Remote Monitored Systems plc (LON:RMS) has announced its final results for the year end 31 December 2020.
|•||Growing revenues of £104k (2019: £52k)|
|•||Losses increased to £1.53m (2019: £0.59m) including share option cost (£434k) and impairment of GyroMetric (£363k)|
|•||Net cash used in continuing operations £990k (2019: £583k)|
|•||Over £6m of new capital raised net of costs|
|•||Acquisition of Pharm 2 Farm|
|•||Proposed disposal of GyroMetric|
|•||Proposed change of name to “nanosynth group plc”|
|•||Three subsidiaries: Pharm 2 Farm Ltd (development of nanoparticles for agricultural products and human nutrients); nanosynth Ltd (development of nanoparticles for advanced materials and their application in healthcare and other sectors): and Cloudveil (intelligence services and Security Risk Management).|
|•||Reconfiguring and strengthening the Company’s board in progress in order to facilitate the Company’s new focus and direction.|
Antony Legge, Executive Chairman commented:
“Significant progress has been made in transforming the Group and refocusing on businesses which provide good opportunities where we are able to apply the Company’s reserves to best exploit those areas. To this end, the board has been largely reshaped as we continue our search for a new CEO and look to invest in our marketing capability. Building on the excellent work done to date, I am confident that we will be able to progress several positive developments in the coming months.”
Antony Legge joined DirectorsTalk to discuss full year results for the period ended 31st December 20210 which you can listen to here
The last twelve months has been a period of major change at Remote Monitored Systems; the Company has acquired a new subsidiary in Pharm 2 Farm Ltd, new shareholders, a new board, a new direction and is now proposing the disposal of its 58 per cent. subsidiary, GyroMetric Systems Ltd, and a change of name to nanosynth group plc. Such pace of change in an organisation is immensely challenging, however, the Company has emerged stronger than this time last year with a healthy balance sheet and many more growth opportunities ahead of it.
2020 started positively, with the Company reporting in April that unprecedented interest in Cloudveil and customer orders for GyroMetric meant that the future was brightening. By the end of June, the potential remained strong, but the lockdown was delaying any meaningful progress. Two months later, on 21 August, the Company announced it was in discussions to acquire P2F, a spin-out from Nottingham Trent University (“NTU”), which had responded to the COVID-19 pandemic by diverting from its original strategy of creating novel agricultural supplements using nano particles to developing enhanced personal protective equipment (“PPE”) through producing an antiviral face mask. The acquisition was approved by shareholders on 4 November 2020.
With the acquisition of P2F completing just 8 weeks before the end of RMS’s financial year and now the proposed disposal of GyroMetric, the results for 2020 provide few meaningful indications for the future.
Revenue increased to £104k in 2020 from £52k in 2019, driven mainly by sales at GyroMetric (up to £83k from £51k in 2019). Operating costs increased to £1.26m from £0.61m in 2019, due mainly to the expense of the share options granted to directors in November 2020 and a number of one-off costs, including costs related to the P2F acquisition. With the carrying value of GyroMetric being written off at the end year reflecting the proposed terms of its disposal, total losses before tax on continuing operations more than doubled to £1.53m from £0.59m in 2019; giving a loss per share on continuing operations of 0.18p. However, nearly half this loss was due to the share option expenses (£434k) and the impairment on the value of GyroMetric (£363k). As these are both non-cash items, the net cash used by continuing operations was £990k, compared to £583k in 2019, driven mainly by an increase of £358k in working capital (mainly due to advance payments on the mask machine and raw materials to make the anti-viral masks at P2F) compared to a decrease of £123k in 2019. Through placings in April, July and December, coupled with the exercise of warrants, the Company raised over £6.0m net of costs of £0.4m. £1.5m of the placing monies from December were not received until after the year end and hence are not included in the year-end cash balance of £3.6m. The exercise to date in 2021 of further warrants and options have raised an additional £0.9m for the Group and, as at 7 June 2021, its consolidated bank balance stood at approximately £5.0m .
Moving into 2021, the Company responded to shareholder concerns with several board changes, including myself replacing Paul Ryan as Chairman and Richard Clarke joining as an independent non-executive director. The challenge for the new board was severalfold; the mask machine arrived at P2F in early January and needed commissioning ahead of a formal launch of P2F’s anti-viral mask under its band name “ProLarva”; initial interest in the mask needed to be converted into sales and decisions needed taking on how to best utilise the funds raised in December 2020. To this last point, the Board commenced a strategic review, which has recently completed. The Board was also keen to build on the innovations behind the anti-viral face mask and develop further products using the same technology, alongside the development of products for the agricultural sector, which had been the founding principle behind P2F.
The first step was to solve the production issue and avoid disappointing customers by being unable to deliver any masks. Commissioning of the mask machine has been delayed by several months as a number of problems were identified and dealt with and the Board is confident that the machine should be fully operational by early July. With the machine at BioCity unable to meet the anticipated demand, the Board outsourced the manufacturing of the mask to Volz Filters UK.
The price of masks has decreased significantly since the start of the COVID-19 pandemic and the differential between the Pro-Larva mask and other, non anti-pathogenic masks is now significantly greater than 12 months ago. This combined with the impact of existing stockpiles of masks, the success of the vaccination campaign and the uncertainty over the lifting or otherwise of current lockdown restrictions has made sales challenging in the UK. The Group has adopted a two-pronged approach to marketing the Pro-Larva mask. The first, for areas suffering from a rise in COVID infection rates, such as India, is to position the mask as a key step in breaking the infection cycle. However, this is only a short-term opportunity that will fade as the pandemic recedes. The second approach is to position the mask as part of an array of enhanced personal protection equipment, providing a broad anti-pathogenic protection and so reducing the impact of infection amongst workers in in key sectors, such as healthcare. The short-term focus will be on the dental and GP sectors, with a longer-term campaign to encourage the NHS to adopt the protection offered by the unique anti-viral layer, currently contained in the Pro-Larva mask.
However, the Pro-Larva mask is but a small element of the Group’s potential. The purpose of the strategic review undertaken by the Board was to identify other areas of opportunity and to apply the Company’s cash reserves to best exploit those areas. GyroMetric had shown potential in the discussions with offshore wind turbine manufacturers. However, significant investment would have been required to take advantage of this and other opportunities for GyroMetric’s technology and so the Board will be seeking shareholder approval at the forthcoming Annual General Meeting (“AGM”) to return control of GyroMetric to its founders and reduce ongoing costs to the Group. Cloudveil continues to show promise, although sales this year have been slowed by the merger of two of its major potential customers. Cloudveil does not currently require any investment, although this could change if it secures some of the current contracts under discussion. The opportunities arising from the intellectual property inside P2F are substantial. The use of copper as a biocide in the anti-viral layer (the ‘α-virion’™ layer) has led to the development of two spin-off applications. Initial tests on the anti-viral characteristics of these new applications have been successful and the Group is now seeking partners to further develop these ideas into commercial products. P2F is also in advanced discussions with a major global agricultural supplier for a new range of animal nutrients.
With the recognition of the importance of nano-technology to the future of the Group, the Board believes that it is now the right time to change the Group’s name. The Board proposes that the Company is renamed nanosynth group plc; and that following the disposal of GyroMetric, there will be three subsidiaries; Pharm 2 Farm Ltd (to focus on agricultural applications and the human nutrient market), nanosynth Ltd (to focus on advance materials such as the ‘α-virion’™ layer and their applications in healthcare and other sectors), and Cloudveil Ltd (to focus on Intelligence Services and Security Risk Management).
As has been previously reported, the Group has begun its search for a new Chief Executive Officer. It is expected that this search could take several months as we want to be certain of finding the right calibre of individual who will help the team best exploit the myriad of opportunities arising from its nanotechnology, but we hope that it will be complete by the time that we announce our interim results. We are also looking to boost our marketing capabilities. In the meantime, we are privileged to have very capable executives across the Group, who are receiving good guidance and support from the Board. The appointment of Dr Gareth Cave and Dr Felicity Sartain as non-executive directors ensures that science remains at the heart of all Board conversations.
Lastly, I would like to thank all the Company’s shareholders for their support over the last few months. I know that many shareholders feel communication can be improved and we continue to work in that direction. However, we also need to ensure that we are only announcing concrete news. After the groundwork that has been carried out during the year to date, I am confident that the second half of the year will see the announcement of several positive developments at nanosynth group plc.
8 June 2021
Proposed Transfer of Gyrometric Systems Limited
The Company also announced that it and Braveheart Investment Group plc have agreed to return control of Gyrometric Systems Limited to its founders; David Orton, Dr Paul Orton and Dr Janet Poliakoff by transferring their shares to the Founders for nominal consideration.
Gyrometric has some world class technology and a number of potential opportunities exist to exploit this intellectual property. However, it would have required significant investment over the next 12 months to take advantage of these opportunities. As a consequence, the Boards of RMS and Braveheart have reluctantly concluded that the best approach is to return Gyrometric to its Founders.
Under the terms of the Transfer, the existing shareholders’ agreement will be terminated; all loans will be written off (including those from RMS and Braveheart); and RMS and Braveheart will each retain a small shareholding in Gyrometric (15% and 6.43% respectively, reduced from 58% and 19.5% respectively). Following the Transfer, the Founders will together hold 75.1% and Anthony Ferguson, a non-executive director of Gyrometric, will retain 3.47%. The current value of RMS’s investment in Gyrometric, including the loans, is around £0.5 million which will now be written off. RMS has also cleared the current liabilities of Gyrometric, which are estimated at around £33,000, to allow the Founders to take the company forward.
Gyrometric had revenues of c.£83k and a loss of c.£105k in the year ended 31 December 2020.
The Transfer is considered to be a related party transaction in accordance with Rule 13 of the AIM Rules for Companies. Accordingly, the Directors of RMS, being Antony Legge, Richard Clarke, Dr. Felicity Sartain and Dr. Gareth Cave, having consulted with the Company’s nominated adviser, SP Angel Corporate Finance LLP, consider that the terms of the Transfer are fair and reasonable insofar as the Company’s shareholders are concerned.
The Transfer is also deemed to be a fundamental change of business under Rule 15 of the AIM Rules and, as such, is subject to shareholder approval. RMS will be convening a general meeting for early July, to be held immediately before the Company’s Annual General Meeting. A circular will be published in due course.