Interim Results

Ocean Harvest Technology Group PLC

12 September 2023

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

12 September 2023

Ocean Harvest Technology Group Plc ("Ocean Harvest" or "the Company")

Interim Results for six months ended 30 June 2023

Ocean Harvest Technology Group Plc (AIM: OHT), specialists in researching, developing and selling seaweed and ancillary products, announces its unaudited results for the six month period ended 30 June 2023 ("the Period").

The Interim Report for the period ended 30 June 2023 will be published on the Company's website today at www.oceanharvesttechnology.com.

Financial Highlights

·      OHT successfully completed its initial public offering raising gross proceeds of £6,000,000

o  Funds raised allows the Company to focus on its strategic growth objectives

·      66% growth in product revenue to €1.6 million (H1 2022: €0.95 million)

·      150% increase in gross margin to €0.56 million (H1 2022: €0.23 million)

o  Substantial increase in gross margin to 36% (H1 2022: 24%)

o  Margin improvements driven by an increase in average selling prices, eliminating selling concessions post Covid-19 pandemic and an improvement in processing yield

·      Well funded with no external debt and a period end cash balance of €4.8 million (31 December 2022: €1.2 million)

Operational Highlights

·      Strong momentum with new customer wins, having onboarded over 10 new customers in the first six months. This includes a top five swine producer in the US and one of the UK's largest feed pre-mixers

·      Expanded seaweed supply chain in new regions such as east Africa and the Philippines, giving access to materially larger volumes of biomass. OHT has also secured a strategic relationship with a producer of brown seaweed which provides price and volume certainty of supply and is progressing similar arrangements with other seaweed suppliers

·      Further improvement in operating efficiencies due to investment in an additional grinding line in Vietnam, increasing yield significantly

·      Completed Life Cycle Analysis of OceanFeed^TM which demonstrates that it has a materially lower CO₂ equivalent footprint in its manufacture than other common ingredients in animal feed.

o  OceanFeed^TM can be net-negative as one tonne used as an additive can reduce CO₂ equivalent emissions from the feed chain by over 10 tonnes

·      Completed further R&D trials which demonstrated the strong efficacy of OceanFeed^TM in a number of applications

·      The Company was awarded a patent which protects the claim made by the Company that use of a seaweed blend as a feed supplement improves the quantity and/or quality of eggs produced by egg laying birds

Conclusion and Outlook

·      The Group has strong momentum and continues to onboard new customers from its growing pipeline of customer trials.

·      The improvements achieved in gross margin year to date are expected to continue due to the revised selling price levels and the Company's developments in seaweed sourcing and processing.

·      The outlook for OHT's supply of seaweed remains strong and supportive of continued growth in the Company's product sales.

·      Whilst the Group continues to see revenue growth in line with expectations in Asia and the Americas, it is experiencing some delays in onboarding new customers in Europe. This is resulting from the direct impact of feed ingredient prices affecting customer profitability as well as customers in this region having more entrenched usage of other additives. This shortfall in Europe had been expected to be compensated for in the second half by volume from a recently onboarded new customer in another region which is now opting for lower initial volumes before moving to full use in future. 

·      In addition, the strengthening of the Euro in 2023 will impact the value of our reported revenue which is primarily sourced in US dollars

o  As a result, we now expect to report total revenue for the year in excess of €3.4 million

·      The Board continues to see supportive conditions for the growth of OHT's products, with the market looking for more sustainable feed ingredients which improve animal production metrics and can replace existing additives such as antibiotics, other synthetic additives and feed ingredients from land based plants.   The number of potential customers trialing OceanFeed^TM has increased significantly since the start of the year and the potential sales value from those customers has more than doubled to over €10 million. The Board has strong visibility over FY24 revenues that support its forecast revenue growth rates.

Mark Williams, CEO of Ocean Harvest Technology Group, commented:

"At our maiden set of interim results I am pleased to say that OHT has begun to deliver on its objectives set out at its IPO in April. We are continuing to strengthen our global sales team and build out our supply chain. We will also continue to invest in R&D to innovate and enhance our existing customer offering in the markets the Group operates in. We will continue to manage some of the short term onboarding delays and we look forward to delivering on our long term growth strategy for our new and existing shareholders."

For more information please contact:

Ocean Harvest Technology Group Plc	Tel: [phone]
Mark Williams, CEO
finnCap Ltd (Nominated Adviser and Sole Broker)	Tel: [phone]
Geoff Nash / Seamus Fricker / George Dollemore (Corporate Finance) Charlotte Sutcliffe / Harriet Ward (ECM)
Camarco (Financial PR Adviser)	Tel: [phone]
Tom Huddart / Rosie Driscoll / Letaba Rimell	[e-mail]

Notes to Editors

Ocean Harvest Technology Group plc is a global leader in the development and commercialisation of value adding products from multiple species of seaweed. The Company provides a range of natural ingredients focused on improving animal performance whilst protecting the environment, through its unique and proven intellectual property portfolio. The Company's products are produced in its facility in Vietnam from seaweeds soured from multiple markets across the world.

For more information, please visit www.oceanharvesttechnology.com.

Chairman's Statement

Introduction

Ocean Harvest Technology is pleased to report its first set of results following admission of the Company to the AIM market in April.

Ocean Harvest Technology is one of the leading commercial scale producers of seaweed blend ingredients for the animal feed market.

The Group was founded in 2005 on the belief that an investment in research and development would result in the ability to create seaweed ingredients that would deliver a number of specific benefits across multiple animal species based on the polysaccharides and other bioactive ingredients present in particular species of seaweeds.

Since its establishment, the Group, through its research and development programme, continues to build a portfolio of intellectual property and has had commercial success in selling its products as ingredients to improve the efficiency, profitability and sustainability of the animal feed chain by delivering improvements in animal gut health.

Ocean Harvest Technology's ambition is to become the largest supplier of proprietary blended seaweed ingredients to the global animal feed industry.

Period Under Review

The Initial Public Offering was completed in April, successfully raising funds to allow the Company to focus on its strategic growth objectives of investing in sales and marketing, research and development and our supply chain.

At the time of the IPO, additional expertise joined the board in the form of non-executive directors David Tilston, Christine Maggs and Stephen Walker.

The Board believes that Ocean Harvest Technology has enormous potential to capitalise on the growing demand for sustainable and natural ingredients which improve the profitability and sustainability of feeding production animals. OceanFeed^TM has demonstrated benefits when used in multiple species of production animals through improved growth rates and feed conversion efficiency and lower mortality rates.  OceanFeed^TM also has a lower carbon footprint than ingredients and additives produced from land-based plants and generates economic benefits in the communities where our seaweed raw material is harvested. 

The Company anticipates upcoming R&D and trial data demonstrating a range of benefits provided by its feed additives, which the Directors believe will enable Ocean Harvest Technology to attract new customers and access new markets within the animal feed industry.

Conclusion

The Board remains focused on ensuring the Company delivers on its long term growth opportunity and ensuring that its business is run in a sustainable and socially responsible manner with a strong level of governance oversight from the Board of Directors.

Ashley Head

Chairman

Chief Executive's Statement

Introduction

Ocean Harvest Technology is one of the leading producers of seaweed based ingredients for use in the animal feed industry.  The business has achieved strong growth in the first six months driven by the acquisition of new customers, the expansion of our supply chain and continued investment in research and development.

Customer Trials

We continue to assist potential customers to run trials to demonstrate the efficacy and application of the Company's OceanFeed^TM products.  OHT currently has trials scheduled or in progress with over 20 potential customers, which is a continued increase in the size of our customer trial pipeline since the start of the year.

The pipeline of customer trials represents potential annual product revenue of over €10 million, which is an increase from the €5 million pipeline at the start of the year.

Seaweed Sourcing and Processing

The Company has continued to expand its supply chain, on-boarding new suppliers in new and existing markets for its key seaweed species. We have commenced sourcing seaweed from east Africa for the first time during H1 2023 and returned to sourcing from the Philippines where we had not sourced from since before the pandemic. We have onboarded new suppliers in Indonesia and increased volumes from existing suppliers in that important market.  Our visibility and confidence of future seaweed supplies has grown with these developments which will enable our continued growth.

In addition, the Company has recently entered into a strategic arrangement with a supplier of brown seaweed which has guaranteed its supply to the Company at favourable pricing for at least the next two years.  We are progressing the development of similar arrangements with other seaweed suppliers.

Our Vietnam facility had the full use of the second grinding line which was installed and commissioned in late 2022. In addition to providing increased volume capacity to the facility, we have observed that the efficiency of this new line has also contributed to lower yield losses when processing the seaweed raw material.  This has been helpful in our margin improvement across the business.

During the period we commissioned an independent party to conduct a Life Cycle Analysis (LCA) of our OceanFeed^TM product and calculate its carbon footprint.  This calculated that 1 tonne of OceanFeed^TM generated total CO₂ equivalent emissions of 596kg, comprised of direct emissions from the product LCA of 433kg and 163kg of emissions from corporate overhead.  These direct carbon emissions of 433kg per tonne are over 30% lower (and in some cases 90% lower) than the CO₂ equivalent emissions of other common ingredients in animal feed such as wheat, corn and soy.  This is mainly because the seaweed we source uses no arable land, fresh water or fertilisers. 

The analysis goes on to demonstrate that OceanFeed^TM can be a net-negative carbon product in its own right across its whole cycle as i) seaweed absorbs carbon prior to harvest and ii) using OceanFeed^TM as an additive can result in producers using less animal feed.  Therefore, using one tonne of OceanFeed^TM can reduce total CO₂ equivalent emissions by over 10 tonnes.

Research and Development

We were very pleased during the period to announce the results of a number of research and development trials which have demonstrated additional applications of OceanFeed^TM or provided additional evidence of previously demonstrated applications of OceanFeed^TM.  These results included:

·      A laying hen trial confirmed improvements in both egg production and feed efficiency when birds were fed an OceanFeed^TM Poultry supplemented diet.  These performance improvements materially increased income per hen.

·      A catfish trial demonstrated that fish fed with OceanFeed^TM Aqua in their diets had higher feed intake and weight gain, leading to a substantial increase in final live weight.

·      A trial with juvenile shrimp where OceanFeed^TM Aqua improved both weight gain and feed efficiency, thus reducing production costs. OceanFeed^TM Aqua also helped reduce mortality in a disease challenge trial run in parallel.

·      A commercial swine trial reported material improvements in feed efficiency in piglets with OceanFeed^TM Swine included in their diet.  OceanFeed^TM Swine successfully replaced a combination of seven conventional gut health additives. 

In the period, the Company was also granted its first patent.  Patent No: GB 2 594 432 is focused on the efficacy of OceanFeed^TM in layer hens and protects the claim made by the Company that use of a seaweed blend as a feed supplement for egg laying birds improves the quantity and/or quality of eggs produced.  Other patent applications submitted by OHT have been progressing with the relevant agencies.

Global Seaweed Market

The World Bank stated in its recently published Global Seaweed Report 2023 that it views seaweed as a high growth input to many developing industries.  In particular:

·      The top four opportunities cited for new growth in seaweed applications are Animal Feed, Pet Feed, Methane Reduction Additives and Biostimulants

·      In discussing the animal feed and pet feed opportunities the report cites the pre-biotic effect of seaweed, and states the improvements in feed efficiency, production economics and anti-biotic replacement ability of seaweed

·      The report cites OceanFeed^TM as a product that delivers specific benefits to animals, quoting the performance benefits of OceanFeed^TM Bovine and OceanFeed^TM Swine

·      It acknowledges the challenge in building supply chain but it does go on to say that OHT is a company that has already built a supply chain that gives it access to high volumes of seaweed

·      The report cites the three key challenges in growing an industry of seaweed ingredients for animal and pet feed as:

o  having the R&D to demonstrate the product's efficacy

o  having a new customer onboarding timeline

o  building the supply chain

We believe that this independent analysis supports our conviction around the major drivers for our business and our strategy to exploit them.

Conclusion and Outlook

In the period, we have delivered very substantial product revenue growth over the same period of last year, and gross margins have increased significantly. The Company has strong momentum and continues to onboard new customers and the improvements achieved in gross margin year to date are expected to continue due to the revised selling price levels and OHT's developments in seaweed sourcing. The outlook for OHT's supply of seaweed remains strong and supportive of continued growth in the Company's end product sales.

Whilst OHT continues to see revenue growth in line with expectations in Asia and the Americas, it is experiencing some delays in onboarding new customers in Europe. This is resulting from the direct impact on feed ingredient prices and customer profitability as well as customers in this region having more entrenched usage of other feed additives. This shortfall in Europe had been expected to be compensated for in the second half by volume from a recently onboarded new customer in another region which is now opting for lower initial volumes before moving to full use in future.  In addition the strengthening of the Euro in 2023 will impact the value of our reported revenue which is primarily sourced in US dollars. 

As a result, we now expect to report full year total revenue of not less than €3.4 million.

Notwithstanding these revenue delays, the Board does not see any change in the longer term outlook for the business and its revenue growth.  The market backdrop remains supportive of OHT's products with customers looking for more sustainable feed ingredients which improve animal production metrics and can replace existing additives such as antibiotics, other synthetic additives and feed ingredients from land based plants. We have onboarded over 10 customers in the first six months of the year and the pipeline of potential customers trialling OHT's products continues to grow in terms of the number of customers and has more than doubled in potential sales value since the start of the year to over €10 million.  This demonstrates the increasing interest and acceptance of key players in the animal feed sector to include OceanFeed^TM blended seaweed ingredients to achieve production and sustainability benefits.

Financial Summary

The Company has prepared the following financial summary, in addition to the attached financial statements, in the same format as previous announcements to ensure consistency of approach and comparability. This summary shows our product revenue and separates the other revenue we record which is a reimbursement of shipping arranged by OHT on behalf of its customers and on which we do not charge a margin. It also separates non-operating and IPO related expenses to show an EBITDA and an adjusted earnings number.

	Six months to	Six months to	Year ended
	30-Jun-23	30-Jun-22	31-Dec-22
	€	€	€
Product revenue	1,576	952	2,513
Other revenue	177	279	495
Reported revenue	1,754	1,231	3,008
Cost of goods sold	1,190	1,003	2,229
Gross Margin	564	227	779
Gross Margin %	36%	24%	31%
Overheads excluding IPO costs, share based payments, depreciation and finance costs	1,784	1,434	3,121
EBITDA	(1,219)	(1,206)	(2,342)
Finance expense	77	44	50
Depreciation	35	25	52
Other	-	-	456
Adjusted Earnings	(1,331)	(1,276)	(2,900)
IPO transaction costs	754	-	-
Share based payments	97	-	-
Profit (loss) before tax	(2,182)	(1,276)	(2,900)

Revenue

Product revenue grew 66% to €1.58 million (H1 2022 €0.95 million.) driven from new customer acquisition and an increase in average selling prices. The Company sold significant volumes of its proprietary blended seaweed products to over 40 customers, increasing from the circa 30 sold to during 2022. These new customers include one of the largest UK animal feed pre-mix companies and a top five swine producer in the US.

The Company has been able to increase average selling prices by demonstrating the significant financial benefits of using its products to new customers and through eliminating selling concessions which the Company had offered to customers in previous years in response to the high shipping costs resulting primarily from the Covid-19 pandemic.

Profitability

The Company recorded gross margin of €0.56 million in the first half vs €0.23 million achieved in the first half of last year. Gross margins have benefited from the increases in average selling prices but also from expanded seaweed sourcing with improved quality, and therefore better production yields.  The gross margin of 36% on product revenue in H1 is a substantial increase on the equivalent margin of 24% and 31% recorded in H1 and full year 2022 respectively. We believe that we will be able to further improve gross margin as we scale the business further.

Administration expenses have increased by €0.4 million over the first half of last year due to a number of factors in personnel expenses including additional headcount and the making of incentive accruals throughout the year.  This led to an adjusted earnings loss of €1.3 million, consistent with the same period last year.

The Company also recorded charges in the period of €0.8 million in IPO transaction expenses including legal, professional and advisory costs. The total reported loss for the period after these items has increased to a loss of €2.2 million from €1.3 million in H1 2022 primarily due to these items.

EPS

Basic loss per share of €0.023 has increased from a loss of €0.019 in June 2022.

Cash Flow

The IPO gross proceeds of €6.9 million have significantly improved cash flow, with a cash balance of €4.8 million at 30 June 2023, however operating cash flow for H1 2023 is impacted by working capital increases from inventory build, particularly of semi-finished goods to support sales volume growth, and trade debtors increased in line with sales growth.  We have worked on the efficiency of these balances with debtors days moving from 145 to 102 and inventory representing 189 days sales vs 213 days sales in H1 2022.

Non current asset expenditure has also increased with investment in the Vietnam manufacturing facility, R&D activity and systems development costs.

As part of the IPO, all of the convertible loan notes which were previously outstanding were converted into shares in the Company.  In addition the IPO proceeds were used to repay the working capital facility that it had with one of its shareholders, hence the Company is in a strong financial position and has no external debt.

Mark Williams

CEO

Unaudited Condensed Consolidated Statement of Total Comprehensive Income

for the interim period ended 30 June 2023

	Note	Six months to 30 Jun 2023	Six months to 30 Jun 2022	Year ended 31 Dec 2022
		€	€	€
Product revenue		1,576,332	951,913	2,513,068
Other revenue		177,478	278,978	495,227
Total revenue	6	1,753,810	1,230,891	3,008,295
Cost of sales		(1,189,624)	(1,003,495)	(2,229,108)
Gross profit		564,186	227,396	779,187
Other operating income		19,930	2,602	9,004
Administrative expenses		(1,935,142)	(1,461,869)	(3,476,495)
Operating loss		(1,351,026)	(1,231,871)	(2,688,304)
Finance expense		(77,074)	(44,484)	(212,380)
IPO transaction costs		(753,885)	-	-
Loss before taxation		(2,181,985)	(1,276,355)	(2,900,684)
Taxation		-	51,188	64,817
Loss for the period		(2,181,985)	(1,225,167)	(2,835,867)
Other comprehensive income
Item that may be subsequently reclassified to profit or loss:
Currency translation differences		496	(596)	50,321
Total comprehensive loss, net of tax		(2,181,489)	(1,225,763)	(2,785,546)
Total comprehensive loss for the period attributable to owners of the parent		(2,181,489)	(1,225,763)	(2,785,546)
Loss per share - basic	5	(0.023)	(0.019)	(0.044)

The above condensed consolidated statement of total comprehensive income relates to continuing operations for the Company.

Unaudited Condensed Consolidated Statement of Financial Position

as at 30 June 2023

	Note	30 Jun 2023	30 Jun 2022	31 Dec 2022
ASSETS		€	€	€
Non-current assets
Right of use asset		101,229	297,917	219,076
Intangible assets	7	109,962	8,923	20,617
Property, plant and equipment		373,999	129,121	346,521
Total non-current assets		585,190	435,961	586,214
Current assets
Trade and other receivables	8	1,290,706	3,525,560	1,251,026
Inventories		1,016,729	892,083	629,865
Corporation tax assets		72,537	96,709	62,412
Cash and cash equivalents		4,756,926	549,407	1,194,440
Total current assets		7,136,898	5,063,759	3,137,743
Total assets		7,722,088	5,499,720	3,723,957
EQUITY AND LIABILITIES
Equity
Share capital	9	1,477,482	761,448	761,448
Share premium	9	8,128,086	-	-
Share-based payment reserve	10	206,406	-	109,456
Merger reserve		26,932,455	26,932,455	26,932,455
Foreign exchange reserve		(47,343)	(98,160)	(47,839)
Retained losses		(29,583,653)	(25,790,969)	(27,401,668)
Total equity		7,113,433	1,804,774	353,852
Non-current liabilities
Lease liability		47,613	245,019	74,504
Total non-current liabilities		47,613	245,019	74,504
Current liabilities
Trade and other payables		493,265	438,556	436,534
Convertible loans	11	-	2,352,260	2,285,030
Lease liability		67,777	77,825	170,514
Borrowings	12	-	581,286	403,523
Total current liabilities		561,042	3,449,927	3,295,601
Total liabilities		608,655	3,694,946	3,370,105
Total equity and liabilities		7,722,088	5,499,720	3,723,957

Unaudited Condensed Consolidated Statement of Changes in Equity

for the interim period ended 30 June 2023

	Share capital €	Share premium €	Share-based payment  reserve €	Merger reserve €	Foreign exchange reserve €	Retained  losses €	Total  equity €
As at 1 January 2023	761,448	-	109,456	26,932,455	(47,839)	(27,401,668)	353,852
Loss for the period	-	-	-	-	-	(2,181,985)	(2,181,985)
Other comprehensive loss:
Foreign currency exchange difference	-	-	-	-	496	-	496
Total comprehensive loss for the period	761,448		109,456	26,932,455	(47,343)	(29,583,653)	(2,181,489)
Transactions with owners
Issue of share capital	434,093	6,511,388	-	-	-	-	6,945,481
Conversion of convertible loan notes (Note 11)	281,941	2,220,658	-	-	-	-	2,502,599
Cost of raising equity	-	(603,960)	-	-	-	-	(603,960)
Share-based payment	-	-	96,950	-	-	-	96,950
Total transactions with owners	716,034	8,128,086	96,950	-	-	-	8,941,070
As at 30 June 2023	1,477,482	8,128,086	206,406	26,932,455	(47,343)	(29,583,653)	7,113,433

	Share  capital €	Share premium €	Share-based payment reserve €	Merger  reserve €	Foreign exchange reserve €	Retained losses €	Total equity €
As at 1 January 2022	761,448	-	-	26,932,455	(98,160)	(24,565,802)	3,029,941
Loss for the period	-	-	-	-	-	(1,225,167)	(1,225,167)
Other comprehensive loss:
Foreign currency exchange difference	-	-	-	-	(596)	-	(596)
Total comprehensive loss for the period	761,448	-	-	26,932,455	(98,756)	(25,790,969)	1,804,178
As at 30 June 2022	761,448	-	-	26,932,455	(98,756)	(25,790,969)	1,804,178

Unaudited Condensed Consolidated Statement of Changes in Equity

for the interim period ended 30 June 2023 (continued)

	Share capital €	Share premium €	Share-based payment reserve €	Merger reserve €	Foreign exchange reserve €	Retained  losses €	Total equity €
As at 1 January 2022	761,448	-	-	26,932,455	(98,160)	(24,565,802)	3,029,941
Loss for the year	-	-	-	-	-	(2,835,866)	(2,835,866)
Other comprehensive loss:
Foreign currency exchange difference	-	-	-	-	50,321	-	50,321
Total comprehensive loss for the year	761,448	-	-	26,932,455	(47,839)	(27,401,668)	244,396
Transactions with owners
Share-based payment	-	-	109,456	-	-	-	109,456
Total transaction with owners	-	-	109,456	-	-	-	109,456
As at 31 December 2022 (Unaudited)	761,448	-	109,456	26,932,455	(47,839)	(27,401,668)	353,852

Unaudited Condensed Consolidated Statement of Cash Flows

	Six months to             30 Jun 2023	Six months to     30 Jun 2022	Year end to 31 Dec 2022
	€	€	€
Cash flows from operating activities
Loss before taxation	(2,181,985)	(1,276,355)	(2,900,684)
Adjustments for:
Depreciation of property, plant, and equipment	32,413	25,381	51,685
Amortisation of right-of-use assets	71,589	76,616	153,232
Amortisation of intangible assets	6,485	-	-
Finance expense	77,074	44,484	212,380
IPO transaction costs	753,885
Loss on disposal of property, plant and equipment	-	-	1,426
Share based payment	96,950	-	109,456
	(1,143,589)	(1,129,874)	(2,372,505)
Changes in working capital
(Increase)/decrease in inventories	(386,864)	(162,215)	100,003
Increase in trade and other receivables	(49,805)	(2,540,269)	(210,953)
Increase in trade and other payables	56,731	211,402	210,959
Cash used in operations	(1,523,527)	(3,620,956)	(2,272,496)
Taxation credits received	-	57,769	50,914
Net cash used in operations	(1,523,527)	(3,563,187)	(2,221,582)
Cash flows from investing activities
Purchase of property, plant and equipment	(59,890)	(30,290)	(273,752)
Payments for development costs	(76,209)	-	-
Purchase of intangibles	(19,622)	-	(11,694)
Net cash flow used in from investing activities	(155,721)	(30,290)	(285,446)
Cash flow from financing activities
Proceeds from issue of share capital	6,945,481	-	-
Cost of share issue	(1,357,845)	-	-
Proceeds from convertible loan notes	-	2,352,260	2,160,030
(Repayments)/proceeds from related parties	(403,523)	166,927	(10,836)
Interest paid on borrowings	(20,200)	(22,819)	(50,097)
Principal paid on lease liabilities	(82,874)	(61,131)	(147,976)
Interest paid on lease liabilities	(11,068)	(21,665)	(38,862)
Net cash generated from financing activities	5,069,971	2,413,572	1,912,259
Increase/(decrease) in cash and cash equivalents	3,390,723	(1,179,905)	(594,769)
Cash and cash equivalents at beginning of period	1,194,440	1,739,935	1,739,935
Effect of foreign exchange rate movements	171,763	(10,624)	49,274
Cash and cash equivalents at the end of the period	4,756,926	549,406	1,194,440

for the interim period ended 30 June 2023

Notes to the unaudited interim report for six months ended 30 June 2023

1.  General Information

Ocean Harvest Technology Plc (the "Company") is a public limited company which is listed on the AIM Market of the London Stock Exchange and incorporated and domiciled in the UK. Its address of its registered office is 1650 Waterside Drive Arlington Business Park, Theale, Reading, England, RG7 4SA. The registered number of the Company is 13411717.

2.  Basis of preparation

The condensed consolidated interim financial statements include the results of Company and its subsidiaries ("the Group") for the six months ended 30 June 2023 and have not been audited. These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

These condensed consolidated interim financial statements have been prepared in accordance with the AIM rules and the recognition and measurement requirements of UK-adopted International Accounting Standards ("UK-IAS") and adopting the accounting policies that will be applied in the 31 December 2023 annual financial statements and consistent with those disclosed in the AIM admission document.

These condensed consolidated financial statements should be read in conjunction with the historical financial information contained within the AIM admission document, which is available on the Group's website at: www.oceanharvesttechnology.com

The Group's statutory annual financial statements for the year ended 31 December 2022 were prepared under FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and delivered to the Registrar of Companies. The Group's auditors reported on these accounts and their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain any statements under section 498 (2) or (3) of the Companies Act 2006.

These condensed consolidated interim financial statements were approved by the Board of Directors on 11 September 2023.

3.  Accounting policies

Going concern

The Directors believe that the Group has adequate resources to continue trading for the at least 12 months from the date of approval of these condensed consolidated interim financial statements. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing these financial statements.

Summary of significant accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in the financial statements disclosed in the AIM admission document.

4.   Critical accounting judgements and estimates

The preparation of the condensed consolidated interim financial statements requires Directors to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these judgements and estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements for inclusion in the AIM admission document.

5.   Loss per share

The calculation of basic and diluted loss per share is based upon the loss attributable to equity holders divided by the weighted average number of shares in issue during the period.

The loss incurred by the Group means that the effect of any outstanding options would be anti-dilutive and is ignored for the purposes of the diluted loss per share calculation.

	Six months to             30 Jun 2023 €	Six months to 30 Jun 2022 €	Year ended 31 Dec 2022 €
Loss for the period from continuing activities	(2,181,986)	(1,225,167)	(2,835,867)
	Six months to             30 Jun 2023 No	Six months to             30 Jun 2022 No	Year ended 31 Dec 2022 No
Weighted average number of ordinary shares	94,073,289	63,999,883	63,999,883
	Six months to             30 Jun 2023 €	Six months to             30 Jun 2022 €	Year ended 31 Dec 2022 €
Basic and diluted loss per share	(0.023)	(0.019)	(0.044)

6.   Revenue

All of the Group's revenue was generated from the sale of goods and was recognised at a point in time (rather than over time). The Group considers the control over goods is transferred to the customer at the point of shipment and recognises revenue at this point in time.

		Six months to 30 Jun 2023	Six months to 30 Jun 2022	Year ended 31 Dec 2022
		€	€	€
Product revenue		1,576,332	951,913	2,513,068
Other revenue		177,478	278,978	495,227
Total revenue		1,753,810	1,230,891	3,008,295

7.   Intangible assets

	Patents and licenses €	Development costs €	Total €
Cost
At 1 January 2023	29,696	-	29,696
Additions	19,622	76,209	95,831
At 30 June 2023	49,318	76,209	125,527
Amortisation
At 1 January 2023	9,079	-	9,079
Charge for the period	2,226	4,259	6,485
At 30 June 2023	11,305	4,259	15,564
Net book
At 30 June 2023	38,013	71,950	109,963
At 31 December 2022	20,617	-	20,617

Development costs are internally generated intangible assets associated with the development of Group's products. 

8.   Trade and other receivables

Due within one year	30-Jun-23	30-Jun-22	31 Dec 2022
	€	€	€
Trade receivables	957,444	941,595	915,912
Other receivables	195,000	133,607	218,830
Prepayments	138,262	98,098	116,285
Cash in transit		2,352,260
Total trade and other receivables	1,290,706	3,525,560	1,251,027

Trade receivables are amounts due from customers for services performed in the ordinary course of business. The Group negotiates the terms and payment conditions with each customer separately. The amounts due from customers are generally due for settlement within 45 days, but the Group does offer extended credit terms to certain customers. For new customers, the Group adopts a policy whereby 50% of the payment is due before fulfilment of any order. Any amounts received in advance are held as a contract liability and recognised in revenue on dispatch. 

The carrying amount of trade and other receivables approximates fair value. Other receivables include deposits and VAT due. 

 Cash in transit relates to convertible loan note proceeds not yet received into the Company's UK bank account.

9.   Share capital and share premium

	Number of Ordinary Shares	Share capital	Share premium	Total
	No	€	€	€
As at 1 January 2023	63,999,613	761,448	-	761,448
Share placing	37,500,000	434,093	6,511,388	6,945,481
Conversion of convertible loan notes	24,356,084	281,941	2,220,658	2,502,599
Issue costs	-	-	(603,960)	(603,960)
As at 30 June 2023	125,855,697	1,477,482	8,128,086	9,605,568

On 4 April 2023, the entire issued share capital of the Company was admitted to trading on AIM and the Company successfully raised £6,000,000 (€6,945,481) gross proceeds by placing 37,500,000 new Ordinary Shares at 16p per share. As part of the admission, the convertible loan notes converted to 24,356,084 ordinary shares. Further details on the conversion can be found in note 11.

10.  Share-based payment schemes

The Group operates two employee share option schemes that are accounted for as equity-settled share-based payments. The total charge for the ended 30 June 2023 in respect of the two options schemes was €96,950 and was recognised in profit or loss.

11.  Convertible loan notes

	30-Jun-23	30-Jun-22	31 Dec 2022
	€	€	€
2022 Redeemable Convertible Loan	-	-	2,285,030
Total Convertible loan notes	-	-	2,285,030

In June 2022, the Group issued £2,025,000 (€2,352,260 on conversion) of convertible loan notes ("CLNs") to existing shareholders in order to fund the continuing operations and development activities of the Group in advance of the Company's listing.

The CLNs accrued interest on the principal amount at 10% per annum from the date on which the CLN are issued up to and including the 31 December 2022 and 6% per annum until the date at which the CLNs were converted. Up to the point of conversion, the total interest accrued was €158,499 (£136,923).

The CLN's converted into 24,356,084 fully paid shares in the Company upon admission to trading on AIM on 4 April 2023 at a discount of 30% and 45% to the issue price.

12.  Borrowings

	30-Jun-23	30-Jun-22	31 Dec 2022
	€	€	€
Current
Amounts due to Heaton Holdings Limited	-	581,286	403,523
Total borrowings	-	581,286	403,523

Related party loans

The Group had a working capital loan with Heaton Holdings Limited, a related party in which Stuart Waring is a director. Interest was charged at 10 per cent per annum upon amounts drawn down. The loan was secured by a fixed charge over the Group's assets.

During the period to 30 June 2023 the full balance of the loan was repaid to Heaton Holdings Limited.

13.  Significant events after the reporting date

There have been no significant events to report since 30 June 2023 and the date of approving this report on 11 September 2023

 

END