REG - Thruvision Group PLC - Final Results
28/06/2024 07:00
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RNS Number : 2446U Thruvision Group PLC 28 June 2024
28 June 2024
Thruvision Group plc
Results for the year ended 31 March 2024
Thruvision (AIM:THRU, 'Thruvision' or the 'Group'), the leading international
provider of walk-through security technology, today publishes its results for
the financial year ended 31 March 2024 ('2024').
Highlights
· Revenue of £7.8 million (2023: £12.4 million), primarily
comprising Entrance Security, new Customs agency and Retail Distribution sales
- reduction reflects previously announced lack of further significant orders
from US Customs and Border Protection ('CBP') in 2024.
· Adjusting for the impact of this single customer, revenue growth
was 85% to £7.6 million (2023: £4.1 million) demonstrating strong
broad-based growth in demand for our solutions.
· Approximately 70% of revenue came from the existing customer base -
most upgrading to our flagship WalkTHRU solution.
· Adjusted gross margin(1) improved by 1.5pp to 53.0% (2023: 51.5%)
mainly due to higher performance product sales. Statutory gross margin down
1.9pp which reflected lower volumes.
· Adjusted EBITDA loss(1) was £2.5 million (2023: loss of £0.2
million), which is in line with market expectations. Operating loss was £3.0
million (2023: loss of £1.0 million).
· Cash balance as at 31 March 2024 was £4.1 million (31 March 2023:
£2.8 million). The Group has no debt.
· Strategic sales partnership announced in May 2024 with Sensormatic
Solutions, a leading global retail solutions company, owned by Johnson
Controls Inc. (NYSE: JCI).
· £3.2m (gross) equity fundraising completed in October 2023,
enabling the strategic investment by Pentland Capital to become a 10%
shareholder in the Group.
2024 2023
Continuing operations £m £m
Statutory measures:
Revenue 7.8 12.4
Gross profit 3.5 5.8
Gross margin 45.1% 47.0%
Operating loss (3.0) (1.0)
Loss before tax (2.9) (1.0)
Loss per share (pence) (1.85) (0.55)
Alternative measures(1):
Adjusted gross profit 4.1 6.4
Adjusted gross margin 53.0% 51.5%
Adjusted EBITDA loss (2.5) (0.2)
Adjusted loss before tax (3.0) (0.8)
Adjusted loss per share (pence) (1.90) (0.46)
(1) Alternative performance measures ('APMs') are used consistently throughout
this announcement and are referred to as 'adjusted'. These are defined in full
and reconciled to the reported statutory measures in the Appendix.
Commenting on the results, Colin Evans, Chief Executive, said:
"FY2024 was an important year for the Group. Our walk-through technology is
now fully proven in the international security market and we are seeing sales
coming from across the world in each of our four market sectors. Some 70% of
our revenue came from existing customers who rely on our technology to screen
many thousands of people every day.
Given this, we are now concentrating on expanding our reach into each of our
four potentially very large markets through a broader set of sales
partnerships. We are delighted to be working with Sensormatic Solutions, the
global retail solutions company, and we are extending our reach through
regional partners into Europe, Asia and the Middle East. With all of the well
publicised security issues being experienced around the world, we are seeing
significantly more interest in our Entrance Security solutions.
Trading in the current financial year is in line with the Board's expectations
and our sales pipeline points to a return to activity levels the Group
achieved in FY2023. This, coupled with the tight control over our cost base,
provides us with the confidence that we are heading towards sustainable
profitability and positive cashflow generation."
For further information please contact:
Thruvision Group +44 (0)1235 425400
plc
Colin Evans, Chief Executive
Victoria Balchin, Chief Financial Officer
Investec Investment Banking (NOMAD & Broker) +44 (0)20 7597 5970
James Rudd / Patrick Robb / Sebastian Lawrence
Meare Consulting +44 (0) 7990 858548
Adrian Duffield
About Thruvision (www.thruvision.com)
Thruvision is the leading international developer, manufacturer and supplier
of walk-through security technology. Its technology is deployed in more than
30 countries around the world by government and commercial organisations in a
wide range of security situations, where large numbers of people need to be
screened quickly, safely and efficiently. Thruvision's patented technology is
uniquely capable of detecting concealed objects in real time using an advanced
AI-based detection algorithm. The Group has offices and manufacturing
capability in the UK and US.
Important information
This announcement may include statements that are, or may be deemed to be,
'forward-looking statements' (including words such as 'believe', 'expect',
'estimate', 'intend', 'anticipate' and words of similar meaning). By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances, and actual results may, and often
do, differ materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with respect to
future events as at the date of this announcement. Save as required by
applicable law, the Company undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
Chairman's statement
The past year has been one of mixed fortunes for Thruvision. On one hand we
failed to build on the record results from the year ending 31 March 2023
('2023') with a significant reduction in both revenue and profitability in the
year ending 31 March 2024 ('2024'). But on the other, we made significant
progress on a number of the strategic and commercial initiatives that we have
been targeting for some time. In doing so, we have built a much stronger
underlying business, which has exited the year with a more distributed
customer base, wider opportunity and activity in more markets, a better
product portfolio, and a stronger balance sheet.
As we announced in October, the financial results for the past year were
dominated by the lack of a previously anticipated material follow-on contract
award from our major customer, US Customs and Border Protection ('CBP'), which
had contributed £8.3 million (or 67%) of our revenues in 2023. Inevitably,
this had a material impact on both revenue, which fell to £7.8 million (2023:
£12.4 million) and profitability, as our Adjusted EBITDA loss expanded to
£2.5 million (2023: £0.2 million loss). As we explained when we announced
this, the lack of a follow-on order was due in large part to the
well-publicised US Federal budget stale-mate. It does, however, indicate the
challenges faced by a small business with a substantial reliance on a single
customer.
However, aside from this significant event, the year saw a number of very
positive actions and results that place the business in a considerably
healthier position than 12 months ago. Revenue from customers other than CBP
actually grew by 85%, demonstrating the increasing scale and resilience of our
other revenue streams and the potential that exists for Thruvision to grow in
the future. Of these revenues, 70% came from existing customers across our
various markets, most of whom are well-known government agencies and leading
retailers, who enthusiastically embraced our new 'WalkTHRU' solution. This
high level of repeat business derives from a clearly defined competitive
market position with now proven technology, which has delivered over £50
million of revenue since we became an independent company in 2017, with more
than 700 units deployed in over 30 countries.
The more fragile global security situation resulted in a significant
bounce-back in our Entrance Security market and led to strong revenues from
Customs Agencies in numerous countries, many of whom look to CBP for
technology leadership. Retail Distribution, which for us is still mainly UK
focused, proved more challenging as retailers restricted budgets in response
to significant cost headwinds and consumer belt-tightening. Aviation too
continued to be challenging, although recent policy changes are expected to
drive future demand for worker screening in US Aviation. As a result of these
various factors, our four markets are all showing signs of healthy demand for
2025 and beyond.
Since its launch in 2023, our WalkTHRU technology has become a powerful growth
driver in all our markets. This unique capability allows our customers to
screen people at walking pace for many applications and hence greatly increase
throughput relative to conventional security solutions. We launched our latest
AI-powered products, the LPC71 Series, in the year to further improve WalkTHRU
performance.
As our technology and international position has become more established, we
are increasingly using channel sales partners as we seek to widen our
distribution more globally. To this end, we were delighted to announce, in May
2024, our Strategic Sales Partnership with Sensormatic Solutions, the leading
global retail solutions company, owned by Johnson Controls Inc. (NYSE: JCI).
There has been considerable commentary that small public companies,
particularly in the UK, have for some time not seen their progress reflected
in enhanced valuations. Thruvision is certainly in this position. However, we
have exhibited great resilience during the past year and we are delighted that
Pentland Group has become a new significant shareholder. This has enabled us
to continue with our investment programme in our leading international
technology and sales capability as well as to end the year with an enhanced
cash position.
Our people remain the bedrock of the business and their continued commitment
is key to our success. We continued to invest in our sales capability and we
added several important hires in this area, including a new Sales Director who
joined from a leading security solution provider. Competition for talent
remains acute, especially in the technology arena. I am pleased to say that we
have filled all of our openings with very high-calibre staff which, I believe,
is an endorsement of our belief that Thruvision is well positioned to be an
important player in the UK technology landscape.
Outlook
2024 was undoubtedly a challenging year for Thruvision with the absence of a
major contract award from our previously largest customer, CBP. However, the
very strong revenue growth we achieved from customers outside CBP, and the
fact that 70% of our revenues came from existing customers provides an
encouraging platform from which we can now return to growth. We also remain
confident that our further product release plans will continue to enhance the
competitiveness of our market positioning.
The more fragile global security situation when combined, as it currently is,
with a generally improving global macro-economy and our increased focus on
indirect sales channels has resulted in strengthening interest levels for our
technology across each of our four target markets. This is resulting in a
pipeline which points to activity levels in 2025 back towards those we
achieved in 2023. With our cost base remaining under tight control, this in
turn should drive us towards our primary strategic goal of sustainable
profitability and positive cash flow generation.
Chief Executive's review
Strategic update
Overview
With a further expansion of our customer base and strong growth outside CBP,
we continued to strengthen our market-leading international position as a
developer, manufacturer and supplier of unique walk-through security
technology.
Overall, revenue was £7.8 million (2023: £12.4 million), with the reduction
reflecting the lack of further orders from CBP in 2024 following the £8.3
million of revenue that it generated in 2023 (2024: £0.2 million). Excluding
CBP, revenue grew by 85% to £7.6 million. Adjusted gross margin remained
strong and improved to 53.0% (2023: 51.5%) with statutory gross margin down to
45.1% (2023: 47.0%) as a result of lower throughput.
We were very pleased to benefit again from high levels of repeat purchasing by
existing customers, which stood at approximately 70% of revenue. Most of these
were upgrading to our latest 'WalkTHRU' capability, which gives us confidence
that our technology continues to deliver real-world benefits. We face little
direct competition at present in our areas of focus.
Looking forward, our objective now is to increase our market share in a number
of growing and established market sectors and to thereby scale the business to
reach sustained profitability.
Strategy for growth
With a strong recovery in demand from our Entrance Security market, and policy
changes driving renewed interest in US Aviation worker screening, the Group
is, once again, seeing opportunities for growth across all four of our market
sectors including Customs and Retail Distribution.
With highly referenceable, household name customers in all of our market
sectors and a wide geographic spread, the Thruvision brand and technology is
now well known in the international security market.
Given this, and with the addition of new sales leadership earlier in 2024, we
have been placing greater emphasis on building out our indirect sales
partnerships in order to proactively develop our sales pipeline and deliver
orders.
As mentioned in the Chairman's statement, in May 2024 we announced our
Strategic Sales Partnership with Sensormatic Solutions, the leading global
retail solutions company. Sensormatic is seeing interest in Distribution
Centre ('DC') security technology from some of the world's largest retailers
and this partnership means it is now able to offer Thruvision technology to
meet this need.
With Sensormatic, we have a rapidly growing sales pipeline across UK, Europe
and the US and have a dedicated senior sales executive managing this
relationship.
With our increasingly well understood technology maturity, we have refreshed
our Value Added Reseller ('VAR') network and now have 11 covering much of
Europe and Asia. These partners have been selected for their expertise and
existing customer base in three of our four markets, Aviation, Customs and
Entrance Security, complementing the Sensormatic relationship for Retail
Distribution.
Our product roadmap is designed to maintain our significant performance
advantage over different competitors through our continued investment in
improving our patented, AI-enhanced Terahertz ('THz') imaging technology. We
made very good progress in the year with a major new release, the 71 Series,
featuring a significant new AI-based software functionality. This work also
lays the foundations for further similarly important new AI-based capability
in the next 12 months.
Financially, we aim to maintain adjusted gross margin in the low 50% range
through a newly designed, more aesthetic and easier to assemble enclosure and
by increasing the relative value of the high margin software component of our
sales. With an increasing percentage of sales coming via partners, we will be
able to manage our cost base such that we expect to see operational leverage
improving as revenues grow, leading to sustained profitability.
Business review
Markets
The Group was, until the pandemic, active in four different market sectors,
each of which has differing end-user requirements and operating on different
economic and geopolitical cycles. In the last year, Entrance Security and
Aviation, which at the time were badly affected by the pandemic, have both
started generating significant interest again. This means that we once more
see growth opportunities across all four of our market sectors.
Customs
Thruvision was already used by international Customs agencies in nine
countries to screen travellers for drugs, cash and other contraband. In the
year, we made further good progress in broadening our international customer
base in this market, adding two new customers in the year. This brings the
total number of Customs agencies that have purchased solutions from Thruvision
to 11 internationally. We also received a further order from an existing
customer in Asia.
Well-publicised US Federal budget issues led, in-part, to our largest
customer, US Customs and Border Protection ('CBP'), not ordering further
equipment from us in 2024. Although our multi-year CBP framework purchasing
agreement remains in place until September 2026, Presidential election
politics means funding for border security remains uncertain. However,
opportunities for fleet expansion with other existing customers and new
customer prospects means we expect to see revenue growth from this sector.
Retail Distribution
Retailers and their logistics partners use our technology to check employees
for a wide range of potential theft items as they leave DCs. Our analysis
shows there are around 20,000 DCs in the UK, US and Europe, which could use
Thruvision systems.
Our model in this market is characterised by a larger number of smaller orders
as customers typically buy on a site-by-site basis. Evidence shows that once a
new customer buys Thruvision and establishes an initial Return on Investment
('RoI'), they are more likely to either buy more units or upgrade existing
units as they better understand how to minimise theft in their organisation.
The market research we published with Retail Economics in November 2023,
showed that theft by employees from UK retailers' DCs was a growing issue,
which was estimated to have cost £1.4 billion in 2023. However, many
retailers have faced a broader set of challenges given current general
economic weakness, which led to us experiencing weaker than expected demand in
the past year.
With retailers tightly controlling discretionary spend in 2024, we signed up
three new retail customers. Of our Retail Distribution revenue in the year,
75% came from existing customers with already proven RoI. They typically
invested to upgrade to our WalkTHRU solution, given the additional throughput
rates and deterrence it offers.
Looking forward, we expect to see similar levels of repeat buying and
upgrading given our very focused product strategy.
The signing of the sales partnership with Sensormatic is a very important
initiative, which we are confident will help us win new customers and
reinvigorate international growth in this sector.
Aviation
In Aviation, we focus on the US market given our long-standing relationship
with the US Government's Transportation Security Administration ('TSA'). Our
technology is used in security checkpoints to ensure no prohibited items are
taken airside and onto planes and is in service in three large US airports
where it is used for screening aviation workers.
Security screening in the aviation industry is a regulated activity and, to
date, Thruvision technology has only been given regulated approval for
aviation worker screening in the US. However, in response to changes in
international aviation policy, the TSA issued a National Mandate in autumn
2023 requiring US airports to upgrade their capabilities for security
screening aviation workers. Under this Mandate, Thruvision technology is
listed by the TSA in its Aviation Worker Screening Toolkit.
In order to further strengthen our market position, we recently completed
operational testing and evaluation of our WalkTHRU solution at San Diego
International Airport with the National Safe Skies Alliance ('Safe Skies').
Safe Skies is an independent, non-profit organisation funded by the US Federal
Aviation Administration.
This testing demonstrates that Thruvision is well placed to help US airports
meet their new TSA-mandated aviation worker security obligations and, since
the announcement, we have seen a meaningful pick-up in sales enquiries, which
we expect to lead to new sales in 2025. We are developing plans for how best
to partner strategically to maximise our reach as this market moves into its
specification and purchasing phase.
Regarding passenger screening, while our testing contract with the TSA has
been extended for a further three years, testing activity levels have slowed.
This is because TSA funding remains focused on completing the unrelated
rollout of new passenger bag CT scanners, which is both costly and running
later than anticipated.
Entrance Security
Thruvision is used by a wide variety of venues ranging from high-security
government sites to public museums to check visitors, typically for concealed
weapons.
The Group saw a strong growth in sales in 2024 in traditional entrance
security weapons checks. Sales also included a specific counter-terrorism
deployment in the Middle East, other early-stage
counter-terrorism work for the US Department of Defense and a counter-drugs
deployment for a European Prison Service.
In all cases, Thruvision technology was selected for its unique ability to
detect reliably a broad range of threat objects, including non-metallics, in a
diverse range of operational environments.
With a continuing increase in geopolitical instability and the related
terrorism risk, we saw significantly growing interest and received orders from
customers across the Middle East, Europe and Africa. We expect this interest
to continue and revenue growth to result.
Product R&D and Intellectual Property ('IP')
Our technology allows security guards to see items hidden in clothing, which
means that intrusive physical searches, or 'pat-downs', are no longer
necessary. Based on our patented THz sensor and image processing software, our
systems can detect, quickly and reliably, all types of material
(non-metallic as well as metallic).
Our product strategy aims continuously to improve throughput rates, detection
performance and ease of use, and is now almost wholly focused on expanding our
WalkTHRU capability.
Our R&D and product roadmap therefore, has three objectives. We have made
good progress in the last year against each of these:
- Focus on utilising latest developments in AI to deliver additional
new functionality and to offer this as optional software licences to help
improve product profitability;
- Provide clear value-add upgrade paths for existing customers to
take advantage of latest developments; and
- Improve the physical design of our product range to improve
in-field useability and aesthetics.
These three strands came together with a major new product release in early
2024, the 71 Series. This new series, focused initially on Retail
Distribution, was the result of feedback from our retailer user forum.
The 71 Series features major new software functionality that adds significant
new video AI capability and, for the first time, tightly couples THz with
video image processing to deliver significant performance benefits to users,
including improved detection performance and people-counting. This new
redesigned software will allow significant further new functionality to be
released in the next 12 months.
With some of the new software functionality sold as an optional extra licence,
the 71 Series should ensure the Group can enhance product profitability.
The Group currently holds patents in five families and our patent strategy is
designed to cover the IP value, which is based on our modular, satellite-grade
engineering THz sensor platform, the unique combination of this sensor with
purpose-designed optics and scanning mirror, and our purpose-developed image
processing software.
As part of our ongoing patent portfolio management, we have taken initial
steps towards increasing our patent portfolio by patenting some new capability
which has resulted from our recent R&D activities.
Manufacturing and support
We have delivered further improvements in our manufacturing capability across
the UK and US. This has mostly focused on optimising supply-chain management
to better manage our working capital needs and redesigning our products for
ease of assembly and reduced manufacturing and support costs. We also saw far
fewer component supply shortages than in previous years.
We expect to see further reductions in build cost through improvements in
product design and economies of scale as revenues grow.
We continued to improve our post-sales support capability and have also been
ensuring full skills transfer to our growing number of VARs. Our product
reliability remains good with a new fault-free record of 28,000 hours
in-service operation being recorded on units deployed in a particular US
airport.
People
Average headcount remained at 43 staff during the year. Within this, we made
changes to introduce a new senior sales leader, from a global airport security
equipment provider, into the business to enhance and execute our sales
strategy. To support this strategy, we then also added an experienced Channel
Sales Manager to develop our VAR network into a more proactive, new demand
generator for the Group.
Financial review
Highlights
Revenue for the year to 31 March 2024 was down £4.6 million (37%) to £7.8
million (2023: £12.4 million) attributable to the lack of further significant
orders from CBP in 2024. Adjusting for the impact of this single customer,
revenue from other customers grew by 85% to £7.6 million, with strong growth
in Entrance Security and Customs.
Adjusted gross margin improved by 1.5pp to 53.0% (2023: 51.5%) mainly due to
product mix. Statutory gross margin was down 1.9pp to 45.1% (2023: 47.0%)
reflecting lower absorption of production overheads as volumes decreased. The
operating loss in the period was £3.0 million (2023: loss £1.0 million),
with an Adjusted EBITDA loss of £2.5 million (2023: loss £0.2 million).
Adjusted loss before tax of £3.0 million increased by £2.2 million (2023:
loss £0.8 million) with statutory loss before tax of £2.9 million (2023:
loss £1.0 million).
Cash as at 31 March 2024 was £4.1 million (31 March 2023: £2.8 million). The
increase in cash of £1.3 million was driven by the share placing in October
2023, which raised net proceeds of £3.1 million and was partly offset by an
operating cash outflow of £0.8 million, capital expenditure of £0.6 million
and net other outflows of £0.5 million.
Revenue
Revenue is split between our two principal activities below.
2024 2023
£'000 £'000
Product 7,394 11,782
Support and Development 420 638
7,814 12,420
The principal growth driver for the business is product sales. Support revenue
includes extended warranty and other post-sale support revenue, as well as
customer-funded development contracts. We expect warranty and other support
revenue to grow in the future, with customer-funded development contracts not
a key driver for future growth.
Revenue is split by market sector and geographical region below.
2023
2024
Revenue by market sector £'000 £'000
Retail Distribution 1,924 2,429
Customs(1) 3,148 9,165
Aviation 23 246
Entrance Security 2,719 580
7,814 12,420
( )
(1) 2024 includes £169k of revenue from CBP (2023: £8,281k). Excluding
CBP, Customs revenue was £2,979k (2023: £884k).
2024 2023
Revenue by geographical region £'000 £'000
UK and Europe 2,436 2,249
Americas(1) 1,998 9,223
Middle East and Africa 845 346
Asia Pacific 2,535 602
7,814 12,420
(1) 2024 includes £169k of revenue from CBP (2023: £8,281k). Excluding
CBP, Americas revenue was £1,829k (2023: £942k).
Gross profit
Adjusted gross profit, defined as gross profit excluding production overheads,
is used to enable a like-for-like comparison of the contribution from sales
after variable costs only. Adjusted gross margin is used as a key
performance indicator ('KPI') to understand the impact of input cost
pressures, product mix and sales price changes. Production overheads are
excluded since the significant movements in revenue volumes impact labour and
overhead absorption rates in each year. Production overheads are monitored
on an absolute basis. As a result, adjusted gross profit is the APM used to
represent this metric, see Appendix for calculation and further information.
Adjusted gross margin grew in the second half of the year reflecting improved
product mix caused by an increased proportion of higher performance product
sales. This contributed to the 1.5pp increase in adjusted gross margin for the
full year, with statutory gross margin down by 1.9pp including a 3.4pp
negative impact from manufacturing as there was lower production throughput
together with pay cost inflation.
Adjusted gross profit and statutory gross profit are shown below.
2024 2023
£'000 £'000
Revenue 7,814 12,420
Adjusted gross profit 4,141 6,401
Adjusted gross margin 53.0% 51.5%
Statutory gross profit 3,522 5,837
Statutory gross margin 45.1% 47.0%
Administrative expenses
Administrative expenses are analysed as follows:
2024 2023
£'000 £'000
Sales, marketing and support 2,454 2,527
Engineering (including R&D) 1,067 1,047
Management 949 1,046
Plc costs 884 829
Property and administration 580 417
Bonus 89 458
Foreign exchange losses/(gains) 80 (198)
Overheads 6,103 6,126
Depreciation and amortisation 465 569
Share-based payments (credit)/charge (50) 96
Impairment of intangible assets - 36
Administrative expenses 6,518 6,827
Administrative expenses decreased by 5% (£0.3 million) to £6.5 million, with
overheads flat at
£6.1 million and a reduction in bonus costs offsetting adverse transactional
exchange movements. The ratio of overheads to revenue increased to 78% from
49% last year driven by lower revenues. Administrative expenses include
share-based payment charges, depreciation and amortisation and impairment of
intangible assets, but these are excluded from overheads. Overheads benefitted
from translational exchange as the appreciation in the US Dollar exchange
rates decreased overheads by approximately £50k, compared to the prior year
average exchange rate experienced.
Sales and marketing expenditure was slightly lower driven by lower sales
commissions. Engineering costs, including R&D costs, were up as a result
of increased headcount in our software team as well as new product costs.
Property and admin cost increases were due to additional finance headcount and
recruitment costs. Management costs were lower driven by one-off costs
relating to the CFO replacement in the prior year; Plc costs were up because
of higher insurance costs and professional fees.
Loss after tax and loss per share
Statutory loss after tax increased by £2.0 million from £0.8 million to a
loss of £2.8 million with the adjusted loss after tax of £2.9 million
increasing by £2.2 million. The tax credit of £0.1 million (2023: £0.2
million) reflects R&D tax credits receivable. Unrelieved trading tax
losses in the UK available to carry forward indefinitely are £9.3 million
(2023: £7.3 million). No deferred tax asset has been recognised (2023:
none).
The loss per share and adjusted loss per share were 1.86 pence and 1.90 pence
respectively (2023: loss per share and adjusted loss per share of 0.55 pence
and 0.46 pence respectively) and reflected the movements in adjusted and
statutory loss after tax.
Cash flow
Cash and cash equivalents increased during the year by £1.3 million to £4.1
million as at 31 March 2024, driven by the share placing in October 2023,
which raised net proceeds of £3.1 million and was partly offset by an
operating cash outflow of £0.8 million, capital expenditure of £0.6 million
and net other outflows of £0.5 million. The operating cash outflow is
driven by an Adjusted EBITDA loss of £2.5 million partly offset by a net
working capital inflow of £1.3 million and cash tax received of £0.4 million
relating to R&D tax credits.
The principal movements in net working capital were as follows:
· Trade and other receivables resulted in a £2.1 million inflow in the
year, driven by higher sales in the final quarter of the prior year compared
to the current year.
· A decrease in trade and other payables resulted in an outflow of
£0.7 million driven by the lower bonus accrual and the timing of stock
purchases in the final quarter compared to the prior year.
Capital expenditure during the year of £0.6 million (2023: £0.1 million) was
driven by investment in demonstration equipment of £0.5 million supporting
the growth in non-CBP activity.
Financing, treasury and going concern
Cash and cash equivalents as at 31 March 2024 were £4.1 million (31 March
2023: £2.8 million).
The Group has prepared and reviewed cash flow forecasts for the period to 30
June 2025, which reflect forecast changes in revenue across its business and
performed a reverse stress test of the forecasts to determine the extent of
any downturn which would result in insufficient cash being available to the
business. Following this assessment, the Board are satisfied that the Group
has sufficient resources to continue in operation for a period of not less
than 12 months from the date of this report. Accordingly, they continue to
adopt the going concern basis in relation to this conclusion and preparing
the consolidated financial statements.
Currency
The Group has both translational and transactional currency exposures.
Translational exposures arise on the consolidation of the US overseas
subsidiary results into GBP. The largest translational exposures during
the year were to the US Dollar. Translational exposures are not hedged.
During the year, currency translation effects resulted in revenue being £115k
lower, gross margin being £20k lower and the Adjusted EBITDA loss £30k lower
than they would have been if calculated using prior year exchange rates.
Transactional exposures arise where the currency of sale or purchase invoices
differs from the functional currency in which each company prepares its local
accounts. The transactional exposures include situations where foreign
currency-denominated trade receivables, trade payables and cash balances are
held. Transactional foreign exchange losses of £0.1 million (2023: £0.2
million gain) were included in administrative expenses. The Group maintains
non-GBP cash balances to meet short-term operational requirements.
The table below shows the average and closing key exchange rates for the US
Dollar compared to GBP.
2023
2024
Average exchange rate for the year 1.257 1.206
Exchange rate at the year-end 1.262 1.236
Other
A programme of share purchases by the Thruvision plc Employee Benefit Trust
was undertaken during the year with the purpose of partly satisfying future
employee exercises of share options. The total number of shares purchased
during the year was 1,051,557 at a cost of £239k.
Dividends
The Board is not proposing to pay a dividend (2023: none).
Events after the balance sheet date
In order to manage fluctuations in working capital, the Group has recently
agreed a continuation of the previous £0.25 million overdraft facility with
HSBC at £0.1 million from 31 May 2024 for 12 months. This remains undrawn at
the date of publication of these results.
Consolidated income statement
for the year ended 31 March 2024
Year ended Year ended
31 March
31 March
Notes
2024
2023
£'000
£'000
Revenue 2 7,814 12,420
Cost of sales (4,292) (6,583)
Gross profit 3,522 5,837
Administrative expenses (6,518) (6,827)
Operating loss 3 (2,996) (990)
Finance income 109 26
Finance costs (62) (15)
Loss before tax (2,949) (979)
Taxation credit 103 174
Loss for the year (2,846) (805)
Loss per share
Loss per share - basic and diluted 4 (1.86p) (0.55p)
All operations are continuing.
Consolidated statement of comprehensive income
for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Loss for the year attributable to owners of the parent (2,846) (805)
Other comprehensive loss - items that may be subsequently reclassified to
profit or loss:
Exchange differences on retranslation of foreign operations (16) (50)
Total other comprehensive loss (16) (50)
Total comprehensive loss attributable to owners of the parent (2,862) (855)
Consolidated statement of financial position
at 31 March 2024
31 March 2024 31 March 2023
£'000 £'000
Non-current assets
Property, plant and equipment 1,375 1,173
Intangible assets 124 109
1,499 1,282
Current assets
Inventories 3,655 3,639
Trade and other receivables 2,229 4,342
Current tax recoverable 99 375
Cash and cash equivalents 4,119 2,810
10,102 11,166
Total assets 11,601 12,448
Current liabilities
Trade and other payables (1,926) (2,690)
Lease liabilities (151) (121)
Provisions (52) (107)
(2,129) (2,918)
Net current assets 7,973 8,248
Non-current liabilities
Trade and other payables (109) (72)
Lease liabilities (492) (604)
Provisions (110) (38)
(711) (714)
Total liabilities (2,840) (3,632)
Net assets 8,761 8,816
Equity
Share capital 1,611 1,472
Share premium 3,282 325
Capital redemption reserve 163 163
Translation reserve (5) 11
Retained earnings 3,710 6,845
Total equity attributable to owners of the Company 8,761 8,816
Consolidated statement of changes in equity
for the year ended 31 March 2024
Share Share Capital redemption reserve Translation reserve Retained Total
capital
premium
£'000
£'000
earnings
equity
£'000
£'000
£'000
£'000
At 1 April 2022 1,466 201 163 61 7,554 9,445
Shares issued 6 124 - - - 130
Share-based payment charge - - - - 96 96
Transactions with Shareholders 6 124 - - 96 226
Loss for the year - - - - (805) (805)
Other comprehensive loss - - - (50) - (50)
Total comprehensive loss - - - (50) (805) (855)
At 31 March 2023 1,472 325 163 11 6,845 8,816
Shares issued 139 2,957 - - - 3,096
Share-based payment credit - - - - (50) (50)
Purchase of own shares - - - - (239) (239)
Transactions with Shareholders 139 2,957 - - (289) 2,807
Loss for the year - - - - (2,846) (2,846)
Other comprehensive loss - - - (16) - (16)
Total comprehensive loss - - - (16) (2,846) (2,862)
At 31 March 2024 1,611 3,282 163 (5) 3,710 8,761
Consolidated statement of cash flows
for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Operating activities
Loss after tax (2,846) (805)
Adjustments for:
Taxation credit (103) (174)
Finance income (109) (26)
Finance costs 62 15
Depreciation of property, plant and equipment 500 619
Profit on disposal of property, plant and equipment - (10)
Amortisation of intangible assets 26 20
Impairment of intangible assets - 36
Share-based payment charge/(credit) (50) 96
Operating cash outflow before changes in working capital and provisions (2,520) (229)
Decrease/(increase) in trade and other receivables 2,132 (2,360)
Increase in inventories (16) (183)
(Decrease)/increase in trade and other payables (745) 321
Decrease in provisions (55) (71)
Cash utilised in operations (1,204) (2,522)
Net income taxes received 378 -
Net cash outflow from operating activities (826) (2,522)
Investing activities
Purchase of property, plant and equipment (581) (37)
Purchase of intangible assets (41) (86)
Proceeds from disposal of property, plant and equipment - 11
Interest received 90 26
Net cash outflow from investing activities (532) (86)
Financing activities
Proceeds from issue of shares 3,243 130
Share issue costs (147) -
Purchase of own shares (239) -
Payments on principal portion of lease liabilities (143) (180)
Financing charge (12) -
Interest paid on lease liabilities (50) (15)
Net cash inflow/(outflow) from financing activities 2,652 (65)
Net increase/(decrease) in cash and cash equivalents 1,294 (2,673)
Cash and cash equivalents at 1 April 2,810 5,441
Effect of foreign exchange rate changes 15 42
Cash and cash equivalents at 31 March 4,119 2,810
Notes to the financial information
1. Accounting policies
1.1 Basis of preparation
The financial information of the Group set out above does not constitute
statutory accounts for the purposes of Section 435 of the Companies Act
2006. The financial information for the year ended 31 March 2024 has been
extracted from the Group's audited financial statements which were approved
by the Board of Directors on 27 June 2024.
The financial statements of Thruvision Group plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
These financial statements are presented in Pounds Sterling ('GBP') and are
rounded to the nearest thousand (£'000), except where otherwise stated.
The financial statements were authorised for issue by the Board of Directors
on 27 June 2024 and the statement of financial position was signed on the
Board's behalf by Colin Evans and Victoria Balchin.
The Company is a public limited company incorporated and domiciled in England
and Wales and whose shares are quoted on AIM, a market operated by the London
Stock Exchange.
The consolidated financial statements have been prepared on a historical cost
basis.
1.2 Accounting policies
The key accounting policies which apply in preparing the financial statements
for the year are set out below. These policies have been consistently applied
to all periods presented in these consolidated financial statements.
The USD/GBP exchange rates used in the consolidated financial statements is as
follows:
2024 2023
Average exchange rate for the year 1.257 1.206
Exchange rate at the year end 1.262 1.236
1.3 Basis of measurement
Going concern
The Group's loss before tax from continuing operations for the year was £2.9
million (2023: £1.0 million). As at 31 March 2024, the Group had net current
assets of £8.0 million (31 March 2023: £8.2 million), of which cash and cash
equivalents of £4.1 million (31 March 2023: £2.8 million).
The Board has taken the cash flow forecast for the period to 30 June 2025,
reviewed the key assumptions underpinning the projection, and considered a
range of downside scenarios to assess whether the business has adequate
financial resources to continue operational existence and to meet liabilities
as they fall due for a period of not less than 12 months from the approval of
the financial statements.
In completing the above analysis, the Board has reviewed the following:
· The current pipeline of potential sales opportunities, differentiating between
existing customers and new customers, and smaller sales and large, multi-unit
sales. Potential scenarios included a general downgrading of smaller unit
sales volumes and the removal of larger sales for which confidence of securing
an order was not already high based on customer interaction to date
· Market, political and recessionary economic trends that may adversely impact
the prospects of revenue realisation from a broad range of customers in all
geographical areas of operation
· The availability of manufacturing facilities and the impact of unforeseen
outages.
· The potential for supply chain issues to result in higher purchasing costs and
reduced margins, or an inability to fulfil all orders received due to raw
materials shortages
· An expectation of retaining a materially higher overheads cost base than the
prior year, aligned to support a growing business
· General inflationary pressures that may have similar impacts on revenues and
costs to those described above
Stress testing has been performed to identify and analyse the circumstances
under which the Group's business would no longer be viable without recourse to
new funding throughout the period reviewed, including steps taken to maximise
liquidity, for example a reduction in discretionary spend and inventory
levels. The testing undertaken applied various stresses simultaneously even
though it would not be considered reasonable to expect all downsides to occur
concurrently.
As a result, the above testing demonstrates that cash generation is sufficient
for the business to remain a going concern, without recourse to alternative
sources of finance, for the period to 31 July 2025.
Overall, the Group is well placed to manage business risk effectively and the
Board reviews the Group's performance against budgets and forecasts on a
regular basis to ensure action is taken where needed. The Directors are
satisfied that the Group has adequate resources to continue operating for a
period of at least 12 months from the approval of these accounts. For this
reason, they have adopted the going concern basis in preparing the financial
statements.
2. Segmental information
The business is run as one segment although we sell our products into a number
of sectors as disclosed in the Finance review. The employees of the business
work across both our geographical and market sectors, with the assets of the
business being utilised across these sectors as well, and it is not possible
to directly apportion these costs between these sectors.
As such, the Directors do not split the business into segments in order to
internally analyse the business performance. The Directors believe that
allocating administrative expenses by department provides a suitable level of
business insight. The overhead department cost centres comprise:
· Engineering (including R&D);
· Sales, marketing and support;
· Property and administration;
· Management; and
· Plc costs.
with the split of costs as shown within the Financial Review.
2. Segmental information (continued)
Revenue is split between our two principal activities below:
2024 2023
£'000 £'000
Product 7,394 11,782
Support and Development 420 638
7,814 12,420
The Group's revenue by market sector and geographical region is detailed
below:
Revenue by market sector 2024 2023
£'000
£'000
Retail Distribution 1,924 2,429
Customs(1) 3,148 9,165
Aviation 23 246
Entrance Security 2,719 580
7,814 12,420
(1) In 2024 includes £169k of revenue from CBP (2023: £8,281k). Excluding
CBP, Customs revenue was £2,979k (2023: £884k).
Revenue by geographical region 2024 2023
£'000
£'000
UK and Europe 2,436 2,249
Americas(1) 1,998 9,223
Middle East and Africa 845 346
Asia Pacific 2,535 602
7,814 12,420
(1) In 2024 includes £169k of revenue from CBP (2023: £8,281k). Excluding
CBP, Americas revenue was £1,829k (2023: £942k).
The Group's revenue by point of recognition is detailed below:
2024 2023
£'000
£'000
Revenue recognised at point in time 7,727 11,888
Revenue recognised over time - extended warranty and support revenue 87 532
7,814 12,420
Analysis of revenue by customer
There have been two individually material customers (comprising over 10% of
total revenue) in the year (2023: one customer). These customers represented
£1,885k (24%) and £938k (12%) of revenue for the year (2023: £8,286k (or
67%)).
2. Segmental information (continued)
Other segment information
The Group's non-current assets by geography are detailed below:
2024 2023
£'000
£'000
United Kingdom 1,176 1,027
United States of America 323 255
1,499 1,282
3. Operating loss
The operating loss is stated after charging/(crediting):
2024 2023
£'000
£'000
Cost of inventories recognised as an expense 3,894 5,475
Research and development expense 636 598
Net impairment credit on trade receivables and contract assets - (57)
Share based payment (credit)/charge (50) 96
Depreciation of property, plant and equipment 500 619
Profit on disposal of property, plant and equipment - (10)
Expenses relating to short-term and low-value leases 1 3
Amortisation of intangible assets 26 20
Impairment of intangible assets - 36
Exchange losses/(gains) 80 (198)
4. Loss per share
2024 2023
Loss after tax (£'000) (2,846) (805)
Weighted average number of shares outstanding (total in issue) 153,197,717 147,138,774
Less: weighted average number of shares owned by Employee Benefit Trust (522,781) -
Weighted average number of shares used to calculate basic and diluted loss per 152,674,936 147,138,774
share
Basic and diluted loss per share (pence) (1.86p) (0.55p)
The inclusion of potential Ordinary Shares arising from LTIPs and EMI Options
would be anti-dilutive. Basic and diluted loss per share has therefore been
calculated using the same weighted number of shares for each financial year.
5. Post-balance sheet events
In order to manage fluctuations in working capital, the Group has recently
agreed a continuation of its overdraft facility with HSBC at £0.1 million
from 31 May 2024 for 12 months. This remains undrawn to date.
APPENDIX - ALTERNATIVE PERFORMANCE MEASURES ('APMs')
Thruvision uses adjusted figures as key performance measures in addition to
those reported under IFRS, as management believe these measures enable
management and stakeholders to assess the underlying trading performance of
the businesses. The APMs exclude certain items that are considered to be
significant in nature and/or quantum.
The APMs are consistent with how the businesses' performance is planned and
reported within the internal management reporting to the Board. Some of these
measures are used for the purpose of setting remuneration targets.
The key APMs that the Group uses include adjusted measures for the income
statement together with adjusted cash flow measures. Explanations of how they
are calculated and how they are reconciled to an IFRS statutory measure are
set out below.
Adjusted measures
The Group's policy is to exclude items that are considered to be significant
in nature and/or quantum, where the item is volatile in nature and cannot be
directly linked to underlying trading, and where treatment as an adjusted item
provides stakeholders with additional useful information to better assess the
period-on-period trading performance of the Group. They reflect how the
business is measured and managed on a day-to-day basis.
The Group excludes certain items, which management have defined as:
- Share-based payments charge or credit
- Impairments of intangible assets
Gross profit, excluding production overheads, is used to enable a
like-for-like comparison of underlying sales profitability and provide
supplementary information. This adjusted measure is termed Adjusted gross
profit. The use of Adjusted gross profit margin provides the Board and
management with a measure of direct product profitability (pricing, direct
costs of sale and directly allocable costs including inventory provisions),
without the impact that sales volumes can have on the absorption of the more
fixed production overheads. It provides a useful measure of sales and
procurement effectiveness as a subset of topline profitability analysis and
may help investors understand and evaluate performance in the same way as the
Board and management. The metric is helpful to show current trends in the
Group's operations and is useful for like-for-like comparisons of product
profitability between years.
These non-GAAP measures should not be considered in isolation or as a
substitute for the comparable GAAP (IFRS) measure and may not be comparable
with other companies. All APMs relate to the current year results and the
comparative year.
Based on the above policy, the adjusted performance measures are derived from
the statutory figures as follows
a) Adjusted gross profit
2024 2023
£'000 £'000
Gross profit 3,522 5,837
Add back:
Production overheads 619 564
Adjusted gross profit 4,141 6,401
b) Adjusted EBITDA
2024 2023
£'000 £'000
Statutory operating loss (2,996) (990)
Add back:
Depreciation and amortisation 526 639
Impairment of intangible assets - 36
Share-based payment (credit)/charge (50) 96
Adjusted EBITDA loss (2,520) (219)
c) Adjusted loss before tax
2024 2023
£'000 £'000
Statutory loss before tax (2,949) (979)
Add back:
Impairment of intangible assets - 36
Share-based payment (credit)/charge (50) 96
Adjusted loss before tax (2,999) (847)
d) Adjusted loss per share
2024 2023
£'000 £'000
Statutory loss after tax (2,846) (805)
Add back:
Impairment of intangible assets - 36
Share-based payment (credit)/charge (50) 96
Adjusted loss after tax (2,896) (673)
Weighted average number of shares 152,674,936 147,138,774
Statutory loss per share (pence) (1.86) (0.55)
Adjusted loss per share (pence) (1.90) (0.46)
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