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Remote Monitored Systems Plc

Remote Monitored Systems continues to make progress across all elements of its business

Remote Monitored Systems plc (LON:RMS) has announced its Final Results for the Year to 31 December 2019 and Notice of AGM.

Financial Overview

During the year ended 31 December 2019 the Group recorded revenues on continuing operations of £52,648 compared with £nil (restated to reflect the disposal of Geocurve) for the year ended 31 December 2018.  The operating loss on continuing operations before goodwill impairment for the year was £582,736 (2018 restated: £667,765).  Administrative expenses on continuing operations before goodwill impairment amounted to £615,540 (2018 restated: £665,343). The loss after tax on continuing operations for the year was £592,290 (2018 restated: £775,477). The loss per share on continuing operations was 0.13 pence (2018 restated: loss per share of 0.24 pence).

●            Consolidated net assets attributable to the owners of the parent at 31 December 2019 amounted to £28,795 (31 December 2018: assets £668,109)

●             Cash balances at the year-end amounted to £74,770 (2018: £109,381)

●          During the year the Company raised £591,484 net of costs through the issue of new shares, as well as £100,000 through the issue of convertible loan notes

Following the year end, the Group raised £350,000 to support the growth of the Group’s core areas of business and to provide working capital. A total of 140,000,000 ordinary shares of 0.2p nominal value each were placed with investors at 0.25p per share. A further 20,400,000 shares were issued to an adviser in lieu of £51,000 of fees.

Outlook

The Group will now continue to make progress across all elements of its business.

GyroMetric, in which the Company owns a 58% interest,  though initially experiencing delays in both sales and installations as a result of the Covid-19 pandemic, now expects that a number of installations and trials including those at Tarmac and Clarke Energy will proceed as imminent maintenance windows arise at client sites.

Cloudveil Limited, the intelligence services and security risk management business acquired in September 2019, whilst also suffering delays and changes in scopes of work caused by the pandemic, has also experienced an unprecedented level of enquiries for its services from a variety of blue chip companies and other private and public bodies in the UK and Europe, and is at an advanced stage of negotiation of commercial terms with a number of these potential customers. As a consequence, Cloudveil is forecasting significant growth, including through sales of IRIS, over the next eighteen months, including contracts expected to start in the forthcoming quarter.

Your Board, substantial owners of the company’s shares, is determined to deliver near term value to shareholders through exploiting opportunities we have created over recent months. As the markets in which we operate return to normality, we anticipate issuing regular updates on our progress.

Annual Report

The Annual Report and Accounts for the year ended 31 December 2019 will be sent to shareholders today and will also be available on the website at

www.remotemonitoredsystems.com.

Annual General Meeting

The Company’s Annual General Meeting (“AGM”) will be held at 10.30am on 24 July 2020. In accordance with the provisions in the Corporate Insolvency and Governance Act resulting from the Covid-19 pandemic, the meeting will not be held in any particular place and shareholders will not be entitled to attend the meeting, therefore shareholders who wish to vote must submit a valid Form of Proxy. However, any shareholders who have questions they would like answered in advance of the meeting can send them to info@remotemonitoredsystems.com and they will be responded to promptly.

The Notice of AGM will be published later today and dispatched, along with Forms of Proxy, to shareholders and will also be available on the website at www.remotemonitoredsystems.com.

In addition to the usual AGM business, the Directors are proposing to reduce the nominal value of the shares. Also, as the convertible loan notes issued in July 2019 are due to mature on 4 July, the Directors are proposing not to seek repayment or conversion but to replace the CLNs with new notes following the AGM, subject to shareholder approval.

Acknowledgments

On behalf of the Board, I would like to thank our business partners, customers, employees and valued shareholders for their continued support.

CHAIRMAN’S STATEMENT

2019 saw the disposal of the Geocurve business, slower than expected progress at GyroMetric and, on a more positive note, the acquisition of Cloudveil.

Geocurve Limited experienced a slower than expected start to 2019, largely as a result of the need to dedicate more resources than expected to the Environment Agency’s Thames Estuary Asset Management 2100 (TEAM2100) programme. Cost saving measures were implemented, followed by a joint venture intended to maximise utilisation and create a market leader in the acquisition and analysis of mobile mapping data. In December 2019 the Board concluded that the investment required to grow Geocurve to critical mass was not justified given increasingly intense competition in the surveying sector and after implementing further cost saving measures, we took the difficult decision to dispose of the business, being the last element of the former Strat Aero businesses. Following shareholder approval, the disposal was completed early in January 2020.

GyroMetric Systems Limited , in which the Company owns a 58% interest, continued to make sales in its established marine drives market. GyroMetric had expected to conduct trials for two major wind turbine manufacturers, starting in June 2019, although progress on these projects has been significantly slower than expected as the priorities of these manufacturers changed. To reduce dependence on projects with long lead times, GyroMetric refocused its sales efforts to develop new markets where the lead times are expected to be shorter and the opportunities towards customers with more immediate returns. As a result GyroMetric announced contracts with several companies including Tarmac, and Clarke Energy and new products including a Universal Bearing Monitor, a Laser Sensor and the Absolute Dynamic Shaft Alignment (“ADSA”) system, which is the world’s first system capable of performing initial absolute alignment as well as continuous dynamic (ie whilst operating) monitoring of relative alignment of rotating machinery. The installations at Tarmac and Clarke Energy have been delayed due to the pandemic, but both will proceed as soon as planned maintenance windows arise at suitable client sites.

Cloudveil Limited, an intelligence services and security risk management business, was acquired in September 2019, pursuant to its previously stated strategy to build upon the Group’s existing data analytics, remote monitoring and surveillance capabilities.

Cloudveil made an excellent start to 2020 but the inevitable delays and changes in scopes of work caused by the Coronavirus crisis and lockdown threatened to slow down progress. The company’s immediate response was to adapt IRIS, Cloudveil’s existing bespoke Management Information platform, to assist organisations to manage their immediate response to the global pandemic, as well as taking the right steps in the short, medium and long term. As a result, Cloudveil will be adding a Cyber Security Assessment package to its Management Information Software, Crisis Management and Security Testing services.

Cloudveil has seen an unprecedented level of enquiries for its services from blue chip companies, large educational establishments, sports clubs and public institutions in the UK and Europe. Cloudveil is engaged in at an advanced stage of negotiation of commercial terms with a number of these potential customers, and is forecasting significant growth, including through sales of IRIS, over the next eighteen months, including contracts expected to start in the forthcoming quarter.

Due to global economic uncertainty resulting from the COVID-19 crisis, forecasting the value and timing of future sales has been difficult and management has taken a prudent approach to impair the investment and goodwill resulting from the acquisition of Cloudveil in the year.

Financial Review

During the year ended 31 December 2019 the Group recorded revenues on continuing operations of £52,648 compared with £nil for the year ended 31 December 2018.  The operating loss on continuing operations before goodwill impairment for the year was £582,736 (2018: £667,765).  Administrative expenses on continuing operations before goodwill impairment amounted to £615,540 (2018: £665,343). The loss after tax on continuing operations for the year was £592,290 (2018: £775,477). The loss per share on continuing operations was 0.13 pence (2018: loss per share of 0.24 pence).

●    Consolidated net assets attributable to the owners of the parent at 31 December 2019 amounted to £28,795 (31 December 2018: assets £668,109).

              ●     Cash balances at the year-end amounted to £74,770 (2018: £109,381).

              ●     During the year the Company raised £591,484 net of costs through the issue of new shares, as well as £100,000 through the issue of convertible loan notes.

Following the year end, the Group raised £350,000 to support the growth of the Group’s core areas of business and to provide working capital. A total of 140,000,000 ordinary shares of 0.2p nominal value each were placed with investors at 0.25p per share. A further 20,400,000 shares were issued to an adviser in lieu of £51,000 of fees.

Acknowledgments

On behalf of the Board, I would like to extend our thanks to our business partners, customers, employees and shareholders for their continued support throughout the period. 

Nigel Burton

Chairman

Dated 27 June 2020

STRATEGIC REPORT

The Directors present their Strategic Report on the Group for the year ended 31 December 2019.

Principal activities and business review

The principal activity of Remote Monitored Systems plc (the “Company”) and its subsidiaries (together the “Group”) was the provision of specialist surveys and inspections, the development and manufacture of digital monitoring and safeguarding systems for rotating shafts, security and risk management consultancy and related software and services.

After the year end the members approved the disposal of the Group’s specialist survey and inspection division (Geocurve) which enabled the Group to focus on its development and manufacture of digital monitoring and safeguarding systems for rotating shafts (GyroMetric division) and security and risk management consultancy and related software and services (Cloudveil division).  More details are set out in the Chairman’s Statement.  Prior year figures have been restated to reflect the discontinued operations of Geocurve.

The year under review represents the seventh year of trading for the Group. During 2019 the Group sought to grow via existing business development and through the acquisition of Cloudveil Limited.

Financial review

The Group recorded revenues from continuing operations of £52,648 (2018: £nil).  The loss for the year from continuing operations after taxation was £592,290 (2018: £775,477).

Administrative expenses from continuing operations amounted to £615,540 (2018: £665,343); a large portion of these costs comprised of wages and salaries, consultancy and professional fees.

Consolidated net liabilities at 31 December 2019 amounted to £19,250 (2018: net assets £690,337). Cash balances at the year end amounted to £74,770 (2018: £109,381).

Following the year end, the Group has secured additional finance to facilitate its development; see Chairman’s Statement for more details. Further details can also be found in Note 33 of the Financial Statements.

Key performance indicators

  Year ended 31 December 2019 £Year ended 31 December 2019 £
Revenue from continuing operations52,648
Administrative expenses from continuing operations615,540665,343
Loss after tax for the year from continuing operations592,290775,477
Earnings per share (pence) from continuing operations – loss(0.13)(0.24)
Net (liabilities)/assets(19,250)690,337
Cash and cash equivalents74,770109,381

Current trading and future developments

The Group continues to make progress across all elements of its business.

Principal risks and uncertainties

There are risks associated with the Group’s business.  The Board regularly reviews the risks to which the Group is exposed and has in place a strategy to mitigate these risks as far as possible.  The following summary, which is not exhaustive, outlines some of the key risks and uncertainties facing the Group at its present stage of development.

The Directors have considered the impact of the Covid-19 pandemic on the business. Although in the longer term it can be expected that the impact will lead to greater demand for remote monitoring systems such as those developed by GyroMetric, in the short term the impact has been negative as the majority of both our own staff and our customers have been in lockdown, resulting in delays in installation and commissioning of systems. Cloudveil has seen an unprecedented level of enquiries since the outbreak of Covid-19, however it has also suffered delays in converting sales leads into contracts during lockdown. As the restrictions continue to be eased in the UK and most of Europe, Cloudveil is expected to make progress towards closing a number of contracts.

Operating risks

The responsibility of overseeing the day-to-day operations and the strategic management of the Group depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Group if one or more of these employees cease their employment.

The Group’s business planning is carried out on the basis of expected future work. The Group is reliant upon securing new contracts. There is a risk that expected contracts will not be won. The directors mitigate this risk by monitoring the pipeline of future contracts.  There is significant risk regarding new contracts with the ongoing restrictions due to Covid-19.  Management is closely monitoring the situation.

The operations of the Group may be affected by various factors, including operational and technical difficulties; difficulties in commissioning and operating plant and equipment; equipment failure or breakdown and adverse weather conditions which may impact surveying operations.

Financial risk factors

The Group’s activities expose it to a variety of financial risks: credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

Credit risk

Credit risk arises from outstanding receivables. Management does not expect any losses from non- performance of these receivables.

Liquidity risk

In keeping with similar sized companies, the Group’s continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. At the date of this report the Group has net cash of approximately £266,000 and therefore the Directors expect to seek to raise additional funding by the end of the calendar year. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s and Company’s ability to continue as a going concern, in order to enable the Group and Company to continue its activities and bring its products to market. The Company defines capital based on the total equity of the Company. The Company monitors its level of cash resources available against future planned activities and may issue new shares in order to raise further funds from time to time.

Section 172 statement

The Directors believe that they have effectively implemented their duties under section 172 of the Companies Act 2006 through adherence to the Quoted Companies Alliance Corporate Governance Code, as detailed below and as published on our website.  The Chairman’s Statement details the Group’s future plans to achieve its long term strategy.

The Group is committed to maintaining an excellent reputation and strive for high standards, while maintaining an awareness of the environmental impact of the work that they do and strive to reduce their carbon footprint.

The Directors recognise the importance of wider stakeholders in delivering their strategy and achieving sustainability within the business; in ensuring that all our stakeholders are considered as part of every decision process we believe we act fairly between all members of the Company.

This Strategic Report was approved by the Board of Directors and authorised for issue on 27 June 2020 by:

Nigel Burton

Chairman and Non-Executive Director

DIRECTORS’ REPORT

The Directors present their Report together with the audited Financial Statements for the year ended 31 December 2019.

General information

The principal activity of Remote Monitored Systems plc (the “Company”) and its subsidiaries (together the “Group”) was the provision of specialist surveys and inspections, developing and manufacturing digital monitoring and safeguarding systems for rotating shafts, security and risk management consultancy and related software and services.

During the year the Group reached agreement to sell its specialist survey and inspection division.  The sale was completed in January 2020.

Dividends

The Directors do not recommend payment of a dividend (2018: £nil).

Directors’ indemnities

The Group has made qualifying third-party indemnity provisions for the benefit of its Directors which were made during the year and remain in force at the date of this report.

Directors’ interests

The Directors who held office in the year and up to the date of approval of these Financial Statements and their beneficial interests in the Company’s issued share capital at the beginning and end of the accounting year were:

 Ordinary
Shares
Ordinary
Shares
 Warrants Warrants
 Interest at
31 December
2019
Interest at
31 December
2018
Interest at 31 December 2019Interest at 31 December 2018
 No.No.No.No.
Paul Ryan 1
Trevor Brown
Nigel Burton
44,794,270
109,637,590
26,098,901
16,963,388
42,857,143
10,714,286
5,500,000

5,500,000

1.     Shares held by Warande1970 BVBA, a company controlled by Mr Ryan

Major shareholdings

The closing mid-market price of the Company’s Ordinary 0.2p Shares at 31 December 2019 was 0.33p.  Shareholders holding more than 3% of the Company’s shares at the date of this report were:

 Ordinary shares%
Trevor Brown
Stephen Jones
Paul Ryan
Nigel Burton 
119,637,590
67,806,004
54,794,270
26,098,901 
18.10
10.26
8.29
3.95 

Capital structure

Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the year, are shown in note 20.  Since 31 December 2019 the Company has raised additional capital as set out below. Further information is set out in note 30 to the Financial Statements.

The holders of Ordinary Shares are entitled to receive notice of, and to attend and vote at, any General Meeting of the Company. Every member present at such a meeting shall, upon a show of hands, have one vote. Upon a poll, holders of all shares shall have one vote for every share held. All Ordinary Shares are entitled to participate in any distributions of the Company’s profits or assets.  There are no restrictions on the transfer of the Company’s Ordinary Shares. Remote Monitored Systems plc’s ordinary 0.2p shares are traded solely on the AIM market.

The Company also has Deferred Shares in issue, the holders of which are not entitled to vote at General Meetings and have no entitlement to distributions.

Going concern

The Financial Statements have been prepared assuming the Group and Company will continue as a going concern. 

The operational requirements of the Group comprise of maintaining a Head Office in the UK alongside its UK operations. The Directors have reviewed the Group’s working capital forecasts, as stated in the Strategic Report.  In line with the agreed plan and budget, GyroMetric requires additional investment to achieve sales growth.

At the date of this report the Group had net cash of approximately £266,000 and therefore the Directors expect to seek to raise additional funding by the end of the calendar year. The ability of the Company to raise additional funds is dependent upon investor appetite and, if necessary, the Directors’ ability to obtain alternative sources of funding.

The Directors have a reasonable expectation that the Company will be able to raise sufficient funding to allow it to cover its working capital for a period of twelve months from the date of approval of the financial statements.  It is for this reason they continue to adopt the going concern basis of accounting in preparing the financial statements Note 2(b). The Auditors make reference to going concern by way of a material uncertainty within the financial statements.

Matters covered in the Strategic Report

The Business Review, results, review of KPIs and details of future developments are included in the Strategic Report and Chairman’s Statement.

Events after the reporting year

Events after the reporting period are set out in Note 33 to the Financial Statements.

EU Referendum

The main trading entities operate in the UK and Europe.  It is not yet clear what impact the UK leaving the EU may have on the Group.  A small proportion of GyroMetric’s sales leads are in Continental Europe. The hesitancy of some customers to spend money has had an impact on the growth of GyroMetric.  The Directors will continue to monitor the situation closely and act accordingly.

Disclosure of information to auditor

Each of the persons who is a Director at the date of approval of this annual report confirms that:

i)    so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and

ii)    the Directors have taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

Independent auditor

The auditor, PKF Littlejohn LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006 at the annual general meeting.

By Order of the Board

Nigel Burton

Chairman and Non-Executive Director

27 June 2020

DIRECTORS’ RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year.  Under that law the Directors have prepared the Group and Parent Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.  Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss of the Group and Parent Company for that year. 

In preparing these Financial Statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·    state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Parent Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the Parent Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Company is compliant with the AIM Rule 26 regarding the Company’s website.

By Order of the Board

Nigel Burton

Chairman and Non-Executive Director

27 June 2020

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.