TIDMTAND
RNS Number : 0674O
Tan Delta Systems PLC
29 September 2023
Tan Delta Systems plc
("Tan Delta", or the "Company")
Interim results for the six months ended 30 June 2023
Tan Delta, a provider of advanced industrial and commercial
monitoring systems, is pleased to report its first set of financial
results for the six months ended 30 June 2023 ("H1 2023" or the
"Period"), since its admission to AIM in August 2023.
Financial highlights:
-- Revenue increased by 54% to GBP0.96m (H1 2022: GBP0.62m)
-- Gross profit increased by 52% to GBP0.61m at 63% margin (H1
2022: gross profit of GBP0.4m at 64% margin)
-- Profit from operations (excluding non-underlying items
relating to the IPO) of GBP0.18m (H1 2022: GBP0.03m)
-- Strengthened balance sheet following receipt of net proceeds
of GBP4.8 million, from successful AIM IPO
For further enquiries:
Tan Delta Systems plc Tel: +44 (0) 845 094
8710
Chris Greenwood, CEO
Steve Johnson, CFO
Zeus (Nominated Adviser & Broker) Tel: +44 (0) 203 829
5000
David Foreman, James Hornigold, Ed Beddows
(Investment Banking)
Nick Searle (Sales)
Chairmans Statement
It gives me great pleasure to present my first chairman's statement
since the Company's successful IPO in August 2023. Whilst we are
a relatively small team at present, all members of the Board and
employees went above and beyond, to ensure the continuing commercialisation
of our products and services, alongside the IPO, which necessarily
requires huge time and focus.
In terms of financial performance, the management team have performed
well during H1 2023 achieving 54% year on year revenue growth whilst
also preparing the business for rapid scaling.
Our target markets are large commercial and industrial operators
and manufacturers of any equipment with an engine, gearbox or hydraulics
which thus relies on lubrication oil for reliable and efficient
operation. In these days of intense global competition, high oil
prices and a drive to decarbonise, our proposition of reduced operating
costs, reduced break downs and oil consumption through waste reduction,
resonates loudly and provides Tan Delta with a very significant
global opportunity.
In anticipation of a successful IPO, the management undertook significant
planning during the period to commence sales and marketing in the
second half of the year ("H2 2023") with an initial focus on European
and North American markets, expanding later on in 2024 to the Middle
East, Asia, Africa and South America. The Company is now in a strategically
advantageous situation with an innovative and proven product addressing
a significant global market with a compelling proposition. Furthermore,
as a result of our IPO we now have the cash to commence material
and sustained sales activities and execution of the Board's long-term
strategy.
In order to provide further support and governance strength during
H2 2023 we will add a new independent Non-Executive Director to
our Board. This will complete the Board of Directors and provide
the Company with the management depth and governance to maximise
its opportunities and deliver shareholder growth.
Finally, I would like to take this opportunity to thank our staff,
advisers and investors who supported us through and at IPO.
Chief Executive Review
We are pleased to have achieved our targets for H1 2023. Following
our successful IPO in August 2023 we are now well placed to continue
performing in line with expectations in H2 2023 and beyond, as the
business continues to grow and benefit from the ability to invest
in product evolution and global sales and marketing.
Revenue increased by 54% to GBP0. 96m (H1 2022: GBP0.62m) whilst
broadly maintaining gross margin which slightly fell to 63% (H1:
2022 64%) as a result of a change in product sales mix. Underlying
operating profits, excluding one-off IPO related costs, also increased
by 608% to GBP0.18m (H2 2022: GBP0.03m) as our cost base growth
is not directly coupled to revenue growth.
During the Period revenue was primarily driven by a small number
of prospects who commenced implementations following their evaluation
period, and by a number of small sales to new customers commencing
their evaluations. In the second half we expect more customers to
enter and commence implementation on their equipment fleets, as
well as contribution from our off the shelf SENSE-2 and MOT products.
During the Period, we had three main operational objectives. Firstly,
we continued to progress and grow existing customer evaluations
and adoption planning for our sensor systems. Secondly, we planned
and prepared for the acceleration of our business post IPO, so that
we were ready to immediately start expanding sales, increasing marketing
activities and upscaling production. Thirdly, was the successful
completion of our IPO and securing significant capital to fund the
execution of our global expansion plans.
Moving into H2 2023, we are focused on the implementation of our
sales and marketing plan which is primarily focussed on our off
the shelf SENSE-2 and MOT products, both of which can be immediately
installed and used by equipment owners/operators. Our marketing
program will see these products actively promoted to specific market
verticals including power generation, manufacturing and transportation
in Europe, North America, Middle East, Asia and South America. In
parallel we have commenced increased production to fulfil expected
demand.
A major operational focus for H2 2023 will be the increase of our
human resources to support and enable our rapid scaling plans with
a particular focus on sales, customer support and production. I
am pleased to report that we are making good progress. In 2024 we
will turn our attention to our technology and product development
team which we will further develop to meet the needs of our next
generation of technology and product development targeting the global
automotive segment.
Notes to editors
Tan Delta Systems plc has developed innovative technologies,
products and services that enable operators of rotating equipment,
from trucks and ships to generators and wind turbines, to reduce
oil consumption, maintenance costs, breakdowns and carbon
footprint.
Tan Delta's products offer customers a compelling proposition of
being able to reduce operating costs whilst improving reliability.
This is achieved through equipment operators gaining a better
understanding of the actual real time maintenance status of their
active equipment through the real time analysis of lubrication oil
used within engine, gearboxes and hydraulic systems. Tan Delta's
data analytics, enables the following benefits:
-- Reduced oil consumption by approximately 30 per cent, by
ensuring oil is not changed before it has reached the end of its
life;
-- Reduced breakdowns and associated costs by detecting issues
before damage or failure occurs;
-- Increased equipment operating times by enabling intervals
between maintenance to be extended and;
-- Reduced carbon footprint through a reduction in oil use and prolonged equipment life.
The Company currently offers four main products built around its
core oil condition analysis sensor technology, all of which target
primarily large commercial and industrial equipment market
segments.
Tan Delta was admitted to trading on AIM in August 2023 with the
ticker TAND. For additional information please visit
www.tandeltasystems.com .
LinkedIn : http://www.tandeltasystems.com
Twitter: https://x.com/Tandeltasysyems
Unaudited statement of profit or loss and other comprehensive
income
For the six months ended 30 June 2023
Note (Unaudited) (Unaudited) (Unaudited)
--------------------------------- -----
Six months Six months Year ended
ended ended
--------------------------------- -----
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Revenue 3 959 621 1,575
Cost of sales (351) (222) (585)
--------------------------------- ----- ------------- ------------- ------------
Gross profit 608 399 990
Other operating income 0 0 1
Distribution costs (22) (17) (44)
Administrative expenses (409) (357) (665)
Non-underlying items 4 (471) 0 0
Profit from operations
- Excluding non-underlying
items 177 25 282
- Non-underlying items 4 (471) 0 0
------------- ------------- ------------
(Loss) / Profit from operations (294) 25 282
Interest expense 5 (4) (4) (4)
Interest Income 0 0 0
Profit /(Loss) before tax
------------- ------------- ------------
- Excluding non-underlying
items 173 21 278
- Non-underlying items 4 (471) 0 0
------------- ------------- ------------
(Loss) /Profit before tax (298) 21 278
Taxation 6 0 0 4
--------------------------------- ----- ------------- ------------- ------------
(Loss) / Profit for the
period attributable to equity
holders of the Company (298) 21 282
--------------------------------- ----- ------------- ------------- ------------
Other comprehensive income
Total other comprehensive
income 0 0 0
--------------------------------- ----- ------------- ------------- ------------
Total comprehensive (loss)
/ profit for the period
attributable to equity holders
of the Company (298) 21 282
--------------------------------- ----- ------------- ------------- ------------
Basic and diluted earnings
per share (GBP) 7 (0.01) 0.00 0.01
--------------------------------- ----- ------------- ------------- ------------
Unaudited statement of financial position
As at 30 June 2023
Note (Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 141 26 121
Right of use asset 107 134 120
Property, plant and equipment 61 70 64
309 230 305
-------------------------------- ----- ------------- ------------- ------------
Current assets
Inventories 229 193 240
Trade and other receivables 8 277 248 320
Cash and cash equivalents 9 332 458 186
-------------------------------- ----- ------------- ------------- ------------
838 899 746
Total assets 1,147 1,129 1,051
-------------------------------- ----- ------------- ------------- ------------
Current liabilities
Trade and other payables 10 (786) (682) (367)
Short term borrowings 11 (24) (24) (24)
Short term lease liability 11 (27) (26) (27)
-----
(837) (732) (418)
-------------------------------- ----- ------------- ------------- ------------
Non-current liabilities
Long term borrowings 11 (26) (49) (38)
Long term lease liability 11 (86) (113) (99)
-----
(112) (162) (137)
-------------------------------- ----- ------------- ------------- ------------
Total liabilities (949) (894) (555)
-------------------------------- ----- ------------- ------------- ------------
Net assets 198 235 496
-------------------------------- ----- ------------- ------------- ------------
Equity attributable to
equity holders of the Company
Ordinary share capital 12 50 0 0
Share premium account 13 0 1,565 1,565
Retained earnings/(accumulated
losses) 13 148 (1,330) (1,069)
-------------------------------- ----- ------------- ------------- ------------
Total equity 198 235 496
-------------------------------- ----- ------------- ------------- ------------
Unaudited statement of changes in equity
For the six months ended 30 June 2023
Share capital Share premium Retained earnings Total equity
GBP000 account / (accumulated GBP000
GBP000 losses)
GBP000
-------------------------
Balance at 1 January
2022 0 1,565 (1,351) 214
------------------------- -------------- -------------- ------------------ -------------
Ordinary share capital 0 0 0 (0)
Comprehensive income:
Profit for the period 0 0 21 21
------------------------- -------------- -------------- ------------------ -------------
Balance at 30 June 2022 0 1,565 (1,330) 235
------------------------- -------------- -------------- ------------------ -------------
Balance at 30 June 2022 0 1,565 (1,330) 235
------------------------- -------------- -------------- ------------------ -------------
Ordinary share capital 0 0 0 0
Comprehensive income:
Profit for the period 0 0 261 261
------------------------- -------------- -------------- ------------------ -------------
Balance at 31 December
2022 0 1,565 (1,069) 496
------------------------- -------------- -------------- ------------------ -------------
Balance at 31 December
2022 0 1,565 (1,069) 496
------------------------- -------------- -------------- ------------------ -------------
Ordinary share capital 0 0 0 0
Comprehensive income:
Loss for the period 0 0 (298) (298)
Bonus issue of shares 50 (50) 0 0
Cancellation of share
premium 0 (1,515) 1,515 0
------------------------- -------------- -------------- ------------------ -------------
Balance at 30 June 2023 50 0 148 198
------------------------- -------------- -------------- ------------------ -------------
Unaudited statement of cash flows
For the six months ended 30 June 2023
(Unaudited) (Unaudited) (Unaudited)
----------------------------------------
Six months Six months ended Year ended
ended
----------------------------------------
Note 30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Cash flows from operating
activities
(Loss) / Profit before Tax (298) 21 278
Adjustments for non-cash/non-operating
items:
Depreciation 5 4 11
Amortisation of intangible
assets 5 0 0
Amortisation of right of
use assets 13 13 27
Taxation 0 0 4
Loss on disposal of plant
and equipment 0 0 4
Interest income 0 0 0
Interest expense 4 4 4
---------------------------------------- ----- ------------- ----------------- ------------
Operating cash flows before
movements in working capital (271) 42 328
(Increase)/decrease in inventories 11 (140) (187)
(Increase)/decrease in trade
and other receivables 43 41 (31)
Increase/(decrease) in trade
and other payables 419 412 97
---------------------------------------- ----- ------------- ----------------- ------------
Net cash generated from
operating activities 202 355 207
---------------------------------------- ----- ------------- ----------------- ------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (2) (34) (39)
Purchase of intangibles
assets (25) (26) (121)
Net cash used in investing
activities (27) (60) (160)
---------------------------------------- ----- ------------- ----------------- ------------
Cash flows from financing
activities
Borrowings and finance lease
obligations (29) (29) (53)
Net cash used in financing
activities (29) (29) (53)
---------------------------------------- ----- ------------- ----------------- ------------
Net decrease in cash and
cash equivalents 146 266 (6)
Cash and cash equivalents
at the beginning of the
period 186 192 192
------------- ----------------- ------------
Cash and cash equivalents
at the end of the period 9 332 458 186
---------------------------------------- ----- ------------- ----------------- ------------
Notes to the unaudited condensed interim financial
statements.
1. General information
The interim financial statements were approved by the Board of
Directors on the 28 September 2023.
2. Basis of preparation
The interim financial statements of the Company are for the six
months ended 30 June 2023.
The comparative figures for the financial year ended 31 December
2022 are not the Company's statutory accounts for that financial
year. The comparative figures were prepared under International
Financial Reporting Standards ('IFRS') for the purposes of
presentation in the Company's AIM Admission Document published on
11 August 2023 ('Admission Document'). The statutory accounts filed
at Companies House were prepared under the historical cost
convention and in accordance with Financial Reporting Standard 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland' including the provisions of Section 1A 'Small Entities'
and the Companies Act 2006. The financial statements were audited
and prepared in accordance with the provisions applicable to
companies subject to the small companies' regime even though they
were exempt from audit under Section 477 of the Companies Act
2006.
The condensed interim financial statements for H1 2023 do not
include all the information and disclosures required in the annual
financial statements and have not been audited or reviewed by an
auditor pursuant to the Auditing Practices Board guidance on Review
of Interim Financial Information. However, selected explanatory
notes are included to explain events and transactions that are
significant for an understanding of the changes in the Company's
financial position and performance in the period.
The condensed interim financial statements for H1 2023 have been
prepared based on the accounting policies adopted within the
Admission Document, and those expected to be adopted for the year
ending 31 December 2023. These accounting policies are drawn up in
accordance with adopted International Accounting Standards ('IAS')
and International Financial Reporting Standards ("IFRS") as issued
by the International Accounting Standards Board and adopted by the
EU.
AIM-listed companies are not required to comply with IAS 34
'Interim Financial Reporting' and accordingly the Company has taken
advantage of this exemption.
3. Revenue from contract
customers
Geographical reporting (Unaudited) (Unaudited) (Unaudited)
--------------------------
Six months Six months ended Year ended
ended
--------------------------
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
United Kingdom 526 325 956
Europe 191 161 270
Rest of the World 242 135 349
959 621 1,575
-------------------------- ------------- ----------------- ------------
4. Non-underlying items
(Unaudited) (Unaudited) (Unaudited)
-------------------------
Six months Six months ended Year ended
ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
IPO costs (471) 0 0
------------------------- ------------- ----------------- ------------
(471) 0 0
------------------------- ------------- ----------------- ------------
IPO costs
On Admission to AIM on 18 August 2023, the Company issued
23,074,000 new ordinary shares, taking the number of ordinary
shares in issue to 73,223,800. Total proceeds amounted to circa
GBP6.0m. The costs associated with the IPO, which were committed at
30 June 2023, amounted to GBP0.47m and they have been recognised as
non-underlying expenses in the income statement in H1 2023.
5. Finance expense
(Unaudited) (Unaudited) (Unaudited)
----------------------------
Six months Six months ended Year ended
ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Interest on bank loans (2) (2) 0
Interest on finance leases (2) (2) (4)
---------------------------- ------------- ----------------- ------------
(4) (4) (4)
---------------------------- ------------- ----------------- ------------
6. Income tax expense
No income has yet been recognised in H1 2023 in relation to
R&D tax credits available from HMRC through the SME R&D
relief scheme.
7. Earnings per share
Earnings per share are
as follows:
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP per share GBP per share GBP per share
Basic and diluted earnings
per share (0.01) 0.00 0.01
----------------------------- ------------------- ----------------- --------------
The calculations of basic
and diluted earnings per
share are based upon:
GBP000 GBP000 GBP000
----------------------------- ------------------- ----------------- --------------
(Loss) / Profit for the
period attributable to
the owners (298) 21 282
----------------------------- ------------------- ----------------- --------------
Number Number Number
----------------------------- ------------------- ----------------- --------------
Number of ordinary shares
at the end of the period 50,149,800 50,149,800 50,149,800
----------------------------- ------------------- ----------------- --------------
The calculation of basic earnings per share is based on the
results attributable to ordinary shareholders divided by the number
of ordinary shares outstanding as if the bonus issue and share
split had occurred at the beginning of the earliest period
presented. The earnings per share calculations for the period and
prior period presented are based on the new number of shares.
The number of shares in issue at the end of the period is used
as the denominator in calculating basic earnings per share. As the
Company is loss making the effect of instruments that convert into
ordinary shares is considered anti-dilutive, hence there is no
difference between the diluted and non-diluted loss per share.
During the period ended 30 June 2023, the Company completed a
110 for 1 bonus share issue and a subdivision of shares. Prior to
the bonus issue there were 451,800 shares at GBP0.001, after the
bonus issue there are 50,149,800 shares at GBP0.001
8. Trade and other receivables
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Amounts falling due within
one year:
Trade receivables 162 193 277
Other receivables 58 20 19
Prepayments 53 17 20
Tax recoverable 4 18 4
277 248 320
-------------------------------- ---------------- -------------- ------------
9. Cash and cash equivalents
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 30 June 2022 31 Dec 2022
2023 GBP000 GBP000
GBP000
Cash at bank available on demand 332 458 186
332 458 186
------------------------------------ ------------ -------------- ------------
10. Trade and other payables
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 30 June 2022 31 Dec 2022
2023 GBP000 GBP000
GBP000
Trade payables (389) (195) (284)
Other payables (16) (50) (15)
Other taxation and social security (15) (20) (12)
Accruals (295) (11) (19)
Deferred income (71) (406) (37)
(786) (682) (367)
------------------------------------ ------------ ------------- ------------
11. Borrowings and lease liabilities
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 30 June 2022 31 Dec 2022
2023 GBP'000 GBP'000
GBP'000
Current:
Bank loans (24) (24) (24)
Lease liability (27) (26) (27)
(51) (50) (51)
-------------------------------------- ------------ ------------- ------------
Non-current:
Bank loans (26) (49) (38)
Lease liability (86) (113) (99)
Total borrowings (112) (162) (137)
-------------------------------------- ------------ ------------- ------------
Banks loans comprise a Coronavirus Business Interruption Loan
provided by Lloyds. The loan was taken out in July 2020 and matures
five years after this date.
12. Share capital
(Unaudited) (Unaudited) (Unaudited)
As at As at As at
30 June 30 June 2022 31 Dec 2022
2023 GBP'000 GBP'000
GBP'000
Allotted, called up and fully
paid
Ordinary shares of 45,180 @
GBP0.01 each 0 0
Ordinary shares of 50,149,800
@ GBP0.001 each 50
50 0 0
------------------------------- ------------ ------------- ------------
Called up share capital
Called up share capital represents the nominal value of shares
that have been issued.
All classes of shares have full voting, dividends, and capital
distribution rights.
On 1 June 2023, the ordinary shares were subdivided from GBP0.01
to GBP0.001 (45,180 shares to 451,800 shares). Subsequently a bonus
issue was made for all the shareholders holding 451,800 shares at
that date. The bonus issue offered 110 ordinary shares for every 1
ordinary share in issue, with a nominal value of GBP0.001 per
share. This increased the number of ordinary shares in issue by
49,698,000 to 50,149,800.
13. Reserves
In anticipation of re-registering the Company as a public
limited company, at a general meeting of the Company on 1 June
2023, it was resolved that the Company would reduce its share
premium account by an amount of GBP1.52m by crediting the Profit
and Loss Account.
Share premium account
This represents the excess value recognised from the issue of
ordinary shares above nominal value.
Retained earnings
This represents cumulative net gains and losses less
distributions made.
14. Post balance sheet events
No adjusting events have occurred between reporting date and the
date of authorisation of the condensed interim report. The Company
listed on AIM on 18 August 2023 raising circa GBP6.0m. The Company
issued 23,074,000 ordinary shares thus taking the total number of
ordinary shares in issue to 73,223,800 from 50,149,800. The costs
associated with the issue amounted to approximately GBP1.2m.
GBP0.47m was recognised in H1 2023 and GBP0.73m will be recognised
in H2 2023.
On 18 August 2023, 1,253,745 share options were granted to those
eligible under the scheme in line with the disclosures made in the
Company's admission document dated on 18 August 2023. The options
have an exercise price of GBP0.26.
15. Availability
Further copies of this interim announcement are available on the
Tan Delta Systems plc website, www.tandeltasystems.com .
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END
IR BLGDCSXDDGXI
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