269
Right-of-use assets 2,133 3,752 5,885
Depreciation of PPE and right-of-use
assets 1,004 899 1,903
Release of capital grant (44) - (44)
Intangible asset additions 2,761 2,243 5,004
Amortisation of intangible
assets 1,558 1,333 2,891
-------------- -------------- ----------
Statement of financial position
Total assets 35,687 28,191 63,878
-------------- -------------- ----------
Total liabilities (16,433) (5,921) (22,354)
-------------- -------------- ----------
Year ended 30 April 2022:
UK Operations US Operations Total for
GBP'000 GBP'000 Group
GBP'000
Revenue from sales
Revenue by segment:
-Sale of goods and services 9,036 9,013 18,049
-Revenue from grants 646 - 646
-Revenue from contract customers 1,227 245 1,472
Total sales by segment 10,909 9,258 20,167
Removal of inter-segment sales (5,564) (2,548) (8,112)
-------------- -------------- ----------
Total external sales 5,345 6,710 12,055
-------------- -------------- ----------
Segment result - operating
loss before exceptional items (3,732) (1,981) (5,713)
Interest received 34 - 34
Interest expense (348) (234) (582)
Exceptional items - 132 132
Loss before tax (4,046) (2,083) (6,129)
Tax credit 1,228 (17) 1,211
-------------- -------------- ----------
Loss for the year (2,818) (2,100) (4,918)
-------------- -------------- ----------
Reconciliation to adjusted
EBITDA:
Net interest 314 234 548
Tax (1,228) 17 (1,211)
Depreciation of PPE and right-of-use
assets 1,010 741 1,751
Amortisation 1,548 1,021 2,569
Share-based payment charge 236 - 236
Exceptional items - (132) (132)
Adjusted EBITDA (938) (219) (1,157)
-------------- -------------- ----------
Other segment information
Property, plant and equipment
additions 124 527 651
Right-of-use assets 2,048 3,458 5,506
Depreciation of PPE and right-of-use
assets 1,010 741 1,751
Release of capital grant (44) - (44)
Intangible asset additions 4,199 1,599 5,798
Amortisation of intangible
assets 1,548 1,021 2,569
-------------- -------------- ----------
Statement of financial position
Total assets 39,494 27,929 67,423
-------------- -------------- ----------
Total liabilities (13,376) (6,611) (19,987)
-------------- -------------- ----------
Inter-segment sales are charged on an arms-length basis.
No other additions of non-current assets have been recognised
during the year other than property, plant and equipment, and
intangible assets.
No impairment losses were recognised in respect of property,
plant and equipment and intangible assets including goodwill.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 2. Segment
loss represents the loss reported by each segment. This is the
measure reported to the Group's Chief Executive for the purpose of
resource allocation and assessment of segment performance.
Revenues from major products and
services
The Group's revenues from its major 2023 2022
products and services were as follows: GBP'000 GBP'000
Product revenue 14,768 9,935
Research and development revenue 2,541 2,120
--------------- ---------------
Consolidated revenue 17,309 12,055
--------------- ---------------
Information about major customers
Included in revenues arising from US operations are revenues of
approximately GBP4,688k (2022: GBP2,178k) that arose from the
Group's largest commercial customer. Included in revenues arising
from UK operations are revenues of approximately GBP1,243k (2022:
GBP955k) that arose from a major commercial customer.
5. Other Operating Income
2023 2022
GBP'000 GBP'000
Coronavirus Job Retention Scheme - 19
Miscellaneous 121 17
PPP loan forgiveness - 1,374
Total other operating income 121 1,410
--------------- ---------------
Miscellaneous income relates to work undertaken during the
financial year on a duty saving project. An Advance Tariff Ruling
application was granted, which resulted in a retrospective duty
claim dating back three years.
Other operating income from the prior year comprised the
forgiveness of PPP loans granted by the US Government and grants
received from the Coronavirus Job Retention Scheme provided by the
UK Government in response to COVID-19's economic impact on
businesses.
6. Loss before tax for the year
Loss before tax for the year has been arrived at after
charging/(crediting):
2023 2022
GBP'000 GBP'000
Net foreign exchange (gains)/losses (98) 155
Research and development costs recognised
as an expense 882 1,308
Depreciation of property, plant and equipment 1,910 1,751
Release of capital grant (44) (44)
Amortisation of internally-generated intangible
assets 2,891 2,569
Cost of inventories recognised as expense 4,858 3,003
Exceptional items - reversal of trade receivables
and AROC (see note 8) - (132)
Staff costs (see note 7) 11,166 9,543
---------------- ----------------
7. Staff costs
The average monthly number of employees (excluding non-executive
directors) was:
2023
Number 2022 Number
Directors (executive) 3 3
Research and development, production 149 133
Sales and marketing 8 5
Administration 13 13
------- -----------
173 154
------- -----------
Their aggregate remuneration comprised:
2023 2022
GBP'000 GBP'000
Wages and salaries 9,418 8,069
Social security costs 824 739
Pension scheme contributions 570 499
Share-based payments 354 236
--------- ---------
11,166 9,543
--------- ---------
The total Directors' emoluments (including non-executive
directors) was GBP933k (2022: GBP890k). The aggregate value of
contributions paid to money purchase pension schemes was GBP26k
(2022: GBP24k) in respect of four directors (2022: four directors).
There has been no exercise of share options by the Directors in the
period and therefore no gain recognised in the year (2022:
nil).
The highest paid director received emoluments of GBP270k (2022:
GBP270k) and amounts paid to money purchase pension schemes was
GBP4k (2022: GBP4k).
Key management compensation:
2023 2022
GBP'000 GBP'000
Wages and salaries and other short-term
benefits 1,096 1,050
Social security costs 117 112
Pension scheme contributions 33 32
Share-based payment expense 273 146
-------- --------
1,519 1,340
-------- --------
Key management comprise the Executive Directors, Non-Executive
Directors and senior operational staff. There were three Executive
Directors in 2023 (2022: three); four Non-Executive Directors in
2023 (2022: four); and two senior operational staff in 2023 (2022:
two).
8. Exceptional Items
Exceptional items, booked to operating costs, comprised the
following:
2023 2022
GBP'000 GBP'000
Reversal of trade receivables and
AROC - (132)
----------- ---------
Total exceptional items - (132)
----------- ---------
The Group has reversed GBPnil in 2023 (2022: GBP132k) in
relation to items impaired in a prior year. The impairment
(recognised in FY2020) related to two separate contracts with
specific customers in Asia who were identified as having a
significantly elevated credit risk. The assessment carried out by
management suggested delays in delivery due to travel restriction
and subsequent doubt over expected future cash flow, increasing the
likelihood of credit default by these specific debtors in the next
12 months due. A charge of GBP13,062k was presented in FY2020 as an
exceptional item arising as a result of COVID-19 in accordance with
the Group's accounting policy, as it was considered to be one-off
in nature, size and incidence. It represented a full write down of
invoiced debtors and AROC. The amounts have been fully written down
as management have concluded that any collateral is not considered
to be material. No adjustment or reversal to the impairment
calculated in 2020, specific to one of the contracts, has been
included in 2022 and 2023 on the basis that the recoverability of
this receivable remains uncertain.
9. Tax
Recognised in the income statement
2023 2022
GBP'000 GBP'000
Current tax credit:
UK corporation tax on losses in the year 940 942
Adjustment in respect of previous periods 252 286
Foreign taxes paid - (17)
-------- ---------
Total current tax 1,192 1,211
Deferred tax:
Origination and reversal of timing differences - -
Adjustment in respect of previous periods - -
Total deferred tax - -
-------- ---------
Total tax credit in income statement 1,192 1,211
-------- ---------
The main rate of UK corporation tax for the financial year was
19.49% (2022: 19%) whilst the US federal corporate tax rate is 21%.
The deferred tax asset at 30 April 2023, which has not been
recognised, has been calculated at 19.49% (2022: 19 %).
Reconciliation of tax credit
The charge for the year can be reconciled to the profit in the
income statement as follows:
2023 2022
GBP'000 GBP'000
Loss before tax (7,292) (6,129)
Tax at the UK corporation tax rate of 19.49%
(2022: 19%) 1,422 1,165
Non-taxable income/(expenses) not deductible 36 (184)
Effect of R&D 396 456
Effect of other tax rates/credits 63 124
Share scheme deduction under Part 12 CTA 2009 - -
Unrecognised movement on deferred tax (1,251) (815)
Adjustment in respect of previous periods 252 286
Effects of overseas tax rates 274 179
Total tax credit for the year 1,192 1,211
---------- ----------
There are no tax items charged to other comprehensive
income.
The effect of R&D is the tax impact of capitalised
development costs being deducted in the year in which they are
incurred.
The rate of corporation tax for the year is 19.49% (2022: 19%).
The other tax jurisdiction that the Group currently operates in is
the US. Any deferred tax arising from the US operations is
calculated at 27.59%, which represents the federal plus state tax
rate.
10. Losses per share
As the Group is loss making, dilution has the effect of reducing
the loss per share. The calculation of the basic earnings per share
is based on the following data:
2023 2022
Losses GBP'000 GBP'000
Losses for the purposes of basic and
diluted losses per share being net
losses attributable to owners of the
Group (6,100) (4,918)
----------- -----------
2023 2022
Number of shares Number Number
Weighted average number of ordinary
shares for the purposes of basic losses
per share 431,851,820 431,851,820
Effect of dilutive potential ordinary
shares:
Share options 312,909 350,556
----------- -----------
Weighted average number of ordinary
shares for the purposes of diluted
losses per share 432,164,729 432,202,376
----------- -----------
2023 2022
Basic (p) (1.4) (1.1)
------ -----
Basic earnings per share is calculated by dividing the loss
attributable to shareholders by the weighted average number of
ordinary shares in issue during the year. IAS 33 requires
presentation of diluted EPS when a company could be called upon to
issue shares that would decrease earnings per share or increase the
loss per share. For a loss-making company with outstanding share
options, net loss per share would be decreased by the exercise of
options. Therefore, the anti-dilutive potential ordinary shares are
disregarded in the calculation of diluted EPS.
11. Intangible Assets including Goodwill
GBP'000
Cost
At 1 May 2022 and 30 April 2023 1,275
-------
Accumulated impairment losses
At 1 May 2022 and 30 April 2023 -
-------
Carrying amount
At 30 April 2023 and 30 April 2022 1,275
-------
Goodwill acquired in a business combination is allocated, at
acquisition, to the CGUs that are expected to benefit from that
business combination. Before recognition of impairment losses, the
carrying amount of goodwill had been allocated as follows:
Goodwill Intangibles
CGU GBP'000 GBP'000
Advanced Imaging 1,275 13,813
CBRN - 7,218
Biological Threat Detection - 9,523
-------------- -----------
Total 1,275 30,554
-------------- -----------
The goodwill arose on the acquisition of Nova R&D, Inc. in
2010, and represents the excess of the fair value of the
consideration given over the fair value of the identifiable assets
and liabilities acquired.
Goodwill has been allocated to the Advanced Imaging CGU.
Impairment tests
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired, by comparing the carrying value of the goodwill to its
value in use on a discounted cash flow basis.
The Group tests intangible assets with finite lives for
impairment if an indicator exists. In undertaking the impairment
test, management considered both internal and external sources of
information. The impairment testing did not identify any
impairments in each of the CGUs.
Forecast cash flows
Management has prepared cash flow forecasts for 10 years
(CBRN/Biological Threat Detection) and 15 years (Advanced Imaging)
plus a perpetuity. This exceeds the five years as set out in the
standard but has been used on the basis that the entity is in the
early stage of its maturity and will not have reached steady state
after five years. Management have visibility over contracts in
place and in the pipeline that enable it to forecast accurately and
the cash flows are based on the useful economic life of the 'know
how', which is considered to be the essential asset.
Advanced Imaging
The key assumptions to the value in use calculations are set out
below:
-- Growth rate. The 2023 model includes a prudent revenue growth
in years 1 and 2 (see below for comparatives). This growth rate
comprises both capacity increases as a result of increases in raw
material to finished product efficiencies and price increases,
factoring in existing contracts and those in the pipeline and is
reflective of historical growth rates as well as and the Company's
share of the overall markets the Advanced Imaging CGU operates in.
No growth is assumed after 10 years.
-- Discount rates. Management have derived a pre-tax discount
rate of 8.85% (2022: 11.35%) using the latest market assumptions
for the risk-free rate, the equity premium and the net cost of
debt, which are all based on publicly available sources, as well as
adjustments for forecasting risk for which management considered
the historical growth of the entity as well as the visibility of
cash flows from a contracted perspective, which are all based on
publicly available sources. The discount rate is lower than that
used in 2022. The key drivers of this change are the changes in
market assumptions for US corporate bond yields and risk-free
rates.
The Challenge Model Base Case incorporates the following into
the Advanced Imaging forecast:
-- Revised year 1 and year 2 cashflows to match the severe but
plausible budget conducted as part of the Going Concern review.
-- Modelled a smoother increase in revenues from the year 1 and
year 2 budgets to year 15 whilst taking into consideration
potential capacity constraints.
CBRN
-- Growth rate. The 2023 model includes a prudent growth rate of
25% per annum which is reflective of recent growth in this
particular sector of the business. This growth rate considers
existing contracts and those in the pipeline and is reflective of
historical growth rates as well as and the Company's share of the
overall markets the CBRN CGU operates in. No growth is assumed
after 10 years.
-- Discount rates. Management have derived a pre-tax discount
rate of 10.92% (2022: 10.50%) using the latest market assumptions
for the risk-free rate, the equity premium and the net cost of
debt, which are all based on publicly available sources, as well as
adjustments for forecasting risk for which management considered
the historical growth of the entity as well as the visibility of
cash flows from a contracted perspective. The discount rate is
higher than that used in 2022. The key drivers of this change are
the changes in market assumptions for UK corporate bond yields and
risk-free rates.
The Challenge Model Base Case scenarios incorporates the
following into the CBRN forecast:
-- Revised year 1, 2 and 3 cashflows to match the severe but
plausible budget conducted as part of the Going Concern review.
-- Modelled a smoother increase in revenues from the year 1 and
year 2 budgets to year 10.
Biological Threat Detection
-- Growth rate. The 2023 model is based on management's
assumption of future programme revenue and product delivery. The
forecast revenue consists of known revenue opportunities across
four key areas. For prudency additional upside revenue from other
known opportunities has been excluded.
-- Discount rates. Management have derived a pre-tax discount
rate of 10.92% (2022: 10.50%) using the latest market assumptions
for the risk-free rate, the equity premium and the net cost of
debt, which are all based on publicly available sources, as well as
adjustments for forecasting risk for which management considered
the historical growth of the entity as well as the visibility of
cash flows from a contracted perspective.
The Challenge Model Base Case scenarios incorporates the
following into the Biological Threat Detection forecast:
-- Modelled a smoother increase in revenues from the year 1 and
year 2 budgets to year 10.
Sensitivities
The headroom in the base case models for each CGU are noted
below:
Advanced Imaging CBRN Headroom Biological Threat
Headroom Detection Headroom
Base model GBP20,268k GBP15,999k GBP28,103k
----------------- -------------- --------------------
Combination of Discount GBP15,064k GBP12,290k GBP23,134k
Rate +2% and Challenge
model
----------------- -------------- --------------------
Combination of Discount GBP26,297k GBP20,391k GBP33,954k
Rate
-2% and Challenge
model
----------------- -------------- --------------------
The table below sets out the headroom in the challenge base
model for each CGU:
Advanced Imaging CBRN Headroom Biological Threat
Headroom Detection Headroom
Challenge base model GBP11,718k GBP2,286k GBP18,780k
----------------- -------------- --------------------
Combination of Discount GBP6,032k GBP125k GBP15,681k
Rate +2% and Challenge
model
----------------- -------------- --------------------
Combination of Discount GBP18,674k GBP4,860k GBP22,366k
Rate
-2% and Challenge
model
----------------- -------------- --------------------
The Directors have reviewed the recoverable amount of the CGU
and do not consider there to be any impairment in 2023 or 2022
12. Other intangible assets
Patents,
trademarks
Development & other
costs intangibles Total
GBP'000 GBP'000 GBP'000
Cost
At 1 May 2022 35,880 7,913 43,793
Additions 4,821 183 5,004
Exchange differences 4 1 5
----------- ------------ --------
At 30 April 2023 40,705 8,097 48,802
----------- ------------ --------
Amortisation
At 1 May 2022 9,296 6,122 15,418
Charge for the year 2,325 566 2,891
Exchange differences (46) (15) (61)
----------- ------------ --------
At 30 April 2023 11,575 6,673 18,248
----------- ------------ --------
Carrying amount
At 30 April 2023 29,130 1,424 30,554
----------- ------------ --------
At 30 April 2022 26,584 1,791 28,375
----------- ------------ --------
The Group amortises capitalised development costs on a
straight-line basis over a period of 2-15 years rather than against
product sales directly relating to the development expenditure. Any
impairment of development costs are recognised immediately through
the profit and loss.
Patents and trademarks are amortised over their estimated useful
lives, which is on average 10 years.
The carrying amount of acquired intangible assets arising on the
acquisitions of Nova R&D, Inc. and eV Products, Inc. as at the
30 April 2023 was GBP182k (2022: GBP357k), with amortisation to be
charged over the remaining useful lives of these assets which is
between 3 and 13 years.
The amortisation charge on intangible assets is included in
administrative expenses in the consolidated income statement.
Further details on impairment testing are set out in note
11.
13. Property, plant and equipment
Fixtures
Computer Plant and and
Lab equipment equipment machinery fittings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 May 2022 210 1,463 18,621 619 20,913
Additions - 34 226 9 269
Exchange differences - - 2 - 2
At 30 April 2023 210 1,497 18,849 628 21,184
--------------- ---------- ---------- --------- --------
Accumulated depreciation
and impairment
At 1 May 2022 75 1,189 8,358 347 9,969
Charge for the year 42 118 1,182 54 1,396
Exchange differences - (3) (8) (1) (12)
--------------- ---------- ---------- --------- --------
At 30 April 2023 117 1,304 9,532 400 11,353
--------------- ---------- ---------- --------- --------
Carrying amount
At 30 April 2023 93 193 9,317 228 9,831
--------------- ---------- ---------- --------- --------
At 30 April 2022 135 274 10,263 272 10,944
--------------- ---------- ---------- --------- --------
14. Inventories
2023 2022
GBP'000 GBP'000
Raw materials 2,204 3,554
Work-in-progress 8,321 6,304
Finished goods 369 645
-------- --------
10,894 10,503
-------- --------
The cost of inventories recognised as an expense during the year
in respect of continuing operations was GBP4,858k (2022:
GBP5,006k).
The write-down of inventories to net realisable value amounted
to GBP1,226k (2022: GBP852k). The reversal of write-downs amounted
to GBP271k (2022: GBP94k).
15. Borrowings
2023 2022
GBP'000 GBP'000
Secured borrowing at amortised
cost
Revolving credit facility and
capex facility 5,000 4,500
Other borrowings 1,357 1,965
Convertible loan notes (see
note 16) 2,529 -
-------- --------
8,886 6,465
-------- --------
Total borrowings
Amount due for settlement within
12 months 8,318 5,716
-------- --------
Amount due for settlement after
12 months 568 749
-------- --------
The Group has a GBP5.0m RCF with HSBC, the repayment date for
which has been extended from 11 March 2023 to 31 August 2023. Post
year end, the Group deposited GBP4.5m with HSBC over which the bank
has a legal charge in the event that the RCF is not repaid by 31
August 2023. At the date of this report, the Group are finalising
the terms of an alternative borrowing facility to replace the HSBC
RCF and the Board are confident that this facility will be secured
to repay the RCF by 31 August 2023.
Other borrowings comprise a loan with the landlord in the US in
respect of the facility occupied by eV Products, Inc. This loan is
repaid in equal instalments on a monthly basis and attracts
interest at 7.50% per annum. At 30 April 2023, the total loan due
to the landlord was GBP0.2m (2022: GBP0.4m). Of this, GBP0.2m is
due within 12 months (2022: GBP0.2m) and GBPnil (2022: GBP0.2m) is
due after 12 months.
The Group's US operations were eligible to apply for an Economic
Injury Disaster Loan. A loan of GBP0.1m was approved and secured in
June 2020. A further loan of GBP0.4m was approved and secured in
August 2021. This loan attracts interest at a rate of 3.75% per
annum and the maturity date is 30 years from the date of the loan
note.
The Group secured an additional GBP0.5m loan in September 2022
and a GBP0.1m loan in February 2023. These were to aid with working
capital requirements. Both loans were repaid post year end.
Convertible loan notes of GBP2.8m were securing during the year.
This is discussed further in note 16.
Finance lease liabilities are secured by the assets leased. The
borrowings are at a fixed interest rate with repayment periods not
exceeding five years.
The weighted average interest rates paid during the year were as
follows:
2023 2022
% %
Revolving credit facility 6.90 2.80
Other borrowing facilities 3.40 6.60
16. Convertible Loan Notes
During the year, the Group issued convertible loan notes to the
value of GBP2.84m at an interest rate of 8% per annum, with
interest accruing monthly.
The convertible loan is a hybrid financial instrument, whereby a
debt host liability component and an embedded derivative liability
component was determined at initial recognition. The conversion
option did not satisfy the fixed for fixed equity criterion (fixed
number of shares and fixed amount of cash) and hence these
instruments are not considered to contain an equity element.
For convertible notes with embedded derivative liabilities, the
fair value of the embedded derivative liability is determined first
and the residual amount is assigned to the debt host liability. The
initial recognition of the embedded derivative conversion feature
has been recognised as a liability on the balance sheet with any
changes to the fair value of the derivative recognised in the
income statement. It has been fair valued using a Black Scholes
model which was performed at the transaction date and the period
end date. The inputs into the Black-Scholes model at the year-end
are as follows:
2023
Weighted average share price 6.6p
Expected volatility 40.97%
Expected life 1 year
Risk-free rate 0.031
Expected dividend yields 0%
-------
The debt host liability will be accounted for using the
amortised cost basis with an effective interest rate of 16%. The
Group will recognise the unwinding of the discount at the effective
interest rate, until the maturity date, the carrying amount at the
maturity date will equal the cash payment required to be made.
Embedded Convertible
derivative loan note Total
GBP'000 GBP'000 GBP'000
Initial recognition 594 2,249 2,840
Unwinding of discount - 280 280
Change in fair value (77) - (77)
-----------
517 2,529 3,043
----------- ----------- --------
17. Notes to the cash flow statement
2023 2022
GBP'000 GBP'000
Loss for the year (6,100) (4,918)
Adjustments for:
Finance income (2) (34)
Finance costs 1,245 582
Change in fair value of derivative (77) -
Income tax credit (1,192) (1,211)
Depreciation of property, plant and equipment
and ROU 1,903 1,751
Amortisation of intangible assets 2,891 2,569
Share-based payment expense 354 236
PPP loan forgiveness - (1,443)
Operating cash flow before movements in
working capital (978) (2,468)
Increase in inventories (391) (4,301)
Decrease in receivables 900 215
(Decrease)/increase in payables (529) 1,741
Cash used in operations (998) (4,813)
Income taxes received 1,195 1,283
-------- ---------
N et cash generated from/(used in) operating
activities 197 (3,530)
-------- ---------
Cash and cash equivalents
2023 2022
GBP'000 GBP'000
Cash and bank balances 1,097 5,081
-------- --------
Cash and cash equivalents comprise cash and term bank deposits
repayable between one and twelve months from balance sheet date,
net of outstanding bank overdrafts. The carrying amount of these
assets is approximately equal to their fair value.
18. Events after the balance sheet date
Post year end, the Company successfully announced a placing,
subscription and open offer to raise GBP8m before expenses. The
Company raised GBP7m through the issue of 140,000,000 placing
shares and an additional GBP1m through an open offer, which
resulted in the issue of 20,564,372 shares. Net proceeds post
fundraising costs amount to GBP7.4m.
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END
FR EAPXDAAKDEFA
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July 24, 2023 02:01 ET (06:01 GMT)
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